Ownership & Deal Safety on Lombok Property Investor

Agrarian Dispute Resolution Mechanisms

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The resolution of agrarian disputes in Indonesia is primarily governed by the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN) through administrative channels and the judiciary through civil or administrative litigation. Under Regulation of the Minister of Agrarian Affairs and Spatial Planning/Head of the National Land Agency No. 21 of 2020 on the Handling and Settlement of Land Cases, land cases are categorized into three distinct classifications as defined in Article 1:

Evolution of Indonesian Land Law

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The evolution of Indonesian land law is characterized by a transition from localized customary systems to a rigid colonial dualism, followed by a mid-20th-century unification effort, and most recently, a shift toward administrative flexibility aimed at economic acceleration under the “Omnibus” legislative framework.

The Pre-Colonial and Early Colonial Period (Prior to 1870)

Before the formal codification of agrarian law by the Dutch colonial administration, land governance in the Indonesian archipelago was dominated by Hukum Adat (customary law). This system was decentralized and varied significantly between regions, though it generally emphasized the communal relationship between a tribe or village and its territory. During the era of the Dutch East India Company (VOC), land policy was primarily extractive and focused on the Preangerstelsel (forced cultivation system) in West Java and various forms of forced deliveries (verplichte leveranties). The VOC did not seek to overhaul land ownership structures but rather to exploit existing feudal hierarchies to secure agricultural commodities.

Foreign Residential Property Ownership

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The legal framework governing foreign residential property ownership in Indonesia underwent a significant transformation with the enactment of Law No. 11 of 2020 on Job Creation, which was subsequently replaced by Law No. 6 of 2023 (the “Omnibus Law”). This legislation, along with its primary implementing regulation, Government Regulation (PP) No. 18 of 2021, expanded the rights of foreign nationals to acquire residential real estate. Previously regulated under PP No. 103 of 2015, foreign ownership was largely restricted to Hak Pakai (Right to Use). The current regime permits broader access to apartment units and simplifies the administrative requirements for eligibility.

Hak Guna Bangunan (HGB): Building Rights

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Hak Guna Bangunan (HGB), or the Right to Build, is a land title governed primarily by the Basic Agrarian Law (Law No. 5 of 1960, hereafter “UUPA”) and further detailed in Government Regulation No. 18 of 2021 concerning Right to Manage, Land Rights, Flat Units, and Land Registration. Article 35, Paragraph (1) of the UUPA defines HGB as:

“Hak untuk mendirikan dan mempunyai bangunan-bangunan atas tanah yang bukan miliknya sendiri, dengan jangka waktu paling lama 30 tahun.” (The right to establish and possess buildings on land that is not one’s own, for a maximum period of 30 years.)

Hak Guna Usaha (HGU): Cultivation Rights

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Hak Guna Usaha (HGU), or the Right to Cultivate, is a specific land title granted by the Indonesian state to individuals or legal entities for the purpose of large-scale agricultural, fishery, or animal husbandry enterprises. The primary legal framework governing HGU is found in Articles 28 through 34 of Law No. 5 of 1960 on Basic Agrarian Principles (UUPA), which has been significantly updated and implemented through Government Regulation (PP) No. 18 of 2021 on Management Rights, Land Rights, Flat Units, and Land Registration.

Hak Milik: Right of Ownership

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Hak Milik, as defined by Article 20, Paragraph (1) of Law No. 5 of 1960 on Basic Agrarian Regulations (UUPA), is the strongest and fullest hereditary right that can be held by a person over land. The statute describes it as: “Hak milik adalah hak turun-temurun, terkuat dan terpenuh yang dapat dipunyai orang atas tanah, dengan mengingat ketentuan dalam pasal 6.” (Ownership right is a hereditary, strongest, and fullest right that can be held by a person over land, bearing in mind the provisions in Article 6). The descriptor “strongest” (terkuat) signifies that Hak Milik is not limited by a specific duration, unlike Hak Guna Bangunan or Hak Pakai, and provides the highest level of legal certainty. The descriptor “fullest” (terpenuh) implies that the holder has the most extensive authority to utilize the land, including its surface and the space above and below it, subject to the “social function” principle mandated by Article 6 of the UUPA, which states that all land rights have a social function.

