Binladin Freezes Plans To Invest in Local Rice

The Jakarta Globe | March 4, 2009

Mita Valina Liem

More disappointing news emerged during the 5th World Islamic Economic Forum on Tuesday, with the minister of agriculture announcing that the Saudi Binladin empire had frozen its plan to invest $4.3 billion in developing rice crops in Merauke in Papua Province and a separate project in Southeast Sulawesi Province.

The Binladin group, one of the biggest business empires in Saudi Arabia, decided to stall its plan to secure food and energy supplies due to the global financial crisis, Agriculture Minister Anton Apriantono said. The announcement follows a lackluster start to the forum on Monday, when organizers revealed only $3 billion in potential investments have been offered to Indonesia, far short of the expected $5 billion.

Binladin had previously planned to put the lion’s share of the investment into the Merauke Integrated Food and Energy Estate, or Mifee, in Papua, with the local government already clearing 585,000 hectares of land in anticipation of the project.

“There is no follow up from Binladin on this,” Anton said. “The financial crisis has caused everything to slow down.”

Aside from Papua, Anton added that local governments in South Kalimantan and Southeast Sulawesi have also prepared land for rice cultivation.

Antara reported that Binladin had signed a memorandum of understanding with the Southeast Sulawesi provincial government in August last year to grow 80,000 hectares of rice.

“However, we understand the situation,” Anton said. “We will focus on our domestic potential instead.” He added that the ministry would not go to the Middle East to try to renegotiate the investment plan.

Asked whether Indonesia would be able to secure commitments for the agriculture sector, Anton said, “There hasn’t been any out of this forum.”

A leader of one of the Islamic countries in Middle East at the forum admitted that the global crisis had left them with less to invest in Indonesia.

“These countries are also suffering from the crisis, although in different ways,” Abdullah bin Hamad Al-Attiyah, the deputy prime minister of Qatar, said on Monday.

Before crude prices plummeted and food prices were at high levels, companies in Gulf Arab states, including the United Arab Emirates and Saudi Arabia, were investing heavily in large tracts of arable land in Africa, South America and Asia to fill a Middle Eastern demand for greater food security.

High inflation caused by high oil prices in the region had sparked fears of food shortages in places where low rainfall and a lack of arable land meant heavy reliance on food imports.

In August, Anton said the Mifee project would start in 2009 and would need one million hectares of food fields, 400,000 hectares of crop estates, and a remaining 100,000 to 200,000 hectares would be developed for forestry and husbandry. The government would build the supporting infrastructure, such as main roads, he added.

Binladin previously planned to plant the higher-quality rice variety of Basmati, famous for its fragrance and delicate flavor. The group had also showed interest in developing food crops in Papua’s Fakfak, Anton said in August.

Osama bin Laden, the architect of the 2001 attacks on the World Trade Center in New York, is estranged from the bin Laden family and has no connection to the project.
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