Real Estate Law – Resolution of Land Case

Resolution Land CaseBackground

Minister of Agrarian and Spatial/Head of National Land Agency issued the regulation concerning the settlement of land case i.e. Minister of Agrarian and Spatial/Head of National Land Agency Regulation No. 11 of 2016 on the Settlement of Land Case (“Permen Agraria No.11/2016”), which became effective since 14 April 2016.

Land Case

Land Case is a conflict of land between individual person, legal entity, or institutions that do not have a wide impact (“Dispute”), a conflict of land between individual person, group, class, organization, legal entity, or institution that has a tendency or has a wide impact (“Conflict”), or a conflict of land which is managed and resolved through court (“Land Suit”) which is to obtain the management of resolution in accordance with the prevailing laws and/or the land policy.

Resolution of Dispute, Conflict, and Land Suit

Permen No.11/2016 divides the scope of the resolution into two parts, as follows:

  1. The resolution of Dispute and Conflict; and
  2. The resolution and the management of Land Suit

Resolution of Dispute and Conflict

The resolution of Dispute and Conflict is conducted by:

  1. Initiative by the Ministry

The Ministry, through the Head of the Land Office ("Kakantah"), the Head of the Regional Office of the National Land Agency ("Kakanwil BPN"), or the Directorate General ("Ditjen"), conducts the monitoring to find out the Dispute and Conflict which occurs in particular region towards the complaint or the report on newspaper. Furthermore, Kakantah reports the monitoring result to Kakanwil BPN quarterly and copied to the Minister. If the monitoring result needs to be followed up, the Minister or Kakanwil BPN provides an order to Kakantah to conduct the resolution of Dispute and Read the rest of this entry »

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Real Esatate Law – Procedure of Relinquishment or Revocation of Right to Cultivate or Right to Use on Burned Land

Burned LandBackground

Land fire causes disasters and huge material and social losses towards community and the State. Looking back to the land fires in 2015, the land fires were also occurred on the right to cultivate or right of use type of land, which allegedly made by the land owner. As a matter of fact, land fire is an annual problem faced by the government.

On 14 April 2016, the Minister of Agrarian Affairs and Spatial Layout/Head of the National Land Agency issued the Minister of Agrarian Affairs and Spatial Layout/Head of the National Land Agency Regulation Number 15 of 2016 on Procedure of Relinquishment or Revocation of Right to Cultivate or Right of Use on Burned Land (“Permen ATR No. 15/2016”). The objectives of Permen ATR No. 15/2016 are to give (a) guideline for the relinquishment or revocation of HGU or HP on burned land, and (b) legal certainty on burned land that has been relinquished or revoked to become a state land.

It is important to note that the HGU and HP as stipulated in Permen ATR No. 15/2016 is the HGU and HP as regulated in Indonesian agrarian laws, especially HGU and HP with the land allocation for agriculture, livestock, and fishery owned by legal entity.

Obligation of HGU or HP Holder

Aside from the obligations of HGU or HP holder in Government Regulation No. 40 of 1996, Permen ATR No. 15/2016 also stipulates additional obligations that should be obeyed by every HGU or HP holder, such as:

  1. land maintenance, including improvement of its fertility, and prevent any damage to the natural resources and preserve environmental capacity according to prevailing regulations;
  2. provide facilities and infrastructure for controlling land fires, such as providing water resources and precautionary measures, and create crisis center of extinguishing fires and handling after land fires for land with HGU or HP, including the land of surrounding residents;
  3. maintain water properly and correctly in order to keep peatlands moisturized and non-flammable;
  4. conduct land and ground clearing that do not cause disaster or material or social loss to the State;
  5. build and maintain environmental infrastructure and land facility;
  6. facilitate the monitoring of possession, use and utilization of land by Ministry of Agrarian Affairs and Spatial Layout/Head of the National Land Agency (“Ministry”);
  7. bear any consequences arising from the granting of HGU or HP, including the non peformance of obligations that have been regulated in prevailing regulations, as well as obligations as mentioned above related to the possession, use and utilization of land.

