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Relevant Elements in Challenging for Value of Land Procurement Compensation for the Public Interest

By June 30, 2022 No Comments

Introduction

The development of public facilities in Indonesia continues to develop in order to realize the prosperity of society. One of the aspects needed in the development of public facilities is a large and strategic land. To meet these needs, the Government must carry out land procurement. Land procurement for the public interest is specifically regulated in Law Number 2 of 2012 on Land Procurement for Development in the Public Interest (“Land Procurement Law”) as amended by Law Number 11 of 2020 on Job Creation (“Job Creation Law”) and Government Regulation Number 19 of 2021 on the Implementation of Land Procurement for Development in the Public Interest (“GR 19/2021”).

The definition of Land Procurement itself is stated in Article 1 Number 2 of Land Procurement Law, namely the activity of providing land by providing appropriate and fair compensation to the entitled party.1 To provide appropriate and fair compensation, Land Procurement Law stipulates that compensation assessment is carried out by an independent and professional Land Appraiser and has obtained a license to practice from the Minister of Finance and has obtained a license from the Land Agency to calculate the value/price of land procurement’s object.2 However, there are still many objections to the calculation of the compensation value for land procurement by those who are entitled to the land due to dissatisfaction with the results of the compensation assessment conducted by the Public Appraiser. In this article, we will discuss objections to the amount of compensation in land procurement for the public interest and look the considerations of the judge in the case of an objection request regarding the amount of compensation made by the entitled party to the land.

General Explanation Regarding Compensation and Objection over Amount of Compensation Value on Land Procurement for Public Interest

The definition of Compensation is stated in Article 10 Land Procurement Law, namely appropriate and fair compensation to entitled party in the land procurement process. Compensation in Procurement Land for Public Interest is carried out through the Deliberation Process for Determination of Compensation. Deliberation on the determination of compensation is a deliberation conducted by the land agency as the executor of land procurement with the entitled party/their representative and involving the Land Requirement Agency (Instansi yang Memerlukan Tanah) to obtain an agreement regarding the form and/or amount of compensation based on the results of the compensation assessment from land appraiser, the result of deliberation are stated in the Minutes of The Deliberation on The Determination of Compensation.3 The compensation can be given in the form of:4

  1. Money;
  2. Substitute land;
  3. Resettlement;
  4. Shareholding; or
  5. Other forms agreed by both parties.

Article 6 paragraph (9) of GR No.19/2021 also determines the aspects that are the estimated value of compensation in Land Procurement, including:5

  1. Land;
  2. Upper Ground Space and Underground Space;
  3. Building;
  4. Plants;
  5. Objects related to the land, and/or
  6. Other compensation can be assessed

In addition, Article 35 of Procurement Land Law stipulates that, in the event that certain land affected by the Land Procurement have residues that can no longer be functioned according to their designation and use, the entitled party may request a full compensation of the land.6 The form and/or amount of compensation for land procurement determined by the Appraiser is then notified to the entitled party to conduct a deliberation to determine compensation. In the event that there is no agreement regarding the form and/or amount of compensation, the entitled party may file an objection to the local District Court within maximum period of 14 (fourteen) working days after the deliberation on the determination of compensation.7 In the case that entitled party objecting the decision of the district court, within 14 (fourteen) working days they may file an appeal to the Supreme Court of the Republic of Indonesia.8

Based on the legal remedies described above, the judge must determine whether the objection submitted by the entitled party can be admitted or not. Thus, it is necessary to look at the elements used by the judge in deciding the objection application regarding the amount of compensation for land procurement for public interest.

The elements used by the Judge in admitting an objection claim to the amount of ompensation for land procurement for the public interest:

  1. Fair Replacement Value
    The term of Fair Replacement Value can be interpreted as the value for the benefit of the owner based on equality with the Market Value of a Property, taking into account the extraordinary element in the form of non-physical losses resulting from the expropriation of rights to the said Property.9 The assessment of the fair replacement value can be divided into 2 (two), as follows:

