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)