Review of The Basic Agrarian Law of 1960 (Indonesia)

LAND ADMINISTRATION PROJECT
FINAL REPORT ON
THE REVIEW OF THE BASIC
AGRARIAN LAW 1960
Prepared By
Warren L. Wright
TA Land Law Adviser
International
December 1999
i
EXECUTIVE SUMMARY OF THE REVIEW OF INDONESIA’S BASIC
AGRARIAN LAW 1960
Introduction
This report is divided into five chapters, namely: Chapter I - Indonesian Land
Tenures, Chapter - II Registration of Land Rights and Security of Title, Chapter
III – ILAP, the Land Market and the Basic Agrarian Law, Chapter IV – Hak
Ulayat and the Basic Agrarian Law, and Chapter V - Auxiliary Observations and
Conclusions.
Chapter I Indonesian Land Tenures

After an intensive examination of the provisions of the Basic Agrarian Law which
create the land tenures which exist in Indonesia and a review of several
implementing laws and regulations, the general conclusion is that, from a legal
perspective, those tenures are complex, use-related and are not at all secure.
This is so because they remain continually liable to forfeiture to the State,
usually without just compensation. Apart from the constant susceptibility to
forfeiture by abandonment or failure to comply with the conditions of the grants
of the main tenures, all but one of the tenures are limited in time and their
extension and renewal is dependent on the exercise of executive discretions of
the State. The result is that rather than there being a developed system of private
land law, there is constant intervention in and control over land tenures by the
State. Furthermore, this insecurity is compounded by an astonishing degree of
uncertainty in the Indonesian land law which is generated by the basic
provisions of the Basic Agrarian Law and maintained by successive
governments since the law was enacted.
The principle recommendations flowing from this examination include that this
control by the State over tenures and its correlative allocative function ought to
be abandoned in favour of secure private land tenures which are not susceptible
to such control. The several distinctive use-related tenures ought to be
rationalised into a simple ownership/leasehold dichotomy. The general
uncertainty also needs to be addressed through a thorough review of the Basic
Agrarian Law.
Chapter II Registration of Land Rights and Security of Title

In addition to the problem of the fundamental juridical insecurity of the existing
tenures identified in Chapter I, the system of title registration which prevails in
iii
Indonesia is a negative system. Furthermore, title to land passes regardless of
registration. The deleterious consequences of these facts from the perspective of
title security particularly and the land administration system generally are
discussed. The negative and positive systems of title registration are compared
and the benefits of positive registration discussed at length. Of particular
concern is the problem of the maintenance of the land title registration system
following initial registration and the prioritisation of competing interests in land.
The conclusion from this Chapter is that it is essential for the Indonesian title
registration system to move from the negative system to a positive system of
land title registration.
Chapter III ILAP, the Land Market and the Basic Agrarian Law
One of the objectives of the Indonesian Land Administration Project is the
creation of an equitable and efficient land market. This Chapter examines this
objective having regard to the provisions of the Basic Agrarian Law which
impact negatively on the creation and operation of such markets.
It is concluded that if the goal of a stable land market is to be realised in

Indonesia, then, in addition to addressing the problems of the insecurity and
complexity of the tenures and the negative system of title registration, urgent
attention needs to be given to re-examination of those provisions of the Basic
Agrarian Law which inhibit or prevent a land market from developing. Those
provisions are identified and briefly discussed.
Chapter IV The Basic Agrarian Law and Hak Ulayat

Chapter IV considers the issue of the rights of Indonesia’s indigenous peoples
and the provisions of the Basic Agrarian Law which pertain to what is known as
hak ulayat – the traditional right or relationship with land which is exercised by
communal groups. An examination is also made of some recent legislative
developments and their impact on hak ulayat. The main conclusion from those
considerations is that there is little or no effective protection of the rights of
indigenous peoples. Since much social conflict has been generated by the lack of
effective legal protection of those rights in the basic law, it is recommended that
a thorough review of the relevant existing laws be undertaken with a view to the
drafting of an effective legislative scheme which has due regard to hak ulayat
and provides an effective mechanism for the resolution of that conflict.
iv
Chapter V Auxiliary Observations
This chapter contains some incidental observations which augment the general
need for the reform of the Basic Agrarian Law and sets out some calls for review
which have been made within Indonesia.
General Conclusion
The Basic Agrarian Law must be reviewed and replaced with a Basic Land Law
which addresses the numerous problems identified in this review. Since secure
land tenure and title is essential to good governance and civil peace. Having
regard to the extraordinary degree of conflict between the State and society over
land in Indonesia, it is essential that these problems be addressed. In addition, if
the most benefit is to be gained from land and land-related markets, the
substantial legal obstacles to the creation of truly efficient and equitable markets
must be removed through the same review of the Basic Agrarian Law. Attention
must also be given to the plight of traditional indigenous communities which
exist in many parts of the nation.
As Indonesia seeks to move away from its authoritarian past towards a just and
peaceful society through a process of comprehensive reformation and renewal, a
particular urgency attaches to the necessity to review the Basic Agrarian Law.
Finally, attention is directed to the reports produced under the auspices of Part
C of the project which also consider the Basic Agrarian Law; in particular, those
entitled “Indonesian Land Law and Tenures - Issues in Land Rights” and
“Commercial Transactions and Security Interests in Land”. This review of the
Basic Agrarian Law has drawn significantly on the analyses and conclusions of
the former report and the writer respectfully endorses the findings of that report.
v
TABLE OF CONTENTS
EXECUTIVE SUMMARY i - iii
1. CHAPTER I - LAND TENURES ........................................................................................................................................ 1

1.1 INTRODUCTION .................................................................................................................................................................1
1.2 OBJECTIVES OF THE INDONESIAN LAND A DMINISTRATION PROJECT (ILAP) ......................................................1
1.3 LAND TENURES - INTRODUCTION..................................................................................................................................3
1.4 ENGLISH COMMON LAW TENURES – THE FEE SIMPLE AND THE LEASEHOLD ESTATE ......................................3
1.5 INDONESIAN LAND TENURES..........................................................................................................................................5
1.5.1 Right of Ownership (Hak Milik)........................................................................................................................ 6
1.5.2 Right of Exploitation/Cultivation (Hak Guna Usaha).................................................................................. 6
1.5.3 Right to Use Buildings (Hak Guna Bangunan) .............................................................................................. 7
1.5.4 Right of Use (Hak Pakai) .................................................................................................................................... 7
1.5.5 Right of Lease (Hak Sewa).................................................................................................................................. 8
1.5.6 Apartment Ownership Right (Hak Milik atas Satuan Rumah Susun) ........................................................ 9
1.5.7 Security Right (Hak Tanggungan).................................................................................................................... 9
1.5.8 Right of Management (Hak Pengelolaan)....................................................................................................... 9
1.5.9 Right to Clear Land and Right to Collect Forest Produce (Hak Membuka Tanah dan Hak
Memungut Hasil Hutan)....................................................................................................................................................10
1.5.10 Right to Use Water and Right to Cultivate and Catch Fish (Hak Guna Air dan Hak Pemeliharaan
dan Penangkapan Ikan) ...................................................................................................................................................11
1.5.11 Right of Use of Airspace (Hak Guna Ruang Angkasa)................................................................................11
1.6 SECURITY OF INDONESIAN TENURES..........................................................................................................................11
1.7 THE ORIGINS OF LEGAL UNCERTAINTY IN INDONESIAN LAND LAW ....................................................................12
1.8 THE A BOLITION OF THE COLONIAL DUALISTIC LAND LAW AND THE UNIFICATION OF INDONESIAN LAND
LAW – M ORE LEGAL UNCERTAINTY.....................................................................................................................................13
1.9 INSECURITY THROUGH FAILURE TO ENACT IMPLEMENTING REGULATIONS OF THE BASIC A GRARIAN LAW 15
1.10 THE REINFORCEMENT OF UNCERTAINTY .................................................................................................................16
1.11 CONFLICTS BETWEEN A DAT LAW AND THE BASIC A GRARIAN LAW ..................................................................17
1.12 A N EXPLANATION OF THE A RTICULATION OF A DAT LAW IN THE BASIC A GRARIAN LAW ..........................25
1.13 W HY INDONESIAN LAND TENURES ARE INSECURE ..................................................................................................26
1.14 EXTINCTION OF HAK M ILIK – THE BASIC A GRARIAN LAW ...................................................................................27
1.15 A BANDONMENT ..............................................................................................................................................................28
1.16 TIME PERIOD OF A BANDONMENT ...............................................................................................................................28
1.17 GOVERNMENT REGULATION NO 36 OF 1998 RE CONTROL AND UTILISATION OF A BANDONED LAND.........30
1.18 PROCEDURE FOR CONTROLLING AND UTILISING A BANDONED LAND .................................................................32
1.19 COMPENSATION FOR EXTINCTION OF RIGHTS ON A BANDONED LAND ...............................................................34
1.20 LOSS OF HAK M ILIK AND REVERSION TO STATE CONTROL UNDER OTHER LAWS............................................35
1.21 REGULATION OF THE M INISTER FOR A GRARIAN A FFAIRS NO 2 OF 1960 RE THE IMPLEMENTATION OF
SOME PROVISIONS OF THE BASIC A GRARIAN LAW .............................................................................................................35
1.22 REGULATION OF THE M INISTER FOR A GRARIAN A FFAIRS NO 2 OF 1962 RE CONFIRMATION OF
CONVERSION AND REGISTRATION OF FORMER INDONESIAN RIGHTS ON LAND ............................................................36
1.23 STATE CONTROL OF OTHER LAND UNDER THE CONVERSION PROVISIONS OF THE BASIC A GRARIAN LAW 37
1.24 M ORE UNCERTAINTY FOR HAK MILIK ........................................................................................................................38
1.25 HAK M ILIK ON STATE LAND .......................................................................................................................................38
1.26 CANCELLATION OF DECREE GRANTING HAK M ILIK ON STATE LAND ...............................................................39
1.27 CANCELLATION OF HAK GUNA USAHA, HAK GUNA BANGUNAN AND HAK PAKAI ...........................................40
1.27.1 Hak Guna Usaha.................................................................................................................................................40
1.27.2 Hak Guna Bangunan .........................................................................................................................................41
1.27.3 Hak Pakai ............................................................................................................................................................43
1.28 CONCLUSION RE GOVERNMENT REGULATION NO 40 OF 1996 ...............................................................................43
1.29 STATE CONTROL ENTRENCHED IN THE BASIC A GRARIAN LAW ..........................................................................44
1.30 W HY SECURITY OF LAND TENURE IS INDISPENSABLE – ECONOMIC DEVELOPMENT AND PROTECTION OF
INDIGENOUS LAND TENURE .....................................................................................................................................................46
2. CHAPTER II - REGISTRATION OF LAND RIGHTS AND SECURITY OF TITLE...............................................49
2.1 A LTERNATIVES TO NEGATIVE TITLE REGISTRATION SYSTEM ............................................................................50
2.2 TYPES OF REGISTRATION SYSTEMS ............................................................................................................................50
2.3 DEEDS REGISTRATION SYSTEMS..................................................................................................................................50
2.4 PRIORITY RULES IN DEEDS REGISTRATION SYSTEMS .............................................................................................51
2.5 RELEVANCE OF REGISTRATION IN DEEDS REGISTRATION SYSTEM .....................................................................52
2.6 TITLE BY REGISTRATION – THE TORRENS SYSTEM ................................................................................................52
2.7 INDEFEASIBILITY............................................................................................................................................................53
2.8 REGISTRATION IN THE INDONESIAN SYSTEM ...........................................................................................................55
2.9 INCENTIVES TO SEEK REGISTRATION.........................................................................................................................56
2.10 DEFERRED INDEFEASIBILITY V. IMMEDIATE INDEFEASIBILITY............................................................................60
2.11 INDEMNITY AND A SSURANCE – THE TORRENS POSITIVE SYSTEM .......................................................................61
2.12 REGISTRATION AND LAW REFORM .............................................................................................................................62
2.13 THE FIRST FALTERING STEP TOWARDS A POSITIVE SYSTEM IN INDONESIA .....................................................64
2.14 A RTICLE 32(2) AND THE CIVIL CODE .........................................................................................................................66
2.15 SOME ISSUES A SSOCIATED WITH THE INTRODUCTION OF A POSITIVE REGISTRATION SYSTEM ...................66
2.16 THE POSITIVE SYSTEM AND “LAND THEFT ”.............................................................................................................67
2.17 A DVANTAGES OF REGISTRATION OF TITLE TO DEVELOPING COUNTRIES .........................................................68
2.18 PRECIS OF M AIN BENEFITS OF TITLE BY REGISTRATION.......................................................................................70
3. CHAPTER III - ILAP, THE MARKET AND THE BASIC AGRARIAN LAW 1960................................................73
3.1 INTRODUCTION ...............................................................................................................................................................73
3.2 THE M ARKET AND THE BASIC A GRARIAN LAW .......................................................................................................73
3.3 THE SOCIAL FUNCTION OF RIGHTS ON LAND ...........................................................................................................75
3.4 PROHIBITION ON A BSENTEE OWNERSHIP AND LIMITS ON A REAL QUANTITIES ..............................................76
3.5 PROHIBITION ON CORPORATE OWNERSHIP OF HAK MILIK.....................................................................................77
3.6 RESTRICTIONS ON FOREIGN OWNERSHIP ...................................................................................................................78
3.7 FURTHER ISSUES FOR THE LAND M ARKET - LAW NO 4 OF 1996 RE SECURITY TITLES ON LAND AND LAND-
RELATED OBJECTS....................................................................................................................................................................80
4. CHAPTER IV - HAK ULAYAT AND THE BASIC AGRARIAN LAW.....................................................................83
4.1 INTRODUCTION ...............................................................................................................................................................83
4.2 HAK ULAYAT IN THE BASIC A GRARIAN LAW ...........................................................................................................83
4.3 GOVERNMENT REGULATION NO 24 OF 1997 RE LAND REGISTRATION AND HAK ULAYAT .............................86
4.4 REGULATION OF THE M INISTER FOR A GRARIAN A FFAIRS NO 5 OF 1999 ............................................................86
4.5 ILAP AND HAK ULAYAT ...............................................................................................................................................89
5. CHAPTER V - AUXILLIARY OBSERVATIONS AND CONCLUSIONS...............................................................91
5.1 POSSESSION .......................................................................................................................................................................91
5.2 REVIEW OF PUNITIVE PROVISIONS...............................................................................................................................91
5.3 INVOLVEMENT OF PRIVATE SECTOR IN LAND REGISTRATION..............................................................................92
5.4 REGISTRATION OUTSIDE CITIES ..................................................................................................................................93
5.5 CALLS FOR REVIEW OF THE BASIC A GRARIAN LAW FROM WITHIN INDONESIA ................................................93
5.6 GENERAL CONCLUSION..................................................................................................................................................94
BIBLIOGRAPHY & REFERENCE a -f

REVIEW OF THE BASIC AGRARIAN LAW 1960
“The legal foundation…needs fundamental reform.” 1
1. CHAPTER I - LAND TENURES
1.1 Introduction
The Basic Agrarian Law of 1960 is the legal foundation of the Indonesian land law
system. It was enacted on 24 September 1960.2 The purpose of this document is to
provide a briefing paper on that law. This will be undertaken primarily from the
perspective of the goals of the Indonesian Land Administration Project (hereafter
ILAP). Consequently, not all of the provisions of that law will be subjected to
scrutiny but only those which have a direct or indirect impact on the objectives of
the project. It is to be noted, however, that, in the course of examining those
provisions which are pertinent to ILAP, it is necessary to go beyond the Basic
Agrarian Law itself and to include a review of some of its more important
implementing laws and regulations.
The paper begins which an overview of land tenure as regulated in the Basic
Agrarian Law from the perspective of the legal security which is conferred on
those tenures by that law and its main relevant implementing provisions. An
examination of the negative title registration in Indonesia follows along with an
analysis of the positive registration system and the benefits which it can have for
developing countries. The paper then proceeds to look at the Basic Agrarian Law
and the land market. Finally, the position of indigenous peoples under the Basic
Agrarian Law will be considered.
1.2 Objectives of the Indonesian Land Administration Project (ILAP)

The main objective of ILAP is “to foster efficient and equitable land markets and
alleviate social conflicts over land through the acceleration of land registration
and,…through improvement of institutional framework for land administration
needed to sustain the program” (sic).3
1
Indonesian Land Law and Tenures Issues in Land Rights Final Report Topic Cycle 4 Part C Indonesian Land
Administration Project (Support for Long Term Development of Land Management Policies) at p. 1-11.
2
State Gazette No 1960-1-04
3
Per World Bank Staff Appraisal Report Document No 12820-IND Indonesian Land Administration Project 16
August 1994 at p. i.
1
It is said that efficient and equitable land markets are an important basis for
economic development in terms of more efficient and transparent land
transactions, less risk in land-related investment, mobilisation of financial
resources through use of land as collateral and provision of incentives for longer-
term investment towards sustainable land use.4 It is also stated that a
“comprehensive, accurate and efficient land registration system is a sine qua non in
developing such land markets since it enables land to be freely traded by
reducing or eliminating the risk perceived by purchasers and vendors of land.”5
The progress to be achieved under the project is also supposed to be
“instrumental to development in various sectors to encourage foreign
investment.”6
The assertion that an accurate and efficient land registration system is an

indispensable precondition to the development of a land market represents a
superficial analysis of the problems which exist in the Indonesian land law
system. This is so because registration, of itself, will not achieve the goal of an
operational land market so long as there are other deep-seated problems with the
land law system upon which rights to land depend. If the basic tenures which are
the subject of registration are fundamentally insecure, then the stated objective can
not be achieved merely through registration. Further, even if those tenures are
otherwise secure, if registration of titles to the tenures does not result in a secure
title, then the risks associated with transactions with land rights will not be
eliminated.
What is meant by security is firstly, the degree of security which is conferred by

the law on private land right ownership from intervention from the State and,
secondly, the degree of protection which is conferred by the land title registration
system which a right holder who purchases land in good faith and for valuable
consideration enjoys from claims from other people
Once an initial land ownership record is constructed through the implementation

of systematic registration, it is of the utmost importance that the land law and
registration system contain effective mechanism which ensures that derivative
registrations (that is, the registration of transactions and devolutions with the land
4
Ibid. at page 2.
5
Ibid.
6
Ibid. at pages i-ii.
2
right after it has been registered for the first time. If there is not sufficient incentive
in the registration system to ensure the capture in the register of transactions with
land following initial registration or the system itself inhibits derivative
registration capture, then the maintenance of the system will not be achieved. If
maintenance is not achieved, then the results of initial registration will be
meaningless and what progress was made through systematic registration will be
irretrievably lost. It is with regard to such issues that the following overview of the
Basic Agrarian Law has been undertaken.
1.3 Land Tenures - Introduction

Tenure defines the nature and characteristics of the object of ownership and is
prescribed by the basic concepts of the land law. A land tenure defines the length
of item the land is used or owned, the rights and responsibilities of use or
ownership, the opportunities for transfer and devolution and the risk of its
extinction and reversion to the public authority of the State.
By contrast, title identifies the owners of the tenure in particular parcels of land at
a particular time. Whereas tenures are the subject of this Chapter, the issues
pertaining to title are discussed in Chapter II. Security of tenures from forfeiture to
the state and security of title to those tenures from the claimed constitute the real
sine qua non of not only a land market but are also essential for the maintenance of
a just social order.
There follows, for the purposes of comparison, a brief discussion of the land
tenures which exist under one of the contemporary predominant land tenure
models - the English common law tenure system. This will be followed by an
examination of Indonesian land tenures with a view to establishing whether or not
the latter can be considered to be legally secure land tenures.
1.4 English Common Law Tenures – The Fee Simple and the Leasehold
Estate
The English land tenure model is a dominant model in many advanced market
economies. It admits only two basic tenures: freehold and leasehold. Within the
category of freehold tenures, there are three sub-categories: the fee simple, the fee
tail and the life estate. The fee tail no longer exists. It descended only to lineal
heirs. The life estate is not inheritable at all; lasting only so long as the owner of it
is alive and it can not be transferred from the original grantee. Its creation and use
is usually limited to family arrangements.
The most important tenure under the English common law is the fee simple. The
estate in fee simple is the largest estate known to that law. It is the most “extensive
3
in quantum, and the most absolute in respect to the rights which it confers”.7 The
essential features of the fee simple which distinguish it from the fee tail and the
life estate are:
w the owner may be an individual or a body corporate and has the unfettered
power to dispose of the fee simple either by sale or gift during the owner’s life
or by will upon his death; and
w on intestacy (dying without making a will), the land devolves, in the absence of
lineal heirs, to collateral heirs.8
Freehold estates are conceptually tenures held of the State although this now has
only one practical but extremely rare consequence of reversion to the State if the
owner dies without a will or without lineal or collateral heirs; a process known as
“escheat”.9 It is otherwise a perpetual estate which can never be lost to the State
through, for example abandonment, failure to use or care for the land or any other
provision of the law.
Nor can it vanish because of the destruction of the physical earth. Land in English
law is indestructible since it is not merely the surface nor the physical substance of
the earth but is the three dimensional space defined by reference to natural or
artificial boundaries. Tenures under the Indonesian system can vanish because of
the so-called destruction of the land 10.
A fee simple can be compulsorily acquired by the State in the public interest but
compulsory acquisition can only be implemented for public purposes and it is a
power which all States exercise in relation to the land within their territories.
Where property rights are protected by the law from arbitrary acquisition by the
State, just compensation must be paid to the owner.
The other broad category of tenure in English law is the leasehold estate. The
leasehold estate is a lesser tenure than the fee simple because it is limited in
duration. It is created by agreement between the person who leases and the owner
7
Per Butt P Land Law Edition 3 1996 LBC Information Services p. 112.
8
Lineal heirs are direct descendants (children). Collateral heirs siblings or relatives other than children.
9
Escheat also occurred under feudal land law rules where the owner was convicted and sentenced to death for
crimes. Per Williams The Fundamental Principles of the Present Law of Ownership of Land (1931) 75 Sol J 843
cited at footnote 12 in Butt op. cit p.67. The death penalty since been abolished in many common law
jurisdictions.
10
For example, Article 27b Basic Agrarian Law: A right of ownership shall be nullified when any of the
following takes place…..b. the land in question vanishes.
4
of the fee simple. It is terminable for breach of terms of the lease and is therefore a
lesser estate than the fee simple. Its primary use is in connection with commercial
transactions.
1.5 Indonesian Land Tenures
Whereas there are only two basic land tenures in common law systems of land
ownership, in Indonesia there are several unique tenures. Article 16 of the Basic
Agrarian Law creates the following tenures:
w the right of ownership (hak milik);
w the right of exploitation/cultivation (hak guna usaha);
w the right to use buildings (hak guna bangunan);
w the right of use (hak pakai);
w the right of lease (hak sewa);
w the right to clear land (hak membuka tanah); and
w the right to collect forest produce (hak memungut-hasil-hutan).
Article 16 also provides for the creation of rights other than those mentioned
above which must be stipulated by way of an act and also refers to “the rights of
temporary nature which are mentioned in Article 53” (see infra).
Rights which have been stipulated by way of an Act are:
w the right of ownership of apartments (hak milik atas satuan rumah susun);
w the security right (hak tanggungan); and
w the right of management (hak pengelolaan).
In addition, the Act creates the following additional rights to water and airspace:
w the right to use water (hak guna-air);
w the right to cultivate and catch fish (hak pemeliharaan dan penangkapan ikan); and
w the right to use airspace (hak guna-ruang-angkasa).
5
There follows a brief description of the basic nature of the several Indonesian land
tenures.
1.5.1 Right of Ownership (Hak Milik)

A hak milik is described as “the strongest and fullest right which one can have to
land and which goes down from one generation to the next”. A hak milik can be
transferred to other parties. Only Indonesian citizens (that is, individuals) can own
a hak milik but the government may determine which corporate bodies can have a
hak milik and what requirements they shall fulfil to make them eligible for holding
a hak milik.11
The Act also states that “the use of land having the status of a hak milik by a party
other than the owner shall be defined and regulated by way of legislation” and
that “hak milik can be used as debt collateral by encumbering it with a hak
tanggungan (security title).”12
1.5.2 Right of Exploitation/Cultivation (Hak Guna Usaha)

A hak guna-usaha is the “right to work on land directly controlled by the State for a
definite term which can be granted to a company dealing in agriculture, fishery, or
animal husbandry. A hak guna-usaha may only be granted on land whose area is at
least five (5) hectares, “on the condition that in the case where the area of the land
is 25 hectares or more, adequate investment shall be made and good corporate
management techniques shall be adopted as appropriate, given the current
developments in times.” A hak guna-usaha may be transferred to another party.
The term for which a hak guna usaha may be granted is strictly prescribed. The Act
provides that the term of a hak guna-usaha shall be “at most, 25 years”. However,
where a company requires more time, it can be granted a hak guna-usaha with a
term of “at most, 35 years”. In addition, the Act further provides that, “upon
request of the right holder and in view of the condition of the company in
11
Articles 20, 21 Basic Agrarian Law.
12
6
question, the terms of a hak guna-usaha as meant in paragraphs (1) and (2) of this
article can be extended for, at most, 25 years.”13
Only Indonesian citizens and corporate bodies established under Indonesian law
and domiciled in Indonesia may be granted hak guna usaha.14
A hak guna-usaha is created by a right granting decree by the State and it can be
used as debt collateral by encumbering it with a hak tanggungan (security title).15
1.5.3 Right to Use Buildings (Hak Guna Bangunan)

