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Differences of Right of Management under the Old and New Law

By April 29, 2022 No Comments

A. Introduction
After the Job Creation law is enacted, the Government issued the Government Regulation No. 18/2021 on Right of Management, Land Rights, Condominium Units, and Land Registration (“GR 18/2021”) as one of the  implementing regulations of the Job Creation law. One of the topics regulated is the Right of Management.  Surely there are several provisions that are different from the right of management under GR No. 40/1996 on Right to Cultivate, Right to Build, and Land Rights (“GR 40/1996”). The differences in right of management will be discussed in this article.

B. Differences
Under the old law, namely GR 40/1996, right of management is defined as the right to control by the state whose authority is partially handed to the holder.1 Meanwhile, under the newer law, namely GR 18/2021, right of management is defined as the right to control by the State of which authority to exercise is partially delegated to the holder of the right of management.2
Right of management under GR 40/1996 can be used on land rights, but only for right to build and right of use. In GR 18/2021, right of management are used on for the right to cultivate, right to build, and right of use.3 GR 40/1996 does not stipulate the origin of right of management, but the GR 18/2021 regulates that right of management may derive from state land and ulayat land, and can also be determined by the Ministerial Decree that can be made electronically.4

Right of management derived from state land is granted to:

  1. Central Government agencies;
  2. Regional government;
  3. state-owned enterprises/regional-owned enterprises;
  4. state-owned legal entities/regional-owned legal entities;
  5. Land Bank body; or
  6. a legal entity appointed by the Central Government.

Meanwhile, right of management on ulayat land is stipulated for the customary law community.5
The holder of the right of management is authorized for:

  1. Prepare a plan for the allocation, use, and utilization of land in accordance with the spatial layout plan;
  2. use and utilize the entire or part of Land under right of management for self-use or handled jointly with other parties; and
  3. determine tariff and/or annual mandatory fee from other parties in accordance with the agreement.6

In addition, GR 18/2021 regulates that there are provisions regarding land utilization agreement, if the right of management land is cooperated with other party. The provisions of the land utilization agreement contain the arrangement of the agreement on land, tariff or annual mandatory fee.7
Right of management must be registered to the Land Office. The right of management is effective since it is registered at the Land Office, and the right of management holder obtains a certificate as proof of ownership of the right of management.8
Right of management cannot be used as mortgage right collateral. Right of management may not be transferred to other parties. In this case, right of management may only be relinquished in the event that right of ownership is granted, for the public interest / other matters regulated under the law. This relinquishment of right of management is made by and before the competent authority and reported to the Minister.9

The removal of right of management may occur due to:

  1. the rights is nullified by the Minister, due to administrative defects or final and binding court’s decision;
  2. voluntarily released by the right holder;
  3. Released for the public interest;
  4. Revoked under the law;
  5. Right of ownership is granted over the land;
  6. Stipulated as abandoned land
  7. Stipulated as destroyed land.10

The result of the removal of land with right of management, are as follows:

  1. the land becomes a state land; or
  2. according to the court’s decision.11

On the other hand, reclaimed land may be granted with right of management under the condition of having obtained reclamation permit.12

C. Similarities
In both regulations, GR 40/1996 and GR 18/2021, there are similarities in the provisions regarding the effect of the removal of the right of use, the right to build over the right of management. The removal of right of use resulted on, the land is to be returned to the holder of the right of management.13 Likewise, the removal of the right to build over the right of management resulted on the land to return to the holder of the right of management.14

D. Novelty

  1. Land Bank

    Based on GR 18/2021, Land Bank body is a special purpose body (sui generis), which is an Indonesian legal entity formed by the Central Government, with a specific authority to manage land.15 In GR 18/2021, right of management can be granted to Land Bank body.16 In addition, GR 18/2021 stipulates that Reclamation Land may be granted the right of management and/or Land Rights on the condition that a reclamation permit has been obtained.17

  2. Overground Space

    Based on GR 18/2021, Overground Space means the space existing over the Land surface used for certain activities of which control, ownership, use and utilization are separate from the control, ownership, used and utilization of a parcel of Land.18 In essence, use and utilization of plot of land owned by a holder of Land Right are limited by:19

    • the height limit in accordance with the basic coefficient of the building and coefficient of the building floor provided for in the spatial layout plan; and 
    • the depth limit provided for in the spatial layout plan or up to the depth of 30 (thirty) meters from the Land surface in the event that it is not regulated in the spatial layout plan.

