Rajawali group to invest U$300 M - U$430 M in plantation, mining sector

Jakarta (ANTARA News) - Rajawali Corporation Group is to invest US$300 million - US$400 million in the plantation and mining sectors after calling off its bid to become a strategic investor in national flag-carrier PT Garuda Indonesia, a spokesman said.

"We had earmarked the same amount of funds for the Garuda divestment program but since the government decided to postpone the plan to 2009, we will divert them to the expansion of our activities in the plantation and mining sectors," Darjoto Setiawan, Rajawali Group managing director, said here Monday.

The government had previously intended to invite strategic investors to revitalize Garuda which run up debts totaling US$794 million mainly with European countries belonging to the Export Credit Agency (ECA).

Darjoto said Rajawali Group in February 2007 sent a letter to the government to express its interest in investing in Garuda but there was no reply so that it decided to call off its bid last June 14.

The amount of funds the group had set aside to secure a stake in Garuda had been calculated in consideration of Garuda`s present conditions, including the airline company`s need to procure aircraft.

"The amount did not include loans we could provide, if needed," he said.

He said the government`s decision to postpone the involvement of strategic partners in Garuda was not wrong but Rajawali Group was ready to participate any time the government decided to divest the airline.

Now Rajawali Group would use the funds it had originally intended to invest in Garuda to expand its businesses in the plantation and mining sectors.

"In the plantation sector, we already control 100,000 hectares of oil-palm plantations in East and South Kalimantan and are planning to open more plantations as well as acquire existing ones in Papua," he said.

The group - owned by businessman Peter Sondakh -- also had coal mines in East Kalimantan, Darjoto said without disclosing the mines` production capacity.

He only said half of the US$300 million - US$400 million would be allocated for the group`s plantation business and the other half for its mining venture.