1. A Land Acquisition and
Licensing for Property
Development in Indonesia- A
Legal Walkthrough

2. Discussion
PART A
• Overview of Type of Land in Indonesia and its characteristics
• Land registration and its system
• Land Acquisition in Indonesia
2

3. Legal Basis
• Law No. 5 of 1960 on Principal Provisions of Agrarian;
• Government Regulation No. 40 of 1996 on Right to Cultivate
(HGU), Right to Build (HGB) and Right to Use (HP) of Land;
• Government Regulation No. 24 of 1997 on Land Registration;
3

4. OVERVIEW OF TYPES OF LAND IN INDONESIA AND
ITS CHARACTERISTICS
4

5. OVERVIEW OF TYPES OF LAND IN INDONESIA AND ITS
CHARACTERISTIC
Types of Rights of Land in Indonesia
 Right of Ownership
 Right to Cultivate
 Right to Build
 Right of Use
 Right of Lease
Other Types of Rights in Indonesia (not regarded as Rights of Land)
 Right of Management
 Right of Ownership over Condominium Unit
5

6. OVERVIEW OF TYPES OF LAND IN INDONESIA AND ITS
CHARACTERISTICS
RIGHT OF OWNERSHIP
Right of ownership is the most powerful and the fullest hereditary right
that can be owned by a person over a land. (Article 20 Law No. 5 of 1960
on Principal Provision of Agrarian)
6

7. Owned by Indonesian only
RIGHT OF
OWNERSHIP Cannot be owned by foreigner and
legal entity.
Except the legal entity that was
appointed by government, as follows:
a. State Bank
b. Agricultural Cooperatives
c. Religious Institutions
Period of Time: d. Social Institutions
Indefinite
7

8. RIGHT OF OWNERSHIP
Right of Ownership may be revoked if:
1. The lands falls to the States due to:
• Revocation of right due to land procurement for public interest through
appropriate compensation
• Voluntary release by the owner
• The land is abandoned
• An Indonesian who released the nationality, therefore the Right of Ownership is
automatically revoked by law
• Transfer of right through sale-purchase, exchange, bequest, inheritance directly
or indirectly to foreigner.
2. The land is vanished.
8

9. RIGHT OF OWNERSHIP
Encumbrance
The Right of Ownership can be used as a security which
encumbered by mortgage
9

10. The transfer of Right of Ownership can be conducted by:
• Sale and Purchase;
• Exchange;
• Granting;
• Capital Participation (only to certain legal entity that was appointed by
government); and
10

11. Other type of transfers based on the prevailing law and
regulation
• By an auction, which can be proven by the minutes of auction
made by Auction Officials;
• By Inheritance;
• By Merger or Consolidation of company or cooperatives (only
for certain legal entity that was appointed by government).
11

12. RIGHT TO CULTIVATE
Is a right to operate the land
which owned by States, with
Definition certain period of time, for
agricultural, fisheries or farming.
12

13. RIGHT TO CULTIVATE
Subjects who are able to hold
Right to Cultivate
• Indonesian citizen
• Legal entity established based on Indonesian law
and domiciled in Indonesia
13

14. RIGHT TO CULTIVATE
Time period of Right to Cultivate
 Maximum 35 years
 May be extended for maximum 25 years
 After the period and the maximum length of time is expired, right
holder may be given renewal for the same land
14

15. RIGHT TO CULTIVATE
Encumbrance of Right to Cultivate
 Right to Cultivate can be used as a security which encumbered
through mortgage
 Mortgage shall be removed when the Right to Cultivate is
revoked.
15

16. RIGHT TO CULTIVATE
Right to Cultivate shall be revoked due to:
 The expiry period of time as stipulated in the decree or its extension.
 Nullified by the authorized officer due to:
 The right holder did not complete the obligations
 The right holder did not conduct the terms and obligations which stipulated in
the decree or in the agreement
 Court stipulation with binding legal force
 Revocation by Law No. 20 of 1961 on Revocation of Rights of Land and The
Objects Above The Land
 Voluntary release by the rights holder before the expiry period.
 The land is vanished
 The land is abandoned by the right holder
 The right holder no longer meets the requirement as the right holder.
16

