Land Bank in Management Quandary

Kompas

Didie SW

Land and other natural resources in Indonesia, as the blessing of Almighty God, belong to the nation and constitute national wealth.

The state controls natural resources in its capacity as the representative of the entire people to guarantee that they are used for the greatest prosperity of the people.

As the holder of the people’s mandate, the state is obligated to publicly account for natural resource management, as stipulated in Law No. 5/1960 on Agrarian Principles (UUPA). Articles 125-135 of Law No. 11/2020 on Job Creation (UUCK) regulate the Land Bank. Further stipulations are contained in Government Regulation (PP) No. 64/2021 on the Land Bank Agency (PP BBT).

In line with the spirit of the UUPA, which emphasizes the regulation’s function of social engineering towards achieving social justice, it is is inevitable that the Land Bank (BT) is introduced within a framework of preventing inaccurate land banking operations.

It was also stressed that the BT should be a means of attaining social justice as mandated in Article 33, Paragraph (3) of the 1945 Constitution.

The original idea of establishing the Land Bank was initiated by the National Development Planning Agency (Bappenas). In the 2013 Policy Paper, the constraint as regards the provisioning of land for development to serve the public interest necessitated the establishment of a land bank as a statutory institution to specifically represent the state in executing the reservation of land. It was also stressed that the BT should be a means of attaining social justice as mandated in Article 33, Paragraph (3) of the 1945 Constitution.

Philosophically, the BT has a tough mission, as it requires tenacity and determination to accommodate the various interests in the allocation of land, which was initially only intended to fulfill the public interest.

Bappenas’ idea was followed up in the National Medium Term Development Plan (RPJMN) 2015-2019, of which one of the strategic issues concerned the availability of land for development to serve the public interest.

Transparency and accountability

The RPJMN 2020-2024 mentions the need to set up the BT to overcome the problem of land supply for the public interest. Presidential Regulation No. 61/2019 on the 2020 Government Working Plan led to the formulation of the PP on the Land Bank and the Public Service Agency (BLU) under the Agrarian Affairs and Spatial Planning Ministry/National Land Agency (ATR/BPN). Presidential Regulation No. 86/2020 on the 2021 Government Working Plan refers to the realization of the Land Bank’s institutional operations as among the development targets in the land sector.

The Job Creation Law regulates the BT in Articles 125-135. The PP BBT issued on 29 April 2021 defines the Land Bank Agency as a statutory body formed by the central government that has special authority over land management and is responsible to the President.

KOMPAS/DIONISIUS REYNALDO TRIWIBOWO

Several residents of Pantai Village who already have land certificates but are still being worked on by oil palm plantation companies in West Kapuas, Kapuas Regency, Central Kalimantan, Friday (7/5/2021).

It is thus clear that the Land Bank Agency is not a public service agency, or BLU, as initially designed. While the original aim for the BT was that it provide land for the public interest, Article 2 in conjunction with Article 16 of the PP BBT stipulates that the land supply is intended to serve the public interest and five other interests, which are social interests, national development interests, economic equity, land consolidation and agrarian reform (RA).

As a side note, the 19 development activities for the public interest in Law No. 2/2012 on Land Procurement, has been expanded into 25 types of activities in relation to zonal development under the Job Creation Law.

Balance between development activities directly and indirectly connected to public services is needed in supplying land for the public interest. Likewise, the proportion of land available for “national development”, which focuses on promoting economic investments, should not overtake that allotted for achieving the other aims.

Among the seven functions of the Land Bank (Article 3, PP BBT), land use should be especially noted because it directly relates to the operation of the Land Bank Agency. The provisions that regulate land use are the most detailed compared with those that regulate the Land Bank’s six other functions (Articles 14 and 40).

Land use is managed in cooperation with other parties in the form of transactions, leasing, business collaborations, grants, land swaps and other arrangements as agreed. The BBT generally enjoys a privileged authority over the holders of right to manage (HPL) as stipulated in Article 137, Paragraph (2) of the UUCK. The BBT is authorized to: (a) draw up master plans; (b) assist in licensing, approval and other business facilities; (c) handle land procurement; and (d) determine service fees.

Third parties may use HPL land on behalf of the BBT as an incentive in the form of land rights extensions and renewals (rights to build, lease, use) “concurrently” on their use and on reaching agreements.

The negligence in regulating these issues potentially violates Constitutional Court Decision No. 21-22/PUU-V/2007.

