URBAN LAND CONSOLIDATION:
IN SEARCH OF ITS APPLICABILITY IN INDONESIA
by
Leni Dharmawan
B.A., American Studies
Universitas Indonesia, Jakarta
(1982)
Submitted to
the Department of Urban Studies and Planning
in Partial Fulfillment of the Requirements of
the Degree of Master of City Planning in Developing Areas
at the
Massachusetts Institute of Technology
May, 1989
©)
Leni Dharmawan 1989.
All rights reserved.
The author hereby grants to MIT permission to reproduce and to
distribute copies of this thesis document in whole or in part.
Signature of Author
Department of Urban Studies and Planning
May, 1989
Certified by
Shlomo Angel
Visiting Professor
Supervisor
\hegis
Accepted by
Donald A. Schon
Chairman, MCP Committee
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
URBAN LAND CONSOLIDATION:
IN SEARCH OF ITS APPLICABILITY IN INDONESIA
by
Leni Dharmawan
Submitted to
the Department of Urban Studies and Planning
on May 18, 1989 in partial fulfillment of the requirements
for the Degree of Master of City Planning in Developing Areas
ABSTRACT
Urban land consolidation (or land readjustment/pooling),
which has been applied extensively in Japan, South Korea, and
Taiwan, is a self-financing method to convert rural land into
urban land by consolidating the land, subdividing it into
regular-shaped plots, and providing the necessary
infrastructure.
The landowners finance the work by reducing
their plot size for infrastructure and for land sale to the
public.
With the provision of the infrastructure, the land
value is estimated to increase significantly, and thus the
land sale can cover the project costs.
Indonesia started using the method in 1981.
However, it
did not aim to self-financing projects.
This was due to the
absence of supporting legislation that enabled the project
implementing agency to apply the method fully as practiced in
the other countries. As a result, the projects relied heavily
on government's budget and provision of infrastructure is very
limited.
The aim of this thesis is to search the applicability of
the full method in Indonesia.
Based on the experience in
Japan, South Korea, and Taiwan, the thesis identifies what
aspects of factors Indonesia needs to have and what
adjustments it needs to make.
Thesis Supervisor:
Dr. Shlomo Angel
Title:
Visiting Professor
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
ACKNOWLEDGEMENT
I want to thank Professor Shlomo Angel, my thesis
advisor, and Professor William A. Doebele, my reader, who has
been very helpful and encouraging during this thesis writing.
I am also grateful to Roy Kelly who provided me with materials
on the Indonesian projects, to Freddy Tulung whose inputs were
valuable, and to Syafruddin Temenggung who I have never met
and yet his long-distant help was instrumental.
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
TABLE OF CONTENTS
Abstract
2
Acknowledgment
3
Table of Contents
4
Introduction
6
1.
Overview of Land Consolidation System
1.1.
General Concept of Land Consolidation
1.2.
History of Land Consolidation
10
10
14
2.
Current Practice in Land Consolidation
2.1.
Japan
2.1.1.
Implementers
2.1.2.
Procedures
2.1.3.
Land Valuation, Reduction and Replotting
2.1.4.
Financing
2.1.5.
Conclusion
22
22
2.2.
30
2.3.
2.4.
South Korea
2.2.1.
Implementers
2.2.2.
Procedures
2.2.3.
Land Valuation, Reduction and Replotting
2.2.4.
2.2.5.
Financing
Conclusion
Taiwan
2.3.1.
Implementers
2.3.2.
2.3.3.
2.3.4.
2.3.5.
Procedures
Land Valuation, Reduction and Replotting
Financing
Conclusion
34
39
Indonesia
2.4.1.
Implementers
2.4.2.
Procedures
2.4.3.
2.4.4.
2.4.5.
Land Valuation, Reduction and Replotting
Financing
Conclusion
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
3.
Adjustments for Indonesia
3.1.
Enabling Legislation
3.2.
Cadastral Conditions
3.3.
Financing
3.4.
Preventive Measures against Speculation
3.5.
Land Valuation and Land Replotting Methods
3.6.
Training
49
49
52
54
58
62
65
4.
Conclusions and Recommendations
66
4.1.
4.2.
66
69
Conclusion
Recommendations
Bibliography
75
Appendix 1
78
Appendix 2
82
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
INTRODUCTION
Urban
land
consolidation
development used
Korea,
and
(Japan),
part
for years
Taiwan.
Seoul
of urban
For
in
is
countries
example,
(South Korea),
one
in
method
like
cities
and Kaohsiung
of
land
Japan,
South
like
Nagoya
(Taiwan) a
large
land has been developed by land consolidation.
Basically, the method is used to convert rural land into urban
land by consolidating farm plots
shapes)
better
land
(which usually have irregular
and rearranging property
shape
for urban development
subdivision.
boundaries,
lines
In
the project
so that plots have
a
and produce an organized
the process of rearranging property
implementers
set
aside
some land for
constructing public infrastructure and for sale to the public
in order to get money to pay for a project.
The plots are now
inevitably smaller than the originals, but their values are
higher because they have public infrastructure.
Planners
increase the
the
in
Indonesia
see
that
this
method
can
help
supply of urban land at a cheaper price because
government does
infrastructure.
The
not
have
to
buy
landowners give
the
land
a portion
for public
of their
land
for the infrastructure in return for a significant increase in
their
land value.
The
savings
from the
land development
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
system
is
significant, particularly
scarcity that
advantages of
of
Indonesia
Indonesia
is
in
facing now.
land consolidation that
to
apply
a
the
consolidation creates much
of
This
is
financial
one
of the
attracts the government
system.
less
time
In
addition,
resentment
against
government than the usual compulsory acquisition.
land
the
However,
I
believe land consolidation will not attain its optimum benefit
without the appropriate
Japan,
supporting conditions.
Experience in
South Korea, and Taiwan proves the needs of supporting
conditions
and
mechanisms,
such
as
regulations
in
land
are
what
development and land taxation.
These
appropriate
conditions
and mechanism
Indonesia is still
looking for in its early stages of adopting
the
country
system.
somehow
The
differently
from
implemented
Japan,
South
the
system
Korea,
and
in
1981
Taiwan.
After.nearly a decade, it is time to review what Indonesia has
done and what other things it needs to do to get the most
advantage of the system.
For this purpose, the country should
take into account its own socio-cultural, economic, political,
and institutional conditions.
It would be disastrous to take
a foreign system just like it is without any adjustment since
different countries have
different conditions
that might
affect the outcome of the system.
My main purpose
land
consolidation
is
to find
that
and formulate
may be
suitable
a mechanism of
for
Indonesian
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
conditions in order to make the most advantage of the system.
What
are
the
parts
of
the
alteration,
what
alternatives
are possible?
structure
the
overview of
are
the
parts
that
that
do.
do
not
Why,
need
and what
To answer these questions, I will
thesis in the
the general
mechanism
following way.
land
Chapter
consolidation
system.
I is
an
In the
first part of this chapter I will discuss the basic concept of
land consolidation
requirements.
(not country-specific),
The
second part
will
be
its objectives
the
history
and
of the
system in different countries.
In Chapter
practices.
II
I will
review current
land consolidation
I will group Japan, South Korea, and Taiwan (as
the countries from which Indonesia learns about the system) on
one side,
and lay out the mechanism they use to
land consolidation.
On the
other
side
is
a
implement the
review of the
Indonesian experience with land consolidation, what mechanisms
Indonesia uses, and what the
results are.
I will end Chapter
II with a conclusion in which I will identify the similarities
and
relevant
differences
between
the
more
experienced
countries and Indonesia.
Based on conclusions in Chapter II,
in Chapter III I will
discuss those
differences and other aspects
which may
alteration to be
need
applicable
of the
to the
case, and how Indonesia should improve the system.
system
Indonesian
Chapter IV
is the overall conclusion of the thesis, and it will end with
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
policy recommendations concerning the appropriate mechanism of
land
consolidation
in
Indonesia,
in addition
to
suggestions
for further research.
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
CHAPTER 1
OVERVIEW OF LAND CONSOLIDATION SYSTEM
1.1
General Concept of Land Consolidation
Land consolidation has
land
pooling
readjustment,
the
system
obtained
(especially
used
land replotting,
includes
all
government uses the name
several
in
and land
names
such as
Australia),
land
reparcellation
since
these processes.
In
land consolidation.
Indonesia
the
For consistency
I will also use this name throughout the thesis.
Land consolidation takes
place when a
one area
is replotted by adjusting the
cutting
down
provide
the
space
size
for public
of
the
plots
(such as
(see Figure 1).
consequence
land
land now has
the
the
the
an
can be
made
to
order
in
to
sewerage
One direct
increases because
services and a regular shape.
consolidation
resulting in
value of
in
roads,
system and parks) and other needs
is
lands
shape of the lands and
original
facilities
group of
the
At the same time
suit
the
organized land development
city plans,
with
integrated
provision of public facilities.
From the
government's point
of view,
land consolidation
saves funds for purchasing land and providing public services.
It also
what
creates
compulsory
less resentment
acquisition
against the government than
usually
does.
From the land-
Page
10
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
LAND REAJUSTMENT SYSTEM
After the project
Before land readjustment
Mr.A'sland Parcei
Mr.B'slad pc
Mr.J's Iandparcei
Figure 1
Reproduced from OECD (1986).
Page 11
A
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
owners' point
and what
is
of view the
more
system preserves their ownership,
important,
it gives
them
a profit
expect their land value will increase much more
they pay
(in
the
facilities).
form of
In
fact,
land contribution
it
is
this
as they
than the cost
for
expected
the public
surplus
from
unearned windfall gain that justifies the provision of public
services by the land owners instead of by the government.
Who
either
initiates
public
objectives
city
or
the
land
private
of the project.
council
corporation.
housing and
or public
Usually
larger
the community
consolidation
institutions,
The public
such
objective
infrastructure
that participates
is
as
to
association
Their
or
objective
a
is
to
the
or
get profit,
(Archer, 1984, p.
thus
construction)
it is
developed
applied
areas,
likely to be
(built up).
to
so
rural
there
becomes
cheaper, too,
land for
developers.
is
the
difference
after the
11).
The physical consolidation process
infrastructure
housing
The private
between the value of their property before and
consolidation project
the
(usually through
private
which
the
(not just for
in the project).
cooperative),
can be
get
installation
initiators can be the landowners themselves
an
can be
depending on
initiators
corporations,
their
project
(site
replotting
and
easier
and
if the
land is not yet
faster,
and
Therefore land consolidation is usually
areas
(farmland)
is
need
no
to
in
the
resettle
fringe
of urban
residents.
