2011 ICN July

ISSN 0853-2086
INDONESIAN COMMERCIAL NEWSLETTER

MONTHLY REPORT
MARKET INTELLIGENCE REPORT ON PALM OIL INDUSTRY IN INDONESIA
Indonesian Commercial Newsletter Since 1978 Published by PT Data Consult Founder : Sulaeman Krisnandhi Editor-in-Chief : D. Ganjar Sidik Senior Editors : - Hendrawan Tranggana - Agustina R. Effendy
JULY 2011
PT DATA CONSULT
BUSINESS SURVEYS AND REPORT
Maya Indah Building Jl. Kramat Raya No. 5L, Jakarta Pusat Phone: 3904711, 3901877; Fax.: 3901877 E-mail: datacon@idola.net.id Website:http://www.datacon.co.id
List of Content
INDONESIAN COMMERCIAL NEWSLETTER JULY 2011
FOCUS: INDONESIAS BANKING RESILIENCE AGAINST FINANCIAL CRISIS ................................... 1 Bank resilience is still high............................................................................................................ 1 Performance of largest banks good.............................................................................................. 3
INDUSTRY PROFILE: PALM OIL INDUSTRY IN INDONESIA....................................................................................... 5 Backgrounds ................................................................................................................................. 5 Industrial Structure........................................................................................................................ 5 Locations of plantations ................................................................................................................ 7 Main players in oil palm plantations.............................................................................................. 8 Large plantation companies........................................................................................................ 13 Development of Production ....................................................................................................... 14 Technical aspect ......................................................................................................................... 16 Investment .................................................................................................................................. 18 CPO trade ................................................................................................................................... 23 Consumption growing ................................................................................................................. 24 CPO prices in world and domestic markets................................................................................ 25 Trade policy ................................................................................................................................ 26 Policy in industrial sector ............................................................................................................ 27 Regional regulations hamper investment ................................................................................... 28 Conclusion and Prospects .......................................................................................................... 29
COMPANY PROFILE : WILMAR GROUP ....................................................................................................................... 32 Backgrounds ............................................................................................................................... 32 Palm Oil Industry......................................................................................................................... 33 Cooking oil industr ...................................................................................................................... 34 Fertilizer industry......................................................................................................................... 35 Bio-diesel .................................................................................................................................... 35 Double refined sugar industry..................................................................................................... 35 Property ...................................................................................................................................... 36 Financial performance.. .............................................................................................................. 36
INDUSTRY : COCONUT PLANTATIONS: POTENTIAL NOT PROPERLY TAPPED ................................... 38 Copra-based industrial scheme .................................................................................................. 38 Plantations dominated by smallholders estates......................................................................... 40 No significant increase in production .......................................................................................... 41
Indonesian Commercial Newsletter
- July 2011
List of Content
No large scale coconut processing industry ............................................................................... 42 Coconut oil less competitive ...................................................................................................... 43 Around 30% of coconut production exported ............................................................................. 44 No progress in exports of coconut derivatives........................................................................... 45 Imports of coconut ...................................................................................................................... 46 Imports of coconut derivatives .................................................................................................... 47 Conclusion .................................................................................................................................. 49
INDUSTRY : MULTINATIONAL PLAYERS CONTROL PESTICIDE BUSIENSS IN INDONESIA ................ 50 No additional production capacity............................................................................................... 50 Production stagnant .................................................................................................................... 51 Imports growing .......................................................................................................................... 51 Multinational players dominate market ....................................................................................... 52 Chinas products potential competitors....................................................................................... 53
CORPORATE NEWS IN BRIEF: Nalcos aluminum smelter project closer to implementation....................................................... 54 Hyundai Mobil Indonesia set to post 75% rise in sales .............................................................. 54 Isuzu ready to launch expansion worth US$ 14.76 million ......................................................... 54 Lafarge plans to build new cement factory in North Sumatra..................................................... 54 Suzuki Motor to invest US$ 800 million for capacity expansion ................................................. 55 Krakatau Steel to team up with MCC to build iron plant ........................................................... 55 Adaro acquires coal miner at US$ 222.5 million......................................................................... 55 BRI acquires BRIngin Remittance .............................................................................................. 56 Intraco hopes to chalk up 30% increase in sales next year........................................................ 56 First Media US$ 200 million expansion ...................................................................................... 56
ECONOMICS NEWS IN BRIEF: Government offers 5-year income tax holiday............................................................................ 57 Syndicate of 5 banks to finance PKT project.............................................................................. 57 Use of renewable energy to be mandatory in Indonesia ............................................................ 57 Government reserves forest lands for rice fields ....................................................................... 57 Limits set for cost recovery discourages oil investment ............................................................. 58 APPENDICES: Directory of Palm Oil Plantation Companies in Indonesia .......................................................... 59 ECONOMIC INDICATOR: Economic Indicators.................................................................................................................... 64 Export and import........................................................................................................................ 65 Gross Domestic Product ............................................................................................................. 66 Oil Price and Foreign Exchange ................................................................................................. 67 The Indonesian Economic Trends .............................................................................................. 68
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Indonesian Commercial Newsletter - July 2011
FOCUS
INDONESIAS BANKING RESILIENCE AGAINST FINANCIAL CRISIS Global financial crisis that struck in 2008 is not yet over. Threat of new wave of crisis is even looming large haunting countries in the euro zone including Greece, Ireland, Italy and Portugal. Any country may comes next joining the list of ailing countries in that region. . The impact of the protracted crisis is not unlikely to spread to other regions including East Asia, which has so far enjoyed a fairly healthy growth. As always has been crisis spreads faster through the financial sector. Countries having weak banking system or bigger banking exposure to crisis hit countries would likely be the first to suffer the impact. Indonesian banking industry has little exposure to debt burdened countries in the euro zone and the United States. Therefore, the impact of the crisis is not so serious at least until today. However, if the crisis continues the impact could be bad for the countrys banking sector. Liquidity crisis could come as a new problem if the head offices of foreign bank branches in the country are facing cash flow problem such over default on bonds issued by crisis hit states. The head offices may have to withdraw their funds from their branches abroad such as Indonesia. The crisis will spread the wider when big corporations are facing financial difficulties and have to withdraw funds from their units all over the world triggering liquidity problem in many countries . Indonesian banking sector, therefore, could also be indirectly hit by the crisis in Europe and the United States. Indirect impact of the crisis could also hit the real sector because of shrinking exports on weak demand in international markets. As a result inflows of foreign exchange to banks would decline. Bank resilience is still high After lingering crisis for over three years, Indonesian banking sector has been able to weather and avert financial crisis. The strength of the countrys banking sector is reflected in a number of indicators such as credit expansion, liquidity, capital adequacy ratio (CAR) and provision against non performing loans all are in good levels. Credits continue to grow amid the global crisis. Ambitious credit expansion without sufficient liquidity, capital and reserves would be liable to run into big problem. Credit expansion has been high in the country in the past five years excepting in 2009 . Bank credits grew 20% a year on the average . In 2009, growth is still
Indonesian Commercial Newsletter July 2011
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recorded though slower at 10% and in 2010, the growth was high again at 23%. Liquidity is still safe despite the credit expansion. Since 2008, the loan to deposit ratio (LDR) has been above 70% . In the past two years LDR averaged 79.67% which means the liquidity is still good with more room for credit expansion. The bank CARs are by far in a better level compared with the average when the country was beset by monetary crisis in 1998. In the wake of the 1998 crisis, when many banks collapsed or were driven to the brink of bankruptcy. The CARs of commercial banks in the country in the past five years have averaged more than 12% in line with the Basel III requirement. By June 2011 , the CARs of Indonesian banks averaged 17%. The fundamental strength of the countrys banks is reflected by the levels of their non performing loan (NPL), which are relatively low despite the high credit growth. . In 2006, the gross NPL of banks averaged 6.07% and in June 2011, it was only 2.74%. The level of 2.74% is relatively safe but there is still potential risk The NPL could easily surge if the oil fuel (BBM) prices and interest rates are raised . There is potential default in consumer and small business credits amid shrinking exports of commodities . The performance of the countrys banks has also improved based on their record of Return on Assets (ROA), which grew from 2.33% in 2008 to 3.07% in June 2011 . Their Net Interest Margin (NIM) is high at 5.79% despite declining lending rates.. With high profitability ratio (NIM and ROA) , the countrys banks would have enough reserves to be set aside for provision against NPLs . Table - 1 Banking activities and indicators of performance of banks
Indicators Credit disbursement Rp. billion Third party funds (DPK) Rp. billion LDR (%) CAR (%) ROA (%) NPL (%) Net Interest Margin (%) Note : *)June 2006 792,297 1,287,102 61.56 21.27 2.64 6,07 5.80 2007 1,002,012 1,510,834 66.32 19.30 2.78 4,07 5.70 2008 1,307,688 1,753,292 74.58 16.76 2.33 3,20 5.66 2009 1,437,930 1,973,042 72.88 17.42 2.60 3,31 5.56 2010 1,765,845 2,338,824 75.21 17.18 2.86 2,56 5.73 2011* 1,950,727 2,438,011 79.67 17.00 3.07 2,74 5.79
Focus
The performances of banks could also be seen from the profit they earn. In the past three years banks recorded a sharp increase rising from a total of Rp 30,606 billion in 2008 to Rp 57,309 billion in 2010. In the first half of the year the total profit already reached Rp 37,096 billion. With the good financial performances, the shares of Indonesian banks are the beset sellers in the world. Table - 2 Profit/loss reports of Indonesian banks (Rp. Billion )
Indicators Operating income Operating cost Operating profit Current years profit Profit after income tax Note : *)June 2006 212.499 184.826 27.719 40.555 28.334 2007 219.653 184.617 35.035 49.859 35.015 2008 262.061 232.170 29.891 48.158 30.606 2009 298.180 258.311 39.869 61.784 45.215 2010 350.873 302.549 48.325 76.140 57.309 2011* 186.451 160.370 26.081 46.689 37.096
Performance of largest banks good The good performance of the banking sector in Indonesia is attributable mainly to healthy performances of big lenders. The countrys largest lender in assets Bank Mandiri has maintained good performance. While posting high credit growth, Bank Mandiri could still keep a safe level of CAR at 16.65% , well above the minimum level set by the central bank with LDR at 73% allowing more room for credit expansion. Large banks in the country recorded good ratio of reserves against gross NPL more than 100%. BCA, Mandiri. BRI. BNI. CIMB Niaga. Danamon. BTPN. OCBC NISP all have provision coverage ratio of more than 100% They have LDR below 100% allowing more room for credit expansion. Bank Tabungan Negara (BTN), a medium sized bank, however, already had LDR at 110 %. In addition large banks still have access to bond market to improve heir liquidity. Banks, however, need to be always aware that liquidity of bond market tends to fluctuate depending much on the confidence of foreign investors which have a 35% share of the market of state bonds. The debt problem in the euro zone has no effect the Indonesian banks. The banks have continued to record good performance amid the global economic slowdown and financial woes. Meanwhile, foreign banks began to experience sluggish performance. Citibank, previously ranked among 10 largest lenders in the country has been thrown out of the top ten banks after recording a sharp fall in profit as a result of the sanction by the central bank over case of embezzlement of funds belonging to depositors by one of its officials and the death of a debtor in the hands of its debt collectors. 3
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Table - 3 Assets and performances of major banks
2009 Name of banks PT Bank Mandiri (Persero) Tbk PT Bank Central Asia Tbk PT BNI (Persero).Tbk PT BRI (Persero) Tbk PT Bank Danamon Indonesia Tbk PT BII Tbk PT CIMB Niaga Tbk PT Pan Indonesia Bank Tbk PT Bank Permata Tbk PT BTN (Persero) Total *) September 2011 **) June 2011 Note : Asset : Rp Billion Assets 375,239 283,182 226,911 318,447 96,806 58,737 106,889 76,270 56,213 58,481 1,657,176 LDR (%) 59.15 55.16 64.06 80.88 88.76 78.11 95.22 73.28 90.64 101.29 CAR (%) 15.43 15.33 13.78 13.20 17.55 14.71 13.59 21.79 12.16 21.49 410,619 323,345 241,169 395,396 113,861 72,030 142,932 106,508 74,040 68,334 1,948,234 Assets 2010 LDR (%) 65.44 50.27 70.15 75.17 93.82 83.18 87.23 74.22 87.46 108.42 CAR (%) 13.36 13.50 18.63 13.76 13.25 12.65 13.24 16.58 14.13 16.74 448,313 360,123 258,969 390,361 127,597 87,322 157,323 107,862 92,906 76,063 2,106,838 Assets* 2011 LDR** (%) 73.43 55.87 76.08 90.22 99.04 82.98 92.40 79.41 85.65 110.85 CAR** (%) 16.65 13.92 17.34 14.79 12.21 13.68 13.66 15.64 13.19 15.85
The threat is still potential for the crisis in the euro zone to spread to other regions. Therefore, Indonesian banks need to continue to observe banking prudential principles. In fact small banks begin to face liquidity problem. Only two big lenders Bank Mandiri and Bank Central Asia (BCA) still have excess liquidity. If foreign exchange supplies begin to fall short of requirement even big banks could also be in difficulty to maintain their liquidity.
**dgs**
INDUSTRY PROFILE
PALM OIL INDUSTRY IN INDONESIA Backgrounds Indonesia crude palm oil (CPO) industry has grown fast in the past years. In 2010, the country CPO production totaled 21.0 million tons from 19.4 million tons in the previous year. In 2011, the production is forecast to rise further 4.7% to 22 million tons. Meanwhile, exports totaled 15.65 million tons in 2010 to rise to an estimated 18 million tons in 2011. Indonesia has become the worlds largest producer of CPO with production reaching 21.0 million tons in 2010. Only 25% or 5.45 million tons of the production is predicted to be disposed of on the domestic market. The country is still seeking to expand its export market for the commodity and increase sales such as to Pakistan, Bangladesh, and East Europe and China. The countrys CPO production has grown from year to year as lands are available for the expansion of its oil palm plantations reaching 7.5 million hectares in 2010. The government encourages development of the industry by supporting in the development of infrastructure. The government is building industrial clusters for palm oil-based industries in the northern coats of Java, eastern coast of Sumatra , East Kalimantan , Sulawesi and Merauke. In 2011, the Association of Palm Oil Companies (Gapki) decided to withdraw from Roundtable Sustainable Palm Oil (RSPO) and instead joined the Indonesian Sustainable Palm Oil (ISPO) obligatory in 2012. Development of the country CPO industry is still facing hurdles mainly in road infrastructure to facilitate transport from the plantations to seaports. The government has promised to improve or build infrastructure in CPO production centers in Indonesia. Another problem is slow development of CPO processing industry and upstream CPO industries producing CPO derivatives like fatty acid, fatty alcohol, glycerin, methyl ester. So far the country has not made full use of its abundant availability of CPO to feed downstream industries. The country has produced only a few number of downstream palm oil products including surfactant, pharmaceuticals, cosmetics, and organic base chemicals, etc. Industrial Structure Oil palm plantations and owners In the past 10 years, the oil palm plantations in Indonesia expanded 8% a year from 5.45 million hectares in 2005 to 7.82 million hectares in 2010. The expansion was faster as from toward the end of the 1980s when the private sectors began to enter the plantation business in large scale. Earlier state companies dominated oil palm plantations.
Indonesian Commercial Newsletter - July 2011
Industry Profile
The rising prices of crude palm oil attracted big investors and many farmers also began to grow the crop. In the beginning farmers were involved in this business as plasma farmers in cooperation with big investors under the nucleus smallholders scheme. Later more farmers grew the crop outside the nucleus smallholder scheme. Currently private plantation companies dominate oil palm plantations in the country. In 2010, plantations owned by private companies made up 49.75% or around 3.89 million hectares of the countrys total oil palm plantation areas of 7.82 million hectares with smallholders plantations making up 42.35% or 3.31 million hectares with sate plantations making up the rest or 7.9%. In the period of 2005-2010, the plantations owned by state company (PBN) expanded slowly by 3.3%. The plantations owned by private companies (PBS) grew faster by 10.3% a year and smallholders plantations (PR) expanded by 8.13% a year. Table - 1 Development of oil palm plantations and owners, 2005 - 2010 Year 2005 2006 2007 2008 2009*) 2010**) Plantation areas ( hectares ) PBN PBS 529,854 2,567,068 687,428 3,357,914 606,248 3,408,416 602,963 3,878,986 608,580 3,885,470 616,575 3,893,385
PR 2,356,895 2,549,572 2,752,172 2,881,898 3,013,973 3,314,663
Total 5,453,817 6,594,914 6,766,836 7,363,847 7,508,023 7,824,623
Sources : Plantation directorate general Note : PR : Smallholders plantations PBN : Plantations owned by state companies PBS : Plantations owned by private companies *) Provisional **) Estimation
Plantations dominated by foreign investors Not all of the plantations areas, however, have been cultivated. In 2010, the country had 7.8 million hectares of oil palm plantation areas but only 5.7 million hectares if them were cultivated. Based on data at Gapki and the Forestry ministry, the country has 30 million hectares of land suitable for oil palm plantations mainly in Sumatra and Kalimantan. Currently big investors in this sector are competing in securing more lands for expansion So far foreign investors mainly from already control around 2 million 6
Industry Profile
hectares of land for oil palm plantations. Based on data at Association of Indonesia Oil Palm Farmers (Apkasindo), by 2010, Malaysian investors had acquired 230 oil palm plantations in Indonesia. The foreign investors are large company group such as Golden Hope and Syme Darbi from Malaysia, and Wilmar Group from Singapore with concessions in Kalimantan and Sumatra . More foreign investors are still eyeing concessions for plantations in the country where there are at least 30 million hectares of damaged forest lands that could be utilized to develop oil palm, rubber and sugar plantations. However, in 2011, the Forestry Ministry cancelled the principle licenses for 3 million hectares of land reserved for 251 investors in oil palm plantation as they failed to implement their projects as scheduled. The government decided to hand over the lands to serious investors. The minister for state enterprises also supports the plan of the forestry ministry to suspend issuing new license for foreign investment in the oil palm and rubber plantations . Locations of plantations Based on data at the plantation directorate general, oil palm plantations are located in 17 provinces in Sumatra, Java, Kalimantan, Sulawesi, Maluku and Papua. In 2010, Sumatra had the largest plantation areas making up around 76.46 % or 5.89 million hectares of the total areas of oil palm plantations in the country. By provinces, Riau has the largest area of 1.82 million hectares, followed by North Sumatra 1.31 million hectares. Kalimantan had a total of 1.55 million hectares with the largest or 791,667 hectares in Central Kalimantan followed by West Kalimantan having 532,000 hectares. Java has small plantation areas totaling only 35,993 hectares or 0.46% of the total areas in the country. The plantations are found only in West Java and Banten. Table - 2 Total areas of oil palm plantations by regions, 2006 - 2010 (hectares)
Indonesia /Provinces Indonesia Nanggroe Aceh Darussalam North Sumatra West Sumatra Riau Riau Islands 2006 6,594,914 308,560 1,054,695 315,618 1,547,942 6,933 2007 6,766,836 274,822 1,114,871 291,734 1,620,882 6,678 2008 7,007,876 274,135 1,143.906 305,871 1,623,458 547 2009 7,508,023 292.813 1.286.179 322.844 1.734.348 585 2010 7,824,623 306.085 1.307.396 336.432 1.815.313 610
Industry Profile
Table 2 - contd
2006 Indonesia /Provinces 568,751 Jambi 630,214 South Sumatra 165,221 Bengkulu 157,229 Lampung 133,284 Bangka Belitung 9,831 West Java 14,077 Banten 492,112 West Kalimantan 571,874 Central Kalimantan 243,451 South Kalimantan 237,765 East Kalimantan 48,431 Central Sulawesi 24,490 South Sulawesi 2,966 Southeast Sulawesi 29,736 Papua 31,734 West Papua Sources: Plantation directorate general 2007 448,899 682,730 163,455 152,409 172,227 10,550 14,894 451,400 616,331 257,862 339,294 52,298 15,708 18,912 29,736 31,144 2008 454,771 718,068 161,505 158,488 171,535 11,573 15,046 476,891 709,206 265,187 368,504 52,169 16,232 21,213 25,925 33,646 2009 480.512 765.816 165.176 169.296 180.192 11.786 16.072 510.033 759.693 283.947 394.312 55.221 17.144 22.300 26.787 35.044 2010 500.736 798.048 172.128 176.422 187.776 12.283 16.748 532.034 791.667 295.898 410.908 58.063 17.865 23.449 27.915 36.847
Main players in oil palm plantations State companies lost their domination of oil palm plantations since 1990 to private companies which invested in big way in this thriving business. In 1997 especially after the regional monetary crisis that badly shook the country, Malaysian investors took advantage of the condition in the country to open new plantations and acquire existing plantations . Amid the crisis many plantation companies were facing financial problem forcing them to sell their assets including to Malaysian investors. PT Astra Agro Lestari PT Astra Agro Lestari (AAL) is subsidiary of the Astra Group. It is a holding company in the agribusiness division of the Astra Group. In 2004, PT AAL began to focus more expansion of its palm oil business and sold its non core business assesses. AAL acquired 5,000-6,000 hectares of land a per year to be used for oil palm plantations. It also took big steps in replanting since 2009. Currently its oil palm trees average 16 years in age. Currently AAL is the largest listed oil palm plantation company in the country controlling 265,000 hectares of plantations. Around 77.3% or 204,845 hectares have been producing and the remaining 60,155 hectares with young crop are not yet ready for harvest . In 2010, AALs CPO production reached 1.1 million tons, up 2.8% from 1.08 million tons in the previous year. The CPO production was processed from 3.3 million tons of fresh fruit bunches (FFB) from its own plantations and from 8
Industry Profile
906,000 tons of plasma farms FFB and from 618,600 tons of FFB acquired from other companies. In 2010, AAL built three new CPO processing plants including one in East Kalimantan with a processing capacity of 105 tons FBB/hour, one in Central Kalimantan with a processing capacity of 225 tons FBB/ hour and another one in South Kalimantan with a processing capacity of 30 tons FBB/hour. It also expanded the capacity of CPO processing plant in Riau with an investment of Rp 1.5 trillion to be completed in 2012. Currently AAL has 22 units of CPO mill with total processing capacity of 1,050 tons of FFB per hour, an CPO refinery in North Sumatra with a capacity of 300 tons per day, one unit kernel processing plant with a capacity of 700 tons per day in Sumatra, Kalimantan, and Sulawesi In 2011, AAL plans to build four CPO processing plants with a processing capacity of 5 tons of FFB per hour to cost around US$ 56 million. Two of the factories are to be built in East Kalimantan, 1 unit in South Kalimantan and another 1 unit in Central Sulawesi to be completed in 2014. PT Asian Agri PT Asian Agri (PT. AA) is a holding company for the agribusiness division of the Raja Garuda Mas Group having oil palm plantations in number of areas in Sumatra. PT AA is a parent company for the Asian Agri Group, which includes AA Plantation I in North Sumatra. later the Asian Agri Group expanded to Riau and Jambi. It also cooperates with plasma farmers. Currently Asian Agri has 28 oil palm plantations with 19 palm oil factories in North Sumatra, Riau and Jambi. The factories have the capacity to produce 1 million tons of CPO per year. The Asian Agri Group through its subsidiary PT. Asianagro Agungjaya built a biodiesel factory in Dumai, Riau with an investment of Rp 350 billion. The factory started operation in 2008 using CPO as the feedstock It has a production capacity of 200,000 tons per year in the first year of operation to be expanded gradually to 400,000 tons. Asian Agri plans to build a bio-diesel factory in Marunda, Jakarta, with a capacity 200,000 tons per year. The factory will produce bio-diesel with a purity of 100% and could be used as an alternative fuel with mixture with oil. Asian Agri has oil palm plantations in a number of provinces in North Sumatra, Jambi and Riau - totaling 160,000 hectares including 100,000 hectares of
Industry Profile
nucleus plantations and 60,000 hectares of plasma farms. Its total production capacity of CPO is 240,000 tons per month. PT SMART PT SMART Tbk operates an integrated palm oil industry from upstream to downstream. It operates oil palm plantations and production facilities for CPO and its derivatives such as cooking oil and other CPO derivatives. The company is a subsidiary of the Sinar Mas Group and it has 102,556 hectares of oil palm plantations in 2005 in Sumatra and Kalimantan. Most or 91,500 hectares of its plantations have been productive and the rest with young crop have not been ready for their first harvest. SMART has 12 units of palm oil processing plants with an annual production capacity 2.9 million tons CPO and 2 kernel processing plants with a production capacity of 200,000 tons of palm kernel oil (PKO) per year. In 2005, only three of the factories were operational in East Kalimantan and South Kalimantan with a total production capacity of 450,000 tons of CPO per year. PT SMART also has CPO refineries producing cooking oil with an annual production capacity 840,000 tons. SMART has complied with the regulation of the Indonesia Sustainable Palm Oil USPO) effective as from March 2011 and the regulation will be obligatory for all oil palm plantation companies in 2014. SMART sets aside up to Rp 1.1 trillion for capital expenditure in 2011, to be used to finance cultivation of new lands and replanting over 5,000 hectares of old plantations. In addition, SMART is building factories to increase its CPO n production capacity to 1.5 million tons per year. SMART has 137,543 hectares of oil palm plantations in 2011 including 126,553 hectares already producing and 10,990 hectares have yet to start their first harvest. In 2011 until March, its FFB production reached 641,084 tons, including from plasma farms. Its CPO production totaled 162,087 tons and PKO production totaled 34,881 tons . PT Bakrie Sumatra Plantation In 2005, PT. Bakrie & Brothers Tbk of the Bakrie & Brothers Group increased its share in its subsidiary PT. Bakrie Sumatra Plantation by 28% from 28.41% earlier. Later PT. Bakrie Sumatra Plantations acquired rubber plantations and processing factory from PT. Huma Indah Mekar in Lampung and an oil palm plantation and processing facilities from PT. Agro Mitra Madani in Jambi at a total price of Rp 140 billion. PT. Meanwhile, Bakrie Sumatra Plantations divested
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Industry Profile
non productive assets including an oil palm plantation under PT. Patriot Andalas in West Kalimantan. BSP agreed to cooperate with International Finance Corporation (IFC), a subsidiary of the World Bank to build oil palm plantations in West Africa with an investment of US$ 200 million to start in 2010. BSP was eyeing a concession of 200,000 hectares in Africa, where concession could be effective for 100 years. BSP sought to expand operation to Cambodia where it planned to open 10,000 hectares of oil palm plantations with an investment of US$ 30 million BSP has issued bonds valued at US$ 25 million through its subsidiary BSP Finance BV. The bond carried a coupon rate of 10.75% with maturity in 2011 . It provided collateral with four subsidiaries PT Bakrie Pasaman Plantations, PT Agrowiyana, PT Agro Mitra Madani, PT Huma Indah Mekar, and PT Air Muring. Arch Advisory Limited was named as the advisor. In late 2010, BSP through subsidiary PT. Flora Sawita Chemindo (PT. FSC) shipped its first export of stearic acid including 10 containers to China, 3 containers to o Syria, and 1 container to Iran, and 2 containers of glycerin to India, and 1 container of glycerin to Taiwan. Stearic acid is a basic material and auxiliary material for rubber and tire industry, lubricants, detergent, electronics, and lastics. Glycerin is an auxiliary material in toothpaste, pharmaceutical, cigarette, cosmetic, soap and foodstuff industries. China is the largest buyer for its stearic acid paling, accounting for 40% of its exports followed by Europe accounting for 25%. In 2010, BSP acquired the entire assets of the Domba Mas group at a price of Rp 2.06 trillion. The Domba Mas group had 3 subsidiaries PT Flora Sawita Chemindo (FSC), PT Domas Agrointi Perkasa (DAP), and PT Domas Sawitinti Perdana (DSP). PT FSC had a total production capacity of 54,000 tons of fatty acid per year, consisting of 49,000 tons of stearic acid and 5,000 tons of glycerin per year. Its factory is located in Tanjung Morawa, Medan, North Sumatra. PT FSC started operation in 1998, but in 2007 it was forced to suspend operation. After the acquisition, BSP spent US$ 2 million on its renovation before resuming operation. Dap and DSP have a total production capacity of 50,000 tons of fatty acid per year and 132.000 tons of fatty alcohol per year. PT ASD-Bakrie Oil Palm Seed Indonesia is a producer of oil palm seeds with a processing capacity of 20 million per year. The cultivation of seedlings, built with an investment of US$ 4.7 million started production in 1915. ASD-Bakrie plans to produce varieties of high yield seeds to turn out plants with a high productivity.
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Industry Profile
