Capital Investment Coordinating Board (“BKPM”): Investment on Food Sector Becomes A Priority

 Investment, Trade and Industry

August 11, 2016

Capital Investment Coordinating Board (“BKPM”):

Investment on Food Sector Becomes A Priority

 

 

Food industry has been one of the attractive business sectors in Indonesia, considering the country has abundant resources from land and sea. However, investment  in food sector is still minuscule and needs to be expanded. Seeing the huge investment opportunity for food industries and the needs to enhance national food security, the recently appointed Head of BKPM, Thomas Lembong, stated his intention and focus to boosting investment in food sector by attracting investments from both domestic and foreign investors.

 

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Wahyuni Bahar
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On Wednesday, 27 July 2016, President Joko Widodo announced the new composition of his cabinet for period 2014-2019.[1]One of the positions that have been changed is the Head of the BKPM. Thomas Trikasih Lembong has been selected to replace Franky Sibarani to administer investments in Indonesia.[2]

 

Indonesia is a lucrative food industry market, surrounded by tropical forests, fruitful lands, and rich ocean. The Government sees the open opportunity for food sector, hence agricultural and marine sectors are included in the Presidential Regulation No. 3 of Year 2016 on National Strategic Project. Food estate, quarantine facility in Bangka Belitung (2,170 ha), and establishment of integrated cold storage in 20 locations would be the main projects that the Indonesian Government aims to conclude.

 

In the first half of 2016, the top sector for domestic investment  is food industry, amounting to 16.64 trillion Rupiah, putting food industry as one of the top five foreign direct investment destinations. Domestic investment on food and plantation accounts for 12.24 trillion Rupiah. Pursuant to that data, Thomas Lembong will continuously focus to expand the investment in food sector. [3] This action is taken in accordance with the directives of the President Joko Widodo at the plenary session of the first cabinet that instructed to solve the food issues and encourage investment in food sector within the next three months. [4]

 

Issues that have been hampering food industry are issues on food supply chain, food production, and food distribution due to limited infrastructure and technology, which relates to food security. The government is not satisfied with the current food’s trends, prices, and limited supplies. Further, Thomas Lembong sees that there are still a big opportunities to improve our food industry[5] and safeguard food security in Indonesia through sufficient supplies and stable prices.

 

Related to that matter, Thomas Lembong intends to increase the particular food productivity of agriculture and livestock. He encourages investors for doing modernization in the agricultural and livestock sectors, such as modernizing the abattoir, the rice mill, and others.[6]This method is aimed to improve food industry’s efficiency and profitability.[7]To realize such goals, the government further liberalized certain sectors through the new Negative Investment List published in May 2016. Cold storage and restaurants business are now opened 100% to foreign ownership, while distribution and warehousing are increased to 67% from the previous 33% foreign ownership. [8]

 

The government has also issued regulations to provide ease of doing business to the investors, particularly related to the licensing procedures.[9]Licensing procedures has been reformed at the end of 2014, and now centralized under BKPM.  Online monitoring service has also been introduced to simplify the registration and as a possibility for the investors to monitor the progress.[10]With such improvements, investments are expected to increase and distributed well across Indonesia, particularly on food sector.

 

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[1]       https://m.tempo.co/read/news/2016/07/27/078790887/ini-susunan-menteri-baru-hasil-reshuffle.
     Accessed on 1 Augusts 2016.

[2]      http://www.thejakartapost.com/news/2016/07/27/jokowis-new-cabinet-announced.html.

     Accessed on1 Augusts 2016.

[3]      http://jambi.tribunnews.com/2016/07/31/pemerintah-menggenjot-investasi-di-sektor-pangan.
     Accessed on 1 Augusts 2016.

[4]      http://www.cnnindonesia.com/ekonomi/20160729075613-92-147809/thomas-lembong-fokus-kejar-
     investasi-sektor-pangan/. Accessed on 1 Augusts 2016.

[5]       http://www.antaranews.com/berita/575786/tom-lembong-genjot-investasi-sektor-pangan-untuk-
     turunkan-harga-pangan. Accessed on 1 Augusts 2016.

[6]       http://jambi.tribunnews.com/2016/07/31/pemerintah-menggenjot-investasi-di-sektor-pangan.
     Accessed on 1 Augusts 2016.

[7]    http://www.antaranews.com/berita/575786/tom-lembong-genjot-investasi-sektor-pangan-untuk-
     turunkan-harga-pangan. Accessed on 1 Augusts 2016.

[8]      http://www.euind-tcf.com/dni-and-reforms/. Accessed on 1 Augusts 2016.

[9]       http://www.jitunews.com/read/38728/langkah-merevisi-regulasi-mampu-tarik-investor-di-sektor-
     pangan. Accessed on 1 Augusts 2016.

[10] http://www.indosight.com/blog/new-regulations-make-investments-indonesia-faster-clearer/.
      Accessed on 1 Augusts 2016
     

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