Foreign Capital Investment in Plantation Forests

The regulatory climate for foreign capital investment in the forestry sector, particularly the plantation sector, has been given a significant boost by the recent issue of the Minister for Forestry Regulation No. P.21/MENHUT-II/2005, which permits, provided the entity has been incorporated in Indonesia, the authority and power to secure business licenses to exploit plantation forest products.

The Regulation has been issued based on Article 36(3) of Government Regulation No. 34 of 2002. It is expected that the Regulation will facilitate greater foreign capital investment in the forestry sector thereby not only increasing investment levels but also being the primary driving force for development of the sector. The Regulation also refers to the provisions of both the Foreign and Domestic Capital Investment Laws; namely, Law No.1 of 1967 as amended by Law No. 11 of 1970 on Foreign Capital Investment and Law No. 6 of 1968 as amended by Law No. 12 of 1970 on Domestic Capital Investment.