    • The Fair Replacement Value is calculated by the Expert Appraiser

      Applications for objections to the amount of compensation offered by the Public Appraiser are sometimes not in accordance with the fair and proper amount. Thus, in the event that the Applicant wishes to file an objection regarding the amount of compensation offered by the Public Appraiser, the Applicant for Objection is suggested to include an Expert Appraiser (other than a Public Appraiser appointed by the Government) as a comparison. For example, in Decision No. 61/Pdt.G/2015/PN Kis jo. 1875 K/Pdt/2016, the case between a Limited Liability Company engaged in the plantation sector against the Regional Office of the National Land Agency of North Sumatra Province, it was found that in the land procurement for the Development of the North Sumatran Railway Track, the judge’s consideration in admitting the Applicant’s objection was because the applicant provides an expert who also conducts an assessment of the land, so that it can be used as a comparison. In that case, there is a difference in the compensation value from the expert assessment (another Public Appraiser) and the initial Public Appraiser. This is due to the inappropriate performance of the Public Appraiser.

    • The Fair Replacement Value is calculated without the Expert Public Appraiser

      In Decision No. Decision No.33/Pdt.G/2020/PN Psb, between objected parties (Applicant) versus the Regional Planting Office of West Pasaman Regency and the Padang River Region V Padang (Respondent), the judge admitted the objection of the Applicant, whose land was valuated lower than the land purchase price. In his consideration, the judge considered that the amount of compensation offered by the Respondent was not reasonable because it was lower than the purchase price of the land. So that it does not meet a fair and proper compensation as mandated by Law No. 2/2012. In this case, the applicant does not include an Expert Appraiser as a comparison. However, it is the judge who determines the amount of compensation for the appropriate amount of compensation by looking at the evidence of the land sale and purchase certificate and the land price certificate. In addition, the judge also considers the increase in the price of land every year and the value of the sale value of the tax object from the object of land procurement.10In another case, in decision No. 52/Pdt.G/2019/PN Pwr jo. 2050 K/Pdt/2020, the case between the resident versus the Ministry of Agrarian and Spatial Planning as well as the Ministry of PUPR, it is proven that the Public Appraiser did not calculate the amount of compensation as thoroughly, in this case, non-physical losses in the form of losses due to loss of business or work, relocation costs, processional transfer costs, and the value of the residual property. In the consideration of this case, the Supreme Court requires a thorough calculation, including non-physical losses (loss of business or work) in the amount of Rp 50,000,000.

  2. Performance of Land Appraisers
    In Decision 61/Pdt.G/2015/PN Kis jo. 1875 K/Pdt/2016, the case between a Limited Liability Company engaged in the plantation sector versus the Regional Office of the National Land Agency of North Sumatra Province, it was found that in the land procurement for the Development of the North Sumatran Railway Track, the Public Appraiser did not visit the site to see the object of land procurement. In that case the Public Appraiser uses the services of another party and only uses the data provided by the other party. The Judge of the District Court considered that the assessment carried out by the Public Appraiser was legally flawed and null and void. Thus, the judge admitted the Applicant’s objection.

The elements used by Judges in declining objections to the amount of compensation for land procurement for the public interest

