Jakarta, IO – The government, since Megawati administration in 2001, has pledged to achieve sugar self-sufficiency but after two presidents (and four administrations) it appears that this remains a distant dream. In the intervening years, annual domestic sugar production has been stuck at between 2.1 to 2.4 million tons while the demand for both consumption and industrial sugar has hit 7 million tons.
The current target is spelled out in the 18-article draft presidential regulation (Perpres) on sugar self-sufficiency. It became a hot discussion topic among sugarcane farmers at the end of 2022. They believed the Perpres is a “trick” to smoothen the path for imports, especially by state-owned sugar factories accused of acting like a monopoly. Thus, they rejected it. Meanwhile, private sugar players are questioning the rationale and urgency of the Perpres. What’s more, it is seen as unjustly favoring the state-owned sugar companies. This applies to both white crystal sugar (consumption sugar) and refined sugar for industrial use. The role of the private sector seems to be overlooked.
In a nutshell, the draft aims to accelerate sugar self-sufficiency – by 2028 for consumption sugar and by 2030 for industrial sugar. The ultimate goal is to sustain food security and guarantee raw and auxiliary material for the Industry (in particular food and beverages). The responsibility will fall on the shoulders of relevant ministries/ agencies, regional governments, state-owned enterprises (BUMN), region-owned enterprises (BUMD) and/or the private sector, according to their respective duties, functions and authorities. In other words, it gives a detailed breakdown of “who does what.”
In addition to coordinating and evaluating implementation, the Coordinating Economic Minister is tasked with determining steps to overcome any obstacles that may emerge. The Agriculture Minister is mandated with guiding and assisting sugarcane farmers to boost production and improve productivity, as well as ensuring the quality of milled sugarcane, through provision of seeds and fertilizer, replanting, production facilities, and funding/financing access.
In addition to providing facilities and budgeting support for ministries/agencies, the Finance Minister is directed to provide necessary tax and customs incentives, as well as support for finalizing the status conversion of state property (BMN) into state capital participation (PMN) to state-owned plantation holding company PT Perkebunan Nusantara (PTPN) III. The Public Works and Housing Minister is expected to build support infrastructure in the sugarcane plantation area, while the Investment Minister/head of Investment Coordinating Board (BKPM) is to assist with the business license and investment facilitation and promotion.
Meanwhile, the Environment and Forestry Minister is in charge of approving the land conversion permit and support for a number of sugarcane plantations, through the social forestry and agroforestry schemes. The Agrarian and Spatial Planning Minister/head of National Land Agency (BPN) is tasked with adjusting the spatial layout for sugarcane plantations and/or sugar factories.
The Industry Minister is responsible for recommending the sugar import quota for the industry, spurring productivity of sugar factories, establishing and refining policies related to facilities to obtain raw materials for the construction of new sugar factories, revitalizing sugar factories and sugarcane plantations as well as expanding cultivation land. The Trade Minister’s part is to issue permits for sugar imports. The SOE Minister is to foster and supervise collaboration among BUMNs, and the National Food Agency is directed to determine the allocation for the imports of consumption sugar. Finally, governors and mayors/regents have the duty to support the issuance of permits for sugarcane plantations and sugar factories, adjust spatial plans, and provide technical guidance to sugarcane farmers.
Sugar self-sufficiency is to be achieved by boosting productivity up to 93 tons per hectare, through improved nurseries, plant maintenance, harvesting and transportation. The size of sugarcane plantation is to be expanded to 700,000 hectares from plantation land, through social forestry and agroforestry, and land owned by smallholder farmers. Then, to increase the efficiency, utilization and capacity of the sugar factories to 11.2 percent. Finally, to improve the welfare of sugarcane farmers. If this plan works, it is projected that 4.7 million tons of consumption sugar can be produced in 2028, rising to 8.89 million tons in 2030. By this estimate, the nationwide demand for consumption and industrial sugar can be met.