URBAN LAND PROVISIONING FOR DEVELOPMENT OF PUBLIC INTEREST

8/10/2019 URBAN LAND PROVISIONING FOR DEVELOPMENT OF PUBLIC INTEREST

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2014

The World Bank & BAPPENAS

Miya Irawati, Adhitya Wirayasa


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Table of Contents

Table of Contents .............................................................................................................................. i

Table of Figures .............................................................................................................................. iv

Chapter 1. INTRODUCTION ...................................................................................................... 1

1.1. Background ...................................................................................................................... 1

1.2. Objectives ......................................................................................................................... 1

1.3. Output ............................................................................................................................... 2

1.4. Methodology ..................................................................................................................... 2

1.5. Schedule ........................................................................................................................... 3

1.6. Report Outline .................................................................................................................. 5

Chapter 2. URBAN LAND POLICY CONDITION ININDONESIA .............................................. 7

2.1. Introduction ....................................................................................................................... 7

2.2. Urban Land Management Regulatory Framework Related to the Housing Sector ........ 9

2.2.1. The 1945 Constitution of the Republic of Indonesia ................................................ 9

2.2.2. Law No.5/1960 Regarding Basic Regulation on Agrarian Principles (UUPA) ......... 9

2.2.3. Law No.2/2012 Regarding Land Acquisition for Development of Public Interest and

derivatives regulation............................................................................................................. 152.2.4. Law No.1/2011 Regarding Housing and Settlements and Law No.20/2011

Regarding Vertical Housing................................................................................................... 20


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2.5.2. Land Readjustment ................................................................................................. 34

2.6. Spatial Planning, Zoning and Licensing ........................................................................ 34

2.6.1. Municipal and District Spatial Plan ......................................................................... 34

2.6.2. Zoning and Housing and Settlement Sector .......................................................... 36

2.6.3. Licensing ................................................................................................................. 40

2.7. Conclusion ...................................................................................................................... 41

Chapter 3. LITERATURE REVIEW ON CASE STUDIES ........................................................ 43

3.1. Introduction ..................................................................................................................... 43

3.2. Land Bank ...................................................................................................................... 43

3.2.1. Netherlands ............................................................................................................. 43

3.2.2. Philippines ............................................................................................................... 46

3.2.3. China ....................................................................................................................... 49

3.2.4. ColombiaBogota ................................................................................................. 51

3.2.5. South Korea ............................................................................................................ 54

3.3. Land Consolidation/ Land Readjustment ....................................................................... 58

3.3.1. Netherlands ............................................................................................................. 58

3.3.2. Switzerland .............................................................................................................. 60

3.3.3. Indonesia ................................................................................................................. 64

3.4. Conclusion ...................................................................................................................... 65

Chapter 4. MODEL OF URBAN LAND MANAGEMENT FOR HOUSING SECTOR AND

OTHER INFRASTRUCTURES ..................................................................................................... 67


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4.4.5. The Working Scheme of Land Provisioning Institution .......................................... 79

4.4.6. Legal Aspects of Public Service Board (BLU) ........................................................ 80

4.5. Conclusion ...................................................................................................................... 80

Chapter 5. ROADMAP FOR ESTABLISHMENT OF LAND PROVISION INSTITUTION FOR

HOUSING SECTOR AND OTHER INFRASTRUCTURES IN INDONESIA................................ 83

5.1. The Way Forward ........................................................................................................... 83

5.2. Quick Wins ..................................................................................................................... 88

REFERENCES............................................................................................................................. 89ANNEXES..................................................................................................................................... 93

Annexes .................................................................................................... 94

ANNEX 1INSTITUTIONALANALYSIS :BLU(PUBLIC SERVICE BOARD)PERUMNAS (STATE-OWNED

ENTERPRISES AS NATIONAL HOUSING PROVIDER) ........................................................ 93

ANNEX 2INSTITUTIONALANALYSIS:BLU(PUBLIC SERVICE BOARD)BANK(STATE-OWNED

ENTERPRISES) ............................................................................................................ 104

ANNEX 3THE SUMMARY OF BLUBASED ON GOVERNMENT REGULATION NO.23/2005(FINANCIAL

MANAGEMENT OF BLU)AND GOVERNMENT REGULATION NO.74/2012(REVISION OF

GOVERNMENT REGULATION NO.23/2005).................................................................. 116


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Table of Figures

Table 1.1 Schedule ...................................................................................................................... 3

Table 2.1 Typology of Land Rights According to Law No.5/1960 and Government Regulation

No.40/1996 ................................................................................................................ 10

Table 2.2 Land Supply and Zoning Aspect in Accordance with Law No.1/2011 and Law

No.20/2011 ................................................................................................................ 20

Table 2.3 Comparison of Land and Building Tax (PBB), Land and Building Title Transfer Duty

(BPHTB), and Final-Income Tax (PPh Final) ........................................................... 24Table 2.4 The Contents of Municipality and District General Spatial Plan ............................... 35

Table 2.5 Licensing for Land Use and Land Allotment (SIPPT- Surat Izin Peruntukkan dan

Penggunaan Lahan) .................................................................................................. 40

Table 3.1 Task of the METROVIVIENDA Officials ................................................................... 52

Table 4.1 Ideal Situation for Land Provisioning Operation ....................................................... 69

Table 4.2 Institutional Analysis of Urban Land Provisioning in Indonesia ................................ 74

Table 4.3 Purposes of the Acquired Land by Land Provision Institution .................................. 77

Table 4.4 Characteristics and Responsibilities of Two-Tiers Organization Structure .............. 78

Table 5.1 Proposed Road Map for the Urban Land Policy Reform to Support Housing Sector84

Figure 2.1 Concept of Housing Development and Improvement (Source: UN Habitat, 2008) ... 7

Figure 2.2 Stages on Land Acquisition as Stipulated by Law No.2/2012 .................................. 17

Figure 2 3 Land Acquisition Scheme According to Law No 2/2012 during Planning and


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Figure 3.6 Coordination Procedures Under LI Syndicate After the Feasibility Study ................ 63

Figure 3.7 Land Consolidation Practice in Indonesia................................................................. 65

Figure 4.1 The way of Thinking for Analyzing Urban Land Provisioning Institution (Land Bank)72

Figure 4.2 Proposed Organization Structure of the Urban Land Provisioning Institution (Land

Bank) in Indonesia ..................................................................................................... 79


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Chapter 1. INTRODUCTION

1.1. Background

Poverty reduction and economic development in Indonesia is being stunted by an immense

housing crisis. There is an estimated housing backlog of 16 million units, and formal production

only responds to a quarter of the annual demand of 800,000 units each year.

Most low-income housing in Indonesia is built by small contractors through informal processes,leaving a large number of urban poor in inadequate shelters with insecure tenure rights, poor

access to basic services and vulnerability to disaster risks. Demand pressures for affordable

and serviced land and housing are increased in the context of rapid urbanization.

Addressing the challenge of affordable housing through a blend of comprehensive policy reform

of the housing supply and financing systems will be a key factor in determining the extent and

pace by which Indonesias urbanization and strong economic growth will be benefit the urban

poor.

In the context of medium-term plan, the RPJMN, Bappenas has developed dual policy goals of

an alleviating poor conditions in existing slums, and a preventing formation of new slums

through effective housing policy. This Program, led by Bappenas and Kemenpera, with support

of the World Bank, will aim to address five key pillars (building blocks, urban land policy, public

housing policy, housing microfinance and mortgage markets) to improve access to affordable

housing for low-income Indonesians.

Through Law No. 2/2012 and Presidential RegulationNo.71/2012 on Land Procurement for

Development of Public Interest, land acquisition problems are still having challenges because

land acquisition can be done if the institution that needs land has already fund allocation in their


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blockages and assessing land policy instruments and its implementation in Indonesia, such as

land banking and related tools. This work will culminate in inputs into Indonesias Housing Policy

Roadmap.

