Govt. may allow lower loan rates for replanting

The Agriculture Ministry has agreed in principle to lower the interest rate paid by plantation owners participating in the government’s plantation revitalization program from 10% to 6%, Minister Anton Apriyantono said on Tuesday, The Jakarta Globe reported.

“We need to discuss it further with the Finance Ministry,” Anton Apriyantono added.

The lower rate was proposed by the Indonesian Chamber of Commerce and Industry (Kadin) as well as several plantation industry associations.

Apriyantono said the decision to set the rate plantation owners would pay at 10% was made when market interest rates were 14% to 16%. Interest rates have since fallen to about 12%, so the rate available to plantation owners could be lowered, he said.

Achmad Mangga Barani, the Agriculture Ministry’s Director General of Plantations, said the ministry had forwarded the proposal to lower the rate to the Finance Ministry last month.

Barani said the Agriculture Ministry had allocated Rp650 billion to subsidize loans for plantation revitalization from 2007 to 2011. However, only Rp200 billion had been disbursed as of the end of last month.

A total of Rp37.4 trillion in bank financing was allocated for the program beginning in 2007, but only Rp4.1 trillion has been borrowed by plantation owners.