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local industry group is upbeat on the potential for Indonesia’s cacao processing industry on the back of greater supplies of cacao beans.

Piter Jasman, the Indonesian Cacao Industry Association’s (AIKI) chairman, said on Sunday that the increased allocation of cacao beans to domestic processors in recent years had attracted both Indonesian and foreign investors.

“Two new investments from Malaysia and Switzerland totaling around US$90 million will enter Indonesia this year,” he told The Jakarta Post over the telephone.

Piter said the Malaysian investor would build a cacao processing factory in East Java with an annual capacity of 30,000 tons a year, while the Swiss investor would build a factory in South Sulawesi with a capacity of 60,000 tons.

Both factories could start operation by the end of 2012, he said.

Piter declined to name of the firms. A representative from the Investment Coordinating Board (BKPM) was not available to confirm the investments.

The BKPM announced in November that three companies from China, the Philippines and Europe would invest $33.6 million in cacao processing in West Sulawesi.

“Many other investors are interested in making investments in the processing industry, but they are still worried about a sufficient supply of cacao beans,” he said.

Piter added that more investors would be attracted to Indonesia if the domestic processing industry was better developed and able to use more of the nation’s cacao bean output.

The investments, coupled with recently production capacity increases announced by eight firms and the establishment of six new firms, meant that 80 percent of Indonesia’s total cacao output could be absorbed domestically, he said.

Industry Minister MS Hidayat officially launched on Friday the production capacity increase and new investments in Bandung, West Java.

Eight firms, including Bandung -based PT General Food Industries and Tangerang-based PT Bumitangerang Mesindotama, upgraded production capacity, while six firms, including Batam-based PT Asia Cocoa Indonesia and Makassar-based PT Kopi Jaya Cocoa, set up factories, increasing the country’s estimated production capacity to 689,750 tons for 2011, up 29.5 percent from 531,675 tons in 2010.

According to AIKI, investments by the 14 firms in the cocoa processing sector in 2011 totalled $158.07 million.

Piter said the government needed to implement its revitalization program to ensure cacao production could reach a production target of 1.2 million tons in 2014 to secure a stable supply for the industry.

The government started a five-year cacao revitalization program in 2009 to boost production through intensification, rehabilitation and rejuvenation activities covering a total area of 450,000 hectares.

The government revoked a 10 percent value-added tax in 2007 covering primary commodities, including cacao and rubber, to stimulate the development of downstream industry. However, cacao producers kept exporting much of their output due to surging commodity prices on the international market.

Last year, the government also took another measure by issuing a progressive export tax system on commodities, including cacao, based on international prices, to secure supplies for domestic processing industries.

According to the Industry Ministry, exports of cacao beans were 432,426 tons in 2010, down 2 percent from 439,300 tons in 2009, while export values reached $1.19 billion in 2010, up 10 percent from $1.09 billion in 2009.

Meanwhile, exports of processed cocoa were 103,055 tons in 2010, up 26 percent from 81,993 tons in 2009.

According to the International Cocoa Organization (ICCO), Indonesia, with a total production of 550,000 tons in 2010, was the world’s third largest cacao producer after Cote d’Ivoire, with 1.24 million tons and Ghana, with 632,000 tons.

ICCO estimates that demands for processed cocoa will increase by 5 percent a year.