14/08/2008 (The Edge Daily), Kuala Lumpur - Asiatic Development Bhd’s indirect wholly owned unit Ketapang Agri Holdings Pte Ltd (KAH) has teamed up with Singapore-based Palma Citra Investama Pte Ltd and Indonesia-based PT Sawit Mandira to cultivate oil palm on 15,800 hectares of land in Kabupaten Ketapang, Kalimantan, Indonesia.

In a statement to Bursa Malaysia yesterday, Asiatic said the joint venture (JV) was in line with its corporate strategy of increasing its interest in the palm oil business on the back of its continued faith in the industry’s long-term prospects.

Asiatic said KAH and its partners would set up a JV company, PT Sawit Mitra Abadi, to undertake the development of the oil palm plantation. KAH will take a 70% stake in Mitra Abadi’s enlarged paid-up capital for 700 million rupiah (RM252,090), while Palm Citra and Sawit Mandira will hold 25% and 5%, respectively.

“KAH will contribute cash progressively in accordance with the development plan determined by Mitra Abadi. Its contribution will be up to RM3,500 per hectare but shall at no time exceed 70% of the total contribution to Mitra Abadi,” it said. The venture would be funded via internal funds and borrowings.

Asiatic said the JV was expected to be incorporated by Dec 31, 2011. It said although the JV was not expected to have any material impact on Asiatic’s earnings for the fiscal year ending Dec 31, 2008, it was expected to contribute positively to its earnings in the long term.