PAPER RESUME

CAN LAND TAX BECOME INSTRUMENT TO CONTROL LAND CONVERSION?:

STUDY OF CORRELATION BETWEEN LAND TAX AND FARM LAND
CONVERSION IN SLEMAN, YOGYAKARTA

Thesis
as a fulfillment to obtain a Master of Engineering degree

in
Magister Perencanaan Kota dan Daerah

Proposed by
Ratih Purnamasari
2012/342446/PTK/08581
to
POST-GRADUATE PROGRAM
FACULTY OF ENGINEERING
UNIVERSITAS GADJAH MADA
YOGYAKARTA
2015

CAN LAND TAX BECOME INSTRUMENT TO CONTROL LAND CONVERSION?:

STUDY OF CORRELATION BETWEEN LAND TAX AND FARM LANDCONVERSION
IN SLEMAN, YOGYAKARTA
Ratih Purnamasari1, Leksono Prabu Subanu2, Retno Widodo Dwi Pramono3

Abstract

Farm land conversion in in Sleman agglomeration raises significantly, about 42 hectares in three
years, between 2011 and 2013 only. This particular issue occurs mostly in 9 villages under subdistrict (desa), all included administratively in the border of Sleman regency, which
geographically reside near city of Yogyakarta on its lower landscape. This special topography
condition provides passive opportunity for lands in this sub-districts to be converted from
farming into commercial purposes. Starting from the point of land conversion, and Land and
Building Tax Imposition Base (NJOP) in farming sector, this paper highlights correlation formed
between NJOP base-rate measurement- Transaction Value and Land Conversion (in hectares)
over farming lands in Sleman.
This research took place in Sleman agglomeration, which consists of five sub-districts
(kecamatan) and nine villages: Kecamatan Depok (Desa Maguwoharjo, Condongcatur,
Caturtunggal, and Maguwoharjo); Kecamatan Mlati (Desa Sinduadi, Sendangadi); Kecamatan
Ngaglik (Desa Sariharjo); Kecamatan Godean (Desa Sidoarum); and Kecamatan Gamping
(DesaTrihanggo and DesaNogotirto). A quantitative approach is used, based on statistical
analysis Pearsons Correlation test and Hansens Gravity Model. These two instruments will
help us to analyze and measure the land conversion from 2011 to 2013, with a handful mapoverlaying technique.
Analysis will help us to understand the main problem, which is how the correlations happen
between NJOP and Transactional Value, and farm land conversion, also correlation between this
land conversion and strategic zones, areas with highest gravity effects on population density
and differences of living needs. This will result answers on how significant these variables
correlate each other, how land conversion is strictly derived from distance-to-gravity-center
issues, and how NJOP will control the land conversion in the future.
Keywords: Sleman agglomeration, farm land conversion, gravity, NJOP
1

Post graduate student of Urban and Regional Planning, Universitas Gadjah Mada, Yogyakarta, 2015
Lecturer of Urban and Regional Planning, Universitas Gadjah Mada, Yogyakarta
3
Lecturer of Urban and Regional Planning, Universitas Gadjah Mada, Yogyakarta
2

1. Introduction
Land conversion occurred massively
in Sleman agglomeration, the largest
administrative regency in Special Region
of Yogyakarta, during 2000 until 2010.
The trigger of this particular issue is
presumably a rapid growth of business in
property and real estate. Unfortunately,
this rapid growth in responding
urbanization demands on private houses
and new living space near the city, forces
some land owners to release their land
previously used to grow crops or rice to
be converted in commercial area.
In last five years only, there have
been
10
commercial
buildings
(condominium-hotel, apartment, stores,
mal and houses) built on lands that were
formerly rice fields. Rice fields are
favorite because its price per meter is
relatively lower than any other kind of
land use. This farm land conversion
happen almost entire parts of Sleman,
which reside near city borders, has
triggered land tax and market value to
grow wildly.
Tax rate for lands located in area
with higher gravity can grow above
Rp.1.000.000 m/year. Government have
proclaimed their policies regarding this
problem by a set of rules, including Perda
No. 11 Tahun 2012 (PBB Perkotaan dan
Pedesaan), a tool that is said to save farm
lands 21.113 acres in large area. This
roadmap targets to conserve:
a. 0,01%
sustainable
farmland
(including rice fields, multi-crop
agricultures (palawija), and lands in
national conservation zones

b. Non sustainable farm land consisting:

