Law Number 5 of 1960 on Fundamental Provision of Principals on Agrarian

Despite recent legal expansions introduced by the Job Creation Law, the fundamental principles of Indonesia’s 1960 Law of Principal on Agrarian remain the ultimate benchmark for the nation’s land laws. As modern demands threaten to complicate the consistency of these foundational rules, maintaining a clear understanding of the original text is essential. To bridge this gap, we are sharing our dedicated English unofficial translation of the law, carefully refined to preserve its original structure and intent.

Preface

Law of Principal on Agrarian has been applicable for more than 60 years in Indonesia. As its name, the lawmakers from the beginning only intended to promulgate fundamental provisions on agrarian sector, mostly on land.

The Law remains intact. No formal amendment or replacement to date. But since the promulgation of Law on Job Creation in 2020, some of its aspects are expanded e.g., the concept of right of management, space above and beneath the land, land bank institution, abandonment of land and area, and electronic land-related documents. These expansion provisions do not directly amend nor replace the provisions of Law of Principal on Agrarian, but surely, they affect the concept already regulated in it. One example, the Law of Principal on Agrarian stipulates that the land that can be owned is only its surface. The space over and beneath the land can be used by the landowner, as necessary and as permitted by the official. But now, under Job Creation Law, the land right or right of management can be issued for these spaces. This is a new and an inevitable development on land laws and regulations.

Prior to Job Creation Law, draft of Land Law was also discussed and almost promulgated by the lawmakers. But due to various reasons, it was postponed. It is unclear whether or not it will be promulgated later on especially since some provisions planned to be regulated in the draft of Land Law have been stipulated in the Job Creation Law. But it is mandated by the Law of Principal on Agrarian itself that the right of ownership provisions must be stipulated under the law not regulations below the law. This is the law that has never been manifested since 1960.

The unofficial translation of this law has been ongoing for several years in our firm. The translation was commenced and finished by some lawyers and interns. It subsequently was reviewed and edited by the writer, but then stopped due to various reasons. The draft was just lying there but not yet edited further or published. The writer views that, despite the progress of the law in Indonesia, especially after Job Creation Law, understanding the concept of land laws in Indonesia is (still) crucial. The fundamental provisions of the law are intended to guide the lawmakers and the government when they issue or enact subsequent regulations to implement it. Those implementing regulations must surely conform to those fundamental provisions of the law. But due to many interests occurring in the State that are probably conflicting to each other, the modernization of the State, the change of lifestyle of the people and other various reasons, the consistency to ensure that those fundamental provisions are respected, might be overlooked.

Hence, we tried to present the translation of the Law of Principal on Agrarian as we understand it by using the most appropriate word for each word and maintaining the style of writing used in the law. We hope that this translated law will be useful for anyone that would like to know and understand the Law on Fundamental Provision of Principals on Agrarian.

Jakarta, 03 June 2021

Dr. Eddy Marek Leks, FCIArb, FSIArb

LAW NUMBER 5 OF 1960

ON
FUNDAMENTAL PROVISION OF PRINCIPALS ON AGRARIAN
THE PRESIDENT OF THE REPUBLIC OF INDONESIA

Considering:

That in the State of the Republic of Indonesia, of which the structure of its society, including its economic system is especially of an agrarian nature, its soil, water and airspace, as the gifts of God Almighty, have a very important function in the construction of a fair and prosperous society;
That the agrarian law which is still valid today, is partly based on the purpose and aspects of the colonial government and partly influenced by it, that it is contrary to the interest of the people and the State in the implementation of the current national revolution as well as the universal development;
That the agrarian law is characterized by its dualism, by the applicability of customary law together with the agrarian law that is based on western law;
That to the indigenous people the colonial agrarian law does not guarantee legal certainty.

Arguing:

That with regards to what has been mentioned in the considerations above a national agrarian law is necessary, which based on customary law of the land, that is simple and guarantee legal certainty to all Indonesian, by not disregarding the elements of religious law;
That the national agrarian law must provide a possibility for the fulfillment of the function of soil, water and airspace, as intended above and must comply with the interest of the people of Indonesia as well as to fulfill their necessities according to the era’s demand in all agrarian matters;
That the national agrarian law must realize the manifestation of the One God Almighty, Humanity, Nationality, Democracy and Social Justice, as spiritual principle of the state and people’s goals, as described in the Prelude of the Constitution;
That the agrarian law must also be the implementation of Presidential Decree dated 5 July 1959, provision of article 33 of Constitution of 1945 and Political Manifesto of the Republic of Indonesia, as emphasized in the President’s speech on 17 August 1960, that obligates the State to regulate the land ownership and lead its usage, until every land within the sovereign territory of the nation are used for the greatest benefit of people’s prosperity, both individually or through a mutual cooperation;
That related to all aforementioned matters, elements are required and new principal provisions to be composed in the form of law that will become the basis for the formulation of National Agrarian Law mentioned above.

Observing:
Suggestion by the Supreme Advisory Council of the Republic of Indonesia No. I/Kpts/Sd/II/60 on Reshuffle of Rights to Land and Land Use.

Remembering:

Presidential Decree dated 5 July 1959;
Article 33 of the Constitution of 1945;
Presidential Act No. 1 of 1960 (State Gazette 1960 No. 10) on Act of Political Manifesto of the Republic of Indonesia dated 17 August 1959 as Outlines of the State’s Direction and Presidential’s Mandate dated 17 August 1960;
Article 5 in conjunction with article 20 of the Constitution of 1945.

By the Approval of:

MUTUAL COOPERATION OF THE HOUSE OF REPRESENTATIVES

HAS DECIDED:

To revoke:

(1)

“Agrarische Wet” (Staatsblad 1870 No. 55), as contained in article 51 “Wet op de Staatsinrichting van Nederlands Indie” (Staatsblad 1925 No. 447) and provision of other paragraphs of that article;

(2)

“Domeinverklaring” as mentioned under article 1 of “Agrarische Besluit” (Staatsblad 1870 No. 118);
“Algemene Domeinverklaring” as mentioned under Staatsblad 1875 No, 119A;
“Domeinverklaring for Sumatera” as mentioned under article 1 of Staatsblad 1874 No. 94f;
“Domeinverklaring for Manado’s residency” as mentioned under article 1 of Staatsblad 1877 No.55;
“Domeinverklaring for residentie Zuider en Oosterafdeling van Borneo’s” as mentioned under article 1 of Staatsblad 1888 No. 58.

(3)

Koninklijk Besluit dated 16 April 1872 No. 29 (Staatsblad 1872 No. 117) and its implementing regulation;

(4)

Chapter II of the Indonesian Civil Code to the extent on soil, water, as well as natural resources contained in it, except for provisions on hypotheek that are applicable at the promulgation of this Law.

Enacting:

LAW ON FUNDAMENTAL PROVISION OF PRINCIPALS ON AGRARIAN

FIRST

CHAPTER I
FOUNDATIONS AND FUNDAMENTAL PROVISIONS

Article 1

The entire territory of Indonesia is a unified motherland of the whole of the Indonesian people who are united as the Indonesian nation.
All the soil, water, and airspace, including the natural resources contained in it within the territory of the Republic of Indonesia, as a gift from the One God Almighty is the soil, water, and airspace of the Indonesian and regarded as national wealth.
The relationship between the Indonesian nation and the soil, water, and airspace set forth in paragraph (2) of this article is of an eternal nature.
Soil is to be understood not only its surface, but also includes the body of the soil beneath it as well as beneath the water.
Water is to be understood as the inland waters or seas within the territory of Indonesia.
Airspace is understood as the space above the soil and water as described in paragraphs (4) and (5) of this article.

Elucidation of Article 1

As already explained in General Elucidation (II point 1). Under the Law of Principal on Agrarian, a differentiation is made between the meaning of “soil” and “land”, as formulated in paragraph 3 of article 1 and paragraph 1 of article 4. What is meant by “land” is the earth’s surface.

The expanded meaning of “soil” and “water” with airspace are related to the current technical advancements and their possibilities in the future.

Article 2

Based on of the provisions contained in paragraph (3) of Article 33 of the Constitution of 1945 and of the matters referred to in article 1 of this Law, the soil, water, and airspace, including the natural resources contained therein, are in the highest level controlled by the State in its capacity as the all people’s organization of powers.
The State’s controlling right as referred to in paragraph (1) of this article provides the authority:
1. to regulate and administer the allocation, use, supply, and maintenance of the soil, water, and airspace;
2. to determine and regulate legal relationships between people and the soil, water, and airspace;
3. to determine and regulate legal relationships among people as well as legal acts concerning the soil, water, and airspace.
The power which is derived from the State’s controlling right as referred to in paragraph (2) of this article shall be used to achieve the utmost prosperity in terms of nationality, welfare, and freedom for the society and Legal State of Indonesia, which is independent, sovereign, just, and prosperous.
The authority to implement the State’s controlling right as referred to above can be delegated to Autonomous Regions and customary law communities, as required and that is not contrary to the national interest, by way of the provisions of Government Regulation.