Postponement of Application, and Relinquishment or Revocation of HGU or HP

The application of HGU or HP can be postponed if the land is under fire, until the handling of land fires is finished. Whilst the land is already granted with HGU or HP, the right can be relinquished or terminated.

If the area of burned land that is less or equal to Read the rest of this entry »

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Indonesia Real Estate Law – Guidance for Completion of Land Possession Previously Owned by Dutch Citizen or Dutch Legal Entity

land dutchBackground

Under the Law Number 3 Prp of 1960, lands that were owned by Dutch citizens and have not been nationalized under Law Number 86 of 1958, is controlled by the state and will be granted to the rights holder through sale and purchase (“P3MB”). Further, under the Presidium Cabinet of Dwikora Regulation Number 5/Prk/Year 1965, all buildings and lands owned by Dutch legal entities and have been abandoned by their directors/management is controlled by the state, and can be sold to the qualified rights holder (“Prk5”).

In reality, there are still P3MB and Prk5 lands (“Land”) that are not yet registered but has been transferred to other parties, either to individual or legal entity. Considering the above mentioned issues, the Minister of Agrarian and Spatial/Head of the National Land Agency issued the Minister of Agrarian and Spatial/Head of the National Land Agency Regulation Number 20 of 2016 (“Permenag 20/2016”), as a guidance for the completion of land possession and giving legal certainty to the receiver of the Land rights.

Land Rights Application Procedures

The Land will be granted to the rights holder based on the appointment from the government, according to the priority as follows:

  1. civil servants (PNS); and/or
  2. people.

For the application of Land rights, the appointed party or last rights holder submits the application (“Application”) by paying a sum amount of money for Read the rest of this entry »

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Real Estate Law – Cultivation of Water Resources

Man sprinkling water on dry grassBackground

On 28 December 2015, the government of Republic of Indonesia (“GOI”) has issued the Government Regulation No. 121 of 2015 on the Cultivation of Water Resources (“PP No. 121/2015”) which was effective on the date when it was promulgated, namely 28 December 2015.

PP No. 121/2015 is the implementing regulation of the Article 11 of Law No. 11 of 1974 on the Watering (“Law No. 11/1974”) which states that the cultivation of water and/or water resources for the purpose of developing its benefit for public welfare is basically conducted by the government, both central and local government, therefore, any legal entities, social bodies, and/or individuals must obtain permission from the related government to conduct cultivation of water resources. The implementation of cultivation of water and/or water resources in the said article shall be further regulated by a government regulation.

As the PP No. 121/2015 requires any party who is willing to cultivate the water resources to obtain the license on the cultivation of water surface, the Minister of Public Works and Housing (“MPWH”) issued the Regulation of Minister of Public Works and Housing No. 01/PRT/M/2016 on the Procedures of Licensing on the Cultivation of Water Resources and Utilization of Water Resources (“Permen PUPERA No. 01/2016”). Permen PUPERA No. 01/2016 is intended to give information about the procedures of application and issuance of the license of cultivation of water resources.

General Provisions

Water resources (“Water Resources”) are water, water sources, and water power within it. Water is all water contained within, on, or under the ground, including sea water on the ground (“Water”). Water is divided into three types, as follows:

  1. Surface Water, all water on the ground surface;
  2. Groundwater, the water contained in the soil or rock layers below the ground surface; and
  3. Drinking Water, the water which through the processing or without processing to fulfill the requirements of standard of drinking water quality and can directly be drunk.

Scope of this regulation is the cultivation of Water Resources on the Surface Water and Groundwater which may be in the form of:

  1. business activity that requires water as the main raw material to produce a drinking water product; or
  2. business activity that requires water as the auxiliary material to support the production of a product other than drinking water.

