Indonesia plans to develop the sugar industry in Papua.

Indonesia plans to develop the sugar industry in the Papua region.

Indonesia, the world's largest sugar importer, plans to increase the planting of sugarcane in its eastern region of Papua with the aim of reducing imports and developing the sugar industry, including bioethanol production, a cabinet member stated on Monday.

The plans were announced because of rising domestic sugar prices due to tight supply caused by last year's drought caused by the El Niño weather phenomenon.

In 2022, the Indonesian government set a goal to achieve self-sufficiency in sugar by 2027. To do this, it is necessary to significantly expand the plantations.

The government has allocated 2 million hectares (4.9 million acres) of land in Merauke, South Papua province, for an industrial park focused on sugarcane production, mills, a bioethanol plant, and a biomass power station, Investment Minister Bahlil Lahadalia told reporters.

At the first stage, two million seedlings from Australia will be planted, Bahlil said, adding that the project will be managed by domestic companies, including state-owned enterprises.

He did not provide details about the timeline for the development of the industrial park. It is unclear whether the plans include deforestation.

The average price of domestic sugar has now risen 24 percent year-on-year to 18,344 rupees ($1.13) per kilogram due to tight supply, government data showed Monday due to weak production.

The Association of Sugar Factories in the country expects a delay in the mechanical processing season by a month until the end of May this year.

The drought caused by El Niño has damaged crops (sugarcane), and some had to be replanted.