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Introduction – General Considerations |
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BaliTeakFarms has carried out research on setting up teak tree farming operations in Bali. In this memo, we have outlined terms and conditions for different sites, both on freehold land and on leased land. Sites range from 2 hectares to 120 hectares. For some of these projects, BTF is considering also the possibility of blending teak with other faster growing species of trees, notably acacia (locally know as “sengon”), which is in high demand by the local wood carving industry. See note below on acacia tree farming.
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| Left: three months Jati Emas Thailand seedlings in Bali |
BTF Director Sayu with seven year old Jati Emas Thailand near Campuan |
Freehold v. Leasehold
The analysis carried out below indicates that one of the key items is the price of the land, since all other costs of teak farming are essentially the same: on one side, the use of leased land allows the highest yield from the teak farming business; however, the use of freehold land allows for a potentially extremely significant equity upside, such upside being more significant where the land has been selected not only for its teak farming characteristics, but also with a view to positioning for possible long term real estate development. Moreover, the combination of medium-long term (15-25 years) teak farming operation with a well selected real estate investment offers the highest possible security to the investor, allowing the balancing, and respective hedging of two different types of investments.
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