On the heels of the Indonesian government announcing the country’s goal of increasing palm oil output by 33% to 40 million tons by the year 2020, the Parliament has drafted a bill that would open up the industry to local, smaller players, but would also limit foreign ownership of plantations to 30%. Currently foreign ownership limits are set at 95%. Industry insiders state that if the bill is passed it will not only reduce foreign investment in the country but it will also reduce the capital value of the country’s plantations, and restrict the flow of overseas capital needed to modernize the industry. Indonesia’s parliament aims to conclude discussions on the bill soon and expects it to be approved before the new administration takes office in October. Once passed, the law would be retroactive for companies that already own plantations, giving them five years to comply. Wilmar International, Malaysia’s Sime Darby Bhd, Cargill, and Golden Agri Resources are all currently operating in Indonesia’s palm oil industry.
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