If,
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
however,
tear
the replotting plan requires that
down
the
compensation
project's
existing
to
buildings,
buildings'
cost calculation.
land consolidation
takes
owners
the project
all
are
should
expenses
included
and
in
the
Such a case may happen when the
place
in
rundown
or destroyed
urban
centers.
The attachment of the land consolidation project to urban
areas, where main infrastructure already exists, is important,
because the project can just connect its infrastructure to the
existing one.
Thus, the cost is
lower.
In addition, being a
part of the urban areas will push the land value higher rather
than
if
it
carry out
is
land
rural
areas.
In fact,
consolidation project
one of the
is
that the
criteria to
site should
be ready to be urbanized, characterized by the availability of
main
infrastructure
and
has
the
potential
for
urban
development.
.The
increase
expected
should
land value
of
enable
the
project to be self-financing by selling a part of the land at
the market value
proceeds
bear.
are used to
Any
recover
the
surplus or deficit is
proportionally
project.
(after the project has been completed).
to
the value
of
costs
the
project has
shared among the
land they
The
to
landowners
contribute
to
the
Therefore it is to the landowners' interest that the
project increases land value
as much as possible.
The higher
the value, the higher the surplus.
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
A
subsidy
public
from the
services
provided
benefit other people
highways),
it
the costs.
equity
the
government
by
depends
the project.
than the participating
will be unfair
for
This is an issue of
(among the landowners
redistribution of
on the
types
If
services
the
landowners
the landowners
(e.g.,
to bear all
"external" equity.
Internal
themselves) can also rise from
the plots
after
the
consolidation,
whether what the landowners get match what they put in.
is
why
order
the
to
land valuation
accurately
system becomes very
calculate
of
how much
one
This
important
gives
in
and
in
gets
out of the project for equity purposes.
1.2
History of Land Consolidation
In
the
late
consolidation
inheritance
shape
thus
of
19th
in the
division
the
century
rural
areas.
system
farm plots were
inefficient
Germany
At that time,
during the
irregular,
for production
started
due
land
to
the
Franconian era,
the
long thin
(Minerbi, 1986, p.
lines
and
11).
The
government applied land consolidation to rearrange the land
boundaries
to
produce
regular-shaped
plots
in
order
to
increase efficiency.
The
rural
land consolidation practice was
adopted to
urban areas, particularly Frankfurt-am-Main, to provide public
facilities.
The mayor of Frankfurt-am-Main, Franz Adickes
(hence the law was known as Lex Adickes),
initiated voluntary
Page 14
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
regroupment contract
which the
owners'
government exchanged its
when
facilities.
since
(Kuppers and Nishiyama,
their
land was
However, the
1986, p.
considered
suitable
Property
1903.
in
for public
practice did not always work well
or asked for
cash (at a much higher price) rather than land.
of
in
land with private land
landowners might not have agreed to do so,
land regroupment
34)
was then passed
("Act
Frankfurt-am-Main")
A
law on the
Concerning Regroupment
and
it
came
to
force
in
The law allowed regroupment to take place when at least
half of the owners
agreed to it,
and they would get monetary
compensation when more than 30% of their land was contributed
for public facilities.
40%
Over the years the percentage became
if the project was initiated by the property owners, and
35% by the city council (Kuppers and Nishiyama, 1986, p. 35).
During the
reconstruction period after both world wars, many
cities
the
in
country
applied
the
system.
In
1960
the
regroupment law was included in the Federal Building Act.
Japan adopted the
land consolidation system
from Germany
(known as tochi kukaku seiri in Japanese) during the Meiji era
in
the
system
late
in
19th
the
century.
rural
areas,
The
too,
government
for
the
first used the
same
objective:
to
improve conditions of farmland and make the plots into regular
shapes.
The Agricultural Land Readjustment Act regulated the
practice..)
5Different
In
reality
many
of
the
land
consolidation
authors gave slightly different names and different
Page 15
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
projects, however, were used for housing sites instead as the
needs for housing were growing.
Being
capital
the
Tokyo
the
was
first city
(and
soon
followed by Osaka, Kyoto, Kobe, Yokohama, and Nagoya) in Japan
that applied
the land consolidation system as one solution to
the financial problems to develop the city
(Nakamura, 1986, p.
By 1919 the system had became a general policy under the
18).
City Planning Act.
From then on urban areas in Japan utilized
land consolidation
extensively, especially
earthquake
projects)
120
in Tokyo
until
(28,000-hectare projects in about
The Japan Land Readjustment Association figured
cities).
that
II
great
the
(3,000-hectare land consolidation
in 1923
and World War
after
March
implemented and
70%
1982,
286,000
hectare
projects
were
(205,000 hectares) have completed the
replotting disposition (1986, p. 56).
Generally
years
to
approval
a
land consolidation project
complete,
of
the
starting from
landowners
takes
from 6-10
the negotiation to
(of at
least
two-third
get the
of the
landowners/lessees) and get the authority's approval, to the
In addition to the
times, as noted by Nakamura (1986, p. 17).
18) used the name
p.
(1982,
Doebele
found
I
ones he mentioned,
(1982, p.
Miyazawa
1899,
of
Act
Conservation
Agricultural Land
of 1899,
Law
Consolidation
Land
Agricultural
91) called it
Hayashi
(1978,
p.
23)
referred to
the Agricultural
Land
Readjustment Act of 1909, and Hanayama (1986, p. 20) referred
Nakamura reasoned
to Arable Land Readjustment Law of 1899.
that it was a miscalculation in the process of translation.
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
redistribution of the newly-shaped
lands.
In some cases when
they are located
the projects are large and complicated (i.e.,
in
take
to
up
30
land consolidation projects can
areas),
already built-up
This kind
to complete.
years
usually initiated by the government.
the government
1954
changes to
that made
Act
Before
the practice
Land Readjustment
of land consolidation.
a way for
landowners
to
facilities
law reversed the priority and
The new
by-products).
the
9).
(thus providing public
land value
improve their
were
legalized
land consolidation was
1954
is
The size of the projects
ranges from 18-168 hectares (Archer, 1986, p.
In
of project
authorized government agencies to carry out land consolidation
with
the
agreed.
As
result
a
that
condition
projects
two-third
bodies became
public
more
landowners
active
and
(Nakamura, 1982,
often disregarded the will of the landowners
p.
of
9).
Another
was
1954
important change which was made in the
to
related
land
reduction
the
government compensated
contribution
compensate
than
the
if
exceeded 15%.
the
the value before
the
Before
and compensation.
landowners
Now, the
total value
1954 Act
if
government
their
would only
after consolidation was
consolidation.
land
lower
It was very rare
that the government had to compensate under this Act because
the land value increased significantly after the consolidation
project.
Opposition from landowners helped
shift the program
as it is today (see Chapter 2).
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
Under the Japan's colonization Korea and Taiwan adopted
the land consolidation system.
In Korea, with the passing of
the Colonial City Planning Law of 1934, the system was applied
nationwide, but it emphasized more on regularizing plot shapes
than the provision of public
It
was
not
until
Korea
really
1982,
p.
1975
out
land
the
Most of
nearly 60%
by
after-the-war
adopted
21).
facilities
reconstruction period that
system
for
the projects
of urban development
consolidation
(Lee, 1982, p. 215).
urban
areas
took place
(Doebele,
in Seoul;
in the city was
(Hwang, 1977,
p.
by
carried
485).
It has
become the major method to provide urban residential land.
In the beginning of land consolidation application (until
1950s),
the projects in Seoul were small and the major aim was
to open roads for military uses.
All costs and surpluses were
shared equally among landowners,
making no differentiation on
the
types
reduction
decade
of
land
ratio
bigger
was
they
low
projects
contributed.
(Lee,
were
The
costs for
were burdened
the
landowners
proportionally
seventies
to
to
benefits
the projects were ever
complete)
and the
"under the rationale
receive
the
gains
reduction
that
the
213).
each
the
next
larger urban
share now was made
landowner
larger
rate of
to
In the
land
infrastructure provision
but
national
from the projects
p.
implemented with
infrastructure.
to
1987,
Usually the
got.
(and took longer time
the
land was higher
government was entitled
same
In the
extent
as
to
landowner"
Page 18
Urban Land Consolidation:
In Search of Its Applicability in
(Kim, 1982, p. 130).
included more
such as
Indonesia
The costs and benefits calculation also
variables that might have affected land value,
soil type and location.
In general landowners more or less accepted these changes
since on
the whole they
still gained a
significant
amount of
the increase of their land value after the project completion.
However, the
system is not free of complication.
and inflation push the land prices up.
wait
for
land
to
the
large projects to
brokers
government
has
who
then reap
made
changes
Some landowners cannot
complete
so
they
the benefits.
in
Speculation
their
sell their
As
policies
a
result,
on
land
consolidation today (see Chapter 2).
Taiwan
also
started
the
agrarian
land
consolidation
before moving into the urban land consolidation.
land
reform conducted earlier produced many farm plots which
were too small to be efficiently cultivated.
small
The agrarian
plots
were
pooled
together
to
Therefore these
increase
providing irrigation system and access to roads.
production
by
This program
was proved to be successful in the sense that yields increased
more than the
until
1957
costs
(Lee, 1982,
that the decision to
p.
60).
adopt
However, it was not
system for urban
areas
was made, and Kaohsiung, a rapid-growing port city used it for
the first time
(Chou and Shen, 1982, p.
69).
The population growth in Kaohsiung helped push
rate of land
subdivision in
small
a high
and irregular-shaped plots.
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
At the same time the city did not have money to provide public
facilities, particularly housing.
as
one
way
to
consolidation
financial
solve
the
the
Land consolidation was seen
problem.
government
conditions,
In
fact
estimated
they would have
without
that
with
needed 200
land
their
years to
develop the city as it is now (Hsieh, 1986, p. 67).
The existing Land Law allowed this practice although at
that
time
needed
the
to
be
law did not cover
regulated,
such
some
as
important
the
calculation
contribution and redistribution of the land.
using the
self-valuation system
for taxing purposes,
and after
the
Rather than
allowed by the
special body assesses the
landowners welcome the system since
land value.
the
that was
of
that
law
land before
project.
