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Land Acquisition Act Indonesia

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Legal Updates | Review of the Land Procurement Act for Development in the
Public Interest
As one of the current emerging countries, Indonesia is coming to play an important role in the development of global economic growth. Taking this into account and in order to be a competitive player on an international scale, Indonesia first needs to focus on improvement of national issues, one of which is infrastructure. It is generally realized that good quality infrastructure is a key ingredient for sustainable development. On January 14, 2012, the Government of the Republic of Indonesia issued Law No.2 of 2012 on Land Procurement for Development in the Public Interest (Land Acquisition Act). It is generally acknowledged that one of the main barriers to the development in the public interest, particularly with regard to infrastructure, is land acquisition, which to date has not been resolved through previous regulations (such as Presidential Regulation No. 36 of 2005 and Presidential Regulation No. 65 of 2006). Therefore, the Land Acquisition Act is intended to ensure the acquisition of land for such purposes. The Land Acquisition Act provides for a process of land acquisition that will take less than 2 (two) years with several stages to be fulfilled starting from planning, preparation, and implementation stages, to the submission of results, as will be further provided in its implementing regulation(s). One point regulated under this Act is that the Government of the Republic of Indonesia will provide a settlement in case of any objection to the location of land development which cannot be resolved by the authorized party (e.g. the relevant governor where the land is located). The Land Acquisition Act provides that the objection will be settled in the administrative courts up to the supreme court with the approximate time for completion of 4 (four) months. On another point regarding the compensation stage, the Land Acquisition Act also provides that during the compensation stage, should one party object to the decision issued by the authorized party, then they may file suit in the local court where the land is located up until cassation, whereby the process will be completed in approximately 4 (four) months period. Prior to the enactment of the Land Acquisition Act, investors concern has been that the long process of land acquisition may cause the postponement of business activities, thus resulting in additional expenses and other risks. This issue will now be firmly settled through the legal certainty given by the Land Acquisition Act as investors will be able to reliably estimate the time needed for completing the land acquisition process. In following up, Article 53 and Article 59 of the Land Acquisition Act, the Government of the Republic of Indonesia has just recently issued Presidential Regulation No.71 of 2012 concerning Land Procurement Procedures for Development and the Public Interest (Perpres 71/2012) as an implementing regulation of the Land Acquisition Act. It is claimed that this Perpres 71/2012 will provide further legal certainty in the planning, preparation, execution, and delivery of outcomes for public facilities infrastructure development that have been hampered by land acquisition issues. Perpres 71/2012 provides a legally prescribed time period for each stage of the land acquisition process in order to achieve the most desirable legal certainty. Under Perpres 71/2012, the maximum time period for a land acquisition process is theoretically 583 (five hundred eighty three) working days as from the date the authorized party (e.g. the relevant
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Capital: Jakarta Population: 246 million (estimated, 2012) Currency: Indonesian Rupiah Nominal GDP: $845 billion (2011) GDP per capita: $4,700 at PPP (2011) GDP Growth: 6.5% (2011) External Debt: 25% of GDP (2011) Ease of Doing Business: 129/183 (WB, 2012) Corruption Index: 100/178 (TI, 2011)

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Law No. 2 of 2012 - Land Acquisition for Development in the Public Interest

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Land Acquisition Act Indonesia

governor where the land is located) receives the land acquisition documentation from the government agency which needs the land for the public interest, up until the date when the land is registered with the relevant land office by the government agency concerned. If there are no objections from any party (-ies), the time period can be shortened to 319 (three hundred nineteen) working days. However, it should be noted that Perpres 71/2012 will not be applicable to the compulsory land acquisition process for existing project (-s) which commenced prior to 7 August 2012, unless there are still land area(-s) which have not been acquired for the project(-s) concerned by 31 December 2013, in which case Perpres 71/2012 will apply to the compulsory acquisition of those remaining land area(-s). The existence of both the Land Acquisition Act and Perpres 71/2012 are significant since Indonesia needs to accelerate its infrastructure development to achieve sustainable economic growth and equitable development in line with decentralization. Perpres 71/2012 also provides the procedures and requirements regarding the process of making the agreement between the parties who require the land and those who own the land. It is without doubt that the Land Acquisition Act and its implementing regulation, i.e. Perpres 71/2012, are intended to promote good planning, deliberation, time, and legal certainty in each process as well as fairness in compensation. As for compensation, it is also regulated that the compensation may be in the forms of money, replacement land, resettlement, stock ownership, and/or other forms as agreed by the parties. It is the aim of the Government of the Republic of Indonesia that the issuance of the Land Acquisition Act and Perpres 71/2012 will bring many improvements to infrastructure development in Indonesia, particularly in giving investors time and legal certainty. We can therefore be optimistic that the Land Acquisition Act and its supporting regulations will be well implemented by all stakeholders as it is believed that good infrastructure quality can be achieved through the implementation of this Land Acquisition Act. In the end, it is also hoped that it will enhance the investment climate within the Republic of Indonesia.
Hanafiah Ponggawa & Partners - 2012
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