HABITAT INTL. Vol. 1X. No. 4. pp, 37-52.

1994
Pergamon Elsevier Science Ltd
Printed in Great Britain
0197-3975/94 $7.00 + 0.00

0197-3975(94)ooo38-7

Urban Land Consolidation for

Metropolitan Jakarta Expansion,
1990-2010
RAY W. ARCHER
Asian Institute of Technology, Bangkok, Thailand

ABSTRACT

Urban land consolidation (LC) is an international technique for managing and

financing the conversion of rural land to urban land, which can provide a
number of advantages over the usual process of urban land development. It is
now well established in Indonesia as the Ministry of Agrarian Affairs/National
Land Agency (BPN - Badan Pertanahan Nasional) has undertaken 102 LC
projects in 25 provinces since 1981. However, only three of these projects were
in West Java Province to provide urban land for Jakarta’s rapid expansion, and
this omission should be corrected.
The Metropolitan Jakarta Region population is projected to grow from 17 to
30 million during the 20-year period 199~2010, with the urban area population
growing from 13 to 27 million. This paper recommends the formulation of an
LC programme to supply some of the urban land needed to accommodate this
growth. The paper is presented in three parts. The first outlines the land and
building development taking place around Jakarta. The second describes LC
as an international technique and outlines the Indonesian experience with it,
including case study information on a recent LC project in Medan and the lessons
it provides. The third identifies the possible applications of LC in Metropolitan
Jakarta and recommends the formulation of a programme of LC projects to
increase the supply of urban land in the municipalities and regencies around
Jakarta.

LAND AND BUILDING DEVELOPMENT FOR METROPOLITAN JAKARTA

EXPANSION’

The Metropolitan Jakarta Region encompasses Jakarta and its three neigh-
bouring regencies of Bogor, Tangerang and Bekasi. This region is usually known
as Jabotabek (an acronym for Jakarta, Bogor, Tangerang and Bekasi) and the
three regency area surrounding Jakarta is usually known as Botabek (an acronym
for Bogor, Tangerang and Bekasi). The population of Jabotabek is projected to
grow from 17 million in 1990 to 30 million by 2010 with most of this growth,
10 million of the 13 million, taking place in the Botabek areas.
The government activities in land administration, the provision of infra-
structure, and land-use regulation in Jabotabek are shared between the central,
provincial and local levels of government. In the case of Jakarta, it is administered

