Malaysian group asks RI to review oil palm policy

LHOKSEUMAWE, Aceh (JP): A Malaysian businessman has asked Indonesia to review its decision on freezing foreign investment in oil palm plantations.

Malaysia's Chamber of Commerce's cochairman, Abdul Rahman Maidin, said yesterday that he had asked for a review of the policy during the Indonesia-Malaysia-Thailand Growth Triangle's (IMT-GT) Senior Official Meeting which ended Wednesday.

Maidin told reporters he had also requested special treatment for foreign investors, particularly from Malaysia, who had made investments in the oil palm sector in Indonesia in the last couple of years.

"If possible (the Indonesian government) might consider not applying the policy in the IMT-GT," he said.

The government announced earlier this month that it had decided to ban further foreign investments for oil palm plantations because there were enough foreign investors in the sector, according to State Minister of Investment Sanyoto Sastrowardoyo.

About 80 percent, or 1.6 million hectares, of the total area of oil palm plantations involving foreign investors is owned by joint ventures involving Malaysian investors. Malaysia is currently the world's largest oil palm grower, with Indonesia in second place.

But several observers suspect the ban is aimed at protecting local oil palm plantations and downstream palm oil business -- currently dominated by tycoons Eka Tjipta Widjaya and Liem Sioe Liong.

"The policy is aimed at making Indonesia the biggest oil palm producer in the world. If the Malaysians come with their skills and marketing expertise, it is most unlikely this target can be achieved," said one analyst, a meeting participant.

Kosim Gandataruna, the head of the Indonesian delegation at the IMT-GT meeting, said the policy was expected to avoid an oversupply of palm oil.

"The ban on foreign investments ... is because we have had bad experience in managing cloves. An oversupply of cloves slashed prices to levels which hurt farmers. We don't want that to happen to oil palms," he said.

Most oil plantations in Indonesia are owned, established and managed by large businesses. Farmers, who are involved in the plantations are usually workers paid on a daily basis.

Local economists mostly expressed concern over the ban, saying it was not only counterproductive but also went against Indonesia's commitment to following the world's free trade trends.

Minister of Agriculture Sjarifudin Baharsjah denied on Wednesday allegations that the government was assisting a large business group to monopolize the oil palm business by freezing new foreign investment in the sector. (pwn)