Although the term for this right implies that it is limited to the use of existing
buildings, it includes the right to construct buildings on another’s land as well as
to use such buildings. Thus, a hak guna-bangunan is described in the Basic Agrarian
Law as “the right to establish and possess structures on land which is owned by
another party for a period of at most, 30 years”. Upon request of the right holder
and in view of the needs and of the condition of the structures, the term can be
extended for “at most, 20 years”. A hak guna-bangunan can be transferred to another
party. Ownership of hak guna usaha is also restricted to Indonesian citizens and
corporate bodies established under Indonesian law and domiciled in Indonesia.
A hak guna-bangunan can be created, in the case of land directly controlled by the
State, by a right granting decree by the Government and, in the case of land having
the status of a hak milik, by an agreement between the owner and another party
intending to acquire a hak guna-bangunan with the purpose of giving rise to the
intended right. A hak guna-bangunan can be used as debt collateral by
encumbering it with a hak tanggungan (security title).16
1.5.4 Right of Use (Hak Pakai)

The right of use is “a right to use, and/or to collect produce from, land directly
controlled by the State or land owned by another individual which provides the
holder with powers and obligations as determined in the relevant right-granting
13
14
Article 30 Basic Agrarian Law.
15
16
Articles 35-40 Basic Agrarian Law.
7
decree by the official who is authorised to grant such a right or as determined in
an agreement with the owner of the land, such an agreement being other than a
land-lease agreement or land-exploitation agreement, given that everything is
possible as long as it does not contradict the spirit and provisions of this Act.”
A hak pakai can be granted for a definite term or for as long as the land is used for a
specific purpose or for free, for a certain payment, or for any kind of service. The
Act provides that “the granting of a hak pakai shall not be entailed with conditions
which contain elements of human exploitation.”
Hak pakai may be owned not only by Indonesian citizens but also by foreign
citizens residing in Indonesia and corporate bodies established under Indonesian
law and domiciled in Indonesia or foreign corporate bodies having representation
in Indonesia.
In the case of land directly controlled by the State, a hak pakai can be transferred to
another party only with approval of an authorised official. A hak pakai on land
having the status of a hak milik (right of ownership) can be transferred to another
party only in the case where such a transfer is possible under the relevant
agreement.17
1.5.5 Right of Lease (Hak Sewa)

The Act states that “an individual or a corporate body has a hak sewa atas tanah
(right of lease of land) when the individual or corporate body in question is
entitled to use land owned by another party for purposes related to structures by
paying to the owner of the land a certain sum of money as rent.” The payment of
the rent can be made either on a once-and-for-all basis or on an instalment basis
and either before or after the use of the land in question. The Act also provides
that “an agreement on land lease as meant in this article shall not be include
conditions which contain elements of human exploitation.”
A hak sewa atas tanah may be owned by Indonesian citizens, foreign citizens
residing in Indonesia, corporate bodies established under Indonesian law and
17
8
domiciled in Indonesia, and foreign corporate bodies having representation in
Indonesia.18
The elucidation states that a hak sewa is a hak pakai with special characteristics
and, in view of the provisions of Article 10(1) which require land owners
themselves to work the land over which their right exists, a hak sewa is only
available for structures. A hak sewa on agricultural land is transient (and was
therefore supposed to have been abolished in accordance with Article 53 of the
Law).
Hak sewa is not available over State land.19
1.5.6 Apartment Ownership Right (Hak Milik atas Satuan Rumah Susun)
The apartment right is regulated in Law No 16 of 1985 Re Right of Ownership of
Apartments and approximates to the strata title right in common law jurisdictions.
However, unlike the common law jurisdiction where strata title is a mere
elaboration of the fee simple tenure, the apartment right in Indonesian law is
treated as a distinct tenure. It is not necessary for present purposes to further
detail this right.
1.5.7 Security Right (Hak Tanggungan)

This right was created by Law No 4 of 1996 Re Security Title on Land and Land-
Related Objects. Prior to the enactment of this law, mortgage law governed by the
colonial legislation concerning what was called hipotheek (hypothecation) which
was the only part of the Indonesian Civil Code relating to land which was not
expressly revoked by the Basic Agrarian Law. The security right on land and land-
related objects corresponds to the mortgage interest in common law jurisdictions.
It is not necessary to elaborate this right for present purposes. Further brief
analysis of hak tanggungan is in the separate Chapter III on the land market (infra).
1.5.8 Right of Management (Hak Pengelolaan)

The right of management is a right on State land which confers authority on the
grantee to plan the supply and use of the land the subject of the right, to use the
18
19
Per elucidation of Article 44 Basic Agrarian Law.
9
land for the requirement of the implementation of the holder’s duties and o grant
to third parties a right of use with a term of 6 years over the land which is subject
to the right of management.
The right of management may only be granted to government departments and

official or corporate entities appointed by the government. It is said to be a right
which emanates from the State’s general right of control (as to which see infra).
The right of management has not been created in accordance with an Act, as
required by the Basic Agrarian Law, but by a mere ministerial regulation; that is,
Regulation of the Minister for Agrarian Affairs No 9 of 1965 Re Hak Pengelolaan. To
that extent, there must exist uncertainty about the validity of this right.
1.5.9 Right to Clear Land and Right to Collect Forest Produce (Hak
Membuka Tanah dan Hak Memungut Hasil Hutan)
The Act does not provide much detail about the right to clear land (hak membuka-
tanah) and the right to collect forest produce (hak memungut hasil hutan) other than
the following:
w A hak membuka-tanah and a hak memungut hasil hutan can be acquired only by
Indonesian citizens and shall be regulated by way of a Government
Regulation.
w Using a hak memungut hasil hutan legally does not necessarily mean acquiring a
hak milik (right of ownership) to the land in question.20
The elucidation states only that the right to clear land and the right to collect forest
products are land rights under adat law and that these rights need to be regulated
by way of a government regulation in the interests of the public “which are
broader than the interests of the individual or those of the adat-law community in
question.”
20
10
1.5.10 Right to Use Water and Right to Cultivate and Catch Fish (Hak Guna Air
dan Hak Pemeliharaan dan Penangkapan Ikan)
The hak guna-air is the right to obtain water for a certain purpose and/or to flow
water above another person’s land. The right to use water and the right to cultivate
and catch fish are to be regulated by way of a Government Regulation.21 Such
regulation does not yet exist.
1.5.11 Right of Use of Airspace (Hak Guna Ruang Angkasa)

The right to use airspace (hak guna-ruang-angkasa) provides its holder with the
power to use the energy and other elements existing in the airspace for the
implementation of efforts at maintaining and developing the productivity of soil,
water, and natural resources contained therein and for other purposes related to
such efforts.22 It too is supposed to be further regulated but no such regulation
presently exists.
1.6 Security of Indonesian Tenures

It was noted above that the basic tenures under English land law can not revert to
the State except in the most limited and rare circumstance that the owner dies
without leaving a will or heirs. In this regard, common law tenures enjoy the
utmost legal security. The tenures are not liable to forfeiture to the State in any
other circumstance; neither on the basis of abandonment nor failure to use the land
in accordance with the nature, condition or characteristics of the right. Land may,
in principle, be used for any purpose. Use is regulated by laws but none of those
laws provide that the tenure will be extinguished and the land revert to the State
for failure to comply with the use laws. Other penalties such as fines and
injunctions by the courts are provided to ensure compliance with planning and
use laws. The existence of the common law tenures does not depend on the use to
which the land is put.
There are no limitations on the amount of land which may be owned and land can
not revert to the State by reason of a transfer of ownership to non-citizens. Control
of ownership by non-citizens is implemented through immigration and capital
investment laws in the common law jurisdictions. By contrast, as the following
analysis demonstrates, Indonesian tenures are use-related and are extinguished if
the land is not used in accordance with the use for which a right has been granted.
This is most evident in relation to the right of exploitation/cultivation, the right to
21
22
11
use buildings and the right of use but even the fullest right of ownership may be
lost to the State through several provisions of the law.
In stark distinction to the legal security of the English common law tenures,
Indonesian land tenures are not secure from the legal perspective because of the
many ways in which tenures become liable to forfeiture to the State. The extensive
and pervasive State control and intervention in land tenure ownership and
allocation mean that the tenures can not be considered as legally secure. This
analysis will examine the ways in which Indonesian tenures are subject to State
control, extinguishment and reversion to the State in unique ways. This is the
reason why Indonesian tenures are not secure.
Before turning to a detailed examination of the provisions of the Basic Agrarian

Law which result in insecurity, it is instructive to consider the fundamental nature
of the land law system introduced by the Basic Agrarian Law because the
insecurity of tenure is closely related to a more general uncertainty which
characterises Indonesian land law. This uncertainty has been allowed to prevail
for four decades notwithstanding that the uncertainty which was brought about by
the Basic Agrarian Law could have been addressed or at least substantially
reduced if governments had taken the opportunity to enact the implementing
regulations contemplated by the Basic Agrarian Law.
1.7 The Origins of Legal Uncertainty in Indonesian Land Law.

Prior to the enactment of the Basic Agrarian Law, Indonesian land law was
regulated by numerous colonial Decrees, Ordinances and the Civil Code. The
Basic Agrarian Law, among other things, explicitly revoked the central tenets of
the colonial land law including:
w the Agrarian Act of 187023;
w all of the regulations establishing State land rights (domeinverklaring)24;
w the agrarian property right (agrarische eigendom) contained in Royal Decree of

1872; and
23
Agrarische Wet (S. 1870-55), Article 51 of the Act on the Polity of the Nederlands 1925 (Wet op
Staatsinrichting van Nederlands Indie).
24
Agrarian Decree (Domeianverklaring in Agrarisch Besluit) (State Gazette 1870 No 118) and Declarations of
State Property for Sumatera 1874, Manado 1877 and South and East Borneo 1888.
12
w most of Book II of the Civil Code (only the provisions on hypothek (mortgage)
were expressly retained).25
In addition to the express revocations, other regulations were implicitly revoked.

Article 58 provides that the old regulations which are not expressly revoked
continue to be in force but only so long as they are not contrary to the spirit of the
Basic Agrarian Law. An example of a colonial regulation which is considered to
contrary to the spirit of the Basic Agrarian Law is the Prohibition on Land
Alienation according to which indigenous Indonesians were forbidden to alienate
adat land to non-indigenous Indonesians. Being based on the colonial racial
categorisation of the population rather than the concept of nationality contained in
the Basic Agrarian Law and being also based on the colonial land law’s distinction
between Western and Indonesian rights on land which was abolished by that law,
the Prohibition on Land Alienation Ordinance is to be considered to be contrary to
the spirit of the Basic Agrarian Law and therefore revoked.
As is apparent from Article 58, not all of the colonial legislation was repealed by
the Basic Agrarian Law . The problem created by Article 58 is that there were vast
numbers of regulations promulgated by the colonial State and it is difficult to
determine with certainty which have been invalidated by the Article and which
ones continue to be in force. The compilation of the list of colonial regulations
would be an enormous task in itself let alone determining which are contrary to
the spirit of the Basic Agrarian Law. There is no legal mechanism or authority to
determine a complete compendium of the colonial land laws. Nor has any
authority been constituted to determine whether and why they are contrary to the
Basic Agrarian Law.
Thus, the first major source of uncertainty in Indonesian land law arises.
1.8 The Abolition of the Colonial Dualistic Land Law and the Unification of
Indonesian Land Law – More Legal Uncertainty
Apart from the revocation of the basic principles of the colonial land law, the most
fundamental change effected by the Basic Agrarian Law was the abolition of the
dualistic system in which Western rights on land were governed by the written
colonial law and Indonesian rights based upon adat law. With the enactment of the
Basic Agrarian Law, all Western as well as indigenous adat rights were converted
into a single system of new rights based on adat law. But it is not the original adat
25
These provisions of the Civil Code concerning credietverband (State Gazettes No 540 of 1908, No 586 of
1901 and 584 of 1909) and the provisions concerning hypothec in Book II of the Indonesian Civil Code in so far
as the exertion of security titles to rights on land and land-related objects were revoked in 1996 with the
enactment of the Law No 4 of 1996 Re Security Rights on Land and Land -Related Objects Article 29.
13
law of Indonesia but an adat law which was radically altered by the principles of
the Basic Agrarian Law. Not all of the colonial law was revoked by the Basic
Agrarian Law. The provisions of Book II of the Indonesian Civil Code regulating
mortgages were expressly retained pending the enactment of the mortgage
legislation.
With the revocation of Book II of the Civil Code, rights which were formerly
regulated by written law became governed by the unwritten adat law or, where
they were formally converted to the statutory rights in the Basic Agrarian Law,
subject to the non-specific and incomplete provisions of those rights. The legal
certainty achieved by the written Code disappeared and was replaced by the
uncertainty of a system of unwritten and incomplete adat law.
The drafters of the Basic Agrarian Law realised that further positive law was
necessary to augment the new land law system and provided in the Basic Agrarian
Law that the creation and transfer of rights according to adat law were to be the
subject of further implementing regulations. But 40 years after the enactment of
the Basic Agrarian Law, these critically important implementing regulations still
do not exist. The continuing failure to enact the implementing regulations
mandated by the Basic Agrarian Law concerning the creation and transfer of adat
land rights means that a second major source of legal uncertainty prevails. How
and, indeed, whether new rights on land can come into existence in accordance
with adat law and if, they can come into existence according to local adat, how
they may be transferred remain unclear questions. This uncertainty is
compounded by the very nature of adat law as an unwritten law and the fact that
there has never been an attempt made to codify ascertainable adat principles and
rules concerning land.
The introduction of the Basic Agrarian Law and its declaration of adat law as the
basis of all rights in land, water and air meant that uncertainty was bound to
follow; a peculiar outcome considering the repeated and express emphasis in the
basic purposes of the Basic Agrarian Law of the abolition of legal insecurity and
its replacement by legal security. The uncertainty which was intended to be
addressed was the uncertainty of the land rights of the indigenous population
under colonial law according to which all land in respect of which it could not be
established that there existed eigendom (the Dutch right of ownership) was State
land. But in doing so, the legislature of the independent State of Indonesia
substituted one kind of insecurity for another “in the hope eventually doing away
with legal insecurity altogether”.26
26
Gautama S. Indonesian Business Law 1995 Bandung PT Citra Aditya Bakti at page 151.
14
It is to be further noted that not all of the rights proclaimed by Basic Agrarian Law
were known in the adat law.27 Hak guna usaha and hak guna bangunan bear
remarkable similarity to the Dutch colonial rights of erfpacht and opstal. The
elucidation of Article 16 states that “hak guna usaha (the right to cultivate) and hak
guna bangunan (the right of use of structures) have been created to respond to the
needs of modern society in the current era.”
Hak tanggungan is also unknown in adat law. The institution of hak gadai was used
for the purposes of securing loans but it involved a transfer of the ownership of
the land.28
Furthermore, some adat rights have no corresponding statutory right; for example
hak terdahulu (the right of pre-emption) and hak menikmati (right of enjoyment – a
right to cultivate granted to outsiders which terminates upon harvest).29
In view of all of the foregoing, it is impossible to maintain that adat is either the
practical or philosophical basis of the Basic Agrarian Law. The articulation of adat
as the basis of the national land law turns out to be mere rhetoric which is not
substantiated by the Basic Agrarian Law itself or its implementation.
1.9 Insecurity through Failure to Enact Implementing Regulations of the

Basic Agrarian Law
Acknowledging the insecurity which was inevitably to follow with the enactment
of the Basic Agrarian Law which was not a complete system of land law but a set
of fundamental propositions and principles, numerous implementing regulations
were anticipated. This was also an acknowledgment that adat itself was not
sufficient to full in the details of the new rights on land.
Pending the promulgation of such implementing regulations, a period of

additional uncertainty was also inescapable. Incredibly, this uncertainty has
endured for nearly forty years. Many significant implementing provisions of the
Basic Agrarian Law are yet to be enacted including the following:
w the government regulation on the creation of the right of ownership according

to adat law as specified in Article 22;
27
Also per interview with Mr Herman Soesangobeng ILAP Socio-Economic Adviser ILAP and former National
Land Law Adviser 22 September 1999.
28
Per Reinhart A National Land Law Adviser interview 16 December 1999.
29
Per Ter Haar B Asas-Asas dan Susunan Hukum Adat trans. Soebakti Poesponoto 1960 Eleventh Printing at
pp. 69-70.
15
w the government regulation on transactions according to adat law intended to
transfer the right of ownership mandated in Article 26(1);
w the law concerning further provisions on the right of ownership mandated in

Article 50(1);
w the imposition of areal limitations on non-agricultural land in accordance with

Article 17;
w the government regulation on the right to clear land referred to in Article 46(1);
w the government regulation on the right to collect forest products referred to in

Article 46(1);
w the government regulation on the right to use water referred to in Article 47(2);
w the government regulation on the right to cultivate and catch fish referred to in
Article 47(2);
w the regulation of the right on the use of airspace in accordance with Article 48;
w the legislation on the right of lease of land for structures specified in Article
50(2); and
w the abolition of temporary rights in accordance with Article 53.
Article 50(2) also states that further regulations concerning the rights of
exploitation, right of building, right of use and right of lease shall be regulated by
way of legislation. This regulation, Government Regulation Re Hak Guna Usaha,
Hak Guna Bangunan and Hak Pakai was not enacted until 36 years after the
enactment of the Basic Agrarian Law. The Act specified in Article 51 on hak
tanggungan (security right) also took 36 years to appear.
1.10 The Reinforcement of Uncertainty- Further Modification of Adat Land

Law
While uncertainty arises from the provisions of the Basic Agrarian Law discussed
above, uncertainty was further compounded by the provision that while the new
agrarian law is adat law, that is only to be so as long as it was not contrary to:
1. the interests of the State and nation based on national unity;
2. Indonesian socialism;
3. the provisions of the Basic Agrarian Law itself or other prevailing legislation;
or
16
4. stipulations based on religious law.30
These qualifications have never been elaborated to establish just what parts of the
adat law are rendered invalid by the provisions of the Basic Agrarian Law. Part of
this difficulty is the problem of ascertaining exactly what the adat rules themselves
are. That has never been attempted in a systematic and thorough way.
When the Bill for the Basic Agrarian Law was introduced, the Minister stated that,
“in this bill…adat law is the main foundation because only that foundation is in
accordance with the identity of the Indonesian nation. We also realise, however,
that the adat law which we now know is really the result of development which
has been influenced by colonial politics so that it reality, there are several aspects
of that adat law which have quietly benefited certain small groups in the adat
community itself and created contradictions in our midst which are not in
accordance with the basic goals of the struggle of the Indonesian nation. For that
reason, then, the adat law which is the foundation of this Basic Agrarian Law is not
that which has been made decrepit and inoperable by colonial politics but an adat
law which is based on gotong-royong, which has the potential for development
which is consistent with the principles of religious law and modified to the
demands of the future”.
There follows an analysis of the principles to which adat is made subject to by the
Basic Agrarian Law.
1.11 Conflicts between Adat Law and the Basic Agrarian Law
The potential conflicts between adat law and the principles mentioned in the Basic
Agrarian Law are not comprehensively articulated in the elucidation. The
elucidation merely states that “since most Indonesian people adhere to adat law,
the new agrarian law will also be based on the provisions of adat law…improved
and adjusted to the interests of the people of a modern nation state which connects
the international community as well as to Indonesian socialism.”31 Thus, contrary
to the unqualified assertions made by some observers that adat law in the basis of
Indonesian agrarian law, in fact, “the Basic Agrarian Law creates its own unique
hybrid system which is perhaps as different from traditional adat law as it is from
Western law.”32
30
Article 5 of the Basic Agrarian Law .
31
Elucidation Part II (1).
32
Gautama op. cit. page 154.
17
1. Adat Law Subjugated to the National Interests of the State based on National
Unity
Perhaps the most controversial illustration of this principle is in regard to hak
ulayat. Hak ulayat is the historical and philosophical cradle of adat land rights and
yet even it is subjected to the national interest. The problems created for hak
ulayat by the Basic Agrarian Law are discussed in detail in a Chapter IV.
While the Basic Agrarian Law does away with one type of pluralism, it substitutes
another, even more complex legal plurality. This provision demonstrates a
fundamental conflict within the Basic Agrarian Law. Adat law is the law of the
numerous traditional social formations which existed throughout Indonesia prior
to colonisation. Van Vollenhoven identified 19 so-called “law areas”. In one sense,
the existence of the many diverse and independent adat law communities
predicates legal pluralism.
Legal pluralism predicates the coexistence of different systems of law; something

which is the antithesis of the nation state and its omnipotent and singular
positivist conceptualisation and manifestation of law which tolerates no other
legal authority other than that which emanates from the State in the form of
legislation enacted by its legislative organs or case law developed by its judicial
organs (as well as a carefully proscribed arena of executive law-making processes
which have been ordained by the legislature and scrutinised by the judiciary).
The existence of legal pluralism within the unified nation State therefore
represents a fundamental dilemma.33 This was probably realised by the framers of
the Basic Agrarian Law when they imposed the far-reaching qualifications on the
articulation of adat law as the basis of the new land law contained in the Basic
Agrarian Law. It may also explain the State’s refusal to expressly and properly
deal with the contradictions and problems which were consequential upon the
apparent adoption of adat land law as the basis of the land law. It has also been
observed that the drafters of the Basic Agrarian Law adopted and adapted
adat/ulayat principles in order to enshrine two major objectives which reflected the
politics of the day – the State as controller (socialism – see below)) and an imposed
form of top-down national unity in which legal plurality could not be tolerated.34
33
It is sometimes said that legal pluralism exists in other spheres of Indonesian law; for example, in marriage
law. But that so-called pluralism is generally limited to private law and not to public law (see also Gautama op.
cit. at pp. 1-7). It is not pluralism in the sense of this discussion; that is, a pluralism which grows out of several
sources of legal authority. While different rules apply in family law matters, the authority for all of those rules
emanates from the central state and not from independent sources of legal authority.
34
Evolutionary Change in Indonesian Land Law Traditional Law (Adat) Perspectives Final Report Part C Land
Administration Project at p. 10-2.
18
In the first instance, then, the subjection of adat land law to the national interest
based on the unity of the nation means that adat authority must crumble whenever
it came into conflict with the exercise of authority by the central State because the
State can not tolerate any other source of legal authority other than its own.
Further elucidation of this problem appears in the discussion of hak ulayat in
Chapter IV. The interrelationship between the legal authority arising from the
multitude of traditional social structures and the authority of the central State has
never been the subject of land law jurisprudence and adds complexity to and
confusion over the state of the land law.
The elimination of the conflicts which arise from attempting to force traditional
legal structures into spheres of operation such as the modern nation state where
they are dysfunctional - is a compelling reason in itself for the review of the Basic
Agrarian Law.
2. Adat Law May not Contradict Indonesian Socialism