- 1.000m
- 2.000m
- 5.000m
of public and private lands.
This maps leads to an incentive
scheme, meant to help land owner to hold
their farm lands without selling it. This
set of rules help land owners with lowest
tax as possible as long as they keep land
as productive agriculture resources.
The contradiction comes up when in
some other programs, the local
government (regency/Bupati) has to
pursue their targets to grow tax income
from commercial growth, sourced mostly
from commercial buildings and real
estate markets.
In fact, change in land tax scheme has
been affected mostly by big opportunities
come from commercial areas, offering
high annual tax income regarding public
trading
sectors,
housings,
and
commercial advertising. When a farm
land suffer from rapid growth of
commercial buildings, it also suffer from
logical and economical raise in land tax.
The rice fields NJOP can rise to the sky
because land values of stores (ruko) build
around it has raised first.
This is a form of tax injustice because
the poor farmers have to pay tax than
before just because housing and new
stores were built around their farm lands.
Based on this problem, we can put a
scope into our discussion with the most
important issues, which are:

a. How
land
conversion
in
agglomeration Sleman during
2010-2013?
b. How correlation formed between
land tax and land conversion in
Agglomeration Sleman?
2. Relevant Literature
Two biggest factors affecting land
conversions in Sleman come from: 1)
external and 2) internal aspects. For external,
high population growth demands more
spaces while on the other hand, this include a
strong set of rules ratified by the government.
Economical motives clearly explained
by (Isa: 2004) described that high land rent
occupied from non-agricultural sector has
been compared to those taken from farming
sectors. Lower incentives in farming,
combined with high production cost and low
prices and crops have been long became
strong motives to sell lands, even when the
land prices is in wild dynamics.
These economical factors span on the
same line with Von Thunnens theory on
land rent, saying that farming activity
intensity will decrease if the farm land is in a
close distance to city center. In contrast to
this hypothesis, Alonsos theory proclaimed
that there was only one city center, with the
highest population density, with highest
promise of living standards.
Picture 1. Scheme of Theory Land
Tax and Land Conversion

Source: Land theories compilation, 2013

Land use plan explained by

Jayadinata
(1999)
showed
that
instruments to control the land use can be
found in government policies on farm
lands. This set of rule information
regarding the farm land use organize
systematically to fulfill land use, land
development, land controlling and the
divined status of land owning. Long term
efforts to reduce land conversion can
proceed in the same way Law
Enforcement has taken places, when set
of rules limiting land ownership have
been ratified and implemented.
Land ownership which violates these
rules and expand out of expectation has
to be adjusted accordingly, and the owner
has to be responsible for the exceeding
prices. If there would be miss- conduct
on violation found in the future, e.g. data
manipulation on land ownership, the
government can force the owner to drop
his rights on the land (Suhadi, 1993:5).
3. Method of Analysis
A deductive approach is used in this
research, to explain the findings in both
quantitative and qualitative ways. A
mixed method consist of these two
methods above to obtain a valid data
analysis to explain the problems
comprehensively
problem
clearly
(Creswell, 2013).
This research took place in Sleman
Agglomeration, especially in sub district
located near the city borders, which are:
a. Kecamatan Depok: Caturtunggal,
Condongcatur, Maguwoharjo
b. Kecamatan Mlati: Sendangadi and
Sinduadi
c. Kecamatan Ngaglik: Sariharjo
d. Kecamatan Godean: Sariharjo
e. Kecamatan Gamping: Nogotirto and
Trihanggo

The sampling technique derived

from clustered sampling method with
three steps:
a. Map overlaying techniques from land
use map of Sleman agglomeration
from 2011 to 2013.
b. Defining parcels for commercial uses,
private houses and apartment.
c. Adjusting parcel location that were
already converse, in map according to
Regional Income Agency (Dispenda)
NJOP data.
After obtaining three steps above, we
conducted data gathering process,
consisting two main methods:
a. Field survey which where accomplish
by visiting study area in all sub district
to
average
primary
data,
documentation photo and findings.
b. Interview:
with
most
relevant
informant
regarding
farmland
conversion and land prices (mostly for
villages)
Finally to process all the data found
about
techniques,
we
analyzes,
connecting all findings, with relevant
theories and precise analysis tools. To
make sure that we use correct instrument
and method, we tend to describe:
a. Analysis on land use changes
Analysis on land use changes was
conducted
using
map
overlay
technique with land spaces data in
2011 until 2013 taken from Google
Earth satellite images. In addition for
2013 land use map we proposed
documentation from DPPD Sleman
regency.
b. Analysis on correlation between
NJOP and farmland conversion
This bird of analysis were accomplish
using SPSS.17 statistical analysis
software with Pearson Product
Moment Correlation test. This
Correlation test was aimed to explain

