A PAPER

PROCEDURES FOR ACQUIRING LAND RIGHTS IN INDONESIA

Submitted to fulfill the assignment of Agrarian Law from:

Mrs. Asna Jazillatul Chusna, S.Hi., M.Si.

by:

Mohamad Zakky Ubaid E. (15210024)

AL-AHWAL AL-SYAKHSHIYYAH DEPARTMENT

SYARIAH FACULTY

ISLAMIC STATE UNIVERSITY

OF MAULANA MALIK IBRAHIM MALANG

2016/2017
 PREFACE

Praise be to God who has helped his servant finish this paper with
great ease. Without His help, I may not be able to complete this paper.

The paper is organized so that readers can find out how to acquire
land right in Indonesia from various sources. This paper set up by the
compiler with various obstacles. Whether it came from myself or who come
from outside. But with patience and especially the help of God, finally this
paper can be resolved.

This paper includes on How to Acquire Land Titles in Indonesia and

deliberately chosen because the authors draw attention to scrutiny and
need support from all parties who care about Agrarian Law in Indoneisa.

Authors also thank the teachers/lecturers, especially Mrs. Asna

Jazillatul Chusna who have helped to finish this paper.

Hopefully this paper can provide a broader insight to the reader.

Although this paper has advantages and disadvantages. Authors beg for
advice and criticism. Thank you.

Author

1
 TABLE OF CONTENTS

PREFACE.......................................................................................................i

TABLE OF CONTENTS...................................................................................ii

CHAPTER I: INTRODUCTION

A. Issue Background..............................................................................1
B. Writing Purposes................................................................................2
C. Problem Identification........................................................................2

CHAPTER II: DISCUSSION

A. Land Tenure System..........................................................................3

B. Procedures for Acquiring Land Rights
1. Right of Ownership...................................................................3
2. Right of Exploitation.................................................................7
3. Right of Building.......................................................................9
4. Right of Use............................................................................11

CHAPTER III: CONCLUSION........................................................................14

REFERENCES.............................................................................................15

2
 CHAPTER I
INTRODUCTION
A. Issue Background
There are two important phases when discussing Indonesian land
law, that is, the phase before September 1960, and the phase after this
date. Before September 1960 Indonesian land law comprised a mind-
boggling cacophony of traditional adat law, Dutch colonial laws, Western
civil law, and laws enacted by the Indonesian government from the time of
independence in 1949 (proclamation of independence occurred on 17
August 1945).

The basis of modern Indonesian land law is Law Number 5 of 1960

(UU 5/1960), also referred to as UUPA (Undang-undang Pokok Agraria, or
the Basic Agrarian Law Act). The land tenure legal system in Indonesia is
administered under the Basic Agrarian Law No. 5 Year 1960. Land tenures
and titles are the jurisdiction of The National Land Agency (Badan
Pertanahan Nasional or BPN), a government agency that manages all
grants, extensions, renewals of certified titles as well as running the land
registration system.

Land ownership titles in Indonesia are divided into two broad

categories, which is customary traditional land title (Adat land rights),
and certified titles. The traditional land title is not registered in the BPN
and is considered as having a lower degree of ownership power. Land plots
containing such title are usually owned by inheritance. Other typical
terminology for such land title is girik or petok or pipil. Girik was not
actually an ownership title per se, but only the old version of the land tax
bill, as compared to the modern bill called SPPT-PBB now. However, girik is
considered a land title and can be the basis of a transaction. Land plots
containing such adat title can be converted into certified titles as
registered in the BPN. Buying the land with traditional land title is always
riskier than with the certified titles.

1
 Certified land titles are governed by The Basic Agrarian Law No. 5
Year 1960. They are registered at the local BPN office.

Meanwhile, in Islam, everything, including the being of man, is

owned by God. Land and its plentiful provisions belong to Him, but have
been given to man to keep in trust, to be used wisely for his own benefit
and that of the larger community. For example, the Quran says: To Him
belongs what is in the heavens and what is on the earth and what is
between them and what is under the soil (20:6), while it also observes
that It is He who made the earth tame for you so walk among its slopes
and eat of His provision and to Him is the resurrection (67:15). This
paradigm exactly the same as Basic Agrarian Law in Article 1 Paragraph 2.

