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Double refined sugar industry growing fast.

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Sugar industry in Indonesia includes white crystal sugar (GKP) industry and double refined sugar industry. Double refined sugar is used for industry. In Indonesia, double refined sugar is allowed only to be used by industry. It is not allowed to be sold in open market for use by households which are the market target of refined sugar or white crystal sugar.

Double refined sugar is raw sugar after being processed or refined that it has high quality with almost zero content of dust and sulfur (SO2). Double refined sugar highly safe for consumption, a quality required by food and beverage as well as pharmaceutical industries. It is also very much safe for human direct consumption.

Most white crystal sugar (GKP) factories are owned by state companies (BUMN) but they have been too old. Double refined sugar factories are mostly owned by private companies using imported raw sugar as feedstock.

Until 1996, double refined sugar had not yet produced in the country. The material, therefore, is supplied entirely through imports for local industries. White sugar production is also not yet enough to meet domestic requirement. The first producer of double refined sugar in the country is PT. Angel Products which started operation in 1996.

Producers of double refined sugar has often faced problem in securing the basic material as imports of raw sugar is controlled by the government. In addition, there has been illegal trade of double refined sugar which enter the open market of white crystal sugar. The offender of the regulation banning distribution of double refined sugar to open market could face sanction in the form of cancellation of its license to import double refined sugar.

In September 2013, there were indications of illegal sales of double refined sugar in open market in five regions. Five companies were suspected of being responsible for the violation of the regulation. The brands found in the market included DSI, a product of PT Duta Segar International, BMM of PT Berkah Manis Makmur, Inti Manis, of PT Permata Dunia Sukses Utama, SUJ of PT Sentra Usahatama Jaya and Bola Manis of PT Makassar Tene.

The sales of double refined sugar in the open market caused marketing problem faced by the producers of white crystal sugar or household consumption sugar. The illegal practice was attributed to license to import double refined sugar being larger than quota. Based on data at the Indonesian Sugar Council (DGI), consumption of double refined sugar for food and beverage industry in 2013 is estimated at 2.64 million tons, and the production capacity of local double refined sugar industry is around 3.8 million tons.

The government, through the Capital Investment Coordinating Board (BKPM) still issues license to establish new companies to import double refined sugar until 2017. Circulation of double refined sugar, therefore, would increase still although even now the capacity already exceeds the domestic requirement.

Producers and Production Capacity

Indonesia produces raw sugar and double refined sugar.

Raw sugar is a sugar feedstock produced from sugarcane or beet. The process of production begins from the milling of sugarcane/beet to turn out sap to be followed with evaporation to turn out raw sugar in red crystals.

Double refined sugar is a product from further processing of raw sugar through process of defecation that could not be used for human consumption before being further processing. The process of production begins with dilution of raw sugar to be followed with evaporation to turn out centrifugal crystals followed with the process of carbonization to turn out white crystal sugar (Refined sugar).

Cane sugar is sugar produced from sugarcane. The process of production begins with the milling of canes to turn out sap, to be followed with the process of evaporation to turn out centrifugal crystals and process of carbonization/sulfite treatment to turn out granulated or refined sugar.

The country's double refined sugar industry has grown fast. Double refined sugar was produced for the first time in 1996 by PT. Angels Products (PT. AP). Now, according to the Association of Double Refined Sugar Companies (AGRI), there are 8 producers of double refined sugar with a total production capacity of 3.8 million tons per year. The factories operates at 70% of their total capacity.

PT. Angels Products (PT. AP), formerly named PT. Bernas was established in 1996 as the only producer of double refined sugar in Indonesia. Its factory is located in Serang, Banten. Currently PT AP has a total production capacity of 500,000 tons per year.

PT Jawamanis Rafinasi (PT. JR) was established in 2002 in Cilegon, Banten, now having a production capacity of 540,000 tons per year.

In 2010, PT. JP was acquired by Wilmar Internationalat a price of US$ 50 million. Wilmar International is a subsidiary of the Singapore based Wilmar Group which have business units in CPO industry, plantation, etc. Earlier the Wilmar Group already acquired the world's 5th largest sugar factory, Sucrogen, in Australia at a price of US$ 1.5 billion.

In order to expand its sugar business, Wilmar had also acquired Windsor & Brook Trading, a sugar trading company based in Singapore. The Wilmar Group plans to build 200,000 hectares of sugar plantations in Papua.

