Poorly drafted law

Judging by its primary objectives of bringing about fairness to farmers/smallholders, enhancing sustainable plantation-management practices and building up an internationally competitive plantation industry, the plantation bill that was approved by the House of Representatives on Monday is by no means a good law.

A good law is supposed to primarily serve and protect the interests of the general public, or in this case, the farmers/smallholders. But, the plantation legislation virtually hands a blank check to the government, which is notorious for favoring big business interests.

The legislation leaves to the discretion of the government many crucial provisions, such as those regarding the maximum acreage of big plantations, business partnerships between big plantation firms and smallholders, requirements for the extension of land tile, and procedures for land acquisition.

We, therefore, wonder why the House pushed to pass the law -- even amid such strong opposition from most non-governmental organizations and farmers associations -- when there are many other more urgent bills that badly need enactment. For example, the proposed amendments to the bankruptcy law, which has trapped many companies into legal black holes, have long been overdue at the House.

The House should, in part, be commended for taking the initiative to draft the bill almost two years ago -- perhaps only one of a few laws drafted at the legislature's initiative over the past three decades.

First of all, plantations are the most promising sector of the economy, given the country's huge area, favorable climate and abundance of cheap labor. With more than 10 million hectares of oil palm, rubber, coconut, cocoa, coffee, clove and tobacco plantations, and foreign exchange earnings of almost US$6.5 billion a year, the plantation sector commands strong comparative advantages. In fact, it was primarily plantation crops that attracted foreign colonialists to Indonesia centuries ago.

Moreover, sound plantation management contributes greatly to the development of rural areas, where more than 60 percent of the country's population live, and ideally it is also environmentally friendly.

What then, is the point of hurriedly enacting such a poorly drafted law, which would likely be ineffective in empowering smallholders and protecting the interests of tribal landowners from greedy investors and corrupt officials?

The law stipulates only several clear-cut provisions that minimize uncertainty and different interpretations in its implementation.

It requires foreign investors in plantations to set up joint ventures with national interests, and threatens those found guilty of illegally occupying land and using the slash-and-burn method in land clearing. Heavy punishments range from 10 years to 15 years imprisonment and fines of between Rp 10 billion and Rp 15 billion (US$1.66 million).

The legislation grants a 35-year land title to plantation firms which is extendible by 25 years, contingent upon a set of requirements that will be made by the minister of agriculture. The plantation owner is allowed to apply for another 35-year land title after the extension period ends, again subject to requirements set by the minister of agriculture.

Investors should welcome this provision, because investment in plantations offers a long payback period. Yet, given the bitter experiences of businesspeople in dealing with the government licensing machinery, apprehensions have arisen as to whether the processing of the land title and its extension would be transparent and expedient.

The bill initially set the maximum size of land for a plantation company at 20,000 hectares in one province and 100,000 hectares nationwide, but the specific acreages were deleted from the final bill approved on Monday.

This is indeed a very sensitive area, yet it is very important to have clearly defined acreage ceilings, to create fairness and enhance equity in land ownership.

The House seems to have taken the easy way out and avoided controversy, since many companies already have land titles to much larger acreages than the ceilings specified in the early draft bill. This is a time bomb that could sabotage the applicability of the law, as in the case of a labor regulation enacted in 2000.

Plantation companies, besides requiring land titles, should acquire business licenses from the governor or regent, depending on the location of the estates to be developed. Procedures for this license have yet to be formulated by the minister of agriculture. Again, another red-tape trap.

Yet, one of the most deplorable shortcomings is the absence of clearly set provisions on business ties between smallholders and plantation companies, which has, thus far, put farmers at a major disadvantage in bargaining with businesspeople. The law only stipulates that such relationships shall be mutually beneficial, and regulations regarding these partnerships will be issued by the minister of agriculture.

It would be much better to simply shelve this law, since it would not make investment in plantations more attractive and the industry more competitive. Nor would it be effective in empowering smallholders.