Milk producer Frisian Flag Indonesia to build new $265m factory

Milk producer Frisian Flag Indonesia to build new $265m factory
12 March 2021

Originally published on The Jakarta Post


Milk manufacturer PT Frisian Flag Indonesia (FFI) has begun developing a new production facility worth Rp 3.8 trillion (US$264.6 million) in the Cikarang industrial district in West Java. The new facility, developed on 25.4 hectares, is expected to start operating in 2023, according to Frisian Flag president director Maurits Klavert. It will include a factory, office and logistics and distribution center.

The facility is also expected to employ 850 workers, according to the Investment Coordinating Board (BKPM).

“With the development of our business, it will clearly increase the procurement of fresh milk from cattle breeders in Indonesia and improve cooperation with our business partners, either the suppliers or the hundreds of our distribution partners spread across the country,” Klavert was quoted in a news release as saying on March 10, a day after the company held a groundbreaking ceremony.

Frisian Flag operates two production facilities in Ciracas and Pasar Rebo districts in East Jakarta, and employs more than 2,000 workers nationwide, according to its website. The company produces ready-to-drink milk, condensed milk, powdered milk and infant formula.

The groundbreaking ceremony took place around four months after the meeting between BKPM head Bahlil Lahadalia and Hein Schumacher, the CEO of Frisian Flag Indonesia’s parent company, FrieslandCampina, in The Hague, Netherlands.

“After four months, since they expressed their commitment, all licenses have been completed, starting from building permit, location permit, business registration number and the tax holiday facility,” said Ikmal Lukman, the deputy for investment promotion at BKPM.

The Netherlands was the sixth-largest source of foreign direct investment (FDI) for Indonesia last year, according to data from the BKPM. FDI realization from the Netherlands reached US$1.42 billion in 2020, down 45.17 percent from a year earlier.

The FDI realization in the food industry, however, was up 25.2 percent to $1.59 billion last year.

Industry Minister Agus Gumiwang Kartasasmita said the new investment from Frisian Flag was expected to help the country spur its exports.

“We hope the factory expansion by PT FFI can boost export performance. But the domestic market is still open and very large. From the industry perspective, in addition to exports, we also need to boost import substitution for raw materials,” said the minister.

Indonesia’s exports fell to $15.30 billion in January, down 7.48 percent from $16.54 billion in December 2020, which was the largest figure since 2013. Despite the monthly drop, exports in January are up 12.24 percent from the same month last year as major trading partners such as China have reemerged from the pandemic.

Frisian Flag’s factory expansion plan was officially announced in March 2020 as part of a series of business deals between the Netherlands and Indonesia that were signed during Dutch King Willem-Alexander and Queen Maxima’s visit to the Southeast Asian country.

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