T

he Indonesian government is still weighing the offer from the Nigerian government to develop agricultural businesses in the West African country, an official of the Indonesia and Commerce (KADIN) says.

 “We are currently studying the offer. This is going to be a government-to-government decision,” Mintardjo Halim, the executive of the chamber’s African desk said in Jakarta on Friday.

Mintardjo said that as the study of the investment would continue until March, he could not yet disclose what kinds of the plantations would be developed, and how much the investment would be needed to meet the Nigerian government’s offer.

 He, however, added that considering both countries shared the same climates, Indonesia could develop crude palm oil (CPO) plantation in the West African country.

Nigeria is seeking foreign partners including Indonesia to develop the country’s palm oil plantations.

The director general for export promotions at the Trade Ministry, Gusmadi Bustami, said early this week that Nigeria had offered 4 million hectares of land to Indonesia which could be used for CPO or other plantations. He said the developing a CPO plantation in the country would be quite promising given the country’s high demand for cooking oil.

At present, Nigeria imposes an import duty of up to 30 percent on CPO products. Developing CPO plantations in the country would enable CPO producers to avoid the high import duty, he said.

Gusmadi said that the Indonesian government would also ask for an import tariff reduction during preferential trade agreement (PTA) talks to be conducted in the second-half of this year.

“The country has a potential for palm plantations, though we don’t rule out any other crops. There are varieties of crops we can grow there and there are also possibilities that we won’t utilize the lots for growing only one kind of commodity,” Mintardjo said.

“But still, we also have to see first whether or not this investment will benefit both parties and fetch a win-win solution for us.”

Investing in Nigeria’s agricultural sector should be part of a bilateral trade cooperation agreement with Indonesia, which could include the lowering of import tariffs and the cuts in tax and trade barriers.

At present, the Nigerian government imposes high import duties on a number of goods in order to protect the domestic industry amid concerns over high unemployment rates. Indonesian exporters are eligible for exemptions, but they could face lengthy procedures to get the facility, he added.

 “This investment will help them reduce reliance on oil production through our technology and expertise,” Mintardjo said.

Nigeria, Africa’s top oil producer with 160 million population, is seeking investors in various sectors to reduce its dependence on oil, which supports its 70 percent economy.

Slowdown in the global economy, on the other hand, has prompted Indonesia to no longer rely on its big export destinations — such as the United States, Japan, and the European Union — and shift to other growing markets, including countries in Africa.

Nigeria has become a destination for investment from Indonesia, with around 11 local firms having already entered certain sectors such as food and beverage, petrochemicals and pharmaceuticals.

Bilateral trade between the two emerging economies reached US$2.1 billion in 2011 and during the January-October period last year it totaled $2.7 billion. The trade volume is expected to reach $5 billion by 2015. (aml)