Prijadi says Guthrie transaction final

JAKARTA (JP): Finance Minister Prijadi Praptosuhardjo reiterated on Tuesday that the sale of 25 palm oil plantations by the Indonesian Bank Restructuring Agency (IBRA) to Malaysia's Kumpulan Guthrie Bhd. was already final.

Prijadi made the statement following earlier reports quoting farmers association top officials as saying that Vice President Megawati Sukarnoputri wanted the transaction to be renegotiated.

"(The transaction) is final. What can be further negotiated is Guthrie's commitment to the local community. But the price of the sale is final," Prijadi told reporters.

Prijadi did not provide details.

The Indonesian Association of Farmers (HKTI) executive Bambang Warih told reporters on Monday following a meeting with Megawati that the sale of the palm oil plantations to Guthrie was not yet final.

Bambang quoted Megawati as saying that the Vice President would hold the deal for further negotiations.

But a government source said that the HKTI executive had misquoted Megawati. The source also said that the proceeds from the Guthrie deal had been transferred from an escrow account to the IBRA account.

Guthrie won the deal last year through a competitive bid, paying some US$368 million to IBRA for the palm oil plantations and taking over Rp 500 billion of the plantation companies' debts.

But the HKTI and some legislators had demanded the government cancel the transaction for various reasons, including lack of transparency and preserving national interest. Indonesia is the world's second largest producer of crude palm oil after Malaysia.

HKTI chairman Siswono Yudohusodo insisted that if the deal went through, Guthrie should abide by local regulations.

He was referring to the obligation of large plantations to develop them under the so-called nucleus-estate scheme where only 30 percent of the plantation area is held by the company, with the remaining 70 percent owned by smallholders under a credit program funded by the company.

Under the scheme, smallholders repay their loans using the sales income from their produce that is sold to the company.

IBRA received some 262,000 hectares of palm oil plantations from the Salim Group as part of the repayment of the latter's debt to the government.

Canceling the Guthrie transaction would further damage investor confidence in the economy. IBRA has already been criticized for its slowness in the sale of its assets.

IBRA is also expected to help strengthen the ailing rupiah by selling its dollars obtained from the asset sale. (rei)