Guthrie to up investment in RI operations

Guthrie to up investment in RI operations

Rendi A. Witular, The Jakarta Post, Jakarta

Malaysia's largest plantation group, Kumpulan Guthrie Bhd., said
it would invest about US$100 million over the next two years to
increase the output of its oil palm operations in Indonesia.

The group's chief executive, Tan Sri Datuk Khalid Ibrahim,
told The Jakarta Post over the weekend that Guthrie was very
satisfied with the performance of its 25 oil palm plantations
here, which it purchased from the Indonesian Bank Restructuring
Agency (IBRA) in 2001.

"Our palm oil output from Indonesia is very satisfying. So we
plan to invest more money to set up mills and other facilities
needed to boost the production," said Ibrahim on the sidelines of
a seminar on the agroindustry.

He said that when the group purchased the 25 oil palm
plantations in April 2001, total output was about 200,000 tons
per year. And by March of this year, output had reached 300,000
tons.

He said that with the new investment, output was expected to
jump to 450,000 tons in 2003 and 600,000 tons in 2004.

Guthrie paid some US$368 million for the 25 oil palm
plantations, which cover more than 260,000 hectares in Sumatra,
Kalimantan and Sulawesi.

IBRA took over the plantations in the late 1990s from the
Indonesian Salim Group, as part of the group's repayment of its
debts to the government.

The agency sold the plantations to Guthrie to raise cash to
help finance the state budget deficit, and also to prevent the
plantations from deteriorating any further without the necessary
new investment.

Guthrie has encountered some difficulties in operating the
plantations, including from local regency administrations
imposing various taxes, which in turn have increased production
costs.

There have also been problems with looting by villagers and
land disputes.

Indonesia is the world's second largest palm oil producer
after Malaysia. Oil palm trees in Indonesia are younger than
those in the old British colonial plantations of Malaysia, so
they produce more palm oil.

Some industry players and politicians in Indonesia have
expressed concern that the plantations acquired by Guthrie would
lead to foreign domination of the country's lucrative palm oil
industry, with some of these observer asking that the deal with
IBRA be canceled.