Indonesia attractive for foreign investment, associations say

Monday, 29 November 2010

The Jakarta Post

Indonesia is appealing for foreign investors in palm oil and cocoa processing sectors due to its abundant raw materials, associations say.

Head of the quality control division of the Indonesian Cacao Board, Misnawi, said Friday that Indonesia, the world’s third largest cacao producer, offered wide opportunities for foreign investors to invest in the cacao processing sector in the country.

Last year, Indonesia produced 480,000 tons of cocoa beans and is projected to produce 600,000 tons this year.

The forum was attended by foreign business delegates as well as representatives of embassies from 14 Asian countries of Afghanistan, Azerbaijan, Bangladesh, India, Iran, Kazakhstan, Kyrgyzstan, Maldives, Nepal, Pakistan, Sri Lanka, Tajikistan, Turkmenistan and Uzbekistan. The participants are scheduled to visit Lampung to get an outlook of potential businesses on Saturday.

Currently, Indonesia processes only 20 percent of its total cocoa production, while the larger amount was exported in the form of beans.

“This is far below African countries, such as Ghana. They have already processed 60 percent of their cocoa beans in their own countries,” Misnawi said.

“Malaysia, which imports 35 to 40 percent of our cocoa beans, processes the beans into cocoa butter, powder, liquor and chocolate, and sells these products to our country.”

The global demand for cacao has been increasing in recent years by 5 percent per year. In 2009, the global demand for cacao was estimated at 3.5 million tons a year.

Misnawi said Indonesia currently had some processing factories with a capacity of 250,000 to 300,000 tons of cacao beans per year; however, they could only process between 100,000 and 120,000 tons annually.

Recently, three foreign investors conveyed their plans to establish processing factories in West Sulawesi.

Misnawi said other potential places for processing investment were North and West Sumatra, South Sulawesi, and West Java, which have significant cacao production.

The government aims to reach 1.1 million tons of cocoa beans by 2014.

Vice chairman of the Indonesian Palm Oil Board, Derom Bangun, shared a similar view to Misnawi, saying that Indonesia’s large crude palm oil (CPO) production was appealing for foreign investors to set up refineries in the country.

Indonesia, the world’s largest CPO producer, projects a production of 20 million tons of CPO of which 70 percent is for exporting.

“We encourage foreign investors to invest in a processing sector so that they can sell palm oil products in their countries,” Derom said during the business forum.

“Processed palm oil products, such as fatty acid, soaps and bio-diesel fuel, will certainly have better prices in the market,” he added.

According to Derom, the government has appointed three places — Sei Mangkei in South Sumatra, Dumai in Riau and Maloy in East Kalimantan — as locations for CPO processing industries.

One of the participants, Abdolrahim Golestani of Iran, said his company planned to buy CPO directly from Indonesia and process it at a refineries unit in Iran.