Kadin says govt should rethink oil palm ban<\/p>\n
JAKARTA (JP): The government's ban on new foreign investment
\nin oil palm plantations will harm domestic investment in the
\nsector and allow certain business groups to dominate the sector,
\nthe Indonesian Chamber of Commerce and Industry (Kadin) said
\nyesterday.<\/p>\n
The chamber's vice chairman on agro-business, Adiwarsita
\nAdinegoro, said the government should rethink its ban on new
\nforeign investment in the sector.<\/p>\n
\"What is really happening behind the Investment Coordinating
\nBoard's decision to stop licensing foreign direct investment in
\noil palm plantations?\" Adiwarsita asked.<\/p>\n
\"The government must be transparent in this matter so that it
\nwill not invite prejudice on the part of foreign investors,\" he
\nsaid.<\/p>\n
Earlier this month the government temporarily froze Malaysian
\ninvestments in oil palm plantations in North Sumatra saying
\nMalaysia had overinvested in the sector.<\/p>\n
So far 27 Malaysian companies have invested in Indonesian oil
\npalm estates in cooperation with local companies.<\/p>\n
The minister of agriculture, Sjarifudin Baharsjah, later said
\nthe government's ban did not cover only Malaysian investors but
\nall foreign investors.<\/p>\n
Sjarifudin said the decision to freeze oil palm plantation and
\nrelated palm oil industry foreign investment was because the
\nworld market was oversupplied.<\/p>\n
Malaysia's minister of international trade and industry,
\nRafidah Aziz, who was here for the first ASEAN summit earlier
\nthis week, said she did not oppose Indonesia's decision.<\/p>\n
\"That's the Indonesian government's right to decide. I think
\nyou understand why your government took such decision,\" Rafidah
\nsaid.<\/p>\n
Indonesia is the world's second largest crude palm oil
\nproducer, producing half of what Malaysia does.<\/p>\n
Chrisman Silitonga, a local observer of agricultural and food
\nissues, said he was certain the government would reconsider its
\ndecision once the move was countered with free trade arguments.<\/p>\n
Chrisman, who also works with the National Logistics Agency,
\nsaid the decision to ban foreign investment in oil palm
\nplantations was aimed at diversifying the types of agricultural
\ncommodities grown in Indonesia.<\/p>\n
Adiwarsita agreed and said domestic and foreign plantation
\ninvestments was concentrated on oil palms.<\/p>\n
\"The plantation commodity which enjoys the most robust growth
\nis oil palm,\" Adiwarsita said.<\/p>\n
He said oil palm plantation acreage had grown from 120,000
\nhectares in 1968 to 1.47 million hectares last year, of which
\nlarge business controlled 1.02 million hectares.<\/p>\n
Adiwarsita is also president of PT Wanarimba Kencana which
\nconcentrates on agro-business. The company controls 20,000
\nhectares of oil palm plantations in Kalimantan.<\/p>\n
Chrisman said if the government wanted to see more
\nagricultural diversification the ban should apply to local
\ninvestors too.<\/p>\n
The state minister of investment, Sanyoto Sastrowardoyo, said
\nthe government might totally close oil palm plantations to
\nforeign investors by including the sector on its negative
\ninvestment list. He said this was needed to protect local
\ncompanies.<\/p>\n
It is Sanyoto's office which has the power to do this. The
\nnegative investment list aims to protect local household and
\nsmall enterprises.<\/p>\n
Several parties, including Chrisman and Adiwarsita, have
\nfrowned upon Sanyoto's plan saying that oil palm plantations were
\nalready controlled by big businesses like the giant Sinar Mas and
\nSalim groups, which are owned by politically well-connected
\nbusiness tycoons Eka Tjipta Widjaja and Liem Sioe Liong.<\/p>\n
\"The list is meant to protect small and medium enterprises.
\nThose in the oil palm sector are big businesses, none of whom
\nneed special protection that requires the sector to be put on the
\nlist,\" Chrisman said.<\/p>\n
Adiwarsita said \"the ban on foreign investors in oil palm
\nplantations should not help create a new monopoly in domestic
\ninvestment (in the sector).\"<\/p>\n
One source said the government's decision to ban the
\ninvestments was because the Sinar Mas and Salim groups did not
\nwant to see anyone reduce their domination of the sector.<\/p>\n
The source said it was also because Malaysian investors were
\nreluctant to set up joint ventures with the two groups and
\npreferred to link up with medium businesses mostly controlled by
\nindigenous Indonesians. (rid\/pwn)<\/p>",
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