Land Policy and the Dispute over Plantation Areas


This essay will focus on the explanation about the land policy impacts that particularly result the dispute between small farms and large farms. Ideally, the land policy formulates to regulate and maintain agrarian resources and the relation between people and agrarian resources in specific country in order to be agrarian sources maximization for people welfare. However, the debate flowering that the existing land conflict in one country analyses as an impact of the existing policies, which is either overlapped or contradicted among them (Deininger & Castagnini, 2004; Fitzpatrick, 1997).This essay takes a land policy dynamic in Indonesia, which is explaining the dispute between small farm holder and the company who control huge land for plantation industry.

There is two kinds of conflict/disputes arose on the plantation areas. Firstly, a conflict between local people who cultivated certain area of land within around plantation estates that suspected as illegal occupants. It possibly happens due to overlapping, at least, two policies that can benefit plantation holders and the other take a side to peoples/small landholders. Secondly, conflict between local people who had dispossessed for development of new plantation estates. These two kinds of conflicts possibly occur because the national policy that address to public interest and allocate amount of areas of land to be built various facilities improves economic growth that one of them is the land provision for large plantations.

I. Introduction: Land Policy Development in Indonesia.

Some analysts argue that agrarian politics in Indonesia, nowadays, is no different from the previous New Order era[2]. Both the Reformation and New Order eras practice developmentalism[3]  (Lucas & Warren, 2003).  In brief, the main characteristic of the two eras on agrarian policies were to treat land and other resources as commodities to allow large enterprises and big investment to penetrate into rural communities and to override the land needs of ordinary Indonesians (Bachriadi, Bachrioktora, & Safitri, 2005). Even though Indonesia has the most comprehensive law on land issue – Basic Agrarian Law 1960 (BAL 1960) – (Lucas, 1992),the substance of the law has not reflected developmentalism point of views. In fact, the BAL 1960 that has had populist point of view has an opposite view with developmentalism practice.

Since a New Order era, the development notion that turns into the implementation is reaching the economic growth level. Particularly in New Order era, which has considered following the famous Rostow stages of development (Rostow, 1960), it was called the 5 years planning (Repelita). Especially in the flowering land policy, it has tended to concentrate the land and other natural resources, which were mostly in area that stated as State Land and State Forest, through, provide the open opportunity for huge investment into the few hands of capitalist entrepreneurs (Bachriadi & Wiradi, 2011).

Nowadays, especially after the Reformation era in 1998, The Government of Indonesia has been intensively revising their law and regulation to the country invenstment scheme for the last decades.  Numbers of deregulations changing have been recorded, such as Law of Petroleum and Natural Gas (UU No.22/2001), Natural Resources Law (UU No. 7/2004), Plantation Law (UU No.18/2004), and Foreign Investment Law (UU No. 25/2007). Thoroughly, along with entrepreneurs, they reviewed regulation that was considered investment hindrance and economic development velocity.

The Large Plantation Policy

To be in line with the development policy directions that placed land as development foundations, the plantation policy also in the same track of development. Since the Old Order era, the plantation policy is suitable with the spirit of Basic Agrarian Law 1960[4] which is all of the agrarian sources maintained by the State through the State Rights of Control concepts. This concept required state role to maintain land control issue, it is not about the state domination of owning and also not to being arbitrarily on giving land rights to deny justice and social welfare principles. However, in the New Order era, even though the concept of State Rights of Control still to be applicable as a policy, the implementation has not been as strong as the original spirit of its formulation. The same goes with the implementation of BAL, which has been in the New Order era being ‘frozen’, to not saying it was replaced by the others policy that promulgated latter (Lucas & Warren, 2003; Parlindungan, 1991; Sediono, 2007).

