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Palm Oil Industry Hoping for World Bank Funding
Eny Wulandari | August 27, 2010

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Although the Indonesian Palm Oil Association said it was confident 
environmental issues would not keep the World Bank from resuming its financing 
of the industry, senior government officials said producers could continue to 
rely on commercial loans if the funding fell through. 

Fadhil Hasan, head of the association, also known as Gapki, said on Friday that 
he expected local palm oil firms to qualify for World Bank funds even if they 
failed to meet the International Finance Corporation's sustainable environment 

Fadhil said Gapki planned to address the issue during a World Bank strategy 
forum on palm oil financing in Frankfurt on Tuesday and Wednesday. Indonesia 
will also be represented by deputy trade and agriculture ministers, as well as 
industry representatives. 

The IFC, a member of the Roundtable on Sustainable Palm Oil and the World Bank 
Group, stopped financing palm oil firms in September over environmental 

It said funding would only resume after it introduced comprehensive verifiable 
sustainability regulations. Last month, the IFC released a draft framework for 
re-engagement in palm oil financing. 

The financing suspension followed accusations from environmental groups that 
Indonesian palm oil producers, especially Sinar Mas, were engaged in widespread 
deforestation - a major contributor to greenhouse gas emissions and global 

Indonesian palm oil firms claim Greenpeace, which receives financing from the 
European Commission, is waging a smear campaign against them to help European 
producers of alternative edible oils such as rapeseed. 

An independent audit of the deforestation allegations against Sinar Mas this 
month answered few questions definitively, and both Sinar Mas and Greepeace 
claimed victory. 

Deputy Trade Minister Mahendra Siregar said on Thursday that he expected the 
Frankfurt meeting to focus not only on environmental issues, but also on the 
palm oil sector's contribution to public welfare and the economy. 

The sector directly employs an estimated three million people. 

Mahendra said the nation would not focus on seeking financing during the 
meeting because most of the country's big palm oil companies have been able to 
obtain funding from banks. 

He suggested that the IFC help improve the welfare of small-scale palm oil 

"If we receive funding, we will channel it to the small-scale palm oil 
industry, which accounts for 45 percent of the total sector in the country," he 

Palm oil is one of Indonesia's leading exports. The crude palm oil sector grew 
by 16.2 percent in the first half of this year, with exports valued at $5.71 

For 2009, total exports amounted to $10.37 billion. China, India and Malaysia 
are the primary customers overseas. 

Additional reporting by Antara, Reuters 
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