On 22 April 2016, the Government of Republic of Indonesia enacted Minister of Agrarian and Spatial Planning/Head of National Land Agency No. 18 of 2016 (“Regulation No. 18/2016”).
The Regulation No. 18/2016 is issued with a background that the provisions of limitation of agriculture land possession as set out in Article 17 of Law No. 5 of 1960 and Government Regulation in lieu of Law No. 56 of 1960 need further stipulations to control the possession and ownership of agriculture land by individual and business entity.
Moreover, Regulation No. 18/2016 is addressed to reduce social inequality, distribute equal public welfare, and ensure food resilience.
Limitation of Agricultural Land Ownership
The limitation of possession and ownership of agricultural land is applied to individuals or legal entities.
For individuals, the limitation of ownership of agricultural land is conducted with the following conditions:
- non-density area, maximum area 20 (twenty) hectare;
- less-density area, maximum area 12 (twelve) hectare;
- sufficient-density area, maximum area 9 (nine) hectare; or
- high-density area, maximum area 6 (six) hectare.
The limitation of ownership of agricultural land for legal entities is conducted according to the decree of granting of right.
Transfer of Right of Agricultural Land
The agricultural land that is owned by individual can be transferred to another party with the following conditions:
- the other party as transferee must be domiciled in the same sub-district (kecamatan) with the land; and
- the land shall be used and utilized for agricultural purposes.
The domicile of transferee as mentioned above shall be proved with the local identity card.
The agricultural land owner who is resided outside the sub-district where the land is located, no later than 6 months after obtaining the land right, he must (i) transfer the land right to other person who is resided in the sub-district of land, or (ii) move to reside in the sub-district of land. The violation towards this provision may result to a removal of land rights, and the land shall be controlled by the State.
If the land falls to the State, the owner shall be given with proper compensation.
Provisions of Agricultural Land Use
The owner of agricultural land shall cultivate and utilize the land according to its designation, no later than 6 (six) months from the issuance of land right certificate.
The individual and legal entity-land owner may cooperate with other party based on written agreement in case the land owner is not able to cultivate and utilize the land. For the agriculture land that is owned by individual, the other party that has a cooperation with the land owner may be given the right to use for a definite time over the right of ownership according to the agreement with the land owner, and can be encumbered with mortgage right.