HA6 18-4-D 37
by DKI Jakarta 21s a “special capital prc~vincc” in which tho provincial and
l~~ulli~ip~iladministr~ttions are intcgratcd. In the USC of the sul-r~~L]rldil~~Botabek
;trca, it is administered at the provincial Icvci as part of West Java Province, and
at the local Ict~l by the two municipalities (h-ortrrl?trr!~trs) of Bogor and Tangorang
and the three rcgcncics (krrh~rptrrcws) of Bogor, Tangerang and Bekasi. Most of
the ~OVCI-J~JIICJI~ experience and rcswrct’s for matlaginp and financing Jabotabck
urban devclopmcnt are with DKI Jakarta. whcrcas most of the future growth
Mitt take ptacc in Bntabck. Therefore. thcrc is urgent need to strengthen the
manngcmcnt and financial rcsourccs of the Botabek local governments, and to
make full use of bencfciul land developmcnt techniques such as LC.
The land ownership, tcnurc and transfer system xiministcred by the Ministry
of Agrari;tn A~~~irs/~~lti(~n~~l Land Agency is of ~~ind~ln~~nt~~timportance in
urbnn land ~i~~~~tol~Jn~nt because it pro4cs the ~~)~~tld~~tio~~ for the operation
of the private sector in land 174 creating, protecting and ~I~ilit~ltin~ private
propfxt> land rights. It also &vi&s the private sector urban dcvelopmcnt into
its formxl and informal parts by the registration and non-registration of land
ownership. It directly invotvcs the GwernJlleJlt in the private tand assembly for
the (formal) private sector urban devctopment projects because the Indonesian
land o\vnership and tc‘nurc system is administercci towards social ot>jcctives
under the Brrsic rlgrur.irrrl .i.tr~’ (1960. Articlc 6). which gives the Government
a positive control power (rathcr than ;I police regulatory powcr) over private
Ixxi ownership rights. The Government. thereforc, operates ;I location permit
system and ;I land ownership and tenure conversion system that involves it in
the I~iLln~h~n~ of every rent estate company d~v~l~)pni~nt project.
The physical conversion of rural land to urban USC for the expansion of
M~trop~)iit~lli J:tkiirt;l mainly takes place by private sector land and building
dcvolopment bccausc most of the urban-fringe land is privately ctwncd, most
of the dcvelopcrs xc pri\ratc. and most of the owners and users of the
urban land and buildings are private. The devclopcrs arc the many separate
persons. households and companies that undertake their land and/or building
cicvelopment projects for their private benefit and profit. The main types of
developer arc the landowners and the subdividers that subdivide rural land
(including krrnz~xrq village land) into building plots for sale, the households
and business firms building their own houses. shops. factories. etc. on these
plots. and the rat cstatc companies that undurtako land slll~divisi~~n and building
projects to product ready-made houses, shophouses. shops. factories, etc. for
snlc. This private ~i~v~l{~pn~~nt activity can be divided into f~~rmal and informal
private development.
The formal private devciopmcnt is the land subdivision and building dcvelop-
ment that is carricci out on land that is held on ;I registered title, with the
permits required. and to the standards specified by the planning and building
regulations. Most of’ this formal development is curried out by registcrcd rcul
estate companies that develop land and house projects to produce ready-made
houses fog- wit, shophousc projects. as well as shopping centres, factories.
offices and hotels, and that also develop and operato industrial estates. These
real cstate companies are not permitted to subdivide land into building plots for
sale. oxccpt in the case of int~ustri~~l estates where they can sell serviced sites for
factories. The format ~i~~~~l~~prncIltalso inctudcs the many building d~vcl(~prn~llt
prt$xts. includi1~~ single house pro_jccts. constructed by persons and companies
on their land which the): purchased with a registered iitle or had converted to
;I rcgistcred title.
Int‘o~-mal pri\zatc development is the land subdivibion/partition and building
construction carried out on land that is not held on a registered title. As
dcvctopment and building permits cannot be issued for these projects on
unregistered title land they xc undertaken without these permits. so that the
informal development is outside the land-use regulatory control system. Most of
this development also takes place in areas with little existing network and social
infrastructure. A fourth characteristic of the informal development is that the
housing, and most other buildings, are constructed by the owners’ self-build,
which gives them control of the building design and standards, and the method
and staging of its construction. Households use this self-build control power to
provide themselves with affordable housing.
Most informal development is on land held on customary (adat) title which
the owners demonstrate with various documents such as property tax receipts,
notarized purchase receipts and transfer papers, and letters from the sub-district
and district headmen. Some of this unregistered title land is held on what is
termed “possessory title”, being former state land that has been occupied and
farmed by the owner and his family for decades. These owners also support
their ownership claim with various documents to show their long possession
and use of the land. Only a small part of the informal development is by
the squatter settlements on state or public land, and most of this takes place
within the DKI Jakarta area. Therefore, most of the informal land and building
development is semi-legal, being on private land with tenure but without the
regulatory permits.
Most of the informal housing development is located on the dry (&rat) land
in and around the existing kampung villages, and on land near the existing
urban settlements and along the public roads. In the case of the kampungs,
the landowners’ houses are on their parcels of village land. They partition it
and sell portions as building plots with pathway access for self-build housing.
Many also build rental rooms on part of their land parcel. This land partitioning
and housing construction takes place incrementally so that the development and
population increase in kampung settlements is continuous and can be described
as densi~cation. This densification is not guided by any road/lane layout plan,
and the continuous construction of houses and rental rooms is usually not
supported with the installation of piped water supply, drainage lines or sanitation
systems. As densification increases, there is growing congestion, increasing
health risk and environmental deterioration. When sufficient densification and
deterioration have taken place they become eligible for upgrading under the
Kampung Improvement Programme (KIP). Guided land development (GLD)
through the early installation of road/lane layouts and utility service lines has
been proposed for the kampung settlements and other informal development
areas, but it has not yet been implemented.
Most rural land is unregistered. Although the rural landowners value and
prefer registered title to their land, very few apply for it, mainly because of
the costs and difficulties of obtaining registered title. Therefore, most of the
rural land being converted to urban use is on unregistered title. Most of the
private individuals buying this land for subdivision and building purposes do
not apply for title registration and develop it informally, so that about 70% of
the new housing, and many of the other buildings in the urbanizing areas of
Botabek, are developed informally and by the owner’s self-build. This informal
development provides affordable housing for the majority of the population.
The real estate companies, other private companies, the National Housing
Corporation (Perumnns) and some of the private persons buying the unregistered
land do arrange its conversion to registered title (on their permissible tenure).
When the real estate companies intend to purchase and assemble rural land for
their development projects they first have to obtain a location permit {izin ~0~~~~~
and land purchase permit to authorize their land purchase and its conversion to
registered title. The location permit gives the developer the exclusive right to
negotiate the purchase of the land within the designated area. This mechanism
assists the developers to assemble land for their projects. However, much more
40 Roy W. Archer

