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Jakarta Post

Government criticized for tardiness in revitalizing old sugar factories

  • Stefani Ribka

    The Jakarta Post

Jakarta   /   Thu, September 28, 2017   /   12:29 pm
Government criticized for tardiness in revitalizing old sugar factories University of Indonesia economist Faisal Basri (from right), Indonesian Employers Association (Apindo) public policy chairman Danang Giriwardana, Refined Sugar Industry Users Forum coordinator Dwiatmoko Setiono and Apindo executive director Agung Pambudhi speak at a discussion titled 'Sugar Auction: Solution or Distortion?' in Jakarta on Sept. 27. (JP/Stefani Ribka)

The government is being criticized by some for its tardiness in revitalizing 53 state-owned sugar factories with low productivity.

The country’s lackluster sugar industry has led to a reliance on sugar imports.

 “The slow revitalization is the root problem in the sugar industry today,” said University of Indonesia economist Faisal Basri in Jakarta recently.

"The government needs to solve the root of the problem. Our sugar factories aren't efficient because they are very old," he said during a discussion on sugar issues organized by the Indonesian Employers Association.

Read also: Sugar auction further delayed to January

Most of the sugar factories in Indonesia were established during the Dutch colonial era in 1930s, when Indonesia was the world's second largest sugar exporter.

Now, it is the world's fifth largest sugar importer, Trademap data shows.

The old factories lead to high production costs that push up sugar prices, Faisal said, adding that the household sugar price in Indonesia was set at Rp 12,500 per kg, higher than the Rp 7,000 per kg and Rp 6,500 per kg in Malaysia and Thailand, respectively.

The State-Owned Enterprises Ministry claims the revitalization process is happening, with Rp 4.6 trillion set aside from the budget to renovate factories.

"[The government allocates] trillions of rupiah [to revitalize them every year] but we don't know where all of the money goes," Faisal said. Indonesia has 66 factories that produce household sugar, 53 of which are owned by the state. (bbn)