Fulfillment of various needs of Water shall be conducted through the allocation of Water (“Allocation of Water”) based on the priority as follows:

  1. raw water for fulfillment of daily basic needs;
  2. raw water for fulfillment of daily basic needs obtained without permit;
  3. raw water for fulfillment of daily basic needs which its license has already been granted;
  4. raw water for irrigation of agricultural community within the existing irrigation system;
  5. water for irrigation of agricultural community which its license has already been granted;
  6. water for cultivation of raw water of system of drinking water supply which its permit has already been granted;
  7. water for non-business activity which its license has already been granted;
  8. water for the fulfillment of business needs of drinking water conducted by state owned business entity (Badan Usaha Milik Negara/ “BUMN”)/ regional owned business entity (Badan Usaha Milik Daerah/ “BUMD”) which its license has already been granted;
  9. water for the fulfillment of business needs other than drinking water conducted by BUMN/BUMD which its license has already been granted;
  10. water for the fulfillment of business needs of drinking water conducted by private business entity which its license has already been granted; and
  11. water for the fulfillment of business needs other than drinking water conducted by private business entity which its license has already been granted.

The above priority shall be determined by the authority of relevant central or local government. Central or local government, when determining the priority of water, must take into account the needs of water for maintenance of water source and environment.

Central or local government is obliged to supervise the quality of services of:

  1. BUMN or BUMD as the management of Water Resources; and
  2. other business entity and individual as the holder of license on the cultivation of Water Resources and license on the cultivation of Groundwater.
  1. Type of Cultivation of Water Resources

Under PP No. 121/2015, Cultivation of Water Resources can be implemented to:

  1. certain point or location of Water Resources;
  2. certain section of Water Resources;
  3. certain part of Water Resources; or
  4. river area in a whole.

Cultivation of Water Resources as referred to in letter a, b, and c of the above article may be conducted by:

  1. BUMN;
  2. BUMD;
  3. village owned business entity (Badan Usaha Milik Desa/ “BUMDes”);
  4. private business entity;
  5. cooperation;
  6. individual; or
  7. cooperation between business entities.

Cultivation of Water Resources as referred to in the Article 13 of paragraph (1) of PP No. 121/2015 can be in the form of:

  1. Cultivation of Water Resources as a media. Under Permen PUPERA No. 01/2016, this includes as follows: (i) transportation and whitewater rafting, (ii) power plant, (iii) transportation, (iv) sport, (v) tourism, or (vi) cultivation fishery on water sources.
  2. Cultivation of water and water power as a material, either in the form of a water product or a non-water product. Under Permen PUPERA No. 01/2016, this includes as follows: (i) cultivation of raw water as raw material of production, (ii) industry business, (iii) food business, (iv) hotel business, (v) plantation business, (vi) drinking water business by BUMN/BUMD, (vii) bottled drinking water business, or (viii) other business activity.
  3. Cultivation of Water Sources as a media. Under Permen PUPERA No. 01/2016, this includes as follows: (i) utilization of room on the water sources in the form of bridge construction, embankment, docks, pipelines, and electrical/telephone wiring, and water resources infrastructure, (ii) seasonal agricultural cultivation or farming fish on riverbanks, (iii) annual agricultural cultivation in the green belt of lake, pond, and reservoir, (iv) utilization of riverbank and/or border river for construction activities i.e. bridge, docks, network od stretch of water pipes, electrical wiring, and water resources infrastructure, or (v) utilization of border lake and lake body for construction activities include dock, network or stretch of water pipes, electrical wiring, and water resources infrastructure. and/or
  4. Cultivation of water, water sources, and/or water power as a media and material. Under Permen PUPERA No. 01/2016, this includes as follows: (i) exploration, exploitation, and purification of minerals from water source, (ii) fishery activity that use cage or floating net, (iii) activity of wastewater disposal to the river, (iv) extraction of mineral commodities in the river, or (v) utilization of room of water sources for construction activity of dam and weir.

Permen PUPERA No. 01/2016 regulates that utilization of Water Resources for the purposes as mentioned above are given for the following activities:

