| THE POLITICS OF EXTINCTION | |
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Palm Oil - Malaysian Investment
In the face of rising competition from Indonesia, where labour is cheaper and conversion land more plentiful, Malaysian palm oil firms have invested in new plantations on its neighbour's territory. Afraid of losing their competitive edge, firms have rushed to invest in the Indonesian sector, where the average cost of producing one tonne of crude palm oil is just US$150, compared with US$250 in Malaysia. Malaysia is also approaching saturation point in terms of land available for plantation expansion. Industry estimates that by the turn of the century plantations could occupy a maximum area of around three million hectares, leaving little room for growth for the present 2.5 million hectares dedicated to plantations. The situation is radically different in Indonesia, where companies cannot keep up with the concessions being awarded by the government. By March 1997, when the Indonesian Government called a temporary halt to foreign investment in palm oil, 27 Malaysian firms had entered into joint ventures with Indonesian counterparts to clear land and embark on cultivating new plantations covering 1.5 million hectares. One Malaysian firm which has followed this path is Austral Enterprises Berhard. By acquiring land in Kalimantan, the firm is developing a 30 000 hectare oil palm plantation through its Indonesian venture PT Mitra Austral, representing over one third of the firm's total plantation area. Using this extra capacity Austral predicts a production level of almost 900 000 tonnes by 2001, compared with just over 500 000 tonnes forecast for 1998. The complicity of Malaysian firms in setting some of the fires partly explains the muted criticism by a Malaysian Government whose people had to endure chronic pollution at the height of the blaze. The Indonesian authorities have been investigating reports that 18 Malaysian and five Singaporean firms were responsible for fires on their concessions. |
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