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Foreing Investors in Palm Oil Indonesia

Foto by Dea Kinanti_Sawitfest 2021/ilustration of plantation
Foreing Investors in Palm Oil Indonesia

InfoSAWIT, JAKARTA – Palm oil plantations in Indonesia have been mastered by foreign investors. This information is still not clear. The most optimistic numbers said, the plantations laid on 3 million hectares, some said, the plantations laid on 2 million hectares. In 2006, the investment of Malaysia in Indonesia’ palm oil plantations reached Rp 3,2 trillion with the plantation mastery laying on 800.000 hectares or 14,5% of the total palm oil plantations nationally.

Malaysia is not the only foreign capital owner that does palm oil business in Indonesia. Many countries do the same, for instance, Singapore, United Kingdom, Belgium, USA, Kuwait, Thailand, and Myanmar.

But Malaysian dominates the investment. It has been starting since on 1990s. Many palm oil - corporates conduct, such as, Sime Darby (gabungan Golden Hope Plantations dan Kumpulan Guthrie), IOI, Agro Hope, dan KLK Kepong. Some in the forms of investment companies, such as, Pinehill Ventures Limited.

Even financial institutions, such as, Khazanah dan Tabung Haji (TH) operates palm oil business in this country. Sime Darby, the main actor in crude palm oil (CPO) produced 2,4 million tons or 6% of the total palm oil production annually with its productive plantations about 522.489 hectares. It could be said, it was the pioneer of palm oil expansion in Indonesia.

Sime Darby through PT Minamas Plantations (was officialy operating since 2001) now operates in 8 provinces in Sumatera, Kalimantan, and Sulawesi that cultivates total areas about 299.263 hectares but just 68% (204.845 ha) planted by palm oil within kinds of ages. That is why Indonesia has the significant position for Sime Darby.

What was the reason for Malaysia ‘attacking’ Indonesia? One of it was because Malaysia has less backup areas (to develop palm oil plantations). If the areas exist, the price would get increasing three to four times.

The quality of soil in Malaysia is not as good as in Indonesia because it is in hard liquid clay, like stone when it is in dry season. It is different from Indonesia with its fertile areas. The land characteristic is very good to develop palm oil, such as, it has much clay, water surfaces are deep enough, not stone, deep enough solum, and soil pH level is at 4 – 6. These kinds of soil are very good to develop palm oil plantations in Indonesia.

Latosol, ultisol, ullvial, sapric peat soil, coastal plain, and river estuary soil are good to develop palm oil plantations.

According to the study of Rabobank published in May 2012, palm oil plantation land in Malaysia would be no more available for the next four years while in Indonesia, there would be more to expand for the next 10 – 20 years.

United States Department of Agriculture (USDA) predicted Malaysia would have only backup areas about 800 thousand hectares to be planted by palm oil plantation. Serawak where it was claimed to be the most potential area to develop palm oil plantations, is mostly in sandy peat in lower ground or degraded pedaofficial page forests that ‘belong’ to the original people.

Malaysian palm oil plantation industrial expansion in Indonesia has something to do with “Look-East Policy” that Prime Minister of Mahathir Mohammad claimed in 1982. By the late of 1990s many Malaysian companies showed off in plantation sectors in its neighborhood companies, such as, Indonesia and Philippine.

In Indonesia, Kumpulan Guthrie acquired palm oil plantations that belong to Salim Group in Musi Rawas, South Sumatera while Tabung Haji got into Philippine by developing palm oil plantations in Mindanao. (*)

Source: Majalah InfoSAWIT, January 2013