Malaysia may invest more in RI palm oil
Malaysia may invest more in RI palm oil
KUALA LUMPUR (Reuters): Malaysian palm oil plantation
operators welcomed Indonesia's agricultural reforms and said they
may spur more Malaysian investment in that country's palm oil
industry.
Malaysia, the world's largest producer, already has many palm
oil joint ventures in the second largest grower Indonesia.
"Investments will definitely grow in the long run if
negotiations start now," said a plantation company executive.
But the Malaysian economy and currency need to strengthen
before there can be any serious new spending in Indonesia, he
said.
Indonesia plans to free up agricultural markets, cut tariffs,
encourage foreign investment and scrap state monopolies under a
new IMF program agreed last week.
The agreement also pledged that by February 1 all formal and
informal barriers to investment in palm oil plantations would be
scrapped and curbs would be lifted on investment in the wholesale
and retail trade.
Indonesia's currency -- the rupiah -- has suffered worst in the
turmoil that has swept Southeast Asia, falling some 75 percent
against the U.S. dollar since July last year.
The Malaysian ringgit has fared better, tumbling 41 percent.
Malaysian plantation executives said the potential for growth in
palm oil consumption in the edible oils industry was enormous.
"Palm oil is a commodity that moves in big volumes," said one
plantation executive. "It is a food item with more than 30
percent of the world edible oils market...so there is plenty of
room for growth."
Malaysia produced 9.0 to 9.1 million tonnes of palm oil last
year and Indonesia produced an estimated 5.2 million tonnes.
Malaysian palm oil industry was boosted last month by an
Indonesian ban on the export of crude palm oil and palm olein
until the end of March to ensure adequate supplies to its
domestic market.
After the end of the ban, its palm oil exports would be
subject to tax not exceeding 20 percent.
"This is good news for us. With the export ban in Indonesia,
buyers will have to turn to us (Malaysia) for palm products,"
said a senior trader in Kuala Lumpur. "This will help draw down
our stock level."