Indonesia will limit foreign ownership in food estates, such as rice cultivation, to less than 49 per cent, Agriculture Minister Suswono said Jan. 28, a decision that could discourage investor interest.
Saudi Arabia, China and other countries are acquiring farmland abroad as part of efforts to achieve greater food security, following sharp increases in food prices in 2008.
Indonesia is keen to open up food crop investment for foreign investors and the government has just completed drafting a decree as a guideline for such investments, Suswono said.
He said that although the output from food estates is mainly for export markets, the decree stipulates that in the event of domestic shortages, production must go to the local market first.
An Agriculture Ministry official had previously said that among foreign investors, the Saudi Binladin Group is planning to invest $4.3 billion to grow basmati rice, which is not popular in Indonesia.
Binladin is eyeing two million hectares of farmland in Indonesia’s easternmost island of Papua. The investment has stalled because of problems acquiring land from local people.