Guiding Principles:
Land Tenure in Development Cooperation

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Orientierungsrahmen:
Bodenrecht und Bodenordnung

Deutsche Gesellschaft
für Technische Zusammenarbeit
Abt. 45 / Div. 45

 

Ulrich Löffler, (1996):
Land Tenure Developments in Indonesia

3.2.1 The Basic Agrarian Law No. 5 / 1960

The BAL or Undang-Undang Pokok Agraria Nomor 5 Tahun 1960 (UUPA) is based on Article 33 of the 1945 Constitution (Undang-Undang Dasar 1945) of the Republic of Indonesia, and on Principle 5 of the state philosophy of Pancasila.[FN 13]

In Chapter XIV, Article 33 of the Constitution, Paragraphs 2 and 3 state: "Branches of production which are important for the State, and which effect the lives of most of the people, shall be controlled by the State" and "Land and water and the natural resources found therein are controlled by the State and are utilized to the fullest extent for the greater prosperity of the people."[FN 14]

Principle 5 of the Pancasila specifies: "that to provide a just and prosperous society, adequate supplies of food and clothing must be provided for the populace."[FN 15]

The Basic Agrarian Law (BAL) is made up of 67 articles divided up into four chapters covering:[FN 16]

1.) Basic Principle and Provisions

2.) The Rights to Land, Water and Air Space, and Land Registration

3.) Penal Provisions

4.) Transitional Provisions

The basic principles of the BAL are summarized in Box 1.[FN 17] What were the basic alterations to the previous legislation for the new BAL: The new BAL [FN 18] "substituted a single code based on Indonesian traditional (adat) law purified from ‘feudal’ and ‘capitalistic’ elements" and "the new legislation qualified indigenous law in various ways, although in vague terms, such as that it must not be ‘contrary to national interests’, ‘contrary to Indonesian socialism’, ‘contrary to other agrarian legal precepts’ or ‘contrary to religious law’ and that it would be ‘founded on national unity’".

Adat land rights acquired before the enactment of the BAL are fully protected and can be registered and titled under the new system.[FN 20] It is, however, significant that "in all land matters the BAL would govern and take precedence over the Adat system of land law."[FN 21]

The new Agrarian Law comprises two important alterations of the previously valid land regulations. For one thing it canceled the old land registration, titling laws and regulations. This led to the dissolution of the existing dual legal system (western law and adat law), and to the introduction of a new system of land law of unique Indonesian applicability. Land which was originally registered under western law could "be converted to the new system, but failure to do this would lead to forfeiture, with the land reverting to state ownership."[FN 22]

For another thing, a new Agrarian Law was developed whereby in particular "a system of land rights with varying degrees of tenure and with different citizenship requirements determining the type of right to be granted." [FN 23] The fixing of ceilings and the exclusion of foreigners from land ownership should protect the autochthonous Indonesian citizens from economically stronger groups. [FN 24]

 

Box 1: Principles of the Basic Agrarian Law [FN 25]

Article 1: Foundation of the Law

The entire earth, water, air, and natural resources of Indonesia are gifts of God Almighty and constitute the wealth of the nation.

Article 2: Control and Authority

The state, on behalf of the whole people of Indonesia is responsible for the control and regulation of earth, water, air, and natural resources of the nation to achieve the maximum prosperity of the people.

Article 3: Adat Community Lands

Adat property rights shall be adjusted to the national law and interests and shall not be in conflict with the acts and other regulations of higher level.

Article 4: Rights authorized

Several types of land rights, under the state’s direction and control, may be granted to and owned by persons and corporations.

Article 5: Adat

Adat applies to agrarian matters unless it conflicts with national and state interests, Indonesian socialism, and legislative regulations, in which case the national law provisions prevail.

Article 6: Function of land rights

All rights on land have a social function.

Article 7: Land ownership and control

Excessive ownership and control of land is not permitted.

Article 8: State Regulation of Natural Resource Exploitation

All exploitation of natural resources shall be regulated by the state.

Article 9: Rights of Indonesian Citizens

Only Indonesian Citizens regardless of being male or female may have the fullest use of the earth, water, and air resources of the nation.

Article 10: Agricultural Land

Persons and corporations with land rights for agricultural purposes are obliged to cultivate or exploit the land by themselves and not to use extortionate methods.

Article 11: Legal Relationships with the Society

Legal relationships between persons and corporations with the land and resources are to be regulated to achieve maximum prosperity for the people while preventing excessive control over the livelihood of other persons. The different needs, both economic and legal, of society shall be considered, including the need to ensure the protection of economically weak groups.

