Best Paper from IDF 2019: Kharisma Bintang Alghazy Proposed an Investment Task Force and Incentives for Agricultural Startups

Kharisma Bintang Alghazy

 

The winner of the Best Paper in the Indonesia Development Forum (IDF) 2019, Kharisma Bintang Alghazy proposed a package of agricultural investment policies, to address issues of licensing, land conversion, minimal research funding, and agricultural innovation, and agricultural digitalization. The results of the research presented by Bintang are in line with the discussion in sub-theme 4 IDF 2019, Improving the Investment Climate for Employment Creation.

"The agricultural sector is still strategic and relevant in creating jobs in Indonesia as long as the investment climate continues to be improved," said Kharisma as a member of the Business Licensing Regulatory Reform Team, the Coordinating Ministry for Economic Affairs.

The Business Licensing Regulatory Reform Team is part of the team that builds an Online Single Submission (OSS) system for business licensing. Kharisma said that he was very interested in exploring public policy issues, especially regarding the 4.0 Industrial Revolution, Micro and Small Enterprises (UKM), and Electronic-Based Government. Before joining the Coordinating Ministry for the Economy, this University of Indonesia Law graduate was a researcher at the Djokosoetono Research Center. 

Kharisma's research entitled "Agricultural Economic Policy Package for Improving Investment Climate" was awarded by the Minister of National Development Planning / Head of Bappenas, Bambang Brodjonegoro at the closing of the  IDF 2019, 23 July 2019. In his research presentation, Kharisma wrote investment activities, both Foreign Investment (PMA) and Domestic Investment (PMDN) proved empirically have an important role in creating employment.

"In general, the increase in investment realization in Indonesia tends to coincide with an increase in the number of workers," Kharisma said.

However, investment climate conditions in the agricultural sector in Indonesia still face four fundamental problems, namely the conversion of agricultural land into non-agricultural land that continues to occur, a limited budget for research, innovation and empowerment of farmers' abilities is minimal, low levels of ease of doing business, and the complexity of obtaining permits in the regions, and there is no specific incentive for agricultural digitalization.

According to Kharisma, licensing authority is held by line ministries. This means that investment in the agricultural sector is regulated by the Ministry of Agriculture, which currently has developed norms, standard procedures, and investment criteria to guide local governments throughout Indonesia, both at the provincial and district / city levels.

"In practice, there are many regional governments out there who still impose additional requirements which are not imposed by the line ministries, and this is not recorded nor known by the ministries," Kharisma continued.

While related to the issue of land conversion, Kharisma assessed that many regional governments made their own discretion.

"In certain regions, agriculture has been determined, but in the absence of a Spatial Detail Plan (RDTR) as outlined in the form of a regional regulation, regional governments can easily change land functions. What was planned to be for agriculture was just transformed to be non-agricultural, so land conversion occurs," added Kharisma.

For example, in Yogyakarta, land use change, as quoted by setkab.go.id, reaches 200 hectares every year. Quoted from Republika, at the national level, the Ministry of Agrarian Affairs and Spatial Planning (ATR) / National Land Agency (BPN) recorded the average land use change per year reaching 150 thousand to 200 thousand hectares.

 

Four Agricultural Economic Policy Packages

The four fundamental problems of the investment climate cause investment uncertainty in the agricultural sector. Therefore, according to Kharisma, the government needs to knit a variety of solutive, strategic and relevant policies that are packaged in the form of Agricultural Economic Policy Package.

First, the acceleration of the preparation of RDTR digital maps in 541 districts / cities and the One Map policy.  RDTR map is a picture of a district / city administration area with a scale of 1: 5,000 which shows the distribution of land and zoning according to the allotment of space.

"Meanwhile, the One Map Policy is a policy that integrates a variety of thematic maps (including RDTR maps) into the same reference," he added.

The aim is to control the rate of conversion of agricultural land and provide certainty for businesses in the agricultural sector in accessing information about the function of land use in the district / city.

Second, the reallocation of the government budget for research and innovation in agricultural products and the development of business actors in the agricultural sector by using the State Budget (APBN) or the Village Fund. The budget reallocation aims to provide wider access for farmers and businesses in using higher quality seeds, medicines and fertilizers.

"In addition, to develop capacity and improve the skills of farmers and agricultural businesses in Indonesia to be able to access modern agricultural knowledge," Kharisma said.

Third, to continue the Online Single Submission (OSS) Licensing System and the Establishment of the Agricultural Investment Task Force. OSS is an internet-based integrated business licensing system that functions to apply for and issue business licenses for 20 business sectors, including the agricultural sector, and can be accessed online.

"Meanwhile, the Investment Task Force will later, in charge of guarding land conversion control, be able to supervise the end-to-end investment in the agricultural sector," Kharisma added. 

The Task Force is expected to move quickly and on target in handling agricultural investor complaints. The Task Force originates from a cross-sector, namely the Ministry of Agriculture, involving agricultural agencies in each district / city, the Investment Coordinating Board (BKPM), the Ministry of Home Affairs, and the Ministry of Agrarian Affairs and Spatial Planning, or the National Land Agency (BPN).

"These four stakeholders have authority in the context of investment in the agricultural sector," Kharisma said.

Fourth, a review and provision of incentives for digital platform-based businesses in the agricultural sector. According to Kharisma, the government needs to re-identify the effectiveness of incentives for business activities in the agricultural sector, such as providing tax allowances for the agricultural sector. Providing incentives for digital platform-based businesses in the agricultural sector includes efforts to encourage the growth of digital platform-based agricultural sector business activities, such as mass funding, farmer education, and the establishment of a marketplace.

"It has been proven. The farmers I interviewed said that the platforms were very useful," he added.

According to Kharisma, in recent years many startups and young farmers have put up business in the agro-industrial sector or the downstream agricultural sector.  For example, Tani Hub, Igrow, and 8villages.

"Now Indonesia has 10 or 12 business people who use digital technology platforms. Don't let it decrease to eight or five, if you can add 40 or 50," he said.

Kharisma explained the results of his research in the Inspire Session entitled "Improving the Investment Climate for Employment Creation" on July 22, 2019. He hopes his research can be input to improve investment in the agricultural sector that has the potential to expand employment opportunities, in accordance with the main theme of IDF 2019, "Mission Possible: Seizing the Opportunities of Future Work to Drive Inclusive Growth".  Congratulations to Charisma!