The
willing
a
issues
to
limit
In
some
major projects
contribute more
allowed by the
able to meet the costs.
than 40%
law).
it increased the
landowners
of their
The vacant
were
land
even
(which is
land for sale was
The government basically did not have
to finance the projects, and financial institutions lent money
for the projects because they could be assured that they would
get it back from the land sale.
have
From the
history of
a
experience with the
lot of
the
four
different countries which
system,
had derived from agricultural necessity.
applied
to
urban
areas,
changes
had
land consolidation
When the
been
made
system was
to
suit
the
Page 20
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
urban
conditions.
On
the
whole
there
was
resistance from landowners against the system.
hardly
any
If there were,
"many objections stem from the shortcomings of explanations by
executors
or
from the
lack of
skilled persons
in executive
agencies" (Miyazawa, 1982, p. 104).
Page 21
Urban Land Consolidation:
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CHAPTER 2
CURRENT PRACTICE IN LAND CONSOLIDATION
2.1.
Japan
Japan
is
the
country
that
has
consolidation system most extensively.
applied
More
the
than
land
100 cities
in the country have used the system, particularly Nagoya which
has
developed 90%
of its built-up areas through consolidation
(Misra, 1984, p.
162).
The land consolidation is
as
urban
development
a
tool
reputation
p.1).
for
as
"the
On average
mother
of city
that
it
planning"
so dominant
has
earned
(Hayashi,
a
1978,
it has also increased the public facilities
on the project site from 11% to 28%
(Miyazawa, 1982, p. 92).
However, with today's high land prices
start questioning whether
the system
is
and inflation, people
still
as powerful
as
before.
2.1.1.
Implementers
The major implementers of land consolidation projects are
local public bodies and
landowner associations.
terms of project area each had a share of
respectively
(Miyazawa, 1982, p.
among individual
landowners,
93).
42.3%
By 1979
and 29.5%
The rest was
administrative
in
shared
agencies
and
public corporations.
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
Public
bodies
introduction of
country was
projects,
were
the
still
particularly
Land Readjustment
developing
active
Act of
its urban areas.
landowners complained that the
the
1954 when the
A
such as highway construction, were
However, many
after
lot
of big
undertaken.
government often
disregarded their will and projects like highways were somehow
detrimental
to
their
living environment,
contribute their land (Nakamura, 1982, p.
With
these
complaints
had completed major
showed
a
shift
and the
12).
fact that the government
infrastructure
in land
and yet they had to
installation, the
consolidation practice.
1970s
Since that
time private institutions, in this case the land consolidation
associations,
have
become
more
active
and
taken
the
opportunities to make profits during the fast urbanization.
They see that big cities have limited space to accommodate the
cities'
activities.
associations
middle
size
urbanization
2.1.2.
At
Therefore,
concentrate
cities
more
adjacent
to
on
the
the
land
consolidation
suburbs
the big
cities
and
small
to
to catch the
spillover.
Procedures
the
initial
stage
the
implementers
choose
the
site
(usually within the designated urban promotion area) and make
sure
they
get
requires at
the
support
from
least two-third of
the
the
landowners.
landowners
(in
The
law
terms of
Page 23
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
number and acreage) should agree with the project.
this support,
To get
implementers should campaign and give intensive
information about the project and its benefits.
Landowners
should
at
least
agree how
much
land
they
should contribute, which they will do only after they know how
much
they will
of their
land's value.
land at
this
office,
banks,
198.,
p.
get from the project in terms of the increase
stage.
Thus,
should value
the
Usually they use evaluators from the tax
and professional
Landowners
33).
implementers
evaluators
should get
(City of
a. compensation
Nagoya,
if
their
land value before the project is higher, but this case rarely
happens
(Nakamura, 1982, p. 9).
To carry out the project, implementers must get a permit
from
the prefectural
(depending
on
institution).
the
governor,
kind
of
Implementers
or
other
project
submit
superior
and
authority
implementing
the project
programs,
including the rules and regulations all related parties should
follow.
The program should include the:
-
location
-
objective
-
reasons for choosing the
-
the time period
-
the budget and the fund's source
-
the replotting and allocation plans (including plans
of the project
of the project
for public facilities),
- methods of the
site
and
land sale.
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Urban Land Consolidation:
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In making the program, the implementers should also make
sure of
the
details of the
where.
The
plans
site,
for public
such as
who
facilities
owns what
should
take
and
into
account the future demands or expected development, especially
for big projects.
Upon
receiving
the
proposal,
the
prefectural
office
examines that what is written in the program matches with the
official
records,
such as
the property ownership.
If it is
not, the implementers should make corrections as necessary.
The next step is to exhibit the project program to public
for two weeks in case there is any objection.
objection,
the
implementers should revise
If there is an
the program.
Once
the implementers get the landowners' and authority's approval,
the project can start.
2.1.3..
Land Valuation, Reduction and Replotting
The basic
much
as
original
value
possible
the
in terms of
in replotting
new
land
location,
a
should
the
be
land
the
is
same
that
as
as
the
location and characteristics, and its
should be proportional
assessed using
use,
principle
certain
to the
index
and other
original.
The land is
number which weighs the
land
factors that may affect the land
value.
Conflicts
may
arise
during
the
replotting.
Some
landowners may manage to get more favorable location and some
Page 25
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
may not
be
satisfied with what
landowners
is
important,
persuade
them
projects,
may
replotting).
of applepie
2.1.4.
to
be
Negotiation among
implementers
the
new
from their
Hayashi
lots,
(1977, p.
must be
which,
original
likens this process
among friends"
in
location
as
able
to
large
(flying
"sharing pieces
37).
Financing
For projects
land is
money
accept
far
[sic]
and
they get.
initiated
the major
from the
by private
source
sector,
of revenue.
government
cost-equivalent
Implementers
can borrow
(interest-free) for 5 years.
The
government gives the loan based on an average per square meter
of the
project.
Private banks,
Japan Housing
Japan Development Bank also provide loans
Agency, and
(Hayashi, 1978, p.
38).
For
projects
ordinary
budget
subsidies
from
initiated by
of the
local
public
implementing
or
national
sector,
agency,
there
government.
project's beneficiaries are more than the
besides
local
are
Usually
the
also
the
community, so
it will not be fair to ask the local community (landowners) to
bear all
example
the
of
government
sale.
The
expenses.
this
share
kind
the
of
Highway construction is
project.
costs.
There
landowners contribute
Both
is
no
their
local
a typical
and
central
land reserved for
land only
for the
highway construction.
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Urban Land Consolidation:
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2.1.5.
Conclusion
There is more opposition from landowners when the public
bodies
are
objective
of the
the
is
implementers
to get
free land for
landowners' will.
implementers,
small
usually
the
landowners.
development
enthusiastic
project.
They
can spare
implementers' main
infrastructure,
conflict is
their
their
their
landowners as the
who
land
influence
land for
plots
forced
too
to leave
small
the
site
to develop, although
compensation or priority to
project
by
if the
paying
the
buy a
difference
can
see
value
to
more
carry out
and
the
even
Small landowners
reduction makes their
they may either
larger plot
in
and
urban
are
reduction
sell parts of it and reap significant gains.
may be
regardless
between the large
landowners
increase
thus use
the
In the case of
Large
will
and
since
cash
get a
after
(Misra,
1984,
the
p.
163).
In
areas
where the
land prices
landowners may also object the system.
development
need
to
anyway.
(without land
participate
reduction).
since their
are going up
fast,
They prefer individual
They do
land value
not
will
see
any
increase
On the other hand, if land prices are moving slowly,
landowners welcome
the
land readjustment because they know it
will soon increase their land value.
The basic objective of land consolidation is to increase
the supply of urban land which then will lower the land price.
Page 27
Urban Land Consolidation:
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However,
the
taxation system becomes
this objective.
2-3%
an obstacle
to
achieve
The tax on agricultural land can be as low as
of residential
land next to
it.
Therefore, it becomes a
strong incentive for landowners to keep their land as farmland
rather
than
residential
consolidation.
to
speculate
land--even
of
for a price increase
living
the
land
They hold on to their farmland in the cities
land is kept out of the market),
source
after
(they
(which is
inevitable
since
although farming is not their
are known
as
"weekend
farmers").
In
metropolitan areas of Tokyo, Osaka, and Nagoya,
... there are 63,000 hectares of farmland inside
urban-development districts, including 40,000
hectares of high-priced agricultural plots that have
been designated "taxable as residential
land."
The
purpose of this classification is to encourage the
conversion of farmland into housing lots by raising
taxes.
But strangely enough, only 14% of these plots
are actually being taxed at the residential rate; the
owners of the others pay only trifling amounts.
They
have taken advantage of a loophole in the system that
allows them to apply for exemption from higher tax
rate by declaring their intention to continue farming
for the next 10 years (Nakajima, 1987, p.
In land consolidation projects
19).
only, 18,400 hectares of
land
are vacant (OECD, 1986, p. 58).
In this
stagnant
situation the urban land
if
not
diminishing.
extraordinarily high.
urban
sprawl
In turns the
because people
need
supply
The
is
artificially
price
becomes
situation will
more
land.
lead to
Without
a
supporting law of higher taxes on farm land or a compulsion to
build on vacant land, land consolidation cannot do much to
increase land supply and decrease land prices.
Page 28
Urban Land Consolidation:
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L
4-
1~
w
Keeping it in the family: The tax system induces owners of urban farms to hold on
to their land even if they must leave the work to spouses or other relatives
Holdouts: Unless more of these small farm plots are put on the market, land prices
in metropolitan areas will rise to even more exorbitant levels
Figures 2 and 3.
Reproduced from Economic Eye, 1987.
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
2.2.
South Korea
The
South
Korean
government's
industrialization in Korea in
especially
in
consequence
was
major
the
of
like
urban
Seoul.
that time
since the
One
services,
housing, but for the government housing was
at
spur
a
obvious
particularly
lower priority
government was putting its
more to industrialization.
to
1960s had pushed urbanization,
cities
need
efforts
resources
Little financial support from the
government to provide urban services pushed the implementation
of land consolidation, especially in Seoul.
Just
like
Japan,
urbanization
extensively used of land consolidation.
in
Korea
In fifty years
84) there have been 397 projects
(58 or 15%
that
(13,984 hectares
covered
Seoul).
and
43,580 hectares
has
made
(1934-
of them in Seoul)
or
32%
in
More than 80% of the Seoul projects was done in 1960s
1970s
(Lee,
readjustment],
1987,
p.
213).
In
fact,
"without LR
Seoul might not have been able
to
successfully the enormous influx of migrants..."
[land
accommodate
(Hwang, 1986,
p. 22).
2.2.1.
Implementers
Like
in
Japan,
implementers
of
land
consolidation
projects can be individual landowners, landowner associations,
public corporations,
and municipal
and central
governments.