The Wilmar Group also acquired a producer of double refined sugar, PT Duta Sugar International (DSI), which is located in Cilegon, Banten at a price of US$ 105 million. Currently DSI has a production capacity of 800,000 tons per year. Soon, DSI would expand its production capacity to 1.04 million tons per year. PT Sentra Usahatama Jaya (PT. SUJ) was established in 2001 in Serang, Banten as a domestic investment (PMDN) company. It started operation with a production capacity of 750 tons of double refined sugar per day or 270,000 tons per year.

In 2003, with Quantum Trade Co., Ltd. joined as a new shareholder, the status of the company was changed into foreign investment (PMA) company. Its production capacity continued to rise to reach 600,000 tons per year.

The three companies--PT AP, PT JR and PT SUJ formed the embryo of the Indonesian Association of Double Refined Sugar (AGRI).

PT Permata Dunia Sukses Utama started operation in 2005 in Banten with a production capacity of 400,000 tons per year. Other producers of double refined sugar followed such as PT Dharmapala Usaha Sukses in Cilacap withj a capacity of 250,000 tons per year and PT Duta Sugar International di Banten.

PT Sugar Labinta (PT. SL) with a production capacity of 250.000 tons per year, has a factory in Lampung supplying double refined sugar production mainly to food and beverage, and pharmaceutical factories. PT. SL plans to build a new sugar factory to produce white crystal sugar in East Java with a production capacity of 10,000 tons per day. The basic material will be supplied from a cooperative having a sugar plantation of 24,000 hectares. PT SL has since 2007 started producing double refined sugar using imported basic material, raw sugar. In 2010, its production of double refined sugar totaled 240,000 tons.

Double refined sugar production of PT SL is supplied to large food and beverage producers like Indomilk, Indofood, Yupi, Teh Botol Sosro, Arnotts, Kraft, Nutrifood, Mayora, Kratindaeng, and the Orang Tua Group.

PT Makassar Tene (PT. MT) in Makassar, South Sulawesi has a production capacity of 400,000 tons of double refined sugar per year. PT MT and its partners PT Permata Dunia Sukses Utama and PT Sumatera Tonggi established a joint venture company PT Permata Tene. The joint venture company plans to build a sugar factory in Probolinggo, East Java with a milling capacity of 8.000 tons of canes per day (TCD).

The factory will be built over an area of 50 hectares with an investment of Rp 1.5 triliun. It is expected to be completed and operational in 2015. Around Rp 500 billion of the fund would be used for expansion of sugarcane plantation and Rp1 trillion for the sugar factory.

The factory will also rely for sugarcane supply on the local farmers having sugar plantations totaling 17,000 hectares. The factory is to be built in Probolinggo aas the location is good for sugar plantations, according to a research center Pusat Penelitian and Pengembangan Gula Indonesia (P3GI) Pasuruan.

Production of Double Refined Sugar Grows 13.2% Per Year

The country's production of double refined sugar will also depend on the imports of raw sugar licensed by the government.

In 2008, some of the producers of double refined sugar among the members of AGRI agreed to cut capacity utilization from 100% to 80% to reduce surplus of supply of double refined sugar in the country and to prevent illegal sales of double refined sugar in open markets.

Four producers cut production from 100% to 80% of the production target of 1.7 million tons to 1.5 million tons that year. However, efforts by the four producers failed to have effect on reducing supply as two new factories came on line increasing the domestic production and supply of double refined sugar.

The country's production of double refined sugar grew strongly by 30.9% to 2 million tons in 2009, up again 3.4% to 2.1 million tons in 2010.

The production of double refined sugar in 2012 rose 5% to 2.5 million tons from 2.4 million tons in 2011. The increase followed growing demand from food and beverage industry for double refined sugar.

In 2013, the country's production of double refined sugar is forecast to reach 2.7 million tons, to meet industrial requirement that year.

Imports of Raw Sugar Cut

The government control imports of raw sugar. The importers must have a sugar factory to process the raw sugar.

The importers are required to distribute the sugar produced from the imported feedstock to eastern part of Indonesia. In order to prevent illegal sales in Java and Sumatra, the (DGI) has set up a supervisory team.

Based on data from BPS in 2011, easter Indonesia still had a shortage of around 515 million tons of consumption sugar per year. The shortage could be coped with by domestic producers.

Currently PT Makassar Tene in Makassar is the only producer of double refined sugar in eastern Indonesi with a total production of 1,800 tons per day. The production of double refined sugar of PT. Makassar Tene is entirely used to meet requirement in the region.

