Eastern provinces oil palm plantations open to foreigners
Eastern provinces oil palm plantations open to foreigners
JAKARTA (JP): The government still allows new foreign
investment in oil palm plantations in eastern Indonesia, the
minister of agriculture, Sjarifudin Baharsjah, said yesterday.
But foreign investors would be required to involve
smallholders in their plantation projects under the nucleus and
smallholder scheme to ensure locals benefited directly from
foreign investment, Baharsjah said.
Under the scheme, the investor acts as the nucleus estate and
agent of development for the smallholders, helping them develop
their own crops (usually two hectares) and process and market
their produce.
The eastern region covers the islands east of Bali.
Sjarifudin said the ban on new foreign investment in the palm
oil industry was imposed only in the western region covering
Kalimantan, Java and Sumatra, Sjarifudin said.
"Through the nucleus-smallholder estate scheme, the government
intends to accelerate the development of the eastern provinces
and to allow smallholders to benefit from the opening of oil palm
plantations in their areas," Sjarifudin said at a meeting on
investment opportunities in agribusiness in West Sumatra.
The government announced early this month a ban on new foreign
investments in oil palm plantations because of the large areas
already licensed to Indonesian joint ventures with foreign
investors.
About 80 percent or 1.6 million hectares of oil palm
plantations licensed to foreign investors are owned by Indonesian
joint ventures with Malaysian partners.
Malaysia is currently the world's largest palm oil producer,
followed by Indonesia.
Analysts have suspected the ban is aimed at protecting local
big oil palm plantations and downstream palm oil businesses
controlled by tycoons Eka Tjipta Widjaya and Liem Sioe Liong.
Analysts warned that the sudden restrictive measures made
investors worry that similar rulings might be taken in other
sectors.
Sjarifudin argued yesterday the ban was to promote investment
in oil palm plantations in eastern Indonesia.
He expressed disappointment that only a few foreign investors
had implemented the nucleus-smallholder estate scheme.
"The government considers the scheme the best method of
plantation development," Sjarifudin said.
"Under the scheme, the farmers, besides owning small plots of
plantations, also serve as workers at the big plantations," he
said.
He acknowledged the ban had confused investors who were still
processing their projects. Some of them had started land
preparations and many others had yet to buy land.
The minister said the government would soon make an inventory
of these projects before deciding which could proceed.
"But any decision we take will not cause investors to suffer
losses," he said.
The opening of the eastern region to new foreign investment in
the palm oil industry was welcomed yesterday by observers and
businessmen.
Economist Firwan Tan from West Sumatra Andalas University said
the policy should be followed by concrete steps to develop
infrastructure in the eastern provinces.
The chairman of the Gemala group, Sofyan Wanandi, believed
foreign investors would be willing to open oil palm plantations
in the eastern provinces.
Investors would also be willing to implement the nucleus-
smallholder estate scheme if the government could convince them
of the scheme's objective, Sofyan said.
"My only regret is why the government had not clarified the
policy on palm oil investment immediately after the controversy
emerged," he said. (jsk)