Until
(Ministry of Construction)
now, municipal
government
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
has been
though,
the
major project implementer.
landowners
have become
more
In smaller
active
to
cities,
initiate a
project.
2.2.2.
Procedures
In the planning phase the
implementers
(in area which has been designated
the Ministry of Construction)
to get
their approval.
(in number
and
implementers
weeks to
At
area) must
announce
for
two-third
agree.
of the
Once both
the project
site
land consolidation by
and negotiates with
least
review the plans.
choose the
landowners
landowners
sides agree, the
and give the public two
The plans
are then
submitted to
the Ministry of Construction to get its approval./
The
next phase
is the development of the project.
necessary, existing buildings
development works start.
plots.
Landowners
ends with
the
The
are demolished
site
last phase is reallotment of the
register their new plots.
cash
and the
When
adjustment among the
The
last phase
landowners
(the
difference of what they should get and what they really get).
,It
is not unusual for local government initiated
projects to
start before they obtain a formal approval from the Ministry
of Construction
since
local
government
assumes the ministry
will approve (Hwang, 1986. p. 289).
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Urban Land Consolidation:
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2.2.3.
Land Valuation, Reduction and Replotting
Today replotting is determined by the value of land each
owner contributes.
value
of
value
of each plot.
much
the
land
All possible factors that might affect the
are considered before putting up
However, the
assessment, although it
refined now than before, does
reflect
the market value
land).
Negotiation with
implementers
(which is
not always
the
have the obligation to
In
of the
then.
The
suggestion and
and act accordingly.
Financing
South
practically
Korea
land
consolidation
self-financing, even though
construction of large infrastructure.
subsidies
the, city)
"true" value
listen to
is
accurately
landowners are important
complaints from landowner participants
2.2.4.
the real
(Hwang, 1986,
and private
289).
projects
they often
involve
Government seldom gives
Yet, both government
institutions
are
can
give
a
(usually
loan
to
the
project which will be paid back after the cost-equivalent land
is
auctioned.
into
a
special
In Seoul,
surpluses from the projects
fund which
is used
to help finance
are put
the next
projects (Kim, 1982, p. 149).
2.2.5.
Conclusion
Little
subsidy
made
the
Korean projects
primarily for network infrastructure
(which were
and housing land supply)
Page 32
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
very much dependent on cost-equivalent land.
The dependency
leads
ten
to
large-scale
consolidation]
1971-80
each"
projects.
projects in Seoul
(mainly by the
"...the
[land
LC
completed during the period
Seoul City Government) averaged 282 ha
(Archer, 1986, p.
12).
The heavy dependency on cost-equivalent land has resulted
in
too
some drawbacks.
high
(as
First,
high
as
the
68.3%
land reduction ratio becomes
in
one
project
in
Seoul
which
started in 1982) and landowners show strong resistance against
this.
Second,
Third,
there is
landowners
spaces
for public
facilities become
smaller.
land speculation in and around the projects--
leave
transactions.
the
land vacant
In addition,
redistribution was based on
for
since
capital
gains between
land contribution and
size rather than value,
internal
inequity in the benefit often happens.
The
large
scale
projects
also
have
their
obstacles.
Korea has limited arable land and this land is fragmented into
small
holdings
complicated.
wait for the
which
Other
can
make
than that,
land
replotting
more
many owners cannot afford to
completion of large projects so that they sell
their land to speculators
(Archer, 1984, p.
14).
Almost half
of the projects took more than 10 years to complete.
The drawbacks
somehow decline the
popularity in the 1980s.
on it
and diverse
land consolidation's
The government decided to rely less
the use of land development system with
Page 33
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
negotiated and compulsory land purchase.
It also changed into
land valuation method in calculating the land contribution and
redistribution.
produce
Land
land
However,
for
low-
Development
consolidation
site
(due
its
large-scale project
and middle-income
Corporation
system
to
in
because
speculation)
an unsatisfactory source
decided
the
plus
housing,
increase
all
(Archer, 1986, p.
(than Seoul
and Phusan)
to
12).2
Yet,
the Korea
use
land price
the procedures
of moderate cost
development"
not
land
on the
"made
land for
them
housing
in smaller
land consolidation is
to
cities
still being
used.
2.3.
Taiwan
After the
first urban land consolidation project
Kaohsiung, only
until
1971
areas,
from
in
1971
initiate 49
11
since
projects of 385
the
addition to
to
1978
hectares were carried out
government gave
lack of
nineteen
its
priority to
skilled personnel.
local
in
governments
rural
However,
managed to
projects which covered 2,175 hectares, and nearly
45% of the area was in Kaohsiung.
By the end of 1985 urban
No further explanation was given about how the infrastructure
was financed without the land consolidation.
It could have
been included in the budget for the whole project and the sale
of the houses was expected to recover the costs.
Page 34
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
land
68%
consolidation in Taiwan had covered 6,429 hectares and
(4,389 hectares) of it was for buildings
(Hsieh, 1986, p.
73).
In theory there are voluntary and compulsory measures the
government can take to
but
as
much
as
measures to
may
also
carry
out
The
landowners
(in
project can
the
the
law
number
go
take
revision.
possible
on.
them
land consolidation projects,
government uses the
avoid opposition.
landowners.
should
implement
On the other hand, government
project
requires
and
into
by
that
area)
If there
voluntary
the
at
should
are
request
least
approve
of
the
of
the
before
the
50%
objections, the government
consideration
and make
necessary
However, under the pretext of public interests, the
government has
the
final
say
for the project implementation
(compulsory measures).
2.3.1.
Implementers
City government
developer.
(especially in Kaohsiung) is the dominant
Starting in 1979 the
law authorized landowners to
form an association to carry out land consolidation projects.
By the end
of
1985 they had carried out 25 projects which
covered 89 hectares
(an average of 3.5 hectares/project).
The
government
even provides some tax and charges exemption to
encourage
the
associations.
However,
"leaseholders
are
neither allowed to carry out urban land consolidation projects
Page 35
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
nor provided with rights to claim their
consolidation
2.3.2.
program"
(Hsieh,
1986,
p.
rights on urban
8).
Procedures
Basically
the procedures
and South Korea.
are
similar to
those in Japan
The implementers survey the area, make plans
and negotiate with landowners to get their approval.
speculation
not
to
do
ownership
the
land
any
complication, landowners
construction
on
the
(except for inheritance).
plans
official
and
are
submitted
approval.
The
to
the
next
land
are
To avoid
also requested
nor
transfer
its
After they have approved,
provincial
step is
to
government
announce
for
the plans
publicly, and if within 30 days there are no objections, the
implementers
can proceed with the
project preparation, make
detailed designs, and calculate the cashflow.
The
same.
value
criteria of
site
selection is
also more
or
less
the
The crucial criteria is that the estimation of the land
increase should be enough to
The
land
the
land development
reduction
Implementers
should not
in the
should
take
recover the project costs.
exceed 40%.
area
into
Future
demand of
should also be considered.
account
the
potential
development of the site, and the plans should conform with the
city plans.
Size is another criteria included in the site selection.
The project should not be too large for fear that it will take
Page 36
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
too
long
to
complete and
Today, except
landowners
may not unable to wait.
for projects initiated by landowners
much smaller),
(Hsieh, 1986,
(which are
the size generally ranges from 70-100 hectares
p.
14)
which is much larger than it was
in the
initial stage.
2.3.3.
Land Valuation, Reduction and Replotting
In
that
replotting the
the
new
plots
characteristics
to
land implementers
should
the
be
should make
similar
original.
in
efforts
location
and
The .main consideration is
the total value of the land before and after the project.
Committee
of
applies
rule-of-thumb
a
(based
etc.)
get
on
to
Urban Land Appraisal
location,
coefficient
accessibility,
decide how much each
back
their
land.
assesses
The
for
the
plots.
different
land
topographical
The
It
type
conditions,
landowner should contribute and
method
of
the
assessment
is
announced to public.
In
cases
they are
all
where
a
landowner
has more than one
above the designated minimum
gets the same number of new plots.
plots and
size, the landowner
If the plots are below the
minimum size and thus have to be combined, implementers should
try to
locate the combined new plot in the location of the
original
largest plot.
However,
this
matter is
subject
to
negotiation.
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Urban Land Consolidation:
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2.3.4.
Financing
Private
sector
Association) can get
(i.e.,
a
loan
Urban
Land
(from the
Consolidation
Equalization of
Land
Rights Funds) at a low or even be exempted of interest rate,
depending
on
the
type
of
project
financial
institutions
after the
project is completed.
by the
government,
the
can also
capital
they
lend
are
the
doing.
Other
fund to be
repaid
If the project
layout
is
is
initiated
the budget of
the
relevant agencies.
2.3.5.
So
Conclusion
far the system has been a success with the landowners.
The government has made a lot of efforts to explain about it
so that the landowners understand what benefits they can get.
The good understanding helps
to
step
in
and
(Doebele, 1982,
p. 90).
a problem now is
to
manage
average
of
the
a
and
reap
which
are
not
theirs
the insufficient number of skilled personnel
takes
completed
from
benefits
chance of speculators
However, what the government feels as
coordinate
project
Kaohsiung),
the
reduce the
the project
about
projects
.7
3
years
range
to more than 300
implementation.
to
complete.
widely
hectares
(at
The
On
size
least
in
although the
majority have been a medium size, between 40 and 72 hectares
(Archer, 1986, p.
15).
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
2.4.
Indonesia
The
first
proposed in
land
1979
consolidation project in
and was not carried out until
located in Denpasar, Bali
government has
1,800
(see Appendix 1).
implemented nearly
hectares
Indonesia
in
sixteen
1981.
was
It was
Since then the
40 projects covering about
provinces
(Bray, 1988,
p.
i).
However, there are certain basic differences in the concept of
the land consolidation Indonesia is applying.
The major difference is that
in
Indonesia
is not
the cost-equivalent
is
considered
to
land consolidation projects
self-financing because
land.
be
So
far,
they do
not have
only one reported project
"self-financing."
It was
a 7.7-hectare
project in Bandung, initiated for the first time by the Center
for Land Research and Development
(under the Ministry of Home
Affairs) with the local planning agency.
In this project, the
local government got land for its offices as a reimbursement
for
the
funds
the
government had
spent
on
the
project
(see
Appendix 2).
