ASEAN KEY DESTINATIONS
Perhutani to operate SE Asia’s largest sago factory
Indonesia: State-owned forestry firm Perhutani will start operating a sago factory in Sorong, West Papua, in the first quarter of next year, which it claims will be the largest in the Southeast Asian region.
Project manager for the factory construction, Rizal Situela, said Wednesday that the 8-hectare factory would be the second sago ffacility in Southeast Asia, after one owned by Malaysia, and would be the biggest in terms of production capacity.
“The factory is expected to have a full production capacity of 100 tons per day, while Malaysia has what is called a sago production center, managed by a number of farmers, with average output of only five tons per day per farmer,” he said.
Perhutani president director Bambang Sukmananto said that the factory construction, which started September last year, had reached between 60 and 70 percent completion, and it would be ready for operation in March next year.
The factory would produce 25 percent of its full capacity during its first year of operation, 50 percent during its second year and would reach full capacity during its third year, he said.
Bambang said that his firm would predominantly market sago produced by the factory to the domestic market, including Cirebon in West Java and Surabaya in East Java.
Perhutani would also export to some Asian countries, such as Japan and Malaysia, he added.
National demand for starch (sago essence) reached around 5 million tons per year, while the country’s sago industry could supply only 3.5 million tons annually, leaving a great opportunity for Perhutani, according to Bambang.
He said that the island of Papua alone had the largest sago palm forests in the world, reaching 2.5
Perhutani currently had a license for 15,000 ha of sago palm forest in Papua and it would partner with local farmers to add production, he said.
Perhutani would invest Rp 112 billion (US$9.3 million) in the factory, with 30 percent coming from bank loans, while the remaining 70 percent would be from internal cash, Bambang said.
He said that Perhutani had so far spent 30 percent of the total investment budget for the factory construction.
He expected the government to soon materialize its plan to build a small harbor close to the factory to facilitate access to the area and estimated that his firm would reach break even point in seven years.
The move to build a sago factory is part of Perhutani’s strategy to diversify its business, in addition to an earlier move to jump into agroforestry tourism and the energy sector.
Perhutani, which was previously known only for its timber products, has seen a rising contribution from its non-timber products.
Non-timber products currently account for 53 percent of Perhutani’s revenue, a surge from only 25 percent in the period of 2005 to 2009.
The firm targets a 40.46 percent increase in its bottom line to Rp 287 billion this year from Rp 204.9 billion.
It also aims to boost its revenue by 19.2 percent to Rp 4.6 trillion from Rp 3.86 trillion last year.
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