MARKET DEVELOPMENT
Breakthrough in M'sia-Indon ventures
Breakthrough in M'sia-Indon ventures
25/6/07 (The Star) - The Malaysian Indonesian Business Council (MIBC) has scored major inroads into the Indonesian market through initiatives involving the opening up of land as well as facilitation of infrastructure and power projects.
MIBC chairman Tan Sri Ahmad Sarji Abdul Hamid told StarBiz: “The Indonesian Government has been cooperative in attracting Malaysian investments in the provinces, for example, through the opening up of land for oil palm cultivation or inviting tenders for power and infrastructure projects such as toll roads.''
Among the Malaysian companies, Golden Hope Plantations Bhd, Sime Darby Bhd and Kumpulan Guthrie Bhd are active in the Indonesian plantation sector.
“We are thankful that the Indonesian government has given us land use rights,'' said Ahmad Sarji, who is also chairman of Permodalan Nasional Bhd, the major shareholder of the three plantation companies.
The good news is that the Indonesian government has agreed to extend the land lease from 30 to 60 years, he said, adding that the MIBC was waiting for a decision on whether this extension was automatic or based on applications for renewal.
The warming up of ties between Malaysia and Indonesia recently follows an earlier visit last month by Indonesian president Susilo Bambang Yudhoyono to Kuala Lumpur, where he attended the Malaysian Islamic Economic Forum held at the Putra World Trade Centre.
“President Susilo met members of the MIBC who took the opportunity to explain to him that they were keen to invest in Indonesia,'' said Ahmad Sarji.
“He indicated that he would respond with economic and financial changes so as to accelerate foreign investments into his country.
“We also learned from the president that each plantation company can now own 100,000ha of land in each province compared with only 20,000ha previously,'' he added.
The council is in the midst of finding out whether this is retrospective or current.
Ahmad Sarji was attending the Malaysia-Indonesia Investment & Finance Summit held in Jakarta last Monday.
The one-day conference was hosted by the Labuan Offshore Financial Services Authority and managed by the Asian Leadership & Strategy Institute.
Two days prior to that, he had had a three-hour discussion with the Indonesian authorities on matters of concern to Malaysian investors in Indonesia. His co-chairman at the MIBC is Tanri Abeng.
The MIBC also discussed other issues regarding the palm oil sector. Indonesia will now allow the supply of oil palm seedlings from Malaysia to be 50% for companies that supply internally and 25% for those supplying externally, he said.
In the past, Indonesia had been strict on the supply of oil seedlings from Malaysia. Their Government had acceded to a request from the MIBC for some leeway in this respect.
There was also a proposal for the setting up of a working committee to look further into the joint marketing of palm oil in the world market. Members of the committee will comprise those from the Indonesian Palm Oil Commission and Malaysian Palm Oil Board.
Another major area of concern involves land acquisition. Malaysian companies find it difficult to implement power generation and infrastructure projects without a suitable land acquisition legislation, which exists in Malaysia.
It is now mostly left to the investing companies to solve the problem, with the help of the provinces, and that process is becoming costly.
“We suggested bridging finance projects where the Government of Indonesia will pay in kind, for example, in the form of land or mining concessions for privatised infrastructure projects,'' said Ahmad Sarji.
Other matters being discussed included:
The supply of coal from Indonesia. Malaysia's current requirement of 10 million tonnes is expected to double by 2010 and 80% of that comes from Indonesia. In 2004, Malaysia imported only 5.4 million tonnes.
Training for Indonesian workers especially in the estates and within the projects undertaken by Malaysian firms.
Review of the composition of the working committees within the MIBC. These are divided into four categories - infrastructure, social, plantations and information, communication and technology (ICT).
This review is to ensure high-level representation and that committee members in Malaysia and their counterparts are well matched on the basis of their functions and projects.
The possibility of Malaysians taking part in social sector projects, for example, hospitals.
The potential of commercial production of herbs and cosmetics. This is in view of Indonesia's strength in the spa and herbal industry, as well as various proposals for joint ventures.