land has been designated under location permits than is being developed, so
that a large amount of the land suitable for urban development in Jabotabek
is effectively blocked from development.
This sketch of the land and building development taking place for the
expansion of Metropolitan Jakarta indicates that LC projects could be used
to improve this development in four main ways. First, by bringing additional
unregistered rural land into the formal development system. Second, by con-
structing the desirable network infrastructure in each project so as to convert
the rural land for sustainable urban development. Third, by creating a supply
of serviced building plots on registered title for self-build housing development.
Fourth, by bringing some of the land currently blocked from development by
the excessive location permit designations, into early development.

URBAN LAND CONSOLIDATION - AN INTERNATIONAL TECHNIQUE

Urban LC is a land development technique used in many countries for managing

and financing the urbanization of selected urban fringe areas, whereby groups of
land parcels are consolidated for their unified design, servicing and subdivision
into a layout of streets, open spaces and building plots, with the sale of some
of the plots for cost recovery and the distribution of the other plots back to the
landowners. A definition from another perspective is that LC is a technique
for converting rural land into urban land whereby a group of neighbouring
rural landowners are combined in a compulsory temporary partnership for the
unified planning, servicing and subdivision of their land, with the project costs
and benefits being shared between the landowners. Each landowner contributes
rural land and receives back building plots, with his/her land area being reduced
but its market value increased so as to give him/her a significant net profit. It
is a simple concept, as is illustrated by Fig. 1 which shows an LC project to
produce serviced building plots. Figure 2 shows a partial LC project to produce
reshaped and serviced land parcels ready for subdivision into serviced building
plots. As LC converts rural land to a planned layout of public roads, public
utility networks, open spaces and serviced building plots, it provides the physical
foundation for sustainable urban development.
LC is widely used in Japan, South Korea and Taiwan, and is used in some
cities in Australia and Canada as well as many cities and towns in Europe. It has
also been adopted in Indonesia and Nepal, and is being introduced into Thailand

Rural
land
parcels
Landowners’

Fig. 1.
 &ban Land ~o~so~~d~tion for ~~tro~~~ita~ Jakarta Expansion, ~~2OIO 41

Rural
land
parcels

Private land
c servicing and
The land consolidation project
subdivision
projects

Fig. 2.

