15 Sep 2025
Stricter Mechanism in Land Acquisition and New Provisions on Indonesian Land Regime

Introduction

In late April 2025, the Minister of Agrarian Affairs and Spatial Planning (“MOAA”) issued a new regulation that significantly reshapes the process of acquiring and registering land rights in Indonesia. The regulation — MOAA Regulation No. 5 of 2025 on the Delegation of Authority for the Stipulation of Land Rights and Land Registration Activities (“MOAA Reg 5/2025”) — introduces two major changes:

1. It narrows the options for converting land rights, limiting companies and investors who previously may have the flexibility to choose the more suitable mechanism in acquiring land rights, subject to the agreement with the landowner.

2. It revises how authority is delegated across different land offices, with special rules for high-profile areas such as Batam Free Trade Zone and the new capital, Ibu Kota Nusantara (“IKN”).

These developments mark a clear tightening of land acquisition rules and could directly affect how businesses structure their transactions going forward.
 

Analysis
 

1. Stricter Mechanism and Limitations on Conversion of Land Rights

One of the most notable changes under MOAA Reg 5/2025 is the tightening of rules on the conversion of land rights.

Previously, the law (MOAA Reg 18/2021) allowed several types of conversion, such as:

• Converting Hak Milik (HM or Right of Ownership) into Hak Guna Bangunan (HGB or Right to Build) or Hak Pakai (HP or Right to Use);

• Converting HGB into HP, or vice versa; and

• Converting Hak Guna Usaha (HGU or Right to Cultivate) into either HGB or HP.

In practice, these mechanisms were widely used. For example, if a limited liability company (PT) wanted to acquire land owned by an Indonesian individual, the HM title (which generally can only be held by Indonesian individuals) could first be converted into an HGB, a title that companies are eligible to hold. This approach created a relatively straightforward path for businesses to acquire land.

Now, under MOAA Reg 5/2025, such direct conversions are no longer permitted. The only available options are:

1. Public auction, or

2. Relinquishment of rights to the State, followed by the granting of a new title.

This shift effectively closes the previously common route of converting land rights for corporate buyers. Transactions involving parties ineligible to hold HM, such as PTs, must now go through the relinquishment process. While possible, this route carries greater legal risks (for instance, if third parties challenge the process while the new title is pending).

2. Delegation of Authority for the Stipulation of Land Rights and Land Registration Activities

    

Beyond tightening the rules on land conversion, MOAA Reg 5/2025 also restructures who has the authority to approve and register land rights. This change is critical because it affects how fast applications are processed, which authority you deal with, and how disputes are managed.

1. Shift in Delegated Authority

   Under the new regulation, the Minister of Agrarian Affairs and Spatial Planning (MOAA) retains ultimate authority but can delegate certain responsibilities to:

• Head of Regional Office (provincial level), or

• Head of Land Office (city/regency level).

This delegation is no longer uniform. Instead, it is tied to several risk and capacity indicators, such as:

• population density and geography,

• social dynamics,

• plot size and service volume,

• land value, and

• potential for disputes.

To put it simply: smaller and lower-risk applications are handled locally, while larger or more complex ones are escalated to higher levels.

For example, in individual non-agricultural land cases:

• up to 5,000 sqm → Head of Land Office,

• 5,000–15,000 sqm → Head of Regional Office,

• above 15,000 sqm → MOAA itself.

For legal entities, the thresholds are stricter and vary depending on land category and region. The result is a tiered system designed to keep oversight proportionate to scale and risk.

Implication: Investors and companies seeking to acquire large tracts should expect greater scrutiny and longer timelines, since approvals must be escalated to MOAA (in Jakarta).

2. Special Focus on Batam and IKN

   Recognizing their strategic importance, Batam and IKN have their own tailored rules:

a. Batam

• Head of Regional Office: can grant HGB/HP over state land up to 250,000 sqm, and over HPL land between 1–2 million sqm.

• Head of Land Office: can grant HGB/HP over HPL land up to 1 million sqm.
  
  b. IKN

• Head of Regional Office: holds exclusive authority to grant HGB over HPL land.

• Head of Land Office: no authority specified under the new regime.

Implication:

• In Batam, the tiered system allows significant decentralization, which may encourage faster processing of mid-size projects.

• In IKN, authority is consolidated at the Regional Office level, reflecting the government’s desire for tight control and centralized oversight in the new capital. This could streamline decision-making but may also reduce flexibility for investors dealing with local offices.

Closing

MOAA Reg 5/2025 introduces a fundamental shift in Indonesia’s land regime. Direct conversions are no longer available, approvals are subject to tiered thresholds, and oversight in Batam and IKN is more centralized. While existing titles remain valid until expiry, renewals and future acquisitions will face tighter scrutiny.

These changes increase execution risk and may lengthen transaction timelines, particularly for corporate buyers and investors dealing with land held under Hak Milik. Market participants should reassess acquisition strategies in light of these developments and engage counsel early to navigate the new framework.

By partner Nurdin Adiwibowo (nadiwibowo@abnrlaw.com), senior associates Danny Tanuwijaya (dtanuwijaya@abnrlaw.com), and Zefanya Tampubolon (zmerari@abnrlaw.com)

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.