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[Back] 23/10/2020
23/10/2020

BKPM Gets Full Authority to Issue Exemptions to Land Area Limits for Strategic Projects

 

The Ministry of Agrarian Affairs and Spatial Planning (“MAASP”) has issued Regulation No. 13 of 2020 (“Reg. 13/2020,” effective 31 August 2020)[1] to amend MAASP Regulation 17 of 2019 (“Reg. 17/2019”),[2] which sets out the rules governing the granting of location permits (izin lokasi).

 

A “location permit” is defined by Reg. 17/2019 as “a permit issued to an undertaking to acquire land needed for its business and/or activities, which simultaneously serves as a title transfer permit and a permit to use the land for the purposes of the said business and/or activities.”

 

Of particular interest, Reg. 13/2020 makes changes to the administrative process for the obtaining of location permits by businesses in industrial areas/special economic zones, free-trade zones, free-port zones and/or other zones that have been designated as national strategic projects (“Prescribed Project Zones”), where such businesses require more land than is permitted under the maximum land-area thresholds.

 

Under both Reg. 13/2020 and Reg. 17/2019, the maximum land areas in Prescribed Project Zones for which location permits may be issued to a single business or business group is 400 hectares (Ha) within one province (the thresholds for Papua Province and West Papua Province are twice this, i.e., 800 Ha within one province), and 4,000 Ha in total throughout Indonesia.

 

However, these thresholds may be exceeded in certain circumstances. Reg. 17/2019 required an application for an exemption from the threshold in a Prescribed Project Zone to be submitted to the Investment Coordinating Board (Badan Koordinasi Penanaman Modal / “BKPM”). However, such exemption could only be granted by the BKPM in coordination with, and upon the approval of, the MAASP’s Director General of Agrarian Arrangement (Direktur Jenderal Penataan Agraria).

 

Under Reg. 13/2020, responsibility for the whole procedure has now been transferred to the BKPM, thereby eliminating an entire layer of bureaucracy in the process.

 

From the investor perspective, Reg. 13/2020 is a welcome development as it should help to expedite the issuance of location permits for land areas that exceed the prescribed thresholds, while at the same time further strengthening the BKPM’s increasingly dominant role in investment licensing.

 

Contact us

 

Should you have any queries on the above or require legal advice as to how you can best protect your interests during this time of uncertainty, please contact the persons below, call us on +6221-2505125 or email us at info@abnrlaw.com.

 

Mr. Emir Nurmansyah (enurmansyah@abnrlaw.com)

Mr. Nafis Adwani (nadwani@abnrlaw.com)

Mr. Agus Ahadi Deradjat (aderadjat@abnrlaw.com)

 

[1] Peraturan Menteri Agraria dan Tata Ruang/Kepala Badan Pertanahan Nasional Nomor 13 Tahun 2020 Tentang Perubahan atas Peraturan Menteri Agraria dan Tata Ruang/Kepala Badan Pertanahan Nasional Nomor 17 Tahun 2019 Tentang Izin Lokasi

[2] Peraturan Menteri Agraria dan Tata Ruang/Kepala Badan Pertanahan Nasional Nomor 17 Tahun 2019 Tentang Izin Lokasi

 

This edition of ABNR News and the contents hereof are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained herein. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.