Indonesia sets Land Bank to boost infrastructure plans

Joko Widodo puts forth plan to set up a “Land bank” to support his infrastructure reform framework.

Indonesia’s Finance Minister Bambang Brodjonegoro yesterday announced Jokowi Widodo’s plans to create this year a land bank to accelerate funding of major infrastructure projects and said he had set a deadline to end of March for procurement agencies of infrastructure projects to complete their ongoing tasks.

The decision comes days after fuel subsidies cuts expected to save the government some 230 trillion rupiah ($18bn; €15.4bn) were officialised and shortly after members of the newly appointed executive announced new land acquisition legislation for the country as soon as January first.

“Beginning Jan 1, a new land acquisition law for public needs will be in place,” Indonesia’s Vice President Jusuf Kalla had declared to local press early November last year.

The government plans to double spending on transportation from last year, said Energy and Mineral Resources Minister Sudirman Said in the same interview.

According to Brodjonegoro the bank will be managed by three ministries-finance, public works and transportation-but no details have yet been disclosed on the way it would operate.

The finance minister added he would simplify the development process state infrastructure projects, will review the fuel policy in two years, will look at oil prices and gasoline supply in assessing the policy, international press reported, according to press reports.

The legislative provisions currently limit land acquisition processes to 382 days and have been widely criticized by the industry, being deemed too long.

In a phone interview given to the Infrastructure Investor today, International Financial Corporation country manager Sarvesh Suri explained he had made recommendations to the government last year to create an agency for land consolidation as, too often, land occupants were not the registered owners, significantly slowing down the land acquisition process. According to him the government’s plans should remedy this problem. 

The World Bank had given poor ratings to the land acquisition programme in place with its Land Management and Policy Development Project for Indonesia report issued in March last year, judging outcomes unsatisfactory and the risk to development outcome to be significant. It underlined the failure from ministries to cooperate efficiently to implement the December 2012 land acquisition law. 

“In a country like Indonesia where the institutions bearing on land rights are poorly defined and not transparently administered, the priority needs to be championing legal and policy reform; in these circumstances, a project that pays less attention to reform than to land titling is unlikely to lead to a sustained increase in tenure security,” noted the report. 


 “This project approached institutional reform incidentally and made no headway because there was little support for it: there was little or no high-level commitment by government and the three implementing agencies showed little or no inclination to work together on policy reform. The decentralization of land management presupposes that there is adequate coordination between the sub-provincial agencies responsible for surveying, mapping and zoning.