InfoSAWIT, KUALA LUMPUR – Indonesia’s newly enacted Agrarian Reform Law is drawing attention from Malaysian plantation companies with significant operations and investments in Indonesia, particularly over the potential implications for land ownership, conflict resolution and plantation governance.

The law, approved by Indonesia’s House of Representatives on September 22, 2026, introduces a framework for restructuring land ownership and control, strengthening land redistribution and improving mechanisms for resolving agrarian conflicts. However, the practical impact on plantation companies remains unclear because several implementing regulations have yet to be issued.

According to KLSE Screener, Public Investment Bank analyst Chong Hoe Leong said the new regulation could add to the regulatory challenges facing Malaysian plantation companies after the sector encountered land-related issues and significant penalties in Indonesia over the past year.

20% Land Provision Draws Attention

One provision being closely watched by plantation businesses concerns the requirement for holders of cultivation rights and plantation permits to provide at least 20% of their land for agrarian reform and land redistribution. The requirement may also be fulfilled through an equivalent profit-sharing mechanism.

The law also provides scope for regulating limits on land ownership or control, although the specific thresholds and implementation mechanisms remain subject to further regulations.

For Malaysian companies with substantial exposure to Indonesia, the eventual implementing rules could determine how the provisions affect plantation assets and operations.

Companies identified as having significant exposure include SD Guthrie Bhd, Kuala Lumpur Kepong Bhd and Genting Plantations Bhd.

Implementation Remains Key

Public Investment Bank has not changed its broader view of Malaysia’s plantation sector despite the regulatory concerns. The bank expects the immediate financial impact to remain uncertain until the implementing framework becomes clearer.

The next stage of Indonesia’s agrarian reform process will therefore be closely watched by plantation companies operating in the country. Key issues include land-control limits, redistribution obligations, dispute-resolution mechanisms and the authority of the institution responsible for implementation. (T2)

Source: InfoSAWIT