Indonesian socialism is mentioned in Article 5 where it states that adat must not be
contrary to Indonesian socialism. Article 14 also states that “…the Government
shall – within the context of Indonesian socialism – devise general plans
concerning the supply, allotment, and use of the soil, water and aerospace…..”.
But it is nowhere made clear what Indonesian socialism is. It is certainly not a
prescription for the ownership and control of the means of production in the
Marxist sense. Marxist theory predicates the destruction of private property
ownership and social ownership of the means of production and that is clearly not
contemplated by the Basic Agrarian Law which permits private land ownership
and has no other real expression of socialism as it was understood in the 1960’s
not as it is understood now.
At the same time, the law appears to confer a high degree of State control over
land which one would more likely have found in the communist States of the
twentieth century. Perhaps this control, which is further discussed infra, is the real
meaning of Indonesian socialism in the sphere of land affairs. But even this
analysis does not fully explain the State’s dominance in land affairs because it is
maintained by bureaucrats that the State does not actually own the land but
merely controls it. This fiction allows the State to avoid the problems created by
the assertion of the domain declaration by the colonial state but does not prevent
the State from acting as if it were the owner of land when it grants rights on State
land or assumes control over privately held land when the rights on it expire by
reason of the land law and it reverts to State control.
19
The failure to clearly articulate what Indonesian socialism is means that further
uncertainty was implanted into the land law.
The only other guidance on the principle of Indonesian socialism is to be gleaned

from other provisions in which it is said that the idea of socialism is implicit. For
example, Article 6 provides that all rights on land have a social function. Land
must not be used only for the benefit of the owner but also in such as way as to
benefit the people. Article 15 states that every land right holder is obliged to take
care of the land, to prevent if from being damaged and to increase its fertility. The
explanatory memorandum emphasises the importance of maintaining harmony
between individual interests and general interests “in order to achieve the goals,
prosperity, justice, and happiness of the people.”35 But these are not expressions
of socialism but general statements about the nature of land ownership which
could apply to any system.
According to Gautama36, the principles of Indonesian socialism are most evident

in Article 7 which prohibits excessive land ownership and possession to prevent
harm to the public interest; Article 10 which obliges land right holders to work the
land themselves; and Article 17 which authorised the government to set areal
limitations on land ownership. Areal limitation was first introduced prior to the
Basic Agrarian Law through Law No 1 of 1958 Re Abolition of Partikelir Land
which was subsequently confirmed in Government Regulation (in lieu of an Act)
No 56 of 1960 concerning the Fixing of Area of Agricultural Land) and Law No 1 of
1961 and Government Regulation No 12 of 1961. These limits apply only to
agricultural land and not to other land.37 Presumably, where adat law placed no
limits on the quantity of land which may be owned by any particular entity, that
adat law is invalid.
The imposition of areal limits on land ownership is not an expression of the

classical concepts of socialism.
Having regard to the political history and fate of the Indonesian Communist Party
in 1965-1966, it is difficult to understand how any expression of socialism has been
retained in the basic law. Gautama notes that land reform, under the New Order
regime, “was regarded as no longer popular and a program of the leftist
influence.”38 Consequently, no effective or substantial land redistribution has
35
Part II(4) Elucidation.
36
Gautama op. cit. at pp158-159.
37
Although there is presently draft legislation to impose limits on the ownership of non–agricultural land as
well.
38
Ibid. p. 160.
20
been undertaken and so even “Indonesian socialism” as expressed in the Basic
Agrarian Law has not been realised in any concrete way. Yet it remains a principle
of the Law.
This is even more surprising when regard is had to the contents of the speech by
the Minister for Agrarian Affairs concerning the issue of land reform when he
introduced the bill. The Minister stated in his speech to the House that “land
reform can not be separated from the Indonesian National Revolution; a land
reform program which has the following purposes:
w to implement a just division of the land resources for the livelihood of farmers
along with the revolutionary structural reformation of land affairs to achieve
social justice;
w to implement the principle of “land for the farmers” so that land will not
become an object of speculation and exploitation;
w to strengthen and widen the right of ownership of land as the strongest right
for every Indonesian citizen, for men and women which is individual and
inheritable but which also has a social function;
w to end the landlord system and to abolish unlimited land ownership by

implementing maximum and minimum limits for each family with the result
that the liberal capitalist system over land is gradually eroded away and
protection is given to economically-weak groups; and
w to increase national production and promote intensive cooperative farming in

the form of cooperatives and other gotong royong groups to achieve prosperity
which is strong and just and accompanied by a system of credit especially for
the farmers.”
After 40 years, more than 80 million Indonesian citizens still live below the
poverty line while incalculable wealth has been accumulated by certain small
groups of the ruling political and military elite. There is no just division of
resources. Land reform programs which began in the mid-1960’s were abandoned
following the elimination of the Communists and there has been no substantial
effort to implement this objective of the Basic Agrarian Law. After a period of self-
sufficiency, rice now has to be imported. Cooperatives have not flourished. The
landlord system has not been abolished and a form of capitalist economic
development (commonly referred to as crony capitalism) flourished under the
New Order government. The rights of the Indonesian people to their land are not
strong but continue to be subject to the control of the State, interference and unjust
acquisition by the State and the State’s private sector companions. Conflicts over
land constitute an enormous social problem.
21
Another expression of socialism is the vast State control over land which is
conferred by the Basic Agrarian Law. In the “classical” socialist/communist States,
State control extended to every aspect of life in much the same way as the
leviathan Indonesian State totally dominated the public and private life of the
nation and its citizens during the New Order. The State’s domination in land
affairs has been yet another dimension of such domination.
There seems to be no purpose to the continued articulation of socialism of any

kind in the basic land law.
3 (a) Adat Law Subject to other Provisions of the Basic Agrarian Law
An example of possible conflict between adat law and the Basic Agrarian Law
arises from the adat law of the Minangkabau in West Sumatera39 where, through
the matrilineal system of social organisation, only women inherit and own land.
Article 9(2) of the Basic Agrarian Law , however, provides that every Indonesian
citizen, be it male or female, has equal opportunities to acquire a land right and to
obtain benefits and yields thereof…”. This is an obvious conflict between adat
land law and the Basic Agrarian Law. If the gender-equality provisions of the
Basic Agrarian Law were to be enforced over the adat law of the Minangkabau
people, it would mean the complete breakdown of the Minangkabau social
system as it presently exists. The implementation of gender-equality provisions of
the land law must take account of such problems and can not be enforced in an
unqualified way in the Indonesian context. Thus, the provision of the Basic
Agrarian Law which recites gender-equality in relation to access to land needs to
be tempered in its application rather than being an unqualified assertion as an
uncompromising legal principle.
Adat law also permits the use of land by persons other than the owner through the
institution of share-cropping.40 Article 53 of the Basic Agrarian Law, however,
provides that “the provisional (temporary) rights as meant in Article 16(1)(h)
of….hak usaha-bagi-hasil (right of output-sharing endeavour), hak menumpang (right
of transient occupancy), and hak sewa tanah pertanian (right of lease of agricultural
land),….shall be regulated in order to put restrictions on their characteristics
which contradict this Act while efforts shall be made to nullify the existence of
such rights within a short time.”
39
See Benda-Beckmann The Minangkabau of West Sumatera An Anthropological Study.
40
See Ter Haar’s detailed description of perjanjian paruh hasil tanam (agreements to share land produce) at
pages 102-105 of Asas-Asas dan Susunan Hukum Adat.
22
In this regard, it is to be noted that while certain provisions have been imposed on
share-cropping by Law No 2 of 1960 Re Share-cropping Agreements (Agricultural
Land), no efforts have been made to abolish this institution. Indeed, share-
cropping is still very widely practised. The failure to abolish share-cropping is
contrary to the provisions of Article 53 of the Basic Agrarian Law. The continuing
practice of share-cropping is also in conflict with the Article 10 of the Basic
Agrarian Law which states that owners must work the land themselves.
There seems to be little point in retaining provisions of the Basic Agrarian Law
such as Article 53 which directs that efforts be made to abolish legal institutions
relating to land, such as share-cropping, when, in reality, such institutions
continue to exist and operate on a significant scale. That is a further ground for
reviewing this aspect of the Basic Agrarian Law.
3 (b) Adat Law must not contradict Other Legislation

Article 5 provides that another of the things which adat law must not contradict is
“other legislation”. This is also a broad basis upon which adat law may be
annulled. An example of other legislation which is contrary to adat land law is
Government Regulation No 24 of 1997 Re Land Registration.
ILAP is implemented under this regulation which contains the rules which must
be complied with before a right of ownership is acknowledged by the State and
may therefore be registered. One of the rules in that the present right holder or, the
present right holder and his/her predecessors, must have been in actual
possession for an uninterrupted period of twenty years before s/he is entitled to
be recorded as the owner.41
This provision seems to be applicable even within areas where hak ulayat still exists. To the
extent that this regulation conflicts with adat principles whereby the creation of a hak milik does
not require 20 years possession and which does not admit successive occupations and uses by
predecessors in possession as a basis for the creation of a hak milik, it is in conflict with the adat
law because hak milik adat can come into existence after only one or two harvest seasons.42 The
Government Regulation No 24 of 1997 has precedence over the adat rules because
adat may not contradict “other legislation” as prescribed by Article 5. One
argument which flows from this is that hak milik adat may not come into existence
41
Per Article 24(2) Government Regulation No 24 of 1997 Re Land Registration.
42
Ter Haar op. cit. at p. 68.
23
in accordance with any rule other than that government regulation and that it in
direct conflict with adat being the basis of the land law system.
It is also in open conflict with other provisions of the Basic Agrarian Law which direct the
government to enact legislation concerning the creation and transfer of hak milik according to
adat. The failure of successive governments to enact the regulation referred to in
Article 22 of the Basic Agrarian Law concerning the creation of the right of
ownership according to adat law, together Government Regulation No 24 of 1997
Re Land Registration which sets out rules contrary to adat land rules, adat law on
this important aspect has been invalidated. The same analysis applies to the other
rules of evidence mentioned in Article 24 of Government Regulation No 24 of
1997.
The other bases upon which a right may be registered are:
w written evidences which establish the existence of the right as at 24 September

1960 (the date of enactment of the Basic Agrarian Law) together with written
evidences of the transfer of the right to the present right holder where the right
holder who owned the right as at that date transferred the right.; or
w a statement by a witness or the party in question “provided that the truth of the
statement..can be evaluated as reliable by the Adjudication Committee”.43
Both of these methods of establishing a right of ownership are not in accordance

with adat land law procedures and, to that extent, they also render the adat land
law nugatory. Practically no adat system used formal written evidence of the type
specified in the elucidation of Article 24 of Government Regulation No 24 of 1997.
The creation of the right of ownership according to adat law is described by Ter
Haar and it is completely different to the methods in that regulation for
establishing the creation of a right of ownership.
The elucidation of Article 24 of Government Regulation No 24 of 1997 opens with

the words: “Basically, what is meant by evidence of ownership is the evidence of
ownership on behalf of the right holder which already existed at the time the Basic
Agrarian Law came into effect…”. This implies that no rights of ownership other
than those which are granted on State land are able to be created after the date of
enactment of the Basic Agrarian Law. That is also in conflict with the continued
operation of adat land law in accordance with the Basic Agrarian Law.
43
Article 24 Government Regulation No 24 of 1997 and its elucidation.
24
To the extent that “other legislation’ has so far rendered the fundamental tenets of
adat land law concerning the creation and transfer of the right of ownership, this
other legislation has left adat law as a dead letter and again demonstrates that
what is needed is not a variable unwritten uncertain land law based on adat but
one which is positive and comprehensive and founded upon a new basic land
law.
4. Adat Must Not Contradict Religious Law

It may only be speculated what the practical consequences of this provision are.
One possible contradiction arises from the differences in the inheritance rules
contained in Islamic law and adat law; particularly in relation to the distribution of
the estate between heirs where the heirs include both males and females.
Generally, adat law does not make distinctions between the rights of female and
male heirs whereas Islamic law does; with the latter stipulating that male heirs
receive a greater share of the estate that females.
This problem is further complicated by the existence of 5 official religions in

Indonesia– Islam, Catholicism, Protestantism, Buddhism and Hinduism. The
articulation of religious law is an additional confounding factor in the
interpretation and application of the Basic Agrarian Law.
1.12 An Explanation of the Articulation of Adat Law in the Basic Agrarian

Law
With such emasculating provisions of the Basic Agrarian Law which have the
effect of making a myth out of the principle that adat is the basis of Indonesian
land law, attention ought to be given to the question why this myth continues in
the legal system and the ideology of the land law.
The endurance of the existing land law is said to be based on its claims to be adat-
based. However, rather than having been developed into a clear written land law
system since the enactment of the Basic Agrarian Law, the amorphous adat rules
and philosophy have been manipulated as an ideological tool by those in power.
This ideology finds expression in the Basic Agrarian Law as well as in its
apologists who argue that since adat can not be understood by outsiders, any one
who is not a member of the culture can not understand or criticise land law.
Because adat is inherently flexible, unwritten and community-based, it enables the

modern State to justify what it does in relation to land by referring to “adat
principles and philosophy” which arose out of small agrarian societies, had the
25
implicit consent of the people and the unchallengeable motive of pursuing their
prosperity.”44
Adat principles function perfectly well in their traditional environments. In land

law, the influence of adat is strong and the result is mystification. By using adat
which, in its traditional form is based on an oral tradition, is vague and cryptic
and required interpretation by the adat chiefs, the new State was assured the role
of interpreter of the law to manage its inherent unworkability and lack of
explicitness. Adat can answer any problem but it can not do so is a systematic way.
In the final analysis, adat can not operate on the national scale because it is the
unknowable unwritten way small communities traditionally operate. It can not
explain or justify the activities of a nation state. Adat is not a legal system which is
necessary for the existence of a nation state and outside its sphere of legitimate
operation in the traditional communities, it is not a normative system.45 It is not
capable of addressing the fundamental problems attaching to land affairs in
modern Indonesia.
The conclusion which is compelled from the foregoing is that it is imperative to

review the Basic Agrarian Law from a realistic and practical perspective focussed
on the needs which are relevant to this point in the development of Indonesia.
1.13 Why Indonesian Land Tenures are Insecure

According to the Report entitled Indonesian Land Law and Tenures Issues in
Land Rights, the tenures which exist under the Basic Agrarian Law are, as
commodity rights, fundamentally flawed.
Legally, the insecurity factors are overwhelming.
Where certainty is most needed in the law governing land rights, it is least
available. The discretion of the State to extend, renew or terminate the tenures
means that security may only be obtained from extra-legal sources which are
“ultimately political or bureaucratic patronage”46 because the rights which exist
on land do not exist as of right as they ought to but on the non-legal exercise of the
State’s executive discretion. Legal security of land tenures is not granted by the
land law system. Rather, uncertainty is entrenched by the Basic Agrarian Law. It is
44
Per Indonesian Land Law and Tenures op. cit at page 1-8.
45
Ibid.
46
Final Report Indonesian Land Law and Tenures Issues in Land Rights Indonesian Land Administration
Project Part C Support for Development of Long-Term Land Management Policies at pp 7-25 - 7-26.
26
said that State powers to annul titles are extensive and discretionary. It is therefore
proposed to examine the principle rights on land to determine whether and why
this is the case.
The General Elucidation of the Basic Agrarian Law states that the colonial agrarian
law did not guarantee legal certainty for the indigenous population and that, in
that regard, there is a need for a new agrarian law which is simple and which
guarantees legal certainty for the whole Indonesian community. The reference to
the guarantee of legal certainty is stated repeatedly throughout the elucidation.
However, a closer examination of the fundamental provisions of the Basic
Agrarian Law and its implementing laws demonstrate a bewildering degree of
general uncertainty in the land law (as shown above) as well as in its tenures as we
shall now see.
1.14 Extinction of Hak Milik – The Basic Agrarian Law

Hak milik (the right of ownership) is described in the Basic Agrarian Law as “the
strongest and fullest right which may be owned by a citizen”. However, it is
incontestable as a matter of legal principle that this most basic right of ownership
is not secure from extinguishment and forfeiture to the State in ways which are far
beyond the usual prerogative of the State to acquire private property rights in the
public interest and upon payment of just compensation.
Article 27 of Basic Agrarian Law provides that the right of ownership is annulled if
the land is destroyed or the land reverts to the State because of:
w the revocation of the right based on Article 18 (compulsory acquisition in the

interest of the nation and State or the common interest of the community);
w voluntary transfer by its owner;
w the land is abandoned/neglected; and
w the provisions of Articles 21(3) and 26(2) (foreign acquisitions).
Resumption by the State of land ownership is not in principle objectionable

provided that it is implemented with just compensation. No State can be denied
the power of resumption. In this regard, Article 18 of the Basic Agrarian Law
provides that rights on land may be annulled in the public interest by the
payment of proper compensation.
Nor is voluntary surrender of rights to the State problematical.
27
The abolition of the right if it is transferred or devolves to a foreigner if that
foreigner does not voluntarily transfer it to a citizen is part of the general
prohibition on foreign ownership which is discussed in further detail in Chapter
III.
1.15 Abandonment
The most interesting of the bases upon which hak milik is annulled and reverts to
the State is abandonment (Article 27a.3).
“Abandonment” means not only physical abandonment but also use which is not
in accordance with the “conditions or characteristics and purposes of the right”. By
contrast, under Anglo-Australian law as noted earlier, this can never occur. A fee
simple can never be lost to the State by “abandonment” or “use which is not in
accordance with the conditions, characteristics or purposes of the right”.
Ownership of the basic tenure in common law jurisdictions is only forfeited to the
State if there are no heirs following the death of an owner who fails to leave a will
– a circumstance which is extremely rare in any society.
According to the common law, physical abandonment coupled with physical

possession by another for a specified period of time, land may become the
property of someone other than the owner where the land is possessed adversely
to an owner by someone else for the necessary period of time and the owner fails
to exert his right and seek to evict the adverse possessor. But it will never become
State land by virtue of abandonment. The process of adverse possession which
results in the extinguishment of an owner’s title is clearly regulated in the law
with the circumstances under which it may occur and the necessary time periods
clearly specified. It does not depend in any way at all on the exercise of the
executive discretion of the State, as the loss of rights by abandonment are manifest
in Indonesian land law, and the tenure itself does not become extinct.
Misuse of land is regulated in the common law jurisdictions not through the
tenure or land law system but through other regulatory mechanisms such as
environmental law and planning and use laws; breaches of which do not result in
the extinction of the fee simple but which result in other penalties such as fines or
court injunction and damages awards.
1.16 Time Period of Abandonment

Perhaps the most remarkable omission from all of the Indonesian legislation
concerning the extinction of rights by abandonment, and one which compounds
the hazardous nature of Indonesian tenures, is the failure to specify the period of
28
time during which abandonment will result in the loss of the right. The lack of a
clear time period for the processes of abandonment to operate is another area of
uncertainty in the land law.
Articles 27, 34 and 40 of the Basic Agrarian Law which deal with the
extinguishment of the principal rights of hak milik, hak guna usaha and hak guna
bangunan and their elucidations do not mention any time period. Nor do the
provisions of the Government Regulation No 40 of 1996 Re Hak Guna Usaha, Hak
Guna Bangunan and Hak Pakai47 or their elucidations specify any time period (see
infra).
In the absence of the specification of the period of time during which a right must
be abandoned in order to result in its extinguishment under the provisions of the
Basic Agrarian Law and Government Regulation 40/1996, the only other guidance
is the adat law. But this does not assist because adat does not contain such time
periods.48
In his seminal work on Indonesian adat law, Ter Haar discusses the effect of time
on rights; particularly rights on land according to adat. According to adat law, there
are no definitive time periods set for the determination of abandonment. A right
may disappear “when the signs of land use have disappeared and the land is
again covered by forest”. Rights in respect of trees vanish if the marks which have
been cut into the bark have been recovered by the growing tree bark. Preferential
rights are lost when the prohibitive signs have disappeared. Phrases in local
languages to denote the time period which is requisite for a right to be lost
through the effluxion of time include “that the time has happened too long in the
past” and “it has faded because it happened too long in the past”.
According to adat law, rights on land can disappear “because of the abandonment
of the rights for a long time, or new rights created because of the real situation
which has happened for a long time which situation is in conformity with the
implementation of a certain rights. In adat law, the course of time and what has
happened during the time will always be calculated – after appropriate
consideration has been made; and no calculation is made on the exact number of
years.
Ter Haar observes that the assumption that limitation has in fact existed in the adat
law has caused a misunderstanding as if the time of limitation of thirty years or
47
See Articles 17, 35, and 55 of Government Regulation No 40 of 1996.
48
Per Herman Soesangobeng interview 16 November 1999.
29
ten or five years has been known as a public institution of the Indonesian people
in a certain legal environment.”49
In the context of a contemporary nation state, such principles do not assist in

achieving legal certainty in a concrete way. The application of adat law in a
modern city, for example leads only to more uncertainty. On the other hand, any
adoption of set periods of time in State legislation would contort the adat
principles so as to render them unrecognisable. This again demonstrates the
inadequacies of adat law as a basis for a modern land law and the need to move
away from adat in this area of the law.
What is also unsatisfactory about this aspect of the land law is that the
determination of whether or not a right has been lost through abandonment is that
there is no due process. Rather, it is a determination by the executive and without
just compensation. The land becomes State land and available for further disposal
by the executive without any intervening judicial process. There are no provisions
concerning appeals for judicial review of the administrative determinations of
land abandonment. Presumably, appeals to the State Administrative Court would
be possible but access the courts is impossible for most Indonesians and the
independence of the courts from the executive has been compromised throughout
the greater part of Indonesian history.
1.17 Government Regulation No 36 of 1998 Re Control and Utilisation of

Abandoned Land
This regulation governs in further detail abandoned land which is the subject of
hak milik, hak guna usaha, hak guna bangunan, hak pakai or hak pengelolaan (the right of
management) as well as abandoned land “the basis for possession of which has
been obtained but a right on which has not been obtained in accordance with the
applicable legal provisions”.50 It implements the provisions of the Basic Agrarian
Law referred to above which establish the principle of the loss of rights on land by
abandonment and the reversion of the land to the State. This regulation
demonstrates the unusual degree of control over land by the State and is another
source of fundamental insecurity of tenure of rights on land in Indonesia.
49
Per Ter Haar Asas-Asas dan Susunan Hukum Adat trans. K. Ng. Soebakti Poesponoto Pradnya Paramita
Jakarta 1994. in Chapter 12 The Influence of the Passage of Time.
50
This latter class of land seems to include land in respect of which an izin lokasi has been granted and the
land has been acquired from the previous right holders but in respect of which the izin lokasi holder has not
sought the grant of the necessary right.
30
There follows an overview of the main provisions of the regulation. Aspects of the
regulation which appear to be problematical or which expand the degree of
control beyond that which is granted to the State by the Basic Agrarian Law will be
included in this overview. Those latter provisions are beyond power and
exemplify not only the expansion of the State’s control but also a disregard for the
rule of law as contained in the Basic Agrarian Law itself which is apparent in other
aspects as well (such as failure to enact implementing provisions concerning the
creation of hak milik in accordance with adat land law, the failure to enact
implementing provisions concerning the transfer of adat rights and the failure to
abolish share-cropping).
It is instructive to note, firstly, that while express articles of the Basic Agrarian Law
provide that hak milik, hak guna usaha, and hak guna bangunan are cancelled and the
land reverts to State land by abandonment (Article 27.a.3 (hak milik), Article 34.e
(hak guna usaha), and Article 40.e (hak guna bangunan))51, there is no express
provision in the Basic Agrarian Law for hak pakai to be cancelled on this basis. That
provision only exists in this regulation and therefore appears to be contrary to the
Article 18 of the Basic Agrarian Law which states that rights can only be annulled
by an Act. Even so, hak pakai is included along with hak milik, hak guna usaha, and
hak guna bangunan in Article 3 which sets the criteria for determining when such
rights are annulled under the principle of abandonment.
Article 3 provides that land parcels with the status of those rights can be declared
as abandoned land where the land is “wilfully52 not used by the right holder…in
line with its condition or with the nature and purposes of the right in question or if
it not properly taken care of. The precise meaning of the words “condition…or
nature and purposes of the right” are not explicitly defined. Ordinarily, one
would expect to find definitions of these critical words in the legislation and the
omission of clear definitions further opens the door of executive discretion. This
leads to more uncertainty.
The addition of the words “or it not properly taken care of” takes this provision
beyond the Basic Agrarian Law in which the elucidation only states that the land is
51
See Government Regulation No 40 of 1996 Re Hak Guna Usaha, Hak Guna Bangunan and Hak Pakai Articles
17(1).e (hak guna usaha), Article 35(1).e (hak guna bangunan) and Article 55(1).e (hak pakai)
52
The land will not be deemed to be wilfully not used if the non-use is due to the economic circumstances of
the right holder in which case the Head of the Land Office shall “supervise” the right holder to help him use it
(Article 11) What supervision means is not clear. The “wilful non-use” criterion will also not apply where the
land has been sequestered in the course of a dispute (per Elucidation of Article 11).
31
abandoned if it is wilfully not used in accordance with its condition or with the
nature and purposes of the right. The additional words are not a mere elaboration
of the previous phrases but purport to give an additional ground upon which the
land can be considered to be abandoned. This is also inconsistent with Article 18
of the Basic Agrarian Law to the extent that it purports to result in the extinction of
a right pursuant to a law-making instrument which is not an Act.
Article 4 provides an additional basis upon which the rights can be treated as
abandoned in the case where land which is not intended to be subdivided is “not
used in accordance with its allotment as determined in the Spatial Use Plan which
was applicable at the time of the use of the land in question or the physical
development of the land in question started.” Similar objections to this provision
as beyond power may also be raised because this ground does not appear in the
Basic Agrarian Law. Moreover, spatial use plans may be reviewed and changed
from time to time and so the opportunity is opened by this provision for the
government to introduce new bases upon which rights may be lost through
abandonment.
Article 5 states another ground upon which land with the status of hak guna usaha
can be declared as abandoned; viz. where the land is not being cultivated in
accordance with the criteria concerning proper cultivation of agricultural land as
stipulated in the applicable regulations.
Similarly, Article 6 provides that land with the status of hak guna bangunan or hak
pakai which is meant to be subdivided….within the context of its utilisation…can
be declared as abandoned if it has not been subdivided for development
purposes. As a matter of principle, that private property rights might be
extinguished merely because no subdivision is effected after approval from the
subdivision authorities has been given is an extraordinary result. Practically, it
raises extra legal risks for developers which compound the market risks
associated with land development.
1.18 Procedure for Controlling and Utilising Abandoned Land

