JAKARTA, INDONESIA, Nov. 21--The International Finance Corporation (IFC) signed an investment agreement in Jakarta today to provide a financing package of US$41 million to P.T. Kalimantan Sanggar Pusaka (KSP) in Indonesia for the expansion of the company's oil palm estates and crude palm oil production facilities. The project will increase private sector involvement in the agri-plantation sector and, through the company's involvement in the Government of Indonesia's Nucleus Estate and Smallholder (NES) and KKPA Programs, is expected to raise the living standards of transmigrants and local farmers in the remote region of West Kalimantan. The government programs are coordinated by the country's Department of Transmigration, Department of Agriculture and the Provincial Government of West Kalimantan.
KSP is the agribusiness arm of the Lyman Group, a diversified Indonesian business group formerly known as the Satya Djaya Raya Group. KSP was established in 1988 with support from Bank BNI (P.T. Bank Negara Indonesia, Persero). Its initial investment was in a rubber plantation though it expanded into oil palm estates the following year. The project will expand KSP's planted area to approximately 35,000 hectares. In addition to the expansion of its own estates, KSP is developing over 34,000 hectares of oil palms under the NES and KKPA programs. This area will be transferred fully developed to smallholder ownership. KSP's crude palm oil production capacity will be expanded in line with the increased production of fresh fruit bunches.
IFC's financing package consists of an equity investment of US$15 million, a US$20 million loan for its own account and a syndicated loan of US$6 million for the account of Bank Brussels Lambert, Singapore. IFC also assisted the company in raising US$10 million from DEG, the German Development Bank.
Mr. Karl Voltaire, Director of IFC's Agribusiness Department said, "We are very pleased to be associated with a project that has such a high developmental impact. The project will create over 10,000 new jobs and, because palm oil is one of Indonesia's primary exports, expanded production resulting from the project will increase the country's export earnings. In addition, the company's participation in the NES and KKPA programs will help raise the living standards of over 17,000 smallholders and their families, most of whom are currently living as subsistence farmers."
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
