06/11/2012 (Jakarta Post) - State-owned diversified group PT Rajawali Nusantara Indonesia (RNI) has earmarked a Rp 3 trillion (US$312 million) investment for expansion activities next year.

President director Ismed Hasan Putro said that RNI, a holding company for other 14 state firms, will use the money to develop sugar plantations in West Java, palm oil plantations in South Sumatra, convenience stores in Java’s major cities, and expand its property business.

“We will expand our business aggressively next year because we plan to carry out an initial public offering at the end of 2014. We are optimistic that we will grow more in 2013,” Ismed said in Jakarta on Monday after a closed-door meeting with the House of Representatives’ Ethics Council, adding that 70 percent of the investment was supported by loans from state-owned Bank Rakyat Indonesia and the remaining 30 percent came from the firm’s internal cash.

He said the firm would allocate Rp 1.8 trillion for capital expenditures to develop a new sugar plantation in Gempol, Cirebon, West Java.

“By having the new sugar plantation there, we will be able to increase our sugarcane production from 168,000 tons to 180,000 tons [a year] in 2014,” he said.

The construction of the Gempol facility was slated to begin in January 2013 and would commence operations by the end of that year, he went on.

RNI currently runs a number of sugar mills under its subsidiaries located in Subang and Cirebon, West Java; Sidoarjo, Malang and Surabaya, East Java; and Bantul, Yogyakarta.

The company will also expand its oil palm plantation in South Sumatra through its subsidiaries PT Mitra Ogan and PT Laskar Astra Lestari. They will develop a new 26,000-hectare area in Ogan Komering Ilir and Musi Banyuasin regencies for the plantations.

“This year, we have a land bank for oil palm plantations totalling 65,000 hectares and we plan to develop these areas gradually,” he added.

The company planned to enter the retail franchise market next year by operating 15 convenience stores in seven cities across Java: Bandung, Cirebon, Jakarta, Malang, Semarang, Surabaya and Yogyakarta.

The stores, built with a total investment of approximately Rp 20 billion, are expected to expand the distribution of RNI’s finished products such as sugar (sold under the Rajagula brand), cooking oil (Rajaminyak) and tea bags (Likitea).