The Quran does not lay out specific instructions on how land may be
distributed, but it does spell out the principles clearly for a fair and just
system to be developed in an Islamic society. Islam does not allow
ownership, as in exclusive use by a few, but gives trusteeship under
defined terms. Those who have been given this trust have huge
responsibilities to others in terms of their well-being. If landholders do not
fulfil these obligations, the state is fully within its rights to take back the
land and use it for the larger economic benefit, under the principle of
public interest (maslaha). Private trusteeship is allowed and indeed
protected in the Sharia, but only if it does not create injustice, hunger and
poverty in society.

Both the Quran and hadith forbid taking over the property of others
through unlawful means by the individual or by the state. Islam holds a
strict yardstick for rulers to follow. They must ensure a socially just,
economically equitable and fair society, with land distributed amongst
citizens in such a way that they are not exploited by a few. They must also
develop legal and transparent systems of private trusteeship that may not
be susceptible to fraud or forced takeover.

2
B. Writing Purposes.

This paper was provided with the aim:

1) Understanding the land tenure system in Indonesia.

2) Understanding every right lands in Indonesia.
3) Understanding who, how, when, where, and what to do to
obtain the land titles in Indonesia.
C. Problem Identification.
1) Who can possess the land titles in Indonesia.
2) What to do to acquire land titles in Indonesia.

3
 CHAPTER II

DISCUSSION

A. Land Tenure System

In general, land status can be divided into two groups, state land and
private land.1 There are two subcategories of state land;

1. free state land or state land without any right attached to it and;
2. state land the right on which has been designated to person or a legal entity.

Private/civil land is land with a certain right on it, either registered or

not (yet), either possessed by individuals or legal entities, have a long-
term time, can be conveyed to the others or heirs 2. There are presently seven
types of basic right on land according to Basic Agrarian Law (BAL)3 article 16 paragraph 1:

1. right of ownership;
2. right of cultivation/exploitation;
3. right of building;
4. right of use;
5. right of lease;
6. right of opening-up land;
7. right of collecting forest products.

And there are presently three basic rights on water and air space
according to BAL article 16 paragraph 2:

1. right of using water;

2. right of breeding and catching fish;
3. right of using the air space.
B. Procedures for Acquiring Land Rights
1. Right of Ownership (Article 20-27)

1 Erya Heryani and Christ Grant, Land Administration in Indonesia, A

paper, delivered on 3rd FIG Regional Conference, 3-7 October, (Jakarta:
2004), p. 3.

2 Supriadi, Hukum Agraria, (Jakarta: Sinar Grafika, 2010), p. 64.

3 Law No. 5 of 1960.

4
 Right of ownership or Freehold title is the right over land, inheritable
right, the strongest and fullest right on land which one can hold. There is
no time limit on this title and it can be given to the other subject of this
right, or bequeathed to another. Only Indonesian citizens (Indonesian with
Single Nationality)4 can have a right of ownership, and legal entities which
may possesses the right of ownership and its requirements is determined
by Government. These legal entities are:5

1) Banks that established by the state (State Bank);

2) Agricultural Cooperative Agencies that established based on
Law No. 79 of 1958;
3) Religious Agencies that appointed by the Minister of
Agriculture, after hearing the Minister of Religious Affairs;
4) Social Agencies that appointed by the Minister of Agriculture,
after hearing the Minister of Social Welfare.

A foreigner who, following the entry into force of this BAL, acquires
this title by way of inheritance without a will (an intestate inheritance) or
by way of joint ownership of property resulting from marriage and an
Indonesian citizen holding this title who, following the entry into force of
this BAL, loses Indonesian citizenship is obliged to relinquish that right
within one year following the date this title is acquired in the case of the
former or following the date upon which Indonesian citizenship is lost in the
case of the latter. If after expire of that period the right of ownership is not
relinquished, then the right is nullified for the sake of law and the land falls
to the State under the condition that the rights of other parties which
encumber the lands remain in existence.6

4 BAL Article 21 paragraph 4.

5 Government Regulations No 38 of 1963 Article 1.

6 BAL Article 21 paragraph 3.

5
 This is the only title that can be donated as charity (waqf) which will
be used for public interest, religion interest, or another purpose according
to the teaching of Islam7. The land will be registered as land for religious
purpose (waqf land) with a Nadzir, either Indonesian citizen or specific
legal entities as I explained before, as the holder and the maintainer of this
right land. The party who wants to donate his/her land, must pledge in
front of the land waqf registrar. This party must fulfill the requirements as
follow:8

1) Freehold title or another deed;

2) Letter of the validity of land ownership and statement that the
land is not being disputed from chief of village empowered with
head of local sub-district;
3) Certificate of registration
4) Approval from regent or mayor and head of local directorate of
agrarian.

