Sugar investments hampered by raw material scarcity

Mon, 02/13/2012 - 12:30

The Indonesian Food and Beverage Association (GAPMMI) Chairman Adhi Siswaja Lukman said that he expected more than Rp1 billion worth of foreign direct investment in 2012.

"We recorded around that much in 2011. I think it's normal to expect around that much and perhaps a little more from foreign direct investment this year as we have received investment rate from both Fitch and Moody's," he said to AgroAsia.

According to Adhi, GAPMMI has often received inquiries from various prospective investors, discussing about the best industry segment to invest.

"We've got calls from the U.S., Japan, Korea and Australia, in which we always try to tell them the prospects and the methods of how to realize their investments before channeling them to the related government institutions," he said.

Non-alcoholic beverage industries, he said, received the most inquiries from foreign investors.

"Products like milk, non-alcoholic softdrinks, all types of juices and sport-drinks are the number one attractor of foreign direct investments so far," he said.

While sugar is also a popular industry, foreign investors have often decided to delay their investments due to raw material scarcity.

"The government has set one condition for prospective sugar investors, in which national sugar industry must make use of local sugarcane production, restricting the import of raw sugar. And this has delayed many investment inquiries from overseas as even the local sugar processing companies have delayed their expansion plan due to the lack of supply, as the existing sugar plantation area is not enough to meet their raw supply demand," he said.

The Directorate General of Plantation of the Ministry of Agriculture recently stated that the acreage of sugarcane plantation in Indonesia is totaled at 418,259.6 hectares of land, projected to decrease to 394,621 hectares in 2012.

The Ministry of Forestry has stated last year that up to 294,287 hectares of plantation land would be prepared for sugarcane plantation revitalization project, in which 132,564 hectares of land are already available in Papua, South Kalimantan, South Sumatra and Riau Islands.(eaz)

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