17. RIGHT TO CULTIVATE
Right to Cultivate can be transferred to another party
The transfer of Right to Cultivate can be conducted by:
a. Sale and Purchase;
b. Exchange;
c. Granting;
d. Capital Participation;
e. By Inheritance;
f. By an auction, which can be proven by the minutes of auction made by Auction
Officials;
g. By Merger or Consolidation of company or cooperatives.
17

18. RIGHT TO BUILD
Is a right to establish and own buildings
over the land which belong to other
DEFINITION
subjects
18

19. RIGHT TO BUILD
Subjects who are able to possess
Right to Build
• Indonesian citizen
• Legal entity established based on Indonesian law
and domiciled in Indonesia
19

20. Time period of Right to Build
• Maximum period of time 30 years
• For particular request from right holder and able to
be extended for maximum 20 years
• Can be renewed
20

21. RIGHT TO BUILD
 The expiry period of time as stipulated in the decree or in the granting agreement.
 Nullified by the authorized officer due to:
 The right holder did not complete the obligations
 The right holder did not conduct the terms and obligations which stipulated in the
decree or in the agreement
 Court stipulation with binding legal force
 Revocation by Law No. 20 of 1961 on Revocation of Rights of Land and The Objects
Above The Land
 Voluntary released by the rights holder before the expiry period.
 The land is vanished
 The land is abandoned by the right holder
 The right holder no longer meets the requirements as the right holder.
21

22. RIGHT TO BUILD
Encumbrance of Right
• The Right to Build can be used as a security which
encumbered through mortgage
• Mortgage shall be removed when the Right to Build is
revoked.
22

23. RIGHT TO BUILD
Land that can be granted with Right to Build is as follows:
1. State Land
2. Right of Management land
3. Right of Ownership land
23

24. RIGHT TO BUILD
Right to Build can be transferred to another party
The transfer of Right to Build can be conducted by:
a. Sale and Purchase;
b. Exchange;
c. Granting;
d. Capital Participation;
e. By Inheritance;
f. By an auction, which can be proven by the minutes of auction
made by Auction Officials;
g. By Merger or Consolidation of company or cooperatives.
24

25. RIGHT TO BUILD
• The transfer of Right to Build over Right of Management land
requires a written approval from the holder of Right of
Management.
• The transfer of Right to Build over Right of Ownership land
requires a written approval from the holder of Right of
Ownership.
25

26. RIGHT OF USE
Is a right to use and or to take the production of a land which
directly controlled by state or a land which belong to other
person, who grants authority and obligation that is stipulated
by authorized officer or stipulated in the agreement with the
landlord.
26

27. RIGHT OF USE
• Indonesian citizen
• Foreigner domiciled in Indonesia;
• Legal entity established in Indonesia based on
Indonesian law and domiciled in Indonesia
Subjects who are • Foreign legal entity that has a representative
able to hold office in Indonesia
Right Of Use • A religious and social entity
• Representative from foreign country and
International Organizations bodies
• Department, Government bodies Non-
Department and Regional Government
27

28. • Maximum 25 years
Time period of
• Extended for maximum 20 years
Right of Use
• For particular circumstances,
indefinite time period given.
28

29. RIGHT OF USE
Right of Use may be revoked due to:
 The expiry period of time as stipulated in the decree or in the granting agreement.
 Voluntary released by the rights holder before the expiry period.
 Nullified by the authorized officer due to:
 The right holder did not complete the obligations
 The right holder did not conduct the terms and obligations which stipulate in the
decree or in the agreement
 Court stipulation with binding legal force
 Revocation by Law No. 20 of 1961 on Revocation of Rights of Land and The Objects
Above The Land
 The land is vanished
 The land is abandoned by the right holder
 The right holder is no longer meet the requirement as the right holder.
29