Land for religious purposes (edification/waqf) is to be protected and

regulated by way of a Government Regulation.

This title is also one of the titles that makes a person eligible for a
mortgage9 in Indonesia and classified as rights that must be registered
according to the Government Regulation No. 24 of 1997.

The Right of Ownership is nullified if:10

1) The land becomes state land, because:

a) Annulment of rights;

7 Arba, Hukum Agraria Indonesia, (Jakarta: Sinar Grafika, 2015), p. 98.

8 Government Regulations No 28 of 1977 Article 9.

9 Greg Terry and Noor Meurling, Indonesia Property Investment Guide,

(Jakarta: Jones Lang LaSalle, 2011), p.2.

10 BAL Article 27.

6
 For the public interest, including the interests of the Nation and State
as well as the common interest of the people, the rights on land may be
annulled, with due compensation.11

b) and according to a procedure laid down by act.

c) Relinquished voluntarily;
d) Expropriated for the public interest;
e) The land is abandoned/left idle;
f) The land was transferred to those who is not entitled to hold
this right.
2) Land destroyed.

The authority to grant Right of ownership for land agricultural

purposes less than 2 hectares and for land nonagricultural purpose less
than 2.000 m2 is held by head office of regional national land agency, for
land agricultural purpose more than 2 hectares and for land nonagricultural
purpose between 2.000 m2 and 5.000 m2 is held by head office of province
national land agency, for land nonagricultural purpose more than 5.000 m 2
is held by head of national land agency.

The creation of this title according to customary law shall be

regulated by Government Regulation. For example:

1) The opening of customary land;12

2) Aanslibbing (tongue of land). Land on the river bank, lakeside,
or shore.13

This title can also be created by the stipulations of the government

or by the provisions of law concerning land. For example:

1) Granting the right;

11 BAL Article 18.

12 Soejono and H. Abdurrahman, Prosedur Pendaftaran Tanah, (Jakarta: PT

Rinerka Cipta, 1998), p. 13.

13 Soejono and H. Abdurrahman, Prosedur, p. 15.

7
 Land that was originally owned by the government, then granted to
the new owner after fulfilling the procedures and requirements specified by
the National Land Agency. The subject of this title submit a written request
to the head of National Land Agency through the head of Regional Land
Office in the proposed land.14

If the requester of this title is an individual, the name, age,

nationality, birth place, occupation, and information about his/her
wife/husband and dependent children have to be included in the form. If
the requester of this title is a specific legal entity as I explained before, the
name, location, deed of incorporation, date and number of Company
Decree by the authorized officer on appointment as a legal entity which
can possesses this title.

The requester must include the information of the proposed land,

physical and juridical data, such as deed of land, evidence on land which
has been purchased from government or court judgment, record from Land
Titles Registrar, the location of the proposed land, width and boundaries,
type of land (agricultural or nonagricultural), land use plans, the status of
the land (free state land or land which has been designated to person or a legal entity),
and another information which is considered as a necessary information.15

2) Conversion from Right of Use to Right of Ownership.16

This can be done by Indonesian citizen, foreign citizen who domiciled

in Indonesia, Indonesian legal entities, foreign legal entities which
domiciled in Indonesia. One of them submit a written request to the head

14 Arba, Hukum), p. 133.

15 Arba, Hukum, p. 132; Ministry of Agrarian or Head of National Land

Agency Regulations No 5 of 1999 Article 8-10.

16 Ministry of Agrarian or Head of National Land Agency Regulations No 5

of 1998 Article 78-80.

8
of National Land Agency through the head of Regional Land Office in the
proposed land.