Another aspect that distinguishes the Indonesian system
with the
one
in Japan,
Indonesian
projects
construction.
layout
in the
putting the
South Korea,
do
not
include
What the projects do
site, basically
grids for
and Taiwan,
is
is that the
infrastructure
just
organizing
reassembling the
roads and other public
plots,
facilities.
the
then
On
Page 39
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
average,
each project has
a
reduction
rate
of
20%
for
this
purpose.
The main
land
is
reason
because
implementers
delicate
to
the projects
there
get
problem
is no
the
since
government offices.
do not have cost-equivalent
law
that
payback,
the
enables
and
it
the
becomes
implementers have
Without
more
a
always been
the cost-equivalent
the project does not have revenues,
project
land means
and without revenues, the
project cannot afford to construct the public facilities.
All this time the government has carried out the projects
without any legal regulation.
only a sketchy guideline.
a
lot
of
things
the
Each implementing agency has
Without a legal
agency
cannot
do,
support, there are
and
it becomes more
difficult since people are not familiar yet with the program.
2.4.1.
So
have
Implementers
far
been
offices
all the
initiated by
the
government
have tried to carry out
Land Research
project
land consolidation projects
to
offices.
the projects.
Different
The Center of
and Development, is now carrying out a pilot
in Bogor
attempted
in Indonesia
get
mentioned above).
(they completed
a
the
one
in Bandung which
cost-recovery land for the
The Ministry of Public Works
Agency) has also initiated a few projects.
first time as
(the Housing
Other provincial-
level offices might have been doing the same thing with their
Page 40
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
own budget,
although there
national-level
office
is no
(there
official
is
no
report
coordination
to the
on land
consolidation program--each agency works within their
responsibility).
area of
However, the most active implementer
so far
has been the Directorate of Land Reform, under the Directorate
General of Agrarian Affairs, Ministry of Home Affairs..
In practice
offices
other
the
at different
local offices
to
Directorate
government
form a
of
Land Reform, with its
levels,
team to
work
together with
implement
the project.
This team usually includes the planning offices, public works
offices,
local
agrarian
authorities.
offices,
the taxation offices,
and other
By the 1986/87 fiscal year the Directorate
of Land Reform has implemented 32 projects in 16 provinces and
another 8 projects are still in progress (Bray, 1988, p. 3).1
The main responsibility of the Directorate of Land Reform
is to manage land use and ownership.
consolidation projects
its objective
but
land by
rather
to
manage
Naturally, in its land
is not to
creating an
(mostly for residential purposes),
service
organized
land,
layout
producing free land for
Directorate General of Agrarian Affairs was dissolved
last November as the President created a special body to
manage land affairs.
The new office is named National Land
3The
Agency and it is directly responsible to the President.
4Basically, the discussion of the Indonesian land
consolidation in this thesis refers to the projects initiated
by the Directorate of Land Reform, as they have the most data
relative to the other iniators.
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Urban Land Consolidation:
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public
facilities,
and
Infrastructure provision
registering
is not the
the
plot
ownership.
agency's responsibility,
and the agency cannot afford it, anyway, since the projects do
not have revenues from the cost-equivalent land.
The
agency itself
willingness
enforce
agency
is
to give up more
it.
still unsure
land, and it has
What usually happens
(which is
of
is,
the
no authority to
the local public works
included in the project planning) builds the
infrastructure by using its own traditional budget.
interest
of
objectives
the
implementing
of the project.
agency
Bali,
was
Public
Works
acquire
land for
2.4.2.
Procedures
The
carried
bypass
Directorate
reflected
in
the
For example, the project in
out
agency, because
their
is
Thus, the
However, cooperation with the
Public Works is always possible.
Lumintang,
people's
this
at
the
request
from the
agency had problems
to
ring-road project.5
General
of
Agrarian Affairs
puts the
implementation of land consolidation projects into two phases.
The
first phase ends with the landowners signing the release
of
their
5The Directorate
right
of
on
the
Land Reform
land
reported
to
that
the
as
project
a
result
of
the Lumintang land consolidation project, the Public Works
agency saved 50% of its initial budget for land purchase.
Page 42
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
implementer/government.
The
second
phase
ends
with
the
landowners getting back their titles on the new land.
During the
at the
first (preliminary) phase the
provincial
and sub-provincial
identify the project site.
discussions
with
landowners agree
release
prepare
office
a
describe
landowners.
regent
start
the
If
the
to
the
government,
and
then
the
from the head of the
(the regent or mayor).
proposal
to
and
get a preliminary approval
the
to
The result leads to preliminary
officials
rights
local government
With
levels work together
to the basic principles of the project, they
their
implementers
local
agrarian office
or mayor's
to
the
get
approval,
funding
from the
second phase.
project
in
more
The
details
prepare a detailed map of the
the
implementers
national-level
implementers then
to
the
landowners,
existing plots with their
values, and identify the owners of each plot.
Once
the
implementation)
Affairs
and evaluate
out.
The
and provide
the plots,
landowners'
for the
starts.
is
granted,
the
The
the
fund.
The plots
governor then
agrarian office
The
(the
issues
the
a decree to confirm
implementers measure
then design the
approval with all
replotting.
second phase
The Directorate General for Agrarian
on behalf of its Minister issues
the project
the
funding
site
layout and get
necessary negotiation
and land for roads are
a decree
registers the rights
on the
marked
replotting.
of the new plots
and
issues the certificates to the owners.
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Urban Land Consolidation:
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2.4.3.
Land Valuation, Reduction and Replotting
In the beginning the Directorate of Land Reform used the
area method for replotting.
account.
The plot value was not taken into
The rate of reduction could vary within one project.
Those who contributed the most got a land by the widest road.
Using the
get
the
area method only the
landowners'
agreement.
agency found problems to
In
addition, landowners put
more emotional attachment to their land.
flying plots,
plots.
shapes,
public
or
insisted to keep
Many refused to have
some parts
of their
old
This was why some of the plots had slightly irregularor
the plots were
facilities
were
divided into
not
located
in
smaller ones, or
the best
place,
the
in
exchange of the limited flexibility to replot the land.
Usually
in
reduction and
implementing
agency
spirit
landowners
among
always
leaders to agree first.
replotting negotiation,
tried
to
and persuade
revoke
the
the
community
local
community
The Bandung project, however, applied
both the area and value method for replotting.
the
first that used the value method
finished in 1988).
2.4.4.
the
It could be
(it started in 1984
and
So far, no complaint is reported.
Financing
The Directorate General for Agrarian Affairs have funded
the
land consolidation it initiated, using its
traditional
Page 44
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
budget.
The costs covered the preliminary study and the works
for preparing the plans.
public
facilities.
Landowners only contributed land for
The construction of these
carried out by
the
offices) using
their
relevant agencies
conventional
Therefore the works depend on
or priorities
land
for
the
(i.e.,
funds,
there
was
no
the public works
not the project's.
agency's budget
(Archer, 1986, p. 21).
sale,
facilities are
and timing
As there was no reserved
revenue
outside
what
the
government provided.
The project
certificate
Reform
costs
issuance.
said
that
also
cover
An official
it
was
in
the
land registration and
at the Directorate of Land
exchange
of
the
landowners'
participation in the project (Djaja, 1986, p. 8).
However, if
the
over
land
the
title was
not clear--in
land--the
"owners"
registration
the
as
stipulated
redistribution
Program)
."
2.4.5.
Conclusion
There
is
no
of
figure
this case
had to pay for
in
land
Regulation
in
about
status in the sites before the
the
the
the
the
No.
224
Agrarian
rate
of
State
land
of
Land
takes
and
1961
the
(on
Reform
registered land
land consolidation project,
/Some projects outside Java and Bali involved the State's land
which has been occupied by the local people.
With land
consolidation, the land was redistributed to these people with
clear title.
Page 45
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
although in general project reports mentioned problems of
unclear
titling.
The
problems
identifying the landowners.
implementers have
usually
There are
concerns
with
cases when the project
to negotiate with more than one owners
for
one piece of land when the land is inherited to more than one
persons, and it becomes more difficult when not all the owners
are living in the area.
Obviously, unclear
implementation.
implemented,
since
at
plots
with
the project
the
end of
the
is
once
improves
the project
land
slows down the project
land
the
all
certificates.'
consolidation
land registration
landowners
The
rate
get
of
is
rate
the new
registered
(except Jakarta) is estimated between 10%
(DHV, 1986, p. 27)--and in rural areas usually the rate
lower.
sites,
titling
However,
land in urban areas
to 15%
land
If
then
we
assume
land
significantly.
this
rate
consolidation
Thus,
applies
to
improves
land consolidation
the project
the
condition
system helps create
clear land titling.
Despite
the
factors
that
slow down
land
consolidation
projects in Indonesia, the projects take only about two years
to complete, much shorter than those
construction
of
major
in other countries.
infrastructure
may
be
one
of
No
the
,The improved land title (besides the public facilities) might
or might not help
increase the
land price.
Futher
study
is
needed to determine its role, if there is.
Page 46
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
reasons.
However, with the obligation to get 100% landowners'
consensus,
55,
83.7,
and at least four projects
(with a size of 32.4,
and 95.8 hectares) involve more than 700 to 900
landowners,
Archer
finds
the
speed
is
quite
impressive
(Archer, 1986, p. 21).
Most of the projects have been in small towns.
hand,
the
they might have
landowners.
proof
of
In
the
the
advantage
case
of
easier
of the
landownership, people
still
On one
identifying
absence of
accept
of
any formal
a claim on land
based on customary law or the confirmation of the neighborhood
authorities or elders who are considered knowledgeable about
the history of land in the area.
small
of
cities the
the
accepted
site.
In
used
for
fact,
sites may not be ready for urbanization--one
criteria
in
farming
characteristic
On the other hand, being in
some
projects
after
of the
of choosing
site
a
land consolidation
many plots
are
the
consolidation.
may
"justify"
the
still
being
This
rural
implementers
for
not seeing the needs to construct roads and drainage system.
Implementers might not have
site selection.
was
chosen more
project,
applied clear criteria for
The Bandung project report said that the site
because
there
was
land available
rather than because of some criteria.
for
the
This kind of
policy might not produce favorable results--that the projects
cannot
towns
sustain
are
potential
growing fast
development--particularly if
or have
the potential
to get
the
larger.
Page 47
Urban Land Consolidation:
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Early experience in Korea should become a warning.
Lee noted
that in the colonial period in Korea:
Since the projects focused primarily upon
regularising the shape of the plots and realigning
the circulation systems, the provision of essential
urban public facilities through the projects was
severely limited and some of these areas are now
again under consideration for redevelopment (Lee,
1987, p. 215).
