Four Java sugar plants to be closed down

Four Java sugar plants to be closed down

JAKARTA (JP): The government will close down four sugar
factories in Java next month, the first of 26 plants recommended
for closure because they were inefficient or too small, an
official of the Ministry of Industry and Trade said.

M. Yamin Rachman, Director for the Agro Industry, said the
closures were part of a restructuring program in line with
Indonesia's commitment to the International Monetary Fund to
increase competitiveness of the local sugar industry.

Yamin said the government would announce details of the
closure, including the financial arrangements, next month, Bisnis
Indonesia quoted on Friday.

One of the factories to be shut down is owned by the country's
biggest sugar producer, state-owned PT Perkebunan Nusantara XI,
he said. He did not identify the other three.

The government has long considered closing down inefficient
factories but delayed because of lack of funding, he said, adding
that closing a factory would cost about Rp 20 billion ($2.2
million), including paying off the workers.

"The Minister of Finance insists the costs of closure be paid
by the companies themselves," he said.

Yamin said the Directorate General of Plantations had
recommended the closure of 26 of 57 existing sugar factories on
Java because they were inefficient.

"That means there are 22 more factories to be either merged or
shut down," he said, adding that plants with a processing
capacity of less than 2,000 tons of sugar cane per day could be
merged instead of being shut down.

State Minister of Investment and State Enterprises Development
Rozy Munir said earlier that the government would need $307.5
million to close inefficient sugar factories and strengthen the
competitiveness of the sugar industry.

Separately, an official from the Office of the State Minister
of Investment and State Enterprises Development, said it was
impossible to relocate the factories outside of Java because of
the large investment involved.

"To relocate a sugar factory with a capacity of 8,000 tons of
sugar cane a day, an investment of Rp 1 trillion is needed,"
B.S.M. Hutabarat, who heads a team for sugar industry
development, said. (10)