Indonesia Palm Oil Plantation Fund

A newly regulated matter under Law No. 39 of 2014 regarding Plantations (“Plantation Law”) when compared to its predecessor is the provisions on the so-called Plantation Funds, which was mandated to be regulated further under a Government Regulation.

In fulfilling this mandate, Government Regulation No. 24 of 2014 regarding Collection of Plantation Fund (“Government Regulation”) was recently issued as an umbrella instrument for Plantation Funds for the following commodities:

  1. Palm oil;
  2. Coconut;
  3. Rubber;
  4. Coffee;
  5. Cocoa;
  6. Sugarcane; and
  7. Tobacco.

Insofar, the only commodity that has been provided with a Plantation Fund is palm oil, as contained under Presidential Regulation No. 61 of 2015 regarding the Accumulation and Usage of the Palm Oil Plantation Fund (“Presidential Regulation”), which was issued concurrently with the Government Regulation.

This article will elaborate this so-called Palm Oil Plantation Fund (“Fund”) under the Presidential Regulation, of which similar provisions will most likely be apply to the Plantation Fund of other commodities as well.

Purpose

The primary purpose of the Fund is to promote continuous development of domestic palm oil plantations. To this end, the Fund will be used for the following purposes for palm oil plantations:[1]

  1. Human resources development;
  2. Research and development by establishing and supporting research institutions;
  3. Marketing and promotions, which will focus on promoting information regarding the strategic value of palm oil products;
  4. Revitalization (peremajaan) by improving the production and maintenance of palm oil plantations; and
  5. Facilities and infrastructure, including for seeds, fertilizers, pesticides, post-harvest and processing equipment, access roads, transportation, and agricultural machineries.

The Fund will be managed and supervised by the Palm Oil Plantation Fund Management Agency (“Agency”), which will be established by the Minister of Finance.[2] This Agency will determine the Fund’s allocation, with due consideration of government programs and the Steering Committee (Komite Pengarah).[3]

Source

The source of capital for this fund will derive from palm oil plantation businesses, financing companies, the general public and other legitimate sources (such as grants and proceeds from administrative fines).[4]

Specifically for those that derive from palm oil plantation businesses will be collected in the form of: 1) levies for exports of palm oil, including its derivative products (“Export Levies”), and 2) periodical contributions.[5]

Export Levies

Export Levies are payable for:[6]

  1. Exports of palm oil products and its derivative products, whether conducted by palm oil plantation businesses or general exporters; and
  2. Industrial businesses that export palm oil based products.

The Minister of Finance will determine the amount for these Export Levies. Additionally, the Minister of Industry will determine which derivative products of palm oil that will be subject to Export Levies.[7]

Non-payment of Export Levies will be imposed with an administrative fine or export prohibition. The amount for the former will be determined by the Minister of Finance, and the procedure for the latter will be further regulated by the Minister of Trade.[8]

Export Procedure

In order to guarantee payment of Export Levies, the Presidential Regulation stipulates that proof of payment of Export Levies must be contained in a surveyor report. A surveyor report is mandatory in securing an export customs notification (pemberitahuan pabean ekspor) for exports of palm oil products.[9]

A copy of the proof of payment of Export Levies must also be submitted to the Agency.[10]

Periodical Contributions

The amount for contributions payable by palm oil plantations will be determined based on a mutual agreement between palm oil plantation businesses and the Agency.[11]

The Presidential Regulation underlines that contributions will only be imposed to palm oil businesses. Palm oil smallholders or farmers will not be obligated to pay for contributions to the Fund.[12]

Agency and Steering Committee

The Agency will be established by the Minister of Finance, which will be responsible for planning, budgeting, collecting, managing, disbursing, administrating and supervising the Fund.[13] The Agency will be controlled by the Steering Committee, which will determine policies on the collection and usage of the Fund for the Agency.[14]

 


FOOTNOTES

[1] Presidential Regulation, Art. 11 (1)

[2] Presidential Regulation, Art. 20 (1)

[3] Presidential Regulation, Art. 11 (3)

[4] Presidential Regulation, Arts. 2 (2), and 10

[5] Presidential Regulation, Art. 3 (1)

[6] Presidential Regulation, Art. 3 (2)

[7] Presidential Regulation, Art. 3 (3), and 4 (1)

[8] Presidential Regulation, Arts. 4 (1), and 29 (3)

[9] Presidential Regulation, Art. 5 (5) and (6)

[10] Presidential Regulation, Art. 5 (4)

[11] Presidential Regulation, Art. 7 (1)

[12] Presidential Regulation, Art. 7 (2)

[13] Presidential Regulation, Art. 20

[14] Presidential Regulation, Art. 28 (1) and (2)


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Featured image by Faldrian


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