The Ministry of Agriculture plans to change land use and limit foreign ownership in a new regulation on staple food production outside the island of Java, a senior ministry official said.
Sutarto Alimoeso, the ministry’s director general of food crops, said the revisions - necessary to reduce the potential for future disputes - could further delay plans to issue the regulation .
The regulation was initially set to be issued in October 2008, but it has been repeatedly delayed due to wrangling over key details. Under a 2007 presidential decree on foreign-investment limitations, foreign investors can hold stakes of up to 95 percent in most agricultural estates larger than 25 hectares in area.
The decree covers estates that produce palm oil, corn and other staple food crops.
“It’s too risky to allow foreign investors to take stakes this big,” Sutarto said on Friday. “We need to reduce this to 45 percent.”
Under the 2007 decree, investors can establish plantations ranging in size from 5,000 to 10,000 hectares, despite comments by one government official last month suggesting that investors could set up estates of up to 20,000 hectares.
Bayu Krisnamurthi, the deputy minister of agriculture and fisheries at the Coordinating Ministry for the Economy, said that the government would be cautious about issuing the regulation because of the importance of the many staple crops it would cover.
The regulation is mainly targeted at foreign investors planning major investments in rice plantations, Bayu said. The need for the new regulation marks an important shift in domestic agricultural production because crops such as rice, corn and soybeans have traditionally been produced by small farms under two hectares.
Most rice plantations are located throughout the eastern side of the country, including the islands of Sulawesi and Papua, particularly in Merauke district, West Papua.
Johanes Gluba Gebze, head of the Merauke district, said that the area had about 2.49 million hectares of particularly fertile land.
Gebze said that the district administration would try to help investors start businesses in Merauke by accelerating the licensing approval process to just one day.