Elucidation of Article 2

Already explained in General Elucidation (II point 2).

The provision of paragraph (4) concerns the principles of autonomy and medebewind in the implementation of regional administration. Agrarian affairs are by nature and in principle the duty of the Central Government (paragraph (3) of article 33 of the Constitution of 1945). Thus, the delegation of authority over the implementation of the State’s controlling right over a land is a form of medebewind. All will be implemented as required and in ways which should not contradict national interests. Authority over agrarian affair can provide a source of income for the region in question.

Article 3

In view of the provisions contained in Article 1 and 2 the implementation of the customary rights and other similar rights of customary law communities, as long as such communities in reality still exist, shall be such that it is consistent with national interest and the State on the basis of national unity and shall not contradict with the Law and regulations of higher levels.

Elucidation of Article 3

What is meant by “customary rights and other similar rights” is what in the customary literature known as “beschikkingsrecht.” For further elucidation, see General Elucidation (II point 3).

Article 4

On the basis of the State’s controlling right as referred to in article 2, it is determined the types of rights to the surface of earth, which is called land, that can be granted to, and held by, persons, either individually or jointly with others as well as legal entities.
The land rights as referred to in paragraph (1) of this article confers authority to use the land in question as well as the mass of the soil and the water as well as the space above it to a point which is essentially required to allow the fulfillment of the interests that are directly related to the use of the land in question, within the limits imposed by this law and by other regulations of higher levels.
Other than the land rights as stipulated in paragraph (1) of this article the right to water and airspace are also stipulated.

Elucidation of Article 4

Already explained in General Elucidation (II point 1).

Article 5

The agrarian law that is applicable to the soil, water, and airspace is customary law, as far as it is not in contrary to the national interest and the State, which are based on national unity, to Indonesian socialism as well as with the regulations contained in this Law and with other laws and regulations, all with due regard to elements which are based on religious law.

Elucidation of Article 5

This article asserts that customary law is used as a foundation for the new agrarian law. For further elucidation, see General Elucidation (III point 1).

Article 6

All land rights have social function.

Elucidation of Article 6

Not only right of ownership but all land rights have social function. This is already elaborated in General Elucidation (II point 4).

Article 7

In order not to harm the public interest, excessive ownership and control of land are not permitted.

Elucidation of Article 7

This principle confirms the principle which bans “groot-grondbezit” as has been elaborated in General Elucidation (II point 7). As for the limitations, they are regulated in Article 17. That principle knows no exception.

Article 8

Based on the State’s controlling right as meant in article 2, the exploitation of the natural resources contained in the soil, water, and airspace is to be regulated.

Elucidation of Article 8

Since paragraph (2) of article 4 provides that land rights entitle their holder only to the surface of the soil, so the powers generated from it do not concern the natural resources contained inside the soil, water, and airspace. Hence, the exploitation of such natural resources requires separate regulations. This provision serves as a basis for regulations on mining and others.

Article 9

Only Indonesian citizens are entitled to the most complete relationship with the soil, water, and airspace, within the limits stipulated in the provisions of Article 1 and 2.
Every Indonesian citizen, be it male or female, has equal opportunity to acquire the land right as well as to obtain benefits and its yield, either for himself/herself or for his/her family.

Elucidation of Article 9

Paragraph (1) has been explained in General Elucidation (II point 5).

The provision of paragraph (2) is the consequence of the provision of paragraphs (1) and (2) of article 1.

Article 10

Every individual and legal entity which holds an agricultural land rights is in principle obligated to actively till or work on it by himself/herself by avoiding extortion means.
The implementation of the provision contained in paragraph (1) of this article is to be regulated further by regulations.
Exemption from that principle as meant in paragraph (1) of this article is to be regulated by regulation.

Elucidation of Article 10

Already explained in General Elucidation (II point 7). The phrase “in principle” refers to the likelihood of exceptions being made as illustrated in the General Elucidation. Such exceptions however need to be regulated by regulations (Compare the elucidation of article 7). The use of land by a party other than its owner is allowed by article 24 but is limited and is to be regulated.

Article 11

Legal relationships between person, including legal entity, and the soil, water, and airspace as well as the authorities derived therefrom are to be regulated, to achieve the purpose referred to in paragraph (3) of article 2 and to prevent excessive control over the livelihood and work of other persons.
Differences in the circumstance of the people and the legal needs of group of people, wherever necessary and not in contrary to the national interest is taken into consideration, by guaranteeing the protection for the interest of the economically weak group.

Elucidation of Article 11

This article contains the principle of protection for the economically weak group against the strong. The economically weak group can be native Indonesian citizen or of foreign origin. As it is vice versa. See General Elucidation (III point 2).

Article 12

All joint efforts in the agrarian field are based on the common interest in the framework of the national interest, in the form of cooperative or other form of mutual cooperation.
The State in cooperation with other party may establish joint businesses in the agrarian sector.

Elucidation of Article 12

The provision of paragraph (1) is related to that of paragraph (1) of article 11. The type of joint enterprise that conforms to this provision is cooperative and other form mutual cooperation. The provision of paragraph (2) allows the possibility for the creation of “joint enterprise” between the State and the private in the agrarian sector. What is meant by “other party” is Regional Government, private entrepreneur with national capital or private with progressive “domestic capital”.

Article 13

The government endeavors so that the undertakings in the agrarian sector be regulated in such a way, as to increase the production and the people’s prosperity as is meant in paragraph (3) of article 2, as well as to guarantee every Indonesia citizen a living standard suitable to the dignity of man, for himself or his family.
The Government prevents any enterprises in agrarian sector by organizations and individuals of private-monopolistic nature.
Any monopolistic enterprises by the Government in the area of agrarian sector may only be implemented by way of a Law.
The Government endeavors to promote security and social security, including the labor sector, in enterprises of agrarian sector.

Elucidation of Article 13

Paragraphs (1), (2), and (3) have already been explained in General Elucidation (II point 6).

The provision of paragraph (4) is the implementation of the principle of social justice that is humane in the agrarian sector.

Article 14

Taking into consideration the provision stipulated in paragraphs (2) and (3) of article 2, paragraph (2) of article 9 and paragraphs (1) and (2) of article 10 the Government in the framework of Indonesian socialism, makes a general plan concerning the supply, designation and use of the soil, water, and airspace as well as the natural resources contained therein:
1. for the need of the State;
2. for religious and other sacred need in line with the principle of the One God Almighty;
3. for the need of centers of livelihood, social, cultural and other forms of prosperity;
4. for the needs of developing agricultural, livestock, and fisheries production and other similar undertakings;
5. for the need of developing industries, transmigration, and mining.
Based on the general plan mentioned in paragraph (1) of this article and considering the regulations concerned, the Regional Government regulates the supply, designation and use of the soil, water, and airspace for their region, in line with condition in its respective region.
The Regional Government regulation as meant in paragraph (2) of this article shall come into force after having obtained legalization, for the First Level Region by the President, for the Second Level Region by Governor/Head of the region concerned and for the Third level Region by the Regent and Mayor of the region concerned.

Elucidation of Article 14

This article regulates the issue of planning on the supply, designation, and use of the soil, water, and airspace as have been described in General Elucidation (II point 8). Considering the future model of the State’s economy, in which industry and mining will play important role, then other than planning for agriculture planning for industry and mining (paragraph 1 part d and e) must be considered. Such planning is intended not simply to provide land for agriculture, animal livestock, fishery, industry, and mining but also intended to develop them. Legalization of regulation of Regional Government must be performed within the context of general plan made by the Central Government and according to the Central Government’s policies.

Article 15

The cultivation of land, including the increase of its fertility as well as to prevent its damage is the obligation of every individual, legal entity or institution having legal relation with that land, by considering the economically weak party.

Elucidation of Article 15

Already explained in General Elucidation (II point 4). Land must be well maintained, namely maintained in ways that are common to the respective regions, according to the directions provided by the relevant Agencies.

CHAPTER II
LAND RIGHTS, WATER, AND AIRSPACE AS WELL AS LAND REGISTRATION

Section I
General Provisions

Article 16

The land rights as meant in paragraph (1) of article 4 are:
1. right of ownership,
2. right to cultivate,
3. right to build,
4. right of use,
5. right of lease,
6. right to clear land,
7. right to collect forest yield,
8. other rights excluding those mentioned above which shall be stipulated by a law as well as rights of temporary in nature as mentioned in article 53.
The water and airspace right as meant in paragraph (3) of article 4 are:
1. right to use water ,
2. right of fish raise and fishing,
3. right to use airspace .

Elucidation of Article 16

This article is the implementation of the provision in article 4. In line with the principle stated in article 5, namely that national land law is based on customary law, the land and water rights in this article are also based on the systematic of customary law. Accordingly, the right to cultivate and right to build have been created to fulfill the needs of modern society in the current era. It is necessary to assert that right to cultivate is not erfpacht right of the Indonesian Civil Code. The right to build is not opstal right. The erfpacht and opstal institutions have been eliminated with the revocation of the provisions contained in Book II of the Indonesian Civil Code.