As noted above, further uncertainty arises from the lack of a clear time period in
the legislation during which a parcel of land must be abandoned before it can be
declared “abandoned”53. This depends on executive determination and the
discretion is given to the Minister. So while Article 9(4) states that for identification
53
See also discussion of this issue supra.
32
of abandoned land, it is necessary to take into consideration the time lapse
between the time of the acquisition of the right and the time of the identification
process which is regarded as reasonable for the identification process to proceed
further, paragraph (5) states that the time lapse shall be determined by the
Minister. As at the date of writing, this time period has not yet been specified.54
This again confers wide powers on the executive government which compound
state control and injects further uncertainty into the land tenure system.
Article 9(1) assigns this activity to the Land Office “either on its own initiative or
upon order of the Minister or the Head of the Provincial Office or on the basis of a
report from another government institution or from the people”. The Minister is
directed to establish an Assessment Team with the Head of the Land Office as its
leader and with representatives from the institutions related to the use of the land
parcel in question as its members. The Team is therefore entirely comprised of
members of the administrative agencies of the government; none of which can be
considered to be independent.
Once the determination is made that the land has been abandoned, a series of
administrative warnings is issued that the right holder must, within a certain
period, start to use the land in line with its condition or with the nature and
purposes of the granting of the right.
The administrative warnings, of which there are three, give the right holder a
period of one year in each warning to utilise the land in accordance with its
condition or the nature and purposes of the right or to take proper care of it.55 If
the right holder fails to respond in the necessary way to the third warning, the
Head of the Provincial Land Office makes a proposal to the Minister that the land
be declared as abandoned.56
Article 14 then allows the Minister to make the declaration but before doing so
must provide the right holder with an opportunity to transfer the land through
public auction within three months. If that does not happen, Article 15 then
confirms that a land parcel which has been declared as abandoned shall become
land which is directly controlled by the State.
54
Per Mr Anton Reinhart, National Land Law Adviser Interview 23 November 1999.
55
Article 12.
56
Article 13(4).
33
1.19 Compensation for Extinction of Rights on Abandoned Land
Article 15 provides that a right holder shall be paid compensation but the
compensation is only equivalent to the price which, on the basis of the relevant
evidence available, the party paid when it acquired the right. Where
improvements have been made, the amount of money which has been spent by the
right holder on “physical infrastructure or structures” shall be counted in
determining the compensation. The compensation must be paid by the party
which the Minister declares as the new right holder of the right on the land parcel
in question57.
The elucidation of Article 15(2) states that “any escalation has to be determined
using normal calculations but that “it must be kept in mind that the calculation of
compensation is intended to serve as a sanction”; as if the loss of the right and the
intervention of the State were not sufficient sanctions in themselves! The
compensation scheme established by this regulation in relation to abandoned land
can not be described as just compensation. It is explicitly articulated as intended
to be punitive. There is no independent valuation. There is no clear articulation of
the factor of value appreciation or of the extra value added by the improvements
to the land which usually exceeds the actual cost of the improvements.
The elucidation of Article 15(1) states another coercive action by the State: “The
former land-right holder..is no longer entitled to use it and must surrender it to
the party who has been designated by the Minister as the new right-holder.” This
extraordinary provision entails another wide and powerful discretion in the
executive agent of the State which should properly be exercised by the judiciary.
The extinguishment of legal rights, particularly property rights, in democratic
societies, is generally assigned to the judiciary which is independent of the
executive law enforcement and administration agencies of the State.
Article 11 provides that where the results of the identification show that the land
parcel in question is owned by an individual who is not capable of using it in line
with its condition, nature and purposes, because of economic constraints, the
Head of the Land Office shall propose that the individual be given some
supervision to help him utilise the land parcel in the land in question. This is the
basis of another administrative discretion to determine whether a person is
57
Article 15(1), (2).
34
incapable because of economic constraints. “Economically incapable” appears in
the elucidation but there is no elaboration on the meaning of this important term.
There are no provisions in the legislation in relation to appeals from the

determinations of the Assessment Committee or the Minister’s decision so it can
only be assumed that the right holder may, if he can, pursue his remedies through
the State Administrative Court. Having regard to the condition of the Indonesian
judiciary, the judicial system and the inaccessibility to the courts by the people, it
is highly unlikely that there would be an independent judicial review adverse to
the executive’s decisions.
The conclusion from the foregoing examination of this law is that the uncertainty
principle in Indonesian land tenures is further entrenched and significantly
elaborated by this government regulation.
1.20 Loss of Hak Milik and Reversion to State Control under other Laws
There are other provisions of the land law which extinguish hak milik and cause the
land to revert to the control of the State. Two regulations are of particular
notoriety. They are ministerial regulations which purport to implement some of
the conversion provisions of the Basic Agrarian Law; Regulation of the Minister
for Agrarian Affairs No 2 of 1960 Re The Implementation of Some of the Provisions
of the Basic Agrarian Law and Regulation of the Minister for Agrarian Affairs No 2
of 1962 Re Confirmation of Conversion and Registration of former Indonesian
Rights on Land.
1.21 Regulation of the Minister for Agrarian Affairs No 2 of 1960 Re The

Implementation of Some Provisions of the Basic Agrarian Law
This regulation deals with the rights on land which existed under the colonial land
laws.58 Under this regulation, land owned under colonial legislation reverted to
the State for failure to comply with the provisions of this regulation. Indonesian
citizens who had only Indonesian citizenship as at 24 September 1960 who
possessed land with the Dutch right of ownership (hak eigendom) were obliged,
within 6 months of that date to attend the Land Office and give clarification about
their citizenship. If the owner did not so attend or did attend but was unable to
58
Namely, hak eigendom, hak opstal and erfpacht, hak gebruik and vruchtgebruik , hak agrarische
eigendom, hak gogolan, pekulen or sanggan, hak concessie and sewa and “other rights”.
35
prove citizenship, then the hak eigendom was automatically converted into a hak
guna bangunan with a period of twenty years.59
Similar provisions applied to religious and social organisations,60 and hak eigendom
owned collectively by persons or corporate bodies. Although the regulation does
not expressly say so, the land, at the end of the term of the hak guna bangunan, falls
back to the State.
This regulation is still in force.61
1.22 Regulation of the Minister for Agrarian Affairs No 2 of 1962 Re

Confirmation of Conversion and Registration of former Indonesian
Rights on Land
Until its repeal by Regulation of the Minister for Agrarian Affairs No 3 of 1997, hak
milik could also be lost and the land revert to the State by the operation of
Regulation of the Minister for Agrarian Affairs No 2 of 1962 merely because the
holder failed to seek registration of the right.
Article 4 of this regulation provided that where there was a transaction with a right
on land, then an application for confirmation of conversion and registration had to
be submitted through the relevant land deed official to the head of the Land
Registration Office together with the deed which evidences the transaction. If the
transaction occurred through an auction, then the application had to be submitted
through the Head of the Auction Office.
Article 8 then provided that “in the case where a legal action as meant in Article 4
takes place in an area in which the implementation of Government Regulation No
10 of 1961 has started and no application for confirmation of conversion in made
for the legal action in line with the provisions contained in this regulation, the
right in question shall be regarded as a hak pakai having a validity of at most 5
years following the enactment of the Basic Agrarian Law, upon expiry of which the
land parcel in question shall become state land”.
While the validity of this regulation is questionable having regard to Article 18 of

the Basic Agrarian Law which provides that rights on land may only be annulled
“in the public interests, including the interests of the Nation and State as well as
59
Articles 1-4 of PMA No 2 of 1960.
60
Article 6 PMA 2 of 1960.
61
It was not repealed by PMNA3/1997. Confirmed in interview with Mr A Reinhart National Land Law Adviser
on 30 November 1999.
36
the common interests of the people….with due compensation and according to a
procedure laid down by Act”, it will never be known how many of the people’s rights
were considered and treated as extinguished by the administration during its
operation. One may reasonably assume that it was not a few.
1.23 State Control of other Land Under the Conversion Provisions of the
Basic Agrarian Law
Control of other lands was also assumed by the Indonesian State either as
successor to the colonial State or as the successor to rights owned by non-
indigenous entities. This included land which was the subject of hak erfpacht for the
large-scale plantation companies which was converted to a hak guna usaha with a
duration not exceeding 20 years. Hak erfpacht was the most complete right under
the Civil Code which could be acquired in someone else’s land and was like full
ownership except for its reversion after a period of years.
It was pursuant to the erfpacht regulations that the colonial state granted such
rights of 75 years to private foreign entrepreneurs in total disregard of the rights of
the indigenous owners of the land. Just as the Dutch ignored the rights of the
indigenous people in such circumstances, the new State, instead of returning the
land to its original indigenous owners, assumed control of it under these
conversion provisions. Where the owners of underlying rights of ownership from
which these lesser rights derived were not Indonesian citizens, any ownership
rights which they had before the enactment of the Basic Agrarian Law were
invalidated. The same observations apply to hak erfpacht and hak opstal in the
following paragraph.
Hak erfpacht for small-scale agricultural undertakings was cancelled upon the
enactment of the Basic Agrarian Law which meant that such lands immediately
became State lands.62 Concession and lease rights for large scale plantations were
converted to hak guna usaha with a period not exceeding 5 years.63 Hak opstal 64or
hak erfpacht for residential complexes were converted into hak guna bangunan with
a term not exceeding 20 years. Again, upon the expiry of such rights, the land
reverted to the State instead of to the original owners or their heirs.
62
Article III of the Conversion Provisions of the Basic Agrarian Law.
63
Article IV of the Conversion Provisions.
64
Hak opstal was the right to build and possess buildings on someone else’s land.
37
1.24 More Uncertainty for Hak milik
Article 22 of the Basic Agrarian Law provides that the creation of hak milik
according to adat law shall be regulated by Government Regulation. The
elucidation states that an example of the way in which hak milik is created
according to adat law is “pembukaan tanah” (the clearing of land)65. The methods of
creation of the right shall be regulated so that there will not arise matters which
are detrimental to the interests of the state or the public.
After 40 years, the government regulation still does not exist leaving a vacuum as
far as the creation of hak milik according to adat law is concerned.
Article 50(1) provides that further provisions about hak milik shall be shall be
regulated in an Act and Article 50(2) provides that further provisions about hak
guna usaha, hak guna bangunan, hak pakai and hak sewa untuk bangunan shall be
regulated in further legislation. While there has been a recent government
regulation on hak guna usaha, hak guna bangunan and hak pakai66, there is yet no
further provision on hak milik or hak sewa; again resulting in a legal vacuum and
further uncertainty in relation to these rights.
While Article 56 provides that “as long as the Act about hak milik referred to in
Article 50(1) is not enacted, then the provisions of the local adat law and other
provisions about rights on land which confer authority as or similar to the that
referred to in Article 20 (hak milik) apply as long as they are not in conflict with the
provisions of this Act”, whether or not a particular adat law right on land is in
conflict with the provisions of the Basic Agrarian Law can not be known unless
there is an authoritative and comprehensive examination of the relevant adat land
law which in turn must be itself be established followed by a comparison with the
provisions of the Basic Agrarian Law to determine any conflict and so the result is
still uncertainty.
1.25 Hak Milik on State Land

To acquire a hak milik on State land, an application must be made to the National
Land Agency in accordance with Regulation of the Minister of Home Affairs No 5
of 1975 Re Granting of Rights on State Land. The application must contain
information on, among other things, the evidential documents (if any) showing the
status of the land before it became State land, and be accompanied by the fee
(entry money).
65
This contradicts the elucidation of the pembukaan tanah right referred to in Article 16of the Basic Agrarian
Law which states that the clearing of land does not result in a right of ownership.
66
Peraturan Pemerintah No 40 Tahun 1996 Re Hak Guna Usaha, Hak Guna Bangunan and Hak Pakai
38
If the application is refused by the authorised official, then an appeal can be made
to the Minister. Ultimately, therefore, everything depends on the exercise of the
administrative discretion of the State. Even then if a grant of hak milik is made it
will revert to the State for abandonment which includes not just physical
abandonment but also use which is not in accordance with its character and
purpose discussed earlier. In addition, a right-granting decree will also be
cancelled for the reasons discussed below.
1.26 Cancellation of Decree Granting Hak Milik on State Land

If a decree granting the hak milik is granted, it specifies several obligations which
must be fulfilled by the grantee67. The decree states that “all consequences,
expenses, debts and damages which arise from the granting of this right, as well as
all actions for the possession of the land are the total responsibility of the grantee
of the right”. This is so even though the State receives substantial fees for the
granting of the right and acts as if it were the actual owner of the land by granting
a right on it. The grantee must pay the State land “entrance fee” and the
registration fees68. Boundary marks must be installed and maintained by the
grantee in accordance with the relevant regulation.69
The land must be used and put to good use in accordance with its allotment and
nature as well as the purpose for which the grant was made. Tax for the
acquisition of rights on land and buildings70 must be made at the latest within 9
months from the date of the grant.
Failure to fulfil any of the obligations set out in the right-granting decree will
result in its cancellation whereupon the land will fall back into the control of the
State. The decree will also be “revised as necessary” if it is subsequently
established that there is a mistake or error in the determination.71
67
See Surat Edaran Menteri Agraria/Kepala BPN No 500-2165-DIII 27 Mei 1999 Tentang Penyeragaman Bentuk
dan Naskah SK Pemberian Hak dan Pemberian Perpanjangan Hak Atas Tanah Dicta Three and Four of
Annexure 1.
68
The right is deemed to come into existence as from the date of registration at the Land Office Dictum 5 of
SEMA 500-2165-DIII Annexure 1 op. cit. supra.
69
Formerly, PMA No 7 of 1961 Re Land Registration Administration now PMNA No 3 of 1997 Re Provisions
for the Implementation of Government Regulation No 3 of 1997 Re Land Registration.
70
Undang-Undang No 21 of 1997 Re Bea Perolehan Hak Atas Tanah dan Bangunan.
71
Dicta 6, 7 and 8 SEMA 500-2165-DIII op cit supra.
39
It is not clear what happens in this regard where the land has been transferred to a
third party and the failure of the law to deal with this question is also
problematical.
1.27 Cancellation of Hak Guna Usaha, Hak Guna Bangunan and Hak Pakai
1.27.1 Hak Guna Usaha

Government Regulation No 40 of 1996 reiterates the nature of hak guna usaha. It is
a right which may only be granted by the State on State land and is limited in time.
Extensions and renewals are dependent on the exercise of discretion by the State
through the National Land Agency. Article 3 of that Regulation imposes
restrictions on the area of land which may be the subject of the right. The
minimum area is 5 hectares. The maximum which can be granted to an individual
is 25 hectares while the maximum which may be granted to a body corporate is
entirely at the Minister’s discretion “with due observance of the considerations of
the competent official in the business sector concerned bearing in mind the extent
required for the implementation of the most efficient enterprise in the sector
concerned”. Conditions may be imposed72 which, if not complied with, result in
the forfeiture of the right so that the land reverts to unencumbered State land 73.
Extensions and renewals are dependent on the further conditions the land is
“exploited properly in accordance with the conditions, nature and objective of the
granting of the right”74. The right holder is obliged to:
w conduct an enterprise in agriculture, plantation, fishery and/or livestock

breeding in accordance with the conditions as stipulated in the decree granting
the right;
w use the right himself “properly in accordance with the business feasibility
based on the criteria stipulated by the technical agency”75;
w develop and maintain the existing environmental infrastructures and land

facilities in the environment of the right;
72
Article 6(2) Peraturan Pemerintah No 40 Tahun 1996 Re Hak Guna Usaha, Hak Guna Bangunan and Hak
Pakai.
73
Article 17 PP40/1996.
74
Articles 8 and 9 PP40/1996.
75
Article 12(1) oPP40/1996.
40
w maintain the fertility of the land and prevent the destruction of the natural
resources and safeguard the preservation of the environmental capabilities in
accordance with the applicable regulations; and
w not delegate the exploitation of the land to another party except in cases where
it is allowed in accordance with the applicable regulations. 76
The right may be encumbered with the security right but the security right is void
if the right is terminated for failure to comply with any of conditions 77 which
leaves the security right holder in a rather vulnerable position.
If the right is void for failure to meet any of those conditions and is not extended
or renewed, the former holder must, at his own expense demolish the buildings
and objects on the land and surrender the land and plants existing on it to the
State.78
Some of the provisions of this regulation seem to rely on Article 28(2) of the Basic
Agrarian Law which provides that, where the area of land granted with a hak guna
usaha is 25 hectares or more, then it is granted on the condition that “adequate
investment shall be made and good corporate management techniques shall be
adopted, as appropriate, given the current developments in time”. These are
rather vague criteria and may change from time to time.
The conduct of a business on land with a right which is subject to such discretions
of the State and potential forfeiture adds considerably to the business risks.
1.27.2 Hak Guna Bangunan

Similar provisions apply to hak guna bangunan.79 The holder of a hak guna bangunan
“is entitled to control or use the land “for a certain period” or erect or have a
building for private purposes or for their business”80. The holder of the right must:
w use the land in accordance with the designation there of and the conditions
stipulated in the decree or agreement on the granting of the right;
76
Article 12(2) PP40/1996.
77
78
79
Articles 19 – 38 PP40/1996.
80
41
w properly maintain the land and the buildings and ensure environmental
conservation; and
w resurrender the land…to the State (or the hak milik/hak pengelolaan holder if the
right has been granted under such rights) after the hak guna bangunan has
become void.
The right will be invalidated if the holder has not met these obligations.81
The use of hak guna bangunan for residential or business purposes is also
problematical and does not assist in the achievement of incentives for long-term
investment and sustainable land use. The expectation that a holder of such a
limited right to invest a lifetime of savings or capital into land, the right over
which is both limited in time and subject to the peculiar conditions noted above,
defies both economic equity and logic.
The right holder can not be secure in the reality that the efforts of a lifetime of
struggle or enterprise which are more often than not in the form of real property
will benefit his/her descendant generations. The nature of these rights,
particularly when they exist on State land, also opens opportunities for official
corruption as right holders must return to the State and seek the extension or
renewal of their right. Extensions or renewals can only be made once and are
subject to the discretion of the “authorised official”. The right does not exist
perpetually or “as of right” as such a right ought.82
Some attempts have been made by the State to facilitate the transformation of hak
guna bangunan which has been granted for residential purposes (but not for
business purposes) into a hak milik but only for the limited classes of:
w simple and very simple houses (up to a value of approx. US$4500);
w houses purchased by public servants from the government; and
w land which has been granted with a hak guna bangunan or hak pakai for
residential purposes owned by Indonesian citizens the area of which is 600 m2
or less. 83
81
82
The same problems exist in relation to hak pakai. See Articles 39-58 PP40/1996.
83
KMNA No 9 Th 1997, No 15 Th 1997 No 1 Th 1998 Tentang Pemberian Hak milik Atas Tanah Untuk Rumah
Sangat Sederhana dan Rumah Sederhana; KMNA No 2 Th 1998 Tentang Pemberian Hak milik Atas Tanah
Untuk Rumah Tinggal Yang Telah Dibeli oleh Pegawai Negeri dari Pemerintah dan Instruksi Menteri Negara
Agraria No 4 Tahun 1998 Tentang Percepatan Pelayanan Pendaftaran Hak milik Atas Tanah Untuk Rumah
42
These efforts are merely in the form of administrative law-making instruments
which may be withdrawn at any time by the Minister and do not address the
fundamental problems described above. Application must still be made to the
land registration authority and the usual fees paid.84
Fees for the granting of the rights on State land are also at the discretion of the
Minister for Agrarian Affairs and the Minister for Finance85. Where the rights are
terminated for failure to comply with the conditions, the fees which have been
paid for the right are also forfeited to the State and are not refundable.86
1.27.3 Hak Pakai

Hak pakai is governed by similar provisions.87
1.28 Conclusion Re Government Regulation No 40 of 1996

The main conclusion which is compelled by the foregoing analysis of the
Indonesian rights on land is that they are uniquely structured and involve a high
level of insecurity. The powers of the State to annul tenures and titles are
extensive and discretionary. Failure to use the land as required, failure to
adequately invest or “adopt good management techniques in accordance with the
developments in time”, failure to subdivide, failure to comply with spatial use
laws, etc. will all result in the extinguishment of the right.
Such a system requires considerable revision and substitution by a rationalised

system which is more suited to modern times and in which the basic right on land
and derivative rights can not revert to the State except where there is no heir or no
will. Consideration of the introduction of an absolute ownership right along with
the dissolution of the rights of hak guna usaha, hak guna bangunan and hak pakai and
hak sewa untuk bangunan into a single and clear ownership or leasehold without the
peculiarities of these existing tenures are essential to overcome the problems
which flow from the existing system.
Tinggal; Keputusan Menteri Negara Agraria No 6 of 1998 Tentang Pemberian Hak Milik atas Tanah Untuk
Rumah Tinggal.
84
See, for example, Article 1 KMNA 6/1998.
85
See, for example, Articles 11(2) and 28(2) PP40/1996.
86
See Article 50(3) PP40/1996.
87
Articles 39-58 PP40/1996.
43
1.29 State Control Entrenched in the Basic Agrarian Law
The discretionary nature of entitlements to land rights in Indonesia is an
expression of the predominance of the State in land allocation. This predominance
also proceeds from an interpretation of the provisions of the Basic Agrarian Law,
namely, Article 2, which provides as follows:
(1) On the basis of the provisions contained in Article 33(3) of the

Constitution and of the things meant in Article 1 of this Act, the soil,
water and aerospace, including the natural resources contained therein,
are, at the highest hierarchical level controlled by the State in its capacity
as all the people’s organisation of powers.
(2) The State’s right of control as meant in paragraph (1) of this Article
provides the State with the following powers:
(a) the power to regulate and administer the allotment, use,

appropriation, and maintenance of the soil, water, and the aerospace;
(b) the power to determine and regulate legal relationships between
people on the one hand and the soil, water, and aerospace on the
other hand;
(c) the power to determine and regulate relationships among people as
well as legal acts concerning the soil, water, and aerospace….
Several subsequent Articles of the Basic Agrarian Law refer to this provision as their
basis. Article 4 states that it is on the basis of the State’s right of control as meant in
Article 2 that the State determines the types of rights to the surface of the soil,
which is called tanah (land) that can be granted to people…and corporate bodies.
Article 16 proceeds to further implement Article 4 by setting out the types of
tenures discussed earlier in this paper. Articles 20 – 48 are also based on the
power of the State’s control over land.
Article 8 also states that it is on the basis of the State’s right to control as meant in
Article 2 that it regulates the acquisition of the natural resources which are found
in the soil, water and airspace. Pursuant to this provision, legislation has been
enacted in relation to mining and forestry under which concessions to mine and
take timber are granted. Articles 9, 11, 13, 14, 17 also refer expressly to the
provisions of Article 2. A total of 36 of the Basic Agrarian Law’s 58 provisions
relate directly or indirectly back to Article 2. From those provisions, particularly
Articles 27, and 34 and 40 concerning the extinction of hak milik, hak guna usaha and
hak pakai through abandonment and the consequent reversion of the land to the
State’s control, there is an extraordinary level of State control over land.
44
This power is further explained in the General Elucidation which, amongst other
things, states that:
“The State’s power..concerns all the soil, water and aerospace including parts
of them which are already possessed by individuals under certain rights. The
State’s power over land which is already possessed by an individual under a
certain right is defined by the contents of the right..and this means that the
State’s power…ends at the point to which it gives the individual in question
authority to execute the right….The State’s power over land which is not
possessed under a certain right by an individual or another party is broader
and full…The State can grant such land to an individual or body corporate
with a certain right…”.
The State’s control continues to be extensive over all of the rights which are lesser
than the right of ownership because they are limited in time and their nature and
extensions and renewals must be continually sought from the State. Even the
“fullest and most extensive right” of ownership, can be lost to the State through
mechanisms other than expiry by effluxion of time.
The problem of the State’s right of control is further manifest in certain legislative
definitions of “State land” and “land directly controlled by the State”. For
example, Article 1(1) of Government Regulation No 24 of 1997 defines “State land
or land directly controlled by the State” as “land which is not possessed under a
certain land right”. “Land right” is further defined as “the rights mentioned in
Article 16 of the Basic Agrarian Law”. It seems not unreasonable to conclude that
rights which have not been formally converted to the statutory rights under the
Basic Agrarian Law are to be treated as no rights at all. So land upon which exist
adat rights will be treated as State land. At least two ministerial regulations,
PMA2/1960 which is still in operation and PMA 2/1962 which operated for 35
years, treated unregistered adat hak milik rights as lost or converted to lesser rights
of set periods upon expiry of which periods that land was treated as State land
(see discussion of these regulations earlier). Unregistered or unconverted adat
rights will be ignored for the purposes of that definition of State land. That means
that the expanse of State land was been vastly extended because, again, most land
owners did not seek registration.
It has been noted that “if this is the definition of state land (that is, as defined in
Government Regulation No 24 of 1997 (PP24/1997)), this means that a land parcel
which does not have a right on it is state land. What is regulated in Article 1(3) of
PP 24/1997 is substantively not different from the principle of domein as meant in
Article 1 of Agrarisch Besluit 1870. As may have been known, the principle of domein
stipulated that unless it had a proven right on it, a land parcel was the domein
45
(belonging) of the State. It is this principle of domein which the Basic Agrarian Law
seeks to do away with.”88
A definition of state land is also found in another regulation, namely, Government

Regulation No. 8 of 1953 Re The Control of State Land, which reads in its Article
1(a) that “State land is land which is directly controlled by the State.” This
definition does not really explain what is meant by “land which is directly
controlled by the State” but merely replicates what is said in the Basic Agrarian
Law. The failure to clearly define the concepts of “State land” or “land which is
directly controlled by the State” leads to additional uncertainty in the land law;
although in practice, it means that the State acts as owner of most land.
There is a curious argument which is articulated in the elucidation of the Basic

