The government is ready to submit to the House of Representatives in the second half of this year a draft law on land acquisition for public interest in a bid to provide certainty for investors in the infrastructure sector, Coordinating Minister for the Economy Hatta Rajasa said on Thursday.
“The academic draft has been completed, and we plan to present it to the public soon. I expect in the second semester we could submit it to the House of Representatives,” Hatta said.
He said the draft law contained a guarantee for investors that once a plot of land is declared for infrastructure projects, it will be available for acquisition.
“What investors [in infrastructure projects] fear most is uncertainty in land acquisition,” he said. “On the other hand, for the landowners, this draft also guarantees that they will get compensation at market price.”
He declined to explain in detail how the market price for the land would be determined, although he said it would be above the taxable value, or NJOP.
The draft law also stipulates that once a plot of land has been declared for an infrastructure project, the owners are not allowed to sell it to other parties. This apparently is aimed at preventing speculation, which in the past has caused surges in the price of land, making it impractical for infrastructure companies to carry out projects.
Fatchur Rochman, chairman of the Indonesian Toll Road Association, welcomed the government move, saying it would boost infrastructure development.
“I hope the draft law can be approved this year,” Fatchur said.
As part of efforts to boost investment, the government will offer $7 billion in projects, including toll roads and power plants, at an infrastructure summit on April 14-17, Gita Wirjawan, chairman of the Investment Coordinating Board (BKPM), said this week.
Over the next five years, the government hopes to see private investors build 20,000 kilometers of roads and 15,000 megawatts in electricity generating capacity through public-private partnerships.
Hamid Yusuf, of the Indonesian Professional Appraisers Society (Mappi), said land acquisition in Indonesia had often been problematic because there was no mechanism to arrive at a land value acceptable for all parties involved in the transaction. Therefore the need for a law dealing with this was “very urgent.”