Dutch Rabobank to boost financing in Indonesia

Dutch Rabobank to boost financing in Indonesia

SINGAPORE (Reuter): Dutch cooperative Rabobank plans to expand its syndicated loan business in Indonesia in other Southeast Asia's countries to top the US$500 million it posted in 1996, a senior official said on Thursday.

Rabobank general manager Hans Hannaart told Reuters the bank did $500 million in syndicated transactions, mainly in the food and agri-business sector, last year.

"We certainly hope to improve on that number," Hannaart said, adding Rabobank is looking into projects in the palm oil, poultry and sugar industries. "We are (also) looking at the number of sugar transactions in the region."

The poultry and meat industry in Southeast Asia and the animal feed business to support it have grown sharply on the back of the area's rapidly growing population and increasing affluence.

Increased consumption has transformed countries here into large importers of corn, soymeal and wheat.

Growth in the vegetable oil and animal feed sectors has been particularly strong, especially the flow of palm oil from leading producers like Malaysia and Indonesia to the West and China.

Rabobank has moved aggressively into the palm oil industry and was the lead arranger in a $95 million syndicated term loan facility signed on Friday with P.T. Asianagro Lestari of Indonesia, one of the biggest palm oil growers in the country.

"We do a lot of transactions in that sector, palm oil, because we feel that palm oil in Indonesia is a very good sector,"

Hannaart said. "It will definitely become one of the top export earners for Indonesia by the turn of the century."

Indonesia is particularly attractive because "they are the lowest cost producer in the world (of palm oil). There is increasing demand outside Indonesia for the product," he added.

Sukanto Tanoto, the chairman of RGM International and the mother company of Asianagro, told reporters his firm planned to use the proceeds of the loan facility to expand palm oil cultivation in Indonesia sharply in the coming years.

"We expand about 40,000 hectares a year," he said.

Tanoto said the outlook for palm oil remains promising because of strong Chinese buying.

"In the last five-seven years, the Chinese have been buying a lot of palm oil. That's why palm oil prices have been reasonably firm," he said.

Rabobank officials have previously said they had roughly a 60 percent share of the agricultural commodities trade finance market in Southeast Asia.

Hannaart said the Dutch cooperative welcomes competition in the market and expressed confidence Rabobank can maintain its position as the leading institution in commodity financing in the region.

Expansion in the commodity finance business has attracted other banks into the sector although it continues to be dominated by Dutch firms such as MeesPierson and ING Bank and French banks such as Societe Generale.