Global Business Guide Indonesia

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Jaya Agra Wattie
Mr Harijadi Soedarjo

Mr Harijadi Soedarjo, President Director


PT Jaya Agra Wattie was established in 1921 and is now a publicly listed company involved in the cultivation of rubber, CPO, coffee and tea in Indonesia. What more can you tell us about the background and corporate strategy of the company to date?

Mr Harijadi Soedarjo

We were started by James Alexander Wattie and in 1987 we changed to our current name. The company began in Surabaya as rubber, coffee and tea plantations. It was nationalised in 1967 and then we got it back a few years later in 1968 but we only got back 10-12 plantations at the time. This is when my father took over with his partners and in 1987 I joined the company. In 1997 we expanded to South Kalimantan and ventured into palm oil.

The commodities that we have are the reason for our sustainability as when the price goes down for one then another can be relied on. Rubber for example was 40 cents per kilogram in 1998 and in 2011 it was 6 USD. Rubber for the export market that is used in tyres is very much in demand now. Tea also has huge global appeal as a beverage. This combination therefore allows us to be recession proof.


What is your outlook for the palm oil and rubber sectors in the coming years?

Mr Harijadi Soedarjo

I believe both are very promising sectors. Palm oil is heavily consumed all over the world such as in China, India and Europe. Rubber also has a lot of potential. There are problems in the productivity of our farmers and the government should be more active in addressing this. In palm oil, the government is being helpful through the cultivation of plasma and this is a good initiative which they should also do with other crops. For rubber it is more difficult as the growth time is very long for rubber trees at about 5 or 6 years before they can be tapped.

We are unique in being 50% palm oil 50% rubber which is attractive to investors. With over 90 years experience in rubber we have the people and the expertise in this area which is why we stay in rubber and I believe significant growth for the future is there.

Indonesia is the largest global producer of palm oil and for rubber; we will soon overtake Thailand in production. To do this though there must be greater investment in the smaller farmers to improve productivity.

For the future we would like to go into more value added processes. For example at the moment we produce crumb rubber but for the future we could produce more ‘half ready’ pre cut rubber for before export or rubber gloves for example.

At the moment we are working with China on an engine type that can use coal instead of petrol as the price of coal is much lower and therefore offers a very innovative solution. In palm oil there is of course the opportunity for bio fuel but for Indonesia this will only be in the future as it is still at a very early stage here.


In your opinion, what are the main challenges faced by Jaya Agra Wattie as a company and for the plantation industry as a whole to date?

Mr Harijadi Soedarjo

We have over 12,000 workers at our plantations and we must also consider the farmers in the surrounding areas and the villages around our plantations. Therefore the challenge is how to expand and acquire the land for further plantations. Many areas of Indonesia in Sumatra and Kalimantan have potential but it is not easy to get land there plus there are various social issues to deal with. There is also a lot of potential in Sulawesi and Papua. There are so many different cultures and belief systems in Indonesia thus their attitude towards plantations differs in different areas of the country. Some plantations set up and then have to leave the area as they are not welcome there as well as the infrastructure not being ready. In the next three years we need 14,500 new hectares of rubber plantations so we are really concentrating on that.

The export taxes being levied on the export of CPO are a further issue. Also, they have tried to impose an export tax on rubber but the rubber industry association in Indonesia is against it.

At the moment we do not export our palm oil, it is just the local market. Later this year or next year in 2013, when we have enough production, we will begin exporting. Therefore the government tax program has not affected us yet. Indonesia still has a lot of potential for domestic consumption so there will be room to absorb more raw CPO by the downstream sector.


How is the company positioned to cooperate with international partners and investors interested in Indonesia’s rubber and palm oil sector?

Mr Harijadi Soedarjo

We have partners from India that we did a joint venture with before in rubber but we have bought the shares back now. We have had interest from investors in rubber and palm oil.

For the future we would be interested in foreign investment for capital as we need this for our expansion plans. Technical knowhow that we could benefit from such as in value added processes for rubber would definitely be of interest.

Global Business Guide Indonesia - 2012

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