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Indonesia: Palm oil draft bill

A draft bill on palm oil business is being circulated for discussion in the House of Representatives of Indonesia. The draft bill, if passed, is intended to replace the existing laws and regulations on palm oil business, including Law 39 of 2014.

The draft bill recognises three types of palm oil business: cultivation, processing and trading. Before undertaking any of these types of business, the draft bill would require the relevant party to obtain a business licence.

The requirements for obtaining the relevant business licence are listed in the draft bill. These include possession of a location permit and an environmental permit. The applicants would also need to be in compliance with the regional spatial plan.

Applicants for a cultivation business licence would be required to build an adequate infrastructure for controlling the spread of pests.

Applicants for a processing business licence would be required to source at least 20% of any raw materials used in its process from its own plantation.

The draft bill, as it stands at the moment, is facing criticism from multiple directions. The Ministry of Industry has publicly called for Parliament to discontinue discussion on the bill, citing that the prevailing laws and regulations in this area are adequate and working well. Further, Minister of Industry Airlangga Hartarto has stated that the draft bill, if passed, would lead to disharmony at several levels of the regulatory regime and would create confusion in the industry.

Factions in Parliament have expressed differing viewpoints on the draft bill, with several parties, including Gerindra, expressing opposition.

Discussion on the draft bill continues, and the final bill, if passed, may differ substantially from the existing draft.


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