Article 12: Mutual Assistance and Interests

All agrarian efforts, regardless of whether by state or other parties, shall be based on the principle of "Gotong Royong" (Mutual Assistance)

Article 13: Standard of Living

All agrarian undertakings shall be regulated to increase production, to increase the people’s prosperity, and to guarantee Indonesian citizens a standard of living suitable to human dignity. Private monopolies shall be prevented and state activities of a monopolistic nature may be carried out only by special act. Social guarantees and security are to be promoted by the government.

Article 14: Natural Resources Plan

A general plan providing for the reservation, appropriation, and use of the earth, water, air, and natural resources shall be prepared to provide for the needs of the state: religious and sacred needs; needs for economic, social, cultural and welfare purposes; needs for agricultural production, cattle breeding, and fisheries; and needs for industry, transmigration, and mining. Regional governments are responsible for regulation of such resource uses in their respective regions.

Article 15: Conservation Requirements

Land cultivation must prevent damage to the land resource as well as to improve the fertility of soil.

Article 16: Description of Rights

The various types of rights on land, water, and in air space are stipulated:

a.) the right of ownership (hak milik)

(Art. 20-27)

b.) the right of exploitation (hak guna-usaha)

(Art. 28-34

c.) the right of building (hak guna-bangunan)

(Art. 35-40)

d.) the right of use (hak pakai)

(Art. 41-43)

e.) the right of lease (hak sewa)

(Art. 44-45)

f.) the right of opening-up land (hak membuka tanah)

(Art. 46)

g.) the right of collecting forest products (hak memungun hasil hutan)

(Art. 46)

h.) other rights

(Art. 49)

i.) the right of using water (hak guna air)

(Art. 47)

j.) the right of breeding / catching fish (hak pemeliharaan penangkapan ikan)

(Art. 47)

k.) the right of using the air space (hak guna-ruang angkasa)

(Art. 48)

Article 17: Size of Holdings

Both the maximum and / or minimum size of land that may be owned and controlled by an individual or corporation will be regulated. Land areas held in excess of the maximum are to be redistributed to the people based on need. Compensation to owners whose lands are taken shall be made. Attainment of the minimum area is limit is established as a goal to be accomplished over time on a gradual basis.

Article 18: Annulment of Rights

Where it is to be the benefit of the public interest, lands owned under any type of land right may be acquired by the government with compensation to be made to the owner.

Article 19: Registration of Land

All land shall be registered. Land registration covers:

a.) the measuring, mapping and recording of land

b.) the registration of rights on land transfer of these rights

c.) the issue of certificates of rights on land, which will be valid as strong evidence

 

A further ruling of the BAL is the establishment of upper ceilings of land ownership and that the government authorities, in cases where these limits are exceeded, have the possibility of taking the surplus land for redistribution.[FN 26] The government passed a regulation on 24th December, 1960 as an implementation of Article 17 of the BAL, which planned both minimum and maximum land ownership. A minimum limit of ownership of agricultural land of 2 ha was established since the Government assumed that 2 hectares would be enough for the needs of a family. This was supposed to avoid further fragmentation of agricultural land.

Further, there are regulations for avoiding absenteeism amongst landlords. "A landowner cannot control - through ownership, land pledge, or lease - agricultural land outside the subdistrict or adjoining subdistrict in which he or she controls more than 2 hectares."[FN 27] The establishing of upper ceilings and the exclusion of foreigners was meant to protect the autochthonous Indonesian citizens from economically stronger groups.[FN 28]

After the introduction of the BAL, a land reform was carried out in the following years (1961 - 1965). The land reform in Indonesian is seen by many land law experts as a failure. RAJAGUKGUK writes: "Land reform ... can be considered a failure because the provisions were unrealistic, administration and financial planning could not support a successful program, and political differences between Communist and non-Communist factions intensified during this period."[FN 29]

In the following section, the rights which are established by the BAL will be more closely explained:[FN 30]

The right of ownership (hak milik):

The right of ownership is the strongest right to land. Hak milik is not limited in terms of time. The land can be sold, mortgaged and can be inherited by the legal heirs. However, the owner must take the "social function" of land into consideration. Hak milik is subject to registration. The land owner receives a legal document as evidence of his rights (Sertipikat). As well, hak milik can be acquired in various different ways:

  • conversion of Adat rights [FN 31]
  • conversion of state lands which have been granted by the Government.[FN 32]
  • conversion of property, agrarian property and milik which were valid before the BAL came into effect. [FN 33]

