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Govt eyes corporate money to promote land reform
Under Indonesia’s mixed economic system, known as Pancasila economics, the cash-strapped government is launching a socialist-like land reform program by including private companies’ capital on its list of donations
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nder Indonesia’s mixed economic system, known as Pancasila economics, the cash-strapped government is launching a socialist-like land reform program by including private companies’ capital on its list of donations.
Agrarian and Spatial Planning Minister Sofyan Djalil has stated that the government is able to secure Rp 1.1 trillion (US$82.5 million) of funds from the state budget to certify 2 million plots of land. It only certified 40 percent of the target of 5 million plots in this year’s land reform program.
“We are still struggling to [collect] the remainder,” he said on Monday, adding that the Rp 1.7 trillion shortage was expected to be covered by the revised 2017 state budget and other sources including private companies’ corporate social responsibility (CSR) funds, regional administration budgets and the banking industry.
For example, last year, Sofyan signed an agreement with regional administration heads from Jakarta, Surabaya in East Java and Batam in Riau, to give people incentives to certify their land.
The Jakarta administration has agreed to spend Rp 100 billion on land certification in the capital. However, the plan has not materialized, with the ministry claiming that funds have yet to be allocated as incumbent Jakarta Governor Basuki “Ahok” Tjahaja Purnama is running for reelection.
Jakarta has also agreed to relieve people of a 5-percent building and land certification tax for land valued below Rp 2 billion.
Meanwhile, Surabaya has been working with at least nine developers, including Ciputra Group, to help certify 6,500 plots of land through their CSR programs. “We also ask the banks to assist their clients in land certification with financing because most lenders avoid HGB [building use permits] as collateral,” Sofyan said.
The government has estimated that the financial assistance from the private sector and regional administrations could broaden the certification program to 1 million to 2 million plots of land, adding to the government’s target of 5 million plots.
Through the mammoth task, it has embarked on agrarian reform that includes land certification as well as fighting back against land mafia. The ministry recently signed a memorandum of understanding (MoU) with the National Police to take stern action against rampant land mafia practices.
President Joko “Jokowi” Widodo has also promoted his agrarian reform plan as a key to reducing poverty as well as narrowing the equality gap. The reform agenda includes the granting of 21.7 million hectares of idle land to customary people and low-income farmers to improve their welfare and reduce economic disparity.
Land ownership issues from a lack of certification have been a major problem for years, with disputes involving big companies, especially farming and mining firms, often resulting in social conflict.
The problem, which often includes the falsification of land-ownership certificates involving collusion between corporations and officials from different government institutions, along with land mafia practices, could seriously hamper land reform plans in the country.
The land certification target will be increased to 7 million certificates next year and 9 million the year after. So far, only around 45 percent of land assets in Indonesia have been certified.
“Whether their target will be achieved will depend on their commitment, the human resources to measure and certify the land and also the funding for it,” construction and real estate law expert Eddy Leks said, adding that the BPHTB cost hampered most people in land certification.
He reiterated that funding and government commitment were crucial to the land reform program. If the government managed to pull off the certification, it would have more ease in land procurement for future projects.
Agrarian and Spatial Planning Ministry secretary-general M. Noor Marzuki said the government had certified 30 percent of its targeted 5 million plots of land as of March. “The measurement is ongoing. We hope that by March or April we can deliver them [certificates] to people,” he said.
Last year, the ministry certified 1.1 million plots of land, an increase from 950,000 plots in 2015.
