Palm-plantation businessesrepresent one of the most important business sectors in Indonesia. In fact, the palm-plantation sector is also one of the oldest businesses in the country, and one which was first instigated and nurtured way back during the Dutch colonial era. Furthermore, data released by Index Mundi reveals that Indonesia is now the largest producer of palm oil in the world, followed by Malaysia in second place.[1] Indeed, Indonesia and Malaysia are responsible for a full 85% of global palm-oil production.[2]
 
Until 2013, Indonesia’s palm-plantation business sector covered approximately 10 million hectares of land.[3] Details of the country’s palm-plantation areas are set out in the following table:[4]


 
In 2013, palm-oil production in Indonesia reached 27.75 million tons[5], while export earnings from the product amounted to USD 15.84 billion for a total export volume of 20.57 million ton.[6] In addition, palm-plantation businesses in Indonesia have become a huge source of income for the workforce and employ over 3.72 million people.[7] All of this data proves that palm plantations represent one of Indonesia’s most vital business sectors.
 
Such a promising business climate means that many foreign investors are becoming interested in investing in palm plantation business activities. Accordingly, this edition of Indonesian Law Digest (ILD) is the first of two ILD’s focusing on palm-plantation businesses. This first palm-focused ILD will elaborate upon the basic provisions which relate to the establishment of palm-plantation businesses, while next week’s edition will discuss the various obligations which are to be met by palm-plantation businesses as they engage in their various business activities. To this end, this edition of ILD will confine its discussions to the following topics: