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.