The MIBC will hold its next meeting in November in Riau. “Part of the success of the MIBC lies in its ability to bring problems to the highest levels of Government in Indonesia. As joint-chairmen, we have met the president on many occassions and he has always welcomed our suggestions and presence,'' Ahmad Sarji said.
MIBC chairman Tan Sri Ahmad Sarji Abdul Hamid told StarBiz: “The Indonesian Government has been cooperative in attracting Malaysian investments in the provinces, for example, through the opening up of land for oil palm cultivation or inviting tenders for power and infrastructure projects such as toll roads.''
Among the Malaysian companies, Golden Hope Plantations Bhd, Sime Darby Bhd and Kumpulan Guthrie Bhd are active in the Indonesian plantation sector.
“We are thankful that the Indonesian government has given us land use rights,'' said Ahmad Sarji, who is also chairman of Permodalan Nasional Bhd, the major shareholder of the three plantation companies.
The good news is that the Indonesian government has agreed to extend the land lease from 30 to 60 years, he said, adding that the MIBC was waiting for a decision on whether this extension was automatic or based on applications for renewal.
The warming up of ties between Malaysia and Indonesia recently follows an earlier visit last month by Indonesian president Susilo Bambang Yudhoyono to Kuala Lumpur, where he attended the Malaysian Islamic Economic Forum held at the Putra World Trade Centre.
“President Susilo met members of the MIBC who took the opportunity to explain to him that they were keen to invest in Indonesia,'' said Ahmad Sarji.
“He indicated that he would respond with economic and financial changes so as to accelerate foreign investments into his country.
“We also learned from the president that each plantation company can now own 100,000ha of land in each province compared with only 20,000ha previously,'' he added.
The council is in the midst of finding out whether this is retrospective or current.
Ahmad Sarji was attending the Malaysia-Indonesia Investment & Finance Summit held in Jakarta last Monday.
The one-day conference was hosted by the Labuan Offshore Financial Services Authority and managed by the Asian Leadership & Strategy Institute.
Two days prior to that, he had had a three-hour discussion with the Indonesian authorities on matters of concern to Malaysian investors in Indonesia. His co-chairman at the MIBC is Tanri Abeng.
The MIBC also discussed other issues regarding the palm oil sector. Indonesia will now allow the supply of oil palm seedlings from Malaysia to be 50% for companies that supply internally and 25% for those supplying externally, he said.
In the past, Indonesia had been strict on the supply of oil seedlings from Malaysia. Their Government had acceded to a request from the MIBC for some leeway in this respect.
There was also a proposal for the setting up of a working committee to look further into the joint marketing of palm oil in the world market. Members of the committee will comprise those from the Indonesian Palm Oil Commission and Malaysian Palm Oil Board.
Another major area of concern involves land acquisition. Malaysian companies find it difficult to implement power generation and infrastructure projects without a suitable land acquisition legislation, which exists in Malaysia.
It is now mostly left to the investing companies to solve the problem, with the help of the provinces, and that process is becoming costly.
“We suggested bridging finance projects where the Government of Indonesia will pay in kind, for example, in the form of land or mining concessions for privatised infrastructure projects,'' said Ahmad Sarji.
Other matters being discussed included:
The supply of coal from Indonesia. Malaysia's current requirement of 10 million tonnes is expected to double by 2010 and 80% of that comes from Indonesia. In 2004, Malaysia imported only 5.4 million tonnes.
Training for Indonesian workers especially in the estates and within the projects undertaken by Malaysian firms.
Review of the composition of the working committees within the MIBC. These are divided into four categories - infrastructure, social, plantations and information, communication and technology (ICT).
This review is to ensure high-level representation and that committee members in Malaysia and their counterparts are well matched on the basis of their functions and projects.
The possibility of Malaysians taking part in social sector projects, for example, hospitals.
The potential of commercial production of herbs and cosmetics. This is in view of Indonesia's strength in the spa and herbal industry, as well as various proposals for joint ventures.
The MIBC will hold its next meeting in November in Riau. “Part of the success of the MIBC lies in its ability to bring problems to the highest levels of Government in Indonesia. As joint-chairmen, we have met the president on many occassions and he has always welcomed our suggestions and presence,'' Ahmad Sarji said.