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Can Individual Land Certification Programs Be Successful in Indonesia?

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Editor’s note:

Welcome to our new English column of Islam Bergerak. Here we aim to publish intellectual works on – but not limited to – Indonesia’s social, political, economy and cultural issues in a critical and progressive lens. We welcome study cases, reviews, reflections, papers on Indonesia, other countries, theories, or comparative analysis that shed a light of our collective and particular contemporary problems and take the stand to question, decipher, and elucidate the matter. Our first article is a piece from Emilianus Yakob Sese Tolo on the nation’s actual issue on land certification. On 13 February 2018 President Joko Widodo signed Presidential Instruction Number 2 of 2018 on the Acceleration of Complete Systemic Land Registration nationwide which involves seven ministries and other state institutions (National Police, Attorney General, Head of Government Procurement of Goods and Services, National Institute of Aeronautics and Space, Head of Geospatial Information, governors, and regents/mayors). This widely publicized move is deemed to be a positive step for recognition and entitlement. However, many also express concern over the power to claim and reclaim the land by the state and corporation. In this article, Emil examines the evidences and highlights important critical points.

Since the 1980s, the Indonesian government has highly promoted individual land certification programs (ILC) (individual land titling programs) as a national strategy to facilitate national development. This promotion has been done by crafting national programs like Proyek Operasi Nasional Agraria (PRONA) and Layanan Rakyat Untuk Sertifikasi Tanah (LARASITA) (in 1981 and in 2006 respectively), which were launched by the National Land Agency (NLA) to facilitate the ILC programs in urban, rural and remote areas in Indonesia (Wahid et al., 2015). The Indonesian government believes that ILC programs could increase economic growth and welfare since they could provide legal security of land, which may increase land investment, reduce land tenure conflicts and enhance the use of agricultural land. This essay will examine the implementation of ILC programs in Indonesia. It will then look at the impacts of ILC programs, and will critically argue that they have failed to achieve their provisioned goals as they may have resulted in the increase of poverty rate, social conflict and forest degradation.

The process of land privatization in Indonesia began with the Dutch colonization (Soemardjan, 1962; Robison, 1986). In the New Order Era (1967-1998), the process intensified, and land privatization increased drastically as the aim of the government was to achieve significant economic growth (Robison, 1986). The government realized that land security was the key for the economic development in Indonesia (Lucas, 1992).

At the outset of the New Order Era, the agrarian programs in Indonesia, including ILC programs, were designed so as to facilitate both foreign and domestic investment, especially after the government passed two laws, namely the law No. 1/1967 on Penanaman Modal Asing (PMA) and the law No. 11/1968 on Penanaman Modal Dalam Negeri (PMDN) (Tolo, 2013; Robison, 1986).  In the ensuing years, these two laws have highly promoted the privatization of forests and land for the sake of the capital accumulation of foreign and domestic capital in Indonesia.

In order to run this agenda, in 1965 onwards, the government ravaged the Communist Party of Indonesia (PKI), which was the forerunner and advocate of land reform and an intransigent and revolutionary opponent of Western capitalism (Farid 2005, Törnquist, 2011).  In 1971, the government ceased to fund land reform programs, which were seen as communist doctrine and a hindrance for economic growth (Lucas, 1992). Achdian (2009) writes that they were also seen as a threat for a political coalition between the government and “military leaders, right-wing political party elites, technocrats who are pro-Western capitalism, landlords and rich farmers, and several domestic and foreign businessmen who own big capital” (p. vii). ILC programs, therefore, were principally introduced as a response to the perceived communist threat, but they may be promoted as a means to encourage “strong [economic] growth during the 1980s and 1990s” in order to hide “corruption, bad debt and government collusion with business interests” (Robison & Hadiz, 1962, p. 152).

Currently, this formalization of property rights is being adopted by the current government at the moment. Since the 1980s, the government has managed to issue 44 percent of its total target of 60 million land certifications in 2021. In order to reach this target, in 2016, the current president, Joko Widodo, planned to issue 21 million certificates in the next three years (2017-2019). The president also promises that the government will “give certificates to people every day,” and “will monitor it closely” (Adi 2016, Chin 2016). As a consequence, by 2013, out of the 100 million plots in 430 districts in Indonesia, ILC programs had covered some 45 million plots (Wahid et al., 2015). It is quite clear that for the government of Indonesia, land security and ILC programs have been considered to play an important role in economic development, and, conversely, unclear property rights regimes, as Myers and Hetz (2004, p. i) have it, are regarded as an “obstacle to economic development” and could undermine “investment,” “economic growth,” and “urban/rural development”.