1.3. Output

The goal of Phase I is to produce a Roadmap for policy reform in housing, land and settlements

in Indonesia, which will give direction on short, medium, and long-term policy measures,

regulatory reforms and program development to improve the availability and access to

affordable urban land for housing and settlements,

The following activities will be carried out: (i) Identify high- impact Target Areas in each of the

priority sectors; (ii) Develop a set of Policy Options that address these Target Areas; (iii)

Prioritize Policy Options; (iv) Develop Policy Options into a set of specific activities, goals and

targets, as laid out in the Roadmap, to inform the next phase of implementation.

Deliverables will include report, papers and presentation materials that include:

1 Rapid Assessment urban land policy context

2 Identification of Target Areas for Policy Intervention.3 Input into Detailed Policy Alternatives.

4 Inputs on Urban Land Policy for the Housing Policy Roadmap.

1.4. Methodology

The methods to reach the objectives of the study as follows:

1. Summarize Current Knowledge and Key Bottlenecks through literature review andoverview of information available

2. Charting of target areas, outreach to key stakeholders for focused interviews, more in-

depth learning and data collection


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1.5. Schedule

The following schedule for the phase I is described in the Table 1.1.

Table 1. 1 Schedule

Tasks Milestones Month Responsible Other entities

Draft Phase I Workplan Draft Workplan Mar BAPPENAS,

Kemenpera,World Bank

Finalize Workplan

Finalize specific goals, focal areas,tasks and outputs in workplan for

urban land policy pillar.

Finalized Workplan Mar 31st Coordination by

BAPPENAS

National Working

Group and invitedkey stakeholders.

Form Technical Team

Identify members of technical

team. Write ToRs and contract alocal consultant and senior expert

in land supply and management.

Consultants Contracted Apr 15th

Core Team

Summarize Current Knowledge

and Key Bottlenecks

Overview of information available,

primary constraints to landavailability in selected focal areas:

(a) Public-led action to assembleand provide land for housing

in urban areas, including deepinvestigation of Land Banking

/ Land Readjustment tools(b) Zoning for uses, density,

coordination with

infrastructure delivery (landvalue capture etc..)

(c) Foundations of Urban LandPolicy (cadaster systems,registration transactions

Matrices summarizing

current state of knowledge,circulated by email no later

than May 30.

Apr-May Technical Team Access anddiscussions on datawith sampling of

local governments;World Bank Land

team counterparts.


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relevance and impact, and

chart enablingrequirements/barriers to

implementation by weight ofimportance, regional

significance.

Propose strategic suite oftarget areas for policydevelopment.

Review Preliminary Findings

In-depth review and refinement.

Recommendations for Pokja PKPDecisions.

May Core Team

Guidance on Findings

Brief update on findings,

presentation of blockages/targetareas identified, prioritization from

NWG on priorities forward.

Presentation of IntermediaryFindings to NWG

May Coordination byBAPPENAS

/Technical Team

National WorkingGroup and invited

key stakeholders.

Identify Policy Options

Identification of next steps need for

policy options, available to centralgovernment and sub-nationalgovernment to address Target

Areas prioritized by NWG. Preparesummary of implications and

capacity of implementing localgovernments.

Draft of Policy Options May Technical Team

Prioritize Policy Options

Workshop with National Working

Group to select and prioritizepolicy options for urban landpolicy reform.

Preliminary Policy

Priorities identified.

Jul Coordination by

BAPPENAS

/Technical Team

National Working

Group and invited

key stakeholders.

Detail Policy Options

Drill down into specifics of policy

Draft Policy Options

Draft circulated to core team

Aug Technical Team Stakeholders to

commit availability


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detailed policy development,

institutional capacity-building andengagement required for Phase II.

stakeholders.

1.6. Report Outline

The report is divided into the following 5 chapters:

1. Introduction

Chapter one provides the context of this report which comprises of the background,

objectives, output, methodology, schedule, as well as the report outline.

2. Urban Land Policy Condition in Indonesia

Chapter two provides the literature review on the urban land policy condition in Indonesia.

This chapter will be distinguished into seven sub-chapter start with the introduction of the

chapter two. Secondly, the urban land management regulatory framework related to housing

sector is further explained, then followed by the foundation of urban land policy. After that,urban land governance will be described to know the actors involved in urban land supply

and urban land market in the national and regional followed by the current practices of land

provisioning in Indonesia. In addition, the sub-chapter on spatial planning and zoning is also

provided. Finally, the conclusion of this chapter will close the discussion.

3. Literature Review on Case Studies

Chapter three provides literature reviews based on the case studies. These case studies are

the land bank from the countries of Netherlands, Philippines, China, Colombia-Bogota,

South Korea. In addition, literature reviews on land consolidation/ land readjustment in the

Netherlands, Switzerland, and Indonesia are further explained. Finally, the conclusions of


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Chapter 2. URBAN LAND POLICY CONDITION

ININDONESIA

2.1. Introduction

The concept of "enabling approach to shelter" was first introduced in 1988 with the adoption of

the Global Shelter Strategy (GSS) in 2000. GSS introduces anew comprehensive framework, to

facilitate "adequate shelter for all by the year 2000", which calls for major changes in the role ofgovernment. Fundamental policy change is through the adoption of an "enabler" that mobilizes

all potentials and resources of various actors in the production process and improvement of

housing quality (Figure 1).The role of Government in the context of "enabler" means that

government facilitate the actors in mobilizing resources (land, Infrastructure, building materials,

labor and finance) in order to achieve an efficient housing.


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Access to affordable land is pivotal for the urban poor, especially to afford land in urban space.

As our cities grow in population, demand for land creates problems in urban space, such as: 1)

the increasing scarcity of land allocated for housing in urban zones, and 2) the increasingcommercial value of the land. Currently, land is less and less seen as an asset for public

benefit, but more as a commodity to sell to the highest bidder in the market.

Each land is unique regarding their infrastructure, accessibility, and facilities. Location and

attributes are the prominent factors that determine land value, usability, and selling price. When

land supply is scarce and demand for land increases due to the increase of urban population,

the land price will increase. This is basis for the formulation of land economics (law of supply

and demand).Thus; those who have money can buy land in the city center. Meanwhile, theurban poor will be increasingly relegated to the suburbs or they have to dwell in the slums (and

squatters) in the city. For the urban poor who are displaced to the suburbs, the transport cost

from home to their workplace is around 30% of their income(generally they work in the informal

sector in the city center).

City is practically treatedas itscolor in map of development planning and land use policies.

Technical documents such as zones, infrastructure, and centers of economic activity are in fact

political in nature, which is determined by policy makers and people / institutions that dominatethe land market. Thus, land provision for the urban poor housing development could be

successful if there is a strong political will or commitment from government. Government could

ensure land availability for the urban poor with the following land management:

1. Government regulations and policies related to land ownership and the land provision for

urban housing.

2. Standards for public interest development, which consists of several rules, procedures,

and specification details of infrastructure facilities provided.3. The alternatives of land provision tools for urban housing by public institutions and other

actors.

4 Land use planningthat regulates lands particularly those allocated for housing and


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2.2. Urban Land Management Regulatory Framework Related to the Housing

Sector

Under Indonesias constitution, all land falls into two categories: forest estate (kawasan hutan);

and non-forest estate (area pengunaan lain). Therefore, two government agencies are

responsible to administer these lands. Ministry of Forestry is responsible to administer forest

estate, whilst the National Land Affairs Agency (Badan Pertanahan Nasional BPN) is

responsible to administer non-forest estate respectively.

