'Oil palm plant ban will not last long'
'Oil palm plant ban will not last long'
JAKARTA (JP): The government's recent ban on new foreign
investments in oil palm plantations will not last long, because a
permanent restriction will contradict the free trade principles,
an observer has said.
Chrisman Silitonga, an observer of agricultural and food
issues, said on the weekend he was certain the government would
reconsider the decision once the move was countered with free
trade arguments.
Chrisman, who also works with the National Logistics Agency,
believed the decision to ban foreign investment in oil palm
plantations was aimed at diversifying the types of agricultural
commodities grown in Indonesia.
"I think the government doesn't want to see only one commodity
develop rapidly while the others are left behind," he said. "I
think the government is aiming at creating a balance between the
types of commodities grown," he said.
Chrisman said many Indonesian and foreign businesses were now
competing to invest in that sector.
"If these large investments continue -- leading to an
oversupply of oil palm production -- they would effect prices and
become a boomerang to the investors," he said.
Chrisman said if the government wanted to see a better
diversification of agricultural commodities, the ban should not
be imposed on foreign investments alone but on domestic
investments as well.
"And the ban should not only be aimed at investments in oil
palm but in all agricultural commodities that have a tendency to
'backfire' like oil palm," he added.
He said the government should not include the ban on
investments in oil palm estates on the negative investment list.
"The list is meant to protect small and medium enterprises.
Those in the oil palm sector are big businesses, none of whom
need special protection that requires the sector to be put on the
list," Chrisman said.
Earlier this month the government temporarily froze Malaysian
investments in oil palm plantations in North Sumatra saying
Malaysia had overinvested in the sector.
So far 27 Malaysian companies have entered Indonesian oil palm
estates in cooperation with local companies.
Minister of Agriculture Sjarifudin Baharsjah said last week
the government's decision to freeze oil palm plantation and
related palm oil industry for foreign investors was because there
was an oversupply of palm oil on the world market.
State Minister of Investment Sanyoto Sastrowardoyo said last
week that the government might totally close oil palm plantations
to foreign investors. He said this was needed to protect local
palm oil plantation companies.
A reliable source said the government's decision to ban the
investments was because the giant Sinar Mas and Salim groups --
controlled by politically well-connected business tycoons Eka
Tjipta Widjaja and Liem Sioe Liong -- did not want to see anyone
reducing their domination.
The source said it was also because Malaysian investors were
reluctant to set up joint ventures with the two groups and
preferred instead to link up with smaller, medium-scale
businesses, mostly controlled by indigenous Indonesians.
Another reliable source said several crude palm oil (CPO)
exporters were now suspected of misusing rediscount facilities by
marking up export volumes.
"The case had been submitted to the General Attorney's office
but was turned down because of objections from Bank Indonesia,"
the source said.
Indonesia is the world's second largest CPO producer,
producing half the volume of Malaysia. (pwn/rid)