Even well
the
after
colonial
period, the
limited public
facilities (because landowners resisted higher reduction rate)
may
result
inhabitants
projects
in
a
in the
could
lower
site
head
quality
of
(Kim, 1982,
the
same
life
p.
for
142).
direction,
the
later
Indonesian
which
is
not
desirable.
Page 48
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
CHAPTER 3
ADJUSTMENTS FOR INDONESIA
Based
on the
South Korea,
crucial
experience
and Taiwan)
issues
of
and
the
of
Indonesia should
other countries
Indonesia,
address
the
land consolidation and optimize the
are
related
to
the
(1)
enabling
there
(Japan,
are some
to move further with
system.
legislation,
These
(2)
issues
cadastral
conditions,
(3)
financing,
speculation,
(5)
land valuation, reduction and land replotting
(4)
preventive
measures
against
methods, and (6) training.
3.1.
Enabling Legislation
Japan,
regulations
since
the
South
Korea,
on or
related to
early
stage
and
they
Taiwan
had
laws
and
land consolidation practices
applied
beginning Japan had the Agricultural
1899,
have
the
system.
In
the
Land Readjustment Act of
South Korea had the Colonial City Planning Law of 1934,
and Taiwan had the Land Law of 1930.
As they move along, they
pass other laws and amendments that are more suitable to their
conditions,
so that they are able to make better use of the
system.
Indonesia,
regulations
that
on the other hand, does not have adequate
might
authorize
the
land
consolidation
Page 49
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
practices.
However, the
Directorate
of
government
Land Reform under
(in this case
it
is the
General
the Directorate
of
Agrarian Affairs) was pretty sure of the benefits of land
consolidation and realized that producing applicable laws
regulations would take a
proceed with
the
long time.
system despite
Therefore,
and
it decided to
the unavailability of legal
support (Djaja, 1986, p. 2).
Without the
have
any
choice
landowners
to
is
a
always
enabling legislation the government does not
but
getting
carry out
a
chance that
government has
total
consensus
from
land consolidation project.
some
taken a
a
lot
landowners
of
time
do
to
not
There
agree.
negotiate
the
with
The
all
landowners
and it often has to give explanation to individual
landowners
(Djaja, 1986, p.
implemented.
Thus,
it
that requires
less
than
because
it will
is
8),
or else the project cannot be
necessary to
100%
consensus
speed up the
set up a
regulation
from the
landowners
implementation and reduce
the
risk of project rejection.
Japan and South Korea require two-third of the landowners
to
approve
requires
before
only more
the
than
project can
a half.
proceed,
As
the
while
system is
Indonesia, government should avoid drastic measures.
be preferable
third
to
requirement
requirements"
follow the
although
are
recognized
Japanese
both
in
and
"over
Indonesian
Taiwan
new
in
It would
South Korean two-
half
and
legal
two-third
system.
For
Page 50
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
example,
of
to change the constitution, two-third of the members
the People's Assembly should be present
third
of
them
should
agree;
if
there
and at
are
least two-
more
than
one
presidential candidates, more than half of the members of the
People's Assembly should agree.
The
legislation should
also
regulate the procedures
land consolidation practices in details
and yet
of
flexible
enough to
the different conditions
country.
It should create a standardized guideline that will
help
implementation move
the
Issues
size,
in different
faster
areas
in the
and more efficiently.
like the criteria for site selection, minimum new plot
maximum
subsidies,
land
reduction
minimum
compensation, equity,
rate,
provision
of
cost-equivalent
public
and implementing
land,
facilities,
institutions
should
also be addressed explicitly since they would otherwise create
problems.
Land issues have always been crucial.
have
been
history.
improvements
sources
Their
of
agrarian
sensitivity
Politically, they
discontent
has
in
resulted
Indonesian
in
ad
hoc
and solutions, rather than a complete treatment.
Moreover, the government has been giving higher priorities to
economic growth, particularly
1966).
in the New Order period (after
Yet, the development of the country has brought land
issues back, and they have become more pressing, thus demanded
serious treatment./
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Urban Land Consolidation:
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The
creation of the National
Land Agency is
of the serious needs to deal with land issues.
an evidence
By making the
land agency (previously the Directorate General for Agrarian
Affairs)
President,
as
an
autonomous body,
and with
issues
will
get
offices
a
at
can
of
every
government
larger political
consolidation can benefit
personnel
responsible
from this
the new agency are
expect them to have
the
same
to
level,
the
strong
Land
since many of
old agency,
commitment
the
land
recognition.
change
from
only
the
and we
to
land
consolidation system.
3.2.
Cadastral Conditions
Despite
the
impressive
speed
of
project
completion
Indonesia has shown, clear land titling and good cadastre will
even make
land consolidation move faster.
The time and cost
spent on the needs to find out who owns what, where, and how
much will be much reduced.
Project implementers can be sure
with whom they should negotiate and quickly determine whether
they can proceed with
the project.
They deal with only one
person for at least one plot of land.
in the
to ruling
faction
.Of 171 complaints people reported
Parliament during the period of 1982-87, seventy percent are
related to land issues (Tempo, 1988, p. 22).
Recently some
disputes on government land purchases and fake land
certificates have become national news.
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Urban Land Consolidation:
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Compared with Japan,
still has
have
and
Taiwan, Indonesia
lot of problems with its cadastre.
a
an up
South Korea,
landownership database,
to date
It does not
and there
is no
sufficient supporting technical
and administrative skill.
I mention
Indonesian government
in
Section
3.1,
the
give priority to land issues until lately.
Law of 1960,
not
even
which is
the major
fully implemented until
did not
The Basic Agrarian
land law in
now.
As
The
the country,
is
law requires that
all land be registered, and yet only "a very low percentage of
land is
titled, and throughout
large number
of
small
the
country there
individual parcels
of
are
a very
land and also
a
large number of individual owners"' (MacAndrews, 1986, p. 79).
There
are
several
major
factors
attributable
to
the
cadastral conditions, such as:
-
The Basic Agrarian Law does not impose a time limit for
registration (MacAndrews, 1986, p.
-
People
consider the
certificate of title
27).
cost they have
is
to
pay to
too high, and they
get the
still have
to pay bribes.
-
The process
time.
is cumbersome and therefore takes a long
The government may say that it needs only 3 to 6
months to get a certificate, but in practice it takes
more than a year.
Inefficient bureaucracy, the need to
bribe at various level of offices, lack of adequate and
qualified personnel throughout the country contribute
to the delay.
Page 53
Urban Land Consolidation:
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-
Dishonest personnel take part in creating fake land
(one plot may have three
certificates
certificates for
three different owners, or there may not be any plot at
all).I
In addition to the disincentives above, people still feel
secured with
the
the
customary
neighborhood
authorities
or
elders
some
statement from
saying
the
land
This is very much in practice in small towns.
theirs.
do not
law, or
land
People
see an immediate need to get a land certificate.
they have
extra
improvement or other necessities
Registering
rather use
fund, they would
the
land
to
get
a
When
it for housing
business, education).
(e.g.,
land
is
certificate
is
a
not
priority.
3.3.
Financing
One
sys,tem's
of the basic principles of land consolidation is the
ability
to be
In
self-financing.
fact,
this
the
principle that mainly attracts the governments of Japan, South
Korea,
and Taiwan to implement the
Chapter 2,
this
is
exactly the
system.
ability
that
As
I discuss
the
in
Indonesian
government do not make use of, except in the Bandung project.
business lead to criminal acts that have involved
More than 1000 fake certificates have
billions of rupiahs.
been found in Jakarta and Bekasi (a small city adjacent to
2The
Jakarta).
Page 54
Urban Land Consolidation:
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The
Directorate
been the major
yet
General
reasoned
implementer
participation in
it
system,
familiar with the
stages,
Agrarian Affairs which has
for
is
get people's
better to
only implements
thus the government
2).
(Djaja, 1986, p.
the "basic" land consolidation
are not
since people
that
The early
stages of people's participation is the contribution of their
and the "basic"
(mostly roads),
land for public infrastructure
land consolidation is to rearrange the plots and put it grids.
In addition, the Directorate General for Agrarian Affairs does
not have legal power to take land from the project and sell it
to
recover
costs,
the project
might not be willing
apart
to give up more
that
fact
from the
people
cost recovery
land for
since the government usually provides the public facilities at
no cost to the landowners (Archer, 1986, pp. 19, 21).
In
such
Indonesia
conditions,
have
provision).
been
the
finance
budget to
compensation.
subsidized
totally
implementing
The
The
consolidation projects
land
agency
(except
uses its
administrative work,
Public
Works
for
land
traditional
replotting,
agency
in
finances
and
the
construction of public facilities.
The practice clearly has missed the most
important part
of land consolidation system, which is self-financing.
Again,
the situation shows the urgency to have legal forces to regulate and implement
Instead of
office's
land consolidation with clear objectives.
just managing the
objective is,
land use, as what
cost recovery
the Agrarian
should also be
included
Page 55
Urban Land Consolidation:
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as the main objective, and to assure the cost recovery, provision of
1),
infrastructure
though
land value
is vital.
The
they are not complete,
after the project.I'
available data
show the high increase
This unearned
justifies the government to tap the
(Table
capital
in
gains
landowners' profit more by
increasing the reduction rate for cost recovery.
Table 1
Increase in Land Value in Indonesian Projects
Location
Land Value
Land
Before
Increase
Reduction
(Rp '000/m)
--------------
in Value
(%)
After
Denpasar, Bali
10
50
17
315
Tarok Dipo,
10
40
11
256
12.5
30
20
92
7.5
20
28
92
2
20
20
700
50
27
137
Bukittinggi
Lumintang, Badung
Tengah, Bogor
Painan Timur,
Painan
Babakan Surabaya,
17.5
Bandung
Source: Bray (1988).
3The references
nominal or real.
either.
Bray
Average rate of inflation from 1981 to 1987 is 9.6%.
(1988,
based on
do not
clarify
whether these
prices
are
The years of the valuation are not clear,
p.
48)
acknowledged
spot surveys
that
and anecdotal
the
data
evidence,"
"appears
to be
as there has
been little monitoring.
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Urban Land Consolidation:
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The
main
strategy
is
how
to
sell
the
them of the advantages
landowners, convince
idea
to
and disadvantages
of participating or not participating in the project.
necessary
also
recovery
to
note that the
should be attractive
land parts
enough to
the
chosen
It is
for cost
sell quickly
so that
the risk to have an idle investment can be minimized.