Therefore, the customary rights which are by nature contradictory to the provisions of this law (Article 7 and 10) but which, due to the current circumstance of the people cannot be discarded as yet, is given a temporary character, and will be regulated (paragraph 1 point h in conjunction with article 53).

Article 17

By remembering the provisions in article 7, in order to achieve the purpose referred to in paragraph (3) of article 2, the maximum and/or minimum area of the land which may be owned by a family or a legal entity under one of the rights mentioned in article 16 is regulated.
The determination of the maximum limit referred to in paragraph (1) of this article is executed by regulations within a short time.
Lands in excess of the maximum limit referred to in paragraph (2) of this article are taken by the Government with compensation, to subsequently be distributed to the people who need them according to the provisions provided by Government Regulation.
The attainment of the minimum limit referred to in paragraph (1) of this article, which shall be stipulated by regulations, is gradually implemented.

Elucidation of Article 17

The provision of this article is the implementation of what is stipulated in article 7. The determination of maximum limit will be shortly made by regulation. Lands in excess of the maximum limit will not be confiscated but will be acquired by the Government with compensation. Those lands will subsequently be distributed to the people who need them. Compensation to the former owner has to be paid in principle by they who obtain that land. But since they are in general unable to afford paying the land price in a short time, then the Government will make available loan and other efforts so that the former owner will not have to wait too long for the compensation.

The determination of the minimum limit does not mean that the people having less land than that will be forced to relinquish their land. The determination of such minimum limit is primarily intended to prevent further subdivision (“versplintering”) of land. In addition, efforts will be made –such as transmigration, large-scale land clearance off Java, and industrialization– so that the minimum limits can be gradually achieved. What is meant by “family” is the husband, wife, as well as their unmarried children and are their responsibility and which total ranges around seven (7) persons. Either a man or a woman can be head of the family.

Article 18

For public interest, including the interest of nation and the State as well as the collective interests of the people, the land rights can be revoked, by providing appropriate compensation and in accordance with the procedure by the Law.

Elucidation of Article 18

This article serves as a guarantee for the people concerning their land rights. Revocation of right is possible, but bound with conditions, e.g., must be accompanied with appropriate compensation.

Section II
Land Registration

Article 19

In order to guarantee legal certainty, a land registration by the Government throughout the entire territory of the Republic of Indonesia in accordance with provisions regulated under the Government Regulation.
The registration referred to in paragraph (1) of this article includes:
1. the measuring, mapping, and bookkeeping of land;
2. the registration of land rights on land and its transfer;
3. the granting of letters evidencing right, served as a strong evidence instrument.
The land registration is to be implemented by considering the condition of the State and the people, the need for socio-economic flow as well as the possibility of its implementation, according to the consideration by the Minister of Agrarian.
Under the Government Regulation it is regulated the related fees of the land registration referred to in paragraph (1), on condition that the people who are financially incapable shall be exempted from the payment of those fees.

Elucidation of Article 19

This land registration will be administered in simple and easy-to-understand ways as well as implemented by the relevant people (see General Elucidation IV).

Section III
Right of Ownership

Article 20

The right of ownership is an inheritable right, the strongest and fullest that can be owned by one over land, by remembering the provision contained in article 6.
The right of ownership is assignable and can be transferred to other party.

Elucidation of Article 20

This article mentions the characteristics of right of ownership which make it different from other rights. Right of ownership is the “strongest and fullest” right that can be owned by one over land. The giving of this character does not mean that that right is an absolute, unlimited and cannot be challenged right as to the eigendom right according to its genuine meaning previously. That character will be evidently contradictory to the character of customary law and social function of every rights. The words “strongest and fullest” are intended to distinguish it from right to cultivate, right to build, right of use and others, namely, to show that among the land rights that can be owned by one only right of ownership that is “est” (meaning: the most) strongest and fullest.

Article 21

Only an Indonesian citizen may own the right of ownership.
The Government determines which legal entities may own the right of ownership and its conditions.
Any foreigner who, following the promulgation of this Law, has obtained the right of ownership through inheritance without a will or by way of joint ownership of property resulting from marriage, and any Indonesian citizen holding the right of ownership who, following the promulgation of this Law, loses his/her citizenship is obliged to relinquish that right within one year following the date the obtainment of that right or the loss of nationality. If after the expiration of that period the right of ownership is not relinquished, then that right is lost by law and the land falls to the State, on condition that other party’s rights that pledges it will prevail.
As long as an individual other than his/her Indonesian citizenship possesses a foreign nationality he or she cannot own land with the right of ownership and to him/her the provision in paragraph (3) of this article applies.

Elucidation of Article 21

Paragraphs (1) and (2) have already been elaborated in General Elucidation (II point 5). In paragraph (3), only two ways are mentioned for acquiring a right of ownership since other ways are forbidden by paragraph (2) of article 26. As for the methods of acquiring a right mentioned in this paragraph are without taking a positive action which is intentionally aimed on the occurrence of that right transfer.

It is appropriate therefore that for as long as citizens let themselves, other than Indonesian citizenship holds other State’s citizenship, in the matter of land ownership he or she is distinguished from another Indonesian citizen.

Article 22

The manifestation of right of ownership according to customary law is regulated by the Government Regulation.
Other than the mean as meant in paragraph (1) of this article, right of ownership manifests because:
1. a determination by the Government, in accordance with the procedure and requirements regulated by the Government Regulation;
2. provision of Law.

Elucidation of Article 22

As an example of how a right of ownership manifests under customary law is land clearance. Those means will be regulated so that things which harm the interests of the public, and the State are not occurred.

Article 23

The right of ownership, as for each of its transfer, its removal and its pledge with other rights must be registered in accordance with the provisions referred to in article 19.
The registration as referred to in paragraph (1) serves as a strong instrument of evidence concerning the removal of right of ownership as well as the validity of its transfer and its pledge.

Elucidation of Article 23

Already explained in General Elucidation (point IV).

Article 24

The use of owned land not by its owner is limited and regulated by the laws and regulations.

Elucidation of Article 24

As an exemption of the principle stated in article 10. The forms of relationship between the owner and cultivator/user are for example: lease, sharecropping, use or right to build.

Article 25

The right of ownership can be used as debt collateral by pledging it with right of mortgage.

Elucidation of Article 25

Owned land pledged with this right of mortgage remains in the hand of its owner. The landowner who needs money can also (for temporary) pledge its land according to provisions in article 53. In this regard, the land is transferred to the pledgee.

Article 26

The sale and purchase, exchange, granting, granting through a will, granting according to customs and other acts intended to transfer the right of ownership as well as its supervision are regulated by the Government Regulation.
Every sale and purchase, exchange, granting, granting through a will and other acts which is intended to, directly or indirectly, transfer the right of ownership to a foreigner, to a citizen despite his or her holding an Indonesian citizen also possessing a foreign citizenship or to a legal entity except as stipulated by the Government as set forth in paragraph (2) of article 21, are null by law and the land falls to the State, on condition that, the rights of other party pledging it remain in existence as well as all payments received by the owner cannot be reclaimed.

Elucidation of Article 26

The provision of paragraph (1) is already explained in General Elucidation (II point 6) having its purpose to protect the economically weak party. In this Fundamental Law, distinction is no longer made between indigenous and non-indigenous citizen, but between economically strong and economically weak community. The economically strong party can be indigenous or non-indigenous citizen. Meanwhile what is mentioned in paragraph (2) is the consequence of the provision of article 21 concerning the subject that cannot own a land.

Article 27

The right of ownership is removed if:

the land falls to the State:
1. because of revocation of right under article 18;
2. because of the voluntary delivery by its owner;
3. because of being abandoned;
4. because of the provision of paragraph (3) of article 21 and paragraph (2) of article 26.
the land vanishes.

Elucidation of Article 27

Land is abandoned when it is deliberately not used according to its condition or character and purpose of its right.

Section IV
Right to Cultivate

Article 28

The right to cultivate is a right to work on land directly controlled by the State, for a period set forth in article 29, for farm, fishery, or animal husbandry.
The right to cultivate is granted on land of which area is at least five (5) hectares, on condition that if the area is 25 hectares or more, must use adequate investment and good corporate technique, in accordance with the development of the time.
The right to cultivate is assignable and can be transferred to other party.

Elucidation of Article 28

This right is a special right to work on land that is not his/her own for the business of farm, fishery, and animal husbandry. Its difference than right of use is that this right to cultivate can only be given for the above purpose and over a land of which area is at least five (5) hectares. Different than right of use, a right to cultivate is assignable and can be transferred to other party and can be pledged with a right of mortgage. A right to cultivate cannot be granted to foreigners, whereas for legal entities having foreign capital is only possible by limitation as mentioned in article 55.

To encourage so that the use and utilization of its land are efficient, it is stipulated that for a land of which area is 25 hectares or more, there must be an adequate investment and good corporate technique. This does not mean that the land of which area is less than 25 hectares its utilization may be badly performed since, in that case, the right to cultivate can be revoked (article 34).

