Palm oil industry closes to foreigners

JAKARTA (JP): The Minister of Agriculture, Sjarifudin Baharsjah, said yesterday the government had frozen the palm oil industry for foreign investors because of oversupply in world markets.

"There have been overwhelming investments in the palm oil industry and we have been encouraging foreign investors to help develop plantation-related industries other than palm oil," he said at the opening of a one-day meeting between government officials and executives from large plantation firms.

He said Indonesia needed to consolidate its palm oil industry to face the world market's bleak conditions.

The Director General of Plantations, A.R. Tondok, said world palm oil production was estimated to be 24.7 million tons this year, while consumption just 17 million tons.

World annual palm oil output is projected to increase to 27.8 million by 2001 and to 30.8 million tons by 2012, while consumption to just 19.2 million tons and 22.5 million tons.

He said Indonesia's production of crude palm oil (CPO) rose to 3.86 million tons last year from 3.47 million tons in 1995.

Indonesia exported 1.57 million tons of CPO in 1995.

But Sjarifudin said foreign investors could join or buy domestic companies' projects if the project's development could not be continued.

Malaysia's Primary Industries Minister, Lim Keng Yaik, said in Penang, Saturday, that Indonesia had temporarily frozen new Malaysian oil palm plantation investments because the sector was overinvested.

Lim said Indonesia imposed the freeze to let the palm oil sector to consolidate after an influx of investments, especially from Malaysia.

So far, 27 Malaysian companies have inked joint venture agreements with Indonesian firms to develop 1.5 million hectares for oil palm cultivation. (10)