Jun. 23--The agribusiness giant Charoen Pokphand Group (CP) has teamed up with the Bahrain-based Islamic bank Al Salam Bank (BSC) to form a strategic partnership in agribusiness and food.

The group signed a memorandum of understanding yesterday with the bank to jointly invest in agricultural and food businesses.

The alliance is part of the bank's diversification strategy, as Gulf countries are targeting investments in farmland and agricultural businesses in developing nations after rampant inflation last year highlighted their dependence on imports.

"Al Salam and Charoen Pokphand will jointly identify suitable agribusiness ventures that will generate attractive risk-adjusted returns while playing a proactive role in addressing food security in the region," said the company's statement.

The alliance will initially carry out detailed feasibility studies to evaluate the viability of various target agribusiness sectors, including livestock, staple foods, aquaculture and perishables. It will also establish an integrated halal food firm, which will also invest in farming, food processing, packaging and distribution.

The studies will cover technical, financial, market and operational due diligence, in order to identify target markets in the Middle East and North Africa.

According to a CP spokeswoman, the partnership would cover not only food supply from CP's worldwide stock but also highly skilled food and farm management.

The value of the joint venture was not immediately available.

Al Salam Bank approached CP Group to consider potential partnership opportunities in agricultural production to serve the food security needs of Bahrain and the Gulf Co-operation Council (GCC) states, which have a population of 36 million and include Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

"This alliance represents CP Group's first joint venture with an Islamic bank and will serve our vision to become 'The Kitchen of the World'," said CP vice-chairman Eam Ngamdamronk. CP Group will provide a highly specialised management team with an extensive track record in the agricultural and food industry for this venture, Mr Eam said.

The joint venture in livestock and agricultural product farming including rice is legal if the foreign shareholding does not exceed 49 percent, said Kanissorn Navanugraha, director-general of the Business Development Department.

"There have been some news reports that business groups from the United Arab Emirates and others are chasing opportunities to handle agriculture-related business to bring back farm output to their own countries, and in principle this practice is surely against the foreign business act, as farming is restricted to Thais," said Mr Kanissorn.

"But in terms of a business partnership, it's not against the law should the foreign investors form a joint venture with Thai citizens if they hold a stake of not more than 49 percent."

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