Bakrie to expand oil palm plantation area

The Jakarta Post ,  Jakarta   |  Wed, 05/14/2008 9:05 PM  |  Business

Publicly listed PT Bakrie Sumatera Plantations plans to add 50,000 hectares to its oil palm plantation by 2010 with an investment of US$260 million.

"Thirty-million dollars will be financed by equity from Bakrie Sumatera's new subsidiary PT Bakrie Sentosa Persada (BSP), $80 million from an international consortium equities and the remainder with bank loans," president director Ambono Janurianto said Wednesday.

Bakrie Sumatera established the palm oil producer BSP in June 2007.

Ambono said the expansion area, located in Central Kalimantan and Riau, Sumatra, was expected to contribute a profit of $100 per hectare, totaling $5 million per annum.

Bakrie Sumatera now operates 87,415 hectares of plantation, with 67,745 hectares for oil palm and the rest for rubber.

Ambono said the holding company aimed to expand its plantation area to 200,000 hectares by 2011.

Bakrie Sumatera, the country's fifth-largest plantation owner by value, booked a 794 percent increase in its first quarter net profit to Rp 18.5 billion (US$1.99 million) over the same period last year.

"The year 2007 was really a great year for palm oil and natural rubber as prices surged to levels never reached before," said president commissioner Soedjai Kartasasmita.

In 2007, the world crude palm oil price reached $600 to $800 per ton up by 100 percent from 2006.(rff/**)

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Florian (not verified) — Thu, 05/22/2008 - 7:35am

Indonesia is already suffering from the high inflation. It's among the top 10 this year, suffering from the high food prices. Now let's think...what will happen if you use up most of your agricultural ground for palm oil plantages, which destroy the ground for any further harvests of any sort of crop?
1. Indonesia will soon depend on the price for palm oil, which is now still increasing, also due to Malaysia's new laws about the use of palm oil(but the price won't always increase), and once the price starts sinking, there's still a demand for the amount of money they got from selling it.
2. Indonesia will have to import more and more food, so even if the price for palm oil is still increasing at that time, the profite has to be used for the import of food, which is actually unnecessary if they'd only plant more rice and crop instead of palm oil plantages.
3. The European Union is about to make a law against the use of palm oil under punishment(high fines if you break the law), so there's one potential market already about to be gone.
4. Indonesia will be more and more a victim of natural disasters, due to the shocking loss of most of their rain forests.

Now is this actually worth it? I can surely understand that Indonesia wants to participate and get their share from globalization. But selling your last resources isn't very wise in my eyes, it's just the same with coal, where Indonesia will be a netto importeur in less than 20 years, while the price for coal keeps increasing. It seems that the Indonesian government doesn't really think about the future of Indonesia.

The Reader (not verified) — Thu, 05/15/2008 - 7:46am

Here's more evidence that Indonesia is not serious about preserving it's forests.

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