The term ‘agrarian’ in Indonesian law has these broader meanings. In the 1960 Basic Agrarian Law (hereafter the BAL) agrarian refers to all natural resources, namely ‘land, water and air space included all natural resources within’ (BAL (1)2). Above all, what is most important in the Indonesian context is that ‘agrarian’ relates to the use and control of land, as welll as the legal relationships of control and usufruct created in the process. This chapter, then, adopts the broader meanings of ‘agrarian’, and will focus on both land utilization, the rights on which it is based, and its consequencesii

Fifteen years after Indonesian independence, in September 24, 1960, the Basic Agrarian Law (BAL) was promulgated.iii This law protected and guaranteed rights of citizens over land and utilization of natural resources, particularly the rights of marginal people and the poor, in order to create social justice and welfare (BAL (9)2).iv This law clearly states that agrarian justice is the basis of the nation’s economic life that is in turn based on social justice. This was contained in a national political consensus namely a People’s Representative Decree (‘Ketetapan MPRS’) No. II/1960, article (4)3, which says that land reform is the basis of universal development (pembangunan semesta) meaning development in all sectors.. Meanwhile in his famous speech ‘The Progress of Our Revolution’, Soekarno, in 1960, declared that ”[T]he Indonesian revolution without Land Reform is just like a building without foundation, just like a tree without a trunk, just like big talk which is empty. The implementation of Land Reform means the implementation of an absolutely essential part of the Indonesian Revolution… [L]and is not for those who sit around and become fat and corpulent through exploiting the sweat of the people whom they order to till that soil” (Soekarno, 1960: 34).

In the spirit of independence, the BAL nationalizes agrarian law in order to liberate agrarian matters from colonial law. The spirit of the new law is also to free the Indonesian people, the majority of whom have been dependant for their livelihood upon land (and other agrarian resources), from pre-colonial ‘feudal’ compounded by exploitation of peasants under colonial policies. That is why land reform, which aiming at protecting and respecting the interest of peasants (whether small farmers, tenants, or agricultural laborers), became the key policy focus of this law. The fundamental principles of nationalism and the social function of land underpin the State’s right of control over land and other agrarian resources and its obligations with respect to agrarian planning for the welfare of the people.

These BAL principles can be summarized as follows: Land must be treated as a means of production to create social welfare, not for individual interests that can lead to concentration of ownership and exploitation ‘of the weak by the strong’.v Accordingly, although individual ownership (hak milik) is paradoxically privileged, the land should not be sold without reason and cannot be commoditized. Idealistically, the owners of the land and agrarian resources within the territory of the unitary state of Indonesia are the people of Indonesia. Foreigners are not allowed to own land in Indonesia, but they can be granted rights to use agrarian resources based on certain regulations. As the manifestation of “collective ownership”, the State holds a mandate to manage resources for the social welfare of the Indonesian population as a whole.vi For this reason, the BAL prohibits the monopoly of agrarian resources, except by the State in its role as the representative of the people’s interest, which is carefully regulated in the BAL as well.vii

Based on the principle of the “State’s right of control”, the central or regional governments were able to issue different kinds of land rights to control and utilize agrarian resources in Indonesia.viii These include rights of private ownership (Hak Milik), building rights (Hak Guna Bangunan), commercial use rights (Hak Guna Usaha), and others. Under the New Order, the principle of the “State’s right of control” over land and natural resources became the basis of both the Basic Forestry Law of 1967ix and the Basic Mining Law of 1967.x These two laws give authority to the government to issue forestry and mining concessions to exploit forest and minerals resources in Indonesia. Those concessions formed as the Hak Pengusahaan Hutan (HPH) and Hak Pengusahaan Hutan untuk Tanaman Industri (HPHTI), which are two kind of forest concession mainly for timber extraction; the Kontak Karya Pertambangan (KKP) or the Contract of Work for Mining and the Kuasa Pertambangan (KP) or the Mining Authority for large scale mining operations.

Dianto Bachriadi and Gunawan Wiradi