T

he debate over giving more flexibility and freedom to foreigners on residential ownership in Indonesia is never-ending.

Despite different views from various parties, the government has made the final step, promulgating a government regulation in the last week of December.

There are several elements in the regulation that are controversial or unclear. The change of duration of right of use (hak pakai) from 70 years to 80 years is highly material.

The separation of marriage asset agreements is another element that is still unclear.

There is wide interpretation and meaning of residence permits for foreigners. I want to look at the conflict between the new regulation of 2015 and other regulations, vertically and horizontally.

The new regulation refers to Law No. 5/1950 on basic agrarian provisions, aka the Land Law. This is a fundamental law that has influence on many other laws.

The Land Law stipulates the types and characteristics of land rights in Indonesia, including right of use. From its origin, as explained in the elucidation of the Land Law, right of use derives from a '€œcollection of meanings'€ of various names of rights of land, with slight regional differences.

Right of use essentially authorizes the holder to use and/or cultivate crops on land that is directly controlled by the state or other parties that is not categorized as a lease or land utilization agreement.

The law further stipulates that the duration of right of use can be definite or as long as the land is used for a definite purpose. The Land Law does not specifically stipulate the duration of right of use. It only states that it can be for a definite term or as long as it is used.

Nevertheless, elucidation of the Land Law states that foreigners and foreign legal entities can have right of use since it only gives limited authority.

The '€œlimitation of authority'€ is further translated through a government regulation of 1996 on right to build (hak guna bangunan), right to cultivate (hak guna usaha) and right of use.

A regulation of 1996 stipulates the duration of right of use is 25 years, extended for 20 years and renewed for 25 years. This results in a maximum 70-year duration.

This duration is 10 years less than duration of right to build, which has a maximum of 80 years. Plus, it regulates that if the holder of right of use would like to transfer his or her rights, he or she needs to obtain prior approval from the officials issuing the certificate of right of use.

These are two essential terms under the regulation where the '€œlimitation of authority'€ is differentiated between right to build, right to cultivate and right of use.

In order to promote foreign investment, the government promulgated a new law on investment in 2007 granting approval in advance on extension and renewal of duration of rights of land under the Land Law.

A few months after its promulgation, the Constitutional Court nullified the terms '€œapproval in advance'€ and accordingly, the extension and renewal can only be made before the term is going to expire.

The 2007 Investment Law clearly regulates that the duration of right of use is 25 years, extended for 20 years and renewed for 25 years. The terms in the Investment Law simply adhere to the government regulation of 1996.

Since the new government regulation of 2015 stipulates the duration of right of use is for 80 years, instead of 70 years, it clearly contradicts the Investment Law. In addition, it also violates the philosophical purpose of right of use under the land law of 1960.

From the explanation above, it is unquestionable that the duration of right of use is in conflict with what has been regulated under the government regulation of 1996.

Another important point is that if the new regulation of 2015 is not rectified, land agencies and other government officials will interpret that for Indonesians, the right of use is valid for 70 years, but for foreigners, it is valid for 80 years. This is not only a conflict in the provisions of regulations, but more importantly, a violation of Indonesia'€™s fundamental rights.

The government regulation of 1996 is only one of many regulations that contradict the new regulation of 2015.

What is shocking is that on the same date, i.e. Dec. 28, 2015, the government also issued a new regulation on special economic zones. In this regulation, it is stipulated that the duration of right of use for foreigners is 70 years.

Why, on the same date, did the government issue several regulations, regulating the same topic, but with two different durations?

Being prudent is always better than acting hastily. It is important that the government always involve legal experts, academics, legal practitioners and private parties before issuing any regulations that have an impact on a particular business sector or even the public-at-large.

It is the government'€™s obligation to ensure that the regulations are implement able and do not contravene existing laws.

Doing so is eventually bad for business, especially for foreign investors.

It is therefore essential to review the new regulation of 2015 to harmonize it with the higher-ranking regulations and horizontally related regulations.

The government has to understand that to use the law as a social engineering tool must not violate legal principles.
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The writer is the founder and managing partner of Leks&Co lawyers