July 28, 2020 | Regulatory Updates

In order to provide a crystal clear framework for the issuance of location permits through one single system, namely by the Online Single Submission (“OSS”) system, on 20 September 2019, the Minister of Agrarian Affairs and Spatial Planning/Head of the National Land Agency issued Minister Regulation No. 17 year 2019 concerning Location Permit (“MinisterRegulation 17/2019”), which also acts as a replacement and revokes Minister RegulationNo. 14 year 2018 concerning Location Permits (“PriorRegulation”).

The Minister Regulation 17/2019 regulates the procedures for the licensing of location permit that needs to be fulfilled in order to obtain a location permit in Indonesia, which consist of the following provisions:

1. Subject and object of location permit;

2. Licensing procedures and validity period;

3. Rights and obligations of the location permit holders;

4. Monitoring and evaluation.

1. Subject and object of location permit


1.a Subject of location permit

Subjects whom are entitled to obtain location permit are business actors who require land in order to run their business activities but do not yet own nor possesses the requisite land; And it includes the following parties:

1. a person who has a capability as according to the law to carry out business activities;

2. legal entities, which among others includes:

a. Limited liability companies;

b. Public companies;

c. Regional public companies;

d. Other state-owned legal entities;

e. Public service entities;

f. Broadcasting agencies;

g. Enterprises which are established by foundations;

h. Cooperatives;

i. Limited partnerships;

j. Firm;

k. CV.

The noteworthy difference between the Minister Regulation 17/2019 and the Prior Regulation, is that, according to Prior Regulation, business activities were not necessarily required to be dependent on the land in order to be granted with a location permit. Furthermore, limited partnerships, firm, and CV were not mentioned -and thus not considered- as subjects whom are entitled to obtain a location permit.

1.b Object of location permit

The provisions between the Minister Regulation 17/2019 and the Prior Regulation in terms of the object of location permit are identical.

2. Licensing Procedures and Validity Period


2.a Licensing Procedures

There are several adjustments made with regard to licensing procedures of location permits which now requires commitment fulfilments under the new Minister Regulation 17/2019, and it encompasses these following terms:

1. Submission of Requirements

a. Business actors are required to submit the Prerequisite Document within 10 business day, counted from the day when the OSS Agency issued the location permit.

b. Should the business actors failed to meet this obligation, their location permit will be revoked.

2. Technical Land Considerations

a. The National Land Agency Office shall follow up any application for commitments fulfilment by conducting technical land considerations; Of which, the result should be made available within 10 business days of the submissions of the location permit commitments as well as proof of payment of service fees.

b. Should the National Land Agency Office fail to issue the results of the technical land consideration within the prescribed deadline, then the application shall be automatically considered as approved.

c. Approval results for technical land considerations should be delivered to their respective regional governments in order to be followed up.

3. Issuance of Approval

a. The results of technical land considerations shall be the basis upon which regional governments make their decisions on whether to approve or reject the location permit commitment fulfilment applications.

b. Approvals or rejections shall be issued within two business/working days immediately following the receipt of the results of technical land considerations. Should the regional governments fail to issue a notice of approval or rejection within the given timeframe, then the location permit commitment fulfilment shall be automatically considered as approved.

c. The OSS should then notify the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency via its system regarding the location permit commitment fulfilment approval.

2.b Validity Period of location permit

The validity period of a location permitlaid out on the Prior Regulation remains unchanged under the new Minister Regulation 17/2019; Which is three years starting from the date upon which the location permits are deemed effective. Moreover, a one-year extension may be granted to the location permit holders should the land acquisition already achieved 50% of the initial acquisition target.

3. Rights and Obligations of the location permit holders

According to the Minister Regulation 17/2019, the location permit holders are allowed to acquire land titles which relate to other overlapping land titles through the following legal acts:

1. Sale and purchase;

2. Indemnification;

3. Land consolidation; or

4. Other lawful methods.

However, the location permit holders are still required to comply with the same obligations as were addressed between the Minister Regulation 17/2019 and the Previous Regulation, specifically:

1. Submission of quarterly reports to the National Land Agency Office;

2. Registration of acquired land through the National Land Agency Office within one year of the expiration of location permits or their extensions; and

3. Utilization of the acquired lands in accordance with their designated functions.

4. Monitoring and evaluation of the location permit

The location permit monitoring and evaluation shall be conducted by the government and carried out on the following matters:

1. Land acquisition;

2. Land use and utilization;

3. Safekeeping; Which shall be conducted by the location permit holders on the land that has been obtained.

The results of monitoring and evaluation shall be the basis for the Government to consider on whether or not the location permit may be extended, or for the granting of a new location permit, and/or the revocation of the existing location permit.