On paper, it looks simple and easy. But the actual execution is something else. Apart from the need for a detailed roadmap to guide the work plan – how to achieve it, evaluation, outcome – what is equally important is a detailed division of work to ensure firm and consistent execution in the field as well as rewards and punishments. The problem is field implementation has always presented the biggest challenge to most government policies. Good policies but chaotic execution. As a result, the target is missed.
What are some of the issues identified so far? First, the government tends to favor BUMN – in this case PTPN III – by downplaying the role of the private sector. The target to achieve sugar self-sufficiency mostly rests on PTPN III. To achieve this, PTPN III must prepare and submit a roadmap, including an investment plan, to the Coordinating Economic Minister, Industry Minister, Agriculture Minister, SOE Minister and head of the National Food Agency. It also reports on the implementation to said ministries/agencies. Surprisingly, the target given to PTPN III was less ambitious: sugarcane productivity of 87 tons/hectare, expansion of cultivation land 179,000 hectares, and yield increase 8.05 percent. So, whose task is it to expand the area of sugarcane plantations by 521,000 hectares, increase productivity by 92 tons/hectare, and yield by 11.2 percent?
To this end, PTPN III can establish commercial cooperation with other business entities, including a joint venture, by selling off 49 percent of its shares. Interestingly, PTPN III is given facilities in the form of import allocation of white crystal sugar and/or raw sugar on an as-needed basis. Many suspect this is a “modus operandi” to legalize sugar imports. The question is whether the other business partners will also be given the same import facilities?
Like it or not, the role of the private sector in the sugar industry has become increasingly dominant. In the consumption sugar sector, privately-held sugar companies have since 2019 overtaken state-owned sugar mills in terms of size of harvested area, sugarcane and sugar production, productivity and milling capacity. In fact, in the refined sugar sector, all the 11 players are private firms. Denying the role of the private sector is like burying one’s head in the sand. While the Industry is open for private sector participation, the role and facilitation by ministries/ agencies are not mentioned at all.
Second, the 110.1 million tons sugarcane production target by 2030 is based on the projected sugarcane harvest at plantations owned by PTPN III – which has established a state-owned sugar processing holding company called SugarCo (officially named PT Sinergi Gula Nusantara) –which total 670,561 hectares. Currently, PTPN III’s total sugarcane fields only cover 180,560 hectares. The question is, where will the additional 490,001 hectares come from? Hasn’t the sugarcane plantation area owned by state-owned sugar factories continued to shrink (by 53,247 hectares in the period between 2016-21, of which 48,763 hectares are in Java. Isn’t it true that with the various policies to increase sugarcane harvest enacted so far have yet to produce any satisfactory results? Without certainty in terms of land, the target will be missed.
Third, the 2030 target is based on the assumptions of PTPN III’s sugar content (rendemen) of 9.2 percent and sugarcane productivity of 92.6 tons/hectare. Currently, it stands at only 7 percent and 73.7 tons per hectare, respectively. How can they be increased? Will there be any new technological breakthroughs, in terms of seeds, replanting, special fertilizers or other cultivation techniques? What is the relationship between sugar companies and sugarcane farmers? Will there be any incentives for sugarcane farmers in the form of cheap loans, while they wait for the harvest – which can take up to 10-12 months? Without any certainty, the target will be missed again.
Beyond that, the most important thing is the coherence and consistency of government policies. As we all know, the sugar Industry is over-regulated. There is no other commodity that is regulated so rigidly, with a plethora of rules at various levels, than the sugar Industry. Ironically, government policies are often pragmatic, inconsistent and prone to abrupt changes. Worse, these changes seem to be dictated by other parties who have certain vested interests. Coordination among ministries/agencies is not effective. Each has their own roadmap. Sectoral ego/silo mentality is still prevalent. Exemplifying this lack of coordination is the absence of accurate and unified data so far, both on production and consumption level of consumption and industrial sugar.