Hak Pakai: Right to Use

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The legal framework for Hak Pakai (Right to Use) is primarily established by Articles 41 through 43 of Law No. 5 of 1960 on Basic Agrarian Regulations (UUPA), and further refined by Government Regulation (PP) No. 18 of 2021 concerning Management Rights, Land Rights, Flat Units, and Land Registration. Article 41, Paragraph (1) of the UUPA defines Hak Pakai as:

“Hak pakai adalah hak untuk menggunakan dan/atau memungut hasil dari tanah yang dikuasai langsung oleh Negara atau tanah milik orang lain, yang memberi wewenang dan kewajiban yang ditentukan dalam keputusan pemberiannya oleh pejabat yang berwenang memberikannya atau dalam perjanjian dengan pemilik tanahnya, yang bukan perjanjian sewa-menyewa atau perjanjian pengolahan tanah, segala sesuatu asal tidak bertentangan dengan jiwa dan ketentuan-ketentuan Undang-undang ini.” (The right to use is the right to use and/or collect products from land directly controlled by the State or land owned by another person, which grants authorities and obligations specified in the decision of its granting by the authorized official or in an agreement with the landowner, which is not a lease agreement or a land cultivation agreement, provided it does not conflict with the spirit and provisions of this Law.)

Hak Ulayat: Customary Land Rights

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The legal framework for Hak Ulayat (customary land rights) is rooted in the recognition of Masyarakat Hukum Adat (Customary Law Communities) as the primary subjects of these rights. Under Article 18B paragraph (2) of the 1945 Constitution of the Republic of Indonesia (Undang-Undang Dasar Negara Republik Indonesia Tahun 1945), the state recognizes and respects customary law community units and their traditional rights as long as they remain active and align with societal development and the principles of the Unitary State of the Republic of Indonesia. This constitutional mandate is operationalized through Article 3 of Law No. 5 of 1960 on Basic Agrarian Principles (Undang-Undang Pokok Agraria or UUPA), which stipulates:

Land Acquisition for Public Interest

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The legal framework for land acquisition for public interest in Indonesia is primarily governed by Law No. 2 of 2012 on Land Acquisition for Development in the Public Interest (Undang-Undang Nomor 2 Tahun 2012 tentang Pengadaan Tanah bagi Pembangunan untuk Kepentingan Umum). This framework was significantly amended and streamlined by Law No. 11 of 2020 on Job Creation, which has since been superseded by Law No. 6 of 2023. The operational details are further elaborated in Government Regulation No. 19 of 2021 (Peraturan Pemerintah Nomor 19 Tahun 2021).

Land Registration and Digital Certification

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The legal framework for land registration in Indonesia is primarily governed by Government Regulation No. 24 of 1997 on Land Registration (Peraturan Pemerintah Nomor 24 Tahun 1997 tentang Pendaftaran Tanah), which was significantly amended and modernized by Government Regulation No. 18 of 2021 on Management Rights, Land Rights, Flat Units, and Land Registration (Peraturan Pemerintah Nomor 18 Tahun 2021 tentang Hak Pengelolaan, Hak atas Tanah, Satuan Rumah Susun, dan Pendaftaran Tanah). These regulations mandate the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN) to conduct land registration throughout the territory of Indonesia to provide legal certainty and protection to holders of land rights.

Strata Title and Sarusun (Condominiums)

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The legal framework governing multi-story structures and individual ownership within them in Indonesia is primarily dictated by Law No. 20 of 2011 on Condominiums (Undang-Undang Nomor 20 Tahun 2011 tentang Rumah Susun), as amended by Law No. 6 of 2023 on the Stipulation of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation into Law (the “Job Creation Law”). The operational details are further elaborated in Government Regulation No. 13 of 2021 on the Implementation of Condominiums (Peraturan Pemerintah Nomor 13 Tahun 2021 tentang Penyelenggaraan Rumah Susun).

The Basic Agrarian Law (UUPA) of 1960

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Law Number 5 of 1960 concerning Basic Regulations on Agrarian Principles, commonly referred to as the Undang-Undang Pokok Agraria (UUPA), serves as the foundational “umbrella act” for all land and natural resource governance in Indonesia. Enacted on September 24, 1960, the UUPA was designed to dismantle the colonial dualism of land law, which previously bifurcated the legal landscape into Western land rights (governed by the Dutch Burgerlijk Wetboek) and Adat land rights (governed by unwritten customary law). The UUPA effectively revoked the Agrarische Wet of 1870 and the Agrarisch Besluit of 1870, establishing a unified national land law based on Adat law, provided such customary principles do not conflict with national interests or the provisions of the UUPA itself.

The Indonesian Land Bank Authority

Mon, 01 Jan 0001 00:00:00 +0000

The Indonesian Land Bank Authority, formally known as Badan Bank Tanah, is a specialized central government agency (sui generis) established to manage land availability for national development and social justice. Its legal existence was institutionalized through Chapter VIII of Law No. 11 of 2020 on Job Creation, which was subsequently reaffirmed by Law No. 6 of 2023. The operational framework is further governed by Government Regulation (PP) No. 64 of 2021 regarding the Land Bank Authority and Presidential Regulation (Perpres) No. 113 of 2021 concerning the Structure and Operation of the Land Bank Authority.