Chinese investors fueling Indonesia's coconut boom

Great leap

Banggai Islands' acting Regent Ihsan Basir told local media that local officials had visited FreeNow's facilities in China and that the agreement they reached with the company was a great leap toward improving the welfare of the Banggai people.

FreeNow provides quality coconut seeds for farmers in the Banggai Islands through village cooperatives.

In the Central Sulawesi Regency of Donggala, PT Agro Persada Borneo, a registered Indonesian company, began construction of its coconut processing plant on Oct 3. Local officials expect the project to boost economic development and improve employment opportunities in the regency and other coastal areas in the western part of Central Sulawesi.

In March, another Chinese investor, Luckin Coffee, which is China's leading coffee chain, reached an agreement with the government of the Banggai Islands to secure coconut supplies for the Chinese company.

During the agreement-signing ceremony in Banggai, Li Shan, Luckin Coffee's supply chain director, stressed the importance of maintaining the quality of coconuts to be supplied to his company. In China, consumption of coconut-based latte coffee produced by Luckin is growing fast.

This October, in North Halmahera Regency in the province of North Maluku, east of Sulawesi, local officials and coconut farmers witnessed the inaugural shipment to China of two containers of locally produced coconut milk and virgin coconut oil that had been processed at a facility owned by PT Natural Indococonut Organik. It is not yet clear whether any Chinese investors will join the company in processing coconuts in Halmahera.

Minister of Agriculture Andi Amran Sulaiman officiated at the inaugural shipment ceremony along with North Maluku Governor Sherly Tjoanda Laos and top executives of the Indonesia-owned PT NICO.

On the occasion he said that, increasingly, people in China and European countries are developing a liking for coconut-based beverages, in addition to traditional animal-based products.

In August, PT NICO exported coconut derivatives to the Republic of Korea, Canada, Australia, Hungary, Germany and the Netherlands.

The company's processing plant in North Halmahera's Tobelo village has the capacity to process 600,000 coconuts per day.

While in Halmahera, the agriculture minister announced the government's program to develop 10,000 hectares of new coconut plantations on the island and in other areas of North Maluku next year. The aim is to ensure future coconut supply for the Tobelo processing plant, he said.

Bambang, deputy head of the Indonesian Quarantine Agency, said Indonesia has to improve the quality of its coconuts and their derivatives to meet foreign buyers' standards, including those set by Chinese importers.

Other problems in developing the country's downstream industry include low coconut productivity and low-quality coconut seeds. Low productivity is partly due to the fact that almost 50 percent of coconut palm trees in Indonesia are more than 25 years old, media reports said.