In the implementation, the plantation development policy in Indonesia becomes one attempt to revive back the cultuurstelsel nuance that ever lived in colonial era, which was more than a hundred years ago, and operated the exploitation and extraction over agrarian sources through plantation industry. It is true that since 1970s, the plantation policy was narrowed to export targets with the assumption that the plantation production has considered as an important thing (which was as a second rank after paddy product) in order to support the Indonesian economic growth. It was started with the program of renewal, rehabilitations and expanding of export products (Peremajaan, Rehabilitasi, dan Perluasan Tanaman Eskpor/PRPTE), then followed by the exertion to enhance small farmers productivity or small enterprises through the management unit project (Project Management Unit/PMU)[5] and Nucleus-Estate Scheme (NES) (Perkebunan Inti Rakyat (PIR)-Perkebunan)[6]. The other scheme was Intensification of Small-scale sugarcane Program (program Tebu Rakyat Intensifikasi/TRI), which was implemented in around 1975, that indicated a new advance in the plantation development in Indonesia, through the intensively contrac farming implementation model.

In the New Order era, the impacts was an increasing the massively plantation area. Amount of Commercial Rights (Hak Guna Usaha/HGU) gave to a number of plantation estates as an implication is the highest rank of land concentration in Indonesia. Based on Result of Plantation Census in 1990-1993, up to 1993 there was 1,206 enterprises and 21 cooperatives, with the total area controlled was around 3.8 million ha that allocated to big plantations in over Indonesia. The number of these has kept increase, which was until 2000, stated in Statistic of Indonesia 2000, there was 2,178 enterprises, both private and state-owned that controlled around 3.5 million ha (Badan Pusat Statistik Indonesia, 2001).

Nowadays, the tendency of development to give a wider opportunity to huge scale capital enterprises is supported by regulation as its prop. At least, there are two vital policies to be mentioned, Law no. 18/2004 on Plantation and Foreign Investment regulation that will be discussed in the next part.

The Plantation Law 2004 as one regulation that consists of the way to maintain all of matters related with plantation. The previous policy was BAL 1960 – which is not explained in the newest law whether the BAL 1960 replaced by or stated no longer operated – and more itemized by the Government Regulation No. 40 /1996 on Collateral Rights over lands (including HGU and HGB) over lands and other matters related to land (Hak Tanggungan Atas Tanah yang Berkaitan dengan Tanah). There are some similarities in both policies promulgated, the BAL 1960 and The Plantation Law 2004. However there is 1 article that new in the Plantation Law 2004, which is about sanction would be gave if anybody collides with the plantation estates border, which is not his/her authority, and impacts to the property damage, then she/he will be fine and punished[7].

Foreign Investment Policy: to Support the Large Scale Plantation

In the Old Order era, precisely in 1965, The Soekarno regime pulled out the Foreign Investment Law No. 78/1958, as well as that revision law that regulated in 1960. The reason was the foreign investment only to perpetuate the Indonesian people exploitation, therefore should be dismissed. However, the New Order regime in 1967, revive back this Foreign Investment Law through promulgation Law no. 1/1967 that clearly stated in the consideration part of this law, in order to Indonesian economic development it was necessary to use foreign potencies to be invested in Indonesia. This notion continues with the newest law that issued in 2007, the Law No. 25/ 2007, which is having similar substance with the previous law.

Through this foreign investment law, it is possibly to foreign companies to operate and, moreover, obtain various facilities as an instrument for their velocity in operating their capital investment. The foreign companies are willing to invest their capital in Indonesia, will gain a concession of land, including the land needed for plantation operation. Alongside, as also pinned on in the Law 1967, the foreign companies will obtain a free tax and free import duty for their purpose to manage their venture. The other advantage is the tax relief for kind of things that can be taxed. In these regulations also explain that the Indonesian government has a guarantee to not to nationalized or be revocation of foreign investment rights, likewise if there is an accidently deprivation, the government is obliged to compensate. Also added in the Law No. 25/2007, the foreign investor is enabled to have a plantation commercial use rights (HGU) up to 95 years in total.

