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OJK Calls on North Sumatra Palm Oil Companies to do IPOs

The Financial Services Authority (OJK) North Sumatra Province Office has appealed to palm oil companies in North Sumatra to carry out an initial public offering (IPO).

North Sumatra OJK Office Head Khoirul Muttaqien said that on top of expanding financial instruments for palm oil businesses, the IPO would also support the development of palm oil - a leading commodity in North Sumatra.

North Sumatra's agricultural sector, which includes palm oil commodities, still has a large influence on the province's Gross Regional Domestic Income (GRDP) in the second quarter (Q2) of 2024. The sector accounts for 24.52 percent of the North Sumatran economy according to Statistics Indonesia (BPS) North Sumatra data.

However, growth in this sector was only around 3.72 percent, lower than the construction sector whose growth was recorded at 6.45  percent with a smaller share in GRDP than agriculture at 12.7 percent.

Khoirul said that OJK North Sumatra has developed a strategy to develop these superior commodities so that their contribution to the province's economy continues to improve. One of said strategy is encouraging palm oil companies to carry out IPOs as an alternative source of funding and to expand the financial services sector.

"We support palm oil companies in North Sumatra to IPO as an alternative funding. We are holding an information roadshow regarding the opportunities and benefits of IPOs for palm oil companies," he revealed on Aug. 8, 2024.

Khoirul said that  palm oil companies in North Sumatra has great potential for IPO. However, not all palm oil companies in North Sumatra are ready to go public due to requirements and procedures that need to be fulfilled by those wishing to be listed on the Indonesia Stock Exchange (IDX), such as publicly-listed companies being required to provide information when the public asks about them.

"On top of readiness to go public, [the companies] need to complete the required documents. Sometimes, companies also need to look at the market price of shares belonging to similar companies that had held IPOs. Those [requirements] are what we are trying to help them with by coaching them so they are ready for an IPO," he explained.

Previously, the North Sumatra OJK also held the Community Oil Palm Plantation Development Scheme (SERAYA) program in South Labuhanbatu Regency, which is one of North Sumatra's oil palm plantation centers.

Khoirul said the program combines the increase of financial access for smallholder oil palm farmers through provision of financing financing, protection for plantation workers through insurance, as well as financial education for farmers and plantation workers.

"Those special programs are [enacted] to restore oil palm as a driver of the North Sumatra economy," he added.

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