Agrarian Law as well as regulations and their elucidations dealing with the
granting of rights over State land that the State is, through its direct control, not the
owner of the land. But one does not have to be the owner in order to act as if it
were the owner. Whatever the confounding effect of this legal fiction is, the fact
remains that the State does act as the owner of the land over which it grants rights
and it receives valuable consideration when it does so; although this is referred to
“uang pemasukan” (entry money”) or recognitie rather than consideration for the sale
of the right.
If equitable and efficient land markets are ever to develop in Indonesia,

accelerated registration of rights on land will not suffice. The predominance of the
State must be abandoned in favour of far more secure and rationalised tenures
and market allocation of land. The State’s control must be whittled back to allow a
conventional land market to operate and to achieve security of tenure.
1.30 Why Security of Land Tenure is Indispensable – Economic

Development and Protection of Indigenous Land Tenure
Insecure property rights are said to inhibit use and investment in both rural and
urban land. They “hinder good governance and the emergence of….civil
society”.89 Without effective access to property, economies are unable to progress
and sustainable development can not be realised. Better defined property rights
lead to more efficient and sustainable use of land resources and improvement in
88
Reinhart A ILAP National Land Law Adviser Annotations on Government Regulation No. 24 of 1997 Jakarta
1999. See also the revocation provisions of the Basic Agrarian Law.
89
Bathurst Declaration on Land Administration for Sustainable Development Report of the Workshop on Land
Tenure and Cadastral Infrastructures for Sustainable Development United Nations International Federation of
Surveyors Bathurst October 1999 at p. I.
46
the definition of those rights is achieved through improvements in the land tenure
system and in the dissemination of information on those rights. Land is
incontrovertibly an asset for economic development. As an object with secure
rights, it has the capacity to underwrite and accelerate economic development
through the utilisation of interests in land as marketable commodities. The
capacity of land, or, more strictly, rights and interests in land, to generate wealth,
to attract capital investment and for creating opportunities for the development of
the financial sector are critical to sustainable economic and social development.
However, to stop there in the analysis of the problem is to look at only one side of
the problem. The commoditisation and individualisation of land rights may not
support sustainable development in pre-capitalist societies but threaten their
existence. In that social context, treating land rights merely as a prima facie
commercial commodity and imposing that conceptualisation from above may not
be acceptable to those societies. These two dimensions of sustainable
development clearly generate conflict and it is the fine balancing of these two
competing conceptualisations of land which must also attend the central
contemporary debate on land reform issues.
In Western societies, the balance between the demands of the market economy for
commoditised land rights and the rights of indigenous peoples in relation to land
has only recently been addressed in a just and equitable way. It was only after
centuries of denial, genocidal policies, legal lies and cultural prohibitions that the
Australian polity finally addressed the past injustices perpetrated upon the
Australian indigenous peoples by acknowledging their just claims to rights on
land which had existed since time immemorial and which had been systematically
denied for two centuries. The rights of the Australian indigenous people in
relation to their land are now enshrined in the common law and national and state
legislation.90
The recent Bathurst Declaration on Land Administration for Sustainable

Development calls for a commitment to providing effective legal security of
tenure and access to property for all men and women, including indigenous
peoples and those living in poverty.91 The lack of security of tenure and the failure
of policy and law-makers to protect the land rights of indigenous people are
identified as two of the most serious problems facing the relationship between
land and people.92
90
Mabo v The State of Queensland (No 2) (1992) 66 CLR 186, Native Title Act 1993 (Commonwealth),
Aboriginal Land Rights Act 1983 (New South Wales), Native Title Act 1994 (New South Wales)
91
Bathurst Declaration op. cit. at p. II.
92
Bathurst Declaration op. cit. at p.2
47
Governments all over the world have committed themselves to the resolution of
these problems. The vision of land administration systems is to provide security
of tenure. Historically, land administration systems have not dealt with or have
not properly dealt with geographical areas under which customary land tenure or
where informal land tenure arrangements have existed. Customary land tenure is
a legal tenure system based on customary law. Informal tenure is frequently
considered to be illegal in that it is not recognised by either statutory State law or
customary law. Land administration systems must be developed to reflect these
realities always bearing in mind the goal of security of tenure. The question of the
security of the rights of Indonesia’s indigenous peoples is the subject of Chapter
IV.
48
2. CHAPTER II - REGISTRATION OF LAND RIGHTS AND SECURITY OF
TITLE
It was noted at the beginning of this analysis that there is a difference between
tenure and title. The foregoing analysis of the Basic Agrarian Law focused on the
tenures which exist according to that law from the perspective of the degree of
legal security which they have from interference and forfeiture to the State. Apart
from the importance of the legal security of land tenures, it is also necessary to
consider the impacts of the title registration system on the issue of security of title.
The Indonesian title registration system is a negative registration system; although

the provisions of Article 19 of Basic Agrarian Law do not necessarily compel this
conclusion. Such an assertion is based upon beguiling reasoning. The conclusion
that the system is a “negative publication system” is based on the words in Article
19(2)(c) which provides that registration includes “[t]he issue of certificates of
rights on land, which will be valid as a strong evidence.” It is argued that because
the certificate is only strong evidence, then the system can not be a positive
system. Such a conclusion flows from a misunderstanding of the nature and
function of a certificate in a land registration system. It is also inconsistent with the
repeated claim in the Basic Agrarian Law of legal certainty.
No probative value attaches to a certificate. It is a document which is outside the

control of the land registration administration system; being handed over to an
owner or other person entitled, by law, to the physical possession of it. It is the
records of the registration authority (in the Indonesian case, the buku tanah), and
not the certificate, which proves ownership. Even in a positive system, the
certificate can never be conclusive evidence of anything. The conclusion that the
system is negative simply because the certificate is only strong (and therefore not
conclusive) evidence ignores the opening words of the Article which are: “In order
to guarantee legal security, the government shall conduct land registration…” The
meaning of the words “[I]n order to guarantee legal security” are fairly clear in
their natural and ordinary meaning and are consistent with the nature of a positive
system not a negative one. The Part C Report “Indonesian Land Law and Tenures
Issues on Land Rights” notes that “usually, registration of land is a phrase
associated with positive registration systems”. 93
93
At page 4-20 op. cit.
49
Furthermore, the elucidation of Article 19 of the Basic Agrarian Law states: “That
this law seeks to provide legal certainty concerning land rights is evident from the
provisions in it which regulate land registration. Articles 23, 32 and 38 (which
impose an obligation on right holders to seek registration of their rights) are
intended to enable them to obtain legal certainty concerning their rights”.94
2.1 Alternatives to Negative Title Registration System

In order to compare the alternatives which are available for registration, it is
instructive and necessary to consider the fundamental features of the various
systems.
2.2 Types of Registration Systems

There are two essential types of registration systems: deeds registration and title
registration. Registrations systems are also divided into systems with negative
effect wherein registration does not provide any guarantee for the registered title
(and in some systems such as Indonesia’s, only provides “strong evidence” of
title) and systems with positive effect. In the latter case, the administrative act of
registration confers “a higher degree of security of title and protection against
adverse claims or, as in the case of the Torrens system, creates and protects the
title absolutely”95. Whereas deeds registration can be positive or negative, title
registration is always positive.
2.3 Deeds Registration Systems

In deeds systems, the deeds themselves are the source of the title and its transfer
and registration is not essential but only for convenience although, in developed
deeds systems, the benefit of registration is that the registered deed prevails
against unregistered or later registered deeds. Conveyancing is complicated and a
transaction requires investigation of the historical chain of deeds and the official
registration records. This historical investigation was theoretically required to
trace back to the original grant from the state but eventually was limited to what is
described as a “good root of title”.96
94
Per the General Elucidation Part IV.
95
Save where the registered owner has participated in a fraud.
96
A good root of title is a deed evidencing a transaction made between the then purported owner with an
unrelated party for the market value of the land which has been accompanied by a thorough investigation of
the title at the time of that transaction and all subsequent documentary devolutions of the title up to the time
of the present transaction.
50
The deed operates to transfer title to a new owner who has rights enforceable
against third parties. Registration enhances the legal consequences of the deed as
the deeds system usually includes complex rules to determine priorities between
competing interests. But registration does not otherwise cure defects arising from
fraud, forgery or mistake.
2.4 Priority Rules in Deeds Registration Systems

The establishment of a secure title is not of itself sufficient to address the critical
issues associated with the acquisition of title to land. In addition, rules of law
known as priority rules were also developed to determine disputes between
competing interests in the same parcel of land. If two or more interests are granted
in the one parcel of land, how is priority between them determined? In the absence
of rules developed by the judicial system, legislation is necessary to enable
priority between competing interests to be determined, generally, by the order in
which the instruments embodying those interests are registered.
A comprehensive priority rules structure does not exist in the Indonesian land law
system. One might have reasonably expected to find some rules about priorities in
Government Regulation No 24 of 1997. However, that regulation is silent on this
issue. There is some attention to the priorities problem in Law No 4 of 1996 Re
Security Rights on Land and Land-Related Objects. Article 5(2) provides that, in
the case where a security title object is encumbered with more than one security
title, the degree of importance of each security title shall be determined according
to the date of its registration with the relevant Land Office. However, Article 5(3)
further provides that, in the case where more than one security title on the same
object are registered on the same date, the degree of importance of each of the
security titles in question shall be determined according to the date of the making
of the deed on security title conveyance. Where the deeds are made on the same
day, then the elucidation states that their priority is determined on the basis of the
serial number of the respective security right conveyance deed.
In the absence of a comprehensive structure for priority rules, there is a clear need
for legislation which should be embodied in a new basic land law or a revised
government regulation on registration.
51
2.5 Relevance of Registration in Deeds Registration System97
The deeds registration legislation does not require registration as a condition
precedent to the validity of the deed.
However, registration may give an interest priority over a competing interest.

Prior to the introduction of the legislative scheme concerning priorities according
to the order in which competing interests are registered, the rule was that, where a
land owner sold land to one person and then later purported to sell the same land
to another person, then the person to whom the first sale had been made would
gain priority and therefore protection under the law in a competition between the
two competing purchasers. The principle here was that the transfer to the second
purchaser failed because “he that does not have can not give”98.
That priority rule was modified by the legislation so that if the second purchaser
registered his deed before the first purchaser and did not have notice of the first
sale, then his interest would prevail over the earlier one. Thus, in conferring
priority, registration may give a deed an operation it would not have apart from
registration. Under the original priority rule, the second conveyance would have
been ineffective to transfer title. Under the rules as modified by the deeds
registration legislation, the second conveyance, if it is registered first and is not
tainted with fraud or notice, is effective to pass the legal title.
Except for priority purposes, however, the legislation does not give a registered
deed any greater efficacy that it otherwise would have. So, registration will not
render operative a deed impugned for fraud, mistake or forgery. Such deeds are
liable to be set aside by the court consistent with the negative nature of the deeds
registration system.
2.6 Title by Registration – The Torrens System

By contrast to deeds registration systems, in title registration systems, title to the
land derives not from the execution of the document to be registered but from the
event of registration itself. Title rests upon the act of the state registration official
in registering an instrument evidencing a transfer of title or the creation of a
derivative interest rather than upon the act of the party executing the instrument. It
is not the parties who effectively transfer the land but the state.99
97
Per Butt P Land Law Op. Cit. pp. 648-673.
98
In English common law, this rule is known as the nemo dat rule (nemo dat quod non habet).
99
Per Butt op. cit. at pages 692-696.
52
Priorities in Title Registration Systems
Registration also determines priority between registered dealings. Their priority
is determined by their order of registration not by the date of execution. Order of
registration is determined by the sequence in which the documents are lodged of
lodgment with the registration authority in a form which entitles the instrument to
be registered (registrable form100).
2.7 Indefeasibility
The foundation of the Torrens system is the principle of indefeasibility of title. An
indefeasible title is one which can not be set aside on the ground of a defect
existing in the title before the interest was registered. The following illustrates the
principle. A is the registered owner of a right. B steals the certificate of title and,
posing as A, sells the land to C, forges A’s signature to a transfer and hands to C
the certificate of title and transfer. C, who is ignorant of the fraud, then becomes
registered as the owner. Upon registration, C acquires a title that A can not set
aside. In contrast, if the land had been governed by the deeds registration system,
A could have set aside C’s title and registration would not have cured the forgery.
The indefeasibility provision of the New South Wales Real Property Act 1900 is
section 42 which provides as follows:
42 Estate of registered proprietor paramount
(1) Notwithstanding the existence in any other person of any estate or

interest which but for this Act might be held to be paramount or to
have priority, the registered proprietor for the time being of any
estate or interest in land recorded in a folio of the Register shall,
except in case of fraud, hold the same, subject to such other estates
and interests and such entries, if any, as are recorded in that folio,
but absolutely free from all other estates and interests that are not so
recorded except:
100
Section 36(6)(b) Real Property Act 1900 (New South Wales). “A dealing shall be deemed not to be in
registrable form:
(i) if, notwithstanding anything done under section 39 (3), the dealing requires a material correction, alteration
or addition,
(ii) unless the Registrar-General has authority to use, for the purpose of registering the dealing, the relevant
certificate of title, or
(iii) unless the dealing is in the approved form....”
53
(a) the estate or interest recorded in a prior folio of
the Register by reason of which another
proprietor claims the same land,
(a1) in the case of the omission or misdescription of
an easement subsisting immediately before the
land was brought under the provisions of this
Act or validly created at or after that time under
this or any other Act or a Commonwealth Act,
(b) in the case of the omission or misdescription of
any profit à prendre created in or existing upon
any land,
(c) as to any portion of land that may by wrong
description of parcels or of boundaries be
included in the folio of the Register or registered
dealing evidencing the title of such registered
proprietor, not being a purchaser or mortgagee
thereof for value, or deriving from or through a
purchaser or mortgagee thereof for value, and
(d) a tenancy whereunder the tenant is in possession
or entitled to immediate possession, and an
agreement or option for the acquisition by such
a tenant of a further term to commence at the
expiration of such a tenancy, of which in either
case the registered proprietor before he or she
became registered as proprietor had notice
against which he or she was not protected:
Provided that:
(i) The term for which the tenancy was
created does not exceed three years, and
(ii) in the case of such an agreement or
option, the additional term for which it
provides would not, when added to the
original term, exceed three years.
(iii) (Repealed)
(2) In subsection (1), a reference to an estate or interest in land recorded

in a folio of the Register includes a reference to an estate or interest
recorded in a registered mortgage, charge or lease that may be
directly or indirectly identified from a distinctive reference in that
folio.
In addition, unlike the deeds registration system where notice of an earlier interest
will disentitle the holder of an registered interest to deny an earlier interest, even a
54
person who has notice of an unregistered interest and who registers with the
intention of destroying that interest is safe. Notice is not fraud. The system permits
the holder of unregistered interests to freeze the register by the lodgment of a
caveat which prevents registration without the consent of the person lodging the
caveat.101
A feature of the Torrens system is that registration is not compulsory. No where in

the legislation is there any obligation to register. The system is not based upon
compulsion or punishment for failing to register. But if the owner of an interest
does not register, he does not obtain the benefit of indefeasibility and his interest
will be defeated by a later registered interest. In short, it is pure folly not to
register. Indeed, compulsion can never be a sound basis for achieving the goals of
registration system maintenance. It is presently the only basis upon which
maintenance is sought to be achieved under the Basic Agrarian Law and
Government Regulation No 24 of 1997 Re Land Registration. Compulsion has
failed to achieve maintenance even where the threat has been the extinction of the
right in respect of which registration was not sought such as that contained in
Regulation of the Minister for Agrarian Affairs No 2 of 1962 (see discussion supra).
2.8 Registration in the Indonesian System

The title by registration system offers real and complete security of title and
protection from claims from persons who are not recorded on the Register. Deeds
registration systems vary in the effect they give to registration because, essentially,
the deeds are effective to pass the title before registration102. As noted above, the
land title registration system mandated by the Basic Agrarian Law is a negative
system. The Supreme Court of Indonesia has also confirmed that the provisions of
the government regulation on land registration are merely administrative and
compliance with them is not necessary for a valid land conveyance103. The
Supreme Court thereby confirmed the validity of adat transactions which do not
rely at all on formal registration structures. This, of course, has rather drastic and
obvious consequences for the administration of land right ownership record.
Registration is not required in order that title legally pass to the transferee, and, if
a transaction is registered, it does not confer any real additional security on the
right holder.
101
Indonesian Land Law and Tenures Issues in Land Rights op. cit. at page 4-11.
102
Ibid at p. 4-13.
103
Decisions of the Mahkamah Agung 16 June 1976 No 1082/K/Sip/1976; 19 September 1970 No
123/K/Sip/1970, 12 June 1976 No 952/K/Sip/1974.
55
This problem has been realised since before the substantive commencement of
ILAP. In the discussion in the Project Preparation Report104, it is noted that the
objective to register has not been facilitated by the Indonesian courts which hold
that the absence of registration does not make a transaction invalid and that the
legal validity of the transaction depends on its requirements; that is, the payment
of cash in the presence of a suitable witness in accordance with adat.
It was further noted in the ILAP preparation report that an obvious means of
overcoming this problem is to legislate “to defer the passing of title to the moment
of registration” but that “a measure of that nature would be in direct conflict with
adat law” and would therefore “present too great a quantum leap to gain
acceptance”. What that argument fails to recognise is that adat has already been so
modified by the Basic Agrarian Law and, where the Basic Agrarian Law does
make provision for the implementation of adat, successive administrations have
failed for forty years to implement the very clear directives in the Law such as
Articles 22 concerning the government regulation on the creation of hak milik by
way of adat law and Article 26 concerning the government regulation on
transactions with hak milik in accordance with adat that this argument is specious.
In any event, the Project Preparation Report went on to recommend a structure

which was supposed to capture transactions with land by forcing parties to resort
to an overly formal and monopolistic mechanism in the form of the Land Deed
Official105 which is also in clear contradiction to the tenets of adat. Government
Regulation No 24 of 1997 Re Land Registration institutionalised this mechanism106
which, rather than ensuring capture of transactions with the millions of rights
which will be registered under this project, its demonstrable result has been quite
the opposite; failure to achieve system maintenance.
2.9 Incentives to Seek Registration

It has been noted that “all registration schemes must contain strong incentives to
achieve a universe of registration of transactions” and “a registration system
which fails to track…transactions..will fail”107. If legal title passes without
registration, as it does in the existing system in Indonesia, then there is no real
incentive to register.
104
At p. 275. Annex 8 Land Law.
105
Ibid. at pp. 275-276.
106
See Articles 37-40 Government Regulation No 24 of 1997 and the implementing regulations concerning
Land Deed Officials: Government Regulation No 37 of 1998 Re Regulation of the Position of Land Deed
Officials and Regulation of the Minister for Agrarian Affairs No 1 of 1996 Re Formation of Land Deed Officials.
107
Indonesian Land Law and Tenures Issues in Land Rights op. cit. at page 4-13.
56
In positive systems of registration, the incentive to register is the incentive to
become the legal owner. Without registration, a person who takes a transfer is not
recognised as the legal owner of the land.
By way of illustration, the New South Wales Real Property Act 1900, in addition to
the indefeasibility provisions, contains the following:
41 Dealings not effectual until recorded in Register
(1) No dealing, until registered in the manner provided by this

Act, shall be effectual to pass any estate or interest in any land under
the provisions of this Act, or to render such land liable as security for
the payment of money, but upon the registration of any dealing in
the manner provided by this Act, the estate or interest specified in
such dealing shall pass, or as the case may be the land shall become
liable as security in manner and subject to the covenants, conditions,
and contingencies set forth and specified in such dealing, or by this
Act declared to be implied in instruments of a like nature.
(2) Repealed.
The indefeasibility provisions and these provisions comprise the central pillar of
the positive system as embodied in the Torrens legislation in New South Wales.
They system is further enhanced by the following provision which bars recovery
of land registered under the Real Property Act 1900:
124 Registered proprietor protected against ejectment except in certain

cases
(1) No proceedings in the Supreme Court or the District Court
for possession of any land, or other proceedings or action
for the recovery of any land shall lie or be sustained
against the person registered as proprietor thereof under
the provisions of this Act, except in any of the following
cases, that is to say:
(a) The case of a mortgagee as against a mortgagor in
default.
(b) The case of a chargee or covenant chargee as against a
charger or covenant charger in default.
(c) The case of a lessor as against a lessee in default.
(d) The case of a person deprived of any land by fraud as
against the person registered as proprietor of such land
through fraud, or as against a person deriving
57
otherwise than as a transferee bona fide for value from
or through a person so registered through fraud.
(e) The case of a person deprived of, or claiming, any land
included in any folio of the Register for other land by
misdescription of such other land, or of its boundaries
as against the registered proprietor of such other land
not being a transferee thereof bona fide for value.
(f) The case of a registered proprietor claiming under a
folio of the Register created before a subsequent folio
of the Register was created, in any case where the two
folios were created for the same land.
And in any case, other than as aforesaid, the production of the folio of the
Register, if it is a manual folio, or the production of a computer folio
certificate, relating to the folio, if it is a computer folio, shall be held in
every Court to be an absolute bar and estoppel to any such proceedings or
action instituted before the production of the folio, if it is a manual folio, or
before the time specified in the computer folio certificate, if it is a computer
folio, against the person named in that folio or certificate as seised of or as
registered proprietor or lessee of the land therein described, any rule of law
or equity to the contrary notwithstanding.
In addition to the near-absolute security afforded to registered title holders by the

positive system, the Torrens system also provides compensation from the Sate for
losses caused by the principles contained in the above provisions as well as for
losses caused by errors in the register caused by the officials of the registration
authority.
126 Compensation for party deprived of land

(1) Any person deprived of land or of any estate, or interest in land:
(a) in consequence of fraud, or

(b) through the bringing of such land under the provisions of this
Act, or
(c) by the registration of any other person as proprietor of such land, estate,
or interest, or
(d) in consequence of any error, omission, or misdescription in the Register,
may bring and prosecute in any Court of competent jurisdiction an
action for the recovery of damages.
58
(1) An action under subsection (1) shall, in any case in which the land
to which the action relates has been included in two or more folios of the
Register created under Part 3, or a folio of the Register has otherwise
incorrectly been created under Part 3, be brought and prosecuted
against the Registrar-General as nominal defendant and, in any other
case, shall, subject to subsections (3), (4) and (5), be brought and
prosecuted against the person:
(a) upon whose application the land was brought under the provisions of
this Act,
(b) upon whose application the erroneous registration was made, or
who acquired title to the land, or the estate or interest therein, through the
fraud, error, omission or misdescription.
(3) In every case in which the fraud, error, omission, or misdescription

occurs upon a transfer for value, the transferor receiving the value shall be
regarded as the person upon whose application the transferee was recorded
as registered proprietor in the folio of the Register.
(4) Except in the case of fraud or of error occasioned by any omission,

misrepresentation, or misdescription in the person's application, or in any
instrument executed by the person, the person upon whose application
such land was brought under the provisions of this Act, or such erroneous
registration was made, shall, upon a transfer of such land bona fide for
value cease to be liable for the payment of any damages which might have
been recovered from the person under this section.
(5) In any of the following cases, that is to say:

(a) where such person ceases to be liable for the payment of damages as
aforesaid, or
(b) when the person liable for damages under this section is dead,
bankrupt, or insolvent, or cannot be found within the jurisdiction,
such damages with costs of action may be recovered out of the Torrens
Assurance Fund by action against the Registrar-General as nominal
defendant.
127 When actions may lie against the Registrar-General as nominal

defendant
59
(1) Any person sustaining loss or damages through any omission, mistake,
or misfeasance of the Registrar-General or any of the Registrar-General's
officers or clerks in the execution of their respective duties under the
provisions of this Act, or by the registration ….. of any other person as
proprietor of land, or by any error, omission, or misdescription in the
Register, and who by the provisions of this Act is barred from bringing
proceedings in the Supreme Court or the District Court for possession of
that land, or other proceedings or action for the recovery of such land,
estate, or interest or to whose claim every such proceedings or action
would be inapplicable may, in any case in which the remedy by action for
recovery of damages as hereinbefore provided is inapplicable, bring an
action against the Registrar-General as nominal defendant for recovery of
damages.
2.10 Deferred Indefeasibility v. Immediate Indefeasibility

