House commission demands review of Guthrie deal
JAKARTA (JP): A commission of the House of Representatives has urged the government to revise the sale of 24 palm oil estates to Malaysia's Kumpulan Guthrie Bhd. in view of claims by local farmers that they were not properly compensated for their land.
Benny Pasaribu, who chairs the commission overseeing state finances, said on Thursday the US$350 million deal between the Indonesian Bank Restructuring Agency (IBRA) and Guthrie Bhd. was shrouded by irregularities.
The deal, signed in November, allowed Guthrie to take over 24 palm oil estates -- covering 260,000 hectares in Sumatra, Kalimantan and Sulawesi -- formerly owned by the Salim Group.
IBRA took possession of the estates as collateral for massive debts Salim owed to the government.
Many farmers, who felt that they had been cheated or forced into selling their land to the Salim Group, are now pressing the new owners to give them better compensation. Others even claim that the amount of land procured is still being disputed.
Analysts pointed out that the hectarage involved in the deal violated the 100,000 hectare maximum limit that a company can possess nationwide under a 1999 regulation of the Ministry of Forestry and Plantations.
Many politicians have since traveled to Riau to support the farmers' demands.
"IBRA must revise the deal to comply with demands from all parties involved," Benny said, warning of serious disturbances unless the government complied.
Finance Minister Prijadi Praptosuhardjo said last week that the government had signed the first of two parts of the sale.
Benny said IBRA should not only pursue financial targets to meet the time limit set by the government. Social and political factors should also be taken into consideration, he added.
If the deal is finalized without revisions, Guthrie will face opposition, including the possibility of farmers occupying the plantations, he said.
IBRA should revise the sale immediately because any further delay will damage plants and risk even bigger losses, he said.
"Without proper cultivation, the oil palm plants will die after six months," he said.
Benny said IBRA has been spending Rp 50 billion a month to pay the salaries of plantation employees.
Separately, Guthrie chief executive Abdul Khalid Ibrahim told reporters in Kuala Lumpur on Wednesday that his company would not renegotiate the deal.
"Neither IBRA nor Guthrie are looking at the opposition as a deterrent to progress that can derail the deal," he was quoted by Reuters as saying.
However, Guthrie will resolve a number of "technical matters" even after it closes the deal, Khalid said, adding that it felt confident handling sensitive issues, including issues involving the community and land, due to its overseas investment experience. (03)