Indonesian Government Sets Limits to Plantation Sizes of 11 Commodities
The Indonesian government has limited the surface area of plantations that can be owned by a company or by a group of companies that have one shared management. This new regulatory framework, stipulated in Permentan No 98/Permentan/OT.140/9/2013 with regard to plantation estates' licensing guidelines, is applied to 11 commodities: tea, sugarcane, oil palm, coconut, cotton, rubber, coffee, cacao, cashew nuts, pepper as well as cloves. The new law has been approved by the minister of Justice and Human Rights Amir Syamsudin.
In the table below, the new maximum surfaces of plantations is listed according to the type of commodity.
| Commodity |
Maximum Surface |
| Oil Palm | 100.000 ha |
| Rubber |
20.000 ha |
| Coffee | 10.000 ha |
| Cacao | 10.000 ha |
| Cashew Nut | 10.000 ha |
| Pepper | 1.000 ha |
| Clove | 1.000 ha |
| Cotton | 20.000 ha |
| Tea | 20.000 ha |
| Sugarcane | 150.000 ha |
| Coconut | 40.000 ha |
Source: Investor Daily
The reason behind the limit to plantation sizes is to (re)organize and regulate the local governments' licensing scheme. Due to weak local government management there have been many examples of issued licenses with no clear limit to the size of plantation. This subsequently hurts new investors as well as disturbs the local population that sees many of the surrounding area fall in the hands of certain companies.
The new maximum limit is still quite high as on average most newly issued licenses involve a surface of about 2.000 to 3.000 ha due to the difficulty (red-tape) and costs to obtain land in Indonesia.
The new law is not retrospective, implying that it only applies to new licenses or existing companies that hold a Hak Guna Usaha (HGU or Rights of Exploitation) license which expires after the implementation of the new law (when extending the license they will need to comply with the new rules).