05 Mar 2021
New Omnibus Law Regulation Revisits Indonesias Long-running Project Land Acquisition Issue
February 2021 saw the issuance of a raft of new Government Regulations to give effect to the reformist Job Creation Law (colloquially, the Omnibus Law), which entered into force on 2 November 2020. In this ABNR legal update, we discuss Government Regulation No. 19 of 2021 on Land Acquisition for Development in the Public Interest.
One of the key issues that has traditionally hampered large-scale development projects in Indonesia, other than the length of time needed to secure licenses, has been systemic difficulties related to land acquisition.
These result from a wide variety of causes, including unrealistically high pricing expectations on the part of landowners; lack of clarity as to who actually owns the land (land is frequently unregistered or title documents are lost or otherwise unavailable); overlapping ownership claims; and so forth.
In 2012, Indonesia’s House of Representative (Dewan Perwakilan Rakyat / “DPR”) enacted Law No. 2 of 2012 on Land Acquisition for Public-interest Development (“Law 2/2012”) as a concerted attempt to overcome the problems related to land acquisition, including the issue of unrealistic landowner pricing expectations, by establishing a mechanism whereby compensation can be determined by an independent appraiser should the negotiations between the parties fail to produce an agreement.
This procedure has now been further developed and expanded by Government Regulation No. 19 of 2021 (“GR 19/2021”), an implementing regulation for Law 2/2012, which is one of a long list of statutes that were recently amended by the Omnibus Law.
GR 19/2021, which revokes Presidential Regulation No. 71 of 2012 (“PR 71/2012”), entered into force on 2 February 2021.
The key provisions of GR 19/2021 may be summarized as follows:
(i) national defense and security; (ii) public roads, toll roads, tunnels, rail lines, stations, and operating facilities; (iii) reservoirs, dams, dikes, irrigation facilities, drinking water mains, drainage and sanitation, and irrigation structures; (iv) seaports, airports, and terminals; (v) oil, gas, and geothermal energy infrastructure; (vi) power plants, transmission lines, substations, grids, and distribution equipment; (vii) Government telecommunications and IT networks; (viii) landfill and waste treatment sites; (ix) central and local-government hospitals; (x) public safety facilities; (xi) central and local government cemeteries; (xii) social and public facilities, and public green spaces; (xiii) nature reserves and cultural heritage sites; (xiv) central-, local- and village-government offices; (xv) urban slum clearance and land consolidation, and low-income housing, including public housing and special housing development; (xvi) central and local government schools and other education infrastructure; (xvii) central and local government sports facilities/infrastructure; (xviii) public markets and parking lots; (xix) upstream and downstream oil and gas industrial zones; (xx) special economic zones; (xxi) industrial zones; (xxii) tourism zones; (xxiii) food security zones; and (xxiv) technology development zones.
In such cases, the compensation must be paid into the local district court, and the court must accept the compensation, within 14 days.
It had originally been hoped that Law 2/2012 would finally resolve the issues constraining the procurement of land for important development projects in Indonesia. However, while it most definitely made an improvement, it also quickly became apparent that some of the factors at work are deeply entrenched and systemic in nature. Since then, a series of regulations has been issued to further tweak the rules so as to make them more effective, but complaints about project delays caused by land-acquisition difficulties continue to emerge with monotonous regularity.
Overall, GR 19/2021 is best viewed as another tweak, rather than a revolutionary breakthrough that will once and for all resolve project-land acquisition problems in Indonesia. It basically goes a couple of steps further along the road to remedying a number of outstanding issues, such as the timeliness of compensation payment by setting a new deadline for payment into court. This is something that will no doubt come as welcome news to those worried about the possibility of long delays in receiving payment for their land. However, the land-procurement issue is unlikely to go away any time soon.
 Undang-Undang Nomor I I Tahun 2020 tentang Cipta Kerja
 Undang-undang No. 2 Tahun 2012 tentang Pengadaan Tanah Bagi Pembangunan untuk Kepentingan Umum
 Peraturan Pemerintah No. 19/2021 tentang Penyelenggaraan Pengadaan Tanah bagi Pembangunan untuk Kepentingan Umum
This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.