  1. fulfillment of daily basic needs for the group who requires large quantities of Water with the following quota: (i) exceeding daily basic needs for 150 persons from 1 point of withdrawal, or (ii) more than 60 liter per person per day;
  2. fulfillment of irrigation water for farmer or groups of farmers for agricultural community within the existing irrigation system which conducted by changing the natural conditions of water sources, can be conducted by heightening, lowering, and diverting the water source;
  3. fulfillment of irrigation water for farmer or groups of farmers that using the water for agricultural community outside the existing irrigation system, which includes the irrigation infrastructure, irrigation water, and human resources;
  4. non-business activity for public welfare that can be in the form of: (i) fulfillment of water for mini hydro power plant or micro hydro power plant for the interest of individual or groups of community; (ii) utilization of room of water sources for construction activity of individual or public welfare whether it built by individual, groups of community or government i.e. bridge, dam, embankment, docks, network or stretch of pipelines, network of electrical wiring; (iii) utilization of riverbank and/or border river for construction activities of individual or public welfare whether it built by individual, groups of community or government i.e. bridge, embankment, docks, network of pipelines, network of electrical/telephone wiring, and water resources infrastructure; (iv) aquaculture using water no more than 2 liters per second per household outside of the existing irrigation system to meet their own interests; (v) tourism or water sport managed for public interest or non-business activity i.e. boat and water bike; (vi) utilization of Water Resources for the purpose of research, development, and education; and (vii) utilization of water for city park which is free of charge, house of worship, public facilities, and other social facilities.

Cultivation of Water Resources in a whole of river area can only be done by:

  1. BUMN in the field of Cultivation of Water Resources;
  2. BUMD in the field of Cultivation of Water Resources; or
  3. cooperation between BUMN in the field of Cultivation of Water Resources and BUMD in the field of Cultivation of Water Resources.
  1. License on the Cultivation of Water Resources

There are 2 types of license on the Cultivation of WR as follows:

  1. License on the Cultivation of Water Resources (Izin Pengusahaan Sumber Daya Air/ “IPSDA”) which is intended for those who cultivate the Surface Water Resources and it cannot be leased or transferred, whether in a part or in a whole; and
  2. License on the Cultivation of Groundwater (Izin Pengusahaan Air Tanah/ “IPAT”) which is intended for those who cultivate the Groundwater Resources.

IPSDA and IPAT are given for the cultivation of Water Resources conducted at certain point or location of water sources, certain section of water sources, or certain section of Water Resources. Those two licenses are granted by the central or regional government in accordance with their authority.

IPSDA

IPSDA is granted to:

  1. BUMN;
  2. BUMD;
  3. BUMDes;
  4. private business entity;
  5. cooperation; or
  6. individual.

Once it is given to the above mentioned parties, the IPSDA cannot be leased or transferred, whether in a part or in a whole to other party.

The application of IPSDA shall be submitted in writing to:

  1. Minister in the field of Water Resources, for the activity of cultivation of Water Resources at the cross province river area, cross country river area, and river area of national strategic. The authority of the minister is conducted by the General Director of Water Resources (Direktur Jenderal Sumber Daya Air/ “Dirjen SDA”) in accordance with the prevailing laws and regulations.
  2. Governor for the cultivation of Water Resources at the cross regency/city river area. or
  3. Regent/mayor for the cultivation of Water Resources at the river area of a regency/city.

The application shall be submitted to the relevant authority mentioned above to be further forwarded to the Water Resources Management to obtain technical recommendation.

Submission of the application of IPSDA consists of:

  1. name, occupation, and address of the applicant;
  2. intention and purpose of cultivation of Water Resources;
  3. plan of water utilization location;
  4. the amount of water and/or room dimension on the water sources which needed to be cultivated;
  5. period of time needed for the cultivation of Water Resources;
  6. type of infrastructure and technology that will be used;
  7. drawing of type of infrastructure and technology that will be used; and
  8. technical recommendation.

IPSDA shall be granted under the following requirements:

  1. cultivation of Water Resources that produces raw water or drinking water is obliged to provide minimum of 15% from debit volume of cultivation of Water Resources stated in the license for the fulfillment of daily basic needs of local community in the form of public facility of public hydrant or water tap;
  2. the holder of IPSDA is obliged to set aside a portion of its profits for the purpose of conservation of Water Resources in order to implement social and environment responsibility in accordance with the prevailing laws and regulations;
  3. license shall be given based on the order of priority of utilization of Water Resources, planning on the water supply, or zone of utilization room at the water sources, as well as the allocation of water; and
  4. calculate the needs of water for the maintenance of water sources and environmental.

