Hartarto rejects Malaysian's oil palm proposal

Hartarto rejects Malaysian's oil palm proposal

JAKARTA (JP): The coordinating minister for production and
distribution, Hartarto, has rejected Malaysian requests to
develop oil palm plantation in Indonesian provinces which are in
ASEAN's subregional growth zones.

Hartarto said yesterday the government had not considered
giving special facilities to Malaysian investors.

Foreign investments in the sector were banned "because they
have reached 1.6 million hectares", the minister said.

"This is about 80 percent of the total oil palm plantation
acreage in Indonesia which is currently two million hectares," he
said.

But Hartarto refused to say how the government would
accommodate the increasing number of foreign investors eager to
operate in the oil palm sector.

The government said earlier this month it was banning foreign
investment in oil palm plantations because of the large areas
already licensed to joint ventures and foreign investors.

But the minister of agriculture, Sjarifudin Baharsjah, said
recently the ban was imposed only in Kalimantan, Sumatra and
Java.

He said the government would still allow foreign investors to
open up oil palm plantations in eastern Indonesia, but would
require them to involve smallholders in their plantation projects
under the nucleus and smallholders scheme.

Hartarto said suggestions that oil palm plantations be
prioritized for eastern Indonesia needed further assessment.

"We still need to consolidate with parties that are related to
investments in this sector," he said during a gathering of North
Sulawesi citizens in Jakarta.

"Consolidation is needed to provide opportunities for our own
businesses," he said.

Malaysian businesses have since requested the government
provide special facilities for oil palm investors, particularly
those operating in Association of Southeast East Asian Nations'
subregional growth areas.

Indonesia is a member of three such growth areas: the Brunei-
Indonesia-Malaysia-Philippines East Asia Growth Area, the
Indonesia-Malaysia-Thailand Growth Triangle and the Indonesia-
Malaysia-Singapore Growth Triangle.

The vice chairman of the Malaysian Chamber of Commerce, Abdul
Rahman Maidin, said last week it was the government's prerogative
to impose such a ban.

But he asked the government to expedite investment procedures
and plantation operations of Malaysian businesses that had
already begun investing in the growth areas.

Businesspeople and observers have said investing in oil palm
plantations in Indonesia was tedious because it involved plenty
of red tape and had many associated costs -- both legal and
illegal.

Analysts have said the ban was aimed at protecting local oil
palm plantations which tycoons Eka Tjipta Widjaja and Liem Sioe
Liong dominate.

Meanwhile, economist Dorodjatun Kuntjoro-Jakti from the
University of Indonesia, who was also at yesterday's gathering,
said eastern Indonesians should participate in projects in
subregional growth areas rather than wait for deregulatory
measures or the opening up of new free trade areas.

Dorodjatun said subregional growth areas were more important
than the free trade regimes of ASEAN, APEC and the World Trade
Organization.

"It is even more important than the elimination of nontariff
and tariff barriers, deregulations and other plans that the
government has in store to boost the region's economy," he said.

Dorodjatun said cooperation in subregional growth areas was
bound to boost provincial economies.

"We can expect to see more flows of goods, services, staff,
money, capital, information and technology in these areas," he
said. (pwn)