If the requester of this title is an individual, the name, age,

nationality, birth place, occupation, and information about his/her
wife/husband and dependent children have to be included in the form. If
the requester is a legal entity, its name, the location and the deed of
incorporation must be included to the form of application.

The requester must include the information of the proposed land,

physical and juridical data, such as deed of land (by court judgment, record
from Land Titles Registrar, letter of release land right, width and
boundaries, land use plans, type of land (agricultural or nonagricultural),
land use plans, and another information which is considered as a necessary information.

2. Right of Exploitation/Cultivation (Article 28-34)

Right of Cultivation is the right provided by the State in order that a

private legal individual Indonesian citizens or Corporation which has been
establish according to the Indonesian law and domiciled in Indonesia 17, and
as well as foreign joint-venture companies18 may utilize State-owned land
to use the land for agricultural (including plantations), fishery, and
breeding purposes. Persons or corporations possessing the right of
exploitation and who do not any longer meet the terms as mentioned
before, are obliged within a period of 1 year to relinquish or to transfer that
right to another party meeting these terms. This provision also applies to
the party that obtains the right of cultivation, and does not meet the said
requirements. If it is not relinquished or transferred within the mentioned
period of time, then that right become not valid by the law, with the
provision that any other parties rights shall be given attention in

17 BAL Article 30 Paragraph 1.

18 Indonesia Property Investment Guide, p.2.

9
accordance with provisions that are to be stipulated in a Government
Regulation.19

In general, the right is granted for an initial maximum period of 25

years for cultivations (Young plants, animal husbandry and fishery), but in
the case of a company which requires more time (Tree crops), it can be
granted with a term of at most 35 years. Two years before the expiry of the
both terms, this title can be extended for another 25 years on the
submission of a written application seeking the extension.

There is no maximum area of land which can be awarded under this

title, but the minimum is 5 hectares. In the case where the area of the land
is 25 hectares or more, a reasonable investment shall be made and good
corporate management techniques shall be adopted, in accordance with
the developments of the times.

Right of Cultivation must likewise be registered at the Land Registry

Office, can be bequeathed, mortgaged20 and likewise be transferred to
other parties such as sale, exchange, gift, etc. with the permission of the
BPN21. This title also allows land to be used as a security for a debt. This
title is also classified as rights that must be registered according to the
Government Regulation No. 24 of 1997.

The right of exploitation is annulled because of:

1) Expire of its period;

2) it is terminated before its term has expired because a certain
condition is not fulfilled;
3) it is relinquished by the holder before its term has expired;

19 BAL Article 30 Paragraph 2.

20 Indonesia Property Investment Guide, p.2.

21 Ulrich Lffler, Land Tenure Developments in Indonesia, A Paper,

delivered for Deutsche Gesellschaft fr Technical Zusammenarbeit, August,
(1996), p. 18.

10
 4) it has been revoked in the interests of the public;
5) the land has been abandoned;
6) the land has destroyed;
7) the provisions referred to in paragraph (2) of Article 30, about
the subject of this right, applies. As I explained before.

The authority to grant right of cultivation for land less than 200
hectares is possessed by the head office of province national land agency,
for land more than 200 hectares is possessed by the head of national land
agency (ministry of agrarian).22

The Right of Cultivation is created by a determination by the

government. The subject of this title submit a written request to the head
of National Land Agency through the head of Regional Land Office in the
proposed land.23 This request or application consists of the identity of
requester, physical and juridical data on the proposed land, and another
information which is considered as a necessary information. The requester also has to
attach:24

1) the photocopy of the requester identity, valid deed of

incorporation after registered as a legal entity;
2) land use plans in either short-term or long-term;
3) land use approval letter;
4) approval of domestic investment or foreign investment or
approval letter from the President for specific foreign
investment.
3. Right of Building (Article 35-40)

22 Ministry of Agrarian or Head of National Land Agency Regulations No 3

of 1999 Article 8 and 14; Arba, Hukum, p. 135.

23 Ministry of Agrarian or Head of National Land Agency Regulations No 9

of 1999 Article 20; Arba, Hukum, p. 136.

24 Ministry of Agrarian or Head of National Land Agency Regulations No 9

of 1999 Article 19.