These two policies, the Plantation Law and the Foreign Investment Law, is enough to invite a number of analysis, particularly from scholar activists who concern with land rights defend that generally, through these two regulations implementation tend to occur rapidly a land conflicts over the plantations. Their analysis arise because, beside that regulations implementation and development direction, lack of other effort to resolve the classical problem on inequality of agrarian structure in Indonesia that since the colonial era has increased continuously (Bachriadi & Wiradi, 2011). Instead of to reach the appropriate economic growth, in the implementation, has achieved land disputes between local people and plantation estates. As mentioned by Bachriadi (2011) “The concession Rights that issued by National Land Agency (BPN) base on The Act No. 40/1996, in other hands, every people in Indonesia have a right to have piece of land base on the Basic Agrarian Law (BAL) 1960. In most cases, the dispute arises due to the government easily to give the concession to the plantation company, based on the Act No. 40/1996 and the people who still live in same area also resist staying because they have a right based on the BAL 1960. Both the plantation company and people have an adequate policy to keep on resist of their land.”

II. Conflicts over the Plantation Estates in Indonesia

In minimum, there are two main categories to see the structurally land conflicts over the plantation estates, the conflict between the local people who cultivate in entire the plantation estates and consider as illegal occupants, and the conflicts among the dispossessed rural people from their agriculture land due to the plantation estates expand.

Local People suspected as Illegal Occupants around Plantation Estates

Local people in some cases hold the BAL 1960 to stay and struggle to defend their agriculture land. In the BAL 1960, article 6 was stated about “social function” of the land which is meant that every piece of land should be address to Indonesian people welfare. Meanwhile the plantation enterprises use the Plantation Law as their support and legitimize to grasp and operate as well as develop the plantation industry.  Both of the regulations, mainly the lastly issued, result disputes experiences and the tense increased in the area where the plantation located.  Conflicts will occur and suspect local people as illegal occupants when the local people do not have enough information about the plantation development, the local people identify that the land was neglected by the estates, and the local people used to work in one plantation estates and stopped due to the collapse of the estates.

Repeatedly, the local people do not know well about the planning of plantation development in their regions/areas, therefore the tense will be occurred in the time when all of the plantation development preparation already fixed. In some cases, for example in West Java province, the local people in Ciamis district, especially in Banjaranyar village, was informed by local leader that in their area will develop a new plantation. The problem arose when the plantation worker started to border the plantation area that given by National Land Agency through the HGU certification (commercial use rights). In fact, the company exceeds the border then coming to local people areas.

The other happened also about the local people who need a piece of land and try to enter the plantation area that was no longer used by plantation estates. It will happen only if the local people resist and well understand about the BAL 1960 notion on land as social functions. According to the State Rights to Control concept, the area that identified was neglected by the right holder, it should back to the state and automatically can distribute to the people who need and live in the entire areas. It is simply that conducted by local people, in every single a piece of land that empty, whether it is arable or infertile, if the local people need to cultivate, they can do this without any permission from the Land Authority. The BAL 1960 also mentioned that after more than 5 years the same local people cultivate in the same area, they deserve to own formally that land.

The other type of conflicts that also similar with previous pattern, is people in the beginning plantation development involved as tumpang sari[8] farmer. Unfortunately, after the couple of time the scheme running, the plantation activities have stopped and farmers have no compensation for the tumpang sari scheme activities. They became jobless and lost their opportunity to work in that plantation. Due to the economic forced, people should find another alternative job. Like an experience a group of tumpang sari farmers in Batang district, in Central Java province, they have mostly gone to the city to earn money (Safitri, 2010). They have not thought that the plantation estates were supposed to responsible on their life. It happened before 1998, in 1998, when Indonesia experienced monetary crises, which was the whole economic sectors in mostly big city in Indonesia were collapse. It also influenced to the ex-tumpang sari farmers who worked in the city, they have not had another options unless gone back to the villages and waiting for the better conditions. During the difficult situation, they have seen that the plantation area where they ever worked as a tumpang sari farmer before was empty and arable. Then they cultivated back that land with cash crops or any crops that can fulfilled their daily life. The conflict arose when the economic conditions were getting better and the estates willing to continue their activities over the same areas.

