SKorean firm may delay Madagascar farm project
Agence France-Presse | 12 February 2009
SEOUL (AFP) -- A South Korean company said Thursday it may delay a controversial project to develop a huge area of Madagascar for farmland due to political unrest in the Indian Ocean nation.
"We may have to delay our investment in Madagascar mainly due to political instability there," Shin Dong-Hyun, managing director of the financing and strategic planning department of Daewoo Logistics, told AFP.
Last year the company won initial approval for the farm project, part of an effort to secure stable food supplies for wealthy but resource-poor South Korea.
It planned to produce four million tons of corn and 500,000 tons of palm oil a year on a total area of 3.2 million acres (1.3 million hectares) -- almost half the size of Belgium.
But the Madagascar government has yet to complete work on details of the deal such as rules on the use of the land, Shin said.
"We have done everything. We are still willing to invest there but the Madagascar government has failed to take steps which are needed for us to push ahead with our investment," Shin said.
He said weak world corn prices also made the deal less attractive. The firm earlier said it would invest six billion dollars in the project.
Opposition leaders and analysts in Madagascar say the Daewoo project fanned the unrest which has claimed around 100 lives since the start of the year.
At least 28 people were killed when security forces opened fire on opposition demonstrators last week.
"Daewoo is one of the reasons for the people's anger," opposition leader Andry Rajoelina said recently. "I condemn the signatories, notably the president and the government.
"Our customs do not allow for land to be sold or leased to foreigners."
Shin denied that the deal helped spark the unrest and rejected criticism that the island would receive little benefit from it.
"Madagascar is a poor country which needs foreign investment for its economic development," he said, adding that both central and regional government officials welcomed the project.
"Daewoo is investing in an underdeveloped area at a time when major foreign investors are considering reducing investment or withdrawing from the country."
Daewoo Logistics has said the project would create more than 71,000 jobs in the impoverished nation, which receives aid from the United Nations' World Food Programme.
It aims to ship the bulk of the produce to South Korea and other countries but is also ready to release some in the island nation.
"We hope Madagascar will regain political stability as soon as possible. We will wait," Shin said.
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