11
 Right of Building gives the holder, legal individual Indonesian citizens
or Corporation which has been establish according to the Indonesian law
and domiciled in Indonesia25, and entities as well as foreign joint-venture
companies,26 the right to build home, store, business office, industry, etc.
on both State and privately owned (Right of Ownership) land. Person or
corporation which holds the right of building and do not longer meet the
requirements mentioned, is obliged to relinquish the right of building or to
transfer it to another party which is eligible for such a right within one year.
This provision also applies to the party that obtains the right of building,
and does not meet the said requirements. If it is not relinquished or
transferred within the mentioned period of time, then that right become
not valid by the law, with the provision that any other parties rights shall
be given attention in accordance with provisions that are to be stipulated
in a Government Regulation.27

This right has limited period of time and can be obtained for state
land (by decree and granted by a minister or an appointed officer) as well
as for private land (by contract and the deed made in front of Land Title
registrar).28 It is granted for not longer than 30 years, but two years before
the expiry of the term, there is possibility of extending for at most 20
years.

Right of Building can be bequeathed, sold, exchanged, presented as

a gift (in case the land is private-owned land, subject to approval of the
land owner in each case) or mortgaged 29 and can be used as a security for

25 BAL Article 36 Paragraph 1.

26 Indonesia Property Investment Guide, p.2.

27 BAL Article 36 Paragraph 2.

28 BAL Article 37.

29 Indonesia Property Investment Guide, p.2.

12
debt. this title is also classified as rights that must be registered according
to the Government Regulation No. 24 of 1997.

The right of building is nullified because:

1) expire of its period;

2) it is terminated before the expiry of its term on the ground that
a condition has not been fulfilled;
3) it is relinquished by the right holder before the expiry of its
term;
4) it is revoked in the public interest;
5) it has been abandoned;
6) the land has destroyed;
7) the provisions of Article 36 paragraph (2), about the subject of
this right, apply. As I explained before.

The authority to grant Right of Building for land less than 2.000 m 2 is
held by head office of regional national land agency, for land between
2.000 m2 and 150.000 m2 is held by head office of province national land
agency, for land more than 150.000 m 2 is held by head of national land
agency.

This title can be created by the stipulations of the government. The

subject of this title submit a written request to the head of National Land
Agency through the head of Regional Land Office in the proposed land.30

If the requester of this title is an individual, the name, age,

nationality, birth place, occupation, and information about his/her
wife/husband and dependent children have to be included in the form. If
the requester is a legal entity, its name, the location and the deed of
incorporation must be included to the form of application.

The requester must include the information of the proposed land,

physical and juridical data, such as deed of land, evidence on land which
has been purchased or relinquished from government or court judgment,

30 Arba, Hukum, p. 138.

13
record from Land Titles Registrar, the location of the proposed land, width
and boundaries, land use plans, status of land (free state land or land which
has been designated to person), and another information which is considered as a necessary
information.

Just these requirements are required if you are not intended to open
this land with investment facilities. If you are, then there are more
requirements which must be attached on your application, these
requirements are:

1) land use plans in short-term and long-term;

2) land use approval;
3) approval of domestic investment, or approval of foreign
investment, or approval letter from technical department for
nondomestic or foreign investment.
4. Right to Use (Article 41-43)

The right of use gives the holder, Indonesian citizen or foreign

citizens domiciled in Indonesia, or corporate bodies incorporated under
Indonesian law and domiciled in Indonesia or foreign corporations which is
having a representation in Indonesia31 or department, Non-Departmental
Government Institutions, local government social or religious agencies or
representative of foreign country or representative of international
agency32, the right to use state-owned land or land owned by others for a
specific purpose as agreed by both parties such as for social activities,
religious worship, embassies and international organizations. Persons or
corporations possessing the right of use and who do not any longer meet
the terms as mentioned before, are obliged within a period of 1 year to
relinquish or to transfer that right to another party meeting these terms. If

31 BAL Article 42.

32 Government Regulation No 40 of 1996 Article 39.

14
it is not relinquished or transferred within the mentioned period of time,
then that right become not valid by the law.33

This title is also classified as rights that must be registered according

to the Government Regulation No. 24 of 1997.