List of relevant laws and regulations in urban land acquisition to fulfill the need of urban housing

are: the 1945 Constitution of the Republic of Indonesia, Law No. 5/1960 Regarding Basic

Regulations on Agrarian Principles, Law No.2/ 2012 Regarding Land Acquisition for

Development of Public Interest and derivatives regulation, as well as Law No. 1/2011 Regarding

Housing and Settlements and Law No.20/2011 Regarding Vertical Housing.

2.2.1. The 1945 Constitution of the Republic of Indonesia

Article 33 of the 1945 Constitution, Chapter XIV the National Economy and Social Welfare,

mandates that (Government of Indonesia, 1945):

(1) The economy shall be organized as a common endeavor based upon the

principle of the togetherness(kekeluargaan).

(2) Productions that are important for the country and affect the life of the people shall

be under the States control.

(3) The land, waters, and all natural resources w ithin shal l be un der the States

con trol and shal l be used to g reatest benefi t of the people.

(4) National economy management shall be conducted on the basis of economic

democracy upholding the principles of togetherness, efficiency with justice,sustainability, environmental perspective, self-sufficiency, and keeping a balance

between growth and national unity.

(5) F th i i l t d t th i l t ti f thi ti l h ll b l t d b


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10

Table 2. 1 Typology of Land Rights According to Law No.5/1960 and Government Regulation No.40/1996

#

Land Rights

Legal

Classification

Definition Eligibility Time Frame Annotation Revocation of Rights

1 OwnershipRights

(Hak milik

HM)

is the inheritable right,the strongest and

fullest right on land

thatone can hold

Only Indonesiancitizens can

have this right.

the Government

is to determine

which corporate

bodies that could

possess an

ownership rights

and the

conditions

thereof

This right isapplied for a

lifetime and

can be

inherited

This right can changehands and be

transferred to other

parties

a. the land in question falls to theState:

In the interests of the public

as well as of the nation and

of the state and in the

collective interests of the

people, by providing

appropriate compensation and

in accordance with the

procedure which is to be

stipulated by way of an Act;

because of a voluntary

surrender by the owner;

because land has been

abandoned; and

A foreigner who, following the

enactment of this law, acquires

a ownership right by way of

inheritance without a testament

or by way of joint ownership ofproperty resulting from

marriage, and an Indonesian

citizen holding a ownership

right following the enactment of

this law loses Indonesian

citizenship is obliged to

relinquish that right within


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11

#

Land Rights

Legal

Classification


one year following the date

the ownership right is acquiredor upon which lost of

Indonesian citizenship,

Every sale/purchase,

exchange, gift, and bequest by

a testament and every other

acts, which are intended to

either directly or indirectly

transfer a ownership right to a

foreigner or to a person of

Indonesian citizenship who

concurrently holds foreign

citizenship or to a corporate

body other than those

stipulated by the Government

b. The land vanishes

2 Cultivation

Rights

(Hak guna-

usahaHGU)

is the right to work on

land (utilize) directly

owned/controlled by

the State for a periodof time and can be

extended if qualified

for agricultural,

fisheries and livestock

purposes

Indonesian

citizens

Corporation

incorporatedunder

Indonesian law

and domiciled

in Indonesia

maximum

25 years or

35 years in

the caseof a

company

which

requires

more time.

can be

extended if

This right can change

hands and be

transferred to

another party. The minimum area

for individual who

received this right is

5 hectares and the

maximum of 25

hectares.

The corporate will

a. the term has expired;

b. it is terminated before its term

has expired because a certain

condition is not fulfilled;c. it is relinquished by the holder

before its term has expired;

d. it has been revoked in the interests

of the public;

e. the land has been abandoned;

f. the land has vanished; and

g. A person or corporation which


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12

#

Land Rights

Legal

Classification


qualified for

a maximumtime of 25

years

receive the right with

the number of areaupon agreed by the

Minister or Appointed

Officer.

holds a cultivation rights and no

longer fulfills the conditions isobliged to relinquish the right in

question or to transfer it to

another party which does fulfill

the conditions. This provision also

applies to a party who acquires a

cultivation right if they do not

fulfill the condition.

3 Building

Rights

(Hak guna-bangunan

HGB)

is the right to

construct and

possess buildings

on land which is not

ones own for a

period of time

Indonesian

citizens

Corporation

incorporated

under

Indonesian law

and domiciled

in Indonesia

for a period of

at most 30

years.

Upon request

of the right

holder and in

view of the

needs and of

the condition

of the

buildings, the

term can beextended for

at most 20

years.

This right can change

hands and be

transferred to

another party.

Building rights come

into existence under

the condition of:

determined by the

Government on land

controlled/ owned by

the State and

determined by anauthentic agreement

between the

landowner with the

party who will acquire

the building rights

a. its term has expired;

b. it is terminated before the expiry of

its term on the ground that a

condition has not been fulfilled;

c. it is relinquished by the right holder

before the expiry of its term;

d. it is revoked in the public interest;

e. it has been abandoned;

f. the land has vanished;

g. A person or corporation which

holds a building rights and no

longer fulfills the conditions isobliged to relinquish the right in

question or to transfer it to

another party which does fulfill

the conditions. This provision also

applies to a party who acquires a

building rights if they do not fulfill

the condition.


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13

#

Land Rights

Legal

Classification


4 Utilization

Rights(Hak pakai)

is the right to use,

and/or to collectproduction/crop from

the land directly

controlled by the

State or land owned

by another individual

(owned rights) which

grants authority and

obligations as

determined in the

relevant right-granting decree by

the official who is

authorized to grant

it or as determined

in the agreement

with the landowner,

where the agreement

is not a land-lease

agreement or land-exploitation/cultivation

agreement

Indonesian

citizens, foreign citizens

domiciled in

Indonesia;

corporation

incorporated

under

Indonesian law

and domiciled in

Indonesia, and

Foreign

corporation

having

representation in

Indonesia.

for a

definiteterm or for

as long as

the land is

used for a

specific

purpose;

and for

free, for a

certain

payment, or

for any kind

of service.

In the case of land

directly controlledby the State, use

rights can be

transferred to

another party only

with the approval of

the authorized

official.

Use rights can be

transferred to

another party only in

the case where such

a transfer is possible

under the relevant

agreement.

-


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14

#

Land Rights

Legal

Classification


5 Lease Rights

for building(Hak sewa)

Rights to use the landowned by anotherparty for purposesrelated to buildings bypaying rental fee tothe landowner

Indonesian

citizens, foreign citizens

domiciled in

Indonesia;

corporation

incorporated

under

Indonesian law

and domiciled in

Indonesia, and

Foreign

corporation

having

representation in

Indonesia.

Depends on

leaseagreement

- -

6 Management

Rights

(Hak

PengelolaanHPL)

Not regulated underLaw No.5/1060.

(Explanation in theparagraph below)


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In addition to the above explanation, other rights that are regulated under Law No.5/1960

areland clearing rights (hak membuka tanah) and forestry extraction rights(hak memungut

hasil-hutan). Those rights can be granted to Indonesian citizens under governmentregulation.

Other important land right is Management Rights (Hak Pengelolaan HPL). This land rights

is not regulated under Law No.5/1960. This kind of right shall be given exclusively among

government institutions. Under the Government Regulation No.40/1996 article 1 (point 2), it

is described as Rights to control by the State that the implementation authority is given to

the holder (Tunardy, 2013). However, the complete definition is given under Law

No.21/1997 Regarding Land and Building Title Transfer Duty (BPHTB) article 2 (3), it isdefined as Rights to control by the State that the implementation authority in part is given to

the holder namely allotment plan and land use, land use for the purpose of performance of

duties, surrender parts of the land to the third party, and/or collaborate with the third party.

Under the Head of BPN Regulation No.9/1999, Procedures for Granting and Cancellation of

rights on state land and management rights, article 67 (1), management righ ts (HPL) can

be given to th e government agency in cludes the local gov ernment, State-Owned

Enterprise, Regional Government-Owned Enterprise, Enterprise (Persero), authori ty

agency (Badan Otorita), or other governments legal entities appointed by the

government.

