Knowing Malaysian Palm Oil Investors in Indonesia

Knowing Malaysian Palm Oil Investors in Indonesia

InfoSAWIT, JAKARTA - Palm oill plantation transaction by foreign investors which always happens should force the small scale plantations owned by them,

Based on the InfoSAWIT Data Center (December 2012), there have been 18 palm oil plantation groups or the Malaysian investment companies have mastered 1,46 million hectares of palm oil plantation in Indonesia. Sime Darby and IOI are as the biggest portion holders.

The width of Indonesia’s palm oil plantations that foreign investors mastered is not right enough. The optimistic numbers of width could be 3 million hectares. Others mentioned to be 2 million hectares. In 2006, Malaysian investments could be reaching about 3,2 billion rupiah within 800 thousands land mastery or 14,5% of total palm oil plantations. Malaysia is not the only foreign investor in palm oil business because there are other countries, such as, Singapore, United Kingdom, Belgium, the United States of America, Kuwait, Thailand, and Myanmar.

But the dominant investors come from Malaysia. The Malaysia’s investment wave to Indonesia’s palm oil plantation has run since 1990’s. Most of the big corporations enter, such as, Sime Darby (the combination of Golden Hope Plantation and Guthrie Groups), IOI, Agro Hope and KLK Kepong. There is an investment company, such as, Pinehill Ventures Limited.

The financial managements, such as, Khazanah and Tabung Haji also involve to to palm oil business in this country. Sime Darby, the main CPO industry, which produces 2,4 million tons or 6% of the world yearly production with 522.489 hectares productive area, can be said as the expansive “pioneer” to Indonesia. Sime Darby, through PT Minamas Plantation (officially pronounced in 2001) now operates in 8 provinces in Sumatera, Kalimantan, and Sulawesi Islands, with 299.263 hectares area in total but it is still 68% (204.845 hectares) planted in multi ages palm oil.

What are the reasons that Malaysian investors “attack” Indonesia? One of the reasons is that the lack of substantial area which is about to decrease. If there is available area, its price will be four times to increase.

The quality of soil in Malaysia is not as fertile as it in Indonesia because the solid soil which becomes too solid, just like rock when being in dry season. It is different from Indonesia’s fertile land, which is suitable to palm oil plantation. It consists of much clay, deep soil surface, not rocky, deep solum and soil acidity (pH) 4-6. The good soil to palm oil plantation is available in Indonesia, such as, latosol land, ultisol, ulvial, peat land, shore- landscape and river land.

According to Rabobank study, published in May 2012, the area to palm oil plantation in Malaysia would end in the next 3-4 years. And Indonesia still has the availabilty to expand palm oil plantation in the next 10-20 years.

Malaysia’s palm oil industrial expansion to Indonesia has something to do with the “Look-East Policy” which was pronounced by the Prime Minister Mahathir Mohammad in 1982. In the end of 1990’s Malaysia’s companies started to show up in its neighborhood countries, Indonesia and Philippine. In Indonesia, Guthrie Groups acquired the Salim Group’s company in Musi Rawas, South Sumatera, while Tabung Haji entered Philippine by developing palm oil industry in Mindanao. (T2)

This article once published in InfoSAWIT, January 2013

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