SIGNING OF THE MEMORANDUM OF UNDERSTANDING BETWEEN
WEST JAVA KORITAN COOPERATIVE AND THE INDONESIAN SUGAR REFINER ASSOCIATION
IN BANDUNG, ON AUGUST 14, 2012
There are 40,000 small and medium sized industries (SMI) in West Java, which need White Sugar, but find it is often difficult to obtain and when available the price is high. On January 30, 2012, a meeting was held between Tambun Industries Cooperative (Koritan), which is a cooperative for Small and Medium Sized Agro Industries Association (SMAIA) in West Java, and the Indonesian Sugar Refiner Association (Asosiasi Gula Rafinasi Indonesia / AGRI) who agreed on a solution which is to establish a partnership to guarantee the availability of white sugar for the small and medium sized industries.
After the working visit by AGRI in Garut on April 18, 2012 as a precursor to a partnership between AGRI and SME, on August 14 2012 a Memorandum of Understanding was signed between AGRI and the West Java Koritan Cooperative regarding the Supply of White Sugar For Small and Medium sized Agro Industries in West Java, as a manifestation of the Law of the Republic of Indonesia Number 20 Year 2008 Regarding Micro, Small and Medium Sized Enterprises, especially Article 16 and Article 25.
In the said partnership, AGRI is to have an important role in providing access to white sugar, while West Java SME Cooperative will act as the distributor of white sugar to fulfill the requirements of its members.
Previously, before being received by the SMI, the white sugar first went through a distributor, an agent, a sub-agent, and then a retailer. This process raised the price of white sugar considerably. The SMI had to go through four links in the chain of retail because the sugar factories do not want to deal with small purchases, said H. Suyono, the Head of the Small and Medium Agro Industries, West Java.
According to Suryo Alam, the Chairman of AGRI, this is what is making large industries even richer, while small industries are finding it harder and harder to survive because their production costs are soaring. So far, larger industries can obtain white sugar at a lower price because they make bulk purchases. Meanwhile, smaller industries must pay a higher price because they can only purchase small amounts.
Suryo Alam further said that thus far large industries have not had any problems in obtaining white sugar because their existence is recorded, and their needs for white sugar are known and monitored, unlike smaller industries whose needs are not recognized. In addition, no data about them is available.
In relation to the need for white sugar, Suyono explained that the SME in West Java require at least 7,380 tons/month and at the most 14,760 tons/month white sugar. In addition to the quantity needed by SME, the quality of the white sugar is also important for SME.
Furthermore, Suyono said that by using white sugar SME can produce goods that have a longer shelf life. Using white sugar can produce goods that last 1.5 times longer. Therefore, white sugar can also replace the use of preservatives.
The Director for Small and Medium Sized Industries Region II, Gati Wibawaningsih, said that the Directorate-General for Small and Medium Sized Industries welcomes the partnership between Koritan and AGRI. This is the first in Indonesia and he believes that all cooperatives and SME throughout Indonesia should be made aware of this so that other areas can also implement similar partnerships.
Gati stated that the Directorate will monitor the implementation of the partnership for one year. If the evaluation proves positive, then the partnership shall be used as a model for partnerships in other regions.
The signing of the Partnership Understanding was attended by Gati Wibawaningsih, Director for Small and Medium Sized Industries Region II– Ministry of Industry representing the Directorate General for Small and Medium Sized Industries – Ministry of Industries; Susi, representing the Directorate General for Domestic Trade – Ministry of Trade; Ferry Sofwan, Head of the Board of Industries and Trades, West Java Province; Representatives from West Java Regional Coordinators; AGRI Management and representative from AGRI members and Representatives from other regional government.
The signing was followed by visits to a number of Small and Medium Industries (such as JS shop for souvenirs from Garut, and CV Saluyu for dodol, a sweet like toffee, and craft) was followed by a discussion and experience sharing among SMI. Discussion topics included the required amount of white sugar each month; the quality of white sugar compared to plantation white sugar; the price of white sugar; distributors of white sugar ; and obstacles to using white sugar .
From the visits, the following was concluded:
- West Java in general and Garut in particular, is one of the areas of small and medium sized food and beverages industries in Indonesia that uses a considerable amount of white sugar.
- As stated by the head of the West Java SME Cooperative, the Head of West Java SMAIA, and the SME/SMI industries in Garut, some of the issues in West Java relating to white sugar are: 1) difficulties in obtaining a continuous and adequate supply of white sugar to fulfill the needs for SME/SMI, 2) White sugar is sold by the sack, whereas the needs and purchasing capabilities of those industries is less than one sack, 3) fluctuating prices, 4) payment systems are not suitable for SME/SMI and 5) differences in quality between white sugar and plantation white sugar which is the usual substitute when it is difficult to obtain white sugar. SMI requests that AGRI take these issues into serious consideration.
- West Java is one of the small and medium sized industrial areas, which can be used as a pilot project for AGRI, for other AGRI partnership programs in 2012.
- In accordance with the agreement West Java SME Cooperative shall be the distributor of white sugar to fulfill the requirements of its members. In relation to this, the head of the SME Cooperative requested that AGRI apply a win-win approach.
- West Java SME Cooperative and SMAIA are prepared to purchase white sugar in cash at a competitive price, and the goods shall be collected from the factory warehouse. It is hoped that both SME Cooperative and SMAIA shall not be a burden for AGRI factories.