2.2.3. Law No.2/2012 Regarding Land Acquisition for Development of

Public Interest and derivatives regulation

Law No.2/2012 RegardingLand Acquisition for Development of Public Interest and derivative

regulation the Presidential Regulation no.71/2012 Regarding the implementation of land

acquisition for development of public interest (amended by Presidential Regulation

No.40/2014 and Presidential Regulation No.99/2014) are the new set of regulations that was

prepared by the Government of Indonesia to speed up the process of land acquisition for


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e. oil, gas, and geothermal energy infrastructure;

f. power plants, transmission, substations, grids, and distribution;

g. telecommunication and informatics networks of the Government;

h. landfills and waste treatment sites;

i. hospitals of the Government/the Regional Governments;

j. public safety facilities;

k. public cemeteries of the Central Government/the Regional Governments;

l. social facilities, public facilities, and public green open space;

m. nature reserves and cultural sites;

n. offices of the Government/the Regional Governments/the villages;

o. urban slum planning and/or land cons ol idation, and rental housing for low -

income communi ty*;

p. educational infrastructure or schools of the Government/the Regional Governments;q. sport infrastructure of the Government/the Regional Governments; and

r. public marketplaces and public parking spaces.

In the elucidation of article 10 (o), Rental Housing for Low-income community is defined as

public housing constructed on the Governments land or Regional Governments land (public

land) with the rental status. Althou gh this law has not covered the public hou sing that

wil l be developed above private land, or with the status o wnersh ip rights to th e land

or bu i ld ing rig hts, land sup ply for p ubl ic ho using further explained by Law No.1/2011

Regarding Hou sing and Sett lements and Law No.20/2011 RegardingVert ical Housing.

The first amendment of the implementation of land acquisition for the development of public


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17

Figure 2. 2 Stages on Land Acquisition as Stipulated by Law No. 2/2012


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2.2.4. Law No.1/2011 Regarding Housing and Settlements and Law

No.20/2011 Regarding Vertical Housing

Law on housing and settlements and law on vertical housing are the core regulation

introduced in 2011 for housing sector. As stipulated in the article 105 (1) of Law No.1/2011:

The central government and the local government are responsible for the avai labi l i ty

of land for hous ing and sett lements, by which the location is stipu lated by the local

government (Governor/Mayor/Regent) through the spatial plan (Government of

Indonesia, 2011b). Similarly, as stipulated in article 22 (2), land provision for vertical housing

is carried out in accordance with the provisions of laws and regulations(Government of

Indonesia, 2011c). Further explanation related to land supply and zoning aspect isdescribed in the Table 2.2.

Table 2. 2 Land Supply and Zoning Aspect in Accordance with Law No.1/2011 and Law No.20/2011

# Specific AspectsHousing and Settlements

(Law No.1/2011)Vertical Housing(Law No.20/2011)

Zoning arrangement Article 105 (2): Availability ofland including its adoption in the

regional spatial plan is theresponsibility of the regionalgovernment

Article 13 (3): determination ofzoning and building sites is

stipulated by the spatial plan ofrespective municipality/district

Article 13 (4): if the localgovernment has not establishedthe spatial plan, theGovernor/Mayor/Regent withapproval from respective Houseof Representative

Developmentrelated to land

n/a Article 17: (development above)(a) Ownership rights, (b) buildingrights and use rights above Stateland, (c) building rights and usei ht b t i ht


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# Specific AspectsHousing and Settlements

(Law No.1/2011)Vertical Housing(Law No.20/2011)

regulat ions.d. utilization of land formerly

known as abandoned landand / or

e. land acquisition fordevelopment of public interestin accordance with the

provis ions of laws and

regulat ions.

f. utilization of part of the landformerly known as abandonedland and / or

g. land acquisition for developmentof public interest

Article 22 (3): In the case ofconstruction of vertical housingunder land withbuilding

rightsorunder use rightsovermanagement rights (HPL), thedevelopers are required toresolve the status of buildingrights or use rights over themanagement rights inaccordance with the provisions ofthe legislation before selling the

vertical housing unit concerned.

Obligation of theprivate developers

n/a Article 16 (2): the developersshall provide public verticalhousing at least 20% (twentypercent) of the total floor area ofthe commercial private verticalhousing project that was built.

Article 16 (3): Obligation referred

to paragraph (2) can be carriedout off-site of the commercialvertical housing area in the samemunicipality/district


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1. Coverage of the Basic Land Map is still around 39.09% of the total non-forest land in

Indonesia

2. Cadastral map is not always updated in line with changes in land use and landownership in the field, as well as related to land registration system and respective data

on land rights.

2.3.2. Land Registration

Land Registration System gives information about land rights and keeps proof of legal

ownership. Many problems of land registration system in Indonesia arise such as:

1. The cost of the first land registration is still expensive for the low-income household.2. The requirement to pay Land and Building Title Transfer Duty (BPHTB) at the first land

registration is a burden for the urban poor(subalterns) because it is still expensive.

3. Implementation of land registration optimally because it has not covered of the entire

Indonesia area (coverage nationally certificated land parcelsreached 51.80% of the non-

forest land)

Nevertheless, the government has shown its commitment to accelerate land registration byimplementing several land registration programs such as: LARASITA (Layanan Rakyat

untuk Sertifikasi Tanah Community Services for Land Certification), cross-institutional

certification (MOU between BPN with each of ministry: Ministry of Marine and Fisheries,

Ministry of Public Housing, Ministry of Agriculture, Ministry of Transmigration, Ministry of

Small and Medium Enterprises), PRONA (Proyek Operasi Nasional Agraria National

Agrarian Operation Project).

2.3.3. Land Transaction

There is still the practice of manipulation at the time of the sale and purchase of land,

especially in the informal land market Several problems related to land transaction are:


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map such as the status of land rights of each land parcels (without information of the

landowners) and land value zones.

Problems of Land Information System in Indonesia:

1. The cost of the system to provide LIS is still high.

2. Land information systems (manual and digital) sometimes are not accurate.

3. Land information system cannot be accessed by the whole community yet.

4. Land information system does not cover the entire territory of Indonesia.

5. Overlapping ownership with the practice of forgery to the land certificate and sell it.

Nevertheless, several measures have been taken to support services implementation andmanagement. One of the programs is Land Office Computerization that has been carried out

since 1997 with support from the Kingdom of Spain (BAPPENAS, 2009). Another measure

is cooperation between BPN and the Swedish Government through grant from Swedish

International Development Cooperation (SIDA). The first project was carried out between

2007-2010 on IPSLA phase 1 (Institutional Partnership for Strengthening Land

Administration). Four core components were determined: 1) Exchange of Knowledge and

Experience, 2) Land Valuation, 3) Legalization of Computerized Land Record, and 4) Urban

Land Reform / Informal Settlement.

2.3.5. Inventory and Identification of Possession, Ownership, Use, and

Utilization of Land (IP4T)

Inventory and Identification of Possession, Ownership, Use, and Utilization of Land

(Inventarisasi Penguasaan, Pemilikan, Penggunaan, dan Pemanfaatan Tanah - IP4T) is

another program prepared by BPN to improve arrangement and structuring (penataan dan

pengaturan) of land. The results of IP4T program are: the degree of inequality of land

possession, the degree of inequality of land ownership, conformity of land use and spatial

planning, the degree of land utilization, and indication of land for land reform purposes


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Table 2. 3 Comparison of Land and Building Tax (PBB), Land and Building Title Transfer Duty(BPHTB), and Final-Income Tax (PPh Final)

# Aspect PBB BPHTB PPh-FINAL1. Definition Land and Building Tax.

Is the tax on earth

and/building that is

owned, controlled, and/or

used by a person or an

institution, except the area

for plantation, forestry,and mining.