Some experts on agrarian studies claim that ILC programs could enhance economic growth which would benefit the majority of people (Smith et al., 2009). Two proponents of ILC programs, Feder and Onchan (1987, p. 311), argue that ILC programs could “affect both investment incentives and the availability of resources to finance investment,” especially in the regions where there are many conventional banks. Indeed, by dint of having ILCs as collateral, people can easily borrow money from banks to run businesses and investment in certain sectors, including in agriculture sectors, since they provide legal certainty (Myers & Hetz, 2004). These advantages, which are provided by the ILC programs, have been extolled by the ILC exponents across the globe.

However, it is also worth considering that while ILC programs may increase overall economic growth, they do not do so equally. In fact, in many cases, the implementation of ILC in developing countries may have led to the increase of poverty (Meher, 2009). This is because the neoliberal ideology that underpins the ILC implementation in developing countries is too “income-centered and growth-oriented” (Boras, 2007; Boras et al., 2012), and thus neglecting sustainable and equal economic development (Tharin, 2008). Indeed, the main rationalization of ILC programs is to treat land as a commodity that can be easily bought and sold for the sake of capital accumulation (Akram-Lodhi, 2013; Polanyi, 1944), which could be referred to as “accumulation by dispossession” by Harvey (2003). As Maura (2013) points out, ILC programs have truly increased the happiness of landowners, but they have also contributed to the loss of land by the small landholders and poor families in developing countries (Mulyani 2015).

As an example, Gordon (1975, p. 145-146), through his ethnographic research in Manggarai, Indonesia, found that, in the 1970s, “a new class of wealthy entrepreneurs has emerged in Manggarai capable of buying land,” which was their first investment choice. This ‘market-led’ land expropriation is a common story in contemporary Indonesia among the poor and small landholders (Hall, 2013). The Indonesian NLA (2013) reports that, between 2011-2013, there were 2.3 million land transactions in Indonesia.

These transactions may have resulted in the widening of the economic gap between the haves and the have-nots in Indonesia as shown by the 2015 gini coefficient of 0.41 due to the fact that the rich who possess big capital could easily buy land from the poor for the sake of their economic investment. Likewise, the gini coefficient of land ownership has also escalated from 0.5 in 1983 to 0.7 in 2003, and continues its upward trend to the present time. Thus, nowadays, a farmer family in Indonesia on average only owns 0.3 hectares of agricultural land (Prakarsa Policy Review, 2011; Tolo, 2015) and many of them live in dire poverty (Pincus, 1996; Li, 2007). These negative consequences of ILC programs confute any arguments in favour of ILC programs in developing countries (Place & Hazell, 1993), as currently encouraged by the World Bank, the IMF and developed countries such as the US, England and Germany (Myers & Hetz, 2004).

Another rationale behind the promotion of ILC is its social function to prevent land tenure conflicts (Deininger et al., 2009). Kristiansen and Sulistiawati (2016) point out that “the main motivation for land registration is potential land conflicts in the future” (as cited in Wahid et al., 2015). As an example, in Mexico, Valsechhi (2014, p. 2) reports that people who possess ILCs are not worried about land tenure conflicts over their land, and they “can now leave their land” for the better jobs in the US “without fear of being expropriated or losing their inheritance” as many migrants from developing countries usually fail in their migration (Li, 2013; Breman, 2009).

However, these arguments are not always true since land tenure conflicts usually happen when governments launch ILC programs, especially in a society whose land is collective assets, which are strictly banned to be certified, as in Sub-Saharan countries in Africa (Place & Hazell, 1993) and in Flores, Indonesia.[i] In Indonesia, many communities in eastern Indonesia, especially in the village level, consider land as collective assets, and once these assets are certified individually, land tenure conflicts begin to happen.[ii] Indeed, according to the data, the more the Indonesian government promotes ILC programs, the more the land tenure conflicts that occur across the country, especially after the implementation of decentralization in 2001, such as in Mesuji, Bima, Pulau Padang, Jambi, Maluku, and Papua (Barron & Kaiser, 2009; Adam, 2001; Tolo, 2013a). According to the data released by LNA (2013), in 2013, there were 4,000 cases of land tenure conflicts in Indonesia (Wahid et al., 2015). These conflicts usually occur between the state and local people, investors and indigenous people, and among individuals within the same society as caused by the land privatization (Lucas, 1997; Prior, 2013; Warren & Lucas, 2013; Barron & Kaiser, 2009; Adam, 2001; Kristiansen & Sulistiawati, 2016; Dale, 2016; Tolo, 2013a). In some cases, the district NLAs usually issue ILCs in order to achieve national targets, and tend to ignore the strict procedures that should be followed.[iii] Moreover, the majority of districts governments in Indonesia see ILC programs and investment as a means to generate income for the development of their regions and other political purposes of political and bureaucratic leaders at the expense of severe land tenure conflicts, people marginalization, and environmental degradation (Tolo, 2013a).