PT ASD Bakrie is a joint venture between BSP and Agricultural Service and Development LLC from Costa Rica. In 2010, BSP expanded its oil palm plantations in Sumatra by opening 10,000 hectares of new plantations with an investment of US$ 25 million to be productive in 2013. Currently BSP has 150,000 hectares of oil palm plantations and 117,118 hectares of rubber plantations located in various areas in North Sumatra , Riau, Jambi, South Sumatra and West Sumatra. BSP planned to expand the oil palm plantations to 200,000 hectares in 2014. Its processing capacity in 2010 was 2.3 million tons of FFB per year with CPO production capacity of 174,417 tons in 2010. PT Perusahaan Perkebunan London Sumatra Indonesia Tbk (Lonsum) PT. Lonsum has the largest oil palm plantations located in North Sumatra, South Sumatra and East Kalimantan. After he process of restructuring in 2004, Lonsum resumed operation of its oil palm plantations in North Sumatra and processing industry in South Sumatra and East Kalimantan after being temporarily suspended The company made replanting over 14,000 hectares of plantations in South Sumatra . In 2004, Robert Kuok Hock-Nien, a tycoon from Malaysia acquired part of the shares of PT Pan London Sumatra Plantation, which now holds 20.94% of the share of PT PP London Sumatra Tbk. (Lonsum). Kuok acquired the stake in Pan London Sumatra Plantation from Andre Pribadi, a younger brother of the owner of the Napan Group, Henry Pribadi. In 2007, Lonsum was acquired by Indofood through PT Indo Agri Resources Ltd at a price of Rp 8.4 trillion. The acquisition was financed with a loan of US$ 25 million from ING, Standard Chartered Bank, Sumitomo Mitsui Banking, and Bank Central Asia. It was reported then that the Salim family agreed to swap its television company PT Indosiar Karya Media Tbk with oil palm plantations of the Sariaatmaja family which also owns the TV stations of SCTV and O Channel. Meanwhile PT Indo Agri owns an integrated industry with oil palm plantations and production facilities for CPO-based cooking oil, margarine, and shortenings with famous brands. Previously IndoAgri had 224,083 hectares oil palm plantation areas, and 74,878 hectares of which were already cultivated. With the acquisition, its oil palm plantations expanded to 387,483 hectares, of which 138,081 hectares were cultivated. Altogether plantations already cultivated totaled 165,000 hectares, including rubber plantations and other crops.
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Industry Profile
Lonsum has 38 plantations and 14 plasma plantations in Sumatra, Java, Kalimantan and Sulawesi totaling 99,386 hectares in 2011. Around 79% of the plantations have been cultivated with oil palm trees averaging 12 years in age, 18% cultivated with rubber trees and other crops .ESPO certificate has been granted for 38,000 hectares of the oil palm plantations with a CPO production of around 170,000 tons per year in North Sumatra. Lonsum operates 11 factories including 4 units in North Sumatra, 6 units in South Sumatra, and 1 unit in East Kalimantan. The factories have a total processing capacity of 405 tons of FFB per hour. The factories have processing capacity ranging from 10 tons to 60 tons per hour each. In 2011, Lonsum plans to expand its oil palm plantations by 3,000 - 4,000 hectares with an investment of Rp 400 billion. PTP Nusantara IV PT Perkebunan Nusantara (PTPN) IV (Persero) is a state company established in 1996 through a merger of a number of state plantations companies in North Sumatra including PTP VI, PTP VII and PTP VIII. PTPN IV is the largest oil palm plantation owned by the state . It has 34 factories including 16 CPO factories with production capacity of 365,081 tons of CPO per year, 34,100 tons of Palm Kernel Oil per year, etc. In 2007, PTPN IV expanded its plantations by taking over 20,000 hectares of plantation from PT Andalas Agro Nusantara in the regency of Mandailing Natal (Madina), North Sumatra. Around 9,000 hectares of the plantations are for plasma farms involving local farmers. Cultivation of the 20,000 hectares of land is expected to be completed in 2011 using seedlings from Guthrie Malaysia. By 2010, PTPN IV had a total of 175,244 hectares of plantations including 135,198 hectares of oil palm plantations, and 4,398 hectares of tea plantations. In 2011, PTPN IV sets CPO production target at 700,000 tons up 1.55% from 2010. In 2011, PTPN IV sets aside Rp 2 trillion for capital expenditure including for the expansion of oil palm and tea plantations to cost Rp 511.024 billion, and house construction, procurement of machines, farm tools, construction of road, and irrigations to cost Rp 464.678 billion and other investment to cost Rp 100.477 billion. Large plantation companies Among large private oil palm plantations companies include PT Asian Agri and subsidiary which have a total area of 160,000 hectares in Sumatra, and PT Astra
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Industry Profile
Agro Lestari (AAL), which has a total area of 265,000 hectares in Sumatra, Kalimantan and Sulawesi, PT SMART which has a total area of 137,574 hectares mainly in Sumatra and Kalimantan. Among state companies is PTPN Nusantara IV 135,198 hectares mainly in North Sumatra. which has a total area of
Table - 3 Large oil palm plantation companies, 2011 Companies Private plantation companies PT Astra Agro Lestari Tbk PT Asian Agri PT SMART Tbk PT Bakrie Sumatra Plantation PT. Gozco Plantations Tbk PT. Sampoerna Agro Tbk PT PP Lonsum Tbk PT. BW Plantation Guthrie Grup Wilmar Group State plantation companies PTPN IV
Sources : ICN processed
Area (hectares ) 265,000 160,000 137,574 150,000 123,894 104,480 99,386 93,000 287,390 200,000 135,198
Development of Production CPO Production up 5.7% per year Production has increased with the expansion of plantations mainly in Sumatra and Kalimantan and boosted by the commodity price hike in international market. In 2007-2011 period, the countrys CPO production grew 5.7% per year. In 2007, the CPO production reached 17.6 million tons, up to an estimated 22 million tons in 2011. The increase in CPO demand that boosted production of that commodity is also attributable to development of bio-diesel industry using CPO as the feedstock
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Industry Profile
Table - 4 Indonesias CPO production, 2007-2011 Year Total (tons) Growth (%) 2007 17,664,725 --2008 18,089,503 2,4 2009 19,440,291 7,5 2010 21,000,000 8,0 2011* 22,000,000 4,8 Average growth 5,7 Note : *) estimate Sources: Plantation directorate general Private companies lead in production In 2010, private plantation companies contributed 11.1 million tons t the countrys total CPO production - up 8.8% from 10.2 million tons last year. The CPO production of private companies accounted for 52.9% of the countrys total production of 21 million tons. Smallholders production totaled 7.2 million tons or 34.3% of the countrys total production. State companies contributed only 12.8% or 2.1 million tons. Table - 5 CPO production by plantation owners, 2005 - 2010 Year 2005 2006 2007 2008 2009 2010**) Production (Tons) PBN PBS 1,449,254 5,911,592 2,313,729 9,254,031 2,117,035 9,189,301 1,938,134 9.238.824 1,961,813 10.230.499 2,089,908 11.136.056
PR 4,500,769 5,783,088 6,358,389 6,923,042 7,247,979 7,774,036
Total 11,861,615 17,350,848 17,664,725 18.100.000 19.440.291 21.000.000
Sources : Plantation directorate general Note : PR : Smallholders PBN : State companies PBS : Private companies *) Provisional **) Estimation
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Industry Profile
Indonesia and Malaysia worlds largest Malaysia and Indonesia dominate the worlds production of CPO. In 2010, with total production of 21 million tons, Indonesia was the largest CPO producer in the world followed by Malaysia with production of 17.8 million tons. The worlds production that year totaled 46 million tons. Indonesia and Malaysia, therefore, accounted for 84% of the production. Indonesias only rival but big one, therefore, is Malaysia. Over 10 years earlier Malaysia was the largest producer although in the past five years, Indonesia has the largest plantations. Malaysian producers are more efficient and productive. Indonesia, however, has taken the lead in production in he past three years although thanks largely to much wide plantations. In 2010, Malaysias oil palm plantations totaled 4.85 million hectares much smaller than Indonesias oil palm plantations of 7.8 million hectares. Table - 6 CPO production of Indonesia and Malaysia, 2007 - 2011 Year 2007 2008 2009 2010 2011* Total production (million tons) Indonesia Malaysia 17.7 15.8 18.1 17.7 19.4 17.8 21.0 17.8 22.0 18.5
Sources : ICN processed Note : * estimate
Technical aspect Oil palm plantations Oil palm trees grow well in tropical areas between 10 degree of north latitude and 10 degrees south latitude. Indonesia, Malaysia, Nigeria and Thailand are among tropical countries. Oil palm trees grow well in loose soil , clayish soil and peat land with a depth of less than 1 meter. Peat land with a thickness of more than 1 meter, acid and swampy lands are not good for oil palm trees. However, with cultivation and irrigation system the plants could grow well in such lands.
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Industry Profile
Oil palm trees generally live for 20-30 years. hey start to yield fruits after they are four or six years old . Peak production is when they are seven to 11 years in age. Older than 11 years their productivity began to decline and after 20 years they no longer productive and replanting will be needed. A bunch of fruits has up to 1,000 seeds. A bunch weights from 10 to 20 kg. A tree could yield a number of bunches in a year. A hectare is grown with 136 160 trees with a space of 8.5-9 meters. Production, therefore, could reach 10 30 tons of fresh fruit bunches depending in the quality of the seedlings. For example, the oil palm plantations of PT SMART produce up to 18.2 tons of fresh fruit bunches per hectare on the average. The production of trees aged between 7 and 18 years average 20 - 24 tons per hectare. Management of Palm Oil All parts of the fruits of oil palms could be processed to have commercial value. The fruits have meat and kernel that could be processed to turn out CPO. The fruit could be processed into palm kernel (PK). The meat CPO content is around 20% and the PK content of CPO is 2.5%. The fiber and the shell could be used as fuel for steam boilers. Foodstuffs could be produced from CPO and PKO through process of refining , bleaching and deodorizing. CPO could be decomposed to turn out RBD Stearin and RBD Olein. RBD Olein is the feedstock for cooking oil and RBD Stearin is used mainly as feedstock for margarine and shortening, as well as soap and detergent. Decomposition of CPO and PK could produce oleo-chemicals including fatty acid and glycerol. The refining production could produce olein making up 73%, stearin making up 21%, and PEAD (Palm Fatty Acid Distillate) 5% of the total production with waste 0.5% . Process of Producing CPO Fresh fruits have to be processed in 24 hours to produce CPO or their content will decline and free fatty acid could turn out to reduce the quality of CPO. Therefore, the processing factory must not be too far from the oil palm plantations. In the CPO factory, the fruits are sterilized and kernels are separated from the fruits. The fruits are then pressed to extract CPO. The CPO is cleaned and distilled. Generally the fruits will have a 20% content of CPO. Therefore, a hectare of plantation could turn out from 2-7 tons of CPO. In 2010, Indonesias oil palm plantations produced an average of 3.55 tons of CPO per hectare with the highest productivity recorded by plantations in Bengkulu averaging 4.0 tons per hectare a year.
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Industry Profile
The palm kernels already separated from the fruit seeds are sent to a palm kernel crushing plant which will turn out PKO making up 45% and palm kernel meal 55% . An economic scale CPO mill has An FFB processing capacity of at least 30 tons per hour. However, currently there are CPO mills have been built with a processing capacity of 10 tons even 5 tons of FFB per hour. Diagram Process of producing CPO
Source: Asian Agri
Investment Investment Interest Strong The interest in investing in the palm oil sector has remained strong in the country especially among Malaysian investors. A number of new plantations have been built mainly in Sumatra , Sulawesi and Kalimantan. Among the investors include Sime Darby Bhd from Malaysia through its subsidiary PT Golden Hope Nusantara, which plans to build a CPO processing plant with a processing capacity of 750,000 tons of FFB per year. The project is estimated to cost Rp936.97 billion to be built over a 6 hectares plot of land in Pulau Laut, South Kalimantan , to be operational in 2013. Lestari Pasifik Berhad from Malaysia will team up with PT Inkud Exchange to build a bio-ethanol plant using palm oil waster as feedstock. They will build up to 18
Industry Profile
316 units of factories with a production capacity of 6.5 million liters of bioethanol/year. The factories will be built over a period of five years with an estimated investment of US$ 350 million. The factories will be built near palm oil companies all over the country. Lestari Pasifik Bhd is the license holder for the palm oil waste processing technology of Mekano-enzimatik system a joint venture with Russian investor. PT Citra Borneo Indah (CBI) plans to build 3 units of CPO factories with a processing capacity of 1 million tons of FFB a year to cost around Rp 300 billion to be operational in 2013. PT Sampoerna Agro Tbk (PT SA) sets aside Rp 1 trillion for capital spending in 2011 to be used to expand cultivated land of oil palm plantations and to tend oil palm plantations. PT SA will expand cultivation by planting seedlings over 10,000 hectares land with an investment of Rp 500 billion. PT SA has 205,688 hectares of lands for oil palm plantations by March 2011, and 104,480 hectares of the lands have been cultivated.. Around 78,518 hectares of the plantations have been producing including 41,983 hectares of plasma plantations. The oil palm plantations are located in South Sumatra, Central Kalimantan, and West Kalimantan. PT. SA has six CPO factories with a total processing capacity of 455 tons of FFB per hour . Five of the factories are located in Sumatra and one in Kalimantan. The company also has a palm kernel oil factory in Sumatra with a processing capacity of 150 tons of palm kernel per day. In the first quarter of 2011, its production of FFB rose 101% to 383,673 tons from the same period in 2010. Its CPO production also increased 101% to 82,664 tons and its production of palm kernel rose 82% to 16,396 tons. Its sales of CPO surged 87% to 72,131 tons and sales of palm kernel oil shot up 86.4% to 18,061 tons. The selling price of CPO increased 27% to Rp 8,357 per kg, and the price of PKO rose 112% to Rp 6,675/kg. Table - 7 New investments and expansion in palm oil industry, 2010- 2011
Names of company PT. Sampoerna Tbk Agro Status PMDN Locations Kalimantan Production capacity Oil palm plantations 10,000 hectares Oil palm plantations 10,000 hectares FFB tons/hour 30 Investment Start up year 2011
Rp500 billion
PT. BW Plantation Tbk
PMA
Kalimantan
N.a Rp65 billion
2011 2012
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Industry Profile
Table 7 - contd
Names of company PT. Astra Agro Lestari Status PMDN Locations East Kalimantan Central Kalimantan South Kalimantan Production capacity - 105 tons FFB/hour - 225 tons FFB/hour - 30 tons FFB/hour - 2 units in East Kalimantan - 1 unit in South Kalimantan - 1 unit in Central Sulawesi Papua Each 5 tons FFB/hour of Investment Start up year
Rp1.5 trillion
of of
2012
of
US$ 56 million
2014
PT. Bio Inti Agrindo (Daewoo International CO) PT. Permata Hijau Group
PMA
PMDN
Kalimantan
PT. Wilmar PT. Jaya Agra Wattie Tbk
PMA PMDN
Kalimantan South Kalimantan
-Oil palm plantations 36,000 hectares CPO - 400,000 tons/year PKO -150,000 tons/year CPO 60,000 tons/year -Oil palm plantations 7,000 hectares - 45 tons FFB/hour - Crumb rubber 3 million tons/year CPO 1 million tons/year CPO 750,000 tons/year Oil palm plantations 7.550 hectares Bio-ethanol from palm oil waste 6,5 million liters /year
Rp53 million
2012
Rp2 trillion
2012
N.a N.a
2012 2012
Rp125 billion Rp300 billion Rp936.97 billion Rp300 billion
2013 2013 2013 2013
PT. Citra Borneo Indah PT. Golden Hope Nusantara PT. Gozco Plantations Tbk Lestari Pacifik Bhd and PT Inkud Exchange
PMDN PMA PMA
N.a South Kalimantan Kalimantan
PMA
North Sumatra
US$ 350 million
2015
Sources : ICN processed
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Industry Profile
Industrial and investment scale in palm oil industry Each oil palm plantation has different characteristics, but based on the result of the analysis, the following data could be used as a reference. Table - 8 Reference data for oil palm plantations and palm oil processing industry Description Age of plant Starting producing Peak productivity Number of trees per hectare Productivity in FFB Productivity in CPO Average production in Indonesia in 2009 Source: Data Consult Data 20-30 years At age of 4 6 y 8-18 years 136 160 trees 10 30 tons o FFB/hectare 2- 7 tons of CPO/hectare 4.11 tons of CPO/hectare
A CPO factory to have an economic scale must have a processing capacity of at least 30 tons of FFB per hour. Based on the assumption that FFB has a CPO grade of21% and palm kernel grade of 5%, a CPO plant with a processing capacity of 30 tons of FFB per hour operating 4,500 hours per year, would produce 28,350 tons of CPO a year. If a hectare of oil palm plantation has a productivity of 3.29 tons of CPO a year, a factory with a processing capacity of 30 tons of FFB per hour would need 9,000 - 10,000 hectares of plantations. A hectare has from 136 to 160 oil palm trees, therefore, 1.25 million - 1.5 million seeds would be needed to cultivate a plantation of 9,000-10,000 hectares. Shortage in CPO factories The rapid expansion of oil palm plantations especially smallholders plantations and ones owned by private companies in the past 10 years has brought about problem in shortage in factories to process FFB into CPO and PKO. In some areas such as in Sumatra factories have operated above their capacity. In North Sumatra FFB processing capacity have operated at 114% of their installed capacity, in West Sumatra 144% of their capacity, Lampung 116% of their capacity and in Bangka Belitung 179% of their capacity on the average. In oil palm plantation centers in Indonesia, many investors have built factories without plantations. They rely mainly on smallholders plantation for FFB supplies. Each regional administration has different policy in the palm oil sector. In 2006, the West Sumatra provincial administration required all plantations companies to 21
Industry Profile
have their own FFB. The regulation was issued following shortage of FFB processing factories in that regions Now with new factories in operations the capacity is enough to process FFB from smallholders plantations .Earlier many farmers could not find factories to process their FFB, therefore, they were forced to sell their FFB almost at any price dictated by the big companies which have processing factories. In 2007, the number of FFB processing factories in the country reached 421 units with a processing capacity of 18,343 tons of FFB per hour. According to the secretary general of the Association of Indonesian Oil Palm Farmers (Apkasindo), in order to improve the productivity and competitiveness of farmers, an additional 100 units of FFB processing plants would be needed each with a processing capacity of 30 tons of FFB per hour. A factory is estimated to cost Rp 80 billion. Table - 9 Number of CPO factories and production capacity, 2007
Processing CPO production capacity (tons of capacity CPO FFB/hour) 14 Nanggroe Aceh Darussalam 410 599 87 North Sumatra 3.030 3.083 20 West Sumatra 1.080 824 128 Riau 5.645 5.137 31 Jambi 1.503 1.194 48 South Sumatra 2.290 1.809 12 Bengkulu 540 356 4 Lampung 125 384 5 Bangka Belitung 345 397 1 West Java 30 19 1 Banten 60 33 20 West Kalimantan 905 1.005 24 Central Kalimantan 1.290 1.388 3 South Kalimantan 110 337 10 East Kalimantan 510 379 3 Central Sulawesi 90 149 1 South Sulawesi 40 46 4 WestSulawesi 140 393 3 Papua 90 60 2 West Papua 110 74 421 Indonesia 18.343 17.666 Sources: Plantation directorate general, Data Consult, processed Provinces Units
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Industry Profile
CPO trade Exports CPO is one of Indonesias major export commodities. In 2006-2010, the countrys exports of CPO grew form year to year both in volume and value from 10.4 million tons valued at US$ 3.5 billion in 2006 to 15.6 million tons valued at US$ 7.6 billion in 2010. Meanwhile, exports of PKO rose from 1.27 million tons valued at US$ 616,476 in 2006 to 2.53 million tons valued at US$ 216,955 in 2010. According to the association of palm oil companies (GAPKI) exports of CPO in 2011 is expected to rise 14.96% to 18 million tons. Increase is expected to be sharper in the second half of the year. Increase is expected in exports to India, China, and Middle East as well as to Europe and the United States. In 2010, the CPO exports rose in value from the previous year mainly on the commodity price hike. In 2010, according to the World Bank Commodity, the CPO price in the world market raised 41.2% to US$1,120 per ton in November form US$ 793 per ton in January. Table - 10 Indonesias CPO and PKO exports and imports, 2006 2010 Tons (000US$) Exports Imports Year CPO PKO CPO PKO 10,471,915 1,274,039 1,645 1,386 2006 3,522,810 616,476 1,287 1,207 11,875,418 1,335,324 1,067 3,594 2007 7,868,640 997,807 1,023 6,013 18,141,004 2,493,439 11,721 727 2008 14,110,228 310,701 13,105 4,153 14,981,467 1,948,430 10,591 534 2009 7,799,544 115,444 7,005 160 15,650,000 2,529,570 4,000 378 2010 7,649,965 216,955 7,005 50
Sources: BPS/ Plantations directorate general
India the largest market Indonesia has exported CPO to more than 150 countries in Asia, Europe, Africa and America. In 2010, exports totaled 15.6 million tons with the largest exports to India , the Netherlands and China.
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Industry Profile
Exports to India in 2010, reached 4.5 million tons. India needed 11 million tons of vegetable oils a year to feed its cooking oil factories.. Around 6 million tons of its requirements are produced locally in soybean oil, groundnut oil, corn oil and rice oil. The rest or 5 million tons is in CPO . The second largest buyer was the Netherlands to which exports totaling 2.8 million tons. China was the third largest buyer to which exports reached 1.1 million tons in 2010. Table - 11 Main CPO export destinations, 2010 Countries of destination India The Netherlands China Pakistan Germany Singapore Malaysia Bangladesh Sri Lanka USA Other more than countries Total Sources : BPS Consumption growing CPO consumption in the country is assumed to be equivalent to production plus imports minus exports or the same as domestic supply. Domestic consumption is almost entirely supplied locally. Imports are insignificant; in volume. The largest consumer of CPO in Indonesia is cooking oil industry estimated to account for 80% of the domestic consumption. Other consumers are margarine/shortening, soap, and oleo-chemical industries. Consumption of CPO by non food industries averages only 700,000 - 800,000 tons a year. In the period of 2006-2010, CPO consumption in the country fluctuated up to 6.8 million tons in 2006 from 1.5 million tons in the previous year. In the following year, the consumption shrank to 5.8 million tons in 2007, down again 24 Volume of exports (000 tons) 4,507 2,880 1,126 1,033 892 829 780 689 329 141 2,444 15.650 % 28.8 18.4 7.2 6.6 5.8 5.3 5.0 4.4 2.1 0.9 15.6 100,0
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Industry Profile
to 2.5 million tons in 2008. In 2009, the consumption increased again to 4.5 million tons and up again to 5.3 million tons in 2010. PKO consumption rose from 1.4 million tons in 2005 to 2.2 million tons in 2007 and but shrank to 1.9 million tons in 2009 and to 1.6 million tons in 2010. Table - 12 Indonesias consumption of CPO and PKO, 2007 - 2010 (Tons)
Year CPO : 2007 2008 2009 2010 Production 17,664,725 18,089,503 19,440,291 21,000,000 Exports 11,875,418 15,647,565 14,981,467 15,650,000 Imports 1,067 11,721 10,591 4,000 Consumption 5,790,374 2,453,659 4,469,415 5,354,000
PKO : 2007 3,532,945 1,335,324 2008 3,617,901 2,493,439 2009 3,888,058 1,948,430 2010 4,200,000 2,529,570 Sources: BPS/Plantation directorate general
3,594 727 534 378
2,201,215 1,125,189 1,940,162 1,670,808
CPO prices in world and domestic markets The price of CPO on the domestic market follows the trend in international market with the reference prices in Rotterdam, Kuala Lumpur Commodity Exchange (KLCE) and Chicago. So far the CPO prices have a 10 year cycle. Growing demands in Europe, China and India, have pushed up CPO prices since 2007. In 2009, the price was Rp8,000 per ton and US$ 701 US$ 750/MT in Rotterdam. Table - 13 Palm oil prices on domestic market. Year 2007 2008 2009 2010 2011* CPO/Belawan (Rp/tons) 7,361,021 6,630,000 8,000,000 10,507,000 8,659,000 Palm Kernel (Rp/tons) 4,416,612 4,421,000 5,399,000 7,039,690 5,801,530 (Rp/kg) FFB (Rp/tons) 889,77 735,00 1,314,00 1,470,980 1,212,260
Sources: ICN processed Note : * per semester I
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Industry Profile
Indonesia gained from the increase in the price of CPO since 2008 with the increase in its production of that commodity. The CPO price in Rotterdam in 2007 was US$ 777 per ton, up to US$ 1,205 in 2010. In the first half of 2011 the price fell to US$1,095 per ton and that of PKO rose from US$ 600 to US$ 964. The countrys CPO exports rose from 14.9 million tons in 2009 to 15.6 million tons in 2010 and exports of PKO fell from 1.9 million tons in 2009 to 1.5 million tons in 2010. Table - 14 CPO and PKO prices in the world market Year 2007 2008 2009 2010 2011* CPO/Rotterdam (US$/Tons) 777 960 758 1,205 1,095 (US$/ton) PKO/ Rotterdam (US$/Tons) 600 768 611 964 876
Sources: ICN process Note * July
Trade policy Indonesia Sustainable Palm Oil (ISPO) Based on a decision of the agriculture minister No.19/Permentan/OT.140/3/2011 March 2011, the government announced a regulation called Indonesia Sustainable Palm Oil (ISPO) The regulation came following the decision of GAPKI to withdraw from Roundtable Sustainable Palm Oil (RSPO) in 2010 ISPO will be obligatory for all oil palm plantation companies. ISPO will be officially effective in March 2012. All oil palm plantation companies are required to fully implement ISPO and have the ISPO certificate before the end of 2014. The agriculture ministry is to issue ISPO certificate for 20 companies a year starting in 2012 . ISPO is aimed at creating sustainability in CPO production and to support Indonesian commitment to reduce GRK emissions and unilateral commitment of the government in Copenhagen (2009) and program based on LOI Indonesia and Norway (2010).
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Industry Profile
Implementation of ISPO is important as palm oil sector is major export earner for the country and 3.9 million families have their livelihood in palm oil sector. Export Reference Price (HPE) up In May 2011, the government raised the export reference prices (HPE) for CPO and derivatives to follow the commodity price hike international markets.. HPE is set based on the average price in previous month in international market free on board (FOB) in several ports in Indonesia Based on the regulation the HPE for fruits and kernels increased to US$ 658 per metric ton (MT), and those for CPO rose to US$ 1,073/MT, Crude Olein (CRD Olein) to US$ 1,148 per MT and Refined Bleached Deodorized Palm Oil (RBD PO) to US$ 1,879/MT, and Refined Bleached Deodorized Palm Olein (RBD Olein) to US$ 1,150/MT. Export taxes on CPO and derivatives are major contributors to the state income. Table - 15 HPE for CPO and derivatives , May 2011 Description Palm fruits and kernel Crude palm Oil (CPO) Crude Olein (CRD Olein) Refined Bleaches Deodorized Palm Oil (RBD PO) Refined Bleached Deodorized Kernel Olein (RBD Olein) Crude Kernel Olein Crude Kernel Stearin Refined Bleached Deodorized Palm Kernel Oil Refined Bleached Deodorized Palm Oil Refined Bleached Deodorized Palm Stearin Refined Bleached Deodorized Palm Kernel Stearin
Sources: Trade ministry
HPE (US$ per MT) 658 1,073 1,148 1,879 1,150 1,787 1,787 1,833 1,152 1,122 2,141
Policy in industrial sector CPO clusters The government will build five clusters for downstream palm oil industries to produce CPO derivatives including ole-chemicals such as fatty acid , fatty alcohol and glycerin and cooking oil. The clusters will be built in palm oil production centers in northern coast of Java, eastern coast of Sumatra, Kalimantan, Sulawesi, and Merauke.
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Industry Profile
Indonesia, despite being the worlds largest producer of CPO is still far lagging behind Malaysia in developing downstream palm oil industry. Indonesian plantations are also behind in productivity. Based on data from the agriculture ministry, the country has 7.9 million hectares of oil palm plantations with production of only 19 million tons of CPO. Malaysia which has only 4 million hectares of plantations produces up to 16 million tons of CPO a year. Regional regulations hamper investment. Regional administrations have issued regulations hoping to raise additional income from the plantation sector, but many of the regulations especially in district areas serve as a disincentive for investment. In South Sumatra, for example, a regional regulation imposes a levy of Rp 5 per kg of FFB. Table - 16 Regional regulations (Perda) on palm oil sector
No SK of Regent 054/2001 Perda No. 56/2002 Perda No. 15/2002 Issued by District administration of Musi Banyuasin, South Sumatra District administration of Pelalawan, Riau District administration. Indragiri Hulu, Riau of Description Contribution of palm oil companies Rp1000/ FFB Contribution of plantations companies to the government Rp 1/kg of FFB Retributions : a. forest Rp1/kg of FFB b. Plantations Rp1/kg of FFB c. CPO Rp 2/kg d. PKO Rp 0,5/kg e. Oil palm seeds Rp 100/seed Levy Rp15/kg of FFB from nucleus companies and Rp5/kg of FFB from plasma farms and Rp100/kg of CPO Retributions : l plantations and sales of seeds: a. CPO from the regency Rp10/kg b. CPO from other districts Rp5/kg c. PKO from the regency Rp5/kg d. PKO from other districts Rp1.5/kg e. Retribution: on FFB : Rp3/kg f. Retribution on kernel Rp1/kg
Perda
District administration of Morowali, Central Sulawesi District administration of Kotawaringin Timur, West Kalimantan
Perda No. 6/2004
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Industry Profile
Table 16 - contd
No Perda No. 7/2000 Issued by District administration of Deli Serdang, North Sumatra Description Tax on plantation products state/regional and private companies and smallholders a. Rubber Rp2/kg b. Cacao Rp3/kg c. Tobacco Rp2/kg d. Palm oil Rp2/kg e. Sugarcane Rp1,000/ton Retribution on use of district road for FFB transport
Perda
District administrations . of Langkat, and Asahan, North Sumatra
Sources: Data Consult processed
Conclusion and Prospects Indonesia took over from Malaysia as the worlds largest CPO producers in 2006 mainly on expansion of plantations. From 2006 to 2010, the country expanded its oil palm plantations by 2 million hectares. In 2010, the countrys CPO production reached 21 million tons, as against Malaysias 17.8 million tons. Currently Indonesia has around 7.8 million hectares of oil palm plantations. In 2011, the countrys CPO production is forecast to rise to 22 million tons. CPO demands in the world are expected to be stronger in 2012 on growing demands from India and China and shortfall in supply. In the first half of 2012, demand for CPO is expected to surge especially from the two countries . The prices of CPO in Rotterdam are predicted to reach US$ 1,210 US$ 1,242 per ton in 2012. The strong market demand in the world market, has drawn many investors to the country seeking to venture in palm oil sector in the country. The government, however, encourages investment more in the downstream sector producing CPO derivatives like oleo-chemicals which have much higher commercial value. Prospects CPO main feedstock for edible oil in the world CPO has gained in the market and has been more competitive facing other edible oil feedstock such as soybean oil, and sunflower oil especially after it was found that CPO is safer that other feedstock of edible oils like soybean oil which has been fund to have trans fatty acid content hat could cause health hazard. The rapid expansion of two largest developing economies in Asia- India and China- will also contribute considerably to growing demand for CPO. The two
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Industry Profile
countries are major consumers of CPO. CPO would be the largest feedstock for edible oils in the world. The CPO consumption has increased especially after the soaring prices of crude oil in the world. With oil prices reaching US$ 100 per barrel , CPO became more feasible to be used to produce bio-diesel. Based on the trend in the past five years, the worlds CPO consumption in the next five years is forecast to rise 6% a year from 50.8 million tons in 2011 to 60 million tons in 2014 . Table - 17 Projection of worlds CPO consumption, 2011 - 2014 (million tons) Year Consumption 2011 50.8 2012 54.4 2013 57.1 2014 60.0
Sources: ICN , processed
Projection of Indonesias oil palm plantations in size and CPO production The countrys production of crude palm oil (CPO) is feared to shrink 2 million tons in the next two years on restriction of plantation expansion. There is potential loss of 300 - 400 hectares of oil palm plantations until 2013 because of the moratorium on the use of forest and peat lands for oil palm plantations, while normally expansion could be as larger as 500,000 - 600,000 hectares. The moratorium is based on an agreement with Norway in 2010 Under the agreement Indonesia was granted a compensation for US$ 1 billion. Indonesia has around 21 million hectares of peat lands mainly in Kalimantan, Sumatra, and Papua. Around 33% of the peat lands are suitable for farm and plantation crops. The losses in oil palm plantations would result in a decline in CPO production worth around US$ 2 billion on assumption that a ton of CPO is worth US$ 1,000. In addition, there is potential loss of investment in 200,000-300,000 hectares of oil palm plantations. Now a hectare of oil palm plantation will need an investment of around Rp 60 million The decline in investment will also mean a potential loss of 60,000 jobs. 30
Industry Profile
In 2011, the country has oil palm plantations estimated at 8.1 hectares, up to 8.7 million hectares in 2015. CPO production is estimated to reach 22 million tons in 2011, up to 30 million tons in 2015. Table - 18 Projection of productive oil palm plantations and CPO production, 2011 2015 Year 2011 2012 2013 2014 2015 Productive plantations (million hectares ) 8.1 7.9 7.7 8.2 8.7 CPO production (million tons) 22.0 21.0 20.7 24.6 30.0
Sources: ICN processed
**Rth**
31
COMPANY PROFILE
WILMAR GROUP Backgrounds The embryo of the Wilmar Group was Wilmar International Ltd which was established in 1991. It is 83% controlled by Wilmar Holdings Ltd, which is jointly owned by Martua Sitorus and Kuok Khoon Hong. Kuok Khoon Hong is a nephew of Rober Kuook, a Malaysian tycoon and Martua Sitorus alias Thio Seng Hap, is a businessman from Indonesia of Chinese origin. According to Forbes Asia, Martua Sitorus is among Indonesias 14 richest men with assets valued at Rp 27.5 trillion in 2010. Martua Sitorus began his business career as a palm oil trader in Indonesia and Singapore. His business thrived and in 1991 he already had 7,100 hectares of oil palm plantations North Sumatra. In the same year his company built two palm oil processing factories. Wilmar International Limited is the largest agribusiness company in Asia listed on the Singapore Stock Exchange. Wilmar International Holdings Ltd, which is based on the Virgin Islands, Britain, also has a stake in Archer Daniels Midland Company, which is listed on the New York Stock Exchange. In addition, it controls China National Cereals, Oils & Foodstuffs Corp, a leading company processing farm products in China. . Recently Wilmar International Ltd launched back door listing on the Singapore Stock Exchange through a US$ 1.29 billion reverse take over with Ezyhealth Asia Pacific. The corporate action involved sales of business in medical equipment of Ezyhealth to CEO, Sin Keng Choo, valued at US$ 5 million. Wilmar Group which is based in Singapore operates in oil palm plantation business, CPO processing, CPO export and import, vegetable oil, palm kernel and specialty fat, bio-diesel, property business, etc. In India, Wilmar International has five CPO processing factories and owns half of Gujarat Adani. Wilmar Ltd sells cooking oil to 20 million households in India. Most of Wilmars oil plantations are Indonesia totaling 350,000 hectares located in Sumatra and Kalimantan and 200,000 hectares of the plantations have been cultivated. It has factories with a total processing capacity of 240,000 tons fresh fruit bunches per day and with a capacity utilization of 80%. The largest plants are found in Dumai and Pelintung with a total capacity of 9,000 tons per day. Wilmar Group plans to expand its oil palm plantations to 500,000 hectares - 1 million hectares with an investment of US$ 500 million in the next several years. 32
