As many foreign and local investor are seeking to win a license to invest in the giant agriculture project in Papua, Indonesia, one unnamed South Korean investor has obtained a permit. Mitsubishi is also bidding. Binladin Group has been rejected.
Indonesian Chamber of Commerce and Industry warns that the government’s plan to develop a major food estate in Merauke, Papua, may run into difficulties because confusing and overlapping land use regulations will deter investors.
The Indonesian government is wise to learn from the South Korea Daewoo-Madagascar deal, which demonstrated the enormous economic, social and political risks associated with foreign ownership of land and water rights.
The development, under which many residents will be forced to sell their land, has met opposition from locals and non-government organizations. The Indonesian Farmers Union (SPI) has said that it will lead to a “land grab” by big businesses at the expense of locals.