  1. Land Location
    This is basically still related to the element of Fair Replacement Value used by the judge in granting the objection request. This can be seen in the Supreme Court Decision No.1738/K/Pdt/2017, a case between residents as Applicant who own 2 (two) parcels of land that are used as the location for the construction of the Manado-Bitung Toll Road versus the Land Office of North Sulawesi, the Land Procurement Committee for the Manado-Bitung Toll Road and the Regent of North Minahasa, in which in his objection, the Applicant said that the value determined by the Public Appraiser for his land is inappropriate because there is another person’s land adjacent to the Applicant’s land, but is offered at a higher price. However, after seeing the facts, the land belonging to another person is different from the land owned by the Applicant, where the land belonging to another person is directly adjacent to the main road, so it deserves a higher value.
  2. Certificated Land vs Uncertificated Land
    In Decision No. 4/Pdt.G/2019/PN Mtp jo. 2204/K/Pdt/2019, the case between the resident as the Applicant who is the owner of the land inherited from his husband/parents affected by the Mataraman-Sungai Ulin (ORR) Road Construction Project versus the Head of the South Kalimantan PUPR Service and the Head of the South Kalimantan Land Office, the judge found facts that the land does not have a title certificated. However, the Applicant objected to the value offered by the Respondent and compared it with the price offered to other people’s adjacent land. In his consideration, the judge said that the assessment also looked at each plot of land, according to the designation and the agency that required the land. The Supreme Court judge in this case also argued that the price of uncertificated land cannot be equated with other land that has been certified. Differences in land prices can occur due to the area of the object, the position of the environment, and the status of the land, so it cannot be immediately compared with other land locations.
  3. Land Appraiser’s appraisal according to the standard
    As explained earlier, the Land Appraiser to be able to perform his services must have license from the relevant agencies. Besides the importance of the license from the Land Appraiser, the assessment of compensation for land procurement must meet the standards, including the 2014 Indonesian Assessment Standard (“SPI 306”) on Assessment of Land Procurement for Development in the Public Interest. This SPI 306 contains technical guidelines for land valuation guidelines related to the provision of compensation in the context of land procurement for development for the public interest. In Supreme Court Decision No. 1738 K/Pdt/2017, the Applicant’s objection by comparing his land with other people’s land that directly bordering the main road was rejected. The reason for the rejection of the objection is that the assessment from the Public Appraisal Service Office is in accordance with SPI 306.
  4. No Comparative Valuation
    This element has basically been discussed previously, where the Applicant for Objection suggested to include an expert who also conducts an assessment of the land to be able to prove that the Land Appraiser’s assessment is not correct. This is in accordance with the judge’s consideration in Decision No. 56/Pdt.G/2020/PN Tjs jo. 1113 K/Pdt/2021, between residents as Applicant who own land used for the construction of an Aircraft Port in North Kalimantan versus the National Land Agency Office and North Kalimantan Transportation Service Office, where the judge in the district court and cassation, declined the Applicant’s objection because the Applicant was considered cannot prove that the assessment carried out by the Public Appraisal Service Office is not correct, because it cannot prove the results of the assessment of another independent institution as a comparison.

Conclusion

In the objection on the amount of compensation in the Land Procurement for the public interest, the judge uses several elements to admit the objection request, among others, the fair replacement value which is calculated based on an expert appraiser as a comparison and can also be carried out without an expert appraiser. The assessment of the replacement of fair value which is carried out without an expert appraiser is carried out by a judge with taking into account the evidence and can also be carried out by a local examination. In addition, the judge also saw the performance of the Public Appraiser, the results of the assessment of the public appraiser that did not meet the standards could cause the results of the assessment to be legally flawed.

In addition, the judge also has several elements that are used to decline objections on the amount of compensation in land procurement for the public interest, including the location of the land, the proof of land ownership (certificated or uncertificated), the assessment of the Public Appraiser that meets the standards and Applicant does not provide comparative assessment. Regarding the comparative assessment, it can be clearly seen that this is one of important things to be able to ensure and prove that the assessment made by Public Appraiser is wrong, a comparative assessment is needed as valid evidence.

Fitri Nabilla Aulia

Sources

  1. Article 1 Number 2 of Law Number 2 of 2021 on Land Procurement for Development in the Public Interest.
  2. Article 1 Number 11 of Law Number 2 of 2021 on Land Procurement for Development in the Public Interest.
  3. Supreme Court Regulation Number 2 of 2021 on Amendments to Supreme Court Regulation Number 3 of 2016 on Procedures for Filing Objections and Depositing Compensation to the District Court in Land Administration for Development For Public Interest.
  4. Job Creation Law Article 36 Paragraph (1) on section Land Procurement.
  5. Article 6 Paragraph (9) GR No.19/2021
  6. Article 35 Law No.2/2012
  7. Article 38 Paragraph (1) Law No.2/2012
  8. Article 38 Paragraph (3) Law No.2/2012
  9. Hamid Yusuf, Memahami Nilai Penggantian Wajar Penilaian Terkait Pengadaan Tanah untuk Kepentingan Umum (Berdasarkan Standar Penilaian Indonesia, MAPPI, 2016, p.25
  10. Court Decision No. 8/Pdt.G/2015/PN BR Jo. 1082 K/Pdt/2016, the calculation of the compensation determined by the Panel of Judges, after conducting a local examination related to the Applicant’s evidence, the Panel of Judges determines that the compensation is based on the NJOP price owned by the Applicant plus compensation for the newly completed building 80% (eighty percent), so that the compensation price is Rp.145,896,960.0 (one hundred forty-five million eight hundred ninety-six thousand and nine hundred and sixty rupiah) and taking into account the value of the Applicant’s business of Rp.225,000,000. 00 (two hundred and twenty-five million rupiah).