Company Profile
So far Wilmar Group has more than 300 factories producing CPO in Indonesia, China and India and distribution units in 50 countries to support the marketing of its palm oil production. Wilmar also produces and distribute fertilizer and has a fleet of ships. It has a force of more than 88,000 multinational staff. Currently it has 48 subsidiaries, and has a 40% share of the countrys CPO production. In addition to the Wilmar Group, Martua Sitorus also has another company group, Karya Prajona Nelayan (KPN) Group, established in 1978. KPN. Has a number of subsidiary PT Bukit Kapur Reksa in Dumai; PT Multi Nabati Asahan in Tanjung Balai Asahan; and PT Sinar Alam Permai in Palembang, which produce palm kernel. KPN is a major player in the countrys CPO industry. It has CPO terminal built with an investment of Rp 15 billion in Sabak, Jambi. KPN has units operating in oil palm plantation, cooking oil, expedition and fertilizer businesses. Palm Oil Industry Palm oil industry has become the core business of Wilmar Group. The company group has 36 subsidiaries operating in the oil palm plantation, and palm oil processing industry including PT Agrindo Indah Persada, PT Musi Banyuasin Indah, PT Agro Masang Perkasa, and PT Selatan Jaya Permai. Its oil palm plantations are located in South Sumatra, North Sumatra, West Kalimantan, Riau, and West Sumatra. Wilmar has become a member of the RSPO since September 2005 and has secured the certificates for all palm oil business operations. Its business in palm kernel is carried out by four subsidiaries PT Bukit Kapur Reksa, PT Karya Prajona Nelayan, PT Sinar Alam Permai, and PT Mekar Bumi Andalas. Its business locations are in Riau, Kuala Tanjung (North Sumatra), Palembang, and Padang. The production capacity of the four factories is 800,000 tons per year and to be expanded to 1.5 million tons in the coming years. With that capacity, Wilmar is the largest producer of palm kernel in Indonesia. Wilmar Group has CPO processing factories with a production capacity of 3.3 million tons per year. Wilmar also buys CPO from other companies including PT. Astra Agro Lestari, PT. Ivo Mas Tunggal, and PP London Sumatera Indonesia Tbk. PT Karya Putrakreasi Nusantara is a vegetable company based in Medan. Its production is used by food, detergent and cosmetic manufacturers as feedstock. PT. Kencana Sawit Indonesia (PT. KSI) has oil palm plantations in three locations totaling 10,216 hectares, of which 7,728 hectares in West Sumatra
33
Company Profile
have been cultivated. It also has plasma farms totaling 650 hectares supplying their fresh fruit bunches (FFB) to feed its processing factories to produce CPO. PT Kerry Sawit Indonesia (PT. KSI) has 3 oil palm plantations totaling 18,994 hectares, of which 15,557 hectares have been cultivated. It has an annual production capacity of 250,000 tons of CPO/year. According to plan, Wilmar Group will build 5-6 units of factories producing CPO derivatives with a total investment of US$ 900 million. The project is to be implemented in 2013. The group has decided to change its downstream investment plans in Malaysia and China in favor of Indonesia. The change followed the government regulation on development of downstream palm oil industry. The factories are to be built in Riau, where the feedstock in CPO is available in larger volume. The government has also pledged to improve the condition of infrastructure in Riau including roads and port facilities in Riau. The government also plans to modernize the infrastructure including the port of Sei Mangke in North Sumatra, where a new cluster of downstream palm oil industry will be built. Cooking oil industry PT. Multimas Nabati Asahan (PT. MNA) is a producer of CPO, palm kernel and CPO-based cooking oil. It started operation in 1996 with a CPO production capacity of 1,500 metric tons a day. Its factory is located in Kuala Tanjung, Asahan, North Sumatra. PT. MNA produces cooking oil known in the market with the brands of Sania and Fortune. In 2009, the business competition watchdog Komisi Pengawas Persaingan Usaha (KPPU) punished 18 cooking oil producers including PT MNA with a total fine of Rp 299 billion for forming a cartel to control cooking oil prices with affine ranging from Rp 1 billion to Rp 25 billion each. The KPPU said the cartel had caused a loss of Rp 1.5 trillion in 2008. PT MNA and a number of other companies PT Sinar Alam Permai, PT Wilmar Nabati Indonesia, and PT Agrindo Indah Persada appealed the verdict to a higher court. Wilmar Group through PT Cahaya Kalbar Tbk is also a producer of cooking oil basic material and cacao. In 2008 it invested Rp 33.8 billion in palm oil transport. The investment was used to acquire a 26% stake or in shipping company PT Pelayaran Tirtatjipta Mulya Persada. The acquisition is aimed at facilitating its exports and inter-island shipments. Cahaya Kalbar exports 40% of its production.
34
Company Profile
Fertilizer industry In 2004, the Wilmar Group began business sin the fertilizer industry producing natrium phosphate and kalium (NPK) fertilizer. In 2005, its built a bio-diesel factory. The company group also has business unit operating in chemical oils. It has a number of tankers with a carrying capacity of from 10,000 to 20,000 tons. It plans to buy tankers with a carrying capacity of 30,00 tons. Bio-diesel The Wilmar Group plans to move its bio-diesel factory from China and India to Gresik, East Java, where the facility is fairly good. The government, however, asked the conglomerate to invest in downstream palm oil industry outside Java. The company group pledged to comply with the governments request in Riau on condition, the government provide adequate infrastructure, especially road and port facilities. In 2007, the Wilmar Group had three bio-diesel factories in Riau, each with a total production of 350,000 tons per year. Altogether the Wilmar Group has 48 companies in Indonesia. One of the companies is PT Multimas Nabati Asahan, which produces cooking oil known with the brand of Sania. In its financial report, the group had assets valued at US$ 15.5 billion in 2007 with income of US$ 16.46 billion and net profit of US$ 675 million. In June 2010, Wilmar established a joint venture with Elevance Renewable Sciences Inc to build bio refinery with a capacity of 360,000 tons per year. The bio refinery is to be built in Surabaya, East Java. The company will use the technology of Biorefinery Proprietary Elevance to produce chemicals, bio-fuiels and oleo-chemicals with high commercial value . The products will be sued to produce surfactant, anti-microbe, lube oil and renewable bio-fuels. Double refined sugar industry In mid 2011, Wilmar International Limited acquired a producer of double refined sugar, PT Duta Sugar International (PT. DSI) at a price of US$ 105 million. The company plans to expand the production capacity of PT. DSI by 30% from 800,000 tons per year at present. PT. DSI already has customers and Wilmar plans to expand its market. In the future the Wilmar Group plans to invest in sugar plantations. The Wilmar Group through its subsidiary PT. Wilmat International Plantation will build sugar factory in Merauke, where it has secured a concession of 200,000 hectares for sugar plantations. The investment in the plantation and sugar factory
35
Company Profile
is estimated to reach US$ 2 billion. The company, however, has yet to build infrastructure as required by the government for all investors in Papua. Toward the end of 2010, Wilmar started feasibility study hiring experts form Australia on the investment plan. The study is expected to be completed in 2 years. Other investors like Medco, Rajawali Nusantara Indonesia (RNI) and Sinarmas have also indicated interest in building sugar plantations and factories in Merauke. In 2010, the Wilmar Group through its subsidiary PT. Wilmar Nabati Indonesia acquired sugar producing company PT Jawamanis Rafinasi at a price of US$ 50 million with factory located in Ciwandan, Banten. PT Jawamanis Rafinasi is a producer of double refined sugar and is a member of the Association of Indonesian Double Refined Sugar Companies (AGRI). The company has a refining capacity of 1,000 tons per day or 400,000 tons per year. The Wilmar Group has also acquired Windsor Brook Trading, a sugar trading company based in Singapore to support its marketing drives. In July 2010, the Wilmar Group acquired Australia Sucrogen, the worlds fifth largest sugar factory from Australias CSR at a price of US$ 1.5 billion. The acquisition is the largest that year in the worlds sugar sector. Property In early 2011, Wilmar International Limited expanded business to property sector in China where it acquired 6 plots of land in Yingkou, in the province of Liaoning at a price of US$ 204.4 million. In the new venture, the Wilmar Group teamed up with the consortium of Kerry properties Ltd and Shangri-La Ltd with share splits of 35%, 40% and 25% respectively . According to plan, the 20 hectare lands will be used for property projects building residential houses, commercial buildings, hotels and office buildings with a total investment of US$ 386 million including fund needed for management after the completion of the project. Wilmar secured a 70-year land use rights for residential buildings, 40-year land use rights for other property and commercial buildings. Financial performance The Wilmar Group operates around 20 refineries in China in addition to ones in Indonesia and Malaysia. The company also has land reserve of 500,000 hectares for plantations, mostly in Indonesia and Malaysia. By the second quarter of 2008, 215,000 hectares of its plantation land were already cultivated 36
Company Profile
and 137,7,000 hectares were already producing . It sells its production in 50 countries mainly in Indonesia, Malaysia, China, India and Europe. Based on its financial report, Wilmar had total assets valued at US$ 15.5 billion in 2007 with income at US$ 16.46 billion and net profit of US$ 675 million. Wilmar International Ltd is listed on the Singapore Stock Exchange and it is the largest publicly traded company in that country by capitalization. In the second quarter of /2008, its income totaled US$ 7.8 billion with net profit of US$ 332 million. Its core businesses are trading, oil palm processing industry , cooking oil manufacturing and plantation.. In the first half of 2011, Wilmar International Ltd reported an increase of 24% onyear in comprehensive profit to US$ 1.19 billion. In the first nine months of this year its income rose 55.9% to US$ 33.19 billion from US$ 21.28 billion in the same period last year. Its gross profit was US$ 3.06 billion or an increase of 55.8% from US$ 1.96 billion. The financial performance, however was still below expectation especially in net profit that rose to US$ 321 million from US$ 259,5 million.
* * Rth * *
37
INDUSTRY
COCONUT PLANTATIONS: POTENTIAL NOT PROPERLY TAPPED As a tropical country, Indonesia is a fertile land for coconut palms. The low lands of its coastal areas from Sumatra in the west and Papua in the east are lined with the swaying slim tall plants. However, the potential has not attracted enough big investors to produce major export commodity from coconut palms like crude palm oil, coffee and cocoa. Currently Indonesia has 3.8 million hectares of coconut plantations expanding from 1.66 million hectares in 1969. The vast majority of 98% or 3.7 million hectares of the plantations are made up of smallholdings of individual farmers. Plantations owned by state companies total around 4,669 hectares with private plantation companies owning the rest. Or owned by state plantation companies and the rest by private companies. Most of the plantations, owned by farmers are left to grow naturally without proper fertilization. They are not well tended, therefore, they remain small not up to commercial scale. Around 65% of the countrys coconut production is disposed of on the domestic market 35 exported either in the form of fresh fruits or processed products. No much progress has been made in the development of downstream industry One factor causing the sluggish development of coconut industry is that its has lost ground in competition with palm oil industry. Oil palm trees produce more and much cheaper vegetable oil. Crude palm oil (CPO) has even become a major world commodity and gained greater domination in the market of edible oils. However, a number of copra-based products have good prospects as they could not be substituted with CPO-based products. Among the coconut-based products that could not be substituted with other products include coconut milk powder, coconut jam, liquid coconut milk, coco chips, desiccated coconut, coconut pith, coconut vinegar, frozen coconut meat, nata de coco, virgin oil, fresh coconut and coconut water concentrate. Other copra-based products like cooking oil and coco chemicals could not stand the competition against those from palm oil and soybean oil. Copra-based industrial scheme Almost parts of coconut palms have commercial value its trees, fruit meat, fibrous husk, the shells and the coconut milk. Among the products from coconut fruits having high commercial value are Virgin Coconut Oil (VCO), activated carbon (AC), coconut fiber (CF), coconut charcoal 38
Industry
(CCL), and oleo-chemicals in the form of fatty acid, metal ester, fatty alcohol, fatty amine, fatty nitrogen, glycerin, etc. Coconut trees are used as raw material for furniture. Among coconut products which have been developed in the country include Coconut Crude Oil (CCO) and derivatives Desiccated Coconut (DC), Virgin Coconut Oil (VCO), activated carbon (AC), coconut fiber (CF), coconut charcoal (CCL). Around 90% of coconut meat is processed to turn out CCO and the rest for other products. However, the percentage has tended to decline in favor of other products such as oleo-chemicals (OC), which are the derivatives of CCO. Other than OC, the products from the coconut fruit meat having good prospects are VCO, DC, CM and CC. The four products have high commercial value. VCO could improve health (immunity to degenerative disease) and as basic material for high value natural cosmetics. DC is a product of food mixture hygienic and practical. CM is a isotonic drink that could substitute milk, and CC is a practical and hygienic material for cooking to substitute milk from manually scraped coconut. Derivatives of coconut shells having commercial value are AC, CCL, shell flour (CP). Activated carbon could be used in oil and gas industry, water distillation, pulp processing, fertilizer industry and gold mine. The fibrous husk could be used as material for furniture, like luxurious car seats, spring beds and geo-textile (GT). From coconut fruits the fiber, the meat and the milk could be processed into various products as follows:
39
Industry
Picture Scheme of Coconut-based industries
Husk Husk
Rubber husk Mattress Geo textile Briquette
Automotive seat Mattress Isolator Acoustic wall Land cover, etc Carpet, etc Necklace, button, etc Drug industry, purifier, etc
Husk
dust Coco peat Compost Handicraft Flour
Handicraft Roof tile/ roof Hardboard Electric insulator Furfural
sabut
Shell
Fruit
Hardboard Coal Gas Fibrous Oil Coco cake Dessicated Coco milk Oil cake Coconut Oil
Electric insulator Hardboard Active coal Coal fluor Black carbon Briquette Alcohol Liquid smoke Cooking oil Oleochemical Dessicated Oil/ fat Coco cream Confectionery Toasted coconut Coconut chips
husk
Meat Scrape
d
Copra Vinegar, Syrup, Dextrose, Nata De Coco, Ketchup, Isotonic drink, etc
Water
Plantations dominated by smallholders estates Coconut plantations have been dominated by smallholdings accounting for 98% owned by individual farmers, traditionally managed and not well tended that they are not up to commercial scale. Altogether there are 3.8 million hectares of coconut plantations in the country including 3.7 million hectares owned by smallholders 4,669 hectares owned by state companies and 66,189 hectares owned by private companies for about 34 years, from 1969 to 2011, the coconut plantations expanded from 1.66 million hectares to 3.8 million hectares. 40
Industry
The largest plantations are found in Riau, Central Java, east Java and North Sulawesi. Table - 1 Areas of coconut plantations in Indonesia and owners, 2000 - 2011 Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*) 2011**) Smallholders 3,601,698 3,818,946 3,806,032 3,785,343 3,723,879 3,735,838 3,720,490 3,720,533 3,724,118 3,731,606 3,737,507 3,742,921 State companies 13,891 8,006 7,070 5,838 4,883 6,127 5,668 5,507 3,822 4,844 4,662 4,669 Private companies 75,825 70,515 71,848 121,949 68,242 61,649 62,734 61,948 55,134 62,674 66,094 66,189 Total 3,691,414 3,897,467 3,884,950 3,913,130 3,797,004 3,803,614 3,788,892 3,787,988 3,783,074 3,799,124 3,808,263 3,813,779 Growth (%) 5.6 -0.3 0.7 -3.0 0.2 -0.4 0.0 -0.1 0.4 0.2 0.1
Sources: Plantation directorate general Note: *) Provisional figure **) Estimate
No significant increase in production The country has the worlds largest coconut plantations but production is not proportional with the size of the plantation areas. The countrys production of coconut in 2010 reached 3.26 million tons. The production has not increased much from the previous years. In 2003, production totaled 2,325 million tons. Until 2008, the production fluctuated with the lowest at 3.05 million tons in 2004 before rising to 3.26 million tons in 2010. The production was relatively small given the size of the plantations. In 2011, production is only 0.7 ton per hectare as against the potential production of 2.5 tons per hectare. Plantations owned by smallholders are generally traditionally managed without proper fertilization. As a result the productivity remains low.
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Industry
The productivity even declines from years before. In 2001, the production averaged 1.3 tons /hectare, down to 0.7 ton in 2005. The productivity is much lower than coconut plantations in India and Sri Lanka. The plants in around 12% or 450,000 hectares of the coconut plantations have been too old and no longer productive. Rejuvenation has been attempted by the government, but no much headway has been made. By 2009, replanting reached only 25,391 hectares in 64 regencies of 27 provinces. Replanting has been made in frontier or isolated areas far from processing facilities. Table - 2 Indonesias coconut production , 2000 - 2011 ( Tons) Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*) 2011**) Smallholdings 2,951,005 3,068,997 3,010,894 3,136,360 3,000,839 3,052,461 3,061,408 3,122,995 3,176,004 3,181,582 3,183,139 3,206,182 State companies 9,038 8,272 4,815 2,629 4,489 3,659 2,897 2,935 3,000 3,293 2,332 2,349 Private companies 84,485 85,749 82,787 115,865 49,183 40,724 66,853 67,337 60,668 73,094 80,976 81,469 Total 3,044,528 3,163,018 3,098,496 3,254,854 3,054,511 3,096,844 3,131,158 3,193,267 3,239,672 3,257,969 3,266,447 3,290,000 Growth (%) 3.9 -2.0 5.0 -6.2 1.4 1.1 2.0 1.5 0.6 0.3 0.7
Sources: Plantations directorate general Note: *) Provisional **) Estimate
No large scale coconut processing industry Traditional, in addition to modern system is still used in the coconut processing industry in Indonesia. No industry with certain products dominating coconut processing in the country. The processed products of coconut in the country include copra, cooking oil (Refined Bleached Deodorized), milk squeezed from coconut, Virgin Coconut Oil, Nata Decoco, palm sugar, charcoal, Geo textiles, etc. Coconut processing factories are located mainly in coconut producing areas such as West Java, East
42
Industry
Java, Central Java, North Sulawesi North Sumatra, etc. Jakarta, however, has many coconut processing factories although it has no coconut plantation. The industry ministry has three categories for coconut industry in two classes upstream industry with products including fresh fruits and copra (black and white copra) ; intermediate industry with products including coconut shells, copra Meal, desiccated coconut; and downstream industry producing cooking oil, coconut cream/milk, activated carbon (AC) , etc. Coconut oil less competitive The productivity of coconut plantations is below other sources of vegetable oils like crude palm oil as a result the derivatives of coconut especially coconut cooking oil is not competitive in price. Coconut oil is superior in quality with high content of lauric acid needed especially in detergent industry and cosmetic industry and friendlier to the environment. Coconut fruits could serve as substitutes for palm kernel, on the contrary, oil palm fruits could not be processed to produce substitutes for coconut milk, desiccated coconut, oriental food, spry dried powder, and hair oil. Oleochemicals, bio-diesel and fatty alcohol could also be produced from coconut although not as efficiently as from CPO. From 17 edible oils and fats traded as international commodities in 2005, coconut oil ranked the 6th, with a market share of 4.34% as against soybean oils share of 30.45%, CPO 30.34%, rapeseed oil 9.54%, sunflower oil 8.16% and animal oils/fats 4.40%. The position of coconut oil has not improved with production of coconut oil grows only 2% per year. There is no big investment in the coconut sector and the government has not show interest in encouraging investment in the sector. The market of coconut derivatives in the world is dominated by the Philippines, known as the worlds largest copra producer. The Philippines accounts for 55% of the worlds supplies of coconut oil. Most of its processed products of coconut are exported. Coconut processing industry producing coconut oil from copra has expanded in the Philippines. That country even imports part of its copra feedstock from Indonesia. Coconut industry in that country also produces CCO-based oleochemicals such as fatty alcohol, fatty-add, methyl ester and alkanola-mide.
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Industry
The market demand for coconut products is quite encouraging especially to be used for organic foods, functional drink, cosmo centicals, oleo chemicals, and bio-fuel and bio lubricants. Around 30% of coconut production exported Indonesia is one of the worlds largest producers of coconut, but it is also a large consumers of that commodity. Most of its production, therefore, is disposed of on the domestic market. Only 30% of its coconut fruits are exported. The Philippines exports 80% of its coconut production. Indonesias coconut exports are almost entirely in fresh fruits, while exports by the Philippines are dominated by processed products Even Malaysia, which produces no coconut is an exporter of coconut based cooking oil importing feedstock from Indonesia. A fairly good growth has been recorded in the countrys exports of coconut since 2004 growing 12.8% with volume totaling 1.87 million tons valued at US$ 2.18 billion. Exports grew in the following years until 2007 when export peaked at 2.4 million tons valued at US$ 4.8 billion. The surge in exports followed a sharp increase in the price of CPO. After rising trend for several years, exports shrank 55% in 2008 to 1.08 million tons valued at US$ 900 million. The decline continued through 2009, down 8.1% to 992,700 tons valued at US$ 494.5 million. Meanwhile, exports of coconut derivatives have remained small both in volume and value. In 2005, the worlds exports of coconut derivatives were valued at US$ 1.2 billion with the Philippines contributing 65% and Indonesia 19% or US$ 228.68 million. Table - 3 Indonesias exports of coconut fruits Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Volume (Tons) 1,379,612 1,453,382 1,495,987 1,662,210 1,874,261 2,024,593 2,286,897 2,407,972 1,080,068 992,766 Growth (%) 5.3 2.9 11.1 12.8 8.0 13.0 5.3 -55.1 -8.1 Value (000 US$) 888,623 786,197 1,037,562 1,494,811 2,180,029 2,582,875 4,321,525 4,868,700 900,498 494,532 Growth (%) -11.5 32.0 44.1 45.8 18.5 67.3 12.7 -81.5 -45.1
Sources: Plantation directorate general, processed
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Industry
No progress in exports of coconut derivatives Among the coconut derivatives exported by the country include cooking oil, coconut flour, desiccated coconut, and copra. Exports have been fluctuating and no much progress has been made in expanding exports. Exports are dominated by cooking oil up to hundreds of thousands tons. Exports of cooking oil rose 27.4% in 2007 to 169,557 tons valued at US$ 203.7 million, but fell in 2008 by 14.5% before rising again 41.7 % in 2009 to 205,309 tons valued at US$ 208.8 million . Table - 4 Exports of coconut-based cooking oil , 2006 - 2010 Year 2006 2007 2008 2009 2010 Volume (tons) 136,164 133,096 169,557 144,922 205,309 Growth (%) -2.3% 27.4% -14.5% 41.7% Value (US$ 000) 33,785 103,871 203,707 106,491 208,830 Growth (%) 207.4% 96.1% -47.7% 96.1%
Sources: Agro-industry directorate general, processed
Exports of coconut flour peaked at 16,470 tons valued at US$16 million in 2009, but plunged to 8,030 tons valued at US9.3 million in 2010. See the following table. Table - 5 Exports of Coconut flour, 2006 - 2010 Year 2006 2007 2008 2009 2010 Volume (tons) 6,586 10,780 14,725 16,470 8,030 Growth (%) 63.7% 36.6% 11.9% -51.2% Value (US$ 000) 4,637 10,526 21,875 16,004 9,327 Growth (%) 127.0% 107.8% -26.8% -41.7%
Other products are desiccated coconut the exports of which tended to decline in the period of 2006 2010. Exports of desiccated coconut fell from 62,410 tons valued at US$ 36.8 million in 2006 to 47,097 tons valued at US$ 48.2 million in 2010. 45
Industry
Table - 6 Indonesias exports of desiccated coconut, 2006 - 2010 Year 2006 2007 2008 2009 2010 Volume (tons) 62,410 60,648 55,431 46,706 47,097 Growth (%) -2.8% -8.6% -15.7% 0.8% Value (US$ 000) 36,885 46,446 48,253 36,608 48,238 Growth (%) 25.9% 3.9% -24.1% 31.8%
Sources: Agro-industry directorate general , processed
Exports of copra have also fluctuated from 2006 to 2010. Exports peaked in 2007 at 46,919 tons valued at US$ 8.8 million. In 2008, exports fell 44.4 % but surged again 51.3% in 2009, before falling again slightly 3.7% in 2010 to 38,043 tons valued at US$ 11.4 million. Table - 7 Indonesias exports of copra, 2006 2010 Year 2006 2007 2008 2009 2010 Volume (tons) 38,363 46,919 26,110 39,517 38,043 Growth (%) 22.3% -44.4% 51.3% -3.7% Value (US$ 000) 7,016 8,821 5,149 7,733 11,451 Growth (%) 25.7% -41.6% 50.2% 48.1%
Sources: Agro-industry directorate general , processed
Imports of coconut Domestic production is more than enough to meet domestic requirement, therefore, imports of coconut are negligibly small. Imports were recorded only since 2000 in the past decade. Imports that year totaled 32,548 tons valued at US$18,000. Imports fluctuated shrinking to the lowest level at 2,764 tons valued at US$ 1.677 in 2008.
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Industry
Table - 8 Indonesias imports of coconut Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Volume (Tons) 32,548 9,298 9,911 17,840 7,648 6,687 6,905 9,915 2,764 3,867 Growth (%) -71.4 6.6 80.0 -57.1 -12.6 3.3 43.6 -72.1 39.9 Value (000 US$) 18,120 6,557 7,334 15,555 6,876 6,441 12,926 13,327 1,677 2,294 Growth (%) -63.8 11.8 112.1 -55.8 -6.3 100.7 3.1 -87.4 36.8
Imports of coconut derivatives The need to imports coconut derivatives is also small. In 2010, imports of coconut-based cooking oil totaled only 287 tons valued at US$ 221,000. In 2009, there was not even import. Table - 9 Indonesia s imports of coconut-based cooking oil, 2006 - 2010 Year 2006 2007 2008 2009 2010 Volume (tons) 105 102 185 287 Growth (%) -2,9 81,4 Value (US$ 000) 58 78 152 221 Growth (%) 34,5 94,9 -
Similarly imports of coconut flour are small and fluctuating . Imports in 2009 totaled 558 tons valued at US$ 1.3 million
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Industry
Table - 10 Indonesia s imports of coconut flour, 2006 - 2010 Year 2006 2007 2008 2009 2010 Volume (tons) 148 27 302 558 383 Growth (%) -81.8 1018.5 84.8 -31.4 Value (US$ 000) 162 87 461 1321 1805 Growth (%) -46.3 429.9 186.6 36.6
Imports of desiccated coconut fell from 410 tons in 2006 to 116 tons in 2010 as shown in the following table. Table - 11 Indonesia s imports of desiccated coconut, 2006 - 2010 Year 2006 2007 2008 2009 2010 Volume (tons) 410 263 268 244 116 Growth (%) -35,9% 1,9% -9,0% -52,5% Value (US$ 000) 513 348 499 358 178 Growth (%) -32,2% 43,4% -28,3% -50,3%
The largest imports of copra were recorded in 2007 reaching 191 tons valued at US$ 50,000 as shown in the following table. Table - 12 Indonesia s imports of copra, 2006 - 2010 Year 2006 2007 2008 2009 2010 Volume (tons) 0 191 110 55 55 Growth (%) -42.4% -50.0% 0.0% Value (US$ 000) 0 50 55 11 9 Growth (%) 10.0% -80.0% -18.2%
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Industry
Conclusion Almost all coconut plantations in Indonesia belong to small farmers with state companies and private companies having only a much small share. The countrys exports 30% of its coconut production, but exports are dominated by fresh fruits. In the past several years, the government began to slap restriction on exports of fresh coconut fruit to better guarantee supplies for local processing industries. Processing companies have complained about shortage of raw material supplies. The country has not made much headway in expanding exports of coconut and derivatives for lack of supplies of basic materials. The country has large coconut plantations but production remains small not proportion with the size of the plantations. Inefficiency and poor management keep the coconut industry commercially small. Most of the plantations are not well tended and not properly fertilized that they could not grow to reach a commercial scale under modern management. In fact many of the smallholdings are no longer productive either on being too old or poor fertilization. Replanting is needed over vast areas of the plantations.
* * Df * *
49
INDUSTRY
MULTINATIONAL PLAYERS CONTROL PESTICIDE BUSIENSS IN INDONESIA Indonesia is a big market for pesticide products. Local producers, however, have failed to take advantage of the big market as the country has continued to depend much on imports for a number of pesticide products. In 2009 the pesticide business in Indonesia was worth around Rp 7 trillion. Imports, mainly from China, both in basic materials and end products, account for one third of the market value of pesticides in the country. Pesticides that kill pests and plant diseases. Are chemicals used much in the agriculture sector in Indonesia? The types of pesticides include insecticides, fungicides, rodenticide, herbicides, acaricides and bactericides. Consumption of pesticides in the farm and plantation sectors grows in the country with the introduction of modern farming to increase productivity. No additional production capacity In the past several years, there has been no increase in the countrys production capacity for pesticides. The production capacity has remained unchanged at 148,800 tons per year since 2005 to 2009. The production capacity has not expanded as there is no incentive to boost production such as in the availability of basic materials. And producers see no guarantee for market opportunity amid sharp competition. Pesticide industry needs a lot of basic materials in upstream petrochemical materials. Supplies of basic materials are not easily available in the country as most of the materials are not yet produced locally. Producers, therefore, will have to rely on an import that makes investment not feasible and less competitive. Meanwhile, imports of finished products of pesticides are growing at more competitive prices. Currently, there are 8 big players in the industry in the country. They are multinational companies such as Syngenta of the United States, Bayer Agro, DuPont Agriculture Product, and Dow Agro Science. PT DuPont Agriculture Products Indonesia, the local unit of the US-based DuPont Agriculture has an 8% share of the pesticide market in Indonesia. Its business in the country is worth around US$ 400 million - US$ 500 million per year. PT DuPont produces insecticides, herbicides, and fungicides with four factories in Karawang, Sidoarjo, Pasuruan, and Malang.
50
Industry
Table -1 Indonesias pesticide production capacity, 2005 - 2009 Year 2005 2006 2007 2008 2009 Production capacity (tons) 148,800 148,800 148,800 148,800 148,800 Growth (%) 0 0 0 0
Sources: Industry ministry
Production stagnant The countrys production of pesticides has remained almost the same at 132,000 tons per year. The production peaked at 148,000 tons in 2005 before shrinking by around 50% in 2006. In 2007, the production almost doubled again to 130,000 tons, and up again to 132,600 tons in 2009. The slow growth in production followed the low growth of only 5% a year in demand. Table - 2 Indonesias production of pesticides, 2005 - 2009 Year 2005 2006 2007 2008 2009 Production (tons) 148,800 64,934 130,000 132,600 132,600 Growth (%) -56.4 100.2 2 0
Sources: Industry ministry
Imports growing Growing imports contribute partly to sluggish growth of the domestic pesticide industry. Imports of pesticides include in the forms of finished products and basic materials. Imports of pesticides in the past three year have increased from only 474 tons valued at US$ 3,525,000 in 2008. In 2009, imports surged to 35,391 tons valued at US$ 165 million .
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Industry
Imports grew further in the following year to 49,817 tons valued at US$ 215 million. In the first 8 months of 2011, imports already reached 36,389 tons valued at US$ 179 million. In the whole year of 2011, imports are expected to increase from 2010. Imported pesticides in the past three years include the basic materials for insecticides, insecticides, fungicides, herbicides. Rodenticide was no longer imported in the past three years. Table - 3 Indonesias imports of pesticides 2006 - 2011 Year 2006 2007 2008 2009 2010 2011* Imports (tons) 558 970 474 35,286 49,790 36,378 Growth (%) 73,8 -51,1 7344,3 41,1 -26,9 Value US$000 1,947 2,565 3,525 164,402 214,916 179,096 Growth (%) 31.7 37.4 4563.9 30.7 -16.7
Note: *) until August Sources: Central Statistic Agency (BPS), processed
Multinational players dominate market Among multinational companies having units operating in the country include Du Pont, Syngenta, Bayer, BASF, and Nufarm. Dow Chemical, Monsanto, and FMC. The companies together dominate the domestic market with a market share of 75% leaving only 25% of the market for local producers. Among the main local players is PT Petrosida Gresik. This company produces active ingredients of pesticides; liquid herbicides; solid herbicides; liquid insecticides, solid insecticides and solid fungicides. The multinational players have modern and more complete production facility making them more competitive.
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Industry
Table - 4 Producers of and market share in Indonesia 2011 Players PT Syngenta PT Bayer Crop Science PT Dow Agro Science PT Du Pont Agriculture Product Nufarm Monsanto BASF FMC Sub total Other companies Total Sources: ICN Chinas products potential competitors In addition to the multinational players, the competition in the market is sharper with the growing imports from China, which is known for high competitiveness in price. The implementation of the Asean-China Free Trade Agreement since January 2010, has resulted in an increase in imports from China with the 0% import duty. Market share (%) 18 15 8.5 8 7 6.5 6 5.5 74.5 25.5 100
* * Df * *
53
CORPORATE NEWS IN BRIEF

