T

he Finance Ministry will issue a regulation to make the use of government land-capping funds more flexible so that the funds can be utilized more effectively in reviving stalled infrastructure projects.

Finance Minister Bambang Brodjonegoro said Friday that land procurement funds for stalled infrastructure projects could be tapped from the government'€™s land-capping funds.

'€œWe want to make it more flexible so that funds earmarked for land-capping can be utilized for land acquisition,'€ he told reporters after Friday prayers at the State Palace.

The land-capping fund is a fiscal instrument whereby the government caps land prices at a certain level and provides funds to compensate private investors if there is any unexpected price increases.

The other notable fiscal instrument is the land revolving fund, whereby the government temporarily covers land acquisition costs for infrastructure projects to be reimbursed by investors at a later date.

Land-capping funds, which are allotted in Public Works and Public Housing Ministry spending, amount to at least Rp 5 trillion (US$374 million) in the 2015 state budget, according to Bambang.

Bambang said he would soon issue a specific Finance Ministry regulation (PMK) altering the usage of land-capping funds.

He said that with the new regulation, some of the land-capping funds could be used for land acquisition for the new toll road connecting Pemalang to Batang in Central Java.

The Pemalang-Batang toll road has been stalled since 2008 as it encountered land acquisition issues, with data from the Public Works and Public Housing Ministry showing that land acquisition was only at 1.8 percent as of January this year.

The second phase of the toll road will connect Batang to Semarang and land acquisition for it stands at 3.3 percent, according to the January data.

One of the major constraints facing infrastructure development in the country is in land acquisition, as government officials and private companies involved in the projects often face resistance from locals who refuse to sell their land, which delays construction.

To resolve the issue, the House of Representatives endorsed the 2012 Land Acquisition Law, which makes it possible to force people to sell their land for the construction of public infrastructure if they are paid fair compensation by the government.

Early signs showed that the law, which was fully implemented only this year, had succeeded in making land acquisition easier, according to Coordinating Economic Minister Sofyan Djalil.

'€œFrom what I'€™ve seen in several cases, the implementation of this law is quite successful. In a toll road construction project in Palembang, for example, we managed to settle at least 7 kilometers of land acquisition within three months,'€ he said on Friday. '€œNational Land Agency [BPN] officials could just ask us which land a project may need, then settlement of the land acquisition is guaranteed,'€ he noted.

Nevertheless, while supporting the construction of government projects, the law guarantees citizens'€™ rights to their property, as those refusing to sell their land, or those dissatisfied with the compensation offered, can appeal to the state administrative court (PTUN) or later to the Supreme Court if the case is extended.