Astra Agro to Focus on Downstream Business

TEMPO.CO, Jakarta - Astra Agro Lestari will focus on the development of downstream business sector in accordance with the government's plan in giving incentives to companies that export crude palm oil. Astra Agro CEO, Widya Wiryawan, said that the effort to expand their downstream business included operating a  2,000 tons capacity refinery which used to belong to a company in West Sulawesi.

"Some of the production is processed for olein oil," said Widya last weekend. According to Widya, as of the first quarter this year, Astra Agro could sell 314,210 tons palm oil and 40,790 tons olein.

He said that although the profit margin of downstream business was not huge, he was sure that the prospect was promising. Other than owning a refinery in West Sulawesi, Astra Agro owns one in Aceh. The refinery has just been upgraded from a 20 tons palm oil production per hour capacity to 40 tons per hour.

"Out of all our refineries, there is an increase in the palm oil production, from 1,230 tons per hour to 1,280 tons per hour," said Widya.

The government is considering giving incentives to palm oil companies by issuing them the Indonesian Sustainable Palm Oil certificate. The incentive will be crude palm oil export tax exemptions.

Last year, Astra Agro profit declined by 25.3 percent to Rp 1.8 trillion because of a drop in core production, crude palm oil price and the weakening of  the rupiah exchange rate. In 2013, fresh fruit production was at 5.12 million tons, a decline of 6.8 percent compared to the previous year. This year, Astra Agro allocated Rp 4 trillion for its capital expenditure.

FAIZ NASHRILLAH