Surya Dumai Industry to build fiberboard plant

Surya Dumai Industry to build fiberboard plant

JAKARTA (JP): PT Surya Dumai Industry (SDI), which plans to go
public this year, announced yesterday that it will build a new
medium density fiberboard (MDF) plant in Riau, with an investment
of US$35 million.

The company's president, Citra Gunawan, said 70 percent of the
investment is to be generated from its planned initial public
offering, which is likely to be held in June this year, while the
rest is from the company's equity.

The installation of the new project will commence next year.
Its commercial production is expected to start in 1997 and will
have an annual production capacity of 50,000 cubic meters of
fiberboards, Citra said.

He told journalists here over the weekend that the MDF plant
is a substitute for the planned expansion project of its plywood
plant.

"We intentionally withdrew our proposal to the Investment
Coordinating Board (BKPM) for the expansion of our plywood plant.
Instead, we will apply for the establishment of an MDF plant,"
Citra said.

He noted that SDI decided to shift to MDF production due to
strong market prospects for such a product, both domestically and
internationally.

Demand for fiberboard in Asia alone reaches 1.75 million cubic
meters annually, while total production from the continent is
only 1.25 million cubic meters.

"Even fiberboards marketed here are all imported as domestic
MDF plants have not yet started their production," Citra said,
adding that MDF made its debut recently.

Approval

At least 15 companies have received approval from BKPM for
building MDF plants, with a total capacity of around 1.95 million
cubic meters and a total investment of Rp 2 trillion (almost $1
billion).

Most of the 15 companies are controlled by conglomerates such
as Barito Pacific, which is led by tycoon Prayogo Pangestu, and
Napan Group by Henry Pribadi. SDI, a subsidiary of the Surya
Dumai Group, is controlled by timber tycoon Mohamad (Bob) Hasan.

To support its MDF project, Citra noted that Surya Dumai Group
has developed 52,500 hectares of industrial forests and another
12,500 hectares of transmigration-related industrial forests.

Along with PT Kiani Lestari, which is also owned by Bob Hasan,
and PT Artika Optima Inti, a subsidiary of the widely diversified
Djajanti Group, SDI is currently being assessed by the Geneva-
based Societe Generale de Surveillance (SGS) as a preliminary
step to going public.

Citra said that SDI is supported by seven concessionaires
under the Surya Dumai Group with a total forest acreage of
908,000 hectares.

However, in addition to supplying logs for SDI with its annual
production capacity of 120,000 cubic meters of plywood, the seven
concessionaires also supply logs for PT Perawang Lumber Industry
with an annual production capacity of 110,000 cubic meters, which
is also under the Surya Dumai Group. (rid)