Astra to spend Rp 900b oil palm estates

JAKARTA (JP): PT Astra Agro Niaga, the agribusiness subsidiary of Indonesia's largest automaker PT Astra International, plans to spend Rp 900 billion (US$378.15 million) on new oil palm plantations in Sumatra.

Rini M Soewandi, finance director of PT Astra International, said Sunday that PT Astra Agro Niaga had a concession of 300,000 hectares for oil palm plantations in Sumatra, of which around 200,000 hectares had been planted and 82,000 hectares had been harvested.

She said the company would plant oil palms on 100,000 more hectares in the next few years.

"One hectare will need around Rp 3 million in new investment," she said on the sidelines of the Astra Family Fair at Jakarta Fair Ground. The fair was held to celebrate the 40th anniversary of Astra International.

She said each hectare would cost between Rp 8 million and Rp 9 million to develop, including the cost of capital.

Oil palm trees usually start bearing fruit five years after planting.

"So total funds to develop the remaining 100,000 hectares will be around Rp 900 billion, including interest," she added.

Rini said PT Astra Agro Niaga planned to go public in the third quarter of this year.

She said funds from the initial public offering would be used to finance the development of the 100,000 hectares.

Rini said that agribusiness would soon become the backbone of Astra International.

She said agribusiness was expected to contribute about 8 percent of Astra International's net profit this year. Infrastructure, including telecommunications, was expected to contribute 4 percent.

Rini said Astra International expected to book Rp 470 billion in net profit in 1996 from an estimated total revenue of Rp 12 trillion, higher than the Rp 450 billion earnings projected for that year. In 1995, it made a net profit of almost Rp 371 billion.

She said the company was projected to earn about Rp 614 billion in net profit this year and Rp 1.5 trillion in the year 2000.

Rini said the company's revenue would increase dramatically this year, especially with the larger contribution expected from agribusiness and infrastructure divisions. (09)