Legal Framework in Plantation for Foreign Investement
Plantation sector is one of areas that is open to Foreign Investor. Based on Presidential Regulation No.39 of 2014 on List of Business Fields That Are Closed to Investment and Business Fields that Are Conditionally Open For Investment (“Negative Investment List”), Foreign Investor are allowed to own up to 95% shares in Plantation Business in Indonesia.
However, before starting up a Plantation Business in Indonesia, it is compulsory for the Foreign Investor to obtain Plantation Technical Recommendation first as regulated on Directorate General of Plantation Decision No. 214/KPTS/HK. 320/8/2014 on Plantation Technical Recommendation In The Frameworks of Investments. The Plantation Technical Recommendation is a technical considerations given by the Indonesia Government through Director General of Plantation used for obtaining foreign investment licenses, especially the following licenses:
- Principle License for running plantation business in Indonesia;
- Principle License for expanding business;
- Principle License for changing this following matters:
- Scope of works of the Company
- Type of plantas
- Production capacity
- Project Location
- Share ownership
- License for Merging Companies; and
- The availability of raw materials in Crumb Rubber Industry.
How To Get Plantation Technical Recommendations
Plantation Technical Recommendation can be acquired by submitting application letters addressed to the Director-General of Plantation of the Indonesian Ministry of Agriculture. The Ministerial has Assessment Team to check the correctness and completeness of that application letters and requirement documents.
If the application is not yet complete, the Assessment Team will return it to the applicant and ask them revise the application. Further, if the application meets all requirements, the Assessment Team will deliver it to the Secretariat of Director General of Plantation to be examined within 15 days. After that such of examinations, the Director General of Plantation of the Indonesian Ministry of Agriculture will issue the Plantation Technical.
However, if the application is rejected, the Director General of Plantation will return the application back to the applicant with the reasons of that rejection. Overall, the process to obtain Plantation Technical Recommendation will take approximately 30 working days since the submission of the first application.
What are the requirement documents to submit the Plantation Technical Recommendation?
All requirements needed to obtain Plantation Technical Recommendation will be tailored to the purpose of the requested recommendation. In general, the documents needed for getting Plantation Technical Recommendation are as follows:
- Application form;
- Company Legality, which consist of:
- The Deed of Establishment and its amendment
- Domicile Certificate
- Taxpayer Registration Number of the Company
- Company Registration Certificate
- Statement Letter from the Company explaining the large and location of plantation are owned by the Company
- Statement Letter from the Company explaining the capacity and location of plantation process owned by the Company;
- Recommendation of land availability or raw materials from local regents or mayors;
- The availability of raw materials from outside the company or from other parties who are known or recommended by the Regional Government if the supply of raw materials from inside companies is insufficient;
- Technical information, at least must include the following information:
- Wide area and/or a capacity of processing units;
- Types of plants, the source of seeds to be used;
- High place, soil type, rainfall, days of rain per year;
- Work plan signed by the applicant include the following:
- Stages of development and/or unit of the processing industry.Financing total and annual gardens development and/or industrial processing plantations
- Plantation Business Permit;
- The Right of Cultivation Certificate (Hak Guna Usaha-“HGU”) or stages of the process to obtain HGU from the National Land Agency.
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HOW CAN SMART LEGAL CONSULTING HELP YOU?
SMART Legal Consulting is an Indonesian Corporate Legal Services. We assist foreign investors run their business in Plantation areas and to secure Plantation Technical Recommendations. Our knowledge, experience, and connections make us the law firm to be your legal partner in Jakarta, managing your investments in Indonesia.
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