NALCOS ALUMINUM SMELTER PROJECT CLOSER TO IMPLEMENTATION. Indias National Aluminium Company Limited (Nalco) is closer to implementing a US$4 billion project in Kutai Timur, East Kallimantan Nalcos executive director PK Mohapatra has signed a memorandum of understanding with East Kalimantan governor Awang Faroek Ishak. Under the agreement, Nalco will build an aluminum smelter with a capacity of 500,000 tons with a supporting facility a 1,250 megawatt coal-fired power plant in Kutai Timur. The factory alumina requirement of 800,000 tons up to 1 million tons a year will still be supplied by Nalco from India. The industry ministry said Nalco is expected to utilize bauxite reserves found in abundance in West Kalimantan to produce alumina to feed the smelter. The project will be built by Nalco in cooperation with Dubai-based MEC Holdings to be completed in 2015. Nalco operates in Indonesia through its subsidiary Nalco International. MEC is a subsidiary of Trimex Group, a mineral resources company based in the United Arab Emirates. The project was planned in preparation for the governments decision banning exports of raw minerals in 2014. Nalco has been investing heavily in Indonesia over recent years. The Indian state-owned company said it invested as much as US$ 3 billion to build a power plant and aluminum smelter in South Sumatra The South Sumatra project, which started operations in 2006, can produce as much as 500,000 tons of aluminum wire each year. HYUNDAI MOBIL INDONESIA SET TO POST 75% RISE IN SALES. PT Hyundai Mobil Indonesia (HMI) hopes to chalk up a 75% increase in sales of its cars to 7,000 units this year from 4,000 units in 2010. Mukiat Sutikno, the vice president of PT HMI, said in order to reach the target the company will boost sales of its products including Hyundai i20, Grand Avega, Hyundai i10 facelift, Hyundai New Tucson limited edition, Hyundai H1 XG and Hyundai Sonata wih market targets consumers with purchasing power of Rp 100 million to Rp 200 million or higher. Sales of premium sedan car New Sonata are expected to reach 30 units per month. ISUZU READY TO LAUNCH EXPANSION WORTH US$ 14.76 MILLION. PT Isuzu Astra Motor Indonesia plans to invest US$ 14.76 million to expand its dealer chain and to produce more commercial car variants. Most or US$ 11.76 million of the fund will be used for the expansion of dealer chain and the rest for the production of more variants of commercial cars GIGA medium sized trucks in five models and 10 variants. The plan will be implemented in 2012. PT Isuzu Astra Motor Indonesia (IAMI) marketing director Supranoto Tirtodiprodjo said the company wills buold more sales outlets to increase the number to 170 units from 86 units at present. LAFARGE PLANS TO BUILD NEW CEMENT FACTORY IN NORTH SUMATRA. PT Lafarge Cement Indonesia, a local unit of the world cement giant Lafarge plans to build a cement factory in Langkat , North Sumatra with a capacity of 1.5 million tons a year. The French company, which already has a cement factory PT Semen Andalas in Aceh, will invest up to Rp 5 trillion (US$ 54
Corporate News in Brief