and Malaysia. The technique has different names in different countries, being
known as land readjustment in Japan and South Korea, land consolidation in
Taiwan and Indonesia, land pooling in Australia and Nepal, and land replotting
in Canada. These different names reflect different parts of the LC process. There
are differences between countries in the form and procedures of their projects,
but they are all landowner partnerships for the unified design, servicing and
subdivision of their land with project cost recovery by the sale of some of the
new plots.
LC projects are usually undertaken by local governments, but may also be
undertaken by central government bodies such as a highways department or
public housing authority, or by a landowners’ cooperative company. In a typical
project, the LC agency selects the area to be developed and identifies the land
parcels (and their owners) to be included. A draft LC scheme is then prepared
to plan and define the project, and to demonstrate its viability and feasibility.
The scheme for the project, therefore, includes a map of the original land
parcels; a list of the land owners, parcels and valuations; plans of the road
and infrastructure layouts; a list of plot valuations; a plot reallocation plan; an
implementation programme; project cost estimates and a financial plan. It should
also include a written statement of the project objectives and principles, and the
implementation measures to be used. The scheme is prepared in consultation
with the landowners, and in cooperation with the government agencies that will
be involved in its implementation. It is prepared as a draft scheme and then
presented for approval by the majority of landowners and placed on public
display. After any necessary amendment it is submitted for central government
approval. The approval final scheme authorizes and regulates the implementation
of the LC project.
The LC agency then arranges a short to medium term loan to finance the
implementation activities and infrastructure works. It designs the engineering
works and engages contractors to construct them. The land is surveyed, serviced
and subdivided into streets, open spaces and serviced building plots together with
the issue of title documents for the plots. The public streets and open spaces are
transferred (dedicated) to the local government. Some of the building plots are
sold in order to recover the project costs and repay the loan, The remaining plots
are transferred to the landowners in proportion to their share in the project, and
they can then sell and/or build on their new plots or hold them unused.
 Part of the importance of LC is due to the fact that it is a multi-purpose
technique for managing urban land development. It is a technique for:
l assembling separate land parcels into larger project sites for their unified
design, servicing and subdivision;
l government land acquisition for public roads and facilities, at no cost to
government;
l constructing the on-site network infrastructure, at no cost to government;
l implementing the officially planned pattern of urban land-use:
l achieving efficient land development at acceptable standards;
l sharing the costs and benefits of land development equitably between the
landowners in the project site;
l achieving the timely development of urban fringe areas “ripe” for develop-
ment; and
l overcoming possible development blockages such as the need for special
infrastructure works.
These are the potential benefits of the LC projects usually undertaken by
local governments for local urban development. LC is also used by central
government agencies, such as the highways department, to implement sections of
their infrastructure projects such as a main road or a highway. An LC project can
be undertaken to construct a section of the main road together with a network
of connecting distributor/collector roads so as to achieve urban development in
depth instead of the usual “ribbon development” along the new main road.
Most LC projects can achieve most of these benefits. As each project will have
many participants with different interests and priorities, it is desirable that the
scheme for each project should clearly state the objectives and priorities (the
target benefits) of the project. As LC is a technique of land conversion for
sustainable urban development this should be an objective of every project.
Although LC has real advantages over the usual private sector land develop-
ment process, they are potential advantages that have to be achieved by the
appropriate and efficient application of the technique. The technique has to be
used selectively and each LC project has to be financially viable and equitable,
and then efficiently implemented. It is appropriate to use the technique when:
(i) The relevant local government (or other approved LC agency) is genuinely
interested in achieving the conversion of the urban fringe lands to a planned
layout for sustainable urban development.
(ii) The urban fringe areas proposed for LC are suitable for urban development
but are fragmented into separate landholdings (usually with many of the
land parcels having no public road connection), and with few buildings
and residents on the land;
(iii) The areas proposed for LC projects are “physically ripe” for urban
development, i.e. with public road and utility service lines connected to
the project land;
(iv) The areas proposed for LC projects are “economically ripe” for urban
development, i.e. at locations with a sufficient market demand for serviced
building plots to support the profitable subdivision of the land;
(v) A majority of the landowners in the proposed project areas understand
and support the use of LC;
(vi) There is a central government law and administration to authorize, regulate
and oversee the preparation and implementation of LC projects; and
(vii) There are skilled and competent personnel available to manage the
preparation and implementation of the projects.
Given these general conditions, then each project will need to be carried out
successfully. For this, it will need to be financially viable and soundly managed.
Each project has to generate land value increases sufficient to cover the project
costs and leave the landowners with a significant net gain in their total land value.
Each project has to be well-managed in order to achieve efficient and profitable
land servicing and subdivision. This financial viability and sound management is
assisted by the preparation of a scheme for each project in consultation with the
landowners.

URBAN LAND CONSOLIDATION IN INDONESIA’

Urban LC is firmly established in Indonesia, which was the first Southeast Asian
country to adopt the technique. The Bali Province Office of the then Directoratc-
General for Agrarian Affairs (Agraria) proposed the first LC project in 1979,
which commenced in 1981 and was effectively completed in 1985 (Agraria was
reconstituted into BPN in 1988). By mid 1903, BPN had undertaken 102 LC
projects in 25 provinces, including 30 projects in Bali Province. The 102 projects
commenced covered 6,230 ha in 38,210 land parcels with 31,740 landowners.-’ A
few LC projects have also been undertaken by the local governments for a few
cities, with the assistance of the Centre for Land Research and Development
in the Ministry for Home Affairs.
Whereas LC projects in other countries are land and infrastructure projects,
the LC projects by BPN have not usually included the construction of the roads.
drains, water and electricity lines necessary for the urban development of the
land. This is partly because the provision of infrastructure is not a BPN function,
partly because some of the project sites at urban fringe locations are still in active
farming use. and partly because the Agency does not have the necessary funding
as it has not retained project land parcels/plots to sell for cost recovery. However.
the BPN projects do enable it to implement a planned roadway and subdivision
layout in the absence of a land subdivision control law. to acquire the land
required for public roads and public facility sites in the absence of an effective
land acquisition law (and with limited funds available to pay compensation for
such acquisition), and to record and certify land ownership in a situation where
most landowners do not have a registered title to their land. The design of
the road and subdivision layout for each project normally follows the official
land-use plan so that the projects are also a means of plan implementation.
Although they are incomplete LC projects without the construction of the
network infrastructure, the BPN projects do provide valuable benefits.
There is no LC law to authorize and regulate LC projects in Indonesia, so
that their implementation mainly depends upon the agreement of the landowners
in each project site to participate. However, the Basic Agrarian Law (1960)
provides a legal basis in general terms for LC by Articles 2. 5, 12 and 14
together with the Land Reform Law (1960) by Article 12. The Directorate
of Land Tenure Arrangement in BPN has responsibility for the development
and promotion of LC which it took over from the former Directorate for Land
Reform when Agraria was reconstituted as BPN. The provincial offices of BPN
have the main role in initating and supervising LC projects, and the local offices
have the main role in preparing and implementing them.
The BPN projects are prepared and implemented in accordance with the
principles and procedures set out in the BPN Regrdatior~ No. 4 ( 1YYl) and before
that, in accordance with the BPN circular letters No. 590/5648/Agr. of Y October
1985, and No. 592/6365/Agr. of 22 December 1986. The first letter stated the
principles of LC and set out the procedure for preparing and implementing
projects. The second authorized the implementation of LC projects that were
supported by 85”/0 or more of the landowners in the project site who own 85%
or more of the site area, as previously the LC projects required lOO”/,, landowner
44 Ray W. Archer

