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View all search resultsExplainer: 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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imed at improving the country’s ease-of-doing-business ranking and boosting food security, the recently passed Job Creation Law officially revises laws related to agriculture, including on investment, imports and land use, but experts are questioning its 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.
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, which stipulates the obligation for foreign investors investing in horticultural businesses to place funds, amounting to the share ownership, in a national bank.
“The removal of articles 100 and 131 contravenes the Constitutional Court decision that strengthens the limitation on foreign ownership to give opportunities to local horticultural businesses,” Henry Saragih, the chairman of the Indonesian Farmers Union, said in a statement on Wednesday.
The jobs law came as the country saw its foreign direct investment (FDI) fall for two consecutive quarters this year, dipping by 6.9 percent year-on-year (yoy) in the second quarter to Rp 97.6 trillion (US$6.63 billion) amid the COVID-19 pandemic.
Meanwhile, FDI realization in the food crops, plantation and livestock sectors stood at $667 million in the January–June period this year, a 31.9 percent yoy increase from $505.4 million in the same period in 2019, according to data from the Investment Coordinating Board.
