JAKARTA: Indonesia is working on a regulation to restrict to 100,000ha 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, would exempt state-owned firms and cooperatives and would not affect companies that already had permits, said Gamal Nasir, director general of plantations at the agriculture ministry.

”Hopefully it can be imposed this year,” Nasir told Reuters yesterday, adding that the regulation would not be retroactive. “Companies that already have acquired more than 100,000ha can still manage them, according to their permit.”

Nasir did not say how the law would affect existing palm firms that were looking to expand.

Major palm oil firms now operating in Indonesia include Singapore-listed Golden AgriResources and Wilmar International, Malaysia’s Sime Darby Bhd and Indonesia’s Astra Agro Lestari most of which have more than 100,000 ha under palm plantation.

Plantations with land licences 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 plantations analyst.

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.

Indonesian Palm Oil Association executive director Fadhil Hasan questioned whether the new law was the best way to prevent the disputes or spread economic development evenly. “In the new draft it is stated that it will be valid for the new plantations only,” said Hasan. – Reuters

Source : The Star