MARKET DEVELOPMENT
Suriname Palm-Oil Industry May Rise Again After Setbacks
Suriname Palm-Oil Industry May Rise Again After Setbacks
23/12/2016 (Caribbean News Now) - An agreement signed in 2004 between the government of Suriname and a Chinese company, China Zhong Heng Tai Investment (CZHT), to rehabilitate Suriname’s palm-oil sector, which was renegotiated in 2011, may finally become a reality after the government announced on December 14 that ongoing negotiations on the implementation of the project and the signing of a new agreement are expected shortly.
Until a final agreement is reached between Suriname and CZHT, specific details of the project remain unclear.
The project has been marred by delays since 2004 and the implementation costs are estimated at US$14 million. China will provide US$4.5 million in the initial phase of the project.
The Patamacca palm oil project in Suriname, a 40,000-hectare area in the eastern Marowijne District, and other palm oil plantations’ yield began declining in the late 1980s due to common spear rot and other oil palm diseases, as well as internal political upheaval. The factory was officially closed in 2004. During the golden age of Suriname’s Patamacca palm oil industry, there was enough cooking oil for domestic consumption and export. In addition, most of Guyana’s imported cooking oil during that period came from Suriname.
The CZHT investment will run a trial on 1,500 acres of land, with three varieties of palm oil plants from Malaysia. Suriname has made available a total of 52,000 hectares of land for the palm oil industry.
Setbacks
In 2004, a deal was signed with CZHT to develop 40,000 hectares of land for palm oil production. The project was problematic, facing pressure from environmental groups and lack of funding. In addition, locals were concerned that the Chinese company would bring their own workers and not hire them. The project was ultimately cancelled in 2004. Then in April 2011, the present government of Suriname negotiated a new contract with CZHT to restart the project, but under different terms. An investment of US$4.5 million, guaranteed by the Chinese government, is allowing rehabilitation work to get under way, including the shipment of oil palm seedlings from Malaysia.
Incentives offered by Suriname
Suriname has offered various incentives to rehabilitate the palm oil industry such as the acquisition of land through joint-ventures with the government of Suriname; a 90% reduction of import duties on capital goods and inputs, and the exemption on import duties is allowed for all investment equipment and for operational cost for inputs such as fertilizer and pesticides. As well, the government is offering no taxes on exports, only a 3% charge for statistical duties. Schedules for depreciation cost can also be agreed upon for taxation purposes. Land taxes are very low, while the government provides land and external infrastructure. Palm oil producers are allowed to generate their own electricity, also using waste from oil palm as fuel.
Job Creation
President Desi Bouterse said that in the next two years, when the palm oil factory takes off, 140 people will find jobs in the first phase of the project.
Since 2008, a Hyderabad-based Indian company, Foods, Fertilizers and Fats (3F) has been negotiating with the government to set up a 40,000-hectare palm oil project. In October 2012, an MoU was signed. This company is expected to invest US$200 million in the project to generate 4,000 jobs in the Sipaliwini region of Suriname.
Until a final agreement is reached between Suriname and CZHT, specific details of the project remain unclear.
The project has been marred by delays since 2004 and the implementation costs are estimated at US$14 million. China will provide US$4.5 million in the initial phase of the project.
The Patamacca palm oil project in Suriname, a 40,000-hectare area in the eastern Marowijne District, and other palm oil plantations’ yield began declining in the late 1980s due to common spear rot and other oil palm diseases, as well as internal political upheaval. The factory was officially closed in 2004. During the golden age of Suriname’s Patamacca palm oil industry, there was enough cooking oil for domestic consumption and export. In addition, most of Guyana’s imported cooking oil during that period came from Suriname.
The CZHT investment will run a trial on 1,500 acres of land, with three varieties of palm oil plants from Malaysia. Suriname has made available a total of 52,000 hectares of land for the palm oil industry.
Setbacks
In 2004, a deal was signed with CZHT to develop 40,000 hectares of land for palm oil production. The project was problematic, facing pressure from environmental groups and lack of funding. In addition, locals were concerned that the Chinese company would bring their own workers and not hire them. The project was ultimately cancelled in 2004. Then in April 2011, the present government of Suriname negotiated a new contract with CZHT to restart the project, but under different terms. An investment of US$4.5 million, guaranteed by the Chinese government, is allowing rehabilitation work to get under way, including the shipment of oil palm seedlings from Malaysia.
Incentives offered by Suriname
Suriname has offered various incentives to rehabilitate the palm oil industry such as the acquisition of land through joint-ventures with the government of Suriname; a 90% reduction of import duties on capital goods and inputs, and the exemption on import duties is allowed for all investment equipment and for operational cost for inputs such as fertilizer and pesticides. As well, the government is offering no taxes on exports, only a 3% charge for statistical duties. Schedules for depreciation cost can also be agreed upon for taxation purposes. Land taxes are very low, while the government provides land and external infrastructure. Palm oil producers are allowed to generate their own electricity, also using waste from oil palm as fuel.
Job Creation
President Desi Bouterse said that in the next two years, when the palm oil factory takes off, 140 people will find jobs in the first phase of the project.
Since 2008, a Hyderabad-based Indian company, Foods, Fertilizers and Fats (3F) has been negotiating with the government to set up a 40,000-hectare palm oil project. In October 2012, an MoU was signed. This company is expected to invest US$200 million in the project to generate 4,000 jobs in the Sipaliwini region of Suriname.