A planned large-scale commercial farming or food estate project in Merauke, Papua, is expected to trigger fresh investment of up to Rp 50 trillion (about US$5.3 billion) in the area in the next five years.
However, Agriculture Deputy Minister Bayu Krisnamurti said on Wednesday that they would have to build basic and supporting infrastructure first before it could actually attract investors.
“We have to build public infrastructure first to attract investors,” Bayu told reporters after the opening ceremony of Indonesia Palm Oil Conference (IPOC) in Nusa Dua.
According to Bayu the government has estimated that between Rp 2.5 and Rp 3 trillion is needed to build the required supporting infrastructure in Merauke.
“We have tried to find some funds for the food estate project,” he said, adding that the government was also seeking cooperation with international donors such as the ADB.
Several giant companies including Medco, Artha Graha and Sinar Mas have also expressed interest in investing in the Merauke project.
“This is a big project. We expect that after the basic infrastructure is ready, investors will come to the area and build more facilities, including ports,” Bayu said.
Commercial food estates are actually rare in Indonesia, as crops such as rice, corn and soybeans are usually grown by small scale farmers on plots of two hectares or under.
The government plans to open up an initial 27,000 hectares of plantation in Merauke.
“We start with 27,000 hectares as the first step. The land will be expanded up to 500,000 hectares out of the available 900,000 hectares of potentially usable land in the area,” Bayu said, adding that government would start the project next year.