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The much-awaited presidential regulation on land acquisition, which has taken more than six months to draft, failed to impress businesses looking forward to an acceleration in infrastructure development.
Signed by President Susilo Bambang Yudhoyono on Aug. 7, the regulation is supposed to serve as the legal basis for the implementation of the Land Acquisition Law, passed by lawmakers late last year.
Both the Indonesian Chamber of Commerce and Industry (Kadin) and the Indonesian Employers Association (Apindo) expressed on Friday their disappointment with the bill.
Contention over the regulation centers on the failure to help ongoing infrastructure projects that have ground to a halt due to land problems, according to Kadin deputy chairman, Didie Suwondho.
“Investors who have financed these ongoing projects are now facing difficulties in acquiring land. This should have been covered in the regulation,” Didie said.
However, the regulation will only cover new projects that are yet to be endorsed by the government.
Among the stalled projects are 24 toll roads, including sections of the Jakarta outer ring road project and the trans-Java toll roads. The entire project, which will cover 605 kilometers, is worth around Rp 160 trillion (US$16.96 billion).
The infrastructure and regional development deputy for the Office of the Coordinating Economic Minister, Luki Eko Wuryanto, said the regulation would only cover ongoing projects if the investors failed to find concrete solutions to their land problems by 2014.
“It will not be until 2014 that the stalled projects will be covered under the regulation,” Luki said.
Another cause for dismay in the regulation is the 583-day maximum time limit to complete an acquisition of land; considerably longer than the 400 days proposed by business associations.
Apindo chairman Sofjan Wanandi said the regulation showed that the government had no clear understanding of the importance of accelerated infrastructure development.
“Just imagine, under the regulation, it will take almost two years to complete the process of acquiring land for infrastructure. This shows there is too much bureaucracy involved during the process,” said Sofjan.
“This doesn’t include talking about building infrastructure on the land, which may take another three years. So, developing one public infrastructure project could take five years or more. It’s just illogical. There’s no sense of urgency.”
Indonesia’s economic development has been stalled primarily by the lack of infrastructure, such as roads, seaports, airports, power plants and railways.
Economists believe the country cannot grow by more than 6.5 percent annually if infrastructure is kept at minimum capacity.
Coordinating Economic Minister Hatta Rajasa remains upbeat about the regulation, however, saying there will be more new investment in the infrastructure projects covered by the regulation.
Hatta has pioneered the so-called Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI), an ambitious program that has infrastructure development at its core.
Under the program, the government plans to construct massive infrastructure projects in six corridors throughout the archipelago, including the trans-Kalimantan highway, and the development of roads and seaports in Papua.
The development of the corridors is expected to garner at least Rp 4,000 trillion in investment in various projects within a 15-year period, spanning from 2011 until 2025.
To attract this much-needed investment, the government had pledged to provide a more business-friendly environment.
“But with such a regulation, these projects will remain on paper,” said Sofjan.
Wijaya Karya’s corporate secretary, Natal Argawan, said the regulation would at least provide legal certainty over land acquisitions and their fixed time frames for the future.
He argued that the regulation was “better than having nothing at all. But I do hope the government will somehow improve the regulation in the future,” he said.
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Other key points in Presidential Regulation No. 71/2012
• All institutions that want to acquire land for public infrastructure must formulate land-acquisition documents, which consist of planning, spatial suitability, land location, land area, land status and land appraisal estimates. The documents will then be submitted to governors in those respective areas.
• The governor must establish a preparation team consisting of the regent or mayor, a provincial apparatus working unit (SKPD) and other relevant institutions.
• The preparation team is in charge of conducting a public consultation on the planned land acquisition by inviting all stakeholders, including affected local communities, to determine the location of an infrastructure project.
• Compensation can be given in the form of cash, relocation, stock ownership or other forms based on the agreement made by all the stakeholders.