Legal Aspects of Principle Approval on Location/Land Exemption ( “SP3L”) in DKI Jakarta Province Region for Development and Investment Activities

Djakarta, Indonesia, at nightLegal Basis Regulating SP3L stipulated by the Government of DKI Jakarta Province

The realization of city physical development plan, part of the General Spatial Plan and Urban Region Section Plan determined by the Government of DKI Jakarta Province, affects the rapid progress of physical development and growth of the investment climate, especially in the region of DKI Jakarta Province. Therefore, improvement of regulations must regulate exemption or purchase of the limited land available in the region of DKI Jakarta Province to prevent any potential disputes which can be a limiting factor for the continuance of development activity. In response, the Government of DKI Jakarta Province has set rules regarding controlling and monitoring activities on the exemption or purchase of land by setting the rules for granting SP3L as referred to in Article 1 letter (i) Governor of DKI Jakarta Decree Number 138 of 1998 on Procedures for Application and Principle Approval of  Location/Land Exemption for Foreign Investment Companies and Domestic Investment Companies in DKI Jakarta ("Governor Decree No. 138/1998") and Governor of DKI Jakarta Decree Number 540 of 1990 on Implementation Guidance regarding the Granting of a Principle Approval for Location/Land Exemption for City Physical Development in DKI Jakarta ("Governor Decree No. 540/1990"),  replacing the previous provisions stipulated in Governor of DKI Jakarta Decree Number Da.11/3/11/1972 on the Improvement of Exempt Permit Application Procedures and Appointment/Land Use and Land Acquisition Procedures and Objects Above It for the Official or Private Interest in the Region of DKI Jakarta ("Governor Decree No. 11/1972") .

Procedure and Requirements regarding SP3L Procuration for Applicants

Under Article 1 of Governor Decree Number 640 of 1992 on the Provisions of the Location/Land Exemption Without Permission from the Governor of DKI Jakarta (“Governor Decree No. 640/1992”), the requirements for obtaining SP3L from the Governor of DKI Jakarta Province for a location or area covering over 5.000 m2 and/or less than 5,000 m2 which on the lane of protocol road by a legal entity or individual. Implementing necessary land exemption for the investment is conducted on the basis of consensus and based on a consensus agreement as stipulated in Article 2 Governor Decree No. 138/1998.The requirements to obtain SP3L set out in Part Two Governor Decree No. 540/1990 explain that the land acquisition to obtain SP3L must first meet the following requirements:




  1. Applicant must be incorporated as a limited liability company, a limited partnership, a state or local-owned enterprise company in any form, a partnership, a firm, a joint venture, an association, a co-operation, a foundation, an institution or a permanent establishment;
  2. The application must be submitted in writing by filling the provided form to the City Planning Office cq. The Land Agency Secretariat of Land Affairs of DKI Jakarta;
  3. The application shall be joined by a project proposal or design which comprise:
    1. Consideration of city planning/zoning;
    2. Procedure for land exemption;
    3. Consideration of the project financing;
    4. Consideration of the project implementation;
    5. Consideration of the project’s socio-economic effects;
    6. Consideration of the project’s environmental consequences; and
    7. Time needed for the accomplishment of the exemption of the land and physical building
  4. Attached recommendation of a Government bank or foreign exchange finances the land exemption and project development.
  5. Land exemption for development project shall be implemented in an integrated land;
  6. To the location/land to which field conditions apply and/or according to the city plan the designation is housing which covers 5.000 m2 (five thousand square meters) or more, the applicant must finance and build cheap condominium and accessory facilities covering 20% (twenty percent) of the commercial area, and/or the other specified provisions determined by the Governor of DKI Jakarta;
  7. The applicant must replace the city's infrastructure and facilities in the concerned location/land.

The application to obtain SP3L must be submitted in writing to the Governor of DKI Jakarta cq. Chairman of the Local Investment Coordinating Board ("BKPMD") DKI Jakarta according to Article 3 paragraph (1) Governor Decree No. 138/1998 jo. Article 3 paragraph (3) Governor Decree No. 11/1972, by using the provided application form with attached to it the following documents:

  1. A situation map in scale of 1 : 5.000;
  2. A copy of the incorporation certificate of the legal entity ;
  3. A statement letter to prepare and  build a cheap condominium covering 20% of the area, subject to Governor Decree No. 540/1990 and Governor Decree No. 640/1992;
  4. Other documents which are deemed necessary.

However, Governor Decree No. 11/1972 not only stipulates SP3L application requirements, but also stipulates the procedure after obtaining SP3L assuming the following requirements are fulfilled by the applicant:

  1. Applicants shall pay a certain amount of money based on the regulation within a period of 30 (thirty) days after the deposit  as stipulated in Article 5 and Article 7 of Governor Decree No. 11/1972;
  2. Issuing an exemption of land permit granted ​​by the Governor of DKI Jakarta after the applicant submits the proof of payment as stipulated in Article 8 paragraph (1) and paragraph (2) Governor Decree No. 11/1972; and
  3. Land exemption permit holder can utilize the land within a period of 4 (four) to 6 (six) months after land exemption has been approved.

 

Legal Consequences of Failure of Obligation Fulfillment in SP3L Application

Legal consequences based on the number 5 Decree No. Part Two. 540/1990 occur when the conditions for the realization of land acquisition were not fully implemented, the land granted  can be transferred unilaterally by the Governor of Jakarta to other parties by providing exemption reimbursement for an administration fee of plus 20% of the acquisition price of land. Subsequently, Article 7 paragraph (1) and paragraph (2) No Decree. 138/1998 stipulate that SP3L applications as referred to in Article 2 paragraph (1) that do not meet the specified requirements, will be returned to the applicant immediately, accompanied by a refusal of the SP3L request in writing by BKPMD Jakarta along with the reasons for rejection at the latest within a period of 12 (twelve) working days..

Febiriyansa Tanjung

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Legal Aspects of Principle Approval on Location/Land Exemption ( “SP3L”) in DKI Jakarta Province Region for Development and Investment Activities
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