It is highly regrettable that the PP BBT contains no explanation that an Authentication Officer from the Land Office must ascertain fulfillment of the “being utilized” requirement and that land rights extensions and renewals must be registered in phases. The negligence in regulating these issues potentially violates Constitutional Court Decision No. 21-22/PUU-V/2007.

In order to maintain balance in the land supply in accordance with its aims, the BBT’s function of land use that constitutes its “business area” should not dominate the agency’s other functions. In the context of land use through transactions, leasing, business collaborations and others, the “nonprofit” character of the BBT should be made clear.

Bappenas (2013) offered the nonprofit option through either of two alternatives: the BT does not claim the price difference, meaning it provides land according to the purchase price while its operational costs comes from the State Budget; or the BT fixes a certain price difference limited to a maximum 5 percent and uses the profit in its entirety for operational costs.

DIDIE SW

Didie SW

The PP BBT specifies that the Land Bank’s reporting and accountability covers financial reports. In the same way, the formulation of the bank’s functions (Article 3, PP BBT) does not include evaluation as part of the integrated process of good institutional governance, which is even more necessary if land is the object that is managed as the source of the people’s livelihood.

Activity and evaluation reports are inevitable to fulfill the principles of transparency and accountability.

Homework

The PP BBT regulates the Land Bank’s general structure, while the more detailed provisions are in a presidential decree that is still being processed. This is unlike the establishment of the Investment Management Institute (LPI), which is fully ready.

The establishment of both the BT and LPI are stipulated in the UUCK, with PP No. 74/2020 on the LPI issued on 14 Dec. 2020, one month after the promulgation of the UUCK. The President announced the members of the LPI supervisory council and board of directors on 16 Feb. 2021. The LPI is a statutory body that wholly belongs to the Indonesian government and is responsible to the President.

With a similar yet unequal rank, the positives in the regulation on the LPI’s organizational structure are worthy of consideration. While both bodies are based on the activities as determined in Article 33, Paragraph (3) of the 1945 Constitution, the LPI’s management is not directly related to basic human needs.

The five members on the directorial board also hail from the professional world.

For the BBT, the aspect of justice in reserving land for different interests is a crucial issue. What type of human resources is expected to sit on the BBT board? The LPI supervisory council, comprising the Finance Minister and the State-Owned Enterprises Minister, is complemented with five members of professional backgrounds. The five members on the directorial board also hail from the professional world.

The PP LPI also stipulates the prevention of conflicts of interest. The regulation on the LPI’s organizational structure, which is comprehensive and can be promptly implemented, covers: membership, tasks and areas of authority (and a code of ethics for the supervisory council), the supervisory council’s membership selection from professional groups, the board of directors’ divisions and committees, and decision-making procedures. The PP LPI contains a provision on membership requirements in the event that an advisory council is needed.

In line with the LPI’s functions, evaluation is included in its “good, accountable and transparent” governance, and its reporting obligations cover activity and financial reports.

For the future, several points are due attention. First, detailed provisions on membership requirements and transparent processes are crucial as regards the recruitment of professional human resources to the BBT board. Second, in view of the BBT’s mission, aims and functions in managing land that essentially belongs to the people, it should be realized that the BBT serves as the state’s representative to justly manage the supply and distribution of land to various parties with diverse interests.

Kompas

Supriyanto

Activity and financial accountability offers proof that the BBT is capable of performing its land management duties justly and sustainably in line with progress in economic, social and ecological development. Third, the transfer of the entirety of state lands determined as BBT assets to the Agrarian Reform Task Force (GTRA) in Article 7 of the PP BBT, which overlaps with agrarian reform land objects (TORA) in Article 7 of Presidential Regulation No. 86/2017 on agrarian reform concerning the status of state land, constitutes a test case in proving the government’s commitment to accelerated agrarian reform. Thirty percent of the BBT land allocated to agrarian reform are to originate from the assets of other parties (Article 8, PP BBT).

The unclear aims of the Land Bank, the availability of accurate and up-to-date land data and the presence of and adherence to a spatial plan pose challenges of their own. When all the homework and challenges have been dealt with and land is managed professionally, transparently and accountably, the BT can move forward without hesitation. Only time will tell.

Maria S.W. Sumardjono, Professor at Gadjah Mada University Faculty of Law and Member of Indonesian Academy of Sciences

(This article was translated by Aris Prawira).