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

3.3.3 Renting land

There are various forms of tenancy in Indonesia [FN 80]. There are, however, no exact figures about the extent of the areas of land used for the various tenancy forms. Many "tenancy contracts" are made unofficially and without the approval of the village head.

Fixed rent tenancy

Land is rented from the landowner for a defined, agreed period. This could be for one cultivation season, or for one year. The tenant pays a fixed amount of rent - in the form of cash (in many regions of Java)[FN 81] or in kind, in the form of products harvested - either before the land is cultivated or after the harvest. The amount of the rent payment depends, amongst other things, upon the location of the land, land quality, irrigation facilities, season, demand for, and supply of land.[FN 82]

Pawned tenancy

The land is mortgaged by the landowner for a specific amount of credit. Usufructuary rights to the land are transferred to the pawn tenant for a certain period. The pawning system (Gadai) not only exists in wetland rice areas, but also in upland farming areas. In the Garut District on West Java, it was observed that in all cases of land pawning, written contracts had been made, whereas for share tenancy and fixed rent tenancy arrangements, no written documents were exchanged. This difference seems to reflect the unique nature of "gadai" as a credit institution and a land-tenure institution. [FN 83] It is not only small farmers who pawn their land because of a financial emergency; large landowners also pawn the property so as to be able, for example, to get credit for buying new land. [FN 84] This form of tenancy also exists in Kalimantan.[FN 85]

Share tenancy

Share tenancy has been widespread in Indonesia for a long time, and still plays an important role today.[FN 86] Sharecropping is the dominant tenancy form in many parts of Indonesia with the exception of Central and East Java, East Kalimantan and a few eastern provinces of Indonesia.[FN 87] The tenant cultivates land rented out by the landowners for an agreed share of the yield. The share can vary. Common distribution ratios in various "Law Areas" in Indonesia are:

Systim maro: this can appear in various sub-forms. As a rule, the landowner receives a determined amount of money from the tenant before renting. After the harvest, the landowner receives 50 % of the harvest.

Systim mertelu: the landowner receives two-thirds of the harvest, but as a rule he provides the seeds or seedlings.

Systim merapat: the landowner receives three-quarters of the harvest, but he provides other inputs besides the seed (e.g. fertilizer), or he pays the land tax.[FN 88]

In West Kalimantan share tenancy arrangements are also common on smallholder rubber plantations. As a rule, the landowner gets 1 / 3 of the yield, and the tenant, who taps the rubber trees, gets 2 / 3. But there are also 50-50 arrangements between landowner and tenant. The tenant has to provide his own tapping equipment. [FN 89]