PT Indofood explores joint venture with RFM

MANILA, Philippines - PT Indofood, a unit of Hong Kong-based First Pacific Co. Ltd. has expressed interest in entering into a joint venture arrangement with one of the subsidiaries of local company RFM Corp.

While there had been rumors that Manuel V. Pangilinan, chief executive officer and managing director of First Pacific, has offered to acquire RFM, highly placed sources told The STAR that the offer was not for RFM “but for a possible joint venture in one of the RFM subsidiaries.”

“But this is still very far,” the source revealed.

Indofood is one of the world’s biggest instant noodle makers by volume and one of the largest plantation firms by area. It is also the largest flour miller in Indonesia, with its flourmill in Jakarta the biggest in the world in terms of production capacity in one location.

The company has operations in all stages of food manufacturing – from the production of raw materials and their processing through to consumer products and distribution to wholesalers/retailers. It is based and listed in Jakarta.

Its consumer branded products subsidiary PT Indofood CBP Sukses Makmur Tbk (ICBP) is the branded products subsidiary, while its agribusiness subsidiaries include PT Salim Ivomas Pratama Tbk (SIMP), PT PP London Sumatra Indonesia Tbk, and Indofood Agri Resources Ltd. (IndoAgri).

Indofood manufactures and distributes a wide range of food products: consumer branded products (noodles, dairy, food seasonings, snack foods and nutrition and special foods), Bogasari (flour and pasta), agribusiness (oil palm, rubber, sugar cane, cocoa and tea plantations, cooking oils, margarine and shortening) and distribution.

There are speculations that the proposed joint venture involves RFM’s flour and noodle business

Indofood products have yet to enter the Philippine market.

Indofood has been expanding its presence in a number of countries. It was earlier reported by Interaksyon that First Pacific is in talks with “several people” for its investments in a Philippine agriculture venture that would supply the raw material needs of Indofood.

 “We’re trying to interest them to invest in plantations here. It has to be the right plantation and the right size because they’re big. They’re huge in Indonesia,” Pangilinan said.

He said the size of Indofood’s palm oil, sugar and rubber and banana plantations run to 300,000 hectares.

“They’re not going to come in if you give them just 100 or even 1,000 hectares. That’s too small for them,” Pangilinan said.

Agriculture Secretary Proceso Alcala had also said he wants to engage First Pacific in such an endeavor, adding that a public-private partnership is the best vehicle for the company’s investment in the sector.

Pangilinan for his part revealed that First Pacific is “definitely open” to tying up with local government units (LGUs) to obtain large tracts of land.

“I believe Indonesia and Malaysia, which have large plantation estates, the land is leased, they’re not bought. If they’re given - let’s say they’re given 10,000, 20,000 or even 50,000 hectares - we don’t want to buy the land. It costs too much,” he said.

“If the company would buy these tracts of land, then its capital outlay would already be big, thus, unprofitable,” he added.

“But if it’s long-term lease, then we would develop the estate. Foreigners can’t do that. What can they do? Take away the land when they don’t like it? Not only the land but also the crops,” Pangilinan said.

While First Pacific is keen on this plan, management still has to look at the numbers and the crops that can be planted in the Philippines, Intraksyon further reported.