Jakarta, Sept 4 - Indonesia plans to build three new sugar mills at a total cost of $445 million, a minister said on Friday, a move which would improve productivity in a sector where many of the facilities are old and inefficient.
The mills are expected to come on stream as early as 2011, with each having the capacity to crush 10,000 tonnes of sugar cane a day, State Enterprises Minister Sofyan Djalil said.
The source of the funding is still unclear, Djalil said, adding that state-owned sugar refiners could either receive government funds from the state budget or seek government-guaranteed loans from the banking sector.
Djalil said that state-run sugar mills are mostly too old and as a result their productivity is low.
State-run mills now produce around eight tonnes of white sugar out of 100 tonnes of sugar cane, compared to more than ten tonnes of white sugar per 100 tonnes of sugar cane at the private mills.
Indonesia was traditionally one of Asia's biggest buyers of the sweetener, but is scaling back imports of white sugar for household consumption since domestic output exceeds consumption.
But Southeast Asia's biggest economy is currently facing difficulties in containing rising sugar prices as distributors, who control sugar stocks, factor in global prices in their selling prices.