Government to Buy Land for Infrastructure Developers

The government is to make good on its commitment to smooth the progress of infrastructure development by buying up land on behalf of developers, allowing them to circumvent the torturous process of acquiring land.

“Land will be acquired by the government once someone has won a tender. The winner will just need to repay the money spent by the government,” Public Works Minister Djoko Kirmanto said on Wednesday.

Before the end of the year, officials will revise a presidential decree issued in 2005 that regulates partnerships between the private sector and the government in infrastructure-development projects.

Current regulations require private businesses to acquire the land for infrastructure projects. The government merely provides a guarantee to pay back the money if the project fails.

Indonesia still uses a 1961 law on land acquisition for public purposes, in conjunction with a presidential decree issued in 2005 and revised in 2006.

Investors and government officials who buy land for infrastructure projects regularly complain about the protracted process under current regulations, blaming speculation and unclear and contradictory regulations for slowing it down.

In addition to taking over the land-purchase process, the government plans to simplify the tender process, Djoko said.

“Current regulations demand a minimum of three contestants in a bidding process or it has to be repeated. With the new regulations, the related ministry can proceed with two or even one bidder,” he said.

According to Deputy Transportation Minister Bambang Susantono, the government is also revising the 1961 law to ensure that it can provide the land needed for public projects.

“The land acquisition issue is a bit complicated. We need a law to back it up. We plan to finish it under the 100 days program,” Bambang said, without elaborating.

In recent years, the government has met resistance from the public, which does not want to see a return to the ways of former President Suharto’s government, which routinely forced landowners to give up their property.

Drajat Wibowo, an economist from the Sustainable Development Indonesia and a former legislator on the budgetary committee, said the government must approach the policy cautiously or it could “backfire.”

“In theory this is the best way to provide land for infrastructure,” he said.

“However, we have learned from our past experiences that land acquisition by the government is always problematic. I mean that bureaucrats always discount the land price, which is set below market price, keeping the difference for themselves. This is the cause of most disputes. So if the government does not approach this cautiously, the policy could backfire.”

Frans Sunito, the president director of PT Jasa Marga, the country’s largest toll-road operator, said in a seminar on infrastructure development last week that a change to the regulations was necessary as investors often ended up fighting speculators and land brokers who drive upprices.

source : The Jakarta Globe.com