agriculture investment in indonesia

The New Leaf of Agriculture Investment in Indonesia

  • InCorp Editorial Team
  • 11 May 2023
  • 4 minute reading time

Indonesia is abundantly blessed and considered the biggest agricultural country. The agriculture investment sector in Indonesia has produced various commodities for food crops, horticulture, and plantations. These products have been cultivated as a source of food as well as income for the country.

With that being said, more than 60% of the Indonesian population works in agriculture. Dr. Andi Nuhung Iskandar, a professor and prominent author, shared that considering a large portion of the people that helps the agriculture investment sector comes from a low-income society, despite the group contribution.

Therefore, he suggested that agriculture workers should be the focal point of national development, especially in the direction of investment. Development in Indonesia’s agricultural sector is required to produce economically competitive products and develop growth and instill community empowerment.

Arabica Gayo 3 Adds Another Superior Coffee Variety in Indonesia

Arabica Coffee of the Gayo 3 variety, otherwise known as Ateng Super, has already been registered with the Indonesian Ministry of Agriculture by the Aceh Agriculture and Plantation Agency, finally acknowledged the coffee plant as the Superior National Variety or Varietas Unggul Nasional.

This particular variety is known for being fast in growing and can be used to produce very high-quality coffee. Aside from that, this variety is also highly adaptable to various areas. There were joint efforts within the Central and Regional Government through research and collaboration to get this variety its distinction.

Coffee Drives Agricultural Investment

Potential Transaction Over Coffee Trade

Agriculture investment in Indonesia, especially for the coffee trade, is not to be taken lightly. The coffee commodity has proved to be one that is successful in attracting transactions.

The estimated transaction figure lies at US 19.5 million, which is only from the Specialty Coffee Expo held in Boston this year. This indicates that Indonesian coffee can compete and be in demand among consumers, especially those in the US market.

The demand is mostly for coffee products from West Java, Gayo, Mandailing, Luwak, Toraja, and Bali. A concrete example of the growth within the sector is seen through the deal established between Caldera Coffee and a buyer from Argentina, which amounts to IDR 157 billion.

The current price for coffee in the market is generally high and is encouraging for stakeholders. However, farmers are often apprehensive due to price volatility. It is integral for farmers to have a price that they can rely on.

That’s why Indonesian coffee industry experts are involved in establishing a sustainable target yield. It is from there that the farmers are supported to conduct sustainable farming while at the same time making a decent amount for their living.

The Future of Agriculture Investment

The Indonesian government has been consistent in its efforts to push agriculture investment. The government has also been focused on driving the capacity building of the farmers through various measures, including but not limited to farming methods, utilization of quality seeds, and also repairs to infrastructure.

Foreign companies are permitted to set up in Indonesia, specifically in the agriculture sector. The relaxation of regulations should be utilized to provide added value to the agricultural sector and the people who are benefited from the business. The inflow of investments would also help make the agriculture sector resilient and sustainable.

Government support also allows for more job opportunities, knowledge, and access to technology. However, the development would not be possible without the transfer and help of technology and expertise.

Alongside the investment inflow, the Indonesian government and relevant stakeholders need to ensure that there is a transfer, as mentioned above. This is done to support the modernization of farmers, increase productivity, and also increase quality. A certification process could do increasing the quality of commodities that would open room for export.

Agriculture investment is required to increase added value when the sector is still a labor-intensive industry that yields relatively low productivity. The role of investment is also of the highest importance due to factors like climate change which effectively threatens the sustainability of the agricultural sector.

Agriculture Digitization

It is a matter of serious concern that Indonesia’s agriculture sector still faces challenges as they are not fully utilizing digital technology. Some help derived from employing technology could be supply chain and data management, market access, digital financial services, information, and precision agriculture.

There has been a bureaucratic process shift in Indonesia. The change is resulting in the government simplifying the registration of businesses as an incentive for those looking to set up shop here. However, there is still some difficulty due to the language barrier and complicated systems.

To overcome the situation, InCorp provides company and product registration services. These services are extended explicitly to businesses that require assistance across various sectors.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Frequent Asked Questions

You can transfer the license as long as your current local distributor agrees to change the product license holder. The procedure will be different for each product category. We can only recommend you try to prevent these issues by setting cooperation with a trustworthy partner from the beginning

Before you can distribute your products in Indonesia, you will have to register your product with the BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). Only an Indonesian legal entity can register the product. If you decide to distribute your product via a local distributor, they will register the product under their entity in Indonesia and become the product license holder. Cekindo can act as your local distributor and register the product under its name.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.