In the history of the development of the concept of indefeasibility by the courts in
interpreting the positive legislation implementing the Torrens system in
Australian jurisdictions, two theories have struggled for predominance. The first
is “immediate indefeasibility”. The other is “deferred indefeasibility”. Generally,
the theory of immediate indefeasibility has ultimately prevailed
An illustration of the way in which the positive title registration system operates
to confer indefeasibility is as follows. A is the registered proprietor of the land. B
steals A’s certificate of title and, posing as A, sells the land to C. B forges A’s
signature to a transfer of the land to C and hands the certificate of title to C along
with the forged transfer. C, who is ignorant of the fraud, then becomes the
registered proprietor. Upon registration, C acquires a title that A can not set aside
by seeking an order from the court. C’s title is immediately indefeasible. In
contrast, if the land had been under a deeds registration negative system, A could
have C’s title set aside by the court. Registration of the deed would not have cured
the forgery. The result of immediate indefeasibility may seem harsh towards A,
who loses the land; but it is a necessary consequence of the theory of immediate
indefeasibility. A is left only with a personal action against B or, if the positive
system is accompanied by a compensation provisions and certain circumstances
such as if B is dead, bankrupt, can not be found in the jurisdiction, a right to
compensation from the assurance fund.
The assurance fund mitigates this otherwise harsh effect of the positive system.
But it should be remembered that the positive system need not necessarily be
accompanied by a compensation scheme. As noted above, the negative system
also has the harsh effect of the innocent purchaser’s registered title being set aside
rather than the extinguishment of the defrauded previously registered owner’s
60
title. But that harshness is not exclusive to the Torrens system. It also exists in the
negative system which casts the burden of losses caused by fraud on the innocent
registered owner who loses both title to the land as well as the valuable
consideration which was paid to the fraudster and the defrauded party has no
remedy or compensation unless he carried title insurance.
An objection raised to the theory of immediate indefeasibility is that it effectively

gives operation to a transfer which, because of the fraud, ought not to be given
effect to. An earlier theory developed just after the introduction of the Torrens
system showed a reluctance by the judiciary to accept the consequences of
immediate indefeasibility and the theory of deferred indefeasibility was
advanced. Under the theory of deferred indefeasibility, A could seek the court’s
order to set aside C’s registration in the circumstances described above. A would
not lose the right to have his name restored to the Register as proprietor until both
C had become registered and a third party (D), acting on the existing state of the
Register (showing C as the registered proprietor) had purchased bona fide for
value from C and become registered, C’s title, though not itself indefeasible,
would form the basis of an indefeasible title in D. Essentially, where title was
claimed under an instrument that was void or voidable, registration of the
claimant as proprietor did not overcome the defect. Indefeasibility of title was
deferred until the next proprietor was registered.108
The modification of the theory of immediate indefeasibility by the deferred

indefeasibility theory may be more suitable as a transitional step towards an
immediate indefeasibility system as it permits recovery of the land where its
alienation from the true owner has been effected through a forgery and the title
has not been passed on to another innocent purchaser.
2.11 Indemnity and Assurance – The Torrens Positive System

It is important to note that the positive system of registration can not, at the initial
stages, be accompanied by title assurance or title insurance because the system
would be quickly bankrupted by claims109. Insufficient time has been provided for
an in-depth analysis of this problem. It has been analysed in the Part C Report and
the conclusions in that report are respectfully adopted.
What is important to note is that “security of title should not be confused with title
assurance or insurance. Insurance is not a substitute for security of title.
Registration could theoretically offer title security without an insurance system.
108
Per Butt op. cit. pages 695 – 698.
109
Indonesian Land Law and Tenures Issues in Land Rights op. cit. at p 4-28.
61
No Torrens system does this, for the good reason of seeking a reasonable balance
between the high level of certainty of interests on the register and compensation
for losses caused by the high level of security afforded to registered and later
registered interests”.110
2.12 Registration and Law Reform

The Part C Report Indonesian Land Law and Tenures – Issues in Land Rights
notes that “a good registration system aims at creating information about land for
the State and information about titles for the public for land use and land trading”
but “that a focus on mechanical registration is too narrow. Good governance
requires a systemic and fair balance between the powers of the State over land and
the rights of owners.” 111Even if an exact record of land ownership is initially
created, security of ownership only comes about when land registration is
combined with land law which delivers tenures “producing the comfort necessary
for a civil society, whether or not it encourages local and foreign
markets…Registration without meaningful rights is self-defeating and costly. That
report concludes that “the drive behind registration should be the establishment
of a balance between rights of owners and the state that is capable of delivering
good governance and civil peace”. 112 113
The fundamental problem with the Indonesian registration system is that

registration does not confer a better proprietary right than is obtained without
registration. So long as registration is only evidentiary and not proprietary, registration
itself is not a sufficient incentive for owners to seek registration.114 In addition, as the
present analysis of Indonesian land tenures under the Basic Agrarian Law shows,
the rights on land are not secure from arbitrary termination by the State.
In an earlier report by the writer115, it was noted that one of the central concerns of
registration is the maintenance of the initial register created following the
implementation of systematic land registration. A scrutiny of the provisions of
Government Regulation No 24 of 1997 concluded that the regulatory structure
pertaining to the maintenance of the system tended to failure in this critical area.
110
Ibid.
111
At p 4-13 – 4-14 op. cit.
112
Ibid.
113
The principle of good governance was recently articulated in Indonesian Law No 28 of 1999 Re State
Organiser Which is Clean and Free from Corruption, Collusion and Nepotism.
114
Ibid. op. cit. at page 4 -21.
115
LASA Report on the Review of Government Regulation No 24 of 1997 dated 9 September 1999.
62
In addition to the deficiencies in this regulation in relation to maintenance, several
other factors which also suggest that initial registration is not followed up by
registration of derivative transaction registration. Those factors include the tax
imposed on transfers of land 116, avoidance of laws imposing limits on the quantity
of land ownership117 and the avoidance of the restrictions on absentee
landownership118.
The failure of the present registration system to capture derivative transactions

has recently been confirmed by an empirical study funded by the World Bank,119
as well as by studies by the ILAP socio-economic adviser.120
The incentives for owners to seek registration are less compelling than is usual in
deeds registration systems. While registration might “guarantee rights of
individuals on land by enabling third parties to ascertain easily whether or not a
certain rights existed and by facilitating the creation of security interests”121 these
results are “the trite and inevitable results of any registration system” and are not
sufficient to secure registration in the contest of competing rights. “To equate with
modern schemes, registration must confer a better property right than is obtained
without registration. According registration only an evidentiary and not a
proprietary impact ensures that registration..is not an attractive proposition for an
owners.”122 Thus the necessity for a system which is based solely on compulsion
and potential threat of criminal sanctions contained in Article 52 of the Basic
Agrarian Law for failure to comply with the obligations to register contained in
the Government Regulation referred to in Article 19. That Government Regulation
is PP24/1997 (formerly PP10/1961) which imposes the obligation “to Register”
transactions with land.123
116
Undang-Undang No 21 Tahun 1997 Tentang Bea Perolehan Hak Atas Tanah dan Bangunan
117
Undang-Undang No 56 Tahun 1960 Tentang Penetapan Luas Tanah Pertanian
118
Peraturan Pemerintah No 224 Tahun 1961 Tentang Pelaksanaan Pembagian Tanah dan Pemberian Ganti
Rugi.
119
World Bank A Social Assessment Study of the Land Certification Program The Indonesian Land
Administration Project esp. Chapter 6 Sustainability Part A The Recording of Transactions.
120
Soesengobeng H Social Assessment Impact Study 1 November 1999 Land Administration Systems
Australia Pty Limited Jakarta 1999.
121
See also the General Elucidation of Government Regulation No 24 of 1997 Re Land Registration.
122
Per Indonesian Land Law and Tenures Issues in Land Rights op. cit. p. 4-21
123
See, for example, Article 36(2) of PP24/1997 “The right holder..shall register with the Land Office the
changes in [the physical or juridical data]”and Article 42 “…the recipient of the bequeathed land shall
submit..[the evidence necessary for] the registration of a right transfer resulting from a bequest….”.
63
The critical proposition of the recommended reforms advanced by the Part C
Report in this regard and from the perspective of the registration system in
Indonesian which is the present basis of ILAP, is that “[i]t is essential to convert
Indonesia’s registration into a positive system”. That conclusion is respectfully
endorsed. Registration alone can not overcome the inherent limitations of the
Basic Agrarian Law and without substantive land law reform, registration will not
improve the economic functions of land and land titles.124
Furthermore, without effective limitation laws, claims can continue to exist from
generation to generation giving rise to yet another source of uncertainty in the
registered titles. Consequently, any steps towards a positive system must be
accompanied by the enactment of the necessary limitation laws. Attention is also
redirected to the fundamental insecure nature of the land tenures themselves
discussed above which must also be addressed in any future land law reform
program.
New priority rules are also essential.
2.13 The First Faltering Step towards a Positive System in Indonesia

The introduction of a positive system would not necessarily be a remarkably
dramatic change because, although the existing system is negative, a positive
element was introduced in Article 32 of Government Regulation No 24 of 1997
which provides that:
“In the case of a land parcel for which a certificate has been legally issued
on behalf of a certain individual or a corporate body that has acquired the
land parcel in question in good faith and has in reality been possessing it,
any other parties think they have rights thereon can no longer claim for
these rights in the case where, within five (5) years following the issuance of
the said certificate, they never raised their objections in writing to the
holder of the certificate and to the Head of the relevant Land Office and
never filed a law suit with the court over the possession of the land parcel
in question or the issuance of the said certificate.”
The enactment of this provision has been described as the introduction of a

positive element into the negative system. However, this provision is
problematical for several reasons and does not address the problem associated
with the uncertainty of registered title which is inherent in the negative system
and which is compounded by the uncertain nature of the tenures themselves.
124
Indonesian Land Law and Tenures Issues in Land Rights op. cit. at p. 4-28.
64
To begin with, the vehicle for this provision is a government regulation whereas
the negative system is entrenched by the Basic Agrarian Law is an Act. The
hierarchical structure of law-making instruments in Indonesia in which an Act is a
higher-level legislative instrument than a government regulation means that in the
event of inconsistency or conflict between an Act and a government regulation, the
inconsistency or conflict must be resolved by regarding the Act as prevailing over
the government regulation. Consequently, Article 32 can not be considered as a
legal provision whose validity is beyond question.
The elucidation of this provision also raises problems and again demonstrates the
inadequacies of adat law as the basis of the national land law system and the need
for new central State legislation to deal with the problems posed by the existing
system. It states that:
“One shortcoming of the negative publication system is that the party whose
name is recorded as the right holder in a land book and certificate is always
faced with the possibility of a claim from another party who thinks s/he owns
the land parcel. Generally, this shortcoming is overcome by using the so-called
“acquisitieve verjaring” or “adverse possession” institution. Our land law, which
is based on adat law can not use this institution because our adat law does not
recognise it. However, in our adat law, there is an institution which can be used
to overcome the said shortcoming of the negative publication system, namely,
the so-called “rechtsverwerking” institution. Under our adat law, one who has
left his/her parcel idle for a certain period of time, after which the land parcel
in question is acquired in good faith and worked upon by another party shall
lose his/her right to make a claim for the land parcel in question. The Basic
Agrarian Law provisions on the nullification of land rights due to
abandonment (Articles 27, 34 and 40) are in line with this institution.”
Thus, what is stipulated in this paragraph in not a new legal provision; rather
it is an application of a legal provision which has existed in adat law, which has
now become part of Indonesia’s National Land Law, and – at the same time – it
is a concrete way of applying the Basic Agrarian Law provisions concerning
abandonment.”
Article 32 of Government Regulation No 24 of 1997 can not properly be described

consistent with the provisions of Basic Agrarian Law concerning abandonment.
Article 27 of the Basic Agrarian Law provides that the right of ownership is
annulled if the land falls back to the State because the land is abandoned.
Abandonment of the land means that the right is cancelled and the land becomes
State land. A new right on state land can not be acquired by possession of any
length of time. Similarly, Article 34 concerns the extinguishment of hak guna usaha
65
which is a right which can only be granted on State land. So, if it is neglected, then
the land reverts to unencumbered State land and, again, possession in good faith
can never be the basis for the acquisition of a right on State land under the
existing law.
This provision is another instance of what Gautama describes as a law which is as

different to traditional adat as Western law is. Under adat law, if land is
abandoned, it reverts to the full control of the community and any new rights must
be acquired in accordance with the local adat. It does not result in the automatic
creation of a new right by someone in actual possession. Article 32 can not be
properly described as founded upon adat.
The emphasis on the certificate in Article 32 is also problematic. Nothing should

depend on the certificate. All emphasis must be placed on the land book.
2.14 Article 32(2) and The Civil Code

The provisions of the Civil Code may also impact on the validity of Article 32(2).
Article 1963 provides that an individual, who in good faith acquires an immovable
object…with a possession of twenty years shall acquire a hak milik on the said
object by way of limitation. Further, Article 1967 provides that all legal
claims…shall become null and void because of limitation with the lapse of 30 year
period. These provisions appear to be still a part of Indonesian law and directly
relevant to the determination of the validity of Article 32(2).
However, the issue of the application of the limitation law to land requires further
clarification and elucidation. The two provisions cited above contain conflicting
periods of time.
What is apparent from the foregoing discussion of Article 32 of Government

Regulation No 24 of 1997 Re Land Registration is that it is not a panacea for the
multi-faceted problems of the negative system of registration which has been
implemented under the Basic Agrarian Law. Rather, what is required is the review
of the Basic Agrarian Law itself.
2.15 Some Issues Associated with the Introduction of a Positive

Registration System
One objection raised to the proposal to move from a negative system to a positive
system is that persons who have been wrongfully deprived of their land will not
be able to recover it because registration confers indefeasibility of title. What this
delusive argument fails to realise is that under either system, some one will lose
out where there has been a wrongful deprivation.
66
Under the negative system, a defrauded land right holder can always apply to the
court for the return of the land even where the currently-registered owner has paid
valuable consideration and acquired the right in good faith. Without insurance,
the innocent registered owner whose title is upset and returned to the defrauded
owner and who can not recover from the fraudster, must bear the loss. In a
positive system, in the absence of insurance or assurance, the innocent owner
keeps the land and the defrauded owner must, if he is unable to recover from the
fraudster, bear the loss.
The change from a negative registration system to a positive one simply moves
the burden of losses from the innocent purchaser to the innocent defrauded owner.
Neither system is capable of accommodating both the innocent purchaser and the
innocent prior owner unless the State intervenes and provides compensation.
There is no real reason why a person who has lost his land through fraud should
be treated any differently from the innocent purchaser for value. Both have the
been the victims of crime. But where the positive system of title registration (or
title by registration as the Torrens system has been described) is augmented with
the State guarantee and compensation for losses caused by the operation of the
principles of the positive system, then is there achieved a perfect world of
registration
2.16 The Positive System and “Land Theft”

It might also be argued that positive registration will protect so-called “land
theft”. Indefeasibility does not protect fraudulently acquired title while it is still in
the hands of a fraudster. Deferred indefeasibility will also not protect an innocent
purchaser who has acquired the title pursuant to a fraudulent instrument.
If someone is alleging that a title has been acquired through the process of land
theft, it will be necessary for them to adduce evidence to establish that. If that
evidence is found and presented and the theft established, then what remains to
be determined by a court is the remedy. The remedy in a negative system is the
return of the land. In a positive system, the remedy is converted into monetary
compensation in the form of a damages award but the land can not be returned
from an innocent purchaser, subject to the doctrine of deferred indefeasibility
described above.
Of course, damages will only be an effective remedy if the fraudulently party can
be found and has assets against which execution of an order to pay damages may
67
be made. If that is not the case, then only compensation provided by the State will
offer an effective remedy.
In the end, if the State is unable or unwilling to provide compensation, then the
loss of the land must be borne by the person from whom the land has been
“stolen”. In this case, then it must be admitted that the ultimate result will be that
the loss will have to be suffered by the defrauded person. But that is not a peculiar
situation as far as the law in respect of such issues concerning theft of assets other
than land. This disadvantage may fall heavily on the persons who have lost their
land through “land theft” but this disadvantage is far outweighed by the
advantages which the positive system creates and which are discussed herein.
One substantial benefit which flows from positive registration which can never be
achieved by the negative is that there is an effective incentive to register thus
ensuring the universal goal of registration systems – maintenance. In addition to
the legal security conferred on a registered owner by the positive system, the
Register is able to function as an effective tool for the implementation of other
government policies which are dependent on a reliable record of land ownership.
Furthermore, disputes are taken outside the registration system. These additional
advantages along with the essential legal mechanism which attracts holders of
rights to seek registration alone justifies the change to the positive system. But
there are many other benefits which flow from positive registration which are
discussed further below.
2.17 Advantages of Registration of Title to Developing Countries

In the developed economies which adopted the Torrens system, registration of
title was introduced for the purpose of simplifying the conveyancing process.
Conveyancing of interests in land was greatly simplified by this system with its
use of simple forms and the abolition of the need to investigate the history of a
registered owner’s title. It has been described as essentially a device designed to
benefit private land owners rather than in terms of social benefit or benefit to the
State. The benefits which have accrued to the State in the form of increased
revenues as well as more rational decision making in policy formulation have
been coincidental but have now become an enduring feature associated with the
system. Furthermore, the creation of an indefeasible title has meant that investors
and lenders can act confidently in relation to their decisions about the land. The
inchoate benefits of positive title registration systems such as rational decision
making and resource allocation are often not seen or acknowledged but they
undoubtedly flow from the positive register and they transcend the financial
aspects of the system.
68
In addition, the process has remedial effects because upon first registration,
defects in the title which in unregistered or non-registration of title systems are the
subject of repeated investigation every time the land is dealt with, are
permanently remedied by registering the title as absolute with the proviso for the
interface of a provisional title which will eventually be transformed into an
absolute title.
The third advantage described by Rowton Simpson is the provision of an accurate

plan based upon the latest revision of the survey record identifying the land and
the fourth is the issue of a certificate containing a facsimile of the register and of
the plan (although this fourth advantage is a dispensable one and in theory ought
not to exist as the register is the only source of proof of title). The simplification of
the land transfer and derivative right creation is another advantage achieve
through the provision by this system of simple forms and procedures for effecting
such conveyances of land rights and interests.
Registration of title not only obviates the investigation of title but also enables any
contract to be limited to current issues affecting the enjoyment of the rights in
question because the seller does not have to deal in the contract with issues such
as special stipulations as to past title and the identity of the land nor does the
buyer have to assume the risk of past defects which impugn the integrity of the
title and hinder the subsequent dealing with the land whether by way of transfer
or mortgage or lease. A bonus of all of this is greatly reduced costs and errors can
be more readily detected and rectified upon examination by the registration
authority while the parties to the present transaction are readily available. In other
systems, errors may not be detected for years when it is too late to rectify as
between the relevant parties.
The unambiguous and brief definition of the land is an advantage which does not
require much further elucidation. Only, it should be remembered that this, and all
other benefits of registration of title will only avail if the system is self-sustaining a
matter about which there has been much discussion in this course.
These advantages will not be achieved by any other system and reforms which fall
short of the prescriptions of the registration of title system contain within them the
seeds of their own destruction and we can reasonably expect those projects which
have failed to come to terms with these issues will also fail generally and have to
be abandoned.
69
Rowton Simpson also asserts that registration of title is also a means of improving
the land law system125. It contains a relatively simple substantive land law
structure compared to systems which require title and boundary investigation.
Here, the reforms of the nature advocated by Rowton Simpson, contain the
potential to render existing land law obsolete and implies that there must also be
a radical review of the existing substantive land law. In all of the contemporary
reforms, such substantive reform has not been contemplated or implemented. In
Indonesia, the review of the substantive land law and the effect of registration as
conferring only strong not conclusive evidence of rights to land was not the
subject of the necessary analysis to determine whether, in the absence of such a
substantive land law reform, the implementation of systematic registration was
worth pursuing unless such reforms were undertaken.
2.18 Precis of Main Benefits of Title By Registration

The main benefits which title by registration confers, when it is “competently
established and efficiently operated” are further discussed briefly hereunder.
An inspection of the record shows at all time the legal situation of the land so any
person dealing on the evidence of the register can do so with confidence. The
abolition of the constantly repeated relatively expensive and sometimes
inconclusive examination of title every time a transaction occurs and the
substitution of one final and authoritative examination by the State. As a result of
this examination is the formation ….of a record of proprietors of land with a title
good against the whole world, subject only to such mortgages and other burdens
as are set out in the Register or…which are declared by the legislation to be
overriding interests.
The registered title needs no further investigation because the law provides that
the register shows the state of the title up to date and complete at all times (except
for interests which are expressly excepted in the actual legislation itself or in
subsequent legislation). It is only this provision of the law which confers on the
register that special quality which distinguishes the title by registration from
registration of deeds. No other system enables title to be presented with the
125
Rowton-Simpson Land Law and Registration at p 168.
70
continuous finality which is the unique characteristic of title by registration.126 It is
this continuous finality which reduces disputes and litigation.
All transactions with land can be effected with security, simplicity and
affordability (simplification of conveyancing). The acquisition and retention of
land by small proprietors is greatly facilitated.
A registered proprietor can borrow money more easily and cheaply. The register
at all times shows the legal definition of the land and its ownership as well as
derivative rights thereby abolishing the retrospective investigation of title. It is
this feature of certainty of title which makes the land reliable security for loans of
money. The loan will still depend on the value of the land and the availability of
credit and to a large extent on the capacity of the land owner to repay the loan. But
the loan will not be withheld because of unsoundness of title. In recent literature,
it is asserted that land registration will undoubtedly lead to the availability of
credit by the land being made available as secure collateral but it must be
remembered that registration alone is not a sufficient condition for the provision
of credit to land owners. Once registered, absolute security is given to the
mortgagee.
The register of title can be utilised in tax collection, land reform, and land use.127
Indeed, “the administration of every public service and every branch of national activity
connected with land is greatly assisted in the execution of its work by the existence of an up-
to-date unimpeachable map and record of landed property throughout the country.”
As West notes,“[a]s an institution a system of land registration must stand or fall

on the service it provides to the state, to the local community and to the individual
land-owning member of society. The idea that it is a sterile and technical exercise
must be dispelled. Instead, it must be recognised as a social and economic service,
part of the administrative infrastructure so necessary for the developing of an
increasingly complex economy.
It may be argued that experience to date in introducing registration of title to
developing countries has not been encouraging; that existing systems are faltering
and do not warrant the expenditure they entail; or that a titles register is too
126
Rowton Simpson op. cit. Chapter 9.
127
See Rowton Simpson op. cit. pp 169-170.
71
sophisticated an institution for operation in a developing country at the present
time.
But what alternative do we have, except confusion in land affairs?…We must not be too
discouraged by past failures but must learn from bitter experience. In our present state of
knowledge, registration of title is the best we can do to provide stability, security and clarity
in land ownership and a basis for the structural and physical planning of the future”128.
The question is not whether registration of title can be afforded but whether any
country which recognises private ownership and allows dealing in land can afford
to do without it because there is no other system which “when competently
established and efficiently operated makes the creation and transfer of interests in
land so simple, quick, cheap and certain or which if such be the policy makes
possible the control of transfer and other dealings. This is incontrovertible”.129
128
West D. “The Role of Land Registration in Developing Countries” 102 Chartered Surveyor November 1969
212
129
Rowton Simpson op. cit. at pp 173-174.
72
3. CHAPTER III - ILAP, THE MARKET AND THE BASIC AGRARIAN LAW 1960
3.1 Introduction
The main objective of ILAP is “to foster efficient and equitable land markets and
alleviate social conflicts over land through acceleration of land registration…and
improvement of the institutional framework for land administration…”130 ILAP is
supposed to “foster more efficient and equitable land markets in terms of: more
efficient and transparent land transactions, less risk in land-related investment,
mobilisation of financial resources through the use of land as collateral; and
provisions for longer-term investment towards more sustainable land use”.131 It is
stated in the World Bank Staff Appraisal Report that “[e]fficient and equitable land
markets are an important basis for modern economic development since they
would quickly and flexibly accommodate changes in land use, allow fair land
transactions, and mobilise financial resources through collateral arrangements. A
comprehensive, accurate and efficient land registration system is a sine qua non in
developing such markets since it enables land to be freely traded, by reducing or
eliminating the risk perceived by purchasers and vendors of land”.132
However, contrary to such analyses, registration, while it is a universal feature of

market economies and is a necessary condition of a functioning land market, it is
not sufficient for the operation of a land market. The land market in Indonesia is
dysfunctional for far more fundamental reasons than the lack of comprehensive
registration and the review of the land registration legislation was a totally
inadequate response to the problems with the land market. Unless these problems
are properly addressed, it is fairly certain that the main objective of this project as
expressed in the Staff Appraisal Report can not be realised. Reforms to the land
registration alone are entirely insufficient. Tenures must also be freed from the
strictures of pervasive State control.
3.2 The Market and the Basic Agrarian Law

The principle cause of land market dysfunction in Indonesia is the Basic Agrarian
Law itself. There are numerous provisions in this law which either inhibit the
130
Staff Appraisal Report Indonesia Land Administration Project 16 August 1994 World Bank Report No
12820-IND Agriculture Operations Division Country Department III East Asia and Pacific Region p. 10.
131
Ibid. page i.
132
Ibid. at page 2.
73
development of an open and free land market or which are in direct contradiction
to the dictates of the land market. It is proposed to examine these provisions and
to determine how they conflict with the stated objective of ILAP.
The provisions of the Basic Agrarian Law in this regard are:
Article 6: All rights on land have a social function.
Article 7: In order not to harm the public interest,

excessive ownership and control of land
are not permitted.
Article 9: Only Indonesian citizens may have the

fullest relation with the earth, water and
airspace….
Article 10(1): Every person and every corporate body

having a certain right on agricultural land
is in principle obliged to cultivate or to
exploit it actively her/himself while
avoiding extortionate methods.
Article 17(1): With due regard to the provisions of

