Jakarta – Pulp and paper producer APRIL Group on Tuesday announced it is investing Rp 33.4 trillion, equivalent to more than $2 billion, in the construction of a new sustainable paperboard production facility located within the company's operations in Pangkalan Kerinci, Riau, Sumatra.
According to APRIL Group, the project marks one of the largest manufacturing investments in Sumatra in the last decade.
When completed, the packaging facility will produce 1.2 million tons of fully recyclable and biodegradable folding box boards annually. These folding boxes will also meet both the national and international markets' demand for eco-friendly packaging. The investment is also expected to give Indonesia's post-pandemic recovery a boost via the diversification of sustainable downstream fiber products with added value.
"We warmly welcome this investment by APRIL Group, which will improve the wellbeing and prosperity of the local communities while also boosting national economic development. The government will continue to develop strategies to support the recovery of national exports through strengthening market access and helping to improve product competitiveness," Coordinating Minister for Economic Affairs Airlangga Hartarto told the groundbreaking ceremony.
Industry Minister Agus Gumiwang Kartasasmita said that the increased manufacturing of paperboards in Indonesia would cut down the product import dependence. "While also boosting our foreign exchange reserves through export-oriented sales. This development also aligns with our government's focus to reduce reliance on imports and boost Indonesia's industrial and manufacturing development," Agus added.
According to Sihol Aritonang, the president director at APRIL Group's operating arm Riau Andalan Pulp and Paper (RAPP), the new investment was the latest stage in the company's development of its operations in Riau and was part of APRIL's long term commitment to the region.
"This is our largest single investment here since the company was founded almost 30 years ago," Sihol said. The new facility is in line with the company's four-pillared sustainability agenda APRIL2030. "This product diversification strengthens our commitment to grow our business sustainably, in line with our existing sustainability commitments and our APRIL2030 targets. The new facility will have a significant positive multiplier effect on our surrounding cities and towns, with over 4,000 construction jobs and nearly 1,000 permanent roles planned," he said.
According to APRIL Group, the demand for recyclable and biodegradable for everything, including packaging, is being driven by consumer preference via expanding retail purchases in high-growth markets such as China, Indonesia, India and Vietnam. The global paperboard packaging market is forecast to grow by 3 percent this year – also driven by increased food production linked to population growth and lifestyle changes such as the preference for individual packaging and food deliveries.
APRIL Group said its fiber supply comes from 100 percent renewable plantation sources. Additional supply for expanded production capacity will also come entirely from its existing supply chain. The company posted a 40 percent increase in fiber yield over the past five years from its existing plantations while also committing $1 per ton of plantation fiber produced towards landscape conservation. The company aims for a 50 percent gain in fiber plantation productivity by 2030.
The investment in downstream diversification and value added products is also in compliance with APRIL Group's Sustainable Forest Management Policy 2.0 which includes no deforestation, thus directly contributing to the achievement of APRIL2030 commitments.