Asia Partner2
Plantation Law lacks detail: Executive
Source:The Jakarta Post, July 15, 2004
ByZakki P. Hakim
Jakarta
Thenew Plantation Law approved by the House of Representatives earlier thisweek still lacks key details, which might create new uncertainties forplantationcompanies, said an industry professional.
Vicepresident of publicly listed plantation firm PT Astra Agro Lestari BennyTjoeng said on Wednesday plantation companies would take a wait-and-seeattitude until government regulations or ministerial decrees coveringthe details were issued.
“ThePlantation Law is a positive thing, but it only serves as a guideline. Weneed elaboration of details,” Benny told The Jakarta Post.
“Insteadof luring new investment, it would discourage foreign and local businesses,”he added.
ThePlantation Law, drafted under initiative of the House, aims to attract newinvestment to one of the country’s most promising economic sectors.
Accordingto Benny, one of the issues needing clarification was the maximum sizeof property that may be owned by a plantation company.
Article10 of the law stipulates only that the Minister of Agriculture woulddetermine the maximum size of property based on a set of criteria includingcrop type, capital, factory capacity, population density and geographicalconditions.
Theinitial draft of the law set the maximum size of property owned by a plantationfirm at 20,000 hectares in a single province and 100,000 ha nationwide.However, the final draft omitted the ruling.
Regardingtitle deeds, Benny said the law did not regulate a regional government’srole in settling land disputes with locals, which was a common problemin rural areas.
Hesaid big plantations also objected to the criminal sanctions imposed on thoseusing the slash-and-burn land clearing method.
Article48 and 49 stipulate maximum sanctions of up to 10 years’ imprisonmentand Rp 10 billion in fines against those who deliberately, or outof negligence, use the slash-and-burn method.
Indonesiafaces annual forest fires generally attributed to slash-and-burn, whichhas contributed to haze and environmental damage both domestically andamong neighboring countries.
Bennysaid 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 heldresponsible, as had occurred in the past.
“Businessesrequire legal certainty. The law is a good start, but we are waitingfor technical details,” he said. AstraAgro Lestari operates 195,000 hectares of oil palm plantations in Sumatra,Kalimantan and Sulawesi. Some 45,000 hectares of these are plasma plantationsowned by small farmers.
ThePlantation Law has also drawn protests from farmers and pro-farmer activists,who claimed it did not protect the interests of farmers, minor stakeholdersand indigenous tribes in land allocation.
Keypoints of Plantation Law
Article10: Maximum and minimum size of a plantation is determined by a ministerin charge of plantation affairs, while title deeds are granted by aninstitution authorized in landed property affairs.
Article 11: Landtitlesare granted for 35 years maximum.
Article 12: Agriculture ministermayrecommend the cancellation of a title if the plantation firm abandons theproperty for three consecutive years.
Article 14: Ministerial input andrecommendationsmust be made prior to shifting ownership of a bankrupt non-listedplantation company to a foreign company.
Article 17: Businesslicensesare granted by governors or regents, according to the location of estatesto be developed.
Article 47: Those who deliberately damage aplantationand its assets or disrupt the business may face a maximum imprisonmentof five years and a maximum fine of Rp 5 billion.
Articles 48,49:Those who deliberately, or out of negligence, apply slash-and-burn farmingmay face maximum penalties of up to 10 years’ imprisonment and Rp10 billion infines.
