Eight investors to open oil palm estates

JAKARTA (JP): Eight foreign companies, mostly from Malaysia, have received licenses from the Investment Coordinating Board (BKPM) to develop oil palm plantations in the country, it was announced yesterday.

Director General of Plantations A. Rante Tondok said the size of the eight companies' plantations would total about 342,000 hectares.

He said that they planned to invest about US$1 billion in the plantation projects.

"The projects are scattered all over Indonesia, especially in eastern Indonesia," Tondok told a news conference.

He said the investment board was also processing the permits for six other foreign investors to start similar projects.

Last year the government closed the oil palm sector to foreign investors to protect domestic companies and to prevent excessive land acquisition by foreigners.

However, the government eased the investment restrictions in January and allowed foreign investors to enter the business if their plantation areas are located in the eastern part of the country and if they operate in partnership with local companies.

In February the government totally freed the oil palm industry to foreign investors to comply with the reform program imposed by the International Monetary Fund (IMF).

Tondok said there are currently 50 foreign investors developing oil palm plantations in Indonesia, covering 926,650 hectares. About 80 percent of these are Malaysian companies.

Before the freeze Malaysian companies signed joint venture agreements to develop 1.5 million hectares of oil palm estates, mainly in Sumatra and Kalimantan.

According to the Directorate General of Plantations, Indonesian investors controlled about 2.4 million hectares as of last year, of which 1.19 million were owned by big private companies, 443,000 by state companies, and 824,000 by smallholders.

Global crude palm oil production is estimated to be 24.7 million tons this year, while consumption is estimated at just 17 million tons.

Indonesia is expected to produce 5.9 million tons of crude palm oil (CPO) this year, up from 5.3 million in 1997. It is the world's second largest producer after Malaysia.

Tondok said that foreign exchange earnings from the forestry sector are expected to reach $5.7 billion this year, up from $5.3 billion in 1997.

Tondok said that the increase was partly due to increasing prices of CPO and several other commodities in the world market. (gis)