Soeharto briefed on Barito's $1b deal in Kuala Lumpur
Soeharto briefed on Barito's $1b deal in Kuala Lumpur
JAKARTA (JP): The Malaysian government has agreed to provide
Indonesia's Barito Pacific Group with one million hectares of
land in Sabah state for the development of timber estates for
pulp.
Minister of Investment Sanyoto Sastrowardojo told reporters
yesterday, after meeting President Soeharto, that the pulp
industry would be developed to support the timber estates and
could employ around 10,000 Indonesian workers.
Chairman of Barito Pacific Prajogo Pangestu and Minister
Sanyoto briefed the President, yesterday, on the Barito's US$1
billion share deal in Kuala Lumpur over the weekend.
Prajogo said that Malaysia's Prime Minister Mahathir Mohamad
had agreed to allow the employment of Indonesian workers in the
timber estate project in Sabah.
Both Prajogo and Sanyoto met Mahathir in Kuala Lumpur last
week following the acquisition of a publicly-listed Malaysian
firm: the Construction and Supplies House Bhd. (CASH). During
this meeting they completed a deal that could be worth up to US$1
billion.
Under the deal, Prajogo and his wife Harlina Tjandinegara
Pangestu sold assets to CASH in exchange for shares that gave
Prajogo a controlling stake in the Malaysian firm, whose assets
were in Malaysia, Papua New Guinea and China.
Prajogo, a leading Indonesian timber tycoon, said yesterday
that he had also reported to Soeharto about the acquisition.
He added that the US$1 billion deal he signed in Kuala Lumpur
over the weekend was given the go-ahead by President Soeharto.
Prajogo argued that his move was a way of harnessing fresh
foreign funds to Indonesia to finance development projects.
"So naturally, the President gave it his blessing," Prajogo
said.
Prajogo said the price of the CASH shares on the Kuala Lumpur
Stock Exchange had risen from two Malaysian ringgits before the
acquisition to 11 ringgits yesterday.
Assuming the price is between 10 ringgits and 15 ringgits, he
said, "It means Barito Pacific will likely get the minimum fresh
funds of Rp 4.1 trillion and Rp 6.9 trillion ($3.2 billion) at
its peak."
CASH was previously controlled by its politically-connected
managing director, Joseph Ambrose Lee Yok Min.
According to Prajogo, he will send the first $1 billion from
CASH back into Indonesia after one year period to finance other
development projects.
However, he declined to comment about how he will finance the
pulp industry.
He added that a pulp mill usually needs between some 100,000
and 150,000 hectares of forest to support its operation.
Among the Barito Pacific companies is Prajogo's flagship PT
Barito Pacific Timber, listed on the Jakarta and Surabaya Stock
Exchanges, which accounts for about 10 percent of the Indonesian
bourse's market capitalization.(09/17)