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The Urgency of Establishing a Land Bank as a Special Legal Entity

The government is currently discussing a presidential regulation that regulates the operations of the Land Banking Agency, which is regulated by GR 64/2021. This regulation is one of the technical regulations for the Land Banking Agency that the government formed last February through Government Regulation No. 64 of 2021 concerning the Land Banking Agency (“GR 64/2021”). The establishment of this institution is mandated by Law No. 11 of 2020 concerning Job Creation. GR 64/2021 was stipulated by President Joko Widodo on April 29, 2021 in Jakarta and was promulgated by the Minister of Law and Human Rights ad interim Mohammad Mahfud MD on April 29, 2021 in Jakarta.

The Land Banking Agency is a special agency and not a public service agency, called sui generis, an Indonesian legal entity established by the central government, exercising part of the government’s authority but is autonomous or independent, and given special authority to manage land.

The assets of the Land Bank are controlled by the Land Bank. These assets, both tangible and intangible, are valuable as a result of past events that provide benefits in the future.

Land Banking in GR 64/2021 has the function of agrarian reform. Agrarian Reform is the restructuring of the control, ownership, and utilization of land that is more equitable through asset management and is accompanied by structuring access for the prosperity of the Indonesian people. The agrarian reform carried out by the Land Bank done outside the forest area.

GR 64/2021 became the basis for the formation of the Land Bank, which has special authority to ensure the availability of land to create a fair economy. The constitution has provided clear regulations regarding land in Indonesia. It is affirmed in Article 33 paragraph (3) of the 1945 Constitution of the Republic of Indonesia that the power given to the earth, water and natural resources contained therein rest with the state. The state is obliged to regulate ownership and its use. The goal is that all land in the entire territory of the Indonesian nation’s sovereignty is used for the greatest prosperity of the people.

Fair economics, according to the Land Bank, as regulated in GR 64/2021, is land for the public interest, social interest, national development interest, economic equity, land consolidation and agrarian reform. The Land Bank answers to the president through the committee. The assets of the Land Bank are separate from state assets. The Land Bank is headquartered in the capital city of the Republic of Indonesia and may have representative offices throughout the territory of the Republic of Indonesia.

GR 64/2021 states that the functions of land banking are planning, land acquisition, land procurement, land management, land utilization and land distribution. The Land Bank is also called a land manager, which will regulate land allocation, take inventory and manage the land in order to develop the land optimally. In conceptual land management, policies and strategies to optimize land utilization must be developed. The Land Bank will also direct the development of land use. The duties of the Land Bank in GR 64/2021 are:

  1. carry out long-term, medium-term and annual planning activities;
  2. acquire land that can be sourced from the stipulation of the government and other parties;
  3. carry out land acquisition for development in the public interest or direct land acquisition;
  4. carry out land management from development, maintenance and security activities and land control;
  5. make use of land through cooperation with other parties; and
  6. carry out land provision and distribution activities.

The Land Bank distributes land in the context of fulfilling the availability of land for public interests, social interests, national development interests, economic equity, land consolidation and agrarian reform. Land distribution carried out by the Land Bank is different from land redistribution, which is the distribution of land directly to persons or entities by the ministry that carries out government affairs in the fields of agrarian/land and spatial planning.

Future regulations are predicted to support the development and operation of land banking in Indonesia. Should you wish to learn more about land banking in Indonesia, please send us an email at info@schinderlawfirm.com.

Schinder Consultant London Ltd.


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