30. RIGHT OF USE
Encumbrance of Right
Right of Use over State Land and over the Right of Management
land can be used as security which encumbered through
mortgage
30

31. RIGHT OF USE
Land that can be granted with Right of Use is as follows:
1. State Land
2. Right of Management land
3. Right of Ownership land
31

32. RIGHT OF USE
Transfer of Right of Use
• The Right of Use that was granted over State Land with certain
period of time and Right of Use over Right of Management can
be transferred to another party.
• The Right of Use over Right of Ownership can only be
transferred if it is provided in the agreement of the granting of
Right of Use over the related Right of Ownership.
32

33. The transfer of Right of Use can be conducted by:
a. Sale and Purchase;
b. Exchange;
c. Granting;
d. Capital Participation;
e. By Inheritance;
f. By an auction, which can be proven by the minutes of auction
made by Auction Officials;
g. By Merger or Consolidation of company or cooperatives.
33

34. RIGHT OF USE
• The transfer of Right of Use over Right of Management land
requires written approval from the holder of Right of
Management;
• The transfer of Right of Use over Right of Ownership land
requires written approval from the holder of Right of
Ownership;
34

35. Definition
Is an agreement by which one party binds himself to give the other the enjoyment of a goods
for a definite period in exchange for a price payment, which payment has been agreed by the
latter party.
(1548 Indonesian Civil Code)
A person or legal entity is regarded to have the Right of Lease over land, if he has a right to
use other people land for the purpose of building, by paying to the owner a sum of money as a
rent.
(Article 44 Paragraph (1) Law No. 5 of 1960 on Principal Provision of Agrarian)
35

36. RIGHT OF LEASE
• Indonesian citizen
• Foreigner domiciled in
Indonesia;
The holder of • Legal entity established in
Right of Lease Indonesia based on
are: Indonesian law
• Foreign legal entity having its
representative office in
Indonesia
36

37. Time period of The period of time of lease is
Right of Lease
stipulated in the agreement
between parties
37

38. 

•
•
38

39. RIGHT OF MANAGEMENT
Definition
Is a right of control of the State where its implementation authority
is partly conferred to the holder
39

40. RIGHT OF MANAGEMENT
Subjects who are able to hold Right of Management
 Government institution including Local Government
 State Owned Enterprise
 Local Government-Owned Enterprise
 Limited Liability Company (Persero)
 Authority Body (Badan Otorita)
 Other government institution appointed by government
40

41. RIGHT OF MANAGEMENT
in accordance with the decree
Right of of the granting of Right of
Management
Management which is issued
Time Period
by the government.
41

42. RIGHT OF MANAGEMENT
Right of Management comprises the authorities to:
• Plan the purpose and utilization of land concerned
• Utilize the land for business interest
• Hand over parts of the land to the third party according to the terms
required by the rights holder, which cover the purpose, utilization,
period of time and financial with a condition that the grant of land of
right conducted by the authorized officials based on the prevailing
law.
42

43. RIGHT OF OWNERSHIP OVER
CONDOMINIUM UNIT
Right of Ownership Over Condominium Unit
Right of ownership of condominium unit which has
individual character separated by common rights of
common equipment, common facilities and common
land.
43

44. Time Period
Condominium can be built over the land which has:
a. Right of Ownership;
b. Right to Build or Right of Use over the State Land; and
c. Right to Build or Right of Use over the Right of Management.
Therefore, the time period of the Right of Ownership Over
Condominium Unit follows its underlying right of land.
44

45. RIGHT OF OWNERSHIP OVER
CONDOMINIUM UNIT
Issued by District/City Land Office
Certificate of Right of
Ownership over
Condominium
Can be used as a security which
encumbered by mortgage
45

46. RIGHT OF OWNERSHIP OVER
CONDOMINIUM UNIT
The transfer of Right of Ownership Over Condominium Unit, and
its registration is conducted by delivering these documents:
a. Deed of Land Deed Official (PPAT) or Minutes of Auction;
b. The related Right of Ownership Certificate;
c. Article of Association and By-Law of tenant association;
d. Others documents that required for the transfer of rights.
46

