KL oil palm projects continue despite ban

JAKARTA (JP): The government's recent ban on new foreign investment in oil palm plantations does not affect Malaysian investors' oil palm projects in Central Sulawesi, a provincial official said over the weekend.

The chairman of the Provincial Investment Coordinating Board, Abdul Azis Tandju, said the government would not cancel their oil palm projects because they had signed Memorandums of Understanding (MOUs) to form partnerships with local firms.

"Several Sabah companies agreed to cooperate with local businesses under the MOUs signed in the beginning of March to develop plantations here," Tandju was quoted by Antara as saying.

But, he said, the Malaysian investors had to detail their partnership programs to ensure that they did not harm local investors' interests.

"The new agreements must guarantee that local investors will remain the owners of oil palm estates," he said.

The government banned new foreign investment in oil palm plantations last month because of overwhelming investment in that sector.

Local economists asked the government to impose the ban only in western regions so that foreign investors could develop oil palm plantations in eastern provinces in partnership with local companies.

Minister of Agriculture Sjarifudin Baharsjah supported their call, but State Minister for Investment Sanyoto Sastrowardoyo said a further study was needed before the ban could exclude eastern provinces.

Investors from Malaysia, the world's largest crude palm oil producer, run most oil palm plantations in Indonesia.

Early this year, the government revoked its approval of a Malaysian company's plan to invest in a 27,000-hectare oil palm plantation in Tanjung Jabung district, Jambi.

Tandju said that Central Sulawesi needed more foreign investment.

He said the central government had to encourage more foreign investment in Central Sulawesi because few of the proposed private investments in the province had been realized in the last 10 years.

"Only 10 percent of the proposed Rp 1.3 trillion (US$548 million) investments by local and foreign investors were realized by 1996," he said. (02)