Tue, 01 Apr 2008
Responding to the Constitutional Court amendment of Article 22 of the Investment Law, the House of Representatives and the Investment Coordinating Board (BKPM) said Monday the de facto duration for property rights would remain unchanged.

Both institutions said that although the amendment had scrapped exact time periods for property rights in the article, the period for land cultivation right remained up to 95 years for foreign investors.

Building rights, they said, remained for up to 80 years, while land use rights could still be acquired for a maximum of 70 years, as stated in the original article.

BKPM chairman Muhammad Lutfi said foreign investors should not be overly concerned by the court's decision, as all land use terms offered under the initial article were still applicable.

Didik Rachbini, the chairman of House Commission VI, which was responsible for formulating the law last year, said the Constitutional Court failed to understand the promotional aspects of the original article.

"Despite being amended, all the provisions stated in the original article are still applicable because they did not contradict the Agrarian Law," Didik said.

He said the original article merely adapted provisions in the Agrarian Law that stated all types of property rights could be extended.

"The original article basically made the extension facility to be given automatically when the investor requested the property rights for the first time. It avoided the arduous process of having to apply for rights over and over again," Didik said.

According to the Agrarian Law, land cultivation rights can be acquired for 35 years and can be extended for a period of up to 25 years, and building rights can be acquired for 30 years and can be extended for a period of up to 20 years, while land use rights can be acquired only by permission of the related local government.

In its March 24 final decision on a judicial review of the newly enacted Investment Law, the Constitutional Court said the House decision to automatically extend the period for property rights violated the 1945 Constitution.

The court said the government could not extend the period automatically as it would "weaken the sovereignty of the people in the face of Law".

Constitutional Court chairman Jimly Asshiddiqie said with the amendment of the article, the government must go back to the Agrarian Law, and that property right extensions could not be given automatically.

The Investment Law, which supersedes the 1967 Foreign Investment Law and the 1968 Domestic Investment Law, aims to provide equal legal status for domestic and foreign investors, in the hope that it can leverage the country's competitiveness as an investment destination.

Under the Investment Law, both foreign and local firms are entitled to the same business incentives, with certain requirements, such as investing in labor-intensive industries, infrastructure projects, projects involving the transfer of technology and so-called pioneering industries.

The law also reduces immigration obstacles, with foreign investors entitled to two-year residency permits that will be subsequently convertible into permanent residency permits. (lva)



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