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)