47. RIGHT OF OWNERSHIP OVER
CONDOMINIUM UNIT
Right Of Ownership Over Condominium Unit may be revoked if:
a. The land right is revoked in accordance with the prevailing laws
and regulations;
b. The land and building is vanished;
c. The fulfillment of the cancelation term;
d. Release the right voluntarily.
47

48. RIGHT OF OWNERSHIP OVER
CONDOMINIUM UNIT
In case the Right Of Ownership Over Condominium Unit is revoked as mentioned in
the previous slide, every owner of the condominium unit has the right to obtain the
common ownership as follows:
Right over common
equipment
Calculated based on Proportional
Comparison Value (NPP), based on
Right over common the actual fact.
facilities
Right over common land
48

49. RIGHT OF OWNERSHIP OVER
CONDOMINIUM UNIT
Certificate of Right of Ownership over Condominium consists
of:
 Copy of book of land and measurement letter of common land in accordance
with the laws and regulations
 Floor sketch picture at the level of the condominium concerned which shows the
owned condominium unit
 Title of division regarding the size of the parts of rights upon common
equipment, common facilities and common land.
49

50. LAND REGISTRATION
IN INDONESIA
Land Registration objects are:
1.Right of Ownership
2.Right to Cultivate
3.Right to Build
4.Right of Use
5.Right of Management land
– Right of Management can be granted to:
 Government Institution
 State-owned enterprise
 Local government-owned enterprise
 Limited Liability Company (Persero)
 Authority Body (Badan Otorita)
 Other government institutions appointed by government
50

51. 6. Right of Ownership over unit of condominium
Right of Ownership toward condominium is an individual right over unit of condominium
separate by the common equipment, common facility and common land (Article 46
Condominium Law)
7. Waqaf land
Based on Law No 41 of 2004 on Waqaf , Waqaf is a wakif legal act to separate and/or
handover part of his assets to be utilized for good or for period of time for public utility or
syariah interest
8. Security Right
Based on Law No 4 of 1996 on Security Right Include Objects Related to Land :Is security
right which encumbered over rights of land as stated in Principal Provision of Agrarian Law,
include or exclude the objects that united to the land, for certain payment of debt, that
prioritize particular creditors towards other creditors.
9. States land
Is a land completely controlled by states and does not have any rights over such land.
51

52. LAND REGISTRATION
IN INDONESIA
Certification
 The land registration would generate a written evidence
in form of certificate.
 Certificate define as an evidence of rights for right of
land, right of management, waqaf land, right of
ownership over unit of condominium and security right.
(government regulation No 24 of 1997)
52

53. LAND ACQUISITION
IN INDONESIA
The land acquisition in Indonesia is implemented through some ways such
as:
• Sale and purchase;
• Exchange;
• Capital injection (inbreng);
• Bequest;
• Inheritance;
• Auction;
• Merger or Consolidation.
53

54. SALE AND PURCHASE
 Sale and Purchase of land is conducted by signing
the Deed of Sale and Purchase which is prepared by
the Land Conveyancing Officer (“PPAT”).
 The PPAT uses the form of Deed of Sale and
Purchase as provided by the prevailing law and it is
signed before the PPAT
54

55. EXCHANGE
 The exchange of land is conducted by signing the
deed of exchange. The deed of exchange is
prepared by the PPAT and using the form as
provided by the prevailing law.
 The deed of exchange will be signed before the
PPAT.
55

56. CAPITAL INJECTION
• Under article 34 paragraph (1) of the Law Number 40 of 2007 on Limited
Liability Companies (“Company Law”), “Share capital may be paid up in the
form of money and/or in other forms”. In the elucidation of article 34 paragraph
(1) of Company Law, the shares will be paid up in some other form whether
tangible or intangible goods, which have a monetary value and which are in fact
received by the company.
• In the event that the shares capital is paid up in some other form, the valuation of
the share capital paid up shall be specified based on a reasonable value
determined in accordance with market prices or by an expert not affiliated with
the company.
56

