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Indonesian Government has issued the Code No.11 of 2020 pertaining to Creation Job on Nov 2, 2020 which is the so-called “Ominibus Law”. This Omnibus law is aiming at reaching four (4) objectives: First, job shifting to other countries, second, Indonesian competitiveness jobseekers’ power is relatively lower than other countries, third, the unemployment or not yet employed inhabitants are increasing, and four, Indonesia comes into a middle-income trap.

 

There are dozens of statutory regulations squeezed and united in the Omnibus Law having total of 49 derivatives implementation rules (45 Government Regulation and 4 Presidential Regulations). One of them is the regulation with respect to management right, land rights, right of ownership over stacked units (SHMSRS) and land registration as specified in the Government Regulation No.18/2020 (“GR No.18/2020”).

 

Summary of the important issues in the GR No.18/2020 to be highlighted for further contemplation are as follows:

 

State land (Tanah Negara). As we know, it has been decades since issues of the state land becoming problems in society.  Individuals or companies often acknowledge certain lands owned by the state when they see formal announcements having the legal threats for the infringement. This announcement usually appears at the same time when the dispute arises. Normally, when an individual or company is starting to utilize the land or request for permits, then the Governmental Authority will notify the true owner of the land. The worse is,  usually, the problem just rises after the building has been constructed on the land. Apparently, the owner of the building did not know to whom he was supposed to deal with. Many similar cases occur because the building owner does not want to ask the relevant National Land Agency (BPN) concerning the lawful owner of the land but merely meets the farmers who are sharecropping the land. Consequently, if the land used is a State Land, then the government is entitled to enforce the rights over the land and demolish the building. 

 

According to Paragraph (1) Art.2 of the GR No.18/2020, State Land is defined as the land is directly owned by the state, constituting the entire parcel of land in the territory of the State of the Republic of Indonesia and no other party has the rights on it. So, it becomes clear that all lands in the Republic of Indonesia owned by the State unless another party obtains the rights according to the Indonesian laws. At the same Article, Paragraph (3) further describes in detail concerning types of State Lands i.e. land as specified by regulation or the government, reclamation land, ground rises, land originated from relinquishing/releasing right, land originated from clearance of the forest area, abandoned land, lands whose duration rights expired and no renewal application, lands whose rights expired and unrenewable by government policy; and lands from the beginning are the state lands.

 

Management Right (Hak Pakai). Before the promulgation of the Omnibus Law, general knowledge for the Management Right was originated from State Land. Yet, the Government has extended the understanding that the Management Right can be obtained from State Land or Customary Land (“Tanah Adat/Tanah Ulayat”). Management Right over the State Law is given to Governmental Authorities such as central governmental authorities, local governmental authorities, state-owned enterprises/local-owned enterprises, state-owned legal entities/local-owned legal entities, land bank agencies, or other legal entities appointed by the state. While the Management Right which is originated from customary land applicable to customary society exclusively. 

 

Other than solely used by the holder, the Management Rights is able to cooperate with a third party under land utilization agreement partly or wholly. The given Management Rights shall be made over rights of land such as the right to cultivate, right to build and/or right to use according to its nature and function pursuant to the government regulation. The Management Right originated from a state land or a customary land is made by ministerial decree and is mandatory to register in the relevant National Land Agency (BPN). The Management Rights is commenced when registered in the National Land Agency (BPN) and the holder will get ownership proof in the form of the Management Right certificate.

 

In addition, according to art. 12 of GR 18/2020 the Management Right cannot be pledged as a debt collateral through mortgage encumbrance and non-assignable to another party. The Management Right is merely subject to release if granted with a right of ownership or released for public interest or other provisions as regulated in the statutory.

 

The Management Right is revoked due to invalidated by the minister for the following reasons: 1 faulty administration; or final and binding court order; or released by its holder voluntarily; or release for public interest; or revoked by regulation; or granted with ownership right; or specified as abandoned land or destroyed land. Consequently, status of the land is back to the state land, or if the customary land returns to customary society’s control.

 

 

Right to Cultivate (Hak Guna Usaha)

Maximum period for the Right to Cultivate is 35 (thirty-five) years and extendable to maximum 25 (twenty-five) years with option to renewal for maximum 35 (thirty-five) years. When total maximum period (95 years) is accomplished, then the land with right to cultivate is returned to a Land directly controlled by State or a land with Management Right. The holders of the Right to Cultivate are Indonesian citizen or legal entity incorporated according to Indonesian Laws and domiciled in Indonesia, failing which, not later than 1 (one) year the Right to Cultivate must be transferred to other party conforms to law, otherwise the Right to Cultivate is revoked by laws.

 

Lands for the Right to Cultivate are:  State Land and Maintenance Land. Right to cultivate is granted by decision of the Ministry, however, if the Right to cultivate is given over the Maintenance Land, then the decision must rely on the approval of the holder of the Management Right.

 

Application to renew the Right to Cultivate must be submitted not later than 2 (two) years upon ending of the Right to Cultivate. However, if the Right to Cultivate is given over the Management Right, its extension and renewal are merely applied if the land already used in accordance with the purpose of the granting of the right.

 

The Right to Cultivate can be used as collateral through mortgage encumbrance and is assignable or released to other party or changeable for the Right.

