7/9/2003 The Jakarta Post - The International Finance Corporation (IFC),the investment arm of the World Bank, has agreed to provide US$26 millionin loans to two Indonesian palm oil plantation companies.

The IFC, in a statement released Friday, said $14 million would be lent toVerdaine Investment Limited and $12 million to PT Sahabat Mewah Makmur, a12,000-hectare oil palm plantation acquired by Verdaine in February 2003.

Verdaine was created in June 2000 with $100 million in committed equityfrom Austindo Nusantara Jaya, Olympus Capital Holdings Asia and JP MorganPartners Asia. Verdaine aims to acquire, rehabilitate and manage 40,000 to50,000 hectares of palm oil plantations.

Verdaine's primary acquisition targets are plantations in Indonesia withpotential for strong cash flow and further growth prospects ifrehabilitated.

"IFC believes that the fundamentals of the palm oil industry in Indonesiaare sound. In these transactions we are able to work with a strong andreliable operator to facilitate its growth across Indonesia," saidJean-Paul Pinard, IFC director of agribusiness in the release.

Verdaine director Kelly Knight said that IFC was the right partner forVerdaine because they both were committed to good corporate governance,sustainable development and the creation of employment.

"The palm oil business is one of Indonesia's most important generators ofemployment and dollar export earnings," she said.

"It is a business where Indonesia has strong competitive advantage butwhere there is a great need for improvement in corporate governance."

Indonesia exported $1.97 billion worth of palm oil and kernels last year,the country's second-largest export commodity after exports of pulp andpaper, according to government statistics.

Indonesia's production of crude palm oil may increase 6.5 percent to 9.6million tons this year, compared with 9 million tons the year before, thecountry's Palm Oil Producers Association said in January. Palm oil exportsmay increase 9 percent this year to 6.1 million as output rises, theassociation said.

IFC finances private sector investments in the developing world, mobilizescapital in the international financial markets, helps clients improvesocial and environmental sustainability, and provides technical assistanceand advice to governments and businesses.

From its founding in 1956 through financial year 2002, IFC has committedmore than $34 billion of its own funds and arranged $21 billion insyndications for 2,825 companies in 140 developing countries.