Only Indonesian nationals are able to receive hak milik. As a rule, hak milik is awarded to individuals, however in exceptional cases under certain preconditions, certain corporate bodies (state banks, cooperative agricultural associations, religious and social institutions) can be awarded the right of ownership.[FN 34] Foreigners are excluded from this right. [FN 35]

The right of exploitation (hak guna usaha)

Hak guna usaha is the right to State land, and the right to use the land for agricultural (including plantations), fishery and breeding purposes. Hak guna usaha is limited timewise. It can, for example, be granted for an oil palm plantation for up to 35 years, with the possibility of extending for another 25 years. So, de facto, hak guna usaha on state lands can be awarded for up to 50 or 60 years. Some of the regulations of the hak guna usaha have their origins in the "erfpacht rights"[FN 36] which was valid before the BAL came into effect. Hak guna usaha can acquired by Indonesian individuals and corporations established under Indonesian Law and domiciled in Indonesia. There is no maximum area of land which can be awarded under hak guna usaha. Hak guna usaha must likewise be registered at the Land Registry Office. Hak guna usaha can be bequeathed and likewise be transferred to other parties (sale, exchange or gift) with the permission of the BPN. Hak guna usaha also allows land to be used as a security for a debt.[FN 37]

The right of building (hak guna bangunan)

Hak guna bangunan gives the holder the right to build on land owned by someone else. This right is limited timewise and can be obtained for state land (by decree) as well as for private land (by contract). It is awarded for not longer than 30 years, but there is the possibility of extending for another 20 years. So far there are no regulations which hinder a further extension. There are maximum area limitations. So far there are no implementation regulations for registration.[FN 38] Hak guna bangunan can be bequeathed, sold, exchanged or presented as a gift. Hak guna bangunan can likewise be used as a credit security.

The right of use (hak pakai)

Hak pakai gives the holder the right to use a particular piece of land. This can be State or private land. In practice, this right is scarcely made use of for privately owned land since other titles, such as the right of lease, or right of land pledging, play a greater part here. Hak pakai is basically limited timewise. Hak pakai can in principle be transferred when no other regulations apply. Resident foreigners and foreign corporations with representatives in Indonesia can be awarded hak pakai. Hak pakai for private land does not get registered because of the lack of implementing regulations.

The right of lease (hak sewa)

There is a differentiation here between hak sewa bangunan (right of lease for buildings) and hak sewa pertanian (right of lease for agricultural land).[FN 39] In the first case, a building can be erected on someone else’s land for a specific but not fixed time by paying a monthly lease. This is a case of a personal right. Hak sewa is created between land owner and lessee with a contract. In the case of hak sewa pertanian, land must be used for agricultural purposes, and the lease can be paid in either cash or kind.[FN 40]

The right of opening up land (hak membuka tanah)

Hak membuka is awarded by the Government to Indonesian citizens for clearing land, and to use the land for a maximum of three cultivation periods. Hak membuka tanah can later be changed into hak pakai, hak guna usaha or hak milik.

The right of collecting forest products (hak memungun hasil hutan)

Hak memungun hasil hutan is awarded to Indonesian citizens by the Government on adat land in order to be able to use wood and other non-wood products.

The right of landpledge (hak gadai)

Hak gadai is a way for the land owner to receive money without having to sell his land. He transfers his right of use to another person who in return pays money to the land owner. The land owner gets his land back when he has paid back the loan. This is known as a land pledge (djual gadai). The pledge arrangement is only rarely conducted before the village head, and is usually unwritten. There is no time limit in which the land owner has to pay back the money in order to get back his land.

The right of sharecropping (hak usaha bagi hasil)

Hak usaha bagi hasil is restricted to agricultural purposes. Hak usaha bagi hasil is governed by Law No. 2 / 1960 (shares, duration). In practice, these Regulations have not always been implemented (see also Paragraph 3.5.).

The right of lodging (hak menumpang)

Hak menumpang is a weak right of use. It allows someone to own a house on someone else’s land. The duration of the right is not fixed. Hak menumpang is governed by the local Adat law.[FN 41]

The right of using water (hak guna air)

Hak guna air is an Adat-based right which allows access to water on another person’s land and / or to divert water across another person’s land.

The right of breeding and catching fish (hak dan pemeliharaan penangkapan ikan)

Hak pemeliharaan dan penangkapan ikan is the right to breed fish and to catch fish on another person’s property.

The right of using the air space (hak guna-ruang angkasa)

Hak guna ruang angkasa is a right, and not a very clear one, for using energy and elements available in the atmosphere.