Village coop joins huge palm oil plantation project

Village coop joins huge palm oil plantation project

JAKARTA (JP): A Village Cooperative Unit (KUD) in West Sumatra
will establish a US$28 million palm oil plantation and processing
plant in cooperation with state-owned and private companies.

The chairman of KUD Aur Kuning, a cooperative in the Pasaman
regency of West Sumatra, Sudirman S., told Commission IV of the
House of Representatives (DPR) yesterday that his cooperative
will set up a joint venture with the state-owned plantation firm
PT Perkebunan (PTP) VI and PT Arthasolid, a private trading
company, to establish a 5,400-hectare palm oil plantation and
crude palm oil (CPO) mill.

Aur Kuning's 2,400 members have been involved in the
development of PTP VI's palm oil plantation in West Sumatra,
earning about Rp 463,800 each per month.

The president of PTP VI, Koentadi Hadinoto, told the
commission that the three parties will sign the joint venture
agreement later this month.

He said the planned venture, to be called PT Bukit Artha
Harapan, will be 55 percent owned by Arthasolid, 35 percent by
KUD Aur Kuning and 10 percent by PTP VI. The cooperative will
have an option to increase its equity ownership to 55 percent.

Koentadi said Arthasolid, a subsidiary of the Artha Graha
Sentral Group, which operates in banking, telecommunications,
trading, palm oil and orchid plantation and hotel, will finance
the cost of the palm oil project, including Rp 35.29 billion for
the plantation and Rp 25.27 billion for the CPO plant.

Payment

KUD Aur Kuning's members, who will get salaries of about Rp
700,000 each every month for 10 years from participating in the
operation of the plantation and CPO plant, will pay their equity
participation within four years.

"The construction of the plant will begin early next year and
will be completed within 18 months. Operation is expected to
start in late 1996," he said, adding that the plant's processing
capacity will be 20 tons of palm oil bunches per hour in the
first two years, which will be increased to 23 tons per hour in
the fourth year.

He said the project is expected to give a profit margin of
about 1.59 percent to 14.23 percent within 10 years, while the
investment will be recovered within five-and-a-half years.

Arthasolid's executive director, Eddy Rinaldi, said 35 percent
of the investment for the project will come from equity and 65
percent from commercial loans.

According to Eddy, his company's sales of palm oil reached Rp
100 billion in 1993. "This year we expect a 25 percent increase
in sales," he said.

Arthasolid sells palm oil to the Middle East, Europe, Africa,
India, Pakistan and China. (icn)