Article 29

The right to cultivate is granted for a maximum period of 25 years.
For a company requiring longer time, it can be granted for a maximum period of 35 years.
Upon request of the right holder and remembering the situation of his/her company, the period as referred to in paragraphs (1) and (2) of this article may be extended for a maximum period of 25 years.

Elucidation of Article 29

According to its nature and purpose a right to cultivate is a right with a limited period. A period of 25 or 35 years with a possibility for a 25-year extension is seen as long enough for the purpose of utilization of long lifespan plants. The determination of period of 35 years, for example, is remembering the oil palm plant.

Article 30

Those who may own the right to cultivate are:
1. Indonesian citizen, and
2. legal entity incorporated under Indonesian law and having its domicile in Indonesia.
An individual or legal entity which holds the right to cultivate and no longer fulfills the requirements as referred to in paragraph (1) of this article within a period of 1 (one) year is obligated to relinquish or transfer that right to other party which fulfills the requirement. This provision also applies to a party who acquires the right to cultivate if he does not fulfill the requirement. If the right to cultivate is not relinquished or transferred within that period, then that right is null by law, on condition that rights of other party will be respected, according to the provisions stipulated by the Government Regulation.

Elucidation of Article 30

The right to cultivate cannot be owned by a foreigner.

Legal entities that can own that right only legal entities having a progressive national capital, be it indigenous or non-indigenous. As for legal entities having foreign capital, the right to cultivate is possible to be granted if that thing is required by the Law regulating the planned and all-encompassing national development (article 55).

Article 31

The right to cultivate manifests by the determination of the Government.

Elucidation of Article 31

Does not need an explanation. As for the provision of article 32 it is already explained in General Elucidation (point IV).

Article 32

The right to cultivate, including its granting requirements, as well as each transfer and removal of that right, must be registered in accordance with the provisions as meant in article 19.
The registration referred to in paragraph (1) serves as a strong instrument of evidence concerning the transfer as well as the removal of the right to cultivate, except in the event that the right is removed due to its period expires.

Elucidation of Article 32

Does not need an explanation. As for the provision of article 32 it is already explained in General Elucidation (point IV).

Article 33

The right to cultivate can be used as debt collateral by pledging it with the right of mortgage.

Elucidation of Article 33

Does not need an explanation. As for the provision of article 32 it is already explained in General Elucidation (point IV).

Article 34

The right to cultivate is removed because:

its period expires;
is terminated before its period expires due to a requirement is not fulfilled;
is relinquished by the right holder prior to the expiration of its period;
is revoked for the public interest;
is abandoned;
the land vanishes;
the provision referred to in paragraph (2) of article 30.

Elucidation of Article 34

Does not need an explanation. As for the provision of article 32 it is already explained in General Elucidation (point IV).

Section V
Right to Build

Article 35

The right to build is the right to construct and own buildings over land that is not his/her own, for a maximum period of 30 years.
Upon request of the right holder and remembering the necessity as well as the condition of the buildings, that period referred to in paragraph (1) may be extended for a maximum period of 20 years.
The right to build is assignable and can be transferred to other party.

Elucidation of Article 35

Different than the right to cultivate, then the right to build is not concerning farmland. Therefore, other than from the land controlled by the State it can also be granted over owned land by a person.

Article 36

Those who may own the right to build are:
1. Indonesian citizen;
2. Legal entity established under the Indonesian Law and having its domicile in Indonesia.

An individual or legal entity which owns the right to build and no longer fulfills the requirements as referred to in paragraph (1) of this article within 1 (one) year is obligated to relinquish the right to build or to transfer it to other party which fulfills the requirement. This provision also applies to a party who acquires the right to build if he/she does not fulfill those requirements. If the right to build is not relinquished or transferred within that period, then that right is null by law, on condition that rights of other party will be respected, according to the provisions stipulated by the Government Regulation.

Elucidation of Article 36

Its explanation is the same as article 30.

Article 37

The right to build manifests:

concerning the land that is directly controlled by the State: by the determination of the Government;
concerning the owned land: by an agreement in an authentic form between the respected landowner and the party who will acquire the right to build, with the purpose to manifest that right.

Elucidation of Article 37

Does not need an explanation.

As for what is stipulated in article 38, it is already explained in General Elucidation (point IV).

Article 38

The right to build, including its granting requirements, as well as each transfer and removal of right must be registered according to the provisions as meant in article 19.
The registration as referred to in paragraph (1) serves as a strong instrument of evidence concerning the removal of the right to build as well as the validity of the transfer of right, except in the event that that right is removed because its period expires.

Elucidation of Article 38

Does not need an explanation. As for what is stipulated in article 38, it is already explained in General Elucidation (point IV).

Article 39

The right to build can be used a debt collateral by pledging it with the right of mortgage.

Elucidation of Article 39

Does not need an explanation. As for what is stipulated in article 38, it is already explained in General Elucidation (point IV).

Article 40

Right to build is removed because:

its period expires;
is terminated prior to its period expires due to a certain requirement is not fulfilled;
is relinquished by the right holder prior to its period expires;
is revoked for the public interest;
is abandoned;
the land vanishes;
the provision in paragraph (2) of article 36.

Elucidation of Article 40

Does not need an explanation. As for what is stipulated in article 38, it is already explained in General Elucidation (point IV).

Section VI
Right of Use

Article 41

The right of use is a right to use and/or collect the yield of land that is directly controlled by the State or the owned land by other person, which grants authority and obligations as determined in its granting decision by the authorized official to grant it, or in an agreement with the landowner, which is not a lease agreement or a land utilization agreement, all things on as long as it does not contradict with the soul and provisions of this Law.
The right of use may be granted:
1. for a certain period or as long as the land is used for a specific purpose;
2. for free, with a certain payment or any types of service.
The granting of the right of use cannot be accompanied with requirements containing elements of extortion.

Elucidation of Article 41

A right to use is the “collection of concepts” of the rights known in land law by different name, all of which – with slight differences due to the differences in circumstances amongst regions—in principle authorizes its owner as mentioned in this article. In the context of simplification as described in the General Elucidation, then those rights in the new agrarian law are called as one name only.

For embassies building of foreign States can also be granted with right of use, since this right can be applicable as long as the land is used for that. Foreigners and foreign legal entities can be granted with a right to use, since this right only provides limited authority.

Article 42

Those who may own right of use are:

Indonesian citizen;
foreigner residing in Indonesia;
legal entity established under the Indonesian Law and having its domicile in Indonesia.
foreign legal entity having its representative in Indonesia.

Elucidation of Article 42

A right to use is the “collection of concepts” of the rights known in land law by different name, all of which –with slight differences due to the differences in circumstances amongst regions—in principle authorizes its owner as mentioned in this article. In the context of simplification as described in the General Elucidation, then that rights in the new agrarian law are called as one name only.

Article 43

As long as concerning a land that is directly controlled by the State, then the right of use is assignable to other party with a permission of the authorized official.
The right of use of owned land is only assignable to other party, if that is possible in the respective agreement.

Elucidation of Article 43

Does not need explanation.

Section VII
Right of Lease for Building

Article 44

A person or a legal entity owns the right of lease of a land if he/she is entitled to use the owned land of other party for the need of building by paying to its owner an amount of money as lease.
The lease payment can be conducted:
1. once or on each certain time;
2. before or after the land is used.
The land lease agreement as referred to in this article cannot be accompanied with requirements containing elements of extortion.

Elucidation of Article 44

Since right of lease is a right of use having special characteristics, it is treated separately. The right of lease is only provided for buildings in view of the provision of paragraph (1) of article 10. The right of lease of farmland is available only for temporary (article 16 in conjunction with article 53). The state cannot lease out land since the State is not the landowner.

Article 45

Those who may hold the right of lease are:

Indonesian citizen;
foreigner residing in Indonesia;
legal entity established under the Indonesian Law and having its domicile in Indonesia.
foreign legal entity having its representative in Indonesia.

Elucidation of Article 45

Section VIII
Right to Clear Land and Right to Collect Forest Yield

Article 46

The right to clear land and to collect forest yield can only be owned by Indonesian citizens and is regulated by the Government Regulation.
By using the right to collect forest yield validly does not of itself the right of ownership on that land is acquired.

Elucidation of Article 46

The right to clear land and to collect forest yield are rights under customary law related to land. These rights need to be regulated by the Government Regulation for the wider public interest than the interest of the individual or legal community in question.

Section IX
Right to Use Water, Pisciculture and Fishing

Article 47

The right to use wateris a right to acquire water for a certain purpose and/or to channel water over other person’s land.
The right to use water as well as pisciculture and fishing are regulated by the Government Regulation.

Elucidation of Article 47

The right to use water and right to pisciculture and fishing are concerning water which is not over his/her owned land. If concerning water over his/her owned land, then these things are already included in the content of the right of ownership over land.

The right to use water is a right to acquire water from a river, canal, or spring which exists outside of his/her owned land, e.g., for the purpose of irrigation of his/her land, household other uses.