Land and Building Title

Transfer Duty.

Is the tax for gaining rights

on land and/or building. The

gaining of rights and/or

building is a legal event that

produces the rights of landand/or building by a person

or institution. Rights of a

land and/or building is the

right of land, including the

building on it, as referred in

the law of land and building

.

Final Income Tax.

Tax that is applied particularly to

a person or institution that acts

as land and/or building seller

Legal Basis Regulated in Law 28/2009

regarding Regional Tax

and Retribution. Article 2

Paragraph (2) letter j Law

28/2009 stated that PBB

is one of the regional

taxes that could be

collected by the regionalcity/district government

Article 2 paragraph (2) letter

k Law 28/2009 regarding

Regional Tax and

Retribution states that

BPHTP is a type of regional

tax that could be collected

by the city/district

government.

Government Regulation Number

71 year 2008 regarding the third

change of Government

Regulation Number 48 Year

1994 regarding Income Tax

Payment from the Transfer of

Rights on Land and Building

Object The earth and/or building

that is owned, controlled,

Right attainment on land

and/or building includes:

Income from the

person/organization that acts as


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# Aspect PBB BPHTB PPh-FINAL

4. Luxury fence;

5. Sports center;

6. Shipbuilding yard;

7. Luxury park;

8. Shelter place/oil rig,

water and gas, oil

pipe; and

9. Tower.

legal power

10. Business merging;

11. Business

consolidation;

12. Business expansion;

13. Present

b. New right grant because

of:

1. Continuation of

release of rights

2. Outside the release

of rights

Subject A person or institution that

could be imposed with

PBB. The PBB tax subject

is a person or

organization that clearly

has the right over the

earth and/or gets the

benefit of the earth,

and/or own, control,

and/or gain benefit over

building .

A person or institution that

gets the right on earth

and/or building.

Subject of tax that conducts

transaction of the transfer of

rights over a land/or building is

imposed with Final PPh

Object that

is not

imposed by

t

a. Used by the central

and regional

government to

i th

a. Diplomatic and consular

representation based on

reciprocal treatment;

b Th t t t i th

a. A person that has PTKP

(penghasilan tidak kena

pajak) who conducts transfer

f i ht l d d/


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burdened with right.

e. Used by diplomatic

and consular

representative based

on reciprocal principal;

and

f. Used by an institution

or international body

representation that is

stipulated by the

finance minister

decision

without the change of

name;

e. A person or waqf

organization; and

f. A person or institution

that is used for worship.

foundation, cooperation, or a

person that has micro and

small business, which

stipulation is regulated further

with the finance minister

regulation, as long as the

grant does not have any

relation with business, work,

ownership, or control

between the related parties. ;

d. The institution that conducts

transfer of land and/or

building to a religious

body,education body, social

body, including foundation,

cooperation, or a person that

conducts micro and small

business, which stipulation is

regulated further with finance

minister regulation , as long

as the grant does not have

any relation to business,

work, ownership, or control

between related parties; or

e. The transfer of rights over

land and/building because of

inheritance.

Management Since PBB is considered

i l t th th

Is a regional tax hence

b th th it f

The collection is the authority of

t l t th h t


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the transfer gross value

Selling

Value of Tax

Object that

is not

Imposed by

Tax or Nilai

Jual Obyek

Pajak tidak

kena Pajak

(NJOPTKP)

At least Rp. 10 Million.

NJOPTKP for each region

then stipulated based on

Regional Regulation.

Stipulated for at least Rp. 60

million for each BPHTP tax

subject.

In terms of rights that is

gained from inheritance or

will grant that is received by

a person that still has blood

relations in a straight

descendant or one degree

up or one degree down with

the grant giver, or spouse,

then NJOPTKP is stipulated

for Rp. 300 million at the

very least

The value of NJOPTKP in

its relation to BPHTP to

further be stipulated with

regional regulation for each

area.

Tax Object

Selling

Value or

Nilai Jual

Obyek pajak

(NJOP)

Is the average price that

is gained from trade

transaction that happens

naturally, if there is no

trade transaction. NJOP is

ti l t d th h i

If the NJOP is unknown or

lower than the NJOP used

when PBB is applied, then

the basis of taxation is

NJOP PBB

NJOP is based on The

Announcement of Tax Regarding

Earth and Building or

Pemberitahuan Pajak Terutang

Pajak bumi dan Bangunan

(SPPT PBB) i l t d If


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1. There is no implementation of the principle of progressive taxation on abandoned land or

land as a possession instead of the first.

2. Land Tax is the exclusive jurisdiction of the Ministry of Finance. Until now it is difficult toknow the information of acquisition of public land taxes openly, and distribution the

money from land tax for any component in the State's budget.

In addition to the land and building tax regulation, Law No.1/2011 article 111 stipulates that

certification of the consolidated land is not subject to Land and Building Title Transfer Duty

(BPHTB). However, the implementation of this regulation depends on the knowledge of the

local government on how to implement land consolidation and willingness to adopt this

particular regulation on BPHTB.

2.4. Urban Land Governance

2.4.1. Stakeholders Mapping and Institutional Responsibilities

Several actors that involve in urban land management and provisioning in Indonesia are:

1. National Land Affairs Agency (BPN-Badan Pertanahan Nasional)

2. Ministry of Public Works (Kementerian Pekerjaan Umum)3. Ministry of Public Housing of Indonesia (KEMENPERA)

4. National Development Planning Agency (BAPPENAS)

5. The National Housing Cooperation (Perum Perumnas)

On the other hand, the actors that involve at the municipal/ district level are the BAPPEDA (

The Local Government Development Planning Agency), and Settlements Development Age

ncy (Dinas Pengembangan Permukiman). In some municipalities, the Settlements Develop

ment agency merges with the Public Works Agency.

In addition to these 5 main actors, the developers also involve in housing provision. These d

evelopers are the members of either Real Estate Indonesia (REI) or Indonesia s Housing an


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Formal activities:

At the Central Level:

1. Setting all land policies & standards.2. Monitoring & supervising all activities related to land registration &

transaction.

At the Provincial Level:

1. Provincial spatial planning & the issue of major land grants

2. Technical services associated with land registration (base mapping,

coordinate networks, licensing of surveyors etc.)

At the Regional Level:

1. Regional spatial planning, land use management, permits, expropriation,

minor land grants and systematic adjudication

2. Land registration

2.4.1.2. Ministry of Public Works

Based on Presidential Regulation regarding Task, Function, Organizational Structure &

Coordination of Republic Indonesia Ministries: Tasks: Assisting the President in performing government affairs partially in the sector

of public works.

Functions:

1. national policy formulation, policy implementation, and technical policy in the

public work affairs and settlement;

2. conduct of government business in their respective sectors;

3. asset management / wealth of the country is the responsibility4. supervision over the execution of their duties;

5. Submitting the evaluation report, suggestions, and considerations in the field of

duties and functions to the President


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2.4.1.3. Ministry of Public Housing (KEMENPERA)

Based on Presidential Regulation about Task, Function, Organizational Structure &

Coordination of Republic Indonesia Ministries: affairs partially in the sector of housing

Functions:

1. national policy formulation, policy implementation, and technical policy in housing

sector;

2. conduct of government business according to the task

3. asset management

4. Supervising on the tasks implementation;5. Submitting the evaluation report, suggestions, and considerations in the field of

tasks and functions to the President.