agreement for their implementation. The 1991 regulation stated the principle of
landowner payment of project costs, and authorized the allocation of some of
the land parcels and plots for cost recovery.
The provincial offices of BPN have had the principal role in LC, first by
initiating most of the projects, then by forming the committees and the
team for each project, and then by overseeing and evaluating the project,
The coordination committee for the project comprises representatives of the
local (Level II) government agencies involved in the LC process, including the
BPN local office, the regency/municipality, the planning board, the planning
department and the district and sub-district headmen. It is usually chaired
by the regent/mayor. Its main function is to prepare the road layout and
replotting plan, and negotiate landowner agreement for the plan and project,
and to facilitate cooperation and coordination by the government agencies. The
technical team comprises staff from the BPN local office under a team manager
from the provincial office, and its work includes field surveys, screening of the
landowners’ title documents, and liaison with the landowners. The evaluation
committee comprises the director and sub-directors of the BPN provincial office
and a representative from the provincial planning board. Its role is to supervise
the work of the technical team, and to review and evaluate the final project.
The preparation and implementation of each LC project is performed in two
stages. The first stage covers the preliminary preparation work up to the issue
of the regent’s/mayor’s decree to authorize the project to go ahead. The second
covers the detailed preparation work and the implementation of the project.
The first stage work has been funded through the annual regional expenditure
budget or the annual budget of BPN and is carried out within one budget year.
It is usually followed by the second stage in the next budget year.

LESSONS FROM A CASE STUDY LAND CONSOLIDATION PROJECT4

It is useful to outline a recent LC project to show the main features of the

BPN projects. The PB Selayang II LC Project in Medan was initiated in 1985
by the then Land Reform Directorate of Agraria as a pilot project for North
Sumatra Province. Funds for the first stage work of preliminary preparation
were provided in the 198611987 budget of BPN.
The project is located on a 78.9 ha urban-fringe site in Tuntungan District of
Medan Municipality some 7 km south from central Medan. The site was initially
divided into 314 land parcels and plots, but due to a 2 year delay betweon the
first and second stages of the project, caused by a shortage of budget funds,
they had increased to 510 parcels and plots with 445 owners by June 1989.
These owners had inherited and purchased the land over a long period, and
they claimed full ownership rights on customary title, but were officially classed
as squatters on state land which had previously been plantation land. Nearly all
the site was farming land, much of it unused, and the 38 buildings on the site
included those of a meteorological station and a primary school on the Northern
edge of the site. The land parcel map of the site is shown in Fig. 3(a).
As the Land Reform Directorate had initiated the project the BPN Central
Office was designated as project manager and the BPN North Sumatra Provincial
Office as the field manager. The Provincial Office arranged the formation of the
team and two committees for the project in June 1986, these being the Technical
Team, the Coordination Committee (Level II), and the Evaluation Committee
(Level I, mainly BPN). The first stage, the preliminary preparation work, was
completed in March 1987 when the mayor’s decree for the project was issued.
The commencement of the second stage was delayed for 2 budget years due to
a shortage of funds in the BPN budget, and was resumed in June 1989 when
 ffrban Land Consolidation for Metropolitan Jakurta Expansion, 1990-2010

(b) Road layout and replotting plan

13 Building
E Market
m Open space
Mosque
a Church
= Road right of way

Fig. 3.

