Ban on foreign palm oil investment to stay

Ban on foreign palm oil investment to stay

JAKARTA (JP): Minister of Agriculture Sjarifudin Baharsjah
ruled out yesterday the possibility of lifting the ban on new
foreign investments in the oil palm plantations.

He said, however, he was willing to discuss with Malaysia
Indonesia's policy on foreign investments in the palm oil
industry.

Speaking to reporters after installing new officials at his
ministry yesterday, Sjarifudin said he had learned of Malaysia's
plans to discuss the issue but had not received an official
proposal.

"As long as the discussions are about matters such as how
foreign investors here can expedite existing administrative
procedures, I am willing to talk to the Malaysians," he said.

Reports last week said that Kuala Lumpur wanted to discuss
with Jakarta the latter's freeze last November on new foreign
investments in oil palm cultivation. The policy was said to have
affected 19 Malaysian companies.

Malaysian Primary Industries Minister Lim Keng Yaik said his
ministry would submit a detailed report on problems faced by the
Malaysian plantation firms to the government this week, before
the matter was taken up with Jakarta.

Ravamping

Indonesia said its freeze on new oil palm foreign investments
was aimed at consolidating and revamping its domestic palm oil
industry.

Officials said there were already too many companies involved
in the sector.

Indonesian Coordinating Minister for Production and
Distribution Hartarto also recently rejected Malaysian requests
to lift the ban.

Foreign investments in the sector were banned "because they
had reached 1.6 million hectares", he said.

Malaysia is the world's biggest producer and exporter of palm
oil, and the government is encouraging local companies to invest
in plantations overseas.

Lim said the 19 companies were among 32 Malaysian firms
currently involved in Indonesia's palm oil sector. Some of the
affected companies are now reportedly at a standstill because
they had pumped money into projects before the freeze was
imposed.

He said the firms had invested between 100,000 ringgit
(US$40,000) and 10 million ringgit ($4 million) each, depending
on the stage of investment they were at. Some companies had
bought and cleared land but had failed to obtain cultivation
approval, he said.

Sjarifudin clarified recently the ban was imposed only in
Kalimantan, Sumatra and Java.

He said the government would still allow foreign investors to
open up oil palm plantations in eastern Indonesia, but would
require them to involve smallholders in their plantation projects
under the nucleus and smallholders scheme.

Sjarifudin installed Sjarifudin Karama as the ministry's new
secretary-general yesterday, replacing Sutatwo Hadiwigeno, and
Col. Setia Purwaka as a member of the board of commissioners of
the state-owned plantation firm, PT Perkebunan X, replacing Col.
Hasril Harun.

Hadiwigeno was appointed secretary-general of the Rome-based
United Nations Food and Agriculture Organization earlier this
year. (pwn)