Formal activities:

1. Implementing programs:

a. New Development: giving subsidy for mortgage in having RSH & Rusunawa

(rented vertical housing), developing Rusunawa, rumah swadaya (self-help

housing), Rumah khusus, PSU Rusunawa, PSU

b. Upgrading: for rumah swadaya (self-help housing)

2. Providing policy, laws, regulations related in housing development, housing

finance, housing mortgage

3. Developing coordination of policy implementation in housing & settlement sector

4. Facilitating Rusunami (vertical housing) through role of private sectors

5. Developing infrastructure (prasarana & sarana dasar) of settlement for PNS &

TNI/ Polris housing

6. Facilitating & giving stimulant for self-help housing development

2.4.1.4. National Development PlanningAgency (BAPPENAS)


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2.4.1.5. The National Housing Cooperation (Perum Perumnas)

Based on Government Regulation, Number 15/2004 on National Housing Corporation

Tasks:1. To carry out the arrangement of housing & settlements for the community

2. In particular, to carry out certain tasks given by the Government in order to meet

the needs of housing for lower income groups

3. To create adequate housings which are suitable to & support the sustainability of

the region

Functions: housing provider

Formal activities:Programs: New housing development in urban area and village area in Indonesia

2.4.2. Institutional Problems

In urban land provision for urban housing development in Indonesia have many problems,

such as:

1. Unclear authority and responsibility between governments in central level and

between the Central Government and Local Government in the land sector-especiallyin the case of the implementation of the inter-government agencies, it is difficult to

determine the strategic institution for taking/ sharing land. Example: MRT projects

need land surrounding the Senayan area: there is a conflict between the Ministry of

Youth and Sport with Government of DKI Jakarta to be a volunteer their land for the

MRT project.

2. It is difficult to acquire lands that are owned by the Ministry / state.

3. Competence & the amount of land sector employee (The National Land Agency) in

the central and regional levels are not adequate. Example: measuring interpreter still

amounted to 8% of the total employees.

4. The lower-level governments usually lack the financial and legal instruments


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purposes, for example: slum upgrading or planned residential development. These activities

often also include the resulting solution through negotiation and participatory; besides, it has

the potential to be used as a self-help technique for housing development.3. Land Bank

This policy is primarily used to acquire land of public or private for the construction. This

action is as an anticipation of various needs as well as a relatively cheap cost. Land banking

can limit land speculation, distribute land to the poor, and finance infrastructure investments;

even so, there is also the risk of the emergence of scarcity of land (land scarcity), the

increase in land prices, and increase the growth of informal land and housing construction.

4. Land Sharing

Typically involves the owner of land occupied by slums or informal settlements. Landowners

can develop the most valuable land economically. On the other hand, landowners have an

incentive to lease or sell part of the property at a price below the market. In practice in

Indonesia, incentives and socialization of the benefits obtained by the land owners, which

are done by the local government is less relevant in this instrument. Hence, the land owner

considers this related to market price of land in these locations than benefits from help in

urban development and housing provision.

5. Incremental Land Development Strategies

This policy allows the person to occupy land without infrastructure services. In addition, the

incremental infrastructure installation can ultimately increase the supply of affordable land

for housing.

6. ResettlementThis policy is commonly done when the government wants to use the land that used to be

slum. These actions often cause more problems than solutions, especially in cases of

i ti d d liti f l t li i t th l ti f ff d bl h i ll


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Land Consolidation practice in Indonesia has existed since 20 years ago but has not been

effective in urban areas in Indonesia. Land Consolidation projects in Indonesia have been

conducted at several locations and initiated by local governments, the Ministries and theNational Land Agency. Land Consolidation projects have been done for a variety of

purposes, including1) the arrangement of urban slums, and2) the provision of social

housings. National Land Agency has implemented Vertical Land Consolidation in urban

areas with the aim of re-arrange the governor, ownership and use of land in an optimal,

orderly and organized, and involved the participation of land owners to the development of

an integrated environment.

Legal Bases of Vertical Land Consolidation in Indonesia are:1. UUD 1945, article 28 (1): has the right to live physical and spiritual prosperity, living

and have a good and healthy environment, and receive medical care

2. Agreement of Ministry of Public Housing, the National Land Agency and Association

of Real Estate Indonesia, Number 22/SKB/M/2007; Number 6_SKB_BPNRI_2007

and Number 008/MOU/DDP REI/XI/2007 to accelerate the development of simple

flats through urban land consolidation

3. Regulation of Head of The National Agency, Number 4/ 1991 about urban landconsolidation policy.

4. Government Regulation, Number 5/ 1990 about rejuvenation of slums for urban

areas on land owned by the State.

Examples of Vertical Land Consolidation implementations that initiated by the National Land

Agency in Indonesia are5:

1. Social Housing in Tegal Panggung, Province of D.I Yogyakarta.2. Social Housing of Pekunden in Semarang, Province of Central Java

3. Social Housing 24 and 26 in Ilir Palembang, Province of South Sumatera


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4. The process emphasizes community participation (voluntary) are generally

decorated conflicts so inefficient (takes a long time to resolve the conflicts before

continuing to the next step to achieve a mutual agreement).5. The weak coordination between public institutions, both at the central level or

between central government and the regional government.

6. Land values to be higher after Land Consolidation process so that VAT& BPHTB

(Land and Building Title Transfer Duty) will be higher than before the process. This

is burdensome for low-income families in urban.

7. There was a change in the form of land, hence the land owner must adjust the

property assets on their land.

2.5.2. Land Readjustment

Land readjustment is changing the definition of land use (urban) existing and / or intensity of

use of land by re-organization of land up and adjustment of land as desired by development

plan.6

Implementation of Land Readjustment is almost similar to the Land Consolidation, only Land

Readjustment is done in the city aimed at re-organization and undeveloped land parcelsappropriate adjustments by the planned development. Implementation of Vertical Land

Consolidation, which is conducted by the National Land Affairs Agency is a practice of Land

Readjustment.

2.6. Spatial Planning, Zoning and Licensing

2.6.1. Municipal and District Spatial Plan

Spatial Planning in Indonesia is governed by Law No.26/2007 regarding Spatial Planning

while Government Regulation No.15/2010 governs its implementation. Based on these

l ti th ti l l i i t f l ti iti l l i


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Table 2. 4 The Contents of Municipality and District General Spatial Plan

District Municipality Description

Goals, policies, strategies Goals, policies, strategies Arrangement of Spatial

structure plan Arrangement of Spatial

structure plan

Consist of: urban centresystems in its region whichrelates to rural area andfacilitation of network systemon regional region such astransportation networkssystem, energy and electricity

network system,telecommunication networksystem, sanitation and solidwaste system, and waterresources networks system

Spatial pattern plan Spatial pattern consists of conservation areasand cultivation areas

The establishment of citystrategic area.

The establishment of citystrategic area.

-

Direction for spaceutilization

Direction for space utilization contains directions on mainprogram in a medium term offive years

Direction for controllingspace utilization

Direction for controlling spaceutilization

Consist of: zoning regulation,direction on permit, directionfor incentive and disincentive,

and direction for sanction.

- Provision and utilization ofgreen open space

-


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Figure 2. 5 Scheme of Spatial Plan Formulation Process

The zoning in the general spatial plan is planned on the map with minimum scale 1:25.000

for the municipal and scale 1:50.000 for the district. Furthermore, the detail spatial plan is

planned on the map with a scale of 1:5.000. Since at the moment the maps on the scale of

1: 5.000 has not covered all the Indonesias land, and it also expensive to buy, most of themunicipal/district has not formulated their own detail spatial plan.


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Figure 2. 6 Draft of Detailed Spatial Plan (Zoning) in the Draft of RDTR DKI Jakarta,Cilincing Sub-District


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R8: sub zone of general vertical housing

4. Settlements zone with low KDB (Ground Floor Coefficient Ratio)

R9: sub zone of settlement with low KDB

5. Vertical Housing zones with low KDB (Ground Floor Coefficient Ratio)

R10: sub zone of vertical housing with low KDB

Our findings about the implementation of zoning with regards to the housing sectors are as

follows:

1. Most of the local government is not prioritizing the provision of low-income housing in thespatial plan in province level and city/ district level. It can be seen on documents of the

spatial planning at city/ district level that have not specifically allocated locations / lands

for housing development for the urban poor.