585 million) in the project, industry minister MS. Hidayat said. Lafarge is currently conducting feasibility study on the project, Hidayat said. Lafarge acquired PT Semen Andalas in 1994, but the factory was destroyed by tsunami in December 2004. Lafarge then built a replacement that came on line early this year in Lho Ngah in Aceh. The replacement factory with a production capacity of 1.6 million tons a year was built at a cost of US$ 300 million Andalas supplies cement for the nothern regions of Sumatra SUZUKI MOTOR TO INVEST US$ 800 MILLION FOR CAPACITY EXPANSION. Suzuki Motor Corp. said it will invest up to US$800 million to expand the production capacity of its car and motorcycle factories in Indonesia Suzuki will also increase the local content of the products of its local unit PT Indomobil Sukses International, its chairman Osamu Suzuki said in a meeting with industry minister M.S. Hidayat here. Indomobils production capacity and local content of its products will be increased by phases, Osamum said after the meeting. Indomobils chief commissioner Gunadi Sindhuwinata said the capacity expansion would be aimed at producing low cost eco cars. Gunadi said the concept of low cost eco car development has been prepared by the principal Suzuki Motor. Realization of the program , however, will depend on the government policy in developing low cost eco cars, he said. KRAKATAU STEEL TO TEAM UP WITH MCC TO BUILD IRON PLANT. State steel maker PT Krakatau Steel (KS) will team up with Metallurgical Corporation of China Ltd (MCC) CERI to build an iron plant with a blast furnace. The project to cost Rp 5.92 trillion (US$697 million) will have an annual production capacity of 1.5 million tons, said Andi Soko Setiabudi, a deputy director of the countrys largest steel maker. KS and the Chinese construction company, have signed the contract to build the project, Andi said. KS will seek a loan of around Rp 5 trillion from Chinese banks to finance the project, he said, adding the remaining fund for the cost will be put up by the company. Meanwhile, the US$ 6 billion project between KS and South Koreas Posco is still in the phase of preparing the land for the integrated steel plant in Cilegon, Banten. The land preparation alone has cost Rp 600 billion, KS president Fazwar Bujang said, adding civil work will start early next year. The first phase of construction of the factory will begin only in 2013 . ADARO ACQUIRES COAL MINER AT US$ 222.5 MILLION. PT Alam Tri Abadi, a subsidiary of PT Adaro Energy Tbk, has agreed to pay US$ 222.5 million for 75% stake owned by Elite Rich Investment Limited in PT Mustika Indah Permai. PT Mustika Indah Permai is developing a coal mine in South Sumatra. In addition, Mustika Indah Permai is a holder of mining license effective for 20 years over a 2,000 hectare concession. Adaro president Garibaldi Thohir said the acquisition is part of the companys plan to expand its coal reserves in Indonesia. Mustika Permai is only one of the targets of its acquisition. Adaro Energy hopes to increase its coal production capacity to 80 million a year.
55
Corporate News in Brief