In the case of advance financing, the projects can borrow
money from public
and private
other
using
business,
"business,"
to
the
land
as
institutions
collateral.
the projects can pay off.
by the
government
is
of
is
Finance
landowners,
should be
Certain
who
not common in Indonesia,
of
kinds
and
the
implementers,
for the
however, the Ministry
to get
Such projects may
general
artery
these
government
criteria.
those
"fairness"--that
also enjoy the
(other than the
benefits of
the
through government subsidies.
include building
criteria,
clarify
larger communities
should pay
roads,
a
subsidy is
landowners) can
then they
embankment,
If
a
61).
(Bray, 1988, p.
deserve
may
project
regulation should
argument
participating
4For
is
proposing the Regional Development Account to
benefit must pay.
project,
The
responsible
channel loans from the central government
The basic
This
The practice of borrowing a loan by and from local
repayment.
subsidy,
like any
so careful feasibility study should be carried out
see whether
supported
financial
schools,
clinics,
river
etc..
Introduction to Land Readjustment
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Urban Land Consolidation:
In Search of Its Applicability in Indonesia
subsidy
The
can
from
come
central
the
again depending on the beneficiaries
government,
or
local
the project
(usually it correlates with the project size).
can cover
The
government can carry out some parts of the project as a direct
subsidy,
or
it
can provide
grants,
interest-free
or
low-
interest loans as an indirect subsidy.
Preventive Measures against Speculation
3.4.
A
fast
increase
of
land price
certainly
will
attract
speculation, which will even push the price higher because the
The community at large
land is being taken out of the market.
has to pay for an unnecessarily higher price.
In general there are two types of land speculators around
the
landowners
have
They
themselves.
first are
The
land consolidation projects.
no
the original
intention to
develop
their land because it is more profitable to keep it that way
while
waiting
speculators
landowners
it.
Thus,
for
are
the price
to
go higher.
the non-landowners.
The
second type
They buy the land from
and wait for a much higher price before they
they
get
the
capital
gains
sell
(not the displaced
landowners) with hardly any efforts.
(Kukaku Seiri) Practice
(City
of
Nagoya,
1982,
pp.
62-65)
provides a good example.
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Urban Land Consolidation:
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Japan, and South Korea to a lesser degree, is facing this
problem of
the
speculation.
landowners
In Japan the
themselves.
They
are
speculators are often
decreasing
the
land
supply from the market, and meanwhile there is always a demand
for land.
cities
Thousands of hectares of land in the middle of the
are
remained undeveloped.
Land price
then becomes
incredibly high (see Chapter 2).
The
itself.
root
In
of serviced
bring
of
fact
problem is
not the
land consolidation
land which in the
the price
pushes
this
down
(in
the price up).
the
is
land consolidation
increasing the
supply
long term,
theoretically, will
short
land consolidation
However,
term
since there
is an
incentive
for people not to develop their land (namely keep the land for
agriculture),
that
addition their
land's value is
the
tax
exemption
is
or
exactly what they are
increasing.
reduction the
The
in
incentive is
government
agricultural land, even those in the cities.
not enough political will to
doing, and
gives
for
So far, there is
make significant changes
in the
taxation system.
What is happening in Japan proves that land consolidation
will not produce
supporting
as much benefit by itself.
conditions
integrated with
the
There
should be
system.
Taxation
system is one of them.
In its efforts to increase revenues, especially since the
fall of oil price,
the government started the taxation reform
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Urban Land Consolidation:
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in early
1980s.
One part
of
the
reform package
is the
new
Land and Building Tax (introduced in 1986) which can be a good
support for land consolidation in Indonesia.
tax
exemptions
market value
property.
and
it
uses,
as
which incorporates
the
tax
It minimizes the
base,
the
capital
the development value of
the
Thus, underutilized land will be taxed based on its
potential value with the objective to discourage speculation
(Kelly, 1988, p. 10).
To
implement
registration,
itself
and
the
law,
valuation
property
are
essential.
is to be made every three years,
rapid development.
In its
identification,
The valuation
except in areas of
strategy to implement the law, the
government has given a priority to improve the valuation, and
the
work
is
appraisal
expected to be
of
finished
the majority of the
this year
for
the mass
properties and in 1990
for
the individual-based appraisal of the higher-value properties.
These
improving
consolidation
practices.
implementation
regulations,
efforts
of
the
Of
law
will
course,
that
be
useful
in
the end
counts,
not
for
it
land
is
the
just
the
and that the related agencies can work together.
It is too soon to say that with this new law and all the work
being done
However,
at
about it
the land consolidation will
least the
law provides the
work better.
right condition for
land consolidation.
South Korean experience
indicates
the
need of
another
measure against speculation, which is complete and good timing
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Urban Land Consolidation:
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information.
different
In this
than
that in
second type.
projects
country
Japan.
Many of
cannot
the
speculation
The
speculators
the landowners
afford
to wait
for
who buy it
the project
rush
to
sell
is
consolidation.
increase
to
complete,
the project finishes.
attributable
landowners
They do
not
see
to
about
the
lack
the benefits of
that
their
Government
that
landowners
the
land
efforts
implementing agencies do not make
understand.
The
of
land value will
significantly, that it is worthwhile to make
to wait.
of the
readily at a price much lower than
partly
understanding of the
are
They sell their land
what they would get had they wait until
The
slightly
in the South Korean
particularly if the projects are large.
to "middlemen"
is
sure
consequence,
the
landowners do not get the benefits they deserve.
The Taiwan experience
shows that with good information,
speculation can be minimized.
The government goes into great
lengths to explain the system to landowners
(Doebele, 1982, p.
90).
necessary.
Wide
promotion
of the
system
is
When
landowners understand that they will benefits, they will not
hesitate to
them
11).
as
ask the government to initiate the project for
as what
the people in
Bukittinggi
did
(Djaja,
1986,
p.
They may have other reasons to reject the project, such
their
emotional
government
or
attachment
to
implementing agency
the
land,
but
should have a
again
the
strategy to
sell the project and give correct information.
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Urban Land Consolidation:
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The timing
of
the
information is
also
important.
For
sure landowners should hear about a coming project before the
speculators
officials
do.
who
information,
A
difficult
know
about
situation
the
intentionally
or
coming
arises
when
the
project
leak
the
unintentionally,
people, or their relatives for that matter.
to
other
Bray finds out
that there is a large proportion of civil servants who own the
land
in
some
land consolidation
sites,
proved that they are not the original
although he
landowners
has not
(Bray, 1988,
p. 51).
3.5.
Land Valuation and Land Replotting Methods
Land valuation
and land replotting methods
are no doubt
two of the most crucial elements in land consolidation.
Both
are tightly related and both affect how much landowners pay in
the form of land reduction, and how much they get in the form
of
serviced
Therefore,
new
the
plot
or
landowners
additional
cash
adjustments.
are concerned that the methods
produce fair results to them.
Unfair and incorrect valuation
and replotting will only create resentment, while the project
needs their cooperation.
In land evaluation, ideally land consolidation projects
should use the market value which is the value the land will
likely get in an open market.
This value is usually assumed
to be "equal to the price recently paid for a similar property
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Urban Land Consolidation:
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or
interest
in
land"
comparative value.
and extrinsic
location,
of these
(Dale,
1988,
The price itself is
51),
known
as
the
affected by intrinsic
factors, such as the nature of soil, topography,
accessibility to public
services,
factors has a value which
utilization.
p.
For example,
nature of soil more than a
a
and title.
Each
is determined by the land
land for farming may value
land for commercial use.
the
Thus,
in
making comparison, adjustments should be made if the affecting
factors and utilization are different.
large
and
involves
a
lot
of parcels,
When the projects are
each
of
the
affecting
factors gets a rate or index number which corresponds to its
value.
The parcel
is then
assessed by computing this number
rather than calculating its real value in monetary terms.
For
land
replotting
there
consolidation projects can
are
apply:
the
three
designated
has
a
size of
the
reduction--regardless
the
land
area method, the value
method, and the combination of the two.
the new plot
methods
In the area method,
original plot minus
the value of
the
land.
the
If
two persons have the same size of old plots and new plots, and
their market values are different, it means they have inequity
in the benefit they get.
only if the
area has
Thus, the area method is appropriate
a homogeneous value, or
if the new plot
is in the original location or very close to it.
In the value
method, the value of the new plot is proportional to the value
of the old one, relative to the other plots in the site.
If
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Urban Land Consolidation:
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the old plot has
should
the
also
has
the highest value in the
the highest,
reduction).
heterogeneous
original
The
too
method is
value,
or when
location.
The
site,
the new plot
(after being adjustment by
applied when
the
the
new plot
area has
is
combination method
not
in
a
the
is used in
a
combination situation.
South Korean earlier cases showed that the land valuation
method they used resulted in unfair distribution of benefits
among
the
system
is
Indonesia
landowners,
is
one
of
at
least
the
reasons
the
Seoul.
In
losing
its
first project in Bali got delayed because of
its
over
the
difficult
reduction
rate
value/price
Bandung,
this
now
disagreement
through
and
popularity,
reduction
discussions
was
based
(Djaja, 1986, p.
initiated
Development,
by
did
use
the
the
on
on
Center
then
it
replotting
plot
9).
three
rate,
in
area
had
to
because
instead
of
go
the
plot
However, for the project in
for
Land
methods
Research
discussed above
and
in
accordance with the existing conditions.
The
importance
of
land valuation
requires qualified assessors
and
land
replotting
in land consolidation projects.
It is a mistake to use unqualified ones just because they are
available
in
the
land
consolidation
Hiring professional assessors
implementing
agency.
is one possibility, or since
so
far the projects have been initiated by government (may remain
so
in
the
near
future
since
other possible implementers are
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Urban Land Consolidation:
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not ready yet),
people
the implementing agency can work together with
from the taxation agency.
Using information
from the
taxation agency will also reduce work and time period.
3.6.
Training
However good a system is,
even with full political and
financial
support, without appropriate competency to
out,
system will not give
the
carry it
maximum benefits.
On this
premise, training is essential for land consolidation.
Government officials,
from the central down to
the local
levels, who are in charge of the system implementation need to
have deep knowledge about how the
reviewing proposals
system works
and monitoring).
prepared to potential problems.
They
(including
should
also be
This non-technical knowledge
can be acquired by learning from other countries' experience.
Technical
knowledge
is
also
important, particularly in
land valuation and replotting methods
(see Section 3.5) which
require a special expertise.
Recruiting skilled personnel,
training
through
the
existing
staff
cooperating with the taxation office are
special
courses,
or
some options.
