Eight investors to open oil palm estates

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)