BRI ACQUIRES BRINGIN REMITTANCE. PT Bank Rakyat Indonesia has taken full control of BRIngin Remittance Company, Hong Kong-based firm offering remittance service. BRI finance director Achmad Baequni, the finance director of the countrys second largest lender said the process of acquisition has been completed at a price of Rp 3 billion. The state bank took over BRIngin Remittance from Dana Pensiun BRI, hoping to expand remittance market in Hong Kong. BRI plans to inject more capital into the firm to allow it to open branches . Achmad Baequni said BRI will expand networks abroad linked to the computer networks of BRI and the remittance firm . BRI will also send workers to work in its remittance firms in Malaysia and middle East to help expand the networks. INTRACO HOPES TO CHALK UP 30% INCREASE IN SALES NEXT YEAR. PT Intraco Penta with core business in heavy equipment distribution, hopes to chalk up a 30% increase in sales next year from this years target of Rp 2.99 trillion (US$ 335 million). The company said it is optimistic its other business lines including financing and renting out heavy equipment would also grow. In the first nine months of the year, the company already recorded income valued at Rp 2.07 trillion or an increase of 50.6% from the same period last year. The company also recorded a strong growth in net profit to Rp 68.1 billion in the January-Sept period from Rp 45.8 billion Earlier the company said it needed US$ 200 million to acquire coal mine this year. Intracos president Petrus Halim said the company would acquire coal mine already on stream Intraco, the distributor for Volvo, Bobcat, Mahindra Tractors, and Sinotruk heavy equipment hopes the process of acquisition would be wrapped by the end of this year. The acquisition to be financed with fund to be raised from the sales of rights shares, is part of the companys expansion plan. FIRST MEDIA US$ 200 MILLION EXPANSION. PT First Media Tbk (KBVL) plans to invest up to US$ 200 million in 2012 and 2013. The investment will be for expansion of business in Wimax internet, cable TV, and video on demand (VOD). First Media chief commissioner Peter F Gontha said the fund for the expansion will be provided internally by the company and its shareholders and strategic investors. Peter said the company will build 900 units more base transceiver stations (BTS). The units will be built in various areas to strengthen its internet business networks in the Greater Jakarta area Jakarta, Bogor, Bekasi, Depok, and Tangerang and Banten. By the end of this year the company will have only 190 towers in the Greater Jakarta area, he said.. The company already secured the license to expand Wimax operation in western Sumatra, North Sumatra and Aceh.
56
ECONOMIC NEWS IN BRIEF