Article 7 and in order to achieve the aim
meant in Article 2(3), the maximum
and/or minimum area of land which may
be owned by a family or corporation
under any right mentioned in Article 16,
shall be regulated. (Law No 56 of 1960 Re
Determination of the Area of Agricultural
Land)
Article 17(3): The land in excess of the maximum limit

meant in paragraph (1) of this Article shall
be taken by the government against
compensation and shall be further
distributed among the people who need it
according to provisions provided by
Government Regulation.
Article 21(1): Only an Indonesian citizen may have the
74
right of ownership.
Article 24: The use of land with the right of

ownership by someone other than the
owner shall be restricted and regulated by
legislative regulation.
Article 26(2): Each sale and purchase, exchange, gift,

bequest by will and other acts which are
meant to transfer the right of ownership
directly or indirectly to a foreigner, to a
national possessing a foreign nationality
in addition to his Indonesian nationality or
to a corporation, except those which have
been determined by the government as
meant in Article 21(2) are cancelled for the
sake of law and the land falls back to the
State with the provision that rights of
another party incumbent thereon remain
valid and that all payments which have
been received by the owner may not be
reclaimed.
Further legal obstacles to a free land market and interests in land exist in other
land-related laws such as the notorious izin lokasi legislation133 and the Security
Title Act.134
3.3 The Social Function of Rights on Land

Article 6 of the Basic Agrarian Law states that “all land rights have a social
function”. This is not really a statement of law but a statement of fact. Land rights
in any society have a social function. That is their essential nature.
The elucidation of this provision does not clarify the legal meaning of this Article.
The General Elucidation of the Basic Agrarian Law states that what this means is
that “whatever land right one has, it is not justifiable for the individual..to use or
not to use his land exclusively for his own interests, much less so if this
133
Presidential Decrees Nos 97 of 1993 and 41 of 1996, Regulation of the Minister of State for Agrarian Affairs
No 2 of 1993 Re Procedures for Companies Wishing to Invest Capital to Obtain Location Permits and Land
Rights.
134
Undang-Undang No 4 of 1996 Re Hak Tanggungan on Land and Land-Related Objects.
75
disadvantages the people. Rights on land can not be used for individual purposes
only but are subordinate to the higher interests of the community and the State.
Land must be used in accordance with the character of the right…Due to its social
functions, it is only appropriate that land should be well taken care of so as to
improve its fertility and to prevent it from damage.”
This provision is the basis for the subsequent provisions in the Basic Agrarian
Law which prohibit absentee ownership and the use of land as a commercial
commodity or as an object of investment or speculation.135136 It also seems to be a
basis for the provisions of the Basic Agrarian Law which extinguish land rights
through abandonment and legislation such as Government Regulation No 36 of
1996 discussed above.
3.4 Prohibition on Absentee Ownership and Limits on Areal Quantities

The provisions concerning the restrictions on absentee ownership, the requirement
for personal use of agricultural land and the limits on ownership of agricultural
land have, according to some analysts, failed to prevent the exploitation of land
and labour and, more importantly, have diminished the land market. In addition,
they threaten the accuracy of the land ownership record as people seek to avoid
their provisions.137
These “blunt and unworkable tools” are also indefensible on economic grounds.
According the Part C Report Indonesian Land Law and Tenures Issues in Land
Rights, the theory behind requiring personal use and limits on ownership is the
assumption that absentee ownership is equivalent to speculation while in a
proper market, absentee land ownership and land accumulation are “effective
allocators because they tend to price land at the opportunity costs and yield
potential”.
Ownership of large amounts of land is not necessarily “bad ownership” and, in

fact, can serve desirable social and economic purposes138. Large-scale agricultural
production is the norm in developed economies. It is the nature of the use of the
135
“Evolutionary Change in Indonesian Land Law Traditional Law (Adat) Perspectives” Final Report Arcadis
Euroconsult 7 April 1999 Land Administration Project Part C Support for Long Term Development of Land
Management Policies Topic Cycle 4 National Development and Planning Agency and National Land Agency
at p. 4-2 citing Harsono B 1997 Hukum Agraria Indonesia: Sejarah Pembetukan Undang-Undang Pokok
Agraria, Isi dan Pelaksanaannya Jakarta Djambatan p pp. 263-268.
136
Speculation is a salient feature of a land market.
137
See Indonesian Land Law and Tenures op. cit. at p. 7-17.
138
Ibid.
76
land and not its quantity which determines whether massive land ownership is
exploitative or not.
As the Part C Report concludes, “to the extent that the system fails to admit
absentee owners, it denies Indonesians the capacity to create markets in land
interests, arguably the greatest land market available”139. This is a consequence of
the State assuming that it, rather than the market, can efficaciously allocate land.
The untenable nature of such central command-orientated economic planning, in
view of the collapse of such economic principles as the century draws to a close,
does not require further elucidation here.
3.5 Prohibition on Corporate Ownership of Hak milik

Comparative studies show that Indonesia is virtually alone in regard to the issue
of ownership of land by corporations 140. Under Indonesian land law, only a
limited class of corporations may own hak milik. This is a consequence of Articles 9,
21(1),(2) and 26(2) of the Basic Agrarian Law. The implementing regulation
pursuant to those Articles is Government Regulation No 38 of 1963 Re
Designation of Legal Bodies Which May Own Hak Milik which allows only state
banks, agricultural cooperatives, religious bodies and social bodies to own hak
milik.
Consequently, corporations may only obtain the lesser rights of hak guna usaha
(Article 30(1)(b)), hak guna bangunan (Article 36(1)(b)), hak pakai (Article 41c) or hak
sewa untuk bangunan (Article 45b). The corporations must also have been
incorporated in accordance with Indonesian law and be domiciled in Indonesia.
These rights are far more limited than the hak milik and more prone to termination
and reversion to state control as is evident from the description and discussion of
them earlier.
The Basic Agrarian Law, by denying corporations the right of ownership, denies
substantial opportunity to undertake investment and land development. Apart
from forcing entities to resort to artificial mechanisms to overcome the limitations
imposed by the restricted nature of the rights on land which corporations may
acquire, the most dire consequence is that “the Indonesian public is not allowed to
collect together to obtain and develop land through the most influential and
successful method of capital acquisition and development ever invented – the
139
Ibid.
140
Indonesian Land Law and Tenures op. cit. pp. 7-20 – 7-21.
77
corporate organisation which limits liability, allows share transfer and has
perpetual life”.
Allowing corporations to own hak milik would have be an immediate stimulus to

the land market and, “more importantly, it would allow [Indonesians] the same
opportunities for capitalisation that are available to market economies everywhere
in the world”. 141
Another consequence of the prohibition of the ownership of hak milik by

corporations is that the hak milik which is owned by an individual and is to be
acquired by a corporation for its own uses or for the purposes of further
development is that the hak milik must be surrendered to the State and an
application made to the State for the grant of one of the rights to which a
corporation is entitled to own such as hak guna usaha or hak guna bangunan. This
also reinforces the State’s control.
3.6 Restrictions on Foreign Ownership

Articles 9, 20, 21, 26, 30, 36, 46, 54, 55 of the Basic Agrarian Law and Articles I and
II of the Conversion Provisions all deal with or mention the issue of foreign
ownership and demonstrate the obsessive opposition to foreign ownership of land
in Indonesia at the time of the drafting of the Basic Agrarian Law.142 Having regard
to the 350 years of colonial domination, ruthless exploitation of the land and
violent oppression of the Indonesian people by the Dutch, it is hardly surprising
that such sentiments were pivotal to the post-colonial State’s policies, laws and
ideology.
However, in the present day, the restrictions in the Basic Agrarian Law on foreign
ownership have drastic consequences for the land market and the economy in
general. In Indonesian, the land law is the primary mechanism to control
investment in land by foreigners. Other legal mechanisms such as foreign
exchange controls, investment approval systems, zoning legislation and land tax
can achieve the same results. The restrictions on foreign ownership constitute a
significant obstacle to foreign investment and, in the era of economic globalisation,
141
Ibid.
142
These prohibitions are duplicated in Government Regulation No 40 of 1996 Re Hak Guna Usaha, Hak Guna
Bangunan and Hak Pakai – see Articles 3, 20 in relation to hak guna usaha and hak guna bangunan so that
if any of those rights devolve or are transferred to a person who is not an Indonesian citizen or a corporation
which has not been incorporated according to Indonesian law and is domiciled in Indonesia and that person or
entity fails, within one year to transfer the right to an Indonesian citizen or corporation, then the right is void
and, if the land is State land, the land reverts unencumbered to the State.
78
impede capital flows and thereby destroy economic opportunities for the
nation.143 Capital will move to places where these restrictions do not exist.
Nationalist groups within Indonesia assert that the admission of foreign

ownership of land is tantamount to the loss of sovereignty and control. But that
has not occurred in jurisdictions which have permitted foreign ownership of land.
It has been noted elsewhere that, while foreign ownership may cause some
problems, for example, Japanese investment in the USA in the 1980’s or northern
Europeans purchasing Mediterranean residential properties, it is important to
recall that these phenomena are cyclical when excess capital is generated in the
dynamic economies. The Japanese suffered heavy losses and retreated from their
US purchases and the trend noted in Europe diminished. The essential fact is that
land is immobile. While ownership may change, no one can physically take the
land away and it is more likely to be used for productive purposes by foreigners
who seek to maximise their capital.144
Amongst the objectives of ILAP as stated in the World Bank Staff Appraisal Report
is the encouragement of foreign investment. Foreign capital demands security in
relation to the land upon which it operates. So long as the prohibition of foreign
ownership is embedded in the law, capital will relocate to other jurisdictions
which do not have such restrictions. The hasty flight of foreign capital in times of
economic or political crises is made easier because the foreign corporations do not
have permanent rights of ownership on the land. The movement of foreign capital
out of Indonesia since the 1997 economic crisis continues to be a critical factor in
Indonesia’s recovery. Some reports estimate that, as at November 1999, approved
foreign investment is negative 76%.145
In his speech to the Indonesian House of the People’s Representatives by the

Minister for Agrarian Affairs upon the introduction of the Bill, the Minister stated
that: “The struggle to reform national agrarian law is closely linked to the history
of the struggle of the Indonesian nation to free itself from the grip, influence and
remnants of colonialism; particularly the struggle of the farmers to free themselves
from the restraints of the feudal system over land and exploitation by foreign
investors.” The first operational part of the Basic Agrarian Law therefore
immediately revokes the principle bases of the colonial land law imposed by the
Dutch which is discussed in some detail in Chapter I. So long as such sentiments
143
Indonesian Land Law and Tenures op. cit. at p. 7-22.
144
Per Land Acquisition and Development Controls Final Report Part C Land Administration Project at p. 7-2.
145
Asian Wall Street Journal 24 November 1999 page 5 Thompson Global Markets. Approved domestic
investment in negative 51.2%
79
are expressed in the law, it will not be surprising if the goal of encouraging
foreign investment is not optimally achieved.
It is also worth noting the observation made in the Part C Report Indonesian Land
Law and Tenures Issues in Land Rights that “Unlike other countries, Indonesia
uses its tenures as primary social and economic policy tools to prevent corporate
and foreign ownership of land, to limit the amount of land available to an
individual and to prevent ownership by groups and this has deterred the
emergence of a civil society.
The unfortunate reality is that a tenure system can not answer the fears of land
concentration, land grabbing and abuse of power. By focusing on tenures rather
than taxation, planning and investment controls and allocations, distortions in the
distribution pattern are further entrenched and opportunities for enduring and
reasonable land allocations are lost. Land transfers are inhibited, changes in
ownership are concealed and other mischiefs are apparent.146
3.7 Further Issues for the Land Market - Law No 4 of 1996 Re Security
Titles on Land and Land-Related Objects
A cursory examination of this important law, which implements Article 51 of the
Basic Agrarian Law, reveals that it too poses significant issues for the market. The
Part C Report on Indonesian Land Law and Tenures – Issues in Land Rights notes
that this law does not give effective remedies to a mortgagee which are “familiar
in the commercially developed systems of land mortgage”.147 It does not entitle a
mortgagee upon default by the borrower to sell the land by private treaty. Private
treaty is only possible with the agreement of the borrower and where doing so
will increase the price of the said object to the maximum to the benefit of all
interested parties148. Nor does it confer on the mortgagee the right to possession of
the land, the right of foreclosure or the right to appoint a receiver.149
146
Op. cit. at pp. 7-28 – 7-29.
147
Ibid. at p. 7-25.
148
Article 20(1), (2) Law on Security Titles
149
c.f. Conveyancing Act 1919 (New South Wales) Section 109 Powers of mortgagees and certain chargees
(1) A mortgagee and a chargee shall by virtue of this Act have the following, namely:
(a) A power to sell or to concur with any other person in selling the mortgaged or charged property, or any
part thereof, either subject to prior charges or not, and either together or in lots, in subdivision or
otherwise, by public auction or by private contract,
80
The immediate right to possession is not only the greatest incentive to avoid
default by the borrower but entitles the mortgagee to the rents and profits of the
mortgaged land and the mortgagee can continue the borrower’s business in
preparation for any sale of the land.150 The right to appoint a receiver is important
for commercial securities. A receiver may demand and recover all the income of
the property exercise any powers which may have been delegated by the
mortgagee. The right of foreclosure is not available to the mortgagee.
The critical deficiencies of the Law on Security Rights have obvious and profound
impacts on the security market and require substantial revision to permit creditors
effective remedies when borrowers default on loans.
Additional problems for security right holders arise from the insecure nature of
the tenures which may be the subject to the security right. Article 4 of the Act
provides that hak milik, hak guna usaha, hak guna bangunan and hak pakai on
State land may be the subject of a security right. In the discussion of those tenures
in Chapter I, it was noted that those tenures are not legally secure because they
may be nullified and the land revert to the direct control of the State for various
reasons. Neither the Law No 40 of 1996 Re Hak Guna Usaha, Hak Guna Bangunan
and Hak Pakai nor Government Regulation No 36 of 1998 Re Control and
Utilisation of Abandoned Land deal with the position of security right holders
when the right which is encumbered with the security right vanishes and the land
reverts to the State. Law No 40 of 1996 indeed confirms that upon cancellation of
the right, the security right is also cancelled.151
Law No 4 of 1996 Re Security Rights provides that “the nullification of a security

right as a result of the nullification of the land right which is encumbered with the
security right shall not result in the nullification of the debt guaranteed with the
security right in question”.152 That is cold comfort to the creditor who has, upon
cancellation of the land right, lost the only effective means of recovering the
(b) A power at any time after the date of the instrument to insure..against loss or damage by fire any building
or any effects or property of an insurable nature whether affixed to the freehold or not being or forming
part of the mortgaged or charged property,...
(c) A power to appoint a receiver of the income of the mortgaged or charged property
(d) A power, while the mortgagee or chargee is in possession, to cut and sell timber.
(e) A power to sever and sell fixtures apart from the balance of the mortgaged or charged property.
150
Indonesian Land Law and Tenures op. cit. at p. 7-23.
151
See Articles 15(2), 33(2) and 53(2) of Law No 40 of 1996.
152
Article 18(4) of Law on Security Rights on Land and Land-Related Objects
81
money lent to the right holder. Furthermore, the rights, apart from hak milik, are
limited in time and that again increases the risk for the lender.
These deficiencies in the land law and security law systems need to be redressed.
If the Law of Security Rights is not revised and the insecurity of tenures removed,
then those laws will continue to inhibit one of the stated goals of ILAP; that is, the
mobilisation of financial resources through the use of land as collateral.153
153
Staff Appraisal Report at p. 2.
82
4. CHAPTER IV - HAK ULAYAT AND THE BASIC AGRARIAN LAW
4.1 Introduction
Further compelling reasons for the reform of the Basic Agrarian Law arise from the
issue of hak ulayat which can not be admitted as a right over land in either the Basic
Agrarian Law or the registration scheme constructed by Government Regulation
No 24 of 1997.
The earlier part of this paper examined the lack of security of Indonesian land
tenures. Legal security of tenure is also a critical issue for indigenous peoples. It
is therefore now proposed to briefly examine Indonesian land law from this
perspective.
Hak ulayat is usually described as the customary right of local indigenous

communities to manage the land within their traditional territories. Early Dutch
scholars described this concept as the “right of disposal” and “sovereignty” over
the land.154 Many traditional communities continued to exercise rights over the
land within their territories.
In modern times, as in the past, much conflict between the traditional communities
and the State has been generated as the State sought to exploit the vast natural
resources within the traditional territories. Such exploitation takes the form of the
granting by the State to private capital of forestry and mining concessions, rights
of exploitation for the establishment of plantation cultivation and the
implementation of transmigration policies and laws. The exploitation of land
which is the subject of hak ulayat has been implemented without a just settlement
with its indigenous peoples. The assertion of the superior authority of the State,
administrative failures in law enforcement and a general political disregard or
denial of the traditional rights of those people has resulted in cultural destruction,
social displacement and environmental degradation.
4.2 Hak Ulayat in the Basic Agrarian Law

It is claimed that hak ulayat is recognised and protected in the Basic Agrarian Law.
But a closer examination of the provisions of this law shows that hak ulayat does
not enjoy any substantive recognition and protection under this law. Hak ulayat
154
Van Vollenhoven in Indonesian Adat Law (beschikkingsrecht); Ter Haar (hak pertuanan) op. cit. at p.78.
83
must, under the present legislation, crumble along with the traditional social
organisations in the face of the superior legal and executive forces of the State.
Article 3 of the Basic Agrarian Law provides as follows:
“In view of the provisions contained in paragraphs (1) and (2) of Article 2,
the implementation of the ulayat rights and other similar rights of adat-law
communities – as long as such communities in reality still exist – shall be
such that it is consistent with the nations interests and the interests of the
State based on national unity and shall not contradict the laws and
regulations of higher levels.”
The General Elucidation of the Basic Agrarian Law states that “This provision
rests on the new agrarian law’s recognition of the existence of hak ulayat..which has
never been officially recognised in law. The lack of recognition has resulted in the
fact that during the period of colonisation, the implementation of agrarian
regulations frequently neglected the existence of hak ulayat. The fact that hak ulayat
is mentioned in the Basic Agrarian Law basically means that the said right is
recognised. Therefore, in principle, hak ulayat will be taken into consideration as
long as the said right in reality still exists in the law community n question.”
The elucidation gives the example that, in the granting of a land right (such as the
right to cultivate (hak guna usaha)), the relevant law community will first be heard
and given some recognitie (recognition) to which they are entitled in their capacity
as holder of the hak ulayat in question.
However, the elucidation goes on to state that “it would not be justifiable for an
adat community….to reject a plan on large-scale clearing of forests on an on-going
basis” which is required for the implementation of projects for food production or
relocation of people. Experience shows that regional development is impeded by
problems related to hak ulayat. The interests of the adat community should be
subordinated to the broader interests of the nation and of the State and the
implementation of hak ulayat should also be consistent with the broader interests.”
Nor would it be justifiable, according to the elucidation, for an adat community to

adhere to “the contents and implementation of their hak ulayat on an absolute basis
as if the law community in question were disengaged from other adat communities
and other regions in the current atmosphere of the State as a unity”.
84
The qualifications in the actual provision of the Basic Agrarian Law and its
elucidation result in only nominal recognition of hak ulayat. While it is said that hak
ulayat is recognised by the Basic Agrarian Law, in reality, this recognition is
tokenistic and superficial. The adat community may continue to exercise its right
of disposal only so long as the government does not dispose of the land. Once the
government plans to dispose of the land, the adat right of disposal must yield to
the national interest of the State.
There are numerous contemporary schemes which recognise and protect the non-
individualistic rights of indigenous peoples to land. Despite attempts to mystify
hak ulayat and claims that it is uniquely Indonesian and something which is
beyond the comprehension of outsiders, it is fairly clear that hak ulayat and the
problems which the modern world pose for Indonesia’s indigenous peoples are
no different from the problems faced by indigenous communities any where in the
world.
The central problem posed by the Basic Agrarian Law for the rights of the
indigenous is the focus on individual ownership and the lack of protection
afforded to hak ulayat and the subjugation of hak ulayat wherever it conflicts with
the exercise of power by the central State. Hak Ulayat is not recognised in juridical
terms.
Another difficulty posed for hak ulayat by the Basic Agrarian Law is as follows. A
person who has acquired a hak milik according to the local adat may, in principle,
apply for the registration of the right as a statutory hak milik under the Basic
Agrarian Law. Once a hak milik is registered, it can not return to the jurisdiction of
its original adat law. Upon extinction of the right through abandonment, the land
will revert to the control of the central State and not back to the adat community.
This is a consequence of Article 27a.3 of the Basic Agrarian Law. Through such
processes, the original territory of the adat community will be diminished until
eventually it disappears.
This process is acknowledged in the Regulation of the Minister for Agrarian

Affairs No 5 of 1999 discussed below where it provides in Article 4 that “the
possession of land parcels which are included in ulayat land as meant in Article 2
by an individual and a body corporate can be carried out by a member of the adat
law community concerned with the right of possession according to the provision
of the existing adat law which, id demanded by the right holder, can be registered
as the right on land which is in line with the provision of the Basic Agrarian Law.”
It is clear, therefore, that the threat posed by the registration under the Basic
Agrarian Law of hak milik which has come into existence in accordance with local
85
adat law requires considerably more substantial consideration. If the legal security
which is sought for hak ulayat is to materialise in legislation, then this issue must
also be resolved.
4.3 Government Regulation No 24 of 1997 Re Land Registration and Hak

Ulayat
Government Regulation No 24 of 1997 Re Land Registration does not include hak
ulayat as a right which is capable of registration.155 Furthermore, the definition of
State land in that regulation does not admit the existence of hak ulayat. It defines
State land as “land which is not possessed under a certain land right”. Land rights
are defined in that regulation as the rights as meant in Article 16 of the Basic
Agrarian Law. It follows from these definitions that any land upon which it can not
be demonstrated that a statutory right exists is State land. Such land therefore
includes land governed by hak ulayat. This is essentially the same definition of the
colonial State’s domein. The problems relating to hak ulayat are related to the control
by the State over all land in Indonesia.
4.4 Regulation of the Minister for Agrarian Affairs No 5 of 1999

There has been a recent departure from the previous policy adopted by the
National Land Agency towards hak ulayat. The regulation is Regulation of the
Minister for Agrarian Affairs No. 5 of 1999 Concerning Guidelines for the
Settlement of Hak Ulayat Issues of the Adat Law Community which was signed by
the Minister on 24 June 1999.
Article 5(1) provides that the investigation and determination that ulayat still
exists..shall be conducted by the Regional Government with the participation of
adat law experts, the adat law community, non-government organisations and other
institutions involved in the management of natural resources. Paragraph (2)
further provides that the ulayat land of the adat law community …shall be stated
on the land registration base map by giving a cartographic mark and, if possible,
by drawing the boundaries and recording them in the land register.
The regulation specifies a role for the Regional Government in the process of
settling hak ulayat and indeed, it seems that the full implementation of the
regulation relies on the enactment of Regional Government regulations. Article 3
155
Article 9 lists the objects of land registration as land parcels having the status of hak milik, hak guna
usaha, hak guna bangunan, hak pakai, hak pengelolaan, wakaf, hak milik atas satuan rumah susun, hak
tanggungan, and state land (tanah negara ).
86
provides, for example, that hak ulayat can no longer be exercised on land parcels
which, at the time of the enactment of the Regional Regulation as meant in Article
6 have already been possessed by an individual or a corporate body with a certain
right according to the Basic Agrarian Law or land parcels which have already been
acquired by a government institution, body corporate or individual in accordance
with the existing provisions and procedures.
Article 6 provides that further stipulations concerning the implementation of

Article 5 shall be regulated by a regulation of the Region concerned. The
elucidation states, in relation to this Article, that if the boundaries of the land can
be provided according to the boundary marking procedure in the implementation
of land registration, the said boundaries can be drawn on the land registration
base map and recorded in the existing land register (daftar tanah not the buku
tanah). All of this should be arranged in a Regional Regulation in line with the
condition of the respective regions as meant in Article 6.
The elucidation further states that:

