Mandiri sets aside Rp 11t for plantations

Urip Hudiono, The Jakarta Post, Jakarta

Bank Mandiri will provide up to Rp 11 trillion (US$1.2 billion) in new loans to the small holder plantation sector over the next three years, says a senior Madiri executive.

The loans are intended to finance the development of up to 321,268 hectares of plantations by some 80,000 growers, and will be disbursed in stages between 2007 and 2010, Mandiri's micro and retail banking director, Budi Gunadi Sadikin, said at an agricultural expo Friday.

"The plantations concerned consist of those producing such commodities as palm oil, cocoa and rubber," he said.

The loans to small-scale plantation growers would be channeled through large-scale plantation companies, which would guarantee the loans, and provide advice and guidance to the growers.

Budi said that the new loans would increase the value of Mandiri's total outstanding loans to the plantation sector to Rp 14.39 trillion, consisting of Rp 11.3 trillion to industrial plantation firms and Rp 3.09 trillion to small-scale plantation cooperatives and growers. The bank has also provided Rp 7.14 trillion in loans to associated processing enterprises, he added

Mandiri's outstanding loans to the plantation sector account for 36 percent of the Rp 39.5 trillion in total borrowing by the sector, according to central bank figures.

Mandiri president Agus D. Martowardojo said the additional lending would support the government's program to revitalize the country's agricultural sector, develop the biofuel sector, and grow small and medium enterprises (SMEs).

A consortium of five state and local government banks recently banded together to provide Rp 25.56 trillion in loans for the development of the plantation sector, including plantations producing biofuel feedstock.

Besides Mandiri, which will provide Rp 11.08 trillion of the Rp 25.56 trillion, Bank Rakyat Indonesia (BRI) will stump up Rp 12 trillion, Bank Bukopin Rp 1 trillion, the West Sumatra provincial bank Rp 980 billion, and the North Sumatra provincial bank Rp 500 billion.

Indonesia is the world's largest palm oil producer. Palm oil, along with jatropha oil, can be processed into biodiesel, and is also used in the production of cooking oil, soap and detergent.

The country also has vast tracts of rubber plantations, most of which are owned and managed by small farmers or cooperatives operating as SMEs.

Palm oil and rubber, whose production and prices grew strongly last year, provided the backbone for Indonesia's strong 2006 export performance, bringing in more than $100 billion in foreign exchange earnings.

Agus said he expected the increased lending to the plantation sector to help Mandiri achieve its 20 percent lending growth target for this year.

Mandiri, Indonesia's largest lender by assets, saw lending grow by 10 percent to Rp 117.7 trillion last year.