Reuters | 21 April 2010  

Jakarta - Indonesia will require investors in food crop production to get local government permission before developing farms or estates in order to prevent land disputes, an agriculture ministry spokesman said on Wednesday.

The country is keen to open up the sector to foreign investors, but the requirement for local permits will also apply to Indonesian interests, said Suprahtomo, the Agriculture Ministry spokesman.

"This will apply to all investors -- including for food estate projects such as in Papua," he said.

He was refering to the 1.2 million-hectare Merauke estate -- which covers an area the size of the American state of Connecticut -- currently offered to investors for planting with food crops such as rice and sugar cane.

A planned $4.3 billion investment by the Saudi Binladin Group to grow basmati rice there has stalled because of problems acquiring land from local people.

Suprahtomo did not say when the requirement will be put into force, but it is part of an agriculture minister decree.

Land ownership is an emotive issue that frequently holds up investment in infrastructure and other projects in Indonesia.

While the country has achieved rice self-sufficiency since 2008, it still struggles to produce enough other food crops, including soybeans and sugar.

Investors in farms bigger than 25 hectares, or employing more than 10 workers, will have to proactively get permits from regents or governors, Suprahtomo said.

Smaller investments will also need to be registered, but Suprahtomo said the onus there would be on local governments.