In 2009 and 2010, allocation of raw sugar import quota rose 66.6% and 10% to 2 million tons in 2009 and 2.26 million tons in 2010.

The import quota continued to rise to reach 2.40 million tons in 2011. However, in 2012 the quota was cut 2.08 % to 2.35 million tons.

AGRI members have a total installed capacity to process 3.2 million tons of raw sugar per year. In 2013, however, there was an idle capacity of 900,000 tons based on the imports of raw sugar.

In 2013, eight members of AGRI have received list of import quota for raw sugar. The imports total 2.26 million tons or 3.83% lower than in 2012.

Gapmmi said sugar requirement for the food and beverage industry in 2013 will reach 2.7 million tons, up 8% from 2.25 million tons in 2012.

New Investment

The government through BKPM still allows the establishment of double refined sugar importing companies until 2017.

Minimum incentives offered by the government for investment in sugarcane based sugar industry makes investors more interested in building double refined sugar factories which are cheaper. A double refined sugar factory with a capacity of 320,000 tons per year will cost around Rp600 billion and could reach a break even points in three years. Construction of a sugarcane-based sugar factory with a processing capacity of 120,000-150,000 TCD, will cost around Rp1.5 trillion and could start operation after 5 years and the break even point could be reached after 12-13 years.

There were four newly licensed double refined sugar factories in 2012. PT. Berkah Manis Makmur (PT. BMM) is a PMDN established in 2011. PT. BMM built a factory over a 12 hectare plot of land in Serang, Banten. The company started operation in October 2012 having a production capacity of 600,000 tons of double refined sugar per year.

PT. Andalan Furnindo in Bekasi has a production capacity of 400,000 tons of double refined sugar per year. This company is a subsidiary of PT. Sentra Usahatama Jaya which operates in double refined sugar industry.

PT. Medan Sugar Industry has a production capacity of 400,000 tons per year with factory in Medan, North Sumatra.

PT. Adi Karya Gemilang (PT. AKG) has a production capacity of 600 tons of double refined sugar per day or 216,000 tons per year. Its factory was built over a 4 hectare plot of land in Lampung with an investment of Rp500 billion. It started operation in July 2013. The company secured the license to import 18,000 tons of raw sugar in n2013. In addition, PT. AKG has a sugar plantation of 2,500 hectares and it is to be expanded to 18,000 hectares in 2015.

PT. AKG is a subsidiary of PT Tunas Baru Lampung Tbk (PT. TBL) which operates in crude palm oil (CPO) industry. Currently PT. TBL has 97,452 hectares of oil palm plantations in Lampung.

Double refined sugar production of PT. AKG is supplied to food and beverage factories in the Greater Jakarta area.

Producers and production capacity of double refined sugar, 2013

Producers Locations Production
 capacity (tons/y)

Duta Sugar International, Cilegon, Banten 800,000
Makassar Tene, PT Makassar, South 650,000
Sentra Usahatama Jaya, PT Cilegon, Banten 540,000
Angels Products, PT Bojonagara, Serang, 500,000
Jawa Manis Rafinasi, PT Cilegon, Banten 500,000
Permata Dunia Sukses Utama, Cilacap, Central 390,000
 PT Java
Sugar Labinta, PT Lampung 250,000
Dharmapala Usaha Sukses, Cilacap, Central 250,000
 PT Java
Total 3,880,000

Source: AGRI


Indonesia's production of double refined sugar,

Year Production Growth (%)
 (000 tons)

2008 1,550 --
2009 2,030 30.9
2010 2,100 3.4
2011 2,400 14.3
2012 2,500 4.2
Average growth 13.2

Source: AGRI


Import quota for raw sugar

Year Raw sugar import quota Growth (%)
 (million tons)

2008 1.20 --
2009 2.00 66.6
2010 2.26 10.0
2011 2.40 6.2
2012 2.35 -2.08

Source: AGRI


News investment in double refined sugar industry

Companies Locations Production

Berkah Manis Makmur, PT Serang, Banten 400,000
Andalan Furnindo, PT Bekasi 400,000
Medan Sugar Industry, PT Medan, North Sumatra 4000,000
Adikarya Gemilang, PT Lampung 216,000

Companies Start-up

Berkah Manis Makmur, PT October 2012
Andalan Furnindo, PT 2013
Medan Sugar Industry, PT 2013
Adikarya Gemilang, PT September 2013

Source: ICN, processed
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Title Annotation:INDUSTRY
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Aug 1, 2013
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