2. Land accessibility and land tenure is handed over to the market mechanism so that low-

income communities cannot access affordable land in the city center.

3. Zoning plan is flexible. In some areas adjusted to the interests of the party that controls

urban area.

In addition, study on Spatial Planning and Land Use Management Improvement for the

Local Government, as part of the LMPDP project had produced severalrecommendation as

follows (BAPPENAS, 2009): improvement of several regulation, improvement on spatial

planning quality, institutional improvement, zoning regulations NSPM improvement inputs,

and zoning regulations NSPM legal aspects.


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Furthermore, our findings concerning the control of spatial plan found several weaknesses

such as:

1. The weakness of law enforcement against the development implementation that doesnot obey with the spatial planning/ land use planning.

2. There are not applied incentives and disincentives in accordance with the spatial plan

document.

2.6.3. Licensing

Licensing is one of the instruments in the spatial planning. Licensing is a very useful

instrument when it comes to controlling land use. The licensing process in Indonesia is usingone mechanism by issuing License for Land Use and Land Allotment Certificate (SIPPT

Surat Izin Peruntukkan dan Penggunaan Lahan). The detail about SIPPT is described in the

Table 2.5.

Table 2. 5 Licensing for Land Use and Land Allotment (SIPPT- Surat Izin Peruntukk an danPenggu naan Lahan)

# Aspects Description

1. Legal Basis and Scope Law no. 26 year 2007 regarding Space Management and GovernmentRegulation number 15 year 2010 regarding Space Management

Implementation, SIPPT in each region then stipulated based on the

regions regulation.

2. Publisher Regional Government through the Space Management Working Unit or

City Management Working Unit.

Function Control of space hence it is suitable to Area Space Management Plan(RTRW) that has been stipulated by the government through zoning,

permit, incentive, and disincentive, and sanctions. Zoning is a guideline of

land use This guideline is made based on a detailed space management


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# Aspects Description

by the institution that issues license..

3. The space utilization license that is inconsistent with the RTRW

can be cancelled by the central and regional government by

providing decent compensation. The central and local

government can undone land use permit that is no longer

appropriate due to changes in spatial planning by provide

adequate compensation.

5. Types Permit to use space:

a. Principal permitb. Location permit;

c. Land use permit;

d. building permit; and

e. Other permit based on the regulations

- -Principal and location permit is given based on the city/district

RTRW.

- -Principal permit cannot be used as the basis to conduct activitiesto use space because it should be followed by location permit.

- -Location permit is needed to use a space that is more than 1

hectare for non-farming activity and more than 25 hectare for

farming activity

6. Benefit After location permit is gained then SIPPT could be given and become the

basis to request for IMB. IMB is the basis to build building to use space.


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Chapter 3. LITERATURE REVIEW ON CASE STUDIES

3.1. Introduction

This chapter summarizes case studies related to land banking, land consolidation, and land

readjustment that have been practiced by several countries in Europe and Asia. Five countries

were chosen namely Netherlands, China, Philippines, Colombia, and Switzerland to share

lessons learned from their experience in applying their land management policies for

development purposes. In addition, case study in Indonesia concerning land consolidation for

vertical housing purposes will be explained.

3.2. Land Bank

3.2.1. Netherlands

The Netherlands has used land consolidation to support urban and rural development since

1913 with the first consolidated land in Wadden-Island Ameland (van Dijk, van den Berg,

Menken, & Verbeek, 2005). In 60s and the 70s, land consolidation became the instrument

for farm restructuring and enlargement. In addition, land bank is also another important

instrument for land management.

3.2.1.1. Actors

Land banking in the Netherlands has many purposes from supporting agriculture in rural

area to supporting city development in urban area. In other words, many organizations

from public and private sectors are involved The main parties involved in the land


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Directorate-General for Public Works & Water Management (Ministry of Transport,

Public Works & Water Management)

ProRail (represented by the Ministry of Transport, Public Works & WaterManagement)

Defence Infrastructure Agency (Ministry of Defence)

Government Buildings Agency (Ministry of Housing, Spatial Planning &

Environment)

The municipality is also the actor of land banking since they could buy, hold, and sell

the land for future development.

Meanwhile, from the private sector, the private banking and the land agents

(rentmeesters) are the actors who are active in the land market. These private banking

are: ABN AMRO, ASN Bank, Bank Nederlandse gemeenten, Fortis, ING Groep,

Nationaal Groenfonds, NIB Capital, Rabobank, Triodos, and Fagoed.

3.2.1.2. Institution and Organization Structure

In the public domain, the particular institution who is responsible for land banking isDienst Landelijk Gebied(DLG/ the Service for Land & Water management) and Bureau

Beheer Landbouwgronden (the office for land management).Meanwhile, six real estate

departments from five ministries are involved in Raad voor Vastgoed Rijksoverheid

(RVR/ the Real Estate Council of the Netherlands).

3.2.1.3. Purposed Sectors

The purpose of land bank in the Netherlands is mainly to support and maintainecological structure such as development of nature and new forest. Another purpose of

land banking is as the instrument to gain financial benefit from leasing as well as for


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In the exchange land banking, DLG buys and maintains land parcels until the other

projects use it for exchange. These are conducted to maintain green space area since

maintaining the ecological main structure is the governments objective. DLG is works

closely with agricultural sector. However, later on they start working for the new forest

and nature areas. In addition, DLG will work with Rijkswaterstaat(Dutch organization for

water and highways) when the infrastructure project takes place and the compensation

of nature land is needed.

When the land bank functions as financing instrument, the land is leased to farmers or

other organizations in a long period to conserve the landscape. This way, the

government receives payment for a certain period. This policy was carried out to financeagricultural sector whilst hardly connected to the infrastructure development or city

extension purposes.

As a developer, the land parcel is sold so that the land use changed. The new land use

could be for housing area, nature, recreation, or any other purposes. The land bank that

falls into this category is usually carried out by the private investors.

3.2.1.6. Constrains and Key Lesson Learned

Problem occurs when there is a small land market with large number of actors in public

domain. With at least six organizations working on the same ground, problems will arise

when one actor wants to sell the land parcel to the private sector whilst the others do

not(van Dijk et al., 2005). This problem occurred in the past and nowadays is solved by

establishing RVR. The other good news is that the private sector also tries to be involve

in financing the development such as for road construction, industrial areas, etc.

Land banking activities in the Netherlands are supported by several factors. Landbanking is successful in Netherlands due to coordination and the decrease of non-

sectoral thinking. Coordination between government agencies in the Real Estate Council

(RVR) i l A th l i h th Mi i t f A i lt N t d


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Finally, sometimes the regulation is too vague, procedures are not clear and the

municipalities have conflicting interests.

To conclude, the land bank in the Netherlands can be seen as either an instrument or asa principle (van Dijk et al., 2005). Land banking is a principle since it consists of

structural or strategic acquisition, holding and selling of lands for future. As an

instrument, land bank is not popular in the past since keeping land in stock is too

expensive due to high interest, and the infrastructural projects only need a small part of

the total budget for land acquisition. However, nowadays, land banking can be used in

the new area where both government and private sector work together to achieve their

goals. In addition, land banking is used complimentary in the practice of land

consolidation. This means, land consolidation projects cannot be successful without land

banking.

3.2.2. Philippines

3.2.2.1. Actors

Land banking in the Philippines was carried out in order to support land reform policy.

Land banking is implemented by Landbank of Philippines (LBP). LBP was founded in

August 8, 1963 under the Agrarian Reform Law enacted by the Congress (Landbank of

Philippines, n.d.). LBP was created in order to finance the acquisition and distribution of

agricultural estates and resale to small landholders as well as the purchase of the

landholding by the agricultural lessee. The other important actor is the Department of

Agrarian Reform (DAR). According to the Comprehensive Agrarian Reform Law (CARL:

RA6657), DAR was responsible for land valuation and compensation (Fuwa, 2000).