the topographic and land-use survey of the site was made. The road layout and
replotting plan was drafted in September, then presented to and negotiated with
the landowners, and finalized in December 1989 when the landowners released
their land to BPN. They took over their new parcels and plots in February 1990
and received their title documents in April 1990. The road layout and replotting
plan for the project is shown in Fig. 3(b).
The plan for the site was prepared so as to create a road layout for a future
suburban residential area with every land parcel and plot being reduced in area
by 20%) reshaped and given a public road frontage. It also allocated land as sites
for a market, a mosque and church, and other public facilities. The minimum
size for new plots was 100 sy. m and the replotting of the original parcels and
plots was designed to reinstate, as far as possible, the landowners on or near
their original land.
The PB Selayang II LC Project. therefore,
* created a planned layout of roadways, public facility sites and reshaped land
parcels;
l enabled go~~ernment to acquire the land for the roads and public faciiity sites
at no cost;
l improved the shape of the land parcels and provided every parcel and plot
with a public roadway frontage; and
l provided all landowners with registered titles to their parcels and plots.
However, the project did not include the construction of infrastructure. Although
the roads were surveyed and pegged, they wcrc not formed or constructed so that
most of the parcels and plots remained inaccessible. There was very little land
or building development on the site after the project, and when sighted by this
author in September 1991 it was still mainly unused rural land.
Although the lack of infrastructure has blocked most of the site from urban
development so that some of the main benefits of the LC technique were not
achieved, there were real benefits from the project and the value of these
benefits was well above the costs. The project costs were borne by BPN and
the landowners, while the benefits (and potential benefits) wcrc received by the
landowners, Medan Municipality and the community.
The cash costs were Rp. 6.5 million for the first stage preliminary preparation
and Rp. 45.3 million for the second stage preparation and implementation,
which were paid from BPN budget allocations, plus Rp. 6.0 million paid by the
landowners for the issue of their land title certificates. The Government (i.e.
Medan Municipality) received 20% of the land area as public road and facility
sites, and about 8 of this 20% represented additional land worth Rp. 350 million
that it otherwise would have had to purchase. The landowners contributed 20%
of their land area which had an estimated market value averaging about Rp. 5,000
per sq. m as at October 1989, and received in return. potential subdivision land
and building plots with registered titles with an estimated average market value
of Rp. 11.000 per sq. m, as at October 1989. The landowners, therefore, entered
the project with rural land worth about Rp. 3.940 million and after contributing
land and cash totalling Rp. 883 million received back future urban land worth
about Rp. 6,757 million, so that they gained Rp. 2,817 million in increased land
value from the project, i.e. an average profit of 71% as at October 1989.
Some of the features of this case study LC project that have wider implications
can be noted, as follows:
(1) The 2-year suspension of the project due to a shortage of budget funds
indicates that LC projects. even without the cost of illfr~lstr~lcture works.
cannot be reliably tinanced through annu~ll budget ~~ppr~~l~ri~~tions.
(2) One government agency paid all the governmental costs of the pro.ject while
another agency received all the governmental bcncfits, which is inhcrcntly
unsound. This imbalance could be corrected by the benefitting agency
reimbursing BPN for its work and expenditures. (It would not appear in the
LC projects in which the costs are recovered by the sale of project land.)
(3) The project provided Medan Municipality with the benefits of land acquisi-
tion for public roads, land acquisition for public facility sites, and implementa-
tion of the official land-use plan, so that LC can contribute to a number of
municipal government functions.
(4) Although the project provided substantial net benefits to government and
to all the landowners, these benefits were less than the potential benefits
 Urhm Lund Consolidation for Metropoliran Jakarta Expm~sion. 1990-2010 47

