Minister denies monopoly charges in palm oil sector

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

Sjarifudin argued that state-owned enterprises and smallholders controlled larger acreage of oil palm plantations than the Sinar Mas Group, the largest business group in the sector.

"If we take a closer look, the acreage of oil palm plantations owned by state firms and the people reaches 600,000 hectares, much larger than that controlled by the largest conglomerate," Sjarifudin said.

"So, news reports that say the ban opens possibilities for private sector monopoly in the sector are groundless," he said.

He did not mention how many hectares of oil palm plantations were currently controlled by large private businesses.

Data at the Indonesian Chamber of Commerce and Industry show that oil palm plantation acreage had grown from 120,000 hectares in 1968 to 1.47 million hectares last year, of which large private businesses controlled 1.02 million hectares.

The state minister of investment, Sanyoto Sastrowardoyo, said earlier the government might totally close oil palm plantations to foreign investors by including the sector on its negative investment list. He said this was needed to protect local companies.

Many parties criticized Sanyoto's planned blanket ban on foreign investors. They said Sanyoto's argument was weak, considering that oil palm plantations were already controlled by big businesses like the giant Sinar Mas and Salim groups, which were owned by politically connected business tycoons Eka Tjipta Widjaja and Liem Sioe Liong.

The Indonesian chamber warned that a ban on new foreign investment in oil palm plantations would harm domestic investment in the sector and allow a certain business group to monopolize the sector.

The chamber's vice chairman on agrobusiness, Adiwarsita Adinegoro, said the government should rethink its ban on new foreign investment in the sector.

Sjarifudin said the ban on new foreign investment in oil palm plantations had nothing to do with monopoly.

He contended that even large businesses which had opened large acreage of oil palm plantations on islands outside Java cooperated with the people, especially transmigrants from Java, through a nucleus estate for a transmigrant scheme, locally known as the PIR-Trans.

Under the scheme, people would be employed at oil palm estates during the early stage of development. After a certain period, they would be accorded ownership for a certain portion of the estates.

"Eka (Tjipta Widjaja), also the Salim Group, Astra Group and other private large businesses, have built oil palm estates for the PIR-Trans scheme," Sjarifudin said.

He said the government's freezing of new foreign investment in oil palm plantations aimed to force the existing license holders to soon materialize their investment plans.

Besides, he said, the government wanted to consolidate the oil palm plantation sector and ensure that there would be no overlapping areas for new investors.

"And we do not want to give land without basis," he said.

In addition, he said, the government was currently conducting a census on oil palm plantations and palm oil industries to have a clearer picture on the business. (rid)