Plantation Holding Company to Sell Rp 10 Trillion of Bonds Next Year

The planned holding company for Indonesia’s state plantation firms will sell Rp 10 trillion ($1.1 billion) worth of bonds next year to finance expansion, the company’s chief-to-be said on Thursday.

The government will turn Perkebunan Nusantara (PTPN) III, one of the state plantation firms, into a holding company for all the others. Its president director, Megananda Daryono, announced the bond offering.

Danareksa Sekuritas has been appointed to help arrange the debt sale, said Megananda, a former deputy minister of state enterprises.

PTPN III will put some of the proceeds from the sale toward the construction of an oleochemical plant in Semangke, North Sumatra, and a sugar plant in Banyuwangi, East Java.

“The groundbreaking for the plants will start this year and they will start operations next year,” Megananda said.

The company needs Rp 2 trillion for the oleochemical plant and Rp 1.4 trillion for the sugar plant. The latter will sit on 10,000 hectares of land in Banyuwangi.

Officials hope the sugar plant will help the country deliver on its target of 5.7 million tons of sugar production in 2014.

State plantation companies PTPN III, PTPN XI and PTPN XII will establish a joint venture to build the facility.

Some domestic analysts say the target for 2014 is unrealistic because too many Indonesian sugar plants use outdated technology, which slows production.

Muhamad Zamkhani, an official at the State Enterprises Ministry, said early last month that sugar production was forecast to reach 2.15 million tons in 2013 and 2.32 million tons in 2014. That would be much lower than the 5.7 million tons the country needs to become self-sufficient in the commodity.

Demand from the local food and beverage industry has risen in line with population growth, and sugar consumption is expected to increase accordingly in the coming years.

Indonesia’s rapidly expanding economy, which the government has forecast to grow by 6.5 percent this year, the same as 2011, will further increase demand for sugar, analysts have said.

Indonesia’s plantation holding company will group 15 plantation companies and also Rajawali Nusantara Indonesia, a state commodity trading company.

The 15 PTPNs are involved in various plantation sectors, including rubber, crude palm oil and tea.

Rajawali Nusantara Indonesia is a diversified company with interests in industrial agriculture, pharmaceutical products and commodity trading.

Investor Daily