“In the meantime it can be confirmed that at the time of the issuance of the
Regional Regulation regulating hak ulayat there will be land parcels which
have already been possessed by individuals or corporate bodies with a
certain right on land in line with the Basic Agrarian Law or already
acquired in line with the existing provisions and procedures although the
right has administratively not been acquired.”; and
“Further arrangement on the above matters (criteria and determination of

hak ulayat and the authority of the adat law community) is delegated to the
Regions according to existing laws and regulations (Article 6), in line with
the purpose of Law No 22 of 1999 RE Regional Government and thus they
will be able to absorb more aspirations of the local community”.
The implementation of this regulation requires further Regional Government

regulation. The elucidation states that the investigation of the existence of the
three elements of hak ulayat; namely, the existence of the adat law community, the
existence of the ulayat area of land and the existence of the relationship between
the community and the territory are to be conducted by the Regional Government.
The question whether or not communal rights exist is a difficult one involving
issues of proof and evidence; for example. how and by whom can traditional
claims to areas of land conclusively be justified in terms of statutory law. This is
87
particularly problematical for shifting agriculturists in forest and mining
concession areas.156
The assignment of the determination of the existence of hak ulayat to the regional
government is also problematical. The regional government is a political
organisation. The determination of legal rights should not be left to agents who
are susceptible to political influences. An independent and specialised judicial or
quasi-judicial body should be constituted with the power to determine the critical
aspects of hak ulayat. Further provision is required in relation to agreements
between the community and outside commercial interests concerning the use of
the land, the resolution of disputes and the constitution of bodies corporate as
representatives of the community and the operation of those bodies.
The regulation is neither adequate in itself to deal with the problem of hak ulayat
nor does it apply in non-forest areas which are outside the jurisdiction of the
National Land Agency.
There is a debate about whether hak ulayat is a right on land or a mere right to
manage the land. The focus on the nature of hak ulayat as a relationship with the
land rather than an enforceable land right inhibits efforts to secure the rights of
indigenous people in Indonesia. This semantic debate distracts attention from the
central issues which are the security of the rights of the indigenous communities
to their land, the right to make decisions about its use by members and non-
members, compensation when hak ulayat is extinguished according to acquisition
laws or intruded upon through the past and future grants of mining, forestry,
plantation concessions or other uses in the public interest, and its surrender to
outsiders. None of these issues is dealt with in the existing regulation.
What is required is an Act of the Indonesian Parliament to deal comprehensively

with hak ulayat. Until that occurs, the difficult issues associated with hak ulayat will
continue. As Sumardjono notes, “some explicit clarification is…required about
what is meant by recognition of ulayat rights and such clarification needs to be
stated in a piece of legislation that can serve as a fair basis for settling the existing
cases of ulayat land and for managing ulayat rights.
156
See Evolutionary Change in Indonesian Land Law Traditional Law (Adat) Perspectives Final Report Part C
Land Administration Project pp. 10-1 – 10-2.
88
If neglected, the ulayat right issue will be a time bomb that is ready to explode
anytime”.157
4.5 ILAP and Hak Ulayat

During the first five years of the implementation of ILAP, areas in which hak ulayat
existed were avoided or, where it was found in selected areas, it was left outside
project implementation. This was a wise decision. Following the World
Bank/AusAID mid-term review mission in November 1999, a decision was made
to abandon this policy.
It is now proposed to implement pilot projects with the express purpose of

confronting and dealing with the “problem” of hak ulayat in the second phase of
ILAP. Arguments are presented that this be done in the name of efficiency (to
ensure completeness of cadastral maps) and to secure legal security for traditional
communities.158 It said that “the purpose of registration of communal land is to
record in the land register in a conclusive and authoritative way the rights of the
community over land that is collectively used and over which the community..has
acquired the right of use or the right of ownership.”
This proposal is fraught with considerable difficulties in light of the many

elemental deficiencies in the existing legislation. The arguments upon which this
proposition are based are illusory.
Hak ulayat is not presently regarded as a right on land, either in the broad juridical
sense under the Basic Agrarian Law nor under the land right registration
legislation. The authority to administer hak ulayat is vested in the community. The
hak ulayat of the community is not a hak milik or a hak pakai. Confusion between the
hak ulayat and a hak milik acquired by a communal group159 must be disposed of.
Where a non-individual entity has acquired a hak milik over particular parcels of
land used for specific communal purposes, that might be registered, subject to the
prohibition of corporate entity ownership of such rights which presently deny
such registration.
Furthermore, under the existing laws, no corporate entities may own land rights
save for those specifically designated by Government Regulation No 38 of 1963.
157
Sumadjono M Land Policy Reforms Kompas 25 September 1998.
158
Developing a Strategy for Registration of Communal Systematic Paper by Registration Systems Adviser
ILAP 13 December 1999 Land Administration Systems Australia Pty Limited Jakarta 1999
159
See the discussion of this in Ter Haar op. cit. at p. 68.
89
An adat community enjoys no legal status under existing law let alone being
recognised a corporate entity capable of owning land rights.
As Slaats has noted, “it may be questioned whether registration of land will add to
their security if the rights granted to them through registration do not coincide
with the traditional system..”160
No proper mechanism exists for the determination of the existence of hak ulayat.
Registration under Government Regulation does not provide legal security of any
rights; even those acknowledged as rights on land under the Basic Agrarian Law.
Proposals that its existence be determined by the Adjudication Committee
constituted under Government Regulation No 24 of 1997 are inappropriate
especially having regard to the anticipated role of the Regional Governments in
this process.
Any proposal to bring hak ulayat within the registration system must first resolve a
multitude of issues, not the least of which is what is to happen in relation to
individualised rights within a hak ulayat area once the hak ulayat area is brought
within the registration system. The current proposal is to register such
individualised rights but that is in direct conflict with the continued existence and
protection of hak ulayat.
It might also be reasonable anticipated that there will be opposition to what might
be perceived as intrusion into the hak ulayat areas. In the recent past, there has
been vigorous opposition to the registration of hak ulayat.161
Consequently, it is recommended that attempts to deal with hak ulayat, in view of

the many legal issues identified above, ought to be abandoned until there is a
comprehensive legislative scheme which addresses those issues.
160
Slaats H Adat Land: A Socio-Anthropology of Law Approach” paper presented at Seminar “Tanah Adat”
Research Centre Universitas Kristen Atma Jaya and Research Centre National Land Agency Bogor September
1996 at pp. 2-3 cited in Memoranda KPA Keempat Mengenai Proyek Administrasi Pertanahan “Tidak Untuk
Pendaftaran Tanah Komunal Konsortium Pembaruan Agraria Bandung 1997 at p. 2.
161
For example, Memoranda KPA Keempat Mengenai Proyek Administrasi Pertanahan “Tidak Untuk
Pendaftaran Tanah Komunal” Konsortium Pembaruan Agraria Bandung 1997
90
5. CHAPTER V - AUXILLIARY OBSERVATIONS AND CONCLUSIONS
5.1 Possession
The Basic Agrarian Law (Article 19) provides for the registration of land rights to
be implemented throughout Indonesia. Pursuant to this Article, Government
Regulation No 10 of 1961 was enacted but did not achieve the objective of
registering all land in Indonesia during the 36 years of its operation; mainly
because of the huge number of land parcels but also because the necessary funds
were not allocated by successive governments. This regulation was replaced by
Government Regulation No 24 of 1997 which is the current legal basis for the
implementation of systematic and sporadic registration of land rights.
An earlier report by the writer analysed some of the problems associated with that
legislation including the requirements to establish entitlement to registration as
owner of a hak milik. One of the bases upon which a right holder might be
registered is 20 years possession; either by the present right holder or by the
present right holder and his/her predecessors.
However, possession is only acknowledged for the purposes of registration of

rights and it otherwise does not have any legal effect. Given that ILAP anticipates
at least 25 years before all land rights will be registered, the land law also requires
review in order to admit possession of land as constituting a legal title to land
whether or not it is registered under Government Regulation 24 of 1997.
This issue is substantially considered in the Report by Part C referred to

elsewhere in this paper and entitled “Indonesian Land Law and Tenures Issues in
Land Rights” at Chapter 2. The recommendations made in that report are
respectfully adopted for the purposes of this report. Careful consideration of the
application of the principle of possession must be given in the context of land
where hak ulayat exists.
5.2 Review of Punitive Provisions

The punitive provisions of the Basic Agrarian Law and the authority granted by
the Basic Agrarian Law for implementing regulations to impose punitive
provisions provide that the maximum penalties which may be so imposed are
imprisonment for a maximum of three (3) months and/or a fine of Rp 10 000.
While these limits on penalties may have been appropriate when the law was
enacted, a fine of Rp10 000 nowadays would not dissuade breaches of obligations
imposed by the Basic Agrarian Law or any of its implementing regulations.
91
In particular, if the recommended introduction of the positive system is
implemented, there will be no need to threaten criminal sanctions for breaching
obligations to seek to register. Such obligations should be omitted from any
subsequent land law or land right registration government regulation. The history
of land right registration demonstrates the failure of coercive mechanisms as
attempts to ensure registration is sought by right holders.
5.3 Involvement of Private Sector in Land Registration

Article 19 of the Basic Agrarian Law provides that “To guarantee legal security,
the Government shall administer land registration throughout the whole territory
of the Republic of Indonesia.” It seems fairly clear from this provision that land
registration must be implemented by the Government as opposed to the private
sector. Government Regulation No 24 of 1997 confirms that registration is to be
implemented by the National Land Agency through it Land Offices.162
However, certain ministerial regulations permit the engagement of private sector

surveyors in the surveying and mapping activities of land right registration; viz.,
Article 45 of PMNA 3 of 1997 Re Implementing Provisions of Government
Regulation No 24 of 1997 Re Land Registration. Regulation of the Minister for
Agrarian Affairs No 2 of 1998 regulates Licensed Surveyors.
There are certain proposals to involve the private sector in activities beyond the
technical activities of surveying and mapping to include right determination.
It is unfortunate that the decision to involve the private sector was not submitted
to a higher law-making authority than the Minister. It is, in principle, not
objectionable that purely technical activities of land right registration be delegated
to the private sector but that is an important policy decision which ought to have
been submitted to the legislature (the DPR).
In any review of the Basic Agrarian Law, consideration should also be given to
this question.
162
Article 5 Government Regulation No 24 of 1997 Re Land Registration.
92
5.4 Registration Outside Cities
The Elucidation of the Basic Agrarian Law states that “registration will be
implemented by taking into account the interests and condition of the State and its
people, the needs for socio-economic movements, and the possibilities open in
terms of personnel and equipment. In view of this, the cadastre will be
implemented first in cities and subsequently, on a gradual basis, throughout
Indonesia.”163 Land registration to date has not focussed solely on the cities. This
practice is in direct conflict with the elucidation. So that this contradiction is
removed, the law requires amendment to enable registration to focus on the poor,
the greatest number of which live in rural areas.
5.5 Calls for Review of the Basic Agrarian Law from within Indonesia
The view that the land law confers wide administrative discretions on the agencies
of the State is also being expressed within Indonesia. In a State where the
executive power is stronger than the judiciary and the legislature, the right of
control over land as stipulated in the Basic Agrarian Law can easily turn into
arbitrariness on the part of the government. This has been evident in the growing
discrepancy in the ownership of land as a productive asset, the lack of recognition
and protection for the people’s rights on land, the government’s unclear attitude
towards hak ulayat, the people’s access to land and their weak bargaining position
in the settlement of land disputes. The State’s right of control over land should be
limited by law. This means that the Basic Agrarian Law needs to be revised.164
There has also been recent developments within the government to generate a
reform process. Presidential Decree No 48 of 1999 Re Team of Policy and
Regulation Review for Land Reform Implementation was issued on 27 May 1999.
The ambit of the decree went beyond the mere land reform provisions of the Basic
Agrarian Law and extended to a review of the regulations concerning land affairs
generally165.
It has also been said “that it is the right time for us to develop a new Land Law as
a replacement for the Basic Agrarian Law, more so because the considerations
given for the establishment of the Basic Agrarian Law --which were made in
reference to Presidential Decree No. 5 of 1959 and to the Political Manifesto of the
163
General Elucidation Part A (IV).
164
Per Prof. Lutfi Nasution Bogor Institute of Agriculture reported in Kompas 29 October 1999.
165
Article 3 of the Decree stated the tasks of the Land Reform Team as including the “review of the regulations
concerning land affairs”.
93
Republic of Indonesia as stated in Presidential Address dated 17 August 1960--
are no longer relevant now.”166
The pressures for reform of land policy generally have been identified as
population growth, the shrinking supply of land, the deterioration of its quality,
the shift in land functions, the mounting seriousness of conflicts over land use,
poverty, unemployment, unequal distribution of access to land and the
marginalisation of the rights of adat-law communities.167
5.6 General Conclusion

The general conclusion from the foregoing analysis of the provisions of the Basic
Agrarian Law which relate to land tenures and title registration, those which
impact on the development of the land market and those dealing with traditional
rights of indigenous peoples is that, on all three counts, radical review of that law
and its main implementing provisions is essential to remedy the multitude of
problems caused by excessive State control of tenures and their basic legal
insecurity, legal provisions which prohibit or inhibit the development of a land
market and those which fail to secure the interests of traditional communities in
respect of land.
These wide-ranging and multi-dimensional issues concern the whole of

Indonesian society and can not be dealt with solely through the land
administration agency. What is required to address the problems of the present
land law system is an independent National Land Law Reform Commission or
similar body established by an Act of the Parliament to:
w develop land law reform policies and strategies;
w develop inter-agency cooperation;
w undertake strategic reform activities;
w generate and supervise legislative reforms; and
166
Prof. C.F.G. Sunaryati Hartono, SH Hak Ulayat Arrangements in the New Basic Agrarian Law Jakarta,
reported in Kompas 31 August 1999.
167
Per Sumadjono M Professor of Agrarian Law University of Gajah Mada Yogyakarta Land Policy Reforms
Kompas 25 September 1998.
94
w procure advice from experts.168
Without such a broad-based land law reform agent, it is difficult to see how the
problems presented by the Basic Agrarian Law for the people of Indonesia,
particularly those pertaining to the security of land tenure and invasive State
control, civil peace and the problems it poses for the Indonesian economy and
indigenous peoples will ever be solved in a just way.
Warren Wright
Land Law Adviser – International
16 December 1999
Jakarta
168
Per Indonesian Land Law and Tenures Issues in Land Rights op. cit. pp. 8-3 – 8-4. A recent development is
the creation of the National Law Commission comprised of prominent intellectuals and practitioners (Kompas
14 December 1999 “Anggota Komisi Hukum Berannggotakan Enam Orang”)
95
BIBLIOGRAPHY & REFERENCES
LAWS AND REGULATIONS
Nederlands
Agrarische Wet 1870 (Agrarian Act State Gazette 1870-55)
Domeinverklaring 1870 (Declaration of the State as Owner 1870 State Gazette 1870-
115)
Algemene Domeinverklaring (General Declaration of the State as Owner State Gazette

1875-119a)
Domeinverklaring untuk Sumatera (Declaration of the State as Owner for Sumatera

State Gazette 1874-94f)
Domeinverklaring untuk Keresidenan Menado (Declaration of the State as Owner for

the Regency of Manado State Gazette 1877-55)
Domeinverklaring untuk Residentie Zuilder en Oosterafdeling van Borneo (Declaration of

the State as Owner for the Regencies in the Southern and Eastern Parts of
Kalimantan State Gazette 1888-58)
Koninklijk Besluit (Decree of the Dutch Kingdom State Gazette 1872-117)
Grondvervreemdingsverbod (Ordinance on Prohibition on Land Alienation 4 August

1875)
Burgerlijk Wetboek voor Indonesie (Civil Code for Indonesia State Gazette 1847-23)
Indonesia
Basic Agrarian Law 1960
a
Circular Letter of the Minister for Agrarian Affairs No 500-2165-DIII 27 May 1999
Re Forms and Drafts of Decisions on the Granting and Extension of Rights on Land
Decision of the Minister for Agrarian Affairs No 2 of 1998 Re Granting of Hak
Milik on Land for Houses Purchased by Civil Servants
Decision of the Minister for Agrarian Affairs No 6 of 1998 Re Granting of Hak

Milik on Residential Land
Decisions of the Minister for Agrarian Affairs No 9 of 1997, No 15 of 1997 and No 1

of 1998 Re Granting of Hak Milik on Land for Simple and Very Simple Houses
Government Regulation No 224 Tahun 1961 Re Implementation of Land

Subdivision and Compensation
Government Regulation No 24 of 1997 Re Land Registration
Government Regulation No 36 of 1998 Re Control and Utilisation of Abandoned

Land
Government Regulation No 40 of 1996 Re Hak Guna Usaha, Hak Guna Bangunan

and Hak Pakai
Government Regulation No 38 of 1963 Re Designation of Bodies Corporate which

may Own Hak Milik
Instruction of the Minister for Agrarian Affairs No 4 of 1998 Re Expedition of Land

Registration Service for Hak Milik on Residential Land
Law No 21 of 1997 Re Tax on the Acquisition of Land Rights and Buildings
Law No 1 of 1958 Re Abolition of Partikelir Land
Law No 4 of 1996 Re Security Rights on Land and Land-Related Objects
b
Law No 56 of 1960 Re Limits on the Area of Agricultural Land
Law No 2 of 1960 Re Share-cropping Agreements (Agricultural Land)
Law No 28 of 1999 Re State Organiser Which is Clean and Free from Corruption,
Collusion and Nepotism.
Presidential Decrees Nos 97 of 1993 and 41 of 1996
Regulation of the Minister for Agrarian Affairs No 2 of 1960 Re The

Implementation of Some Provisions of the Basic Agrarian Law
Regulation of the Minister for Agrarian Affairs No 2 of 1962 Re Confirmation of

Conversion and Registration of former Indonesian Rights on Land.
Regulation of the Minister for Agrarian Affairs No 9 of 1965 Re The Right of

Management
Regulation of the Minister for Agrarian Affairs No 3/1997 Re Implementing

Provisions of Government Regulation No 24 of 1997 Re Land Registration
Regulation of the Minister for Agrarian Affairs No 7 of 1961 Re Land Registration

Administration
Regulation of the Minister of State for Agrarian Affairs No 2 of 1993 Re Procedures

for Companies Wishing to Invest Capital to Obtain Location Permits and Land
Rights
Speech by the Agrarian Minister to the Dewan Perwakilan Rakyat-Gotong Royong

(Gotong-Royong House of Representatives) 12 September 1960 on the Introduction
of the Basic Agrarian Law
Australia
Aboriginal Land Rights Act 1983 (New South Wales)
Conveyancing Act 1919 (New South Wales)
c
Native Title Act 1993 (Commonwealth)
Native Title Act 1994 (New South Wales)
Real Property Act 1900 (New South Wales)
COURT DECISIONS
Mahkamah Agung 16 June 1976 No 1082/K/Sip/1976 and 19 September 1970 No
123/K/Sip/1970, 12 June 1976 No 952/K/Sip/1974
Mabo v The State of Queensland (No 2) (1992) 66 CLR 186
REPORTS AND TEXTS

Bathurst Declaration on Land Administration for Sustainable Development Report
of the Workshop on Land Tenure and Cadastral Infrastructures for Sustainable
Development United Nations International Federation of Surveyors Bathurst
October 1999
Benda-Beckmann The Minangkabau of West Sumatera An Anthropological Study
Butt P Land Law Edition 3 1996 LBC Information Services
Developing a Strategy for Registration of Communal Systematic Paper by

Registration Systems Adviser ILAP 13 December 1999 Land Administration
Systems Australia Pty Limited Jakarta 1999
Evolutionary Change in Indonesian Land Law Traditional Law (Adat)

Perspectives Final Report Land Administration Project Part C Support for Long
Term Development of Land Management Policies Topic Cycle 4
Gautama S. Indonesian Business Law 1995 Bandung PT Citra Aditya Bakti
Harsono B 1997 Hukum Agraria Indonesia: Sejarah Pembetukan Undang-Undang

Pokok Agraria, Isi dan Pelaksanaannya Jakarta Djambatan p pp. 263-268
d
Harsono B Hukum Agrarian Indonesia Himpunan Peraturan-Peraturan Hukum
Tanah Djambatan 1973
Indonesian Land Law and Tenures Issues in Land Rights Final Report Topic Cycle
4 Part C Indonesian Land Administration Project (Support for Long Term
Development of Land Management Policies)
Informasi Peraturan Peraturan-Undangan Pertanahan Biro Hukum dan Humas

BPN Jakarta 1996 – 1999 Vols. 1-4, 6-9
Land Acquisition and Development Controls Final Report Part C Land

Administration Project (Support for Long Term Development of Land
Management Policies)
LASA Report on the Review of Government Regulation No 24 of 1997 dated 9

September 1999
Masruchah Untoro (ed.) Tanah, Rakyat dan Demokrasi 1995 Forum LSM – LPSM
DIY
Memoranda KPA Keempat Mengenai Proyek Administrasi Pertanahan “Tidak!

Untuk Pendaftaran Tanah Komunal” (No! to Communal Land Registration)
Konsortium Pembaruan Agraria Bandung 1997
Pendaftaran Tanah di Indonesia Edisi 2 1998 Koperasi Pegawai Badan Pertanahan

Nasional Bhumi Bhakti
Project Preparation Report Indonesian Land Administration Project 1993

LASA/BPN
Reinhart A ILAP National Land Law Adviser Annotations on Government

Regulation No. 24 of 1997 Jakarta 1999.
Rowton-Simpson Land Law and Registration
e
Soesengobeng H Social Assessment Impact Study 1 November 1999 Land
Administration Systems Australia Pty Limited Jakarta 1999
Sumadjono Maria Land Policy Reforms Kompas 25 September 1998
Ter Haar B Asas-Asas dan Susunan Hukum Adat trans. K. Ng. Soebakti
Poesponoto Pradnya Paramita Jakarta 1994
Van Vollenhoven in Indonesian Adat Law
West D. “The Role of Land Registration in Developing Countries” 102 Chartered

Surveyor November 1969 212
Wignjodipoero S Pengantar dan Asas-Asas Hukum Adat 1988 Jakarta C V Haji

Masagung
World Bank Staff Appraisal Report Document No 12820-IND Indonesian Land

Administration Project 16 August 1994
World Bank A Social Assessment Study of the Land Certification Program The
Indonesian Land Administration Project 1999 Jakarta
NEWSPAPER REPORTS
Asian Wall Street Journal 24 November 1999 page 5 Thompson Global Markets
Sumadjono Maria Land Policy Reforms Kompas 25 September 1998
Prof. Dr. Lutfi Nasution Bogor Institute of Agriculture Kompas 29 October 1999
Prof. Dr. C.F.G. Sunaryati Hartono, SH Hak Ulayat Arrangements in the New UUPA
Jakarta, 31 August 1999
f
Anggota Komisi Hukum Beranggotakan Enam Orang (Law Commission
Comprised of Six Members) Kompas 14 December 1999

Review of The Basic Agrarian Law of 1960 (Indonesia)

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LAND ADMINISTRATION PROJECT

Chapter I Indonesian Land Tenures

Chapter II Registration of Land Rights and Security of Title

It is concluded that if the goal of a stable land market is to be realised in

Chapter IV The Basic Agrarian Law and Hak Ulayat

EXECUTIVE SUMMARY i - iii

1. CHAPTER I - LAND TENURES ........................................................................................................................................ 1

BIBLIOGRAPHY & REFERENCE a -f

“The legal foundation…needs fundamental reform.” 1

1. CHAPTER I - LAND TENURES

1.2 Objectives of the Indonesian Land Administration Project (ILAP)

The assertion that an accurate and efficient land registration system is an

What is meant by security is firstly, the degree of security which is conferred by

Once an initial land ownership record is constructed through the implementation

1.3 Land Tenures - Introduction

1.5 Indonesian Land Tenures

w the right of ownership (hak milik);

w the right of exploitation/cultivation (hak guna usaha);

w the right to use buildings (hak guna bangunan);

w the right of use (hak pakai);

w the right of lease (hak sewa);

w the right to clear land (hak membuka tanah); and

w the right to collect forest produce (hak memungut-hasil-hutan).

Rights which have been stipulated by way of an Act are:

w the security right (hak tanggungan); and

w the right of management (hak pengelolaan).

w the right to use water (hak guna-air);

w the right to use airspace (hak guna-ruang-angkasa).

1.5.1 Right of Ownership (Hak Milik)

1.5.2 Right of Exploitation/Cultivation (Hak Guna Usaha)

1.5.3 Right to Use Buildings (Hak Guna Bangunan)

1.5.4 Right of Use (Hak Pakai)

1.5.5 Right of Lease (Hak Sewa)

Hak sewa is not available over State land.19

1.5.7 Security Right (Hak Tanggungan)

1.5.8 Right of Management (Hak Pengelolaan)

The right of management may only be granted to government departments and

1.5.11 Right of Use of Airspace (Hak Guna Ruang Angkasa)

1.6 Security of Indonesian Tenures

Before turning to a detailed examination of the provisions of the Basic Agrarian

1.7 The Origins of Legal Uncertainty in Indonesian Land Law.

w the Agrarian Act of 187023;

w all of the regulations establishing State land rights (domeinverklaring)24;

w the agrarian property right (agrarische eigendom) contained in Royal Decree of

In addition to the express revocations, other regulations were implicitly revoked.

1.9 Insecurity through Failure to Enact Implementing Regulations of the

Pending the promulgation of such implementing regulations, a period of

w the government regulation on the creation of the right of ownership according

w the law concerning further provisions on the right of ownership mandated in

w the imposition of areal limitations on non-agricultural land in accordance with

w the government regulation on the right to collect forest products referred to in

w the abolition of temporary rights in accordance with Article 53.

1.10 The Reinforcement of Uncertainty- Further Modification of Adat Land

1. the interests of the State and nation based on national unity;

Legal pluralism predicates the coexistence of different systems of law; something

2. Adat Law May not Contradict Indonesian Socialism

The only other guidance on the principle of Indonesian socialism is to be gleaned

According to Gautama36, the principles of Indonesian socialism are most evident

The imposition of areal limits on land ownership is not an expression of the

w to end the landlord system and to abolish unlimited land ownership by

w to increase national production and promote intensive cooperative farming in

There seems to be no purpose to the continued articulation of socialism of any

3 (b) Adat Law must not contradict Other Legislation