Shedding some light on land acquisition in Indonesia

I am nearing the end of my public policy studies in Singapore and I am very happy with my thesis/report on land acquisition in Indonesia. I was finishing it for the past few weeks, hence the recent absence of blog posts. I should be happily blogging again after I finish one more paper on Political Islam in Indonesia.

Screenshot of my thesis cover

I gave a presentation to UKP4 on my research (since they are my client) and here’s some excerpt on what has been causing delays in land acquisition in Indonesia:

  • Information Asymmetry: Lack of information and understanding about the project, and clarity on how much land and when exactly landowners are getting compensated may cause resentment or protests which subsequently delay the whole process of acquiring land. Finding the rightful parties entitled for the compensation (not limited to those who own the legal title) also prove to be difficult. This gives room for land speculators and ill-intentioned third parties to come in as well.
  • Difficulty in Negotiating Compensation Price: Landowners would want to be compensated based on the market value of their land, but the government is reluctant to do so because it is safer to pay the compensation based on the NJOP (Nilai Jual Objek Pajak) value. This is because the previous Presidential Regulation No. 65/2006 was ambiguous in providing a legal basis for market valuation and the usage of appraisers.
  • Financing Gaps: There is often a difference between the estimated costs for acquiring land and the actual payment given to landowners. Relying in government funds to pay the difference would mean to wait for the next budget cycle and this causes another delay (not to forget that this irritates the landowners because they’re waiting to be compensated).
  • Government Asset Swaps (ruislaag): The difficulty in acquiring land/properties which belong to the central/local government is that you need to find suitable land for relocation and of similar value to “swap” it with. For the Lebak Bulus MRT depot, it is hard to find land for relocation for the Lebak Bulus sports stadium and the police housing and academy.

In the 45-page full report I explained the shortfalls of the new Land Acquisition Law (Law No. 2/2012), the details on the causes of delays as well as the recommendations to “debottleneck” the delays.

I am more than happy to share the report, but let me wait to get clearance from my school and the client beforehand.

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3 thoughts on “Shedding some light on land acquisition in Indonesia”

  1. If this is the “trailer” and if it indicates what is ahead, I’m looking forward to the release of the real thing :).

  2. Are the inconsistencies/lack of precision in the law a case of poor legal drafting? Or is it instead a deliberate fudge orchestrated by legislators who are also landowners and who, as such, would suffer from a precisely-worded law?

    Does the Indonesian state have to capacity to “debottleneck” what are largely localized vested interests? Is there a judiciary/attorney general’s office/law enforcement that would give operational substance to changes in the law?

  3. Land acquisitions often impede infrastructure projects in Indonesia. I am interested to read the final version of the report.

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