Indonesia: Land rights developments

Author: | Published: 23 Sep 2015
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Ali Budiardjo Nugroho Reksodiputro

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Graha Niaga, 24th Floor Jl. Jend. Sudirman Kav. 58 Jakarta 12190

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+62 21 250 5125/5136

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+62 21 250 5001/5121 Visit Website
Oene Marseille Emir Nurmansyah
The House of Representative of Indonesia is discussing draft legislation on land to replace Law 5 of 1960.

The draft legislation is notable for several changes to: the building leasehold right (Hak Sewa Bangunan); the removal of certain rights previously listed under Law 5; new provisions regulating the transfer of land for public use; and, the establishment of land courts to adjudicate land disputes.

First, the draft legislation allows the holder of the building leasehold right to encumber the right and use it as collateral to obtain credit. The draft legislation also allows the right to be noted in the relevant land certificate. The draft legislation provides that the right may be held by Indonesian citizens, foreigners domiciled in Indonesia, Indonesian legal entities (presumably including foreign investment companies), and representatives of foreign legal entities in Indonesia. The right may also be transferred to other parties with consent of the land holder.

Second, the draft legislation streamlines the type of land rights recognised under Indonesian law. Specifically, the right to clear land (Hak Membuka Tanah) and the right to collect forestry products (Hak Memungut Hasil Hutan) are no longer listed in the draft legislation.

Third, the draft legislation contains provisions regulating the transfer of land for public use. The drafting language appears to be close in granting eminent domain power to the state ('in exigent circumstances, the rights over land or properties attached to it may be revoked, pursuant to laws and regulations'). It is unclear how this provision would be interpreted and implemented in practice, assuming the draft legislation is passed into law in its existing form.

Finally, the draft legislation mandates the establishment of land courts (Pengadilan Pertanahan) in every province in Indonesia to adjudicate disputes related to land matters.

Oene Marseille and Emir Nurmansyah