REPUBLIKA.CO.ID, JAKARTA -- The government has targeted sugar production from state-owned firms to reach 1.6 million tons in 2017, up 33 percent from 1.2 million tons in 2016, following the restructuring of state-run sugar factories. "An increase in sugar production by state-run companies in 2017 would be achieved through restructuring sugar plants owned by PT Perkebunan Nusantara (PTPN) and PT Rajawali Nusantara Indonesia (RNI) in Java Island from 2016 to 2020," Deputy for Agribusiness and Pharmaceutical at the State Enterpises Ministry, Wahyu Kuncoro, said here on Thursday.

Currently, the national sugar demand has reached 5.7 million tons per year, of which 2.8 million tons are used for consumption and 2.9 million tons for industry, he stated. "The contribution of state-run sugar plants to meet the national demand is still very low. It would need sustainable and structured efforts to develop or build new factories with an adequate supply of sugarcane as raw material," he noted.

Efforts to increase the production of sugar factories would be made both at the on-farm and off-farm level. Restructuring state-run sugar plants would be conducted in three stages to improve production capacity, optimize capacity and productivity, and close sugar factories with production capacity below 2 thousand tons of sugarcanes per day (TCD). "Of the total 45 sugar factories, only 25 percent have the production capacity above 4 thousand TCD, and 78 percent of factories in Java have been operated for more than 100 years. Thus, they are no longer competitive," Wahyu remarked.

According to Wahyu, it would need at least Rp13.61 trillion of investment for the development of state-run sugar factories in five years, which would be used to build new factories, increase capacity, and extend sugarcane plantation. "In addition to construction of new factories, we will also close non-productive factories. Thus, the number would be reduced from 45 factories to 22 factories," he reiterated.

Meanwhile, the Director of Finance of PTPN III Erwan Pelawi underlined that PTPN III, as holding company for state-run plantation firms, controls other state plantation firms, namely PTPN IX, PTPN X, PTPN XI, and PTPN XII.

PTPN IX would restructure its five sugar factories with a total investment of Rp2.51 trillion, while PTPN X would need Rp4.25 trillion of funds from 2017 to 2018 for the development of seven factories. PTPN XI would need Rp4.04 trillion for restructuring factories and for reducing its number from 16 to eight. PTPN XII has also allocated Rp1.7 trillion of funds for the development of its factories.

The holding company would also increase sugarcane supply in cooperation with state-run forestry company Perum Perhutani, which would provide its land for sugarcane plantation. "PTPN has also sought cooperation with sugarcane farmers, who can have their shares in state-run sugar factories, individually or in groups," Erwan pointed out.

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