Land development needs reform

Land development needs reform

By Tommy Firman

BANDUNG (JP): One of the main issues that will emerge with
urban development is the need to design an effective, efficient
and equitable expansion of urban land resources. Therefore, there
is a need to reform and reorientate the policies for urban land
development.

The urban land policy basically refers to the government's
agenda for the control, allocation and utilization of urban land
resources.

It is commonly believed that too much government intervention
is not conducive for the urban land market to work effectively.
It is not whether the intervention is too much or too little but
whether it is effective enough to steer land development.

The management of urban land resources in the future should
aim at increasing the effectiveness and efficiency of land
utilization based on principles of "equity" and "sustainability".

The ideal aspirations might in turn affect the need for a
"policy reform" in urban land utilization, as stipulated in the
Basic Agrarian Law (UUPA) promulgated in 1961, which stressed
that land has its social and functional values and should not be
used as a trading commodity for maximum profits.

First, the issues of land ownership and transfers. The basic
principle is to prevent excessive ownership of urban land as well
as inefficient land utilization. It can become a matter of
speculation which will ruin the public and even cause social
disparities.

In fact, this matter has been addressed in the Basic Agrarian
Law which is still relevant to the present condition. But the
context has now shifted from rural land to urban land. The fact
that concentration of urban land in big cities is in the hands of
large developers is increasing. Some tend to become land capital
gain seekers, this results in escalating land prices but
decreases in land utilization.

This demands a long-term policy encompassing the principles
and control mechanism of land use, including location and
building permits. It should be kept in mind that a location
permit is primarily a tool to control land use development, not
an exclusive right for land acquisition as it has been perceived.

Another important aspect is more "equitable" land transfers,
as the prevailing mechanism of land transfers seems to give too
much authority to those who have been granted a right of land
acquisition.

There should be a mechanism for land transfer that will not
physically evict and take ownership of land from the owners. The
land owners should be considered "share holders" in development
projects carried out by the private sectors, notably developers
on their lands. This is undoubtedly the essence of partnership
between the private sector, the community and the government.

Second, land utilization in urban areas should be based on a
city plan. However it seems that in the attempt to accommodate
rapidly growing economic activities, the urban city plan has been
adjusted without proper procedures.

Given the vast land use changes taking place in large cities
there should be clear and transparent requirements regarding the
process of land use change and shore reclamations. These matters
have a great impact on the socioeconomic condition as well as the
environment.

The control of a land use plan is difficult in the situation
where a plan is concealed from the public, as has been the case
in many cities. Therefore, urban city plans should be made
available and accessible to the public so that it motivates them
to actively participate in urban development control.

Third, urban land taxation which includes property taxes and
value-added taxes can serve as legal instruments in controlling
urban land utilization. But it seems that these economic
instruments have not been effective in Indonesian cities.

There is even a tendency for land taxes as well as location
permits and building permits to be considered instruments for
collecting revenues instead of controlling land use development.

Fourth, land development institutions are still fragmented and
lacking in coordination both at a local and national level.
Coordination needs to be improved.

The Development Planning Board of the first administrative
level (province) and the second administrative level should be
able to undertake these tasks.

The need for decentralization in decision making, regarding
land development, is increasing as the process is often too
centralized and takes little consideration of socioeconomic
conditions at the local level.

The role of private developers in urban land development is
very important and should be encouraged. Therefore, a conducive
environment needs to be developed. One of the components is a
legal assurance for their operation.

There should also be support of financial institutions that
can provide loans for such undertakings -- notably the small and
medium-sized developers -- and the presence of competent
construction industries as well as suppliers of construction
materials.

It should be kept in mind, however, that if the system of land
regulations and institutions are weak, the role of private
sectors in urban land development would tend to be out of
control.

Fifth, the difficulty experienced in urban land management in
developing countries is a lack of adequate information and data
on land affairs to be used as a basis for decision making and
planning for urban land development.

Ideally, there should be a land registration system, covering
at least the data on real estate registry, ownership and rights,
in the form of maps.

In other words, there should be a national registry of real
estate data. Fortunately, at present the National Land Agency
with the assistance from the World Bank, is carrying out a grand
program called Land Administration Program (LAP), which is
essentially a reform in land administration, human resources, and
institutions.

Improving regulations and institutions should become the
agenda for the reformation of urban land development.

This will cover: land use control; clear and transparent
mechanisms and regulations regarding changes of land use as well
as shore reclamation; more equitable land transfer mechanisms;
taxation that can offer incentives and disincentives for
sustainable and equitable land utilization; procurement of land
banking; and others.

Furthermore, institution building is necessary for better
coordination and decentralization of land resource development.

The writer is a lecturer in the Department of Regional and
City Planning, Bandung's Institute of Technology.