 

 

Right to Build (HGB)       

for Right to build is divided into 2 categories:

1. HGB over the State Land; max. 30 (thirty) years, extendable to maximum 20 (twenty) years, and renewable to max. 30 (thirty) years. 
2. HGB over Ownership right Land; max. max. 30 (thirty) years, renewable by a granting deed of HGB over the ownership right.

 

Holder of Right to Build is prohibited to; (i) confine or close yards or other land areas from public traffic, public access and/or waterways; (ii) destroy natural resources and preserve environmental sustainability; (iii) abandon the land; and/or (iv) construct permanent building reducing conservation function of the embankment, conservation function of the boundary and other conservation function, so long as the area of the right to build has a water body border or other conservation function.

 

Right to Build is also able to be a security of debt by encumbering a mortgage. In addition, the Right to build is assignable or released to another party and changeable to the right.       

 

 

Right to Use (Hak Pakai)

There are 2 categories for the Right to Use:

1. Right to Use with limited period for Indonesia citizen and legal entities incorporating pursuant to Indonesian laws and domiciling in Indonesia, foreign legal entities having their representatives in Indonesia, social and religion bodies, as well as foreigner.

 

1. Right to use with no limit of period (so long as it is used) for central governmental institution, local government, village apparatus, and representatives of foreign states and international body representatives. Not all Land Rights able to be used for the Right to Use. PR 18/2020 states only 3 Land Rightss for the Right to Use namely, State Land, Ownership Right and Management Right.

 

Right of Use over the State Land and the Management Right have a duration of 30 (thirty) years, subject to extend for max. 20 (twenty) years and renewable for 30 (thirty) years. Right to use over the ownership right is given for max. 30 (thirty) years and subject to extend by the granting deed for the right to use.

 

Further to give clearer meaning, the Right to Use over the State Land is granted by ministerial decision. The Management Right is given by ministerial decision pursuant to approval from the holder of Management Right, and the Right to Use over ownership right is given by holder of the ownership right through notarial deed passed by land deed Official.

 

Right of Ownership over Stacked Units (SHMSRS)

Those who are entitled to SHMSRS; Indonesia citizen, Indonesia legal entities, foreigner having license pursuant to regulation, foreign legal entities having its representative office in Indonesia; or representative foreign state and international institutions having their representatives in Indonesia; and central governmental agencies.

 

The fresh important issue in this topic is an Indonesian citizen marrying a foreigner may have the same ownership rights over the lands as other Indonesia citizens do. These ownership rights shall not be treated as "joint assets"  and proven by asset separation agreement between husband and wife in the notarial deed. This provision has adopted a constitutional Court Decision No. 69/PUU/XIII/2015 dated 27th day of October 2016, the case was filed by Mrs. Ike Farida.

 

Land Rights or Management Right on Upperground and Underground.

The utilization to the use of land parcels owned by holder of the Land Rights being limited by:

1.  Height limit according to the building basic coefficient (KDB) and the building floor coefficient (KLB) are set in spatial plan; and
2. The depth limit set in the layout plan space or up to a depth of 30 (thirty) meters from ground level, so long as it has not been arranged in the spatial plan.

 

Accordingly, land which is structurally or by function separated from holder of the State Land constituting upper ground or underground controlled by state. Should there be utilization of oil and natural gas resources as well as minerals and coal, the Land Rights on the underground cannot be granted. The upper ground and the underground may be granted with Management Right, Right to Build, or Right to Use after being utilized.

 

Land Registration

Art.90-91 of PP No.18/2020 gives a fresh legal issue by establishing provisions concerning the Control of Land Registration Administration. This issue is highly required for consumers as justice seekers amid many bankruptcy applications filed through commercial district court. Consequently, the consumers become concurrent creditors due to the Sale and Purchase Agreement entered by consumers as buyers and sellers merely deemed as an ordinary contractual agreement since no title transferred to the buyers. Let us go through these clauses:

 

Art.90

1. A concerned party may submit an application of recording for Sale and Purchase Agreement, or Lease Agreement upon the Land registered in the Land Agency.
2. The recording as meant in paragraph (1) conducted in the general register and/or Land Rights certificate. 

 

Art.91

1.  In the event the Land becomes an object of dispute in the court, the concerned parties may submit an application of recording to the Land Agency that the Land Rights or the Right of Ownership over Stacked Units becomes the object of dispute in the court by attaching copy of the civil claim in connection therewith.

2. The Recording as meant in paragraph 1 above is deleted automatically within 30 (thirty) calendar days as from the date of recording or the party submitting the record has revoked his request before the period ended.

3. If the judge, examining the case as meant in paragraph 1, instructs “status quo” over the Right of the Land or the Right of Ownership over Stacked Unit, then based on the judge’s instruction, the application is recorded in the Land Agency.

4. The Recording concerning status quo instruction as meant in paragraph (3) is deleted automatically within 30 (thirty) calendar days unless it is followed by court decision of collateral confiscation in which the official copies and minutes of the execution conveyed to the Head of Land Agency.

 

Given Art.90 and Art.91 of GR No.18/2020, parties in dispute may notify the Head of Land Agency that the land or the unit becomes object of dispute in the court. Thus, this notification will put a halt to any legal act over the related Land Rights or the Right of Ownership over Stacked Unit and, therefore, no party able to transfer, assign or other legal acts which may change the ownership of the object. However, without prejudice to this progress, we hope that there will be derivative laws issued by the government to give legal certainty with respect to the rights of buyer who already made substantial payments to seller for the object (of dispute) although not yet in full.