57. CAPITAL INJECTION (Cont’)
• Further, it must be accompanied by detail giving the value or price, type
or kind, status, domicile as considered necessary for the sake of clarity
regarding such paying up.
• The shared paid up in the form of immoveable property must be
announced in 1 or more newspapers within a period of 14 days after the
deed of establishment is signed or after the general meeting shareholders
resolves on such paying up of shares.
57

58. DONATION
• According to Article 1666 of Indonesian Civil Code, a donation is an
agreement by which the donor during his life irrevocably transfers at no
cost some properties to the benefactor who accepts the delivery.
• It must be conducted before the PPAT and using standard form as set out
in the regulation.
58

59. INHERITANCE
• In the matter of assignment of registered land and the Right of Ownership
over condominium unit, the registration of assignment of land must be
submitted by the heir to Land Office by delivering the certificate of land,
dead certificate of a person whose name is registered in the certificate of
land and the evidence letter as the heir. The evidence letter as the heir can
be:
 testament; or
Court decision; or
Court order; or
59

60. INHERITANCE (Cont’d)
 (1) for local Indonesian citizen, the reference letter of heir is drafted by
the heirs in front of 2 witnesses and it is confirmed by the village chief
and sub district head of the ancestor’s domicile when the ancestor past
away.
(2) the notarized deed of inheritance for Indonesian citizen of Chinese
descendant
(3) the reference letter from inheritance bureau (balai harta
peninggalan) for Indonesian citizen of eastern foreigner descendant
60

61. INHERITANCE (Cont’d)
• However, the heir also has to hand over following documents if the
assignment of land is for unregistered land:
- The evidence letter of conversion of old right over land such as written
evidences, statement of witnesses and/or the statement of the reliable
related party, or the statement letter from the regent which states that the
related party controls the land; or
- The reference letter from the Land Office which states that the related
land is an uncertified land. For the land which is located distance away
from the Land Office, the reference letter is able to be obtained from the
regent.

62. INHERITANCE (Cont’d)
• If the heirs are more than one person and there is particular demand of
land distribution from the ancestor, the registration of assignment over
land or the Right of Ownership over the condominium unit will be based
on the testament and the deed of distribution of inheritance.
• The land will be registered as the common right of the heirs if the deed of
distribution of inheritance has not been issued when the heirs register the
assignment of land.
62

63. AUCTION
• The registration of acquisition of land through auction method is able to be
registered by delivering following documents:
o Minute of auction;
o (1)The certificate of the Right of Ownership over the condominium unit
or certificate of auctioned land if it has been registered; or
(2) the letter from the Chairman of auction officer stating the reason of
undelivered certificate in point (1) if the certificate in point (1) has not
been handed over to buyer; or
(3) if it is an unregistered land, the requirement must comply with the
requirement as follows:
o The identity of the auction buyer;
o The evidence payment of selling price
63

64. AUCTION (Cont’d)
• At least 7 days before the auction is conducted by the auction officer, the
officer must request the physical and juridical data from Land Office relating
to the auction land, that will be auctioned.
• The Chairman of auction refuses to conduct auction, if:
 In the matter of registered land or the Right of Ownership over
condominium unit
The original certificate of land is not submitted to the auction officer,
except in the case of execution auction that can still be implemented
even if the original certificate is not obtained by the auction officer
from the right holder of the land; or
64

65. AUCTION (Cont’d)
The certificate does not conform to the existing data in the Land Officer;
or
 In the matter of unregistered land, the Chairman of auction does not
receive:
 The evidence letter of conversion of old right over land such as written
evidences, statement of witnesses and/or the statement of the reliable
related party, or the statement letter from the regent which states that the
related party controls the land; or