GOVERNMENT OFFERS 5-YEAR INCOME TAX HOLIDAY. The government has announced offer of an income tax break of at least 5 years for new investments entitled to its tax holiday incentive . Head of the Fiscal Policy Agency Bambang Permadi Sumantri said the procedure for the tax incentive is more rigid compared with the procedures for other tax facilities. Bambang said only investors in certain sectors are entitled to the tax holiday facility..The government will use reference the system used by other countries offering tax holiday. The duration of the tax holiday will nto be the same for every investor but will depend on the type of investment and profitability. The incentive is expected to attract big investors to sectors that require large capital and high technology. SYNDICATE OF 5 BANKS TO FINANCE PKT PROJECT. A five bank syndicate ked by state lender PT Bank Mandiri will provide a loan of at least Rp 4.22 trillion (US$337 million) to finance a new production unit of state fertilizer producer PT Pupuk Kalimantan Timur (PKT). PKT signed the loan agreement recently with the syndicate which also include Bank Rakyat Indonesia, Bank Central Asia and regional development banks BPD Kaltim and BPD Jawa Barat & Banten. PKT president Aas Asikin Idat said that the new factory would have an annual production capacity of 1.15 million tons of urea granule and 850,000 tons of ammonia. The project, which will cost around Rp 6.5 trillion (US$ 720 million will be the largest fertilizer factory in Southeast Asia, Aas said. Construction of the factory, which will replace the first 20-year old unit of PKT, Kaltim-1, is expected to start before the end of this year to be completed in 2014. The new factory will bring PKTs total production capacity to 3.4 million tons of urea and 2.1 million tons of ammonia. USE OF RENEWABLE ENERGY TO BE MANDATORY IN INDONESIA. The government will make mandatory the use of renewable energy to power industries in the country. Without mandatory development of renewable energy would remain in the doldrums, a government official said in between a World Renewable Energy Congress in Bali recently. Kardaya Warnika, the renewable energy and energy conservation director general, said a regulation would be issued to use renewable energy to economize on oil. Kardaya said only with regulation the target set in the government energy policy could be reached in 2025. The target is to use renewable energy that would make up 25% of energy consumption in the country in 2025. The regulation would be made effective especially in the oil and general mining sectors and in high rise buildings. A company with power consumption equivalent to 6,000 tons of oil fuel is required to use renewable energy or facing revocation of its operation license, Kardaya cited. He did not, however, say when the regulation is to be issued . GOVERNMENT RESERVES FOREST LANDS FOR RICE FIELDS. The forestry ministry has reserved a total of 200,000 hectares of forest lands for conversion into rice-fields, an official of the forestry ministry said. The lands for rice-field expansion are made available in West, Central and East Kalimantan
57
Economic News in Brief

and South Sulawesi planning director general Bambang Supijanto said. The land would be converted into irrigated rice fields and rain fed fields, Bambang said. He said if rice-fields no longer need expansion at present the lands could be reserved for use in the future. The forestry ministry has also reserved 350,000 hectares of forest lands for sugar plantations mostly or 300,000 hectares in Papua. Around 40,000 hectares of the land in Papua have been used by two companies to grow sugarcanes, Bambang said. Meanwhile, the government has announced moratorium for the use of forest lands for new oil palm plantation amid growing international criticism Indonesia has been wide criticized mainly by environmentalists accusing the country of destroying its tropical forests to provide space for expansion of oil palm plantations. LIMITS SET FOR COST RECOVERY DISCOURAGES OIL INVESTMENT. The government policy limiting operating cost recoverable in the oil explorations will discourage investment in oil exploration. The cost recovery policy would result in shortfall in oil production target , Muhammad Husein, the upstream director of state oil and gas company PT Pertamina said. The policy is tantamount to restriction on oil investment, Husein said. The government policy is confirmed in the state budget. Cost recovery is spending in oil and gas explorations, development and explorations that could be reclaimed by investors under the production sharing contract. Cost recoverable does not include bonuses and other costs not approved by the government. Earlier the government estimated const recovery will rise from US$ 12.5 billion in 2011 or US$ 13.3 billion in 2012. The increase in cost recovery will reduce state income from the oil and gas sector
***
58
APPENDICES
DIRECTORY OF PALM OIL PLANTATION COMPANIES IN INDONESIA STATE OWNED COMPANIES Head Office Address: Phone No. : Fax No.: E-mail: Management Area of Palm oil Number of plant Production PT. PERKEBUNAN NUSANTARA III Sei Sikambing PO BOX 91, Medan 20122 North Sumatera (061) 8455775, 8452244 (061) 8455177, 8468808 ptpn-iii@indosat.net.id President Commisioner : Ir. Soegiat Commisioner: Drs. Mulyohadi Sastrodarmodja, SH President Director: Drs. Akmaluddin Hasibuan 88,287 ha CPO : 10 units CPO : 399,858 tons PKO : 95,836 tons PT. PERKEBUNAN NUSANTARA IV Bah Jambi, Pematang Siantar 21121 Jl. R.A. Kartini No. 23, Medan 20152, North Sumatera (0622) 563001 s/d 5; (061) 4154666, 4519261 (0622) 563003; (061) 556511 President Commisioner : Prof. Dr. Ir. Lufti Ibrahim Nasution Commisioner : Drs. Drs. M. Djoened Ahmad, SH President Director : Ir. Dahlan Harahap 119,585 ha CPO 16 units Fractionatiion 1 unit Exspeller 4 units CPO : 365,081 ton PKO : 31,115 tons RBD Olein : 72,750 tons PT. PERKEBUNAN NUSANTARA V Jl. Rambutan 43, Pekanbaru 28294 Riau (0761) 66565 (0761) 66558 ptpn1-nad@telkom.net President Commisioner : Ir. Insyaf Malik Commisioner: Prof. DR. Muchtar Ahmad, MSc. Main Director: Ir. H. Iman Hersuroso 57,979.69 ha CPO : 12 units CPO : 439,445 tons PKO : 95,627 tons
Head Office Address: Phone No. : Fax No.: Management Area of Palm oil Number of plant Production
Head Office Address: Phone No. : Fax No.: E-mail: Management Area of Palm oil Number of plant Production
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Appendices
Table - Contd Head Office Address: Phone No. : Fax No.: E-mail: Web Site: Management Area of Palm oil Number of plant Production PT. PERKEBUNAN NUSANTARA VII Jl. Teuku Umar No. 300, Kedaton Bandar Lampung 35141 Lampung (0721) 702233 (0721) 702775 ti-ptp@indo.net.id http://www.ptpn7.co.id/ President Commisioner : Ir. Subagyono Darmowiyono Commisioner: Prof. DR. Ir. M. Saleh Ali, MSc. President Director: Ir. Amri Siregar 31.874 ha CPO: 7 units PKO: 1 unit CPO : 163.762 ton Inti sawit : 42.669 ton PKO : 2.893 ton
PT. PERKEBUNAN NUSANTARA XIII Jl. Sultan Abdulrahman No. 11, Pontianak - 78116, Head Office Address: West Kalimantan Phone No. : (0561) 749367, 749368 Fax No.: (0561) 762230 E-mail: ptpn13@kalimantan.ptpn13.com Web Site: www.ptpn13.com President Commisioner : Ir. Ahmad Manggabarani Management President Director: Sukarman Hartoyo, SE Area of Palm oil 43,988.60 ha Number of plant CPO/PKO : 5 units Production CPO : 216,613 tons PKO : 47,118 tons PT. PERKEBUNAN NUSANTARA XIV Head Office Address: Jl. Urip Sumohardjo Km. 4, Ujung Pandang - 90232 Ujung Pandang, Southeast Sulawesi (0411) 444810 Phone No. : Fax No.: (0411) 444840 E-mail: ptpnxiv@indosat.net.id Web Site: www.ptpnxiv.com President Commisioner : DR. Ir. Djoko Budianto Management Commisioner: Dr. Ir. Iskandar A. Nuhung President Director: Ir. H. M. Hasan Sayuti Area of Palm oil 16.228 ha Number of plant CPO : 1 unit PKO : 1 unit Production CPO : 27,500 tons Palm kernel : 2,652 tons Flour kernel (PKC) : 1,420 tons
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Appendices
Table - contd
PRIVATE COMPANIES Head Office Address: Phone No. : Fax No.: E-mail: Management Area of Palm oil Number of plant Production PT ASTRA AGRO LESTARI Tbk. Jl. Puloayang Raya Blok OR I, Kawasan Industri Pulogadung, Jakarta 13930, Indonesia Phone : (62-21) 461-6555 (Hunting), Fax : (62-21) 461-6655, 89 investor@astra-agro.co.id President Commisioner : Michael Dharmawan Ruslim Commisioner: Prijono Sugiarto President Director: Maruli Gultom 170,000 ha CPO : 16 unit CPO : 1,000,000 tons
PT BAKRIE SUMATERA PLANTATIONS Tbk. Head Office Address: Wisma Bakrie Lt 4, Jl HR Rasuna Said kav B-1, Jakarta 12920 Phone No. : (021) 5250212 ext 520 Fax No.: (021) 5200411 E-mail: kisaran@bakriesumatera.com Management President Commisioner : Soedjai Kartasasmita President Director: Ambono Janurianto Area of Palm oil 32,712 ha Head Office Address: Web Site: Management Area of Palm oil Number of plant Production PT SMART Tbk. (Sinar Mas Group) Plaza BII Tower II 28th-31st floor, Jl. MH Thamrin No. 51 Jakarta 10350 Indonesia www.smart-tbk.com President Commisioner : Franky Cesman Widjaja Commisioner: Arthur Tahya President Director: Muktar Widjaja 102,556 ha CPO : 12 units PKO : 2 units CPO : 2,9 million tons
PT. PP LONDON SUMATERA PLANTATION Tbk. (LONSUM) Head Office Address: World Trade Center (WTC), Jl Jend. Sudirman kav 29-31, Jakarta, Indonesia Phone No. : (021) 5206610 Fax No.: (021) 5206611 Web Site: www.londonsumatra.com Management President Commisioner : Mark Howard Commisioner: Rachmat Soebiapradja President Director: Glenn M.S. Yusuf Area of Palm oil 41,870 ha Number of plant CPO : 10 units Production CPO : 220 tons TBS per hour
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Appendices
Table - contd
DIRECTORY OF SEED PALM OIL COMPANIES IN INDONESIA Address : Phone No. : Fax No.: E-mail: Address : Phone No.: Fax No.: E-mail: Address : Product : Phone No.: Fax No.: Address : Product : Phone No.: Fax No.: PUSAT PENELITIAN KELAPA SAWIT Jl. Brgjen. Katamso No. 51 Medan 20158 Sumatera Utara 061 - 7862477 Fax : 061 - 7862488 iopri@idola.net.id PT SOCFIN INDONESIA Jl. Yos Sudarso No. 106 Medan 20115 Sumatera Utara PO BOX 1254 Medan 20001 061 6616066 061 6614390 e-mail : socfindo@indosat.net.id PT LONDON SUMATERA INDONESIA TBK Jl. Jend. Achmad Yani No. 2 Medan PO BOX 1154 Medan 20011 Rubber 061 - 4532300 061 - 4513596, 0622 - 96493 PT DAMI MAS SEJAHTERA Gedung BII Menara 2 Lt 30 Jl. Thamrin no. 51 Jakarta 10350 Rubber 021 3925777, 3181388 021 - 3925779 81 Jl. Teuku Umar No. 19 Pekanbaru 28112 - Riau Desa Berigin Lestari Sungai Tapung Kampar Riau 0761 32986 0761 31417 PT. TUNGGAL YUNUS ESTATE Uniplaza Building 6th Floor, East Tower Jl. Letjen. Haryono MT No. A-1 Medan 20231 061 4532388 061 4532095 Jl. Sukarno Hatta No. 9 Pekanbaru 28000 Riau 0761 571228 0761 571520
Phone No.: Fax No.: Address : Phone No.: Fax No.: Phone No.: Fax No.:
62
Appendices
Table - cont
Address : Product : Phone No.: Fax No.: Address : Fax No.: Contact person : Address : Fax No.: PT. BINA SAWIT MAKMUR Jl. Basuki Rahmat 788 Palembang 30127 Sumatera Selatan Rubber Rss 1 SIR 10, 20 3CV 0711 - 817951, 811767, 814023, 814025, 811921 0711 - 811585, 813188 PT TANIA SELATAN Jl. Pantai Mutiara Blok B No. 7 Jakarta 14450 Palembang 0711 717738 PT. BAKTI TANI NUSANTARA Jl. Ampera No. 97 Pulau Kundur Tanjung Balai Karimun Kepulauan Riau 0777 - 326437 Tunas Type 6/G Batam Center - Kep. Ri Jl. Engku Putri, Kawasan Industri
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APPENDICES
1. ECONOMIC INDICATORS
Indonesias inflation by Group of Commodities, 2005 2010*) (2002=100)