of complete LC projects that include the construction of roads, drains,

water supply and electricity supply lines, so as to make every parcel and
plot accessible, usable and marketable for urban development.
(5) Part of the 90% landowner support for the project was due to the land
registration component that provided every owner with full ownership rights
and title documents for their parcel or plot. It also made a large contribution
to the increase in land values generated by the project.
(6) There were no landowner representatives on either of the project committees,
and communication with the landowners was hindered by their scattered
addresses across Medan. Landowner representation on the committees could
have improved the project through their preference for road construction to
provide access to every parcel and plot, and for recognition of the quality and
value differences in the original land parcels and plots in order to determine
each landowner’s land contribution.
These findings suggest a number of recommendations for the improvement of
future projects. They can be presented as a set of six principles to guide future
LC projects by BPN, as follows:
l All LC projects should be designed to make the new land parcels and plots
usable and marketable for urban development when the project is completed
and, therefore, each project should include the construction of the roads,
drains, water supply lines, electricity lines, etc. necessary to achieve this;
l As BNP is a land agency and municipal government is the main urban
infrastructure agency, then LC projects in urban areas should normally be
undertaken by BPN in cooperation with the municipal government, or in
cooperation with another infrastructure agency;
l As LC projects are landowner partnerships the landowners should participate
in project preparation and implementation, either by representation on the
project committees or by the formation of a landowners’ association for the
project;
l As LC projects are comparable to real estate company development projects,
then the cost of the work necessary for each project should be recovered from
the resulting increase in land values by the sale of some of the project land
parcels and plots (BPN Regulation No. 4 (1991) authorizes the retention of
cost recovery land from LC projects);
l As LC projects are multi-year projects they cannot be reliably financed
through annual budget allocations but should be financed by short/medium-
term project loans that are repaid by the sale of the cost-recovery land; and
l As LC projects require majority landowner support they have to be profitable
and equitable to the participating landowners, so that they should be charged
only for the works necessary for the project, and the project costs should
be shared by the landowners in proportion to their share of the project
benefits.
The benefits provided by LC as illustrated by the Medan LC project (even
without the construction of infrastructure), demonstrate the desirability of using
LC for urban land development in Jabotabek. The inclusion of the construction
of the on-site roads, drains, water, electricity and sewerage lines in each project
with cost recovery by the sale of some of the project land. will allow the full
benefits of the technique to be obtained.
There is increasing recognition of the potential benefits of LC by government
and by private developers.
 INCREASING USE AND RECOGNITION OF LAND CONSOLIDATION

BPN is making increasing use of LC. By 1993, it had commenced 102 urban
LC projects, 44 of which had commenced in the previous 2 years. Bali is
the leading province with 30 projects, followed by West Sumatra with seven.
Only three of the 102 projects were in Jabotabek, and only one of these
was completed. This was the Jambc LC Project on 36.58 ha at Tigaraksa in
Tangerang Regency which was implemented in 1990/1991, with the landowners
paying the project costs. The other two projects, one at Depok in Bogor Regency
and the other at East Bekasi in Bekasi Regency. were not implemented due to a
combination of factors. In the case of the East Bekasi project, the site was in a
rapidly developing area, already partly subdivided and built on, and with high
land prices, so that many of the landowners preferred to sell or subdivide their
land separately rather than join the LC project as proposed.
There is also government recognition of the potential advantages of LC in
urban development and it is now government policy to make general use of
LC for the conversion of rural land to urban uses. The Howirzg and H~4man
Settlement Law (1992) provides that urban land should in future be developed in
“ready-to-build-areas” under the management of a state enterprise organization
(a BUMN), or in an “independent ready-to-build-neighbourhood” under the
management of a private housing developer appointed by the Government.
and that both areas should include LC projects by the landowners. The law
describes these projects and the assistance that should be given to them.
As well as the enlarged BPN programme of LC projects and the provisions of
the Housirzg urzd Hrm~ar~ Settkmctlt LNW (1992) for the general USCof LC, some
of the large real estate companies such as PT Bumi Serpong Damai have stated
their intention to develop their land in association with landowner cooperative
LC projects. The BPN Land Administration Project due to begin in 1994 will also
support the increased use of LC as the survey. mapping, registration and titling of
the rural land parcels will facilitate the preparation and implementation of LC
projects. It will also bring former unregistered land into the formal development
process which will also assist in the increased use of LC.
Although there is official recognition and promotion of LC there is also need
to recognize its limitations and risks. Even in the countries where it is widely
used such as Japan and Taiwan, many local governments choose not to use it.
As a relatively new technique in Indonesia there is need to minimize the risks
for the rural landowners who arc mainly farmers. It should bc introduced and
used alongside the other methods of land development so that the landowners
have alternatives, and each project has to gain their support by its merits. There
should be dissemination of information on the technique so that all landowners
in urbanizing areas understand the concept and the principles of LC. The
requirement of 85% landowner support for a proposed LC project provides
one important safeguard, and the preparation of a scheme for each project to
fully describe. explain and justify it provides another. There should also be
provision for landowner participation in the preparation and implementation
of every project.
The projected growth of Jabotabek urban area population from 13 million
in 1990 to 27 million in 2010 will require the production of a large amount of
urban building land each year. LC can contribute to this needed production.

