Jakarta freezes KL investments

Jakarta freezes KL investments

KUALA LUMPUR (DPA): Indonesia has imposed a temporary freeze on new Malaysian investments in oil palm plantations there because of overwhelming investments in that sector, a Malaysian official said.

Primary Industries Minister Lim Keng Yaik said he was informed of the freeze during a visit to Jakarta last week, Bernama national news agency quoted him as saying in Penang island.

Lim said the Indonesians imposed the freeze to allow the palm oil sector to consolidate following an influx of investments, especially from Malaysia.

So far, 27 Malaysian companies have inked joint venture agreements with Indonesian firms to develop about 1.5 million hectares of land for oil palm cultivation.

Malaysia is the world's biggest producer of palm oil, with an estimated output of 8.04 million tons last year, while Indonesia is in second place, producing slightly over half of that amount.

Lim said the move was a signal that Indonesia will no longer encourage acquisition of land by foreign investors.

He did not expect the freeze to hamper Malaysia's plans to seek tie-ups in oil palm cultivation with foreign partners, adding that he will be leading a trade mission in April to Africa, Latin America and Pacific island nations to scout for new markets.

The Malaysia government is encouraging its oil palm plantation firms to open up ventures abroad in countries like Indonesia, the Philippines and Latin America because of a severe labor shortage at home, and also to ensure a continuous supply of raw material for the country's palm oil-based industry and refineries.