Perppu Job Creation Series – Restatement of Amendments to the Land Procurement Law

This Newsflash is a continuation of our previous Perppu Job Creation Newsflashes with respect to the issuance of Government Regulation in Lieu of Law (Peraturan Pemerintah Pengganti Undang-Undang or Perppu) No. 2 of 2022 dated December 30, 2022 regarding Job Creation (the “Perppu Job Creation”), specifically for Law No. 2 of 2012 dated January 14, 2012 regarding Land Procurement for the Development for Public Interest, or the “Land Procurement Law”. Perppu Job Creation expressly repeals and replaces Law No. 11 of 2020 dated November 2, 2020 regarding Job Creation (the “Job Creation Law”) and took effect immediately as of December 30, 2022. Accordingly, the amendments to the Land Procurement Law under the Job Creation Law are no longer in effect.

Please note that the Perppu Job Creation only restatesthe amended provisions of the Land Procurement Law contained in the Job Creation Law. In other words, there are no further amendments made under the Perppu Job Creation to the Land Procurement Law other than as stipulated under the Job Creation Law. Please see below the notable amended provisions under the Perppu Job Creation.

Previously, the Land Procurement Law only stated that the party who owns or controls the object of land procurement for public interest shall comply with the provisions of the Land Procurement Law. Now, the Land Procurement Law under the Perppu Job Creation specifies in more detail regarding such provision. In the event of land procurement which objects are part of forest areas, village treasury lands, endowment (waqf) land, customary (ulayat/adat) land, and/or land assets of the Central Government, Regional Government, State-Owned Enterprises, or Regional-Owned Enterprises, the land status settlement process must be completed up until the location determination stage. In particular for the land procurement which objects are part of forest areas, the settlement process shall be done through the release of forest areas (for land procurement conducted by Government institutions) or the release of borrow-use mechanism (for land procurement conducted by private entities).

Further, the Perppu Job Creation also expands the development objectives for land procurement that were not previously stipulated under the Land Procurement Law, namely for the development of the following areas that are initiated and/or controlled by the Central Government, Regional Governments, State-Owned Enterprises or Regional-Owned Enterprises:

  • Upstream and downstream oil and gas industrial zones (kawasan industri hulu dan hilir minyak dan gas);
  • Special economic zones (kawasan ekonomi khusus);
  • Industrial zones (kawasan industri);
  • Tourism zones (kawasan pariwisata);
  • Food security zones (kawasan ketahanan pangan); and
  • Technology development zones (kawasan pengembangan teknologi).

Different from the previous provision under the Land Procurement Law which stipulates that public consultation for development plan shall only be done to obtain an agreement on the location of the development plan from the party who owned or controlled the object of land procurement (i.e., the entitled party), the Perppu Job Creation now regulates that such agreement will also need to be obtained from the managers (pengelola) of State-Owned Property/Regional-Owned Property and users (pengguna) of State-Owned Property/Regional-Owned Property. In the event that the foregoing parties do not attend public consultations after being duly invited 3 (three) times, they are deemed to have approved the development plan. We note that these additions are made for the purpose to harmonize the land development plans and to accelerate the land development process.

The Perppu Job Creation also added several articles between Article 19 and 20 of the Land Procurement Law which in essence regulate that land procurement for public interest which area is under 5 (five) hectares may be carried out directly between the Government institutions and the entitled party. However, such land procurement shall be conducted in accordance with the suitability of regional spatial planning (kesesuaian tata ruang wilayah) and the determination of location shall be conducted by the regent/mayor.

Another key amendment is that the Perppu Job Creation extends the period of determination of development location for public interest to 3 (three) years and may be extended for 1 (one) year. Such extension shall be applied at the latest 6 (six) months prior to the expiration of the determination period. Previously, the Land Procurement Law stipulates that the said determination shall be valid for 2 (two) years and may be extended for 1 (one) year.

We note that the amendments to the Land Procurement Law are intended to ensure that the land procurement process for public interest to be easier, quicker, and with no significant obstacles, particularly for the purpose of developing infrastructure projects. Having said this, we anticipate the Government to issue several implementing regulations of the Land Procurement Law to also ensure the smooth-running of the Government’s intention in this matter.

It shall be noted that the Perppu Job Creation was submitted to the Parliament (Dewan Perwakilan Rakyat or “DPR”) for the DPR’s approval after which the Perppu Job Creation would be enacted as a Law. If the DPR rejects the Perppu Job Creation, the regulation will be canceled and the Job Creation Law will be re-enacted. As of the issuance of this Newsflash, the legislative body of the DPR (Badan Legislasi DPR) has approved the Perppu Job Creation to be brought to the second hearing (plenary meeting/rapat paripurna), but is currently still waiting for the DPR’s approval.

March 10, 2023


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