In January 2012, the Government of Indonesia approved the Land Procurement Law for public interest. This new piece of legislation sets out procedures for acquiring land for public purposes with the aim of accelerating the acquisition process by making it compulsory. This has long been a sticking point that has hampered the Government's infrastructure programme.
Under the new law, land can be acquired by the Government for those infrastructure projects deemed to be in the public interest. This can include numerous types of projects, such as roads, airports, ports, railways and power plants, as well as water treatment and public facilities. Lawmakers believe the compensation package will go some way to help resolve land disputes, which have long been considered a primary cause of the country's stagnant infrastructure programme.
Noor Meurling, a partner at Oentoeng Suria & Partners, is bullish about the new law's prospects. "If the Land Procurement Law is ok," he says, "this could be the trigger to kick-start the whole infrastructure programme."
Adequate compensation
Most land disputes revolve around adequate compensation, with some even leading to violence and fatalities among local villagers. In an effort to eliminate such disputes, and their tragic consequences, the new law advocates a new method of calculating compensation with the aim of providing landowners with more value. Under the new method, compensation will take into account the value of the land and buildings, and the quantified loss arising from the stipulated land earmarked for development. A certified and independent appraiser will determine the compensation sum and this amount will form the basis for negotiation.
The law clearly sets out the procedures and timeframe for land acquisition and states each entity's compliance responsibilities. But it also provides opportunities for a party to challenge or object to a ruling. This could potentially place a project on temporary hold while parties seek some kind of compromise, and those skeptical about the new law cite this mechanism as its Achilles heel.
For politicians to lawyers to foreign investors, enactment of the Land Procurement Law is a long overdue piece of legislation, and it is hoped it will accelerate land acquisitions and, as a result, revive the Government's infrastructure programme. However, many legal commentators remain concerned that some landowners may choose to abuse the mechanism for challenging or objecting to a ruling in an effort to stifle a project. If the new Law merely facilitates another form of delaying tactic, rather that serving to protect interested parties, the hope that has accompanied it will have proven unfounded.
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