Therefore, in many cases, the water which one requires needs to be channeled (brought in) through other person’s land and water that is not required in many cases need also to be channeled (thrown out) through a land of another person too. These people are not allowed to prevent that landowner to bring in and throw out that water through their respective lands.

Section X
Right to Use Airspace

Article 48

The right to use airspace provides authority to use the energy and other elements in the airspace for the efforts to maintain and improve soil fertility, water, and natural resource contained therein and other things related to them.
The right to use airspaceis regulated by the Government Regulation.

Elucidation of Article 48

The right to use airspace is created by remembering the progress of current technique and its possibilities in the future.

Article 49

The right of ownershipof land for religious and social institutions as far as it is used for the activity in the social and religious fields, is recognized and protected. Those institutions are also guaranteed to obtain sufficient land for building and its activity in the religious and social fields.
For the need of worshipand other sacred purposes as referred to in article 14, the land that is directly controlled by the State can be granted with the status of the right of use.
The owned waqfland is protected and regulated by the Government Regulation.

Elucidation of Article 49

To remove doubts and skepticism this article provides assertiveness that the things related to worshipping and other sacred purposes, in the new agrarian law will be considered as it should be. Connect also with the provision in article 5 and paragraph (1) part (b) of article 14.

Section XII
Other Provisions

Article 50

Further provisions concerning the right of ownership are regulated by law.
Further provisions concerning the right to cultivate, right to build, right of use, and right of lease for building are regulated by laws and regulations.

Elucidation of Article 50

As a consequence, whereas in this Law contains only the principals of the new agrarian law.

Article 51

The right of mortgage that can be pledged over right of ownership, right to cultivate and right to build mentioned in article 25, 33 and 39 is regulated by Law.

Elucidation of Article 51

As a consequence, whereas in this Law contains only the principals of the new agrarian law.

CHAPTER III
CRIMINAL PROVISIONS

Article 52

Whoever deliberately violates the provision of article 15 is convictedby a confinement of three (3) months the longest and/or a fine of Rp10,000 the highest.
The Government Regulationand laws and regulations as meant in article 19, 22, 24, paragraph (1) of article 26, 46, 47, 48, paragraph (3) of article 49, and paragraph (2) of article 50 can stipulate criminal threat against its violations by an imprisonment of three (3) months the longest and/or fine of Rp10,000 the highest.
The criminalact in paragraphs (1) and (2) of this article is offenses.

Elucidation of Article 52

To secure the best implementation over regulations as well as actions that are the implementation of Law of Principal on Agrarian, the criminal sanctions stipulated in this article is required.

CHAPTER IV
TRANSITIONAL PROVISIONS

Article 53

The rights with temporary nature as referred to in paragraph (1) letter (h) of article 16 are pledge right, right of sharecropping, right of lodging and right of lease of farmland, are regulated to limit their characteristics that violate this Law, and those rights are attempted to be removed within a short time.
The provisions contained in paragraph (2) and (3) of article 52 apply to the regulations as meant in paragraph (1) of this article.

Elucidation of Article 53

Already explained in elucidation of article 16.

Article 54

In connection with the provisions in article 21 and 26, then if a person who besides his/her Indonesian citizenship holds the citizenship of the People’s Republic of China has declared his/her refusal to the citizenship of the People’s Republic of China that is legalized according to the respective laws and regulations, he/she is deemed to have only the Indonesian citizenship in accordance with paragraph (1) of article 21.

Elucidation of Article 54

This article has been created in view of the provisions of Article 21 and 26. One who has declared his/her refusal of People’s Republic of China citizenship but at the promulgation date of this Law has not obtained legalization will be subject to the Conversion Provision in paragraph (3) of article I, paragraph (2) of article II, and article VIII. But after the legalization of decline has been obtained then to him/her the possibility to obtain land right as a sole Indonesian citizen is open. That also applies to persons as mentioned in article 12 of Government Regulation No. 20 of 1959, namely before the assertion from the authorized instance is obtained.

Article 55

Foreign rights which according to the Conversion Provisions of article I, II, III, IV, and V are converted to the right to cultivate and right to build only temporarily valid for the remaining term of those rights, with a period of 20 years the longest.
The right to cultivate and right to build its possibility is only open to be granted to legal entities having foreign capital whether for partially or wholly, if such is required by the law regulating the planned and all-encompassing national development.

Elucidation of Article 55

Already explained in elucidation of article 30.

Paragraph 1 concerning the foreign capital which currently exists, whereas paragraph 2 refers to new foreign capital. As has been asserted in the elucidation on article 30, the granting of a new right under the paragraph 2 is only possible if it is required by Law regulating the planned and all-encompassing national development.

Second:

The rights that already exist in accordance with the Conversion Provisions all are converted to new rights according to the Law of Principal on Agrarian.
Right to cultivate and right to build mentioned in article I, II, III, IV, and V prevail with the general requirements as stipulated in the respective Regulation in paragraph 2 of article 50 and respective specific requirements with the land condition and as mentioned in the deed of which right is converted, as long as it is not in contrary to the new regulation.

Third:

The change of the village government must be provided to secure the best implementation of such restructure of agrarian law according to this Law. Village government will be the implementor that has a very important role.

Fourth:

This provision is intended to remove the rights which are feudal in nature and in contrary to this Law.

Article 56

As long as the Law concerning the right of ownership as referred to in paragraph (1) of article 50 has not been established, then what is applicable is the local customary law provisions and other regulations concerning land rights which provide authority as of or similar to that referred to in article 20, so long as they do not violate the soul and provisions of this Law.

Article 57

As long as the Law concerning the right of mortgage as mentioned in article 51 has not been established, then what is applicable is the provisions concerning hypotheek as mentioned in Indonesian Civil Code and Credietverband as mentioned in Staatsblad 1908-542 as has been amended by S. 1937-190 (Staatsblad No. 1937-190).

Article 58

As long as the implementing regulations of this Law has not been established, then the regulations, whether written or unwritten concerning soil and water as well as natural resources contained in it and land rights, existing at the time of the promulgation of this Law, remain applicable, to the extent they do not violate the soul of the provisions in this Law as well as given an interpretation accordingly.

SECOND
CONVERSION PROVISIONS

Article I

Eigendom right over that exists at the moment of the promulgation of this Law from that moment becomes right of ownership, except if the owner does not fulfill the requirement as mentioned in article 21.
Eigendom right owned by Government of a Foreign State , used for the residence of the Head of the Representative and embassy building, as from the promulgation of this Law becomes the right of use as mentioned in paragraph (1) of article 41, which will prevail as long as the land is used for the aforementioned purpose.
Eigendom right owned by a foreigner, a citizen besides his/her Indonesian citizenship holds foreign citizenship and legal entities not appointed by the Government as meant in paragraph (2) of article 21 from the promulgation of this Law becomes right to build as mentioned in paragraph (1) of article 35 with a period of 20 years.
If the eigendom right mentioned in paragraph (1) of this article is pledged with opstal right or erfpacht right, then these opstal right and erfpacht right are from the promulgation of this Law, becomes right to build as mentioned in paragraph (1) of article 35, which pledging the respective right of ownership for the remaining period of the opstal right or erfpacht right mentioned above, but not more than 20 years.
If the eigendom right mentioned in paragraph (3) of this article is pledged with opstal right or erfpacht right, then the relation between the holder of eigendom right and the holder of the opstal right or the erfpacht right will be subsequently settled according to guidelines as determined by the Minister of Agrarian.
Hypotheek, servituut, vruchtgebruik, and other rights pledging the eigendom right remain pledging that right of ownership or a right to build as mentioned in paragraph (1) and (3) of this article, while those rights become a right according to this Law.

Article II

The land rights which grant authority as of or similar to the right as meant in paragraph (1) of article 20, as called by names as mentioned hereunder, existing at the moment of the promulgation of this Law, namely: agrarisch eigendom right, milik, yasan, andarbeni, right over druwe, right over druwe desa, pesini, grant Sultan, landerinjbezitrecht, altijddurende erfpacht , business right over former tanah partikelir and other rights under any names to be further asserted by the Minister of Agrarian, from the promulgation of this Law become the right of ownership as mentioned in paragraph (1) of article 20, except if the owner does not fulfill the requirement as mentioned in article 21.
Those rights mentioned in paragraph (1) owned by foreigner, citizen that is besides his/her Indonesian citizenship holds foreign citizenship and legal entity not appointed by the Government as meant in paragraph (2) of article 21 become right to cultivate or right to build in accordance with its land usage, as will be further asserted by the Minister of Agrarian.

Article III

Erfpacht right for large plantation company existing at the promulgation of this Law, from that moment becomes right to cultivate as mentioned in paragraph (1) of article 28 that will prevail for the remaining period of that erfpacht right, but not more than 20 years.
Erfpacht right for small farm existing at the promulgation of this Law, from that moment is removed, and will be subsequently settled according to the provisions provided by the Minister of Agrarian.

