Guthrie deal finally closed<\/p>\n
Common sense has finally prevailed among the politicians from
\nthe major factions in the House of Representatives who over the
\nlast few weeks have joined forces with several local
\nbusinesspeople, leaders of farm associations and several non-
\ngovernmental organizations to oppose the sale of 25 oil palm
\nplantations, covering about 260,000 hectares, to Malaysia's
\nKumpulan Guthrie Bhd. Now that the political interference has
\nbeen removed, the Indonesian Bank Restructuring Agency (IBRA) can
\nsoon close the sale, which was won by Guthrie through a
\ncompetitive tender last November.<\/p>\n
High praise should go to the officials of IBRA and the finance
\nministry who apparently have worked hard at lobbying and
\nconvincing the House of the crucial importance of the deal not
\nonly for the state budget but, even more pivotal, for sustaining
\nthe budding recovery of the entire economy.<\/p>\n
Had the political opposition to the deal lasted much longer,
\nGuthrie might have withdrawn from the transaction, thereby
\ndepriving the government of some US$387 million in sorely-needed
\nrevenue. But a more devastating impact would likely have been a
\ncomplete loss of investor confidence in the credibility and
\nauthority of IBRA in disposing of the multi-billion dollar stock
\nof assets currently under its management, thus dealing a
\ncrippling blow to the agency's efforts to raise at least Rp 27
\ntrillion ($2.75 billion) from asset sales for the 2001 state
\nbudget.<\/p>\n
It is not an exaggeration to say that without the timely
\ndisposal of the huge pool of assets which were taken over from
\nclosed, nationalized and recapitalized banks and indebted
\nconglomerates in 1998 and 1999, the economy will never emerge
\nfrom the present crisis. Moreover, the longer the assets remain
\nunder IBRA control, the less will be their economic value.<\/p>\n
Take, for example, the 25 plantation companies that were taken
\nover by IBRA from the Salim Group in 1998 in part payment of its
\nRp 53 trillion debt to the government. IBRA has admitted that the
\ncondition of the plantations, which are scattered among several
\nprovinces in Sumatra, Kalimantan and Sulawesi, has worsened due
\nto lack of investment and working capital. As 57 percent of the
\ntrees are still immature, the estates still need additional
\ninvestment and working capital which IBRA cannot provide. New
\ninvestors are therefore urgently needed to prevent the assets
\nfrom degrading to a total loss.<\/p>\n
Even though land is quite a sensitive issue in all countries,
\none cannot help but wonder as to why House members, local
\nbusinesspeople and NGO leaders came out attacking the sale only
\nafter all the set procedures had been completed. IBRA had
\nnotified more than 90 potential foreign and domestic investors
\nand related organizations about the tender for the plantations
\nbefore the final bidding process was closed.<\/p>\n
The deal with Guthrie, which emerged as the winning bidder,
\nshould instead be welcomed as a confidence-building transaction.
\nA quick profit is certainly not the primary motive for Guthrie in
\ntaking such a plunge into a crisis-plagued country, where the
\npolitical and security situation is highly volatile and local
\nadministrations are still only learning how to exercise their
\nnewly-given powers under regional autonomy. Their interest should
\nbe long term, especially now that international palm oil prices
\nhave sunk to eight-year lows.<\/p>\n
Obviously, Guthrie's investment in Indonesia, the world's
\nsecond largest palm oil producer after Malaysia, is a strategic
\nmove to capitalize on low-cost labor and to sidestep the biggest
\nbarrier to plantation expansion in Malaysia -- the lack of land.
\nNothing wrong with that.<\/p>\n
The argument that the deal will enable Malaysia to monopolize
\nIndonesia's palm oil industry is completely groundless. The
\nplantation companies, even after under Guthrie controlling
\nownership, will remain subject to Indonesian laws and government
\npolicies. Guthrie's entry is instead a synergic tie-up with local
\nplantations as they will benefit from the transfer of better
\nmanagerial expertise and the superior planting technology that
\nhas been developed in Malaysia.<\/p>\n
Now that the political opposition has been removed and the
\ntransaction will be closed within days, Guthrie should start
\nworking to become a good corporate citizen in each of the
\nprovinces where the plantations are located. But since Guthrie
\nitself is a big plantation company in Malaysia, we are confident
\nof its ability to deal with local communities and
\nadministrations.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/guthrie-deal-finally-closed-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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