FDI Restrictions in the Indonesian Horticulture Sector: Implications of Horticulture Law No. 13, 2010
February 28, 2017 - Author: Arief Daryanto, Dr Dale Yi Sahara, Dale Yi, Randy Stringer, Thomas Reardon
Daryanto, A., Sahara, D. D. Y., Yi, D., Stringer, R., & Reardon, T. (2017). FDI Restrictions in the Indonesian Horticulture Sector: Implications of Horticulture Law No. 13, 2010 (No. 131404, pp. 1-42). The World Bank.
As Indonesia’s population and incomes continue to grow at a swift pace, the demand for horticulture products is expected to follow suite. In light of this, the media and the government are growing increasingly concerned about instability and inefficiency in horticulture markets. To help stimulate growth and stabilize the horticulture sector, Indonesia introduced the Horticulture Law No. 13 in 2010 which had numerous provisions to increase regulation on the seed industry in particular. The most controversial of these provisions is the clause that regulates foreign direct investment. This investment provision restricts foreign equity in the horticulture sector to 30% for large firms, and 0% foreign ownership for all firms that are small to medium in size. This is largely believed to be motivated by a protectionist agenda aiming to protect the emerging domestic industry from the large multinational companies.