Besides the above requirements, the cultivation of Water Resources for the purpose of bottled drinking water must also fulfill the following additional requirements:

  1. may only use 20% of the available potential water if it is taken from spring water;
  2. should not close the public access to the water sources that are cultivated;
  3. BUMN/BUMD applied for the IPSDA will be given first priority.

Decision on the application of IPSDA will be issued at the latest 4 months since the date of the application and complete requirements has been received by the relevant authority. If the application of IPSDA is rejected, the relevant authority must give the reasons of such rejection in writing. The application which rejected cannot applied for the IPSDA with the data that has been rejected.

IPSDA is granted for a maximum period of 10 years. If the IPSDA is given to:

  1. an individual or non-legal business entity in which the owner is changed;
  2. a legal business entity that has changed its name;

the IPSDA will be automatically invalid. In case of those events, the new owner shall apply for the renewal of license at the latest of 7 days after the date of change of the owner of the said business entity.

IPSDA can be extended by submitting the application of extension of the license in writing to the relevant authority at the latest of 3 months before the expiry of IPSDA.

IPAT

IPAT is granted to:

  1. BUMN;
  2. BUMD;
  3. BUMDes;
  4. private business entity;
  5. cooperation; or
  6. individual.

Once it is given to the above mentioned parties, the IPAT cannot be leased or transferred, whether in a part or in a whole to other party.

To obtain the IPAT, the applicant must submit its application in written to the governor. The said application must fulfill the administrative and technical requirements. The administrative requirements are as follows:

  1. for an individual shall at least contain the following data: (i) application letter, (ii) identity card, (iii) taxpayer registration number (nomor pokok wajib pajak/ “NPWP”), and (iv) letter of domicile;
  2. for business entity shall at least contain the following data: (i) application letter, (ii) profile of business entity or social agency, (iii) deed of establishment of business entity or social agency, (iv) composition of director and list of shareholders (for business entity) or compositions of management (for social agency), (v) NPWP, (vi) letter of domicile, (vii) business license, (viii) written statement of the ability to pay the tax of Groundwater.

While the technical requirements are as follows:

  1. report of results of drilling or digging Groundwater;
  2. location point of drilling or digging plan in the blueprint on the scale of 1 : 10,000 or more and topography map on the scale of 1 : 50,000;
  3. information of the designation and debit of needs of Groundwater; and
  4. requirements of ability to make the infiltration wells in accordance with prevailing laws and regulations.

IPAT is issued by the governor by the following conditions:

  1. in every Groundwater basin (cekungan Air Tanah) crossing province or country must obtain technical recommendation from the minister in the field of Groundwater; or
  2. within the territory of province other than Groundwater basin crossing province or country must obtain technical recommendation from the provincial agencies in the field of Groundwater.

Technical recommendation as referred to in letter b above shall be given based on the Groundwater conservation zone. The said recommendation must be received by the governor within 1 month after the issuance of application of recommendation letter from the governor.

After the issuance of technical recommendation, the governor shall issue the license to drill/dig for Groundwater within 14 days of the said date. The applicant shall, within 14 days after the issuance of the license to drill/dig, conduct the drilling/digging the land to find the Groundwater. Failing to which within 14 days, the application of IPAT shall be nulled automatically.

Decision on the cultivation of Groundwater shall be issued within 14 days since the date of the report of results of drilling/digging the Groundwater is received by the governor. The IPAT is issued by the governor forwarded to the minister in the field of Groundwater.

IPAT shall be granted for maximum period of 3 years and it is determined by the governor. Determination of IPAT shall consider:

  1. the availability of the water;
  2. condition and environment of water sources; and/or
  3. the purposes of cultivation.

If the IPAT is given to:

  1. an individual or non-legal business entity in which the owner is changed;
  2. a legal business entity that changed its name;

the IPAT will be automatically invalid. In case of those events, the new owner shall apply for the renewal of license at the latest of 7 days after the date of change of the owner of the said business entity.

Rizky Natalia

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Indonesia Real Estate Law – Electrical Power Supply for Building in the Limited Area

Electrical Power Supply for BuildingBackground

On 29 September 2015, Minister of Energy and Mineral Resources Republic of Indonesia has issued the Minister of Energy and Mineral Resources Regulation Number 31 of 2015 on the Electrical Power Supply for Building in the Limited Area (“Permen ESDM 31/2015”). Permen ESDM 31/2015 which became effective on 29 December 2015.