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Urban Land Consolidation:
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CHAPTER 4
CONCLUSION AND RECOMMENDATIONS
4.1.
Conclusion
Land consolidation, originated from
has been
for
used
years.
in
The
Japan,
three
South Korea,
countries,
the
and Taiwan extensively
especially
Japan,
urban
through
produced
thousands
system.
One of their main objectives is to
of hectares
of
German system,
land
have
the
save funds for
land development and public infrastructure provision because
the
system
private
enables cost
resources
recovery by making better usage
(namely
the
land
contribution
of
from
landowners).
From the
acceptable
landowners'
than
point
of view this
compulsory purchase
or
system is more
eminent domain.
In
land consolidation the landowners do not have to move because
they do
not
sell
their
land
to
compensates the
landowners
and thus
resentment).
land
create
except
it
is
the
government
with less
than what they ask
In fact they
smaller but
with
(who usually
a
still
higher
for
keep their
value.
All
landowners share the costs and benefits, which does not happen
in eminent
(i.e.,
domain as
only
certain
landowners
are
affected
only landowners along the proposed road have to give up
their land).
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Urban Land Consolidation:
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The experience
in Japan,
South Korea,
and Taiwan
shows
that landowners can accept the land consolidation system.
The
dissatisfaction
the
is
usually
because
landowners
feel
government imposes its will on them, basically determines the
kinds of facilities
landowners;
to be built without really consulting the
or because the
landowners
find the
land reduction
rate is too high since the government hardly gives any subsidy
although the project
is too large
for
the landowners
to bear
the costs.
Indonesia tried the system for the first time in 1981 and
has been using
it
steadily up to
the present time.
However,
unlike the other countries, Indonesia does not yet aim at cost
recovery.
Instead,
management.
land
the agency is more interested in land
The government subsidizes the projects except for
provision
for
public
infrastructure,
and
since
the
government's fund is limited, the services it provides for the
projects
are
services will
also
limited.
not be
The potential
adequate before
long,
problem
is,
the
especially if
the
place is growing fast (Chapter 2, Section 2.5),
Korea is experiencing.
difficult
and
as what South
Once the area is built up, it is more
costly to
reorganize.
Hence,
projection
of
future needs is mandatory in project feasibility study.
The main
of
"flaw"
legislation
implementation
of
that
like
in
the
Indonesian
can
other
system
enforce
countries.
and
is
the
absence
regulate
the
Consequently, the
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Urban Land Consolidation:
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government
then
is very dependent on
consensus which can be
costly to
the
landowners' total
reach.
The government
neither force the landowners to pay for the project
not
self-financing) nor
have
the
right
to
sell
can
(so it is
the
cost-
equivalent land.
After nearly a decade of implementation, Indonesia shows
the
system is
more benefits
Without
its
the
applicable and
only if
changes
still has
it makes
or
the
capacity to bring
the necessary
improvements,
the
improvements.
system has
limits and is unable to produce better results.
reached
One thing
is obvious, the government will not have the funds to keep on
financing
related
from
the projects.
government
the
creation
political
of
It
officials
support
the
needs
National
stronger commitment
to push
which
for the changes, apart
seems
Land Agency
from
"available"
as an
with
autonomous
the
body,
directly under the President, to handle land issues.
Land consolidation
as
a
system
for
land development is
unable to function optimally without the supporting external
conditions and other prerequisites.
prices, but in the
long run, as
It does increase the land
it keeps on
land supply, it will decrease the prices.
obstacles
to
reach
this
objective.
speculation, which pushes up
taxation
implement
increasing the
However, there are
One
the land price.
of
them
is
Appropriate
system, correct information, and right timing to
the
project
are vital
to minimize
speculation and
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Urban Land Consolidation:
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price increase.
Good cadastre is another important element to
expedite project
mechanism
and
requirements.
implementation.
providing
Establishing
skilled
the
personnel
financing
are
other
Indonesia does not yet have them all, but
it
has made some improvements to reach them.
Land consolidation is also potential
low-income housing.
experience did
to reduce
costs for
The Korean Land Development Corporation
show that
it was
costly and cumbersome to
go
through the whole process of
land consolidation just to get a
small percentage of land for
low-income housing.
This may be
the limitation of the system--it becomes too expensive when it
is
too
large.
worthwhile,
Perumnas)
case
or
At
the
acts as
there
a
smaller
scale,
it
housing corporation
might
(i.e.,
still
Indonesian
a buyer instead of implementer.
should be
a
stipulation that
be
a part of
In this
the cost-
equivalent land should be sold to the housing corporation at a
lower price.
Other
than this
government makes due to
possibility,
land consolidation
the
savings
the
(not having to buy
land for, and provide public facilities) can be transferred to
low-income housing funds.
4.2.
Recommendations
To get
a maximum advantage of the
there are several measures the
land consolidation,
Indonesian government needs to
take.
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Urban Land Consolidation:
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*
Make enabling legislation available soon.
important
step to
to operate.
take to give
been missed.
be covered in the
the
system
financing,
Some major issues
that
need to
legislation are:
- The system's aims.
The
system
organized, urban
of appropriate
the benefits equally
the
power to
the most
We have seen that without this power a lot of
benefits have
provision
a legal
This is
should
at a
land management
facilities,
among
aim
the
self-
with
the
and distribution of
landowners.
Consequently
implementing agency should have the authority to
sell
the cost-equivalent land for cost recovery.
-
The minimum
This
number of
requirement
can
landowners to support the project.
take the
Korean model--two-third of
number
and area)
proceed.
the
less
drastic
landowners
should agree before
Japanese
or
(in terms
of
the project can
Negotiation and mediation is thus necessary to
enable the implementing agency to achieve this quorum.
-
The criteria of site selection.
criteria
The
should
support the aims of the system as mentioned above.
should
the
include,
site
to
among others,
(1)
trunk infrastructure
the
to
close
distance of
reduce costs
assure urban development in the near future, (2)
parcels
of
land
(but still
meet
a
larger
number
of
landowners
size
in the site
can benefit,
and to
the small
the minimum
development after the reduction rate)
They
and
for
so that
(3)
the
relative easiness to identify landownership in the site.
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Urban Land Consolidation:
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-
The
agency.
implementing
it
Ideally
should
be
the
municipality which knows the area best, what it needs, and
whether
it
is
plans.
However,
integrated with the
since
the
general municipality
agrarian office has got more
experience, the municipality should work together with the
agrarian office (i.e.,
the Bandung project) which will be
a good training for the municipality itself.
term
objective,
encourage
Except
to
landowners
carry
out
association
land
For a long-
should
consolidation
for national projects, it
should be
also be
projects.
sufficient for
the implementing agency to get the governor's approval.
- The minimum public facilities.
standard of the public
There should be a minimum
facilities provision, and they
should meet the projected needs
This
as
of the
should be designed to avoid the
well
as
the
landowners
to
site development.
implementing
sacrifice
the
agency
public
facilities for higher profits.
- The criteria of eligibility for subsidies.
The
criteria
should be based on the benefits the project produces.
the
project
benefits
more
than
the
If
participating
landowners, then the government should give a subsidy, and
what
level
of
government
the
subsidy
comes
depends on project--whether it is municipal,
from
also
regional, or
national.
*
Launch an intensive publicity
support for both the
about the system.
legislation and the
To
get
a
implementation the
Page 71
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
"actors"
related
The
need
lawmakers
to
constituents,
their
understand how
should
landowners.
The
will benefit
from
the
know that
in
this
case
the project,
so
system
system does
they
need to
landowners
the
be
are
works.
not harm
generally the
assured that
does
the
they
implementers.
Previous projects can become examples of what the system can
produce.
Hence
the
importance
of publicity which can be
given through mass media and local/neighborhood authorities,
especially
in prospective
landowners can also become a measure
information to
the
stepping
in
Clear
land consolidation sites.
of middlemen
to
reap
the
unearned
against
capital
gains.
*
Create standard
and criteria for project imple-
guidelines
mentation by using the legislation.
agency
implementing
manage
*
to
This
is
to
help
the
efficiently
and better
sustain the system.
Instead of
work
more
the project.
Create
sharing
revolving
all
the
funds to
surpluses
among
the
landowners,
these
surpluses from government-initiated projects can be used to
start other projects.
cash
adjustment
to
This can be done
reach
equity
after all necessary
among all
landowners
is
made.
*
Create coordination.
Coordination,
including
sharing
information, among related agency is necessary so that what
one
agency
is
doing
will
not
contradict
the
others'
and
Page 72
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
impede
the results.
For example, when the municipality has
designated an area for
agency
should
not
land consolidation, the public works
construct
facilities
so
that
the
landowners find it irrelevant to join the project.
*
Train personnel to
acquire
expertise in land consolidation
management and implementation.
implementing
management
agency needs
includes
capabilities,
negotiation.
Th e
such
as
e x p e r t i s e
technical
land
as
t h e
well
valuation
as
and
When the private sector, namely the landowners
association, starts to
get involved, the agency can provide
guidance and technical assistance.
*
Evaluate past projects. In-depth evaluation of past projects
leads to finding of typology to create models that can help
better
implementation
policies.
economic,
and
The evaluation
and
social
formulate
the
appropriate
should include the financial,
impact study
inside
and outside
the
p,roject.
*
Research
on
land consolidation
system in other countries.
and financing system in the
legislation and
financing
An in-depth study of legislation
other experienced countries can
improve the system in Indonesia and avoid making the
same
mistakes.
*
Create
mechanism to
transfer the
savings
the
government
makes due to land consolidation to low-income housing funds.
The
"unused"
budget
allocation
for
providing
public
Page 73
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
facilities
for
is
(including the
land purchase) may be used instead
low-income housing projects.
needed
to
see whether
However,
a further
this new mechanism
is
study
feasible.
Page 74
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
B I B L IO
G R A P H Y
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Page 77
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
APPENDIX 1
Maps of Denpasar Project
(the first land consolidation project)
Page 78
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
Map No.1
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Page 79
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Land Consolidation has been
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DIREC-ORATE OF LANDREFORM
DIRECTORATE GENERAL OF AGRARIAN AFFAIRS
(d U)
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1
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
APPENDIX 2
Maps of Bandung Land Consolidation Project
(the first "self-financing" project)
Page 82
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
Before Land Consolidation
Babakan Surabaya, Bandung
Page 83
Urban Land Consolidation:
In Search of Its Applicability in Indonesia
After Land Consolidation
Babakan Surabaya, Bandung
Page 84