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Jakarta Post
The Jakarta Post
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Govt prepares areas for sugar, cattle investors

  • Grace D. Amianti

    The Jakarta Post

Jakarta | Thu, June 18 2015 | 09:01 am

The government has prepared three areas in eastern Indonesia for new cattle farms and sugarcane plantations, Agriculture Minister Amran Sulaiman said in Jakarta on Wednesday.

Speaking after a meeting with the Investment Coordinating Board (BKPM) head Franky Sibarani, Amran said the government had prepared three regions '€” Southeast Sulawesi, Merauke in Papua and the Aru Islands in Maluku '€” as the main sites for at least 10 sugar factories and sugarcane plantations for new investors.

Amran said his ministry and the investment board would work together to continue removing barriers so that interested investors would be able to realize their investment plans in these two important sectors.

He said as many as 26 foreign investors had expressed an interest in developing sugar refineries and sugarcane plantations, while nine others wanted to enter the cattle business.

The 26 investors who expressed a keen interest in entering the country'€™s sugar industry consisted of 11 refined sugar producers and 15 sugarcane plantation companies, Franky said.

'€œThere are also around two to three Japanese investors who are interested in investing in the sugar industry. However, most of the time, in the sugar sector, foreign direct investors choose to first collaborate with their local partners in joint-venture companies,'€ Franky said.

According to his ministry'€™s calculations, Amran said, a sugar refinery with a capacity to process 10,000 tons of sugarcane per day would cost about Rp 5 trillion (US$374.4 million) to build.

The Agriculture Ministry has also run the plan by the Environment and Forestry Minister Siti Nurbaya, who agreed that the land in the three regions would be able to support the industry, Amran added.

'€œWe are planning to allocate 500,000 hectares of land in the three regions, calculating that one mill with a plantation will need at least 50,000 ha of land,'€ Amran said.

Aside from the sugar industry, Amran said at least nine foreign and domestic investors also showed an interest in investing in Indonesia'€™s cattle sector, which would be located in regions such as East and West Nusa Tenggara, Buru Island in Maluku and East Kalimantan.

'€œThe foreign investors are from Brazil, Australia and New Zealand and they already have experience in cattle farming. We will build ranches and supporting infrastructure in the regions, including seaports and roads,'€ Amran said.

Indonesia'€™s sugar industry has been stagnant for many years because the rising demand for sugar is prompting many sugar producers to make use of existing old mills by importing raw sugar to make refined sugar rather than using the domestic supply of raw sugar. This practice continues despite President Joko '€œJokowi'€ Widodo pledging in his campaign to curb imports of various agricultural products.

The President has also renewed his pledge to achieve meat self-sufficiency by promising to support local cattle farming and by stopping beef imports.

Franky said the BKPM and Agriculture Ministry agreed that the investment board would invite prospective investors to show that they had adequate capital before starting to invest and to show that there was compatibility between their specialities and regional conditions.

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