POTENTIAL APPLICATIONS FOR LAND CONSOLIDATION IN JABOTABEK

The earlier discussion described LC as a multi-purpose technique that can

provide a number of benefits in urban development, including land assembly
for project sites, government land acquisition for public purposes, construction
of network infrastructure, official plan implementation, equitable sharing of costs
and benefits, land title registration, and timely land development. These potential
benefits of LC can be used towards achieving sustainable urban development in
Jabotabek. A programme of LC projects could be undertaken for a range of
development situations so as to achieve these, and additional, target benefits.
These LC projects would be undertaken on selected sites alongside the private
real estate company development projects and the Perumnas housing projects,
and alongside the continuing informal land and building development in addition
to the KIP and GLD projects. The projects would be implemented by local
governments in cooperation with BPN and vice versa, by landowner cooperatives
and by real estate company/landowner joint ventures.
Some of the main development situations for the possible use of LC can be
outlined as follows . . .
Local government regular LCprojecrs. These would be LC projects undertaken
by the regencies and municipalities in cooperation with BPN for the timeIy
development of selected areas that are physically and economic~lIy ripe for
development, and that are not under location permits for real estate companies.
Most of these areas would otherwise be developed informally without a planned
layout, without provision of roads, drains and utility service lines, without open
space, and with most of the land remaining on customary (adat) land title. These
projects would create a new supply of serviced subdivision land and buiIding plots
on full ownership tenure with registered title that would be available for self-build
housing in the formal sector.
Landowner cooperative LC projects. The amount of urban fringe land that
can be brought into formal private land development with the provision of
infrastructure will be increased by authorizing, and then encouraging and
assisting the rural landowners to undertake cooperative LC projects. BPN
could prepare guidelines for identifying appropriate sites and forming landowner
cooperative groups, together with regulations for the preparation and implementa-
tion of their LC projects. The landowners’ cooperative could contract BPN or
professional consultants as project managers to prepare and implement the LC
project on behalf of the landowners.
Real estate cornpff~~ and Ia~downer cooperai~ve LC projects. These would be
joint projects by real estate companies and groups of rural landowners for the
coordinated development of their respective areas. The rural landowners’ areas
would be developed through a landowners’ cooperative LC project with the
assistance of the real estate company. PT Bumi Serpong Damai is following this
approach for the development of Bumi Serpong New Town, and the Housing and
Bernard ~etrle~ne~~Law (1992) provides for its wide use. As well as faciIitating
the development of private enterprise new towns, these joint LC projects could
facilitate and improve many real estate company development projects, including
those with excessive areas of land under location permit designations. They could
also reduce the conflicts with the rural landowners that often arise in the land
assembly for real estate company projects.
LC ~?rojects for ~tl~ll ~~e~Ie~oI?~lent.These projects would be undertaken by
regency/municipal governments in the developing fringe areas so as to fill in
the gaps between the real estate company projects, industrial estate projects,
Perumnas housing projects, the informal development areas and the established
settlement areas, so as to link and integrate them into a coherent urban settlement
pattern. These projects could also include the government acquisition of land
(with compensation) for needed public facilities that have not been otherwise
provided.
LC projects to overcome development blockages. Regency/municipal govern-
ments could use LC to overcome barriers to the urban development of particular
areas, such as the need to bridge a river or canal, or the need for special drainage
works or flood protection works. The need for these special infrastructure works
could be met by an LC project that covers the area of land that will benefit from
their construction. The LC project would combine this construction with the
design, servicing and subdivision of the land for urban dcvclopmcnt, with the
project costs being met by the salt of some of the land parcels and plots from
the project.
LC projects .for rmrirl (1~~1tii.strih~rtori~ollcctor roud r~et~zwks. These arc LC
projects that would be undertaken in conjunction with the construction of
main roads so as to establish networks of related distributor/collector roads
in the areas through which the main road passes so as to open-up the land
for urban development in depth (the main roads include the entry/exit roads to
the toll highways). These road networks would prevent “ribbon development”
along the main road and create a road framework to guide the local urban
development. The LC projects to construct thcsc distributor/collector roads
could be combined with the construction of the main road and undertaken
as a Roads Department LC project, or they could be constructed alongside
the new main road as a scqucnce of local LC projects undertaken by the
regency/municipal government.
LC projects to dewlop llrhm sub-cermes. Regency/municipal governments
could USC LC to implcmcnt planned urban sub-centrcs that provide a mix of
market, shopping, service and cntcrtainment activities together with educational,
health and recreation facilities. Thcsc ccntres would be located near the main
roads and with access to them and would bc provided with a bus station and
parking space. They would provide an alternative to the existing pattern of
ribbon development with its traffic congestion, its conflict between the through
and local traffic, and its conflict between the traffic and the roadside business
activities and pedestrians.

DEVELOPING A LAND CONSOLIDATION PROGRAMME FOR JABOTABEK

The LC projects to bc undertaken in Jabotabek should bc the complete LC

projects that Include the construction of the network infrastructure with recovery
of the project costs by the sale of some of the new