66. AUCTION (Cont’d)
 The reference letter from the Land Office which states that the
related land is an uncertified land. For the land which is located
distance away from the Land Office, the reference letter is able to be
obtained from the regent.
 There is an order from the court to not carrying out the auction in
connection with a dispute over the land.
66

67. MERGER OR CONSOLIDATION
• The registration of acquisition of right of land, right of management
or Right of Ownership over the condominium unit through merger or
consolidation of company or cooperative without any prior
liquidation, is able to be registered after it is legalized by the
authorized officer based on the deed of merger or consolidation of
company or cooperative.
67

68. GENERAL REGULATION OF LAND ACQUISITION
IN INDONESIA
Article 37 paragraph (1) of GR No. 24/1997 on Land
Registration
Land acquisition in Indonesia can only be
registered to Land Office if it is proven by
deed from PPAT except for auction
68

69. GENERAL REGULATION OF LAND ACQUISITION
IN INDONESIA (Cont’d)
Article 38 of GR No. 24/1997 stipulates
• Preparation of the deed of land acquisition is
attended by the parties who conduct the acquisition
of land and it is witnessed minimum by 2
witnesses.
• The form, content and the procedure of drafting the
PPAT’s deed is governed by the Minister
69

70. PPAT’s REFUSAL OF LAND ACQUISITION
PPAT may refuse to notarize the land acquisition due to:
• The original certificate of land is not submitted to the PPAT or the delivered
certificate does not conform to the book of land that are available in the Land
Office; or
• In the matter of unregistered land, the PPAT does not receive:
– The evidence letter of conversion of old right over land such as written
evidences, statement of witnesses and/or the statement of the reliable
related party, or the statement letter from the regent which states that the
related party controls the land; or
– The reference letter from the Land Office which states that the related land
is an uncertified land. For the land which is located distance away from
the Land Office, the reference letter is able to be obtained from the regent.
70

71. PPAT’s REFUSAL OF LAND ACQUISITION (Cont’d)
• One or the parties who will conduct the acquisition or the witness do not fulfill
the requirement to act for the acquisition; or
• One or the parties act based on the absolute power of attorney letter which is
essentially contain a legal act of transferring right from the authorizer to the
authorized. The absolute power of attorney means the authorization which cannot
be revoked by the authorizer, so in essence it is a legal action to transfer a right;
or
• The legal act to conduct the acquisition has not obtained approval from the
authorized officer, if the approval is required by the prevailing law; or
• The related object has been in dispute regarding the physical data and/ or juridical
data; or
• Another requirement is not fulfilled or violation of prohibition which is specified
in the prevailing law.
71

72. PPAT’s REFUSAL OF LAND ACQUISITION (Cont’d)
For such case, PPAT will give written notification to
the related party if the PPAT refuses to prepare the
deed of land acquisition.
72

73. CHAIRMAN OF LAND OFFICE’s REFUSAL OF LAND
ACQUISITION
Chairman of Land Office may refuse to register the land acquisition, if:
• The certificate or the reference letter concerning the condition of land does
not conform with the existing data in the Land Office;
• There is no deed of land acquisition from PPAT for land acquisition
through sale and purchase, exchange, capital injection (inbreng), bequest,
inheritance and merger or consolidation. In the matter of auction, there is
no minute of auction, except for the special situation for example, province
where there is no PPAT. This special situation will be determined by the
Minister.
• The required documents for the registration of land acquisition is
incomplete;
73

74. CHAIRMAN OF LAND OFFICE’s REFUSAL OF LAND
ACQUISITION (Cont’d)
• Another requirement based on prevailing law is not fulfilled;
• The related land is on dispute;
• Legal act which has been approved by the deed of PPAT is void or
nullified by the court.
• Legal action which has been made through deed of PPAT is cancelled
by the parties before it is registered in Land Office
74

75. CHAIRMAN OF LAND OFFICE’s REFUSAL OF LAND
ACQUISITION (Cont’d)
The Chairman of Land Office will give written
notification to the parties concerned. The Chairman
of Land Office also will return the form with the
copy to PPAT or Chairman of auction office.
75