Kuala Lumpur Kepong in Indonesian palm oil, rubber pact

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KUALA Lumpur Kepong Plantation Holdings Bhd, Malaysia’s third-largest palm oil producer, signed an accord with the Indonesian state planter PT Perkebunan Nusantara II to produce oil and rubber in North Sumatra.

The companies signed a 30-year agreement, creating a venture called PT Langkat Nusantara Kepong, in which PTPN II will have 40 per cent share and KL Kepong, the remainder, PTPN II said today in a statement in Jakarta.

The venture will spend about 800 billion rupiah (US$80 million) to develop 20,221 hectares of oil palm and rubber plantations, the statement said. It aims to raise palm oil yields to 27 metric tons a hectare from 10-11 tons currently, and triple rubber yields to 1.5 tons a hectare, it added.

Indonesia, the largest producer of palm oil, and Malaysia, the second-biggest, account for 90 per cent of the world’s palm oil production. – Bloomberg

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