The Local People Dispossession for Development of New Plantation Estates

The impacts of the development of large plantation are the land concentration that also causes the local people dispossession from their land. One of land concentration form of the large-scale agro-industry was land provision for Palm Oil industry that was intensively encouraged since 2002. It was caused by the increase of demand for Crude Palm Oil (CPO) in the global market and raised global agreement on maximizing bio-fuel use. The government of Indonesia has been clearing land around 9 million hectares of 20 million hectares planned for palm oil development in order to reach the main CPO exporter country of the world. The incredible increasing of land provision for this commodity implicates numerous land conversions, both forestry land and small-scale agriculture land.

The classic problem that occurred since the beginning era of plantation development in Indonesia is the local people opportunity to involve in this industry (Lucas, 1992). To follow a brief description on the palm oil industry development in Indonesia, the local people opportunity in this similar industry is limited to be a small part of the palm oil industry or rubber plantation development. The local people found in some cases involve as a counterpart of these industry in order to provide their own land become part of the main areas of these plantation. The other case, the local people will fully engage with this industry even they have no land to give and add up to the main plantation. Due to these two types of the local people involvement, it has been raising some tenses either between the local people and the palm oil plantation estates or among the local people.

In Bengkulu province, there is happening the dispute between the local people and the plantation that implemented the Tree Crops and Smallholders Scheme Project (TCSSP), which is the project that funded by Asian Development Bank (ADB) in the form of the small rubber plantation. This project began in 1992/1993 and ended in 1997 (ADB loan No.1118-INO). In the process, the local people were invited by the estates to involve in this project. As a condition, the local people required to give their own land to become their main area of rubber plantation, through giving their land certificate that promised will be backed again just before the project ends. Then, the local people would get the facilities in order to start their plant as their rights, such as the seeds, the insecticides and all of the need for the rubber plantations. During 5 years implementations, the scheme running quite well, nevertheless, in around the sixth to seventh years, the estates productivity were falling and the estates obligations have not run as usual until the end of the project. The farmers became on edge because their worried of their land certification that was still kept by the project holders. The reasons why the estates did not get back the land certification to the people because the estates consider the local people cannot pay attention to the credit that should pay every month to the cooperation. This case is still in the processes until now because the estates try to escape from its responsibility.

Through the opening the new area for the plantation development, mostly the plantation estates need the skilled worker. It is often fulfilled by outsider through the transmigration program, instead of using the local people who live in an entire the plantation area. This situation impacts to the social tension between the workers and the local people. Meanwhile the new comers have a new job in the plantation activities, the native local people should be dispossessed from their land and still have no an adequate job.


In the road of history the land policy formulation in Indonesia, the taking a side of land provision for the large plantation needs interest can be traced through 3 processes. Firstly, the land policy orientation changes from the populist agrarian policy, which is indicated with land reform implementation, to the land provision policy for investment that has happened since in the mid 1960’s. Secondly, the raising of palm oil as a primary commodity that has motivated government of Indonesia to expand the palm oil plantation area in many areas. And the thirdly, the promulgated amount of new policies that investment velocity. This includes the Plantation Law that issued in 2004, which was not to long after the post-democracy era in 1998, was strengthened the large plantation position within the small farmers.

Hilma Safitri


Work Cited

Bachriadi, D. (2011). Between Discourse and Action: Agrarian Reform and Rural Social Movement in Indonesia Post 1965. Adelaide, South Australia: The Flinders University.

Bachriadi, D., & Wiradi, G. (2011). Six Decades of Inequality: Land Tenure Problem in Indonesia. Jakarta, West Java, Indonesia: Agrarian Resource Center, Konsorsium Pembaruan Agraria and Sekretariat Bina Desa.

Bachriadi, D., Bachrioktora, Y., & Safitri, H. (2005). Ketika Penyelenggaraan Pemerintahan Menyimpang: Mal Administrasi di Bidang Pertanahan. Yogyakarta: Lapera Pustaka Utama.

