Two Asian tycoons to set up seven sugar projects<\/p>\n
JAKARTA (JP): Two of Asia's wealthiest and most powerful
\nbusinessmen are forming an alliance that will create one of the
\nlargest sugar empires in the world.<\/p>\n
Indonesia's Liem Sioe Liong and Malaysia's Robert Kuok plan to
\nmerge their sugar interests in Indonesia under a new holding
\ncompany and spend more than US$1 billion on seven projects which
\nwill cover a total area of more than twice the size of Singapore
\nin south Sumatra.<\/p>\n
According to the Singapore-based Business Times daily, each of
\nthe projects, costing about $130 million, will cover about 25,000
\nhectares, has a planted area of 20,000 hectares, a factory
\ncapable of crushing 10,000 tons of cane a day and producing about
\n120,000 tons of sugar a year.<\/p>\n
Two of the projects have been completely developed and are in
\nfull operation, while the other five will be developed over the
\nnext 10 years.<\/p>\n
The company has obtained loans for one of the five projects
\nand is now sourcing funding for the remaining four projects.<\/p>\n
Nearly half the money or about $70 million for each project
\nwill be for factory machinery and construction, with $20 million
\nfor farm equipment, $10 million for infrastructure development
\nand $30 million for plantation development.<\/p>\n
The shareholders hope to inject $20 million in equity
\ncontributions for each of the projects and generate another $20
\nmillion from internal funds.<\/p>\n
They expect to raise the remaining $90 million for each
\nproject or $360 million in total for the four unfunded projects
\nfrom financial institutions.<\/p>\n
As the two partners are among the biggest names in Asian
\nbusiness and with sugar prices currently on the rise, financing
\nis not expected to be a problem. According to the International
\nSugar Organization, there will be a global sugar deficit of 2.4
\nmillion tons this year --- just over two percent of world
\nconsumption.<\/p>\n
Liem is Indonesia's wealthiest Chinese businessman. He has
\ninterests in cement, property, finance and food in Indonesia and
\nabroad, including Singapore, where he is the biggest shareholder
\nof listed United Industrial Corp. His companies generate a total
\nturnover of more than $10 billion, with his PT Indocement Tunggal
\nPrakarsa being Indonesia's largest listed company.<\/p>\n
Hong Kong-based Kuok, known as the \"sugar king\", is already
\none of the biggest sugar players in the world and has extensive
\ninterests in property, shipping and vegetable oils. He is also
\nthe largest shareholder of the up-market Shangri-La group of
\nhotels.<\/p>\n
Investment<\/p>\n
Kuok's investment in the Indonesian projects, sources said,
\nwill be through Perlis Plantations Bhd., which is listed on the
\nKuala Lumpur Stock Exchange and is one of the largest sugar
\nproducers in Malaysia. A Perlis Plantations spokesman in Kuala
\nLumpur declined comment on the grounds that the projects were in
\na \"preliminary and delicate stage\".<\/p>\n
According to the 1992 annual report of Perlis Plantations, the
\nlatest available, it currently has no other projects in Indonesia
\nexcept for 95 percent owned PT Healthcare Glovindo, which
\nmanufactures rubber gloves. The new investment will be one of its
\nlargest.<\/p>\n
The sources said external financing for the Indonesian
\nprojects could be raised in one of two ways. One would be through
\ndirect loans using the plantation land and fixed assets as
\ncollateral. The other would be for the two share-holders to
\nestablish a leasing company that will purchase all the
\nagricultural and factory machinery and then enter into lease
\ncontracts with the projects.<\/p>\n
The leasing company, if established, will be a subsidiary of
\nthe new holding company of Kuok and Liem, and will only service
\nthe requirements of the sugar projects. Funding will largely be
\nfrom financial institutions, which will secure their loans with
\nthe machinery and equipment leased to the factories.<\/p>",
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"sponsor": "Okusi Associates",
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