Article IV

The holder of concession and lease for a large-scale plantation company within one year following the promulgation of this Law must apply a request to the Minister of Agrarian so that its right is converted to the right to cultivate.
If after that period expires such request is not applied, then the respective concession and lease will prevail for its remaining period, but not more than five years and afterward it will end by itself.
If the concession and lease holder apply for request meant in paragraph (1) of this article but not willing to accept the requirements determined by the Minister of Agrarian, or if such request is declined by the Minister of Agrarian, then the concession or lease continuously prevails for its remaining period, but not more than five years and afterward it will end by itself.

Article V

Opstal right and erfpacht right for housing, existing at the promulgation of this Law, from that moment become right to build as mentioned in paragraph (1) of article 35 that prevails for the remaining period of opstal right and erfpacht right, but not more than 20 years.

Article VI

Land rights to land granting the authority as of or similar to the right as meant in paragraph (1) of article 41 as mentioned by the names hereunder, existing at the promulgation of this Law, namely: vruchtgebruik right, gebruik, grant controleur, bruikleen, ganggam bauntuik, anggaduh, bengkok, lungguh, pituwas and other rights using whatsoever names, that will be subsequently asserted by the Minister of Agrarian, from the promulgation of this Law become right of use as mentioned in paragraph (1) of article 41, which grants authority and obligation as held by its right holder at the promulgation of this Law, to the extent it does not violate the soul and provisions of this Law.

Article VII

Gogolan, pekulen or sanggan right which are permanent in nature existing at the promulgation of this law become right of ownership as mentioned in paragraph (1) of article 20.
Gogolan, pekulen or sanggan right which are not permanent in nature become right of use as mentioned in paragraph (1) of article 41, which grants authority and obligation as held by its right holder at the promulgation of this law.
If there are doubts as to whether a certain gogolan, pekulen or sanggan right is permanent or not in nature, then the Minister of Agrarian decides.

Article VIII

As to the right to build as mentioned in paragraph (3) and (4) of article I, paragraph (2) of article II and article V, the provision in paragraph (2) of article 36 is applicable.
As to the right to cultivate as mentioned in paragraph (2) of article II, paragraph (1) and (2) of article III, and paragraph (1) of article IV, the provision in paragraph (2) of article 30 is applicable.

Article IX

Matters which are necessary for the implementation of the provisions contained in the above Article is subsequently regulated by the Minister of Agrarian.

THIRD

The change of village government composition to implement the agrarian law restructuring according to this Law will be regulated separately.

FOURTH

The rights and authorities over soiland water from Swaprajas or former Swaprajas which still exist at the promulgation of this Law is removed and transferred to the State.
Matters related to the provision aforementioned in the point A above will be subsequently regulated by the Government Regulation.

FIFTH

This Law can be called as Law of Principal on Agrarian and commences on the date of promulgation. For everyone to acknowledge it, ordering the promulgation of this Law by placement in the State Gazette of the Republic of Indonesia.

Legalized in Jakarta

on 24 September 1960

THE PRESIDENT OF THE REPUBLIC OF INDONESIA

(signature)

(Soekarno)

Promulgated

on 24 September 1960

STATE SECRETARY

(signature)

(Tamzil)

STATE GAZETTE OF 1960 – 104

ELUCIDATION OF LAW NO. 5 OF 1960 ON
FUNDAMENTAL PROVISION OF PRINCIPALS ON AGRARIAN

GENERAL ELUCIDATION

Objectives of Law of Principal on Agrarian

In the state of the Republic of Indonesia, of which composition of its people’s life, including its economy, primarily characterized by agrarian, soil, water and airspace, as a gift of the One God Almighty has a very important function to develop a fair and prosperous society as we aim for. On that matter the currently applicable agrarian law, which should have served as one important instrument to develop that fair and prosperous society, apparently to the contrary, on many occasions are the resistor on the achievement of the goal above. That thing is caused especially:

because the currently applicable agrarianlaw was partly established based on the purpose and elements of the colonial government and is partly influenced by it, so that it is contradicted with the interest of people and the State in undertaking the all-encompassing development to finish the current national revolution;
because as a result of the colonial government’s politics of law, that agrarianlaw has a dualistic nature, namely by the applicability of regulations based on customary laws and also regulations based on western law and, of which matter other than creating many problems between groups that are difficult, but are also not in line with the goals of people’s union;
because to the indigenouspeople the colonial government’s agrarian law does not secure legal certainty.

In view of the above, it is necessary to have a new agrarian law which is national, that will replace the currently applicable law, which is no longer dualistic in nature, simple, and secures legal certainty to all the people of Indonesia.

That new agrarian law must provide possibility of the achievement of the function of soil, water, and airspace as mentioned above and must also conform to the interest of the people and of the State as well as fulfill their needs according to the era’s request in all matters of agrarian. Moreover, the national agrarian law must materialize the embodiment of State’s spiritual principle, the State and Nation’s goals, namely the One God Almighty, Humanitarianism, Nationalism, Democracy, and Social Justice as well as especially must be an implementation of the provision in article 33 of the Constitution and the Outline of State Direction contained in the Political Manifesto of the Republic of Indonesia on 17 August 1959 and asserted in the 17 August 1960 Presidential Speech.

In view of all that has been described above, then that new law its elements and principal provisions must be composed in a form of law, which will be the basis for composition of other regulations.

Even though the law is formal and no difference with other laws namely a regulation made by the Government with an approval by the House of Representatives but remembering its nature as basis regulation for the new agrarian law, then what is contained in it is only the principles as well as only matters on their outline and therefore is called as Law of Principal on Agrarian. Thus, its implementation will be regulated in many laws, regulations by the Government and other laws and regulations.

Thus, then in principle, the objectives of Law of Principal on Agrarian are:

to lay down the foundations for the formulation of national agrarianlaw, which will serve as a means to bring prosperity, happiness, and justice to the State and the people, especially farmers, in the context of a fair and prosperous society;
to lay down the foundations to form unity and simplicity in landlaw;
to lay down the foundations to give legal certainty concerning land rights for all people.

Foundations of the National Agrarian Law

Firstly the foundation of the nationalityis laid down in paragraph (1) of article that states, that: “The entire territory of Indonesia is an integral motherland of the people of Indonesia, united as Indonesia nation” and in paragraph (2) of article (1) stating that “The entire soil, water, and airspace, including the natural resources contained in it within the territory of the Republic of Indonesia as gift from the One God Almighty, are the soil, water, and airspace of Indonesia nation and are national wealth.”

This means that the soil, water, and airspace within the territory of the Republic of Indonesia of which independence is fought over by the nation entirely, also becomes the right of Indonesia nation, so they are only the right of their owners. Thus, also the lands in regions and islands are not only the right of indigenous people of that respective region or island. By that understanding thus the relationship of Indonesia nation and soil, water and airspace of Indonesia is a type of relationship customary right that is uplifted to the highest stage, namely on the stage concerning the entire territories of the State.

The relationship between the nation and soil, water, and airspace are the relationship that is eternal in nature (paragraph (1) of article (3)). This means that for as long as the Indonesian people are united as the Indonesia nation still exist and for as long as the soil, water, and airspace of Indonesia also exist, in any circumstance whatsoever there is no power that can terminate or eliminate that relationship that relationship. Thus, although the West Irian region, which constitutes part of the soil, water, and airspace of Indonesia — is currently under the power of the colonizer, under the provisions of this article that part according to the definitive law is also a part of the soil, water, and airspace of Indonesia nation.

The relationship between the nation and the soil, water, and airspace does not mean, that individual ownership rights over (part of) the soil is no longer possible. It has been explained above that that relationship is a type of relationship of customary right, thus it is not an ownership relationship. In the context of customary right, individual right of ownership is recognized. Therefore, it can be asserted that the new agrarian law also recognizes the right of ownership that can be owned by a person, whether individually or jointly with other persons over part of the Indonesian soil (article 4 in conjunction to article 20). Therefore, it is only the soil’s surface, namely what is called as land, that can be owned by someone.

Other than right of ownership, which is the hereditary, strongest, and fullest right that can be owned by one over land, it is also provided right to cultivate, right to build, right of use, and right of lease, and other rights that will be determined under other Law (article 4 in conjunction with article 16).

How the position of these rights in their relationship with the nation right (and State’s) will be outlined in number 2 below.
The “domain principle” which is used as the basis of agrarianlaws and regulations, deriving from the colonial government is not recognized in the new agrarian law.

The domain principle is violating the legal awareness of Indonesian people and the principle of the State that is independent and modern. In relation to this, that principle, asserted through many “domain statement”, namely for example in article 1 of Agrarisch Besluit (S. 1870-118), S. 1875-119a, S. 1874-94f, and S. 1877- 55, and S. 1888-58– has been discarded and those domain statements are revoked.

The Law of Principal on Agrarian is based on the position, that to achieve what is stipulated in paragraph (3) of article 33 of the Constitution of 1945, it is not necessary and also inappropriate, that the Indonesian nation or the State acts as landowner. It is more appropriate if the State, as organization of power of all nation act as Authorized Institution. From this perspective the meaning of paragraph (1) of article 2 must be seen, that “The soil, water, and airspace, including the natural resources contained therein, are at their highest level controlled by the State”.

