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)