Investment could boost agriculture sector's competitiveness

Investment could boost agriculture sector's competitiveness

A farmer creates a marker for seed planting in Porame Village, Sigi, Central Sulawesi, Thursday, July 29 2021. (ANTARAFOTO/BASRI MARZUKI/MY)

The role of investment in the agricultural sector is also becoming more important due to climate change that threatens sustainability of the agricultural sector
Jakarta (ANTARA) - The Center for Indonesian Policy Studies (CIPS) researcher Indra Setiawan stated that investment could increase competitiveness of the domestic agriculture sector.

"The government needs to be more open to investment in this sector and focus on developing the farmers' capacity, agricultural mechanization, and usage of superior seeds, as well as conduct infrastructure improvement," Setiawan noted in a written statement here on Friday.

The agricultural sector has continued to flourish during the pandemic and has vast potential to be developed, both to meet domestic requirements and to increase exports.

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Investment helps the agricultural sector to become resilient and sustainable through research and development funding, technology, as well as community resource capacity building.

Setiawan informed that opportunities for investment in the Indonesian agricultural sector were still wide open. Foreign investment in this sector had constituted only three to seven percent of the total foreign investment (PMA) in Indonesia during the 2015-2019 period.

He believes that the entry of foreign investment would open up employment opportunities, allow access to new technologies and knowledge, and increase export opportunities.

The technology transfer process must be ensured, so that Indonesian workers could also stand to benefit from the investors. This aims to support agricultural modernization, boost productivity, especially of high-value commodities, and improve quality in order to expand market access, he added.

"The role of investment in the agricultural sector is also becoming more important due to climate change that threatens sustainability of the agricultural sector," he emphasized.

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The effects of climate change, such as changes in weather, extreme weather, and decrease in soil quality, would affect the agricultural sector's yield and the availability of sufficient food for the Indonesian population, he pointed out.

“Ratification of the Job Creation Law opens up opportunities for foreign investment to increase in the agricultural sector. The opportunity to increase investment in this sector is expected to have a positive impact on the nation’s agricultural sector, as it is a sector that has recorded positive growth during the pandemic," he stated.

Based on the Central Bureau of Statistics (BPS) data, export value of the agricultural sector in June 2021 increased by 33.04 percent (M-to-M) or by 15.19 percent (Y-on-Y).

"Medicinal plants, aromatics, and spices are the main contributors to increasing agricultural exports," Setiawan stated.

The growth drove up the nationwide contribution of non-oil and gas exports, which was 94.35 percent (US$18.55 billion) of the total export value in June 2021, or an increase of 9.52 percent from the exports recorded in May 2021.

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