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Unilever oleochemical plant open, regional economy boost expected

Consumer goods giant PT Unilever has officially opened its first ever oleochemical processing plant in the Sei Mangkei special economic zone (SEZ) in Simalungun, North Sumatra, becoming the industrial zone’s anchor investor and spurring hopes that it will boost economic growth in the region

Dylan Amirio (The Jakarta Post)
Sei Mangkei, North Sumatra
Fri, November 27, 2015

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Unilever oleochemical plant open, regional economy boost expected

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onsumer goods giant PT Unilever has officially opened its first ever oleochemical processing plant in the Sei Mangkei special economic zone (SEZ) in Simalungun, North Sumatra, becoming the industrial zone'€™s anchor investor and spurring hopes that it will boost economic growth in the region.

The Rp 2 trillion plant, which will be run and managed by PT Unilever Oleochemical Indonesia, will mostly process crude palm oil at a capacity of 200,000 tons a year.

Construction on the plant began in 2013 and officially ended in September.

Unilever Oleochemical Indonesia president director Biswaranjan Sen explained that the plant would also serve as a collaboration opportunity between Unilever and around 600 farmers in the local area, who will serve as raw material suppliers to the plant, thereby increasing the agricultural productivity and income in Sei Mangkei.

'€œAbout 85 percent of what is processed here will be exported, mostly to Unilever and the rest to non-Unilever parties that work as our suppliers,'€ Biswaranjan told reporters during the opening ceremony in Sei Mangkei on Thursday.

'€œIt is the first oleochemical processing factory Unilever has built anywhere in the world and what'€™s processed here will mainly go into home and personal care products.'€

He said that a plan to expand the 12-hectare facility by about 9 hectares was on the cards, provided that the company could secure the required electricity and gas.

Biswanjaran added that the plant was part of Unilever'€™s masterplan to use 100 percent sustainable and certified palm oil in its products by 2020, which he said would be helped by the direct supply of raw materials by local farmers.

Shares in Unilever traded at Rp 37,050 apiece on Thursday, down 1.98 percent from the previous day. The stocks have gained 14.7 percent so far this year this year, easily outstripping the broader benchmark index'€™s (JCI) 12 percent slump.

Coordinating Economic Minister Darmin Nasution commented that the arrival of Unilever Oleochemical Indonesia in Sei Mangkei would not only grow the local economy, but would also help Indonesia move away fromits import goods dependency.

'€œThe successes at Sei Mangkei could serve as a cornerstone of the development of other special economic zones across Indonesia, and also boost industrial growth outside of Java,'€ he said on Thursday at the opening ceremony.

Darmin added that the proximity of the Sei Mangkei SEZ to the Malacca Strait, which will be accessible through the unfinished Kuala Tanjung port project in North Sumatra, would ease the logistics, infrastructure and permit issuances needed for the SEZ to flourish.

Around 45 to 50 percent of the world'€™s trade goes through the Malacca Strait, which the minister says can be harnessed by the Kuala Tanjung port in North Sumatra, scheduled to finish construction in 2017.

'€œRegarding Kuala Tanjung, there are still a few land procurement issues to be settled. There still needs to be commitment and consistency from the government and industrial sector in order for us to be able to build more SEZ like Sei Mangkei and make them efficient in fostering economic growth,'€ he said.

The relatively new Sei Mangkei SEZ, which opened in January this year, is able to accommodate up to 200 businesses.

Investment figures in the zone are estimated to reach Rp 46 trillion in the next 20 years and create around 150,000 new jobs, according to data from state-owned plantation company PT Perkebunan Nusantara (PTPN) III, the business entity behind the SEZ'€™s management.

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