Palm Oil Plantation Business in Indonesia: How to Get Started

Oil Palm Fruit Bunch Tree Vegetable Oil Ho

Palm Oil Plantations are a really lucrative agricultural business for agriculture entrepreneurs and companies to invest in. The potential in this business makes palm oil one of the largest revenue streams in Indonesia. After the President of Indonesia Mr. Joko Widodo (Jokowi) imposed a moratorium on the land available for plantations, the value of palm oil plantations has increased dramatically.

The procedure for acquisition or take over of plantations, particularly oil palm plantations, isn’t as simple as imagined.

Considering that transactions in the property industry, especially the take-over of oil palm plantations, contain very high capital business and involve many parties as mediators, the government in this case the Minister of Trade of the Republic of Indonesia believes the need to make rules to protect the rights and obligations of the parties involved through the Minister of Trade Regulation of the Republic of Indonesia no. 33 / M-DAG / PER / 8/2008 concerning Brokerage Company of Property Trade.

However, even though there are regulations governing trade transactions, it is not uncommon for a trade to be too convoluted and less cooperative between mediators, so that the take-over process really becomes unsuccessful or completely void.

Listed below are steps to get a palm oil plantation in Indonesia

First, get in touch with a reliable brokerage firm and ask if they’ve palm oil plantations to market. Do not contact individual brokers as they might not have the complete detail on specific plantations, and generally they are not clear with the actual relation to the accessible farm. Such cases often occur in Indonesia and you should make certain that the plantations don’t have any legal issues.

Second, ask the brokerage firm to perform the due diligence so you avoid future legal issues in Indonesia. A trusted brokerage firm should have qualified survey tools like drone mapping and a trusted agronomist / business analyst staff.

Third, make sure the selling price of the plantation is fair. Almost all individual agents markup the original cost up to 30%. You should be careful in doing business with these kinds of individual brokers because of this sort of lack of transparency. In this case you want to appoint a trustworthy broker to represent you at the take-over process. A normal commission fee of 1-3% should be expected from the farm selling facet.

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