Indonesia offers $1.57b in agri-projects to Mideast

Zakki P. Hakim, The Jakarta Post, Jakarta

A group of Middle East investors, spearheaded by the Islamic Development Bank (IDB), was offered 10 agricultural projects during a recent visit to Indonesia, the minister of agriculture said.

The group will soon tour each of the project sites, which have a total value of about US$1.57 billion, Minister Anton Apriyantono said on Monday.

Most of the projects deal with developing or rehabilitating agricultural and rural infrastructure, including irrigation systems.

"We have made a proposal to the IDB for soft loans of up to $1.57 billion for the projects, all to improve our agricultural infrastructure," Anton said.

He said the IDB could provide soft loans at rates as low as below 1 percent per annum, with a three-year grace period and a 12-year payment term.

Aside from the IDB, other funding houses showing interest in the projects are the Kuwait Development Fund and the Saudi Development Fund, although the government has asked the IDB to coordinate the funds and review the projects on behalf of the potential investors.

Other than irrigation systems, there are also projects to develop grass fields for livestock in traditional areas, such as Nusa Tenggara, and to create new fields in nontraditional places such as Aceh and North Sumatra.

Tsunami-stricken Aceh, Anton said, has the potential to develop such fields.

"It is an opportunity for investors in Saudi Arabia to try and help develop livestock in Aceh to meet the high demand (for meat) during the haj season," he said.

Anton held a press conference after concluding an official trip to Qatar, Kuwait and Saudi Arabia from May 21 to May 28.

During the trip, he met with Kuwait Prime Minister Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah and the agriculture ministers from Saudi Arabia and Qatar to explore the possibilities for closer cooperation in the farming sector.

He also met with IDB president Ahmed Mohamed Ali, who raised concerns over the implementation of regional autonomy in Indonesia, but still committed to coordinate and forward Indonesia's proposal to other financial institutions in the region.

According to Anton, Indonesia lacks the funds to improve the country's outdated agricultural infrastructure, especially its irrigation system.

"The Ministry of Agriculture gets only Rp 4 trillion ($421.05 million) annually from the state budget. This is not enough to fix our ailing irrigation system, therefore we must seek other (financial) sources," he said.

Anton said 40 percent of the country's irrigation system was damaged due to a lack of maintenance.

The Islamic Corporation for the Development of the Private Sector, an IDB subsidiary, has also offered financing schemes for Indonesia's private sector, including micro-credits for farmers, Anton said.