Right of use granted over state-owned land is valid for a maximum of

25 years, but two years before the expiry of the term, it is extendable for
another period of 20 years, or occasionally for an indefinite period (as long
as the land is being used) only for:34

1) department, Non-Departmental Government Institutions, and

local government;
2) representative of foreign country or representative of
international agency;
3) religious and social agencies.

Right of use granted over private-owned (an underlying Right of

Ownership) land is valid for a maximum of 25 years, and cant be
extended. It only can be renewed by the agreement between the land
owner and the right of use holder, and must be registered by the land title
registrar.35

In case either the state-owned or private-owned land will be used

only for a residence by foreigner domiciled in Indonesia, it is valid for a
maximum of 30 years, and it is extendable for another period of 20 years.
Two years before this extended period passes, it only can be renewed for a
maximum of 30 years, and must be registered by the land title registrar. 36
This residence, must be a new-build-residence, and no one has ever use or

33 Government Regulation No 40 of 1996 Article 40 paragraph 2

34 Government Regulation No 40 of 1996 Article 45.

35 Government Regulation No 40 of 1996 Article 49.

36 Government Regulation No 13 of 2015 Article 6-7.

15
live in that residence. And also, the minimum price for this residence is the
highest price of residence in the proposed region. For example, in Jakarta,
the highest price for buying residence is 10 billion, this 10 billion is the
minimum price for that foreigner to buy.37

This land right can be sold, exchanged, presented as a gift, or

bequeathed. In case the land is private-owned land, subject to approval of
the land owner in each case.

The right of use is nullified because:

1) expire of its period;

2) it is terminated before the expiry of its term on the ground that
a condition has not been fulfilled;
3) it is relinquished by the right holder before the expiry of its
term;
4) it is revoked in the public interest;
5) it has been abandoned;
6) the land has destroyed;
7) the provisions of Article 40 paragraph (2), about the subject of
this right, apply. As I explained before.

The subject of this title submit a written request to the head of

National Land Agency through the head of Regional Land Office in the
proposed land.

If the requester of this title is an individual, the name, age,

nationality, birth place, occupation, and information about his/her
wife/husband and dependent children have to be included in the form. If
the requester is a legal entity, its name, the location and the deed of
incorporation must be included to the form of application.

The requester must include the information of the proposed land,

physical and juridical data, such as deed of land, record from Land Titles

37 Ministry of Agrarian or Head of National Land Agency Regulations No 13

of 2016 Article 6-7.

16
Registrar, letter of release land right or the other legal documents of
release right of land, the location of the proposed land, width and
boundaries, land use plans (for agricultural or nonagricultural), status of
land (free state land or land which has been designated to person), and another
information which is considered as a necessary information.

17
 CHAPTER III

CONCLUSION

Every land titles in Indonesia, has different subject to each other.

This subject is a person or a legal entity which is stipulated in BAL and
Government Regulations.
Every procedure to request and obtain land titles is stipulated in
Ministry of Agrarian or Head of National Land Agency Regulations No 9 of
1999.

18
 REFERENCES

Arba. Hukum Agraria Indonesia. Jakarta: Sinar Grafika, 2015.

Harsono, Boedi. Hukum Agraria Indonesia Sejarah Pembentukan Undnag-

undang Pokok Agraria, Isi dan Pelaksanaannya. Jakarta: Universitas Trisakti,
2013.
Heryani, Erya dan Christ Grant. Land Administration in Indonesia. Delivered
on 3rd FIG Regional Conference, 3-7 October. Jakarta: 2004.

Lffler, Ulrich. Land Tenure Developments in Indonesia. Delivered for

Deutsche Gesellschaft fr Technical Zusammenarbeit, August, 1996.
Muljadi, Kartini dan Gunawan Widjaja. Hak-hak Atas Tanah. Jakarta:
Kencana, 2007.
Rubaie, H. Achmad. Hukum Pengadaan Tanah Untuk Kepentingan Umum.
Malang: Bayumedia Publishing, 2007.
Soejono and H. Abdurrahman. Prosedur Pendaftaran Tanah, (Jakarta: PT
Rinerka Cipta, 1998.
Supriadi. Hukum Agraria. Jakarta: Sinar Grafika, 2010.

Terry, Greg and Noor Meurling. Indonesia Property Investment Guide.

Jakarta: Jones Lang LaSalle, 2011.

19