Pulp and Paper Industry Fosters Local Entrepreneurship

Sulaeman, a producer of cocopeat, which is made from coconut husks and used as a planting medium to grow the seeds of Acacia and Eucalyptus trees. (Photo courtesy of PT RAPP)

By : Muhamad Al Azhari | on 4:59 PM May 01, 2017
Category : Business, Special Reports

Jakarta. Despite Indonesia's pulp and paper industry having experienced ups and downs, affected by challenges from both within and outside the country, one thing that is certain is that the industry's supply chain remains supportive of livelihoods and brings prosperity to communities in surrounding areas.

Government data shows that the pulp and paper industry contributes 6.7 percent of  national manufacturing industry gross domestic product (GDP) and last year, it contributed US$ 3.9 billion (non-oil export) to the country's exports.

As part of this economic benefit, the government data shows that the industry has created jobs for 260 thousands direct jobs and 1.1 million indirect jobs throughout the value chain.

The benefits of the industry's presence have also been felt by Sulaiman, who established his own company, Rifky Pratama Sanjaya, which supplies 200 tons of cocopeat per month to Riau Andalan Pulp and Paper (RAPP) – one of the biggest pulp and paper producers in Indonesia that uses technologically advanced and efficient processes.

"I became [part of the] RAPP supply chain in 2012. I used to work as a contractor on a government project before this," said the resident of Pangkalan Kerinci in Riau Province's Pelalawan district.

The father of two explained that as a producer of cocopeat, which is made from coconut husks and used as a planting medium to grow the seeds of Acacia and Eucalyptus trees, he employs 40 staff members, spread out in Pangkalan Kerinci and Lampung Province, from where he gets his material.

Most residents of Pangkalan Kerinci, a previously small village in the Sumatran rainforest, used to rely on the farming sector, or were fishermen working on the nearby Kampar River.

With the presence of major pulp and paper companies, including RAPP, the area has grown and become the district capital, which is now home to more than 150,000 people.

Sulaiman, who left his job to focus on supplying cocopeat to RAPP, has deep appreciation for the opportunities the company has given the local community.

"RAPP doesn't give the capital for investment, but it made a recommendation to Bank Mandiri and Bank Rakyat Indonesia," Sulaiman said. He added that he secured up to Rp 1 billion ($75,000) in loans from the two banks, which he used to buy machinery to produce cocopeat, build a warehouse in Pangkalan Kerinci and for working capital.

"It is not bad, I can pay my staff a living wage, plus some incentives if they work overtime or the job requires additional effort," he said.

"One of my staff members used to work odd times, helping his father, who is a fisherman and they barely earned Rp 1 million per month. Working here, they can earn more, and some can even earn up to Rp 4 million per month," the 38-year-old businessman said.

 

Seventy-percent ready cocopeat is being dried before it can be supplied to RAPP. (Photo courtesy of RAPP) Seventy-percent ready cocopeat is being dried before it can be supplied to RAPP. (Photo courtesy of RAPP)

In Lampung, a few kilometers from Pangkalan Kerinci, his company provides jobs for 30 people who make use the remains of coconuts to produce various products.

"I had to locate my operation there, as Lampung is one of the biggest coconut producers in Indonesia. Every week, we send the 70-percent finished product to Pangkalan Kerinci for completion," he said.

RAPP community development manager Sundari Berlian told Antara news agency that the company has registered 190 partners who work directly with the company in a wide range of businesses. This includes building contractors, labor and transportation suppliers, water truck operators (who spray the roads to prevent dust), and seedling suppliers.

Sulaiman's cocopeat plays a vital role at four of RAPP's central nurseries and two satellite nurseries that are located near the company's main operational area in Pangkalan Kerinci. RAPP uses the cocopeat to develop the seeds of Acacia and Eucalyptus trees that are later harvested and transformed into pulp and paper products. PaperOne is APRIL Group’s paper brand.

RAPP community development manager Sundari explained that the company's 190 partners employ around 3,300 people, which she said is a notable example of the positive multiplier effect the business creates in the community.

Just a few kilometers from Sulaiman's warehouse, RAPP operates a 1,750-hectare manufacturing complex where it produces various types of high-quality paper.

RAPP employs 5,800 workers directly and 20,000 indirectly in its forest plantation and the company claims that it has had a multiplier effect on Riau's employment rate, having so far created 90,000 job opportunities in various areas.

People like Sulaiman hope such partnerships will be sustained and expanded.

"I am glad that RAPP chose to empower the locals by providing them with good business. We contribute to the region’s economy as a growing business rather than as bystanders” he said.

Show More

 
MORE NEWS