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Explainer: How Job Creation Law impacts agriculture
However, Bayu Krisnamurthi, the chairman of Indonesian Agribusiness Association (AAI), said on Thursday said that the reason for the lack of investment in the agriculture sector was over-regulation, including the government’s policy on rice prices, which could deter private investors.
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Harvest time: Farmers in Sirnagalih village in Bogor, West Java, harvest rice on July 25, 2019 amid a prolonged drought. West Java is one of the country’s major rice-supplying regions. (JP/P.J. Leo)
T
he recently passed Job Creation Law officially revises laws related to agriculture, including on investment, imports and land use, aimed at improving the country’s ease-of-doing-business ranking and boosting food security, although experts have questioned the new law’s efficiency and long-term impacts.
The amended laws include Law No. 39/2014 on plantations, Law No. 13/2010 on horticulture, Law No. 18/2012 on food and Law No. 41/2009 on the protection of sustainable food agricultural land, among others.
President Joko “Jokowi” Widodo proposed the jobs law, which was passed on Oct. 5, to improve Indonesia’s regulatory climate and thus encourage more investment.
However, since its passage by the House of Representatives, it has sparked strong oppositions from labor unions, activists and other civil society groups over concerns about environmental risks and labor rights.
Investment
On the investment front in agriculture, the jobs law removes the 30 percent cap on foreign investment in the horticultural sector, through the revision of Article 100 of the Horticulture Law, according to the latest 812-page draft of the jobs law made available to The Jakarta Post.
The new law also removes Article 131 that stipulates the obligation for foreign investors investing in horticultural businesses to place funds, amounting to the share ownership, in a national bank.
