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.