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 This framework was significantly amended and streamlined by Law No. 11 of 2020 on Job Creation, which has since been superseded by Law No. 6 of 2023.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).

Definition and Scope of Public Interest

Under Article 1, point 6 of Law No. 2 of 2012, land acquisition is defined as the activity of providing land by providing fair and adequate compensation to the entitled parties. The principle of “Public Interest” (Kepentingan Umum) is strictly defined to prevent arbitrary state action. Article 10 of Law No. 2 of 2012, as expanded by Law No. 6 of 2023, enumerates specific types of projects that qualify as public interest, including:

  1. National defense and security interests.
  2. Public roads, toll roads, tunnels, railway lines, railway stations, and railway operating facilities.
  3. Reservoirs, dams, weirs, irrigation, drinking water pipes, sewerage and sanitation systems, and irrigation works.
  4. Ports, airports, and terminals.
  5. Oil, gas, and geothermal infrastructure.
  6. Power plants, transmission lines, and power distribution substations.
  7. Telecommunication and information networks of the State.
  8. Waste disposal and processing sites.
  9. Government hospitals and public health centers.
  10. Public worship facilities.
  11. Public cemeteries.
  12. Social facilities, public facilities, and public green open spaces.
  13. Nature reserves and cultural heritage sites.
  14. Government offices (Central, Regional, or Village).
  15. Slum area arrangement, rental housing, and low-income housing.
  16. Educational infrastructure or government schools.
  17. Government sports infrastructure.
  18. Public markets and public parking lots.
  19. Industrial zones initiated by the Central/Regional Government (added via Law No. 6 of 2023).
  20. Special Economic Zones (SEZ) and Tourism Zones (added via Law No. 6 of 2023).

The Four Stages of Land Acquisition

According to Government Regulation No. 19 of 2021, the land acquisition process is divided into four mandatory stages: Planning, Preparation, Implementation, and Handover.

1. Planning Stage

The agency requiring the land (Instansi yang memerlukan tanah) prepares a Land Acquisition Planning Document (Dokumen Perencanaan Pengadaan Tanah or DPPT). This document must be based on the Regional Spatial Plan (Rencana Tata Ruang Wilayah) and national/regional development priorities. The DPPT includes the purpose of the plan, the location, the estimated land area, the initial status of the land, and the estimated budget for compensation.

2. Preparation Stage

The provincial governor or the relevant regent/mayor leads this stage. The primary objectives are:

  1. Notification of the development plan to the community.
  2. Initial data collection of the location and the entitled parties.
  3. Public Consultation (Konsultasi Publik) to reach an agreement on the location.

If the public consultation results in an agreement, the Governor issues a Location Determination (Penetapan Lokasi or Penlok). According to Article 26 of Law No. 2 of 2012, the Penlok is valid for two years and can be extended for a maximum of one additional year. If there are objections from landholders, a verification team is formed to review the objections. If objections persist, the agency requiring the land may file a lawsuit with the local Administrative Court (Pengadilan Tata Usaha Negara or PTUN).

3. Implementation Stage

Once the Penlok is issued, the National Land Agency (Badan Pertanahan Nasional or BPN) takes the lead. The implementation involves:

  1. Inventory and identification: Measuring the land and recording buildings, plants, and other objects related to the land.
  2. Appointment of an Independent Appraiser: The BPN appoints a licensed land appraiser (Penilai Pertanahan) to determine the value of the land.
  3. Deliberation (Musyawarah): The BPN holds a meeting with the entitled parties to determine the form of compensation based on the appraiser’s valuation.
  4. Payment of Compensation: Compensation must be paid directly to the entitled parties.

4. Handover Stage

After compensation is settled, the BPN hands over the land to the agency requiring it. The land status is then converted into the appropriate right (usually Hak Pakai or Hak Pengelolaan) for the government entity.

Compensation Principles and Valuation

The guiding principle for compensation is “Fair and Equitable” (Ganti Kerugian yang Layak dan Adil). Article 33 of Law No. 2 of 2012 stipulates that the appraiser’s valuation is binding and serves as the basis for the deliberation. The valuation includes:

  1. Land value.
  2. Underground and overground space.
  3. Buildings.
  4. Plants.
  5. Objects related to the land.
  6. Other loss that can be valued (e.g., loss of business, moving costs, psychological loss/solatium).

Compensation can be provided in several forms, as listed in Article 36:

  1. Money.
  2. Replacement land.
  3. Resettlement.
  4. Share ownership (for specific commercial public interest projects).
  5. Other forms agreed upon by both parties.

If a landowner disagrees with the amount of compensation determined during the deliberation stage, they may file an objection with the local District Court (Pengadilan Negeri) within 14 working days of the deliberation. The court must issue a decision within 30 working days. A further appeal can be made to the Supreme Court (Mahkamah Agung), which must decide within 30 working days.

If the landowner refuses the compensation or the owner’s whereabouts are unknown, the agency requiring the land deposits the compensation money with the District Court, a process known as Consignment (Konsinyasi). According to Article 42 of Law No. 2 of 2012, once the money is deposited in court, the land is legally deemed to have been transferred to the state, and the previous rights are extinguished.

Small-Scale Land Acquisition

For land acquisition of less than 5 hectares, a simplified procedure applies. Under Article 121 of PP 19/2021, the agency requiring the land can acquire the land directly through a sale, exchange, or other agreed-upon methods with the landholders. In such cases, a formal Location Determination (Penlok) from the Governor is not required, provided the location is consistent with the local spatial plan.

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