However, these responsibilities were transferred to the LBP on 14 June 1990 due to ascandal involving Voluntary Offered to Sell (VOS) programme in the mid of 1989. These

scandals were discovered due to excessive over valuation of lands of small productivity

l l f ll i b l d d DAR ffi i l A l LBP


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The main purpose of the Landbank of Philippines is to support land reform programme

by financing the acquisition and distribution of agricultural land parcels and re-selling tosmall landholders as well as the purchase of the landholding by the agricultural lessee

(Fuwa, 2000). The other purposes of LBP are:

1. to support Rural Microenterprise Finance Institution in providing loan for rural

area

2. to provide microfinance programs to eradicate poverty

3. government bank with mandates to promote countryside development

3.2.2.4. Financing

At the beginning, the LBP received support for 200 million Php in 1963 from the central

government with authorized capitalization of 1.5 billion Php(Landbank of Philippines,

n.d.). In 1998, the authorized investment increased to 25 billion Php. In addition, the

profits derived from its commercial banking operations are used to finance the Bank's

developmental programs and initiatives.

3.2.2.5. Mechanism

Land distribution under three different administrations (Marcos, Acquino, and Ramos),

consists of three programs such as: Landed Estates, Operation Land Transfer (OLT),

and the new redistribution programs under Comprehensive Agrarian Reform Program

(CARP). Under Comprehensive Agrarian Reform Law (CARL: RA 6657) that was

enacted in 1988, land valuation and landowners compensation were decided by DAR.

Since June 1990, these activities were executed by LBP. The Landbank of Philippines

instructed regional Land Valuation and Landowners Compensation Offices (LVOs) to

perform land valuation and compensation(Fuwa, 2000).


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3.2.3. China

3.2.3.1. Actors

Land banking in China started in early 1990s and was driven by the turmoil in land

management caused by applying dual track system (Y. Zhang, 2009). The dual track

system arose because of the State Land Use Rights (LURs) Transaction enactment and

Transfer Regulation in 1988. Because of this situation, the local governments were given

mandates by the State Council to take appropriate actions to strengthen land

management. Several cities such as Dalian, Shanghai, Hangzhou, and Qingdao then

began to experiment with land banking which was carried out by either public service

unit or a state owned enterprise. The land banking was promoted by the State Council in

2001 and supported by the internal reference materials. The internal reference materials

were issued in 1999 by the Ministry of Land Resources to promote the success of land

bank experience in Hangzhou and Qingdao. These two policies triggered the

establishment a new land bank in China. By the end of 2003, the number of cities or

counties who already established land banking authorities has reached 1600.

3.2.3.2. Institution and Organization StructurePublic land banking authorities, both public service unit and state owned enterprise, are

the institutions that carry out the land banking process. These authorities were

established by city governments to obtain land for city development and to provide land

use right to the public at market price (Huang, 2012). The actual ownership and control

of state-owned land during development process were given to these authorities by the

city government.

The Land Management Law that was enacted in 1998 has given the Ministry of Landand Resource the authority to strengthen land management and administrative power

and could upgrade the ministry from the previous state as a National Land Management


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Figure 3. 2 The Structure of Land Bank at the Public Service Unit in China

source: Xian Land & Resources Bureau (http://www.xaland.gov.en)


The purpose of land acquisition in the land banking process is to support city

development. The Guangzhou land bank consists of three categories: land bank for

commercial development, industrial land, and for indemnificatory apartment lots (Huang,

2012). The land parcels are used for development according to municipal spatial plan

such as for infrastructure development and public other services along with the

commercial development land parcels.


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The regulation on Management of Land Banking issued by Ministry of Finance and

Peoples Bank of China implies that the land banking operation are handed over to the

land banking authorities and set up or managed by the land administration departments

of its local government at city or county level (Huang, 2012). This regulation also gives

mandates to the land bank authorities to carry out land acquisition from the sources of

land such as: (1) State-owned land after resumption by law; (2) Land acquired through

purchase; (3) Land acquired through preemption; (4) Agricultural land acquired through

the process of conversion to construction land and expropriation. In addition, GZLDC

includes the source of land acquisition from other sources designated according to other

laws or state level regulations. The acquisition executed either with compensation or

without compensation according to several categories or circumstances. After landacquisition, the land is registered.

The land is registered under the name of the land banking authorities. During the period

of possessing the land, the land banking authorities are in charge for conservation and

management of the sites of the land bank. In addition, land banking authorities can use

the land bank as a tool for municipal financing activities. (Huang, 2012).

The last step in the land banking process is land disposition. During this process, the

land parcels can be used for several purposes by public sale of Land Use Rights at

market price. As already explained, the land in the Guangzhou is used for land bank for

commercial development, industrial land, and for indemnificatory apartment lots.


Several constraints were found in the land banking practices in China. First, different

government agencies occupied the state owned land which led to a mess in the source

of land acquisition (Q. Zhang, Zhang, Li, Huang, & Li, 2012). This situation has lead to a

situation where the local governments have power over land acquisition in negotiation

and compensation. Second, overlapping supplies caused out of control of the total of


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3.2.4.2. Institution and Organization Structure

METROVIVIENDA is the institution who carry out land banking and working directly

under the mayor of Bogota. To perform its duty, this institution is supported by the Boardof Director position, General Manager, and several divisions. The details of their tasks

and the organization structure are shown at Figure 3.3 and Table 3.1.

Table 3. 1 Task of the METROVIVIENDA Officials

Position Tasks

Board of Director This body sets and defines the general policies. The Mayor of Bogotappoints their members.

General Manager This entity is responsible to formulate strategies and mechanisms forthe implementation of the defined and designated policies.

Education, PlanningOffice

Advises and coordinates with various departments in terms offormulation and monitoring of investment projects in accordance to theguidelines of the District Development Plan and the CompanyStrategic Plan.

CommunicationsAdvisor Office

Leads the formulation, design, organization, implementation, andmonitoring of plans and related communication processes of theorganization.

Internal ControlAdvisor

Advises the management in evaluating the management and ensuringthat the internal control system meets the institutional needs, providestimely information necessary for making decisions that help improvethe management, and the achievement of institutional mission.

OperationsManagement andStrategic Projects

Formulates and evaluates the implementation tools that develop theurban component in accordance with strategic and operationsprojects, such as partial plans, definition of units of urban developmentand management units.

Real EstateManagement Affairs

Directs the structuring of real estate business and encourages theprivate sector. This entity promotes the development of real estateprojects for social housing.

L l Aff i Gi d i i t f l l d l l i t th G l M


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Figure 3. 3 METROVIVIENDA Organization Structure

Source: Adopted from METROVIVIENDA (n.d.)


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3.2.4.5. Mechanism

The first step for housing development is land acquisition that was carried out by

METROVIVIENDA in a strategic location. Instead of taking over all stages of theprojects, they sold the land parcel to the experienced developers for the construction

and marketing process to a various level of the low-income communities (Aristizbal,

2010). The sale of land parcels creates fund for another land acquisition activities.

Before selling land parcels to the developers, METROVIVIENDA also prepare plan for

improving infrastructure near the parcels.


The government of Bogota Municipality has prepared several programs to solve urban

problems especially related to slum area and to provide housing for low-income families.

These programs especially METROVIVIENDA was equipped with criteria to select

suitable area for housing. However, although the program aims to support low income

communities, METROVIVIENDA still cannot solve the problem of informal settlements

and fail to reach the poorest subaltern who

URBAN LAND PROVISIONING FOR DEVELOPMENT OF PUBLIC INTEREST

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