 

Electrical Power

The form of secondary energy which is generated, transmitted, and distributed to all types of purposes, but does not include the electrical which consumed for communication, electronic, or signal.

 

Electrical Power Supply Business

Procurement of electrical power includes power plant, transmission, distribution, and electrical power sales to consumers.

 

Electrical Power Supply Business Permit

Permit for doing electrical power supply business for public interest (“IUPTL”).

 

Business Area

Area which determined by the Minister as a place of business entity distribution and/or electrical power sales of doing electrical power supply business.

 

Building in the Limited Area

Flats, apartment, condominium, market, shopping center, office, warehouse, or building under the individual ownership and common ownership (strata title) for the other activity.

 

Owner Association and Building Occupant in Limited Area

Owner Association and Building Occupant in Limited Area is a legal entity whose consists of owner or Building Occupant in Limited Area.

 

Administrator

Legal entity which charged to manage the Building in Limited Area.

 

Building Unit

Flats unit, apartment unit, condominium unit, market stall, store, office unit, warehouse, or building unit under the individual ownership and another common ownership (strata title) which owned by individual or legal entity.

 

Electrical Power Supply Business for Limited Area

IUPTL holder which has business area obliged to supply the electrical power in their business area. IUPTL holder can be cooperate with Owner Association and Occupant or Administrator appointed by Owner Association and Occupant to supply the electrical power for Building in the Limited Area. If the Owner Association and Occupant has not been formed, Administrator can be formed by the developer. Electrical power splicing to the Owner Association and Occupant or Administrator distributed to the Building Unit, Common Parts, Common Objects or Goods.

 

Conditions of Electrical Power Splicing

  1. Owner Association and Occupant or Administrator are not gain any profit over the distribution of electrical power to the Building Unit, Common Parts, Common Objects or Goods with the conditions of electrical power utilization charge which paid by the owner or occupant of Building Unit to the Owner Association and Occupant or Administrator no more than electrical power utilization charge which paid by the Owner Association and Occupant or Administrator to the IUPTL holder;
  2. Electrical Power Splicing on the Building Unit equipped with gauges and electric barrier (APP) in accordance with the prevailing regulations in the field of legal metrology;
  3. Electrical Power Tariff on the Building Unit refers to the Electrical Power Tariff which valid for IUPTL holder according to the designation;
  4. IUPTL holder conducts the supervision against the distribution of Electrical Power for Building in the Limited Area, Building Unit, Common Parts, Common Objects or Goods.

 

Utilization Charge of Electrical Power

  1. assessment charge and usage tariff of Electrical Power for Building Unit
  2. additional charge which become collective responsibility of the Building Unit owner or occupant in accordance with the agreement, consist of:
  3. reactive power consumption cost (Rp/kVArh);
  4. assessment charge and tariff of Electrical Power usage for Common Parts, Common Objects or Goods;
  5. the difference in charge calculations over the Electrical Power usage, if any, because of implementation of double tariff on the gauges and electric barrier (APP) of Owner Association and Occupant or Administrator and implementation of single tariff on the gauges and electric barrier (APP);
  6. the difference in charge calculation over the Electrical Power usage, if any, because of differentiation on the measurement result of gauges and electric barrier (APP) of Owner Association and Occupant or Administrator with the measurement result of gauges and electric barrier (APP) Building Unit which caused by the technical shrinkage;
  7. street lighting tax.

 

Rights of Owner or Building Unit Occupant

Owner or Building Unit Occupant entitled to obtain information from the Owner Association and Occupant or Administrator on the:

  1. utilization charge of Electrical Power which paid by the Owner Association and Occupant or Administrator to the IUPTL holder;
  2. total data of Electrical Power usage for Building in the Limited Area and Electrical Power usage on the Common Objects or Goods, and Common Parts.

 

Obligation of Owner Association and Occupant or Administrator

Delivering information of the Electrical Power utilization charge and total data of Electrical Power usage to the Building Unit owner or occupant every month based on demand.

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