In December 2016, the Indonesian president issued a new
regulation paving the way for Indonesia's ministry of finance
to provide land procurement funding to projects with national
strategic value, but with insufficient funding to complete the
necessary land acquisition.
The new regulation is designed to provide a solution for
important projects that have faced difficulties in proceeding
due to insufficient budget allocated for the necessary land
Under the new regulation, the relevant government entities
(including other ministries or government-owned entities
(BUMNs)) contemplating land acquisition in the context of these
strategic projects may work with the ministry of finance to
secure additional funding to procure the necessary land.
Assuming that the necessary documentation has been provided,
the ministry of finance will initiate a review and if approved,
will disburse the relevant funds.
The regulation provides two ways for the disbursement to
take place. One method is called 'indemnification' –
or a direct fund disbursement to the relevant land owners. The
second method would involve reimbursing the relevant funds to
government entities that had already used their own funds to
pay for the land acquisition (in other words, the payment had
not been provided for in the budget reserved for the land
acquisition in question).
After the land acquisition is completed, it is required that
the ministry of finance obtains the relevant title certificate
on the land under the name of the government of the Republic of
Indonesia, specifically the ministry of finance.
There is also reference in the regulation to the effect that
the government may provide a guarantee against risks that may
be incurred due to delays in land procurement budgeting. The
implementation of this form of guarantee is to be regulated
The regulation was effective as of December 6 2016.
Oene Marseille and Emir Nurmansyah