Wed, 23 Aug 2006

Indonesia, Malaysia eyeing European bio-fuels market

Andi Haswidi, The Jakarta Post, Jakarta

Indonesia and Malaysia are set to establish a common production and marketing front in order to tap into the growing European bio-fuels market.

Speaking to reporters after accompanying Vice President Jusuf Kalla to meet 55 businesspeople from the Kuala Lumpur Business Club (KLBC) on Tuesday, Investment Coordinating Board (BKPM) director Muhammad Luthfi said Indonesia would permit more Malaysian investors to put their money into the country's crude palm oil industry as part of the collaboration.

The two countries would also collaborate in the marketing field so as to take optimum advantage of the prospective European bio-fuels market, he said.

"We estimate that by 2009, Indonesia and Malaysia can provide 20 percent of the entire bio-fuels demand in Europe," Luthfi was quoted by Antara as saying.

Luthfi said that Malaysian investors, including Sime Derby Bhd., Golden Hope Bhd., and Genting Bhd., had expressed interest in cooperating with Indonesian firms in bio-fuel production.

In the first half of 2006, Malaysia's total investment in Indonesia stood at US$334 million, most of which was in the oil-palm plantation and telecommunications sectors.

According to BKPM figures, total investment in bio-fuel support industries by Malaysian investors in Indonesia to date stood at US$600 million, including investment in palm-oil production, the main raw material used here in the production of bio-fuel.

Luthfi said that an estimated 5.5 million hectares had been given over to oil-palm plantations so far, and that this would likely increase by an additional 3.5 million hectares over the next five years.

He pointed out that the combined crude CPO production of Indonesia and Malaysia accounted for 85 percent of the world's total production.

Mohd. Munir Abdul Majid, a KLBC director, said that as part of the collaborative venture, Indonesia and Malaysia had agreed to allocate 40 percent of their CPO production for use in the bio-fuel sector.

After meeting with the Vice President, some of the KLBC members visited the Jakarta Stock Exchange for talks with representatives of the bourse and the Indonesian Chamber of Commerce (Kadin).

A number of topics were discussed during this meeting, including the possibility of allowing companies from the two countries to have dual listings on the Malaysian stock exchange (Bursa Malaysia) and the JSX.

"These are just preliminary talks between the two sides. Nothing has been decided yet on what kind of cooperation can be arrived at," said Bursa Malaysia strategy head Adhha Abdullah.