According to that basic position above the wordings “controlled” in this article does not mean it is “owned”, but is an understanding, that gives power to the State, as organization of power of the Indonesia nation, for at its highest level:
1. To regulate and implement its use, utilization, supply and maintenance;
2. to determine and regulate the rights that can be owned between the persons and legal actions concerning the soil, water, and airspace;
3. to determine and regulate the legal relationships between the persons and legal actions concerning soil, water, and airspace.
All things are intended: to achieve the greater prosperity of people in the context of fair and prosperous society (paragraphs (2) and (3) of article 2).

The State’s power as meant above concerns all the soil, water, and airspace, including that is already owned by someone or not. The State’s power over land that is already owned with a certain right is limited by the content of that right, meaning to what extent the State grants power to the owner to use his/her right and until that point the limit of the power of the State. The content of those rights as well as their limitations are stated in article 4 and the subsequent article as well as article in Chapter II.

The State’s power over land which is not owned with a certain right by someone of other party are broader and fuller. With reference to the objectives mentioned above, the State can grant such land to a person or legal entity under a certain right according to its designation and necessity, for example the right of ownership, right to cultivate, right to build, or right of use or to grant it in a management to a certain Authorized Institution (Department, Agency, or Autonomous Region) to be used as performance of each of its duty (paragraph (4) of article 2). In that context the power of the State over these lands are more or less also limited by the customary right from the legal society unities, as long as according to its reality the customary right still exists, of which matter will be subsequently outlined in number 3 below.
In connection with the relationship between the nationand the soil as well as water and with the State’s power as meant in article 1 and 2 then in article 3 a provision of customary right of legal community unities is provided, intended to place that right to its proper place in the current atmosphere of having a state. Article 3 stipulates that:

“The implementation of the customary rights and other similar rights of customary law communities, as long as such communities in reality still exist, must be in a way so that it is consistent with the national interests and the State’s, on the basis of nation unity as well as does not contradict to the laws and other higher regulations.”

This provision firstly derives from the acknowledgment of the existence of that customary right in the new agrarian law. As may have been known, even if the customary right in reality still exists and prevail as well as considered in the judicial decisions, that right has never been officially acknowledged in the Law, as its consequence that in implementing the agrarian regulations on customary right during the previous colonialization era it is often ignored. Since the customary right is mentioned in the Law of Principal on Agrarian, that essentially means an acknowledgment of that right, then customary right will be basically considered, as long as that right in reality still exists in the respective legal community. For example, in granting a certain land right (for example right to cultivate) the respective legal community will be previously heard its opinion and will be given “recognitie”, which he/she is entitled to receive it as the holder of that customary right.

In contrast it cannot be justified, if based on that customary right the respective legal community interferes the granting of that right to cultivate, whereas the granting of that right in that region is really necessary for the broader interest. Thus, also it cannot be justified if a legal community based on its customary right, for example simply decline the hugely and regular clearing of forest to perform huge projects in the context of implementation plan to increase the food supply and movement of residents. Experience also shows that the development of that regions is often hindered since the problem concerning customary right. This is the basic of the second thought of the provision of article 3 mentioned above. The interest of a legal community must subject to the broader national interest and the State’s and such customary right its implementation must conform to that broader interest. It cannot be justified, if in a current atmosphere of having a state a legal community still maintains the content and implementation of its customary right absolutely, as if it is cut off from its relationship with the other legal community and other regions within the environment of the State as a unity. This attitude clearly contradicts to the main principle contained in article 2 and also in its practice will bring consequence of the hindrance of the huge efforts to achieve the entire prosperity of the people.

But as already clear from the above explanation, this does not mean, that the interest of the respective legal community will not be considered at all.
The fourth basis is laid down in article 6, namely that “All landrights have social ”

This means, that any land right held by someone, it is not justified, that that land is used (or not used) only for his/her personal interest, even more if that matter creates loss to the people. The land use must be adjusted to the circumstance and character of his/her right, so that it is beneficial to the prosperity and happiness for the owner or beneficial to the people and the State.

But on that matter that provision does not mean, that the interest of individual will be completely pressed by the public interest (people). The Law of Principal on Agrarian also considers the interests of individual.

The interest of the people and the interest of individual must balance each other so that at the end the main goal will be achieved: prosperity, justice, and happiness to all people (paragraph (3) of article 2).

Connected to its social function, then it is a proper thing that the land must be well maintained, so that its fertility be increased as well as its damage is prevented. The obligation to maintain this land is not only subjected to its respective owner or right holder, but become subject to every person, legal entity or instance that owns a legal relationship with that land (article 15). In implementing this provision, the economically weak party’s interest will be considered.
In line with the nationalityprinciple as meant in article 1, then according to article 9 in conjunction with paragraph (1) of article 21 only Indonesian citizen that can own the right of ownership over land, right of ownership cannot be owned by foreigner and the transfer of right of ownership to the foreigner is forbidden (paragraph (2) of article 26). Foreigners can own land with the right of use of which area is limited.

Thus, also basically legal entities cannot own the right of ownership (paragraph (2) of article 21). The reason of (basically) restricting the legal entities owning the right of ownership is since those legal entities do not need the right of ownership, but other rights are enough, as long as there are enough guarantees for their special needs (right to cultivate, right to build, or right of use according to Article 28, 35, and 41).

Thus, then efforts intended to deviate from the provisions concerning the maximum limit of land area that can be owned by right of ownership can be prevented (article 17).

Although legal entities basically cannot own the right of ownership over land, but remembering the people’s need that are closely related with the religious, social, and economical relation concept, then an “escape-clause” is provided to make possible that certain legal entities own right of ownership. With this “escape-clause” then it is later be enough when there is necessity for right of ownership for something or type of legal entity to be granted dispensation by the Government, by way of appointing that legal entity as legal entities that can own right of ownership over land (paragraph (2) of article 21). Legal entities dealing in social and religious affair are designated as bodies that can own right of ownership over land, but as long as that land is required for its activity in that social and religious affair. In matters that are indirectly related to that affair they are considered as normal legal entity.
Subsequently also in connection with the nationalityprinciple mentioned above as it is regulated in paragraph (2) of article 9 that “Every Indonesian citizen, be it male or female, has equal opportunity to acquire a certain land right as well as to obtain benefit and its yield, whether for himself/herself or for his/her family.”

On that matter a protection for an economically weak citizen group against fellow economically strong citizens must be provided. Therefore, in paragraph (1) of article 26 it is stipulated, that “The sale/purchase, exchange, grant, grant through a will and other actions intended to transfer the right of ownership as well as its supervision is regulated by the Government Regulation.” This is the provision that will serve as an instrument to secure the respective economically weak group.

In that connection the provisions contained in paragraph (1) of article 11 can be referred, intended to prevent the occurrence of control over life and work of other people that exceeds the limit of agrarian sectors of which matter contradicts to the social justice principle that is humane. All joint efforts in agrarian sector must be based on joint interest in the context of national interest (paragraph (1) of Article 12) and the Government is obligated to prevent the existence of organization and individual efforts in agrarian sector that is private monopolistic (paragraph (2) of Article 13).

Not only private effort, but also Government’s efforts that are monopolistic must be prevented so that they do not damage many people. Therefore, the Government’s efforts that are monopolistic can only be implemented by law (paragraph (3) of Article 13).
In paragraph (1) and (2) of article 10, a principleis formulated which currently serves as a basis for changes that are taking place in the structure of land affairs nearly throughout the world, particularly in countries which have been/are administering what is called as “land reform” or “agrarian reform” namely, that that “Farmland must be actively cultivated or worked by its own owner.”

To ensure the achievement of this principle, certain provisions have to be made available. For example, a provision on the minimum limit of land area that must be owned by a farmer is necessary, so that he/she earns enough income to live decently for himself/herself and his/her family (article 13 in conjunction with article 17). Also, a provision on the maximum limit of land area that can be owned with right of ownership (article 17) is necessary, to prevent the accumulation of land in the hand of certain groups. In this connection, article 7 contains an important principle, namely that the ownership and control of land that exceeds limit is not allowed, since that matter is damaging public interest. Eventually that provision is also accompanied with the loan grant, seed and other assistances with light requirements, so that its owner is not forced to work in other sector, by delivering his/her land control to another person.

On that matter remembering the composition of our farm community as it is now, temporarily for a later time the use of farmland by people who are not its owners is still possible, for example, through lease, sharecropping, pledge, etc. But all things of other regulations, namely, to prevent legal relations having a character of oppression to the weak by the strong (Article 24, 41, and 53). Thus, the use of land by way of lease, sharecropping, pledge, and etc. cannot be delivered on the basis of approval by the interested party by themselves on the basis of “free fight”, but the authority will provide provisions on mean and its requirements, so as to fulfill the consideration of justice and extortion means are prevented (“exploitation de l’homme par l’homme”). As for example the provisions in Law No. 2 of 1960 on “Sharecropping Agreements” (State Gazette No. 2 of 1960) can be outlined.

