Situated in East Java province in Indonesia covering an area of 3,293.34 square km is a small town called Jember. For more than 50 years now, Jember has been home to PT Mangli Djaya Raya (MDR), a tobacco manufacturing and exporting company. The company was founded on April 11, 1960 by Budi Laksmono, Indra Santoso, Effendy Santoso and Hasantono Santoso. 

Within a few years, MDR, which exported Besuki Na-Oogst and Besuki Voor-Oogst, used in the production of cigars and cigarettes, quickly rose to fame. However, after 2001, MDR faced all kinds of financial difficulties. 

The founders of the company were beginning to lose interest in their business and the supply of money to the company was halted. On July 1, 2007, MDR was sold to Nyoto Permadi, a tobacco businessman. Nyoto had been in the tobacco business since 1977, and he had been involved in exporting tobacco - but always through PT. Persero, a government’s company. 

After the acquisition of MDR in 2007, the company started to increase production and sales by exporting all types of Indonesian tobaccos around the world. Nyoto’s son, Christian Adi Njoto, joined MDR after completing his education in the US and under their leadership MDR has seen its tobacco activities increase sharply by as much as 200%.

The growth has prompted the company to invest in a tobacco processing plant to process all of its tobaccos. At present, MDR is outsourcing its redrying process., 

“By having the brand new tobacco processing plant, we will save on transportation and storage costs and at the same time, deliver a higher and a more consistent product to our customers,” according to Nyoto. 

The new plant will have a state-of-the-art picking, blending, conditioning, re-drying, and packing line complete with quality control laboratory. It will be installed and commissioned by September-October of this year. After a long process of vendor selection and evaluation, based on equipment quality, performance records and the project execution capability of the bidding vendors, Dickinson Fowler Private Limited of India was chosen to supply the equipment and project management activities.

In addition to the development of the city, the completion of this plant will help create many job opportunities. 

“Currently, there is only one other tobacco company with a tobacco processing plant in Jember,: explained Nyoto. “The completion of MDR’s own plant will further help establish Jember as an agriculture town and help improve workers’ welfare., More importantly, it will re-establish Jember’s heritage as Indonesia’s ‘Tobacco Town’.”

 

Tobacco is a major commodity playing a very important role in the Indonesian economy. There are around 230 million people in Indonesia and roughly 70 million people are smokers. It is said to be one of the biggest sources of income for laborers and farmers, providing job opportunities and contributing to government income in terms of tax and foreign currency. 

Jember itself has a population of more than 2,000,000 and it is the third largest city in East Java after Surabaya and Malang. It is famous for its plantations. The Dutch introduced tobacco cultivation. George Birnie was one of those who actively developed the tobacco industry in Jember between 1850 and 1860, which helped the town to ultimately gain the its reputation and title ‘Tobacco Town’. 

Tobacco has been the main cash crop for Jember’s citizens and it is so fundamental that tobacco leaves have been adopted as the city’s official symbol.

Due to the limited infrastructure, access to Jember has historically not been easy. The nearest airport was Surabaya, which is about five hours drive away. Due to Jembers’ inconvenient access, tobacco processing plants were established in the areas surrounding Surabaya, but not in Jember. 

 “Due to its inconvenience access, I think Jember is a forgotten town,” commented Christian. “Residents of Jember have been handling tobaccos for many generations. It would be such a shame if we cannot make use of the very good resources which are available in this region. In the 1960s, there were hundred tobacco companies in Jember. Now, almost half a century later, there are only around 10 companies left, including MDR, which is one of the few companies that still exists from that era. Building a tobacco processing plant in Jember should help to put it back on the world map”

Over the past 50 years, MDR has gone through a long winding journey encountering various tumultuous chapters. MDR’s first partnership was in 1972 with Al Van Beek of the Netherlands, which lasted for only one year. Then in 1984, MDR established another partnership with a Dutch company named Deli Maatschappij with also lasted for only one year. Then, in 1994, MDR established a partnership with a Dutch tobacco dealer, Lippoel Leaf BV, but this unfortunately ended after seven years. The company has encountered a lot of difficulties coupled with a negative market situation. It was threatened with bankruptcy before being taken over by Nyoto Permadi.

This year, led by Nyoto and Christian, MDR is laying out a long-term strategic plan and it is currently undergoing a major restructuring. Part of this plan is to introduce a fully automated and integrated management system with SAP as the main infrastructure. It will incorporate an umbrella system covering sales, inventory, procurement, processing and financial matters. This system will allow all inventories, sales and revenue information to be transmitted daily on a real time basis, making it easy for directors and all relevant management personnel to have access to appropriate information whenever they want. 

 “The implementation of SAP will help employees improve their efficiency and at the same time help in identifying mistakes, and providing quick response and feedback,” according to Christian. “The time we used to spend inputting data can now be used to analyze data instead.” 

In addition, MDR is currently in the process of getting ISO 9001:2008 certification. With this certification, MDR is looking to further increase the quality of its products and meet international specifications. 

“MDR has a vision to expose the world to high quality agricultural products, and this certification would definitely help the company live up to its promise while at the same time providing satisfying customer service,” concluded Christian.