Plantation Law lacks detail: Executive
Zakki P. Hakim, Jakarta
The new Plantation Law approved by the House of Representatives earlier this week still lacks key details, which might create new uncertainties for plantation companies, said an industry professional.
Vice president of publicly listed plantation firm PT Astra Agro Lestari Benny Tjoeng said on Wednesday plantation companies would take a wait-and-see attitude until government regulations or ministerial decrees covering the details were issued.
"The Plantation Law is a positive thing, but it only serves as a guideline. We need elaboration of details," Benny told The Jakarta Post.
"Instead of luring new investment, it would discourage foreign and local businesses," he added.
The Plantation Law, drafted under initiative of the House, aims to attract new investment to one of the country's most promising economic sectors.
According to Benny, one of the issues needing clarification was the maximum size of property that may be owned by a plantation company.
Article 10 of the law stipulates only that the Minister of Agriculture would determine the maximum size of property based on a set of criteria including crop type, capital, factory capacity, population density and geographical conditions.
The initial draft of the law set the maximum size of property owned by a plantation firm at 20,000 hectares in a single province and 100,000 ha nationwide. However, the final draft omitted the ruling.
Regarding title deeds, Benny said the law did not regulate a regional government's role in settling land disputes with locals, which was a common problem in rural areas.
He said big plantations also objected to the criminal sanctions imposed on those using the slash-and-burn land clearing method.
Article 48 and 49 stipulate maximum sanctions of up to 10 years' imprisonment and Rp 10 billion in fines against those who deliberately, or out of negligence, use the slash-and-burn method.
Indonesia faces annual forest fires generally attributed to slash-and-burn, which has contributed to haze and environmental damage both domestically and among neighboring countries.
Benny said the government should define clearly what it meant by "deliberate" and "negligence", as fires could be caused by external factors, third parties or even force majeure -- yet plantations were still held responsible, as had occurred in the past.
"Businesses require legal certainty. The law is a good start, but we are waiting for technical details," he said.
Astra Agro Lestari operates 195,000 hectares of oil palm plantations in Sumatra, Kalimantan and Sulawesi. Some 45,000 hectares of these are plasma plantations owned by small farmers.
The Plantation Law has also drawn protests from farmers and pro-farmer activists, who claimed it did not protect the interests of farmers, minor stakeholders and indigenous tribes in land allocation.
Key points of Plantation Law
Article 10: Maximum and minimum size of a plantation is determined by a minister in charge of plantation affairs, while title deeds are granted by an institution authorized in landed property affairs. Article 11: Land titles are granted for 35 years maximum. Article 12: Agriculture minister may recommend the cancellation of a title if the plantation firm abandons the property for three consecutive years. Article 14: Ministerial input and recommendations must be made prior to shifting ownership of a bankrupt non-listed plantation company to a foreign company. Article 17: Business licenses are granted by governors or regents, according to the location of estates to be developed. Article 47: Those who deliberately damage a plantation and its assets or disrupt the business may face a maximum imprisonment of five years and a maximum fine of Rp 5 billion. Articles 48, 49: Those who deliberately, or out of negligence, apply slash-and-burn farming may face maximum penalties of up to 10 years' imprisonment and Rp 10 billion in fines.