02/12/2009 (The Jakarta Post) - The country's largest bank by assets, Bank Mandiri, has extended more funding for the country’s the palm oil sector as it continues to outperform other agricultural sectors.

Mandiri Corporate Banking Director Riswinandi told reporters on the sidelines of the 5th Indonesia Palm Oil Conference here on Wednesday that the bank had disbursed Rp 35 trillion (3.7 billion) as of October, or 16 percent higher than the year before.

“This business is in a good shape this year and it is not influenced by the global economic crisis,” Riswinandi said.

For Mandiri, Riswinandi added, palm oil industry is the biggest recipient of credits, compared to any other sector. This year, for example, Mandiri allocated 15 percent of its total credit for the palm oil industry.

As for the whole plantation market, Mandiri provided 75 percent of them to palm oil.

Nevertheless, Riswinandi noted that the bank would not increase the proportion of its lending to the palm oil sector to avoid saturation.

“Credit allocation for the palm oil sector will remain the same next year,” he said firmly, adding that the bank also maintained its non-performing loan (NPL) at below 1 percent.

Indonesian Palm Oil Association chairman Joefly J. Baheoeny said that the commitment from Bank Mandiri and other banks to continue financing the oil palm sector would be instrumental for continuing investment in this sector.
 
“It's heartening to hear especially when there is a doubt out there that this business has no prospect,” Joefly said.

Indonesia, the world's largest palm oil producer, has 9.7 million hectares of land licensed for palm oil estates, of which 7.9 million already planted and 1.8 million hectares still stand empty.