* Working on law to limit new plantations to 100,000
* State-owned firms, co-operatives to be exempted
* Looking to impose law this year
By Michael Taylor and Yayat Supriatna
JAKARTA, April 24 Indonesia is working on a
regulation to restrict to 100,000 hectares the plantation area
of new private palm oil firms, a government official said, as
the world's top producer of the edible oil seeks to open up the
industry to smaller players.
The law, an amendment to a 2007 regulation, will exempt
state-owned firms and co-operatives and will not affect
companies that already have permits, said Gamal Nasir, director
general of plantations at the agriculture ministry.
"Hopefully it can be imposed this year," Nasir told Reuters
on Wednesday, adding that the regulation would not be
"Companies that already have acquired more than 100,000
hectares can still manage them, according to their permit."
Nasir did not say how the law would affect existing palm
firms that are looking to expand.
Major palm oil firms now operating in Indonesia include
Singapore-listed Golden Agri-Resources and Wilmar
International, Malaysia's Sime Darby Bhd and
Indonesia's Astra Agro Lestari -- most of which have
more than 100,000 hectares under palm plantation.
Plantations with land licenses due to expire or be renewed
soon could be hit hardest, but few firms release this data, so
the full impact is hard to assess, said a Singapore-based
The amendment to the 2007 regulation, which sought to
protect small plantation firms from bigger predators, may be
aimed at closing a loophole that let major players set up
companies in different provinces, said the analyst, who did not
want to be named because of the sensitivity of the issue.
The timing comes ahead of a campaign for presidential
elections due next year, suggesting the law could be a
government attempt to curb land disputes, common in a country
where provincial and federal rules overlap.
However, the executive director of the Indonesian Palm Oil
Association, Fadhil Hasan, questioned whether the new law was
the best way to prevent the disputes or spread economic
"In the new draft it is stated that it will be valid for the
new plantations only," said Hasan. "But it is unclear to us why
the government is doing this."
Indonesia's palm oil output is expected to be about 28
million tonnes this year, with between 17 million and 18 million
tonnes exported to top buyers that include India, China and
Palm oil is used mainly as an ingredient in food such as
biscuits and ice cream, or as biofuel, and estates growing palm
in Indonesia sprawl across about 8.5 million hectares.
Home to the world's third-largest expanse of tropical
forests, Indonesia is also under intense international pressure
to limit deforestation and destruction of its carbon-rich
peatlands, at risk from urbanisation and the rapidly expanding
palm and mining sectors.
(Reporting by Yayat Supriatna and Michael Taylor; Editing by