correlation between NJOP and land

conversion in Sleman agglomeration.
c. Gravity analysis on education areas
and it is effect on farm
land
conversion:
Analysis technique use will prove
either the theory of gravity in city
spaces will prove or not that education
center and commercial area have big
impact to attract population and to
trigger land conversion in certain
radius.
4. What we found
This research shows that there is a
correlation formed between NJOP and
land conversion occurred in Sleman
agglomeration during 2011 to 2013. By
using Pearsons correlation test we try to
prove that there is a correlation between
land conversion and land tax, based on
parcels distance from main road,
education centers, and city squares. We
found that, based on above analysis
technique, that there is a significant
correlation
between
NJOP,
Land
transaction values, and land conversion
happened in Sleman in its three sub
districts: Depok, Mlati, and Ngaglik.
Concentration of property business and
housing investments has shifted towards
critical points of interests that brought
NJOP beyond its economical and logical
values, even if the lands location is in
fact intersect with a villages where most
farmers live and grow crops.
The demands of house mortgage and
property
investment
(hotels,
condominiums, apartments) in highgravity areas offers big opportunities to
developers and contractors to grow their
business, by taking cheap land such as
rice fields in village just outside city
borders. This result to a new pattern of
competition, by occupying the cheapest

land as possible with the best location and

distance to the city. We found that,
parcels such as Babarsari, Palagan, and
Condongcatur had opened as a gold
candidate to contribute more to land
converting business based on their close
distance to northern border of the city
where new malls and department stores
were already build in last three years. In
these parcels, the demands of private
housings and property investments grow
even higher following bigger population
resulted from urbanization, growing
number of new university students, and
new business came from another cities.
Although rent prices were claimed to
grow high, its dynamics run in a wild
move and sometimes out of the rule.
While there is a clear indications of
how farm lands are easily converted in
three sub districts, the problem does not
show a significant effect in another two
others. In Godean and Gamping, land
conversion occurrence is not affected, in
major measure, by the high demand of
properties and hotels. In these two sub
districts located far outside the city
center, land conversion is not triggered
firmly by elements of distance,
population growth, or education centers.
In fact, there is not any big university or
shopping mall located in these area.
Gambar 2 Grafik Perkembangan NJOP di
Aglomerasi Sleman

Sumber: Hasil analisis, data NJOP dan

jarak persil ke pusat kota dan UGM, 2015

In Gamping, farm land conversion is

merely affected by land prices or tax. Sub
districts with this characteristics tend to
wait for a slow dynamics. Shifting values
of NJOP does not show a significant
change to price of lands, although the
demands already rose. Land conversion
in Gamping and Godean was mostly
triggered by projection. Investors dont
see it too promising to build as soon as
possible, but they worth to wait. This
projection leaves Gamping and Godean
into the next gold candidate, where
investors still consider buying farm lands,
but to be converted in the next few years.
Projections about the possibility of land
development, new infrastructure to build
in the future make investors wait the
moment to occupy and build these two
sub districts when the time is right.
Despite that, the NJOP still in the climb
to higher values because even
projections can show difference in the
market.
5. Discussion
NJOP always follow land conversion
in sub districts intersecting with city
borders. But, some facts show that
villages in northern Sleman have not
always included NJOP as instrument
behind
the
conversion
dilemma.
Speculations play another role, when
some people, with economic motives,
tend to make deal with developers to
meet best prices and best locations. We
discovered this fact while in Mlati, where
low-price rice fields is in fact owned by a
single person with selling motives. This
particular person bought non-productive
farm lands from poor farmers, put them
in idle for several years, wait the price per
meter to grow in multiple, he then sold
them to property developer who came
with the best offer. This already happened
for decades, and the king of the land

always have a big bargaining position

when it relates to land conversion
business.
As far as we found, high demand of
commercial building and housings in
Sleman has formed some new economic
zones based on new and high NJOP.
Information about land prices had not yet
been a clear instrument to control land
use, both in city center and in villages
located near its borders. On the other
hand, information about land prices had
become a gambling dice for some kings
of the lands who occupy rice fields only
for future economic motives. Then came
monopolists, and more rice fields will be
offered because farmers already given up
the injustice tax. This is how market work
in city-village relationship economy.
Nasucha (1995:220) described that
land prices in areas with high density
could climb high in multiple values. This
is mostly because the absence of clear
information regarding how land use
should be managed by owners, both in
legal and material concerns. Land
conversion and tax problems in Sleman
includes two economical motives: 1)
present investment and 2) future
investment. Land conversion with the
first motive will always target the highest
bid, while the conversion in the second
motive pursue the future opportunity to
buy and own land when the prices will
probably climb high.
Land conversion with the second
motive can be seen under spotlight today
because many farmlands have lost their
productivities on crops, suffer from high
tax (because growing commercial
buildings around his rice field), finally
gave up the land to the developers, rather
than to pay the tax, much higher than
their income from the crops. This has
been the main reason during 2011 to
2013, a lot worse than 2006 to 2010,
when the first motive (present

