Indonesia builds five new sugar mills: Official
Indonesia builds five new sugar mills: Official
JAKARTA (JP): Indonesia is constructing seven sugar mills, most owned by the Salim Group, with a combined processing capacity of around 62,000 tons of cane per day and total investments of Rp 1.65 trillion (US$746.9 million), an official says.
"Five of the mills will be new and the remainder are expansions of existing plants. All of the mills will be located outside Java," Director General of Estates of the Ministry of Agriculture, M. Badrun, said yesterday in a hearing with the House of Representatives (DPR).
Badrun's announcement came amid growing criticism of the government's protective measures that have made the sugar industry inefficient and have pushed the prices of sugar higher than international levels.
Analysts, including the World Bank, say that the protectionist policies benefit the predominantly state-owned producers at the expense of consumers, smallholders and downstream industries.
State Minister of Food Ibrahim Hasan said recently that the government is likely to raise the producer price of sugar soon, which is currently at about Rp 792 per kilogram. Ibrahim did not say by what percentage the price of this commodity will rise.
Government figures state that Indonesia currently has 69 sugar mills, 58 of which are in Java, with a combined processing capacity of 2.75 million tons of cane per day.
Indo Lampung
Badrun said yesterday that four of the new mills will be located in Lampung, southern part of Sumatra, with a total processing capacity of 40,000 tons of canes per day. All of these projects, valued about Rp 1 trillion, are controlled by a private firm, PT Indo Lampung.
The director general, who was initially reluctant to identify the owners of the company, later said that Indo Lampung is a subsidiary of the Salim Group.
Badrun said that one of Indo Lampung's new mills is expected to start operating in May. The other three mills are expected to start producing in eight years, he said.
He also said that another domestic private investor, which he refused to name, will start a Rp 250 billion sugar mill in South Sumatra with a processing capacity of 8,000 tons of cane per day. He did not specify when the mill would start operating.
Badrun also declined to name the domestic investor which he said will expand the sugar plant in South Sulawesi, now capable of processing 6,000 tons of canes per day, together with the state-owned PTP XXXII in a project worth Rp 200 billion.
Similarly, he refused to identify the investor who has teamed up with PTP XXXII in an expansion project of a sugar mill in Southeast Sulawesi, with a processing capacity of 8,000 tons of cane per day at a cost of Rp 200 billion.
Consumption
Badrun also said yesterday that the country's total sugar supply this year will reach 3.35 million tons, while its consumption will reach only 2.95 million tons, indicating a 2.6 percent decline from last year.
The bulk of this year's supply, he said, will come from production, estimated to reach 2.37 million tons which actually decreased by 3.6 percent from last year's level.
Badrun said Indonesia is not importing any sugar this year since stocks as of January were estimated at 975,000 tons.
The director general also said that the Indonesian sugar industry must address several issues to anticipate trade liberalization, including productivity and economies of scale.
Badrun did not address any criticism of sugar trade regulations.
A senior official of the National Logistics Agency, the only agency authorized to import and distribute sugar, said last month that no major changes in sugar policies are required. (hdj)