    In the event that there is land which is structurally and/or functionally separated from the holder of Land Rights as referred to in the explanation above, then the land is an Overground Space or Underground Space which is directly controlled by the state.20

    Utilization of Over Ground Space or Underground Space must obtain conformity with space utilization activities issued by the Minister with reference to the provisions of the legislation.21

    The Overground Space or Underground Space may be granted with right of management, right to build, or right of use after the Overground or Underground Spaces have been utilized, granted by a decree of right granting by the Minister.22

    The granting of rights of management, right to build or right of use in the Overground Space or Underground Space must be registered at the Land Office and will be given a certificate as evidence of ownership.23

  3. Underground Space

    Underground and Overgrounds actually had pretty much the same provision. However, there are some differences that are stipulated in GR 18/2021, it is regarding the definition, types, and the utilization of resources.
    Underground space is a space existing under the Land surface used for certain activities of which control, ownership, use and utilization are separated from the control, ownership, use, and utilization of a parcel of Land.24 Underground space consists of:

    • Shallow underground space; and
    • Deep underground space.

    Those types of underground can be granted with right of management, right to build, and right of use.25 Shallow Underground Space is the Land owned by holder of the Land Right with the depth limit. While the deep underground is structurally and/or functionally separated from the holder of Land Right.26

    If shallow Underground Space disrupts public interest and/or interest of the holder of Land Right on the Land surface, then approval from the holder of Land Right is required, where such approval from the holder of Land Right is made in the form of authentic deed. Any form of disruption experienced by holder of the Land Right will be compensated in the form of money or other form in accordance with the agreement with the party to use and utilize the Underground Space. The calculation of the compensation value is carried out by the land appraiser.27

  4. Small Island

    In granting the right of management and/or Land Rights on a plot of Land which is entirely 1 (one) small island, it is obligatory to consider public rights. Granting of Land Right in a water area is implemented based on the permit issued by the ministry administering government affair in the field of maritime and fishery in accordance with the provision of legislation.28

E. Closing
With the enactment of GR 18/2021 that rescinds GR 40/1996, it is expected to regulate certain matters on the right of management that has not been previously regulated. Therefore, it will provide legal certainty to the public. Furthermore, it is hopeful that the new arrangements after the promulgation of the Job Creation Law as outlined in GR18/2021, will positively affect the land legal development and eventually the economy of Indonesia.

Yusuf Arimatia Nainggolan

Sources

  1. Article 1 paragraph (1) of GR 40/1996
  2. Article 1 paragraph (3) of GR 18/2021
  3. Article 8 paragraph (1) GR 18/2021
  4. Article 4 jo. Article 10 paragraph (1) GR 18/2021
  5. Article 5 paragraph (1) and (2) GR 18/2021
  6. Article 7 paragraph (1) GR 18/2021
  7. Article 8 paragraph (2) jo. Article 9 GR 18/2021
  8. Article 11 GR 18/2021
  9. Article 12 GR 18/2021
  10. Article 14 paragraph (1) GR 18/2021
  11. Article 15 GR 18/2021
  12. Article 17 GR 18/2021
  13. Article 56 paragraph (2) GR 40/1996 jo. Article 56 paragraph (2) GR 18/2021
  14. Article 26 paragraph (2) GR 40/1996 jo. Article 32 paragraph (3) GR 18/2021
  15. Elucidation of GR 18/2021 Article 5 letter e
  16. Article 5 GR 18/2021
  17. Article 17 paragraph (1) GR 18/2021
  18. Article 1 point (5) GR 18/2021
  19. Article 74 paragraph (1) GR 18/2021
  20. Article 74 paragraph (2) GR 18/2021
  21. Article 76 GR 18/2021
  22. Article 77 paragraphs (1) and (2) GR 18/2021
  23. Article 80 GR 18/2021
  24. Article 1 point (6) GR 18/2021
  25. Article 79 paragraph (1) GR 18/2021
  26. Article 74 GR 18/2021
  27. Article 79 GR 18/2021
  28. Article 65 GR 18/2021