A further reason why ILC programs are implemented is that it is hoped they could improve the use of agricultural land. Feder and Onchan (1987, p. 311) suggest that ILC programs may also “induce higher levels of land improvements.” They further maintain that, by owning ILC, landowners may be encouraged to utilize their land more effectively and efficiently (Feder & Onchan, 1987; Maura, 2005), especially in the regions where land is abundant such as Maluku, Sulawesi and Kalimantan (Tolo, 2015; Haris et al., 2008; Moeliono et al., 2009; Li, 2007).

However, the ILC programs in Indonesia may have increased deforestation rate as people who have certified their land, which may contain forests, tend to either convert their individual forests into agricultural land or sell them to oil palm and cocoa plantations and logging companies such as in Kalimantan, Maluku and Sulawesi (Haris et al., 2008; Moeliono et al., 2009, Li 2007; Tolo, 2015). This forest clearance for agricultural land may have led to the land grabbing across the country, as has occurred in other countries in Asia and Latin America (Borras & Franco 2011; Borras et al., 2012, Ricketts, et al., 2010), which has led to the loss of more than 143 million hectares of Indonesian forests, especially during the New Order regime (Lucas, 1992; Lucas, 1997; Obidzinki et al., 2013; Magdoff, 2012; Tolo 2013a). The land grabbing in Indonesia may have also led to the increase of forest degradation due to the fact that district governments highly promote the implementation of ILC programs and encourage their inhabitants to convert their individual forests into agricultural land (Noordwijk et al., 2008, Diprose, 2017).

As a result, the deforestation rate increased from 1.8 million hectares annually in 1990 to 3.8 hectares annually in 2003/2004 (Tolo, 2013a). Although this deforestation did contribute to the increase of economic growth, accounting for about 3-4 per cent of Indonesian GDP (World Bank, 2006; Tolo 2013b), it did not significantly reduce the poverty rate in Indonesia (Tolo, 2015). It is quite obvious that the public policy in the agrarian sectors in Indonesia, especially in relation to the implementation of ILC, may have contributed to the increase of Indonesian deforestation rate (Tolo, 2013a). Thus, the remaining 90.1 million hectares of Indonesian forests may be threatened by the ILC programs in Indonesia in the future (Noordwijk et al., 2008; Brockhaus et al., 2012, p. 32; Scheyvens & Setyarso, 2010)

In conclusion, while ILC programs aim to reduce the poverty rate, social conflict and deforestation, in many cases they appear to have had the opposite effect. This essay has shown that the occasional success of ILC programs in some countries, such as Thailand and Mexico, does not automatically occur when implemented in Indonesia (Feder & Onchan 1987; Valsechhi, 2014). One of the possible reasons behind this failure is that the ILC programs in Indonesia seem to have ignored the cultural and structural conditions of the society in relation to the land property rights regime. This may be because, as Li (2007: 11) has warned, many development projects in Indonesia, including ILC programs, tend to exclude “political-economic questions –questions about control over the means of production, and the structures of law and force that support systemic inequalities.” Therefore, the government should reevaluate and reassess ILC programs, before replacing them with another land titling system, which is more aware of these “political-economic questions.” This in fact needs further research so as to find the best way on how to craft a new land titling system, which fits better with the Indonesian cultural and structural context, hence bringing greater welfare to the vast majority of people.

This is a full version of article previously published at http://indonesiaatmelbourne.unimelb.edu.au/why-land-titling-isnt-working/

Notes:

[i] Interview with the head of adat (traditional leader) in Maulkeli Flores, 24 November 2013

[ii] Interview with the head of Luhu village, Maluku Tengah, Seram island, Indonesia, 1 December 2013; Interview with Lorens Pone, a bureaucrat and adat leader in Mbay, Nagekeo, Indonesia, 20 November 2013

[iii] Interview with the head of adat (traditional leader) in Maukeli Flores, 24 November 2013; interview with the head of district Land Agency (BPN), Nagekeo, in Mbay 21 November 2013 

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