In October 2023, the Indonesian government issued Presidential Regulation No. 70 of 2023 on Land Allocation for Investment Arrangement ("PR 70/2023"). PR 70/2023 stipulates land allocations for investment arrangements in the mining, plantation, and forest utilization sectors. This regulation aims at achieving efficient resource utilizations and integrated land management, equity of land utilization, granting of land rights, and fair land distribution to local communities and social welfare.
PR 70/2023 provides the legal base for establishing a task force responsible for mapping, recommending, and facilitating the land use and investment arrangement, and empowering the related Ministers to evaluate business licenses of land users and report to the task force for further actions. The regulation defines criteria and procedures for land classification and allocation for different types of business entities including village-owned enterprises, regional-owned enterprises, Small-and-Medium Enterprises ("SME"), large scale enterprises, and local business entities in the land allocation process.
We provide herein the general overview of PR 70/2023, particularly on the: (i) Task Force for Land Use and Investment Arrangements, and (ii) Classification of Land Utilization and Allocation.
A. The Task Force for Land Use and Investment Arrangements
A task force is established by the President of the Republic of Indonesia to manage fair land use and business licensing for mining, plantation, and forest sectors, as well as improve the effective and efficient utilization of natural resources ("Task Force").
PR 70/2023 stipulates the key responsibilities of the Task Force:
- mapping land utilization for mining, plantation, and forestry activities as a result of amendments or revocations of business licenses and concession permits in forest areas;
- providing recommendations to the Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal or "BKPM") for revocation of business licenses in mining and plantation sectors, as well as concession permits in forest areas;
- providing recommendations to the Ministry of Agrarian and Spatial Planning/ National Land Agency (Kementerian Agraria dan Tata Ruang/ Badan Pertahanan Nasional or "ATR/BPN") in cases related to abolished Land Rights (Hak Atas Tanah or "HAT");
- making land classification and utilization for social welfare; and
- facilitating and simplifying business licensing in the land allocation process for Sub-District-Owned Enterprises (Badan Usaha Milik Desa or "BUMDesa"), Regional-Owned Enterprises (Badan Usaha Milik Daerah or "BUMD"), Community Organizations, SMEs, and Cooperatives.
(Article 2 of PR 70/2023)
Sector Supervisor
PR 70/2023 introduces the term "Sector Supervisor" referring to the Ministry of Energy and Mineral Resources ("MoEMR"), the Ministry of Environment and Forestry ("MoEF"), the Directorate General of Plantation ("DGoP") of the Ministry of Agriculture ("MoA"), and/or ATR/BPN. The Sector Supervisor shall carry out an evaluation of the business sectors on their business licenses in mining, concession permits in the forest area, or plantation sector in accordance with their relevant business licenses. The Sector Supervisor evaluates the business activities on;
- implementation of business activities in accordance with the licenses;
- completeness of the basic requirements and other relevant licenses and/or concession permits;
- suitable implementation of business activities based on the land designation;
- fulfilment of the company's work plan and budget; and/or
- fulfilment of the payment obligation of the Tax and Non-Tax State Revenues.
The Sector Supervisor shall send the evaluation report to the Task Force to make the changes to the business licenses relating to reduction of land areas, revocation of business licenses and/or concession permits in forest areas.
In addition to the above, the Task Force shall send its recommendation to the Head of BKPM to; (a) make changes to the business licenses relating to reduction of land areas; (b) revoke the business licenses, and/or (c) revoke the concession permits in forest areas. The Task Force shall recommend the Ministry of Agrarian/ Land and Spatial Planning authorities on revoked land rights.
(Article 3 of PR 70/2023)
B. Classification of Land Utilization and Allocation
Land Utilization
After the evaluation as mentioned in point A above, the Task Force shall classify the land utilization and allocation. PR 70/2023 classifies lands into those with; (a) economic potentials or natural resources therein, (b) suitable spatial planning based on the business activities, and (c) land capacity and environmental protection. Furthermore, the rights of the re-allocated lands shall be given to the following business actors:
- BUMDesa;
- BUMD;
- community organizations;
- cooperatives;
- SMEs; and
- large-scale businesses.
(Article 4 of PR 70/2023)
Allocation of Land
PR 70/2023 divides land allocations into 3 (three) categories, lands; (a) for Mining Activities, (b) for Concessions Permits in Forest Areas, and (c) for Plantation Activities.
A. Land Allocations for Mining Activities
For this allocation, the Sector Supervisor, MoEMR, delegates its authority to determine, offer, and grant the Mining Business Permit Areas/ Wilayah Izin Usaha Pertambangan (WIUP) to the Head of BKPM (Article 5 (1) of PR 70/2023). The Authority to determine, offer, and grant the WIUP by the Head of BKPM is for the Land derived from the revocation of business licenses before this regulation is enacted (Article 5 (2) of PR 70/2023). After receiving WIUP, the business actor shall apply for the Mining Business Permit/ Izin Usaha Pertambangan (IUP) through the OSS system (Article 5 (4) of PR 70/2023).
B. Land Allocation for Concessions Permits in Forest Areas.
Land allocation for concessions in forest areas include:
- approval for utilization of the forest area;
- approval for relinquishment of the forest area;
- business license for the forest utilization; and/or
- business license for the provision of natural tourism facilities.
(Article 7 (1) of PR 70/2023).
Sector Supervisor, MoEF, delegates its authority to the Head of BKPM on the issuance of forest area director map and investment arrangement on the Land that has been reduced or revocation of concession permits in the forest area to the Head of BKPM (Article 7 (2) of PR 70/2023).
Based on the Forest Area Map and investment arrangement, the Task Force shall offer the available lands in the forestry to business sectors (Article 7 (3) of PR 70/2023). The Task Force shall evaluate the business actors interested in the offer based on certain aspects; (i) potential land areas, (ii) completeness of administrative/management requirements, (iii) technical aspects and environmental management, and (iv) financial support (Article 7 (4) of PR 70/2023).
C. Land Allocation for Plantation Activities
The Head of BKPM shall determine the available lands in plantation areas that may be allocated to business sectors (Article 8 (1) of PR 70/2023). The Task Force shall offer the available lands to business actors. The Task Force shall evaluate the business actors interested in the offer based on the same aspects as those for forest concessions permits in forest areas (Article 8 (3) of PR 70/2023).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
