East Java governor rejects plea to relocate sugar factories

Ainur R. Sophiaan, The Jakarta Post, Surabaya

East Java Governor Imam Utomo has rejected a plea by the central government to relocate a number of loss-making sugar factories to other provinces.

"The proposal was unrealistic as East Java supplied 45 percent of the country's domestic demand for sugar," the governor told reporters after a meeting with sugar producers throughout the province on Friday.

He said the proposal was initially raised by then minister of industry and trade Rahardi Ramelan during the presidency of Abdurrahman Wahid. The proposal was renewed by incumbent Minister of Industry and Trade Rini M.S. Soewandi.

The central government's proposal has drawn complaints by local sugar farmers, who fear possible difficulties in marketing their products if the factories were relocated to other provinces.

Currently, there are a total of 33 sugar plants in operation throughout the province, scattered in the regencies of Pasuruan, Probolinggo, Sidoarjo, Nganjuk and Mojokerto.

Imam did not mention the number of sugar plants suffering the financial losses. However, sources said it was nearly half of the total figure.

The governor said that it would not be that easy to move the sugar plants as there were certain requirements to meet before they could proceed with the relocation.

"There must be a feasibility study on the appropriateness of the new locations and the availability of sugar farmers to support the operation of the new factories," he said.

He admitted that some of the factories still suffered losses due to increasing operational and production expenditure.

"The factory owners have to take the necessary steps to cut expenditure. We (the East Java administration) will also help them to recover," the governor said.

He said his administration was now taking an inventory on problems that the sugar plants have, including their financial status and the quality of their products.

Commenting on the increasing presence of imported sugar in East Java, the governor said the administration would maintain the policy of banning the sale of imported sugar in the province.