GOVT PREPARING POLICY ON INVESTMENT IN FOOD SECTOR

Jakarta, Jun 10 (ANTARA) - The government is preparing the adoption of a special policy on investments in the food sector to boost production of such important staples as rice, corn, soybean and cassava, a senior economic official said.

"The government is conducting a study for the formulation of a policy that will enable medium- and large-scale enterprises to enter the food sector," Bayu Krisnamurthi, deputy for agricultural and marine affairs to the coordinating minister for economic affairs, said here Tuesday.

Allowing medium- and large-scale investments in the food sector was one of the ways by which the government was hoping to increase national food production, he said.

"So far, there has been no investment in the food sector. This will be changed in the hope investments will increase domestic food production. But we must also make sure that our farmers' interest will not be harmed," he said.

The government would encourage investment in the food sector, especially in regions where agriculture was not yet well developed.

"Investments will be possible in regions where there will be no competition with local farmers. We will study this matter further," he added.

The surges in world food prices over the past three months had increased investors' interest in developing the food sector, according to Krisnamurthi.

Citing an example, he said investors from Middle East countries had recently expressed interest in investing in the food sector.

"Especially, the Islamic Development Bank (IDB) and Middle Eastern countries which have surplus liquidity want to invest their funds, and one of the areas they consider most attractive is the food sector in Indonesia," he said.

Meanwhile, Trade Minister Mari Elka Pangestu said, the government was enhancing its partnership with the private sector in order to encourage investment to increase food production.

"The government's task is to develop irrigation infrastructure, and technology, provide land and create a conducive climate for investment in agriculture, food as well as energy," she said.

The minister expressed hope there would be private investment in the food sector to boost national food production.

She said the Indonesian Chamber of Commerce and Industry (KADIN) was drawing up a plan of action to increase food production through land extensification (expanding the area for farming).

"The key is how to provide land without creating problems. Efforts are being made to identify such lands outside Java (where investments in the food sector can be made)," Pangestu said.