Year/ Month Food Stuff 13.91 12.94 11.26 16.35 3.88 15,64 2,21 -0,33 -1,94 -1,90 -0,28 1,27 1,84 1,07 -0,09 -0,35 0,59 Prepared Food, Beverage Cigarette &Tobacco 13.71 6.36 6.41 12.53 7.81 6,96 0,49 0,47 0,32 0,20 0,22 0,41 0,42 0,46 0,48 0,26 0,20 Housing, Water, Electricity Gas and Fuel 13.94 4.83 4.88 10.92 1.83 4,08 0,48 0,40 0,29 0,21 0,25 0,30 0,19 0,33 0,26 0,20 0,22 Clothing Medical Care 6.13 5.87 4.31 7.96 3.89 2,19 0,47 0,69 0,38 0,38 0,50 0,41 0,27 0,26 0,22 0,26 0,17 Education, Recreation & Sports 8.24 8.13 8.83 6.66 3.89 3,29 0,42 0,13 0,17 0,08 0,03 0,18 0,97 2,14 0,54 0,30 0,04 Transport, Comm. & Financial Services 44.75 1.02 1.25 7.49 -3.67 2,69 0,31 0,15 0,08 0,07 0,14 0,15 0,17 0,80 0,18 -0,41 0,13 Gene ral
2005 2006 2007 2008 2009 2010 2011 Jan. Feb. March April May June July August Sept. Oct. Nov. Dec.
6.92 6.84 8.42 7.33 6.00 6,51 0,15 -0,08 0,38 0,75 0,64 0,57 0,62 3,07 0,97 -1,26 1,36
17.11 6.60 6.59 11.06 2.78 6,96 0,89 0,13 -0,32 -0,31 0,12 0,55 0,67 0,93 0,27 -0,12 0,34
Source: BPS (Central Bureau of Statistic)
Monthly Indonesia's Consumers Price Indices and Inflations, 2007-2010, April (2002 = 100)
Months January February March April May June July August Sept. Oct. Nov. Dec. Inflation rate 2007 Inflations 1.04 0.62 0.24 -0.16 0.10 0.23 0.72 0.75 0.80 0.79 0.18 1.10 6.59 2008 Inflations 1.77 0.65 0.95 0.57 1.41 2.46 1.37 0.51
0,97 0,45
2009 Inflations -0.07 0.21

0,22
2010 Inflations 0,84

0,30 -0,14 0,15
2011 Inflations 0,89 0,13

-0,32 -0,31 0,12 0,55 0,67 0,93 0,27 -0,12 0,34
-0.31 0.04
0.11 0.45 0.56
0.29 0,97
1,57 0,76
1.05
0.19
0,44
0,06
0.12 -0.04
11.06
-0.03 0.33
2.78
0,60 0,92
6,96
64
Appendices
2. EXPORT AND IMPORT
Indonesia's Export Development, 2008 2011
FOB value (US$ million) Descriptions Total Exports Oil & Gas Crude Oil Oil Products Gas Non Oil and Gas Agriculture Manufacturing Mining & others 2008 136.761 28.958 12.418 3.379 13.160 107.803 4.937 88.044 14.821 2009 116.490 19.018 7.820 2.261 8.937 97.472 4.363 73.430 19.679 2010 157.779 28.039 10.402 3.967 13.669 129.739 4.363 73.430 19.679 Jan July 2011
116.041 23.383 7.575 2.864 12.944 92.657 3.019 70.550 19.088
% Growth Jan July 2011 over 2010

36,51 55,42 41,85 21,78 76,03 32,44 10,22 34,88 27,98
Indonesia's Import Development, 2008 2011

CIF value (US$ million)
Descriptions 2008 2009 2010 Jan - July 2011*)
99.643,9 23.039,1 6.285,5 15.934,0 819,6 76.604,8 7.554,0 74.912,8 17.177,1
% Growth Jan - July 2011 over 2010

31,87 51,26 30,75 59,39 91,85 26,97 35,08 36,00 15,38
Total Import Oil & Gas Crude Oil Oil Products Gas Non Oil and Gas Consumption Goods Raw Materials/ Auxiliary Goods Capital Goods
129.197,3 30.552,9 10.061,5 20.230,8 260,6 98.644,4 8.303,7 99.492,7 21.400,9
96.855,9 18.988,6 7.362,2 11.137,3 489,1 77.867,3 6.756,4 69.654,8 20.444,7
135.663,3 27.412,7 8.531,3 18.018,2 863,2 108.250,6 9.991,6 98.755,1 26.916,6
* * *
65
Appendices
3. GROSS DOMESTIC PRODUCT The Value of Gross Domestic Product By Industrial Origin At Current Price and At Constant Price 2000
(Trillion Rupiahs)
Industrial origin Agriculture, Livestock, Forestry and Fishery Mining and Quarrying Manufacturing Industry Electricity, Gas and Water Supply Construction Trade, Hotel, and Restaurant Transport and Communication Financial, Ownership & Business Services Services GDP GDP without oil and gas
2008
At Constant Price 2000 2009 2010 Qtr III 2011 284.3 296.4 304.4 85,6 180.0 569.5 17.1 140.2 367.9 191.7 208.8 205.4 2,177.0 2,035.1 186.4 595.3 18.1 150.1 400.6 217.4 220.6 217.8 2,310.7 2,269.5 47,8 160,9 4,8 40,7 113,0 61,0 59,5 59,2 632,5 596,8
172.3 557.8 15.0 130.8 363.3 166.1 198.8 193.7 2,082.1 1,939,3
The Growth of GDP by Type of Expenditure (Percentage) Qtr III 2011 2010 over Qtr III 2010 4.6 4,8 0.3 2,5 8.5 14.9 17.3 6.1 7,1 18,5 14,2 6,5
Type of Expenditure
Private Consumption Expenditure Government Consumption Expend. Gross Domestic Fixed Capt. Formation Export of goods and services Import of goods & services GDP
2008 5.3 10.4 11.7 9.5 10.0 6.1
2009 4.9 15.7 3.3 -9.7 -15.0 4.5
*) January December 2010
* * *
66
Appendices
4. OIL PRICE AND FOREIGN EXCHANGE
OIL PRICES
ITEM Market Latest Date Price 1 month ago 3 months Ago One year Ago CRUDE OIL PRICE (US$/Barrel) - Sumatran Light 1) Tokyo 07/29/2011 115.05 116.79 - Arabian Light 2) Europe 07/29/2011 107.36 107.58 - Arabian Heavy 2) Europe 07/29/2011 101.91 102.33 - Brent 2) Europe 07/29/2011 111.97 112.59 - W. Texas 2) 07/29/2011 101.38 103.19 REFINED PRODUCT (US$/Gallon) - Fuel Oil 2) New York 07/29/2011 . 3565 .3879 - Gasoline, New York 07/29/2011 . 3833 .3867 Premium 3) Sources: 1) FEER - Telerate, 2) AWSJ- Dow Jones International Petroleum Report, 3) AWSJ - Oil Buyer Guide
115.58 111.07 106.72 114.59 104.64 .3650 .3931 115.58
82.25 81.25 78.75 82.90 75.79
.3055 .2795
FOREIGN EXCHANGE AND GOLD PRICE IN JAKARTA

ITEM -FOREIGN EXCHANGE (RUPIAH) US$ Buying Selling Pound. Aust. $ Sin. $ Mal. $ Hk. $ Yen Euro Today 07-29-2011 8.465 8.551 13.828 13.971 9.287 9.384 7.028 7.100 2.862 2.894 1.086 1.097 108.98 110.12 12.099 12.223 1 month ago 8.554 8.640 13.764 13.905 9.169 9.270 6.948 7.020 2.830 2.861 1.099 1.110 106.15 107.27 12.399 12.524 3 months ago 8.494 8.580 14.037 14.181 9.114 9.210 6.892 6.964 2.821 2.853 1.091 1.103 104.67 105.76 12.215 12.341 473 .000 One year Ago 10.010 10.110 16.265 16.433 8.422 8.507 6.942 7.018 2.841 2.872 1.291 1.304 107.94 109.06 14.317 14.461 377.000
GOLD PRICE (RP/GRAM) - Gold 24 carat 473 .000 473 .000 AVERAGE INTEREST RATE - JIBOR a. Over night (O/N) 6.2 6.2 b. 1 month 6.9 6.9 - BI Rate 1 month 6.75 6.75 - SBI (Primary market) 1 month 6.50 6.50 Notes : SBI = Bank Indonesia Certificates, SBPU = Money Market Securities JIBOR = (Jakarta Interbank Offered Rate) n.a. = Data not available Source: Bank Indonesia/Data Consult * * *
6.2 6.9 6.75 6.50
6.2 6.4 6.50 6.15
67
Appendices
5. THE INDONESIAN ECONOMIC TRENDS
Items 1. The growth rate of GDP (% p.a.) - GDP per capita (US$) - GNP per capita (US$) 2. Total export (US$ bill) Total increase (%) Non-oil/gas(US$ billion) Non-oil Increase (%) 3. Total import (US$ bill) Total increase (%) Non-oil/gas(US$ billion) Non-oil increase (%) 4. Current account (US$ bill) 5. Reserve assets (US$ bill) (End of the year) 6. Total money supply (Rp trill.) Increase in 12 months (%) 7. Bank credit (Rp trill.) Increase in 12 months(%) 8. Comm. bank deposit (Rp trill.) Increase in 12 months(%) 9. Average interest rate (% p.a.) a. 3 month time deposit in Rupiah -State bank -Private bank b. Short-term credit -State bank -Private bank 10. Inflation rate, % p.a -Inflation Feb 2011 2007r) 6.3 1.946 1.700 113.9*) 13.0 91.9 15.5 74.4*) 21.8 52.5 24.7 11.0 56.9 2008r) 5.5
2.269 2.189
2009r) 4.5
2.590 2.499
2010p) 6.0 2.750 2.600 128.0*) 11.0 102.4 10.2 95.3 14.9 75.3 30.2 10.1 *) 66.1 *)
2011p) 6.5 2.750 2.600 158.0*) 11.0 29.3 10.2 95.3 14.9 75.3 30.2 8.14 *) 105.2*)
137.0*)
19.0 107.8 17.2 128.1 41.1 98.3 42.2 10.1 51.6
116.1*)
14.0 97.5 21.1 96.8 25.0 77.9 21.0 10.1 66.1
450.0 24.7 953.2 13.2 1.466.3 12.9
456.7 1.5 980.2*) 14.4 1.685.4 14.9
515.8 12.9 980.2*) 14.4 1.914.7 13.6
545.4*) 5.7 980.2*) 14.4 2.006.8 4.8
525.8*) 5.7 1.783*) 14.4 2.006.8 4.8
7.33 7.64 8.41 11.5
10.47 11.65 11.4 9.00 11.06
7.34 7.75 8.3 10.4 2.78
6.48 6.98 7.6 10.3 6,96
6.73 7.06 6.5 6.8 6,96
6.59
0,92
237.2
0,13
237.2
11. Population (million peoples) 222.1 226.2 226.2 Notes : r) Revised figures *) January March 2011 e) Estimate by Data Consult p) Projection revision figures n.a. = data not available Source: Bank Indonesia, Central Bureau of Statistic and Data Consult
* * * 68
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ISSN 0853-2086

INDONESIAN COMMERCIAL NEWSLETTER

MARKET INTELLIGENCE REPORT ON PALM OIL INDUSTRY IN INDONESIA

Indonesian Commercial Newsletter

Indonesian Commercial Newsletter - July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter - July 2011

PR 2,356,895 2,549,572 2,752,172 2,881,898 3,013,973 3,314,663

Total 5,453,817 6,594,914 6,766,836 7,363,847 7,508,023 7,824,623

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

PR 4,500,769 5,783,088 6,358,389 6,923,042 7,247,979 7,774,036

Total 11,861,615 17,350,848 17,664,725 18.100.000 19.440.291 21.000.000

Indonesian Commercial Newsletter July 2011

Sources : ICN processed Note : * estimate

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Source: Asian Agri

PT. BW Plantation Tbk

N.a Rp65 billion

Indonesian Commercial Newsletter July 2011

PT. Wilmar PT. Jaya Agra Wattie Tbk

Kalimantan South Kalimantan

Rp125 billion Rp300 billion Rp936.97 billion Rp300 billion

2013 2013 2013 2013

PMDN PMA PMA

N.a South Kalimantan Kalimantan

US$ 350 million

Sources : ICN processed

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

3,594 727 534 378

2,201,215 1,125,189 1,940,162 1,670,808

Sources: ICN processed Note : * per semester I

Indonesian Commercial Newsletter July 2011

Sources: ICN process Note * July

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Perda No. 6/2004

Indonesian Commercial Newsletter July 2011

District administrations . of Langkat, and Asahan, North Sumatra

Sources: Data Consult processed

Sources: ICN processed

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Indonesian Commercial Newsletter July 2011

Rubber husk Mattress Geo textile Briquette

dust Coco peat Compost Handicraft Flour

Handicraft Roof tile/ roof Hardboard Electric insulator Furfural

Indonesian Commercial Newsletter July 2011

Sources: Plantation directorate general Note: *) Provisional figure **) Estimate

545.4) 5.7 980.2) 14.4 2.006.8 4.8