investment) mostly won. Today, in the

further cases, we found that land
conversion has shifted to mixed-motive
problem: combination of present and
future investment, in both farmer and
developer sides. Every holder plays a
same role because they already know that
commercial buildings will finally get into
the villages.
Out of this big picture we can draw a
map, showing how each property
investment models (present and future)
correlate strongly with space pattern both
in centripetal and centrifugal gravity.
This centripetal force shows that
farmland conversion has been crawling
closer to city centers in the past decade,
as seen in Caturtunggal and Sinduadi.
Meanwhile, centrifugal force shows that
land conversion occur more wildly in
villages outside the city, like Sendangadi
and Maguwoharjo.
Gambar 3 Temuan Penelitian dan Diskusi
Teoritik

Sumber: Hasil analisis dan studi literatur, 2015

Zonation rules have long been

proclaimed to be able to prevent land
speculation and monopolistic practices

over farmlands. But reality shows that

land use control for newly growing cities
faces new challenges, especially those
came when rules have yet been ratified.
Land owning with a limited area of
coverage has been ruled as objects to
progressive tax scheme, according to
PBB and RDTR. This new set of rules is
hoped to be a strong instrument to
prevent land conversion to occupy
productive rice fields and other
agriculture zones.
As for farmlands, the government
have been struggling to complete their
data and maps containing farmlands
owning pattern, in order to explain clearly
which farmer has a right to control which
land, and for how long. This new system
will help the government to put on zoning
maps showing how farmlands will be
monitored and considered as high-priority
objects to tax incentives.
6. Conclusions
NJOPs in rice field parcels in most
Sleman agglomeration (according to
DISPENDA) shows that if real
transaction values of a land is in fact
lower than non-agricultural land.
Farmland conversion in strategic areas,
around northern Ring-Road, Jalan
Magelang, around Universitas Gadjah
Mada campus, airport, and city center
contribute the widest range of prices. This
new-high NJOP values show that there
are attempts to follow the type of lands
and how zones grow around rice fields or
target farm lands.
This particular economic targeting
and motives shows more difficulties to
land tax as an instrument to prevent these
new ownerships, especially for areas
located outside city borders.

7. Recommendations
Farmland conversions in Sleman
have raised significantly during 2011 to
2013, and have not yet meet a resolution
on how a proper instrument should be
used to control its high rate. A rigid land
control scheme was ratified, but the issue
remains hot because the conversion is
keeping on its own direction and the tax
regulation goes some other ways. As a
conclusion and recommendations resulted
from this study, we offer some findings
that might be helpful regarding how to
minimize the possible impacts of land
conversion and the worrying decrease of
farm lands. We recommend the Sleman
district authority to:
a) Tighten mechanisms of obtaining a
farmland for commercial use,
applying a comprehensive terms and
conditions of land owning and
selling, by considering all aspects to
maximize land use for productive
farming. A strict standard of land
trading should be mandatory to
prevent land conversion with only
economic motives.
b) Coordinate and map all policies in a
structured and measurable scheme to
rule all sectors to protect farmlands
from unregulated buying and selling.
Land prices per meter should be
ruled, not just based on how
demands are formed in the
commercial markets.
c) Make a new set of rules to control
land owning and its terms, policies
for new residents and their
ownership rights, as good as new
incentive schemes for farmers who

keep their lands as

agriculture resources.

productive

Protections over economic and social

interests of farmers can be maximized by
giving responsibilities and full authorities
to authority (Bappeda, DPPD) to
optimize surveillance and management to
control ownerships over lands. RDTR can
be and always be a comprehensive
standard to coordinate all proper NJOP
values in fairness. Each area and sub
district has to be monitored, especially
those with high agricultural productivity
and those that suffer from potential lost.
Above all, any kind of violations over
land ownership should be tackled with
the strongest power of will, in order to
protect the core value of humans land, as
a source of life.
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