Badan Pusat Statistik Indonesia. (2001). Statistik Indonesia 2000. Jakarta: Badan Pusat Statistik Indonesia.

Deininger, K., & Castagnini, R. (2004). Incidence and impact of land conflict in Uganda. World Bank Policy Research Working Paper , 3248.

Fitzpatrick, D. (1997). Disputes and Pluralism in Modern Indonesian Land Law. Yale Journal of International Law , 171-212.

Lucas, A. (1992). Land Disputes in Indonesia: Some Current Perspectives. Indonesia (53), 79-92.

Lucas, A., & Warren, C. (2003). The State, The People and Their Mediator: The Struggle over Agrarian Law Reform in Post-New Order in Indonesia. Indonesia , 76.

Parlindungan, A. (1991). Landreform di Indonesia: Suatu Studi Perbandingan. Bandung: Penerbit Bandar Madju.

Rostow, W. (1960). The Five Stages of Growth – A Summary. In W. Rostow, The Stages of Economic Growth: A Non Communist Manifesto (pp. 4-16). Cambridge University Press.

Safitri, H. (2010). Gerakan Politik Forum Paguyuban Petani Batang (FPPB). Bandung: Yayasan AKATIGA.

Sediono, T. M. (2007). A Brief Quarter Century Overview of Indonesian’s Agrarian Policy. The National Seminar of “Land and Household Economy 1979-2005: Changing Roads for Poverty Reductions. Bogor: ICASEP and UNESCAP-CAPSA.

Tabor, S. R. (1994). Transisi Agraria. In A. Booth, Bom Minyak dan Perekonomian Indonesia Setelahnya: Kebijakan dan Performance Ekonomi Indonesia di Masa Soeharto. Jakarta: LP3ES.

Wiradi, G. (2000). Reforma Agraria: Perjalanan yang Belum Berakhir. Yogyakarta: KPA-Insist Press-Pustaka Pelajar.

[1] Master Student of Agriculture and Rural Development in International Institute of Social Studies, The Hague, 2011-2012
[2] It is common to divide period in Indonesia, the first period called Old Order regime/era, which was in between the independence until 1966, then continue with the New Order era until 1998, which was famous with Suharto era, and the last is the Reformation era that exist until now.
[3] ‘Developmentalism’ is a term referred to the New Order’s capitalist-oriented development programs that is very popular words amongst the NGO and social movement activists in Indonesia. The meaning and concept derive mainly from Foucaultian criticism of global development in Wolfgang Sachs’s edited book, The Development Dictionary: A Guide to Knowledge as Power (1992).
[4] Law No. 5/1960 on The Principle of Agrarian
[5] Project of Management Unit (PMU) also commonly is called Division of Project Officer (Unit Pelaksana Proyek/UPP). This UPP Program started in 1973-1994 with the project’s name: Project of Tea Small Enterprises and National Private Big Estate (Proyek Pengembangan Teh Rakyat dan Perkebunan Besar Swasta Nasional/P2TRSN), North Sumatra Small Plantation Project (Proyek Perkebunan Rakyat Sumatera Utara/P3RSU), and Lampung Clove Development Project (Proyek Pengembangan Cengkeh Lampung/PPCL).
[6] It is the reasons why in between 1980-1987 around US$ 3.5 billion of community fund invested to tree crops small scale scheme. Less than a half of them as a foreign funded project (Tabor, 1994, p. 227) that derived from the foreign debt that given by multilateral institutions, such as World Bank and Asian Development Bank (ADB).
[7] Article no. 47, Law No. 18/2004.
[8] Tumpang Sari is one of collaboration working method for limited period that farmers can entails in cash crops agriculture activities in between the young tree crops. In this context, the farmers have a collaboration with the plantation estates, which is possibly to plant with contractual method within the main crops that planted by the estates, they are also maintaining the estates plant as a compulsory.