Wings Noodle Integration

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	25841
Company name	PT Karunia Alam Segar
Country	Indonesia
Sector	Food & Beverages
Environmental category	B
Department	Agribusiness
Status	Active

Date SPI disclosed	May 15, 2007
Projected board date	June 18, 2007
Previous Events	Invested: August 24, 2007 Signed: June 22, 2007 Approved: June 19, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

PT Karunia Alam Segar (PT KAS or the company), an existing IFC client, is one of the operating companies in the Wings Group. It produces instant noodles in Surabaya. Due to high demand, the company is seeking capital to increase its noodle production capacity.

Anticipated development impact of the project

The project is expected to have the following development impacts:

- generate new employment, primarily of women;
- increase produce purchased from local farmers, as PT KAS buys locally produced fresh produce for the seasonings in their instant noodles;
- increase income tax revenues paid to the government of Indonesia; and
- increase in consumer surplus through increased competition in a food staple product consumed by the poor.

IFC's expected development contribution

IFC’s expected development contribution may include:

- providing long-term local currency financing;
- assistance in helping the company comply with IFC’s Environmental & Social Performance standards, and
- supporting and improving productivity of local farmers through a technical assistance program.

Environmental and social issues - Category B

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects. Environmental, social, health and safety issues which may be associated with this type of project, and which were reviewed during appraisal, included: management systems for environmental, health and safety (EHS), and life and fire safety issues; compliance with local and WB/IFC requirements for air emissions, wastewater discharges, indoor air quality, noise and waste management; energy, water and other material use and efficiency; labour issues and community engagement.

PT Karunia Alam Segar (PT KAS or the company), an existing IFC client, is one of the operating companies in the Wings Group. It produces instant noodles in Surabaya. Due to high demand, the company is seeking capital to increase its noodle production capacity. All expansion activities are occurring within the company’s existing property so no new land acquisition is required. The existing plant in Surabaya has been appraised as part of IFC’s first and second investments in the company’s instant noodle operations and visited by IFC’s Environmental and Social Specialists as part of regular supervision visits in 2004 and 2006. This current Project has been appraised against IFC’s Social and Environmental Performance Standards.

All staff receive written information on the company’s human resources policies, compensation and benefits, sick leave and holiday allocation, insurance, etc. A workers’ union has been established and operates in accordance with local laws. The company does not discriminate against union members and it has also established a variety of parallel mechanisms for engaging staff. PT KAS is very attentive to worker needs and make significant efforts to ensure a pleasant working environment is maintained. The company communicates with local government and community representatives on a regular basis, implements a number of philanthropic programs to benefit local communities, and has established a mechanism for receiving and addressing grievances.

EHS and fire safety training is conducted internally every four months on matters ranging from fire safety equipment operation to safe machine operations and heavy lifting to food hygiene. An automatic fire detection and suppression system has been installed that includes thermal detection and centralized chemical sprinkler systems in the seasoning frying areas for noodle production.

The company has demonstrated progress against previous Environmental Action Plans for the project and the Corrective Action Plan for the project includes requirements for PT KAS to certify its operations to ISO 22000 within a reasonable time frame. The company is also monitoring its air emissions from the on-site incinerator and will implement any necessary actions to meet local and WB/IFC requirements if needed.

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