The provision of paragraph (1) of article 10 is a principle, of which implementation requires subsequent regulation (paragraph 2). In our current social structure, then that implementing regulation still needs to open the possibility of dispensation later on. For example, a government employee for his/her old age reserve owns land area of 1 or 2 hectares and due to his/her work it is impossible to work on it alone, accordingly, the continuous ownership of that land should be made possible. For that period that land can be delivered to another person to be utilized through a lease agreement, sharecropping etc. But after he/she does not work anymore, for example after he/she is retired, that land must be actively cultivated by himself/herself (paragraph 3).

Finally, to achieve what the nations and State’s goals mentioned above in agrarian sector, a planning concerning the use, utilization and supply of soil, water, and airspace for various living interest of the people and the State is necessary: National Planning that includes all territories of Indonesia that later is detailed by special plans of each region (article 14). With the existence of such planning, then the land use can be conducted on a led and organized manner so that it may bring the greatest benefit to the State and the people.

Foundations to Establish Unity and Simplicity of Law

The foundations to achieve that goal are clear in the provision contained in Chapter II.

As has been explained above, our current agrarianlaw is “dualism” in nature and make a distinction between land rights according to customary law and land rights according to western law, which derives from the provisions of Book II of the Indonesian Civil Code. The Law of Principal on Agrarian intends to eliminate that dualism and consciously intends to make a unity of law, in accordance with the people’s expectation as one nation and also according to the economic interest.

By itself, this new agrarian law must conform to the legal awareness of most people. Since Indonesian people are mostly subject to the customary law, then this new agrarian law will be also based on those customary laws, as a genuine law, that is perfected and commensurate with the interest of the people in the modern State and in its relationship with international world, as well as commensurate with socialism of Indonesia. As has been acknowledged that the customary law in its development is not cut off from the political influence and colonial community that is capitalistic and feudalistic self-governing community.
In implementing that unity of law, the Law of Principal on Agrariandoes not close its eyes that there still is distinction within the people’s circumstance and the legal need of the groups of people. In connection with it, paragraph (2) of article 11 is stipulated, that: “Difference in people’s circumstance and legal need of the group of people wherever is necessary and does not violate the national interest is considered”. What is meant by difference that is based on group of people for example the difference in legal need of city people and village people, also economically strong people, and economically weak Then paragraph (2) is subsequently stipulated that the protection over the economically weak group interest is guaranteed.
By the elimination of distinction between customary lawand western law in agrarian law sector, then the intent to achieve, simplification of law in its essence will be also implemented.

As has been explained above, other than the right of ownership as hereditary right, the strongest and the fullest that can be owned by one over land, the new agrarian law in principle recognizes land rights, according to customary right as mentioned in paragraph (1) part (d) until (g) of article 16. As to fulfill the need that has been felt within our people nowadays two new right is made, namely, right to cultivate (for plantation, fishery and animal husbandry business) and right to build (to construct/own building over other person’s land) (paragraph (1) part (b) and (c) of article 16. As for the rights existing at the promulgation of this Law all will be converted to become one of the new rights according to Law of Principal of Agrarian.

Foundations to Establish Legal Certainty

Effort aiming for the certainty of land right direction is apparent from the provision of article which regulates the land registration. Article 23, 32, 38 are intended for holder of the respective right, with an intent so that they can obtain certainty on that right. Whereas article 19 is intended for the Government as an instruction, so that in the entire territory of Indonesia the land registration is established that is “rechts-kadaster” in nature, namely that is intended to secure legal certainty.

As for that registration will be implemented by remembering the interest as well as circumstance of the State and the people, the need for socio-economic movements and their possibilities in its personnel and equipment. Therefore, its implementation will be prioritized and gradually increased to cadaster that covers the entire territory of the State.

In line with its purpose namely to secure legal certainty then that registration is obligated to the respective right holders, with an intent that they obtain certainty on that right whereas article 19 is intended for the Government as an instruction; so that in the entire territory of Indonesia land registration is established that is “rechtskadaster” in nature that is intended to secure legal certainty.

As for that registration will be implemented by remembering the interest as well as circumstance of the State and the people, the need for socio-economic movements and their possibilities in its personnel and equipment. Therefore, it will gradually be increased to the cadaster that covers the entire territory of the State.

In line with its purpose, namely, to secure legal certainty, then that registration is obligated to the respective right holders. If it is not obligated then the land registration establishment, that is clear will require a lot of energies, tools, and expenses, will be totally meaningless.

Author

Dr Eddy Marek Leks, FCIArb, FSIArb, is the founder and managing partner of Leks&Co. He has obtained his doctorate degree in philosophy (Jurisprudence) and has been practising law for more than 20 years and is a registered arbitrator of BANI Arbitration Centre, Singapore Institute of Arbitrators, and APIAC. Aside to his practice, the author and editor of several legal books. He led the contribution on the ICLG Construction and Engineering Law 2023 and ICLG International Arbitration 2024 as well as Construction Arbitration by Global Arbitration Review. He was requested as a legal expert on contract/commercial law and real estate law before the court.

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Dr. Eddy Marek Leks, FCIArb, FSIArb

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Law Number 5 of 1960 on Fundamental Provision of Principals on Agrarian

Table of Contents

Preface

LAW NUMBER 5 OF 1960

FIRST

CHAPTER I
FOUNDATIONS AND FUNDAMENTAL PROVISIONS

CHAPTER II
LAND RIGHTS, WATER, AND AIRSPACE AS WELL AS LAND REGISTRATION

Section I
General Provisions

Section II
Land Registration

Section III
Right of Ownership

Section IV
Right to Cultivate

Section V
Right to Build

Section VI
Right of Use

Section VII
Right of Lease for Building

Section VIII
Right to Clear Land and Right to Collect Forest Yield

Section IX
Right to Use Water, Pisciculture and Fishing

Section X
Right to Use Airspace

Section XII
Other Provisions

CHAPTER III
CRIMINAL PROVISIONS

CHAPTER IV
TRANSITIONAL PROVISIONS

SECOND
CONVERSION PROVISIONS

THIRD

FOURTH

FIFTH

ELUCIDATION OF LAW NO. 5 OF 1960 ON
FUNDAMENTAL PROVISION OF PRINCIPALS ON AGRARIAN

GENERAL ELUCIDATION

Objectives of Law of Principal on Agrarian

Foundations of the National Agrarian Law

Foundations to Establish Unity and Simplicity of Law

Foundations to Establish Legal Certainty

Author

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Law Number 5 of 1960 on Fundamental Provision of Principals on Agrarian

Table of Contents

Preface

LAW NUMBER 5 OF 1960

FIRST

CHAPTER IFOUNDATIONS AND FUNDAMENTAL PROVISIONS

CHAPTER IILAND RIGHTS, WATER, AND AIRSPACE AS WELL AS LAND REGISTRATION

Section IGeneral Provisions

Section IILand Registration

Section IIIRight of Ownership

Section IVRight to Cultivate

Section VRight to Build

Section VIRight of Use

Section VIIRight of Lease for Building

Section VIIIRight to Clear Land and Right to Collect Forest Yield

Section IXRight to Use Water, Pisciculture and Fishing

Section XRight to Use Airspace

Section XILand Rights for Religious and Social Purpose

Section XIIOther Provisions

CHAPTER IIICRIMINAL PROVISIONS

CHAPTER IVTRANSITIONAL PROVISIONS

SECONDCONVERSION PROVISIONS

THIRD

FOURTH

FIFTH

ELUCIDATION OF LAW NO. 5 OF 1960 ONFUNDAMENTAL PROVISION OF PRINCIPALS ON AGRARIAN

GENERAL ELUCIDATION

Objectives of Law of Principal on Agrarian

Foundations of the National Agrarian Law

Foundations to Establish Unity and Simplicity of Law

Foundations to Establish Legal Certainty

Author

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CHAPTER I
FOUNDATIONS AND FUNDAMENTAL PROVISIONS

CHAPTER II
LAND RIGHTS, WATER, AND AIRSPACE AS WELL AS LAND REGISTRATION

Section I
General Provisions

Section II
Land Registration

Section III
Right of Ownership

Section IV
Right to Cultivate

Section V
Right to Build

Section VI
Right of Use

Section VII
Right of Lease for Building

Section VIII
Right to Clear Land and Right to Collect Forest Yield

Section IX
Right to Use Water, Pisciculture and Fishing

Section X
Right to Use Airspace

Section XI
Land Rights for Religious and Social Purpose

Section XII
Other Provisions

CHAPTER III
CRIMINAL PROVISIONS

CHAPTER IV
TRANSITIONAL PROVISIONS

SECOND
CONVERSION PROVISIONS

ELUCIDATION OF LAW NO. 5 OF 1960 ON
FUNDAMENTAL PROVISION OF PRINCIPALS ON AGRARIAN