Based on Article 41 of Law Number 5 of 1960 on Basic Regulations on Agrarian Principles (“UUPA”), the definition of Right to Use is the right to use and/or to collect the product, from (i) land which directly controled by the State or (ii) land owned by other persons, which gives the rights and obligations as stipulated in its granting decision by the authorized official, or as stipulated in the agreement with the owner of the land, which is not lease agreement or land management agreement, as far as it does not conflict with the spirit and the provisions of this law.
The Right to Use can be given to:
- Indonesian citizens;
- Foreigner domiciled in Indonesia;
- Legal entity which established under the Indonesian Law and domiciled in Indonesia;
- Departments, Non – Departmental Government Agencies, and Local Governments;
- Social and Religious Organizations;
- Foreign legal entity which have representative in Indonesia;
- Representative of Foreign Country and Representative of International Organizations.
Basically, the Right to Use can be transferred. For the land which controlled by the State, the Right to Use can only be transferred to another party with a permit from the authorized official. However, for the land with the Right of Ownership, the transfer of the Right to Use to another party can only be done after it has been expressly stated in the agreement. Therefore, if by any chance the holder of the Right to Use is not eligible any more to hold such right, then that party will lose its right and shall transfer it to another party or the Right to Use will be eliminated.
Object of Right to Use
Land that can be granted with Right to Use are land which controlled by the state, land with Management Right, and land withthe Right of Ownenrship.
Granting of the Right to Use
The Right to Use is granted through the decision of Minister or authorized officer. The Right to Use of land with Management Right is granted through the decision of minister or authorized officer based on the proposal of the holder of the Right to Manage. This applies to land controlled by the state. And for the land with Right of Ownership, the Right to Use is granted through an agreement of both parties.
Period of the Right to Use
The Right to Use can be granted for a period of maximum 25 (twenty five) years and can be extended for 20 (twenty) years at most (maximum). A renewal can be granted after the time period of Right to Use and its extension has expired. Right to Use of land which controlled by the State can be extended or renewed if the land is still in good condition, and the holder of right has meet with the requirements to hold such right. The Right to Use of a land with Management Right can be extended and renewed by the proposal of the holder of the Management Right. Right to Use over a land with Right of Ownership can only be granted for 25 (twenty live) years and cannot be extended.
The Transfer and Elimination of Right to Use
The transfer of the Right to Use of land which controlled by the state can only be done after the issuance of minister’s decision or authorized officer’s decision. For land with Right of Ownership, the Right to Use can only be transferred if it’s allowed in the agreement. The transfer can only be conducted by the sale and purchase, exchange, capital participation, grant, and inheritance. The Right to Use is eliminated because of:
- Expiry of its time period;
- Cancelled by authorized officer, holder of the Management Right or holder of Right of Ownership before the expiry of its time period, because of:
- Non-fulfillment of obligations of the Right to Use holder.
- Non-fulfillment of requirements or obligations which stated in the agreement of the parties regarding the grating of the Right to Use or the use of Management Right.
- Lawful and enforceable court decision.
- Granted voluntarily;
- It’s being neglected;
- The abolishment of the land;
- The holder of the Right to Use did not release or transfer its right to the third party, within one year since the right holder did not meet the requirement as the holder of Right to Use as stipulated in Article 39 of Government Regulation No. 40 of 1996.