Indonesia still appetizing to U.S. food giant ADM
Indonesia still appetizing to U.S. food giant ADM
By Riyadi
DECATUR, Illinois, USA (JP): U.S. food giant Archer Daniels
Midland Company is still keeping an eye on Indonesia's investment
prospects, despite some disappointment over its operations there.
ADM Group vice president John D. Rice told visiting State
Minister for the Empowerment of State Enterprises Tanri Abeng on
Thursday that his company would restart investment in Indonesia
once the current political debacle was settled.
"We have more than US$1 billion cash-flow worldwide, and we
keep looking for investment opportunities around the world. And
Indonesia is certainly one place we are considering," he said.
ADM's managing director for the Asia Pacific region, Stephen
H.Y. Yu, said his company invested quite heavily in a number of
oil palm plantations and refinery industries in Indonesia in
early 1997 when the crisis was about to engulf Indonesia.
"We were at the early stage when everything fell apart," he
said.
The problems were aggravated by allegations of bribery and
other corporate misconduct, and follow-up investigations by
Indonesian officials, which hampered its operations in the
country, Yu explained.
The issue of bribery surfaced in late 1997 when former ADM
executive Mark E. Whitacre was reported by U.S. media as telling
the FBI that ADM provided payments totaling millions of dollars
to Indonesian politicians in exchange for non-payment of taxes
and help procuring environmental permits.
Whitacre was eventually fired from ADM and the company accused
him of embezzling $2.5 million. He was later convicted of
embezzlement and sentenced to nine years in prison.
Yu said that although the investigations by the Indonesian
government did not find any evidence of wrongdoing, it had
already damaged the company's operations and faith in the
country.
The company was also affected by the government's drastic
policy change in the trade of crude palm oil.
However, Yu said, the company was still looking forward to
increasing investment in the country when the political situation
returns to normal.
ADM currently has five oil plantations scattered across
Sumatra and Kalimantan, five crude palm oil mills, two refineries
and one specialty fats plant. Most of the facilities are located
in Sumatra.
ADM, listed on the New York Stock Exchange, is a global
agricultural processing, marketing and distribution group of
companies. Its worldwide facilities are capable of processing up
to 50 million metric tons of corn, wheat, soy and other
agricultural products annually.
The group's total sales stood at $16.1 billion in 1998 and its
net profits reached $403.6 million.
Tanri Abeng, who was on a 10-day tour of Europe and the U.S.,
said the Indonesian government is seeking strategic investors to
participate in the country's privatization of state firms.
ADM could join the privatization program, but it must follow
the government procedures, he said.
"We have a transparent and competitive mechanism, and they
must follow that path if they want to invest in our state firms,"
Tanri told The Jakarta Post.
Sofyan A. Djalil, a deputy to Tanri, said the road show was to
attract as many investors as possible to invest in Indonesia,
including in state enterprises.
The government plans to get $1.5 billion in revenue from the
sale of state firms for the current 1999/2000 fiscal year.
Sofyan said the government had thus far collected $800
million, including $407 million from selling its stakes in
domestic telephone company PT Telkom, $215 million from Jakarta-
based port management company PT Pelindo II and $170 from
Surabaya-based port management firm PT Pelindo III.
The government expects to draw up more than $700 million from
the privatization of PTP IV (a plantation company), airport
management company PT Angkasa Pura II, international call
operator PT Indosat and fertilizer firms PT Pupuk Sriwijaya in
South Sumatra and PT Pupuk Kaltim in East Kalimantan.