RI woes cast doubt on Guthrie plantation deal<\/p>\n
KUALA LUMPUR (Reuters): Land disputes, demands for a greater
\nshare of revenues by local governments and security problems are
\nthrowing into doubt Malaysia's Kumpulan Guthrie Bhd.'s purchase
\nof Indonesian oil palm plantations, industry sources said on
\nThursday.<\/p>\n
Indonesia said last month the around US$370 million deal for
\n25 plantations once owned by the troubled Salim Group had been
\nfinally closed after weeks of delays and repeated calls for the
\nIndonesian Bank Restructuring Agency (IBRA) to review the deal.<\/p>\n
But then last week, Indonesia Finance Minister Prijadi
\nPraptosuhardjo proposed setting up a team to review the sale. He
\nsaid sale proceeds, which the central bank had planned to spend
\non buying rupiah to help the battered local currency, should not
\nbe used yet.<\/p>\n
Analysts say any review would further weaken already waning
\ninvestor confidence in the troubled country.<\/p>\n
\"We prefer (Guthrie) not to go ahead with the acquisition,\"
\nsaid Noor Azwa Mohd Noor, an analyst at KAV Research Sdn. Bhd. in
\nKuala Lumpur, in view of the various problems Guthrie is likely
\nto face in Indonesia.<\/p>\n
Critics have expressed concern the deal would lead to foreign
\ndomination in the country's lucrative palm oil industry. Some
\neven asked for the deal to be canceled.<\/p>\n
\"If the deal can't be canceled, Guthrie should be willing to
\noffer 70 percent of the shares for (farmers) as promised by Salim
\nwhen it first developed the plantations,\" said Siswono
\nYudohusodo, chairman of the Indonesian Farmers Association.<\/p>\n
\"I am very worried that bigger problems will erupt if Guthrie
\nrefuses to do that. This will slap the government in the face,\"
\nhe said in Jakarta.<\/p>\n
Commenting on news of a possible review in the deal, Guthrie
\nsaid in a statement to the Kuala Lumpur Stock Exchange recently:
\n\"We wish to reiterate... the sale and purchase agreements remain
\nvalid and binding.\"<\/p>\n
Some traders in Malaysia said such a review would further
\nundermine waning investor confidence in crisis-hit Indonesia, the
\nworld's second largest palm oil producer after Malaysia.<\/p>\n
\"This will shake anybody's confidence. Who will come and
\ninvest in Indonesia after this,\" said Nakul Rastogi,
\ninternational trading manager of Pacific Inter-Link Sdn. Bhd. in
\nKuala Lumpur.<\/p>\n
The Guthrie deal was IBRA's second biggest sale after the
\naround $506 million it received from selling its stake in
\nIndonesia's largest car maker, Astra International in 1999.<\/p>\n
Salim was once Indonesia's biggest conglomerate and was headed
\nby a close associate of former President Soeharto, who stepped
\ndown in disgrace amid the worst economic and political crisis in
\ndecades.<\/p>\n
The plantations cover 265,777 hectares and are located in
\nAceh, Jambi, Riau and South Sumatra provinces on Sumatra, central
\nand South Kalimantan and Central Sulawesi. Guthrie has 110,000
\nhectares of palm oil holdings in Malaysia and much of its
\nrevenues come from palm oil.<\/p>\n
Industry sources say one of the main problems Guthrie will
\nface is unresolved land acquisition, in which small farmers claim
\ntheir land has been taken by politically well-connected
\nplantation companies without proper compensation.<\/p>\n
After Soeharto's downfall in 1998, many farmers claimed back
\ntheir land in sometimes violent clashes with plantation staff,
\nwhile the economic crisis sparked widespread looting.<\/p>\n
Bambang Warih Koesoema of the Social Democratic Union, an
\norganization dealing with local farmers, warned of more problems.<\/p>\n
\"It's time for the government to pay back what it had taken
\nfrom the people. People are now very sick and tired. They are
\nvery emotional. If their rights are violated again, you know what
\nwill happen,\" he said.<\/p>\n
\"Long before the government decided to sell ex-Salim
\nplantation to Guthrie, I asked IBRA to give a chance for people
\nin Riau to buy the plantations located in Riau,\" said governor
\nSaleh Djasit.<\/p>\n
\"IBRA should have taken the opportunity to improve the welfare
\nof the local people by selling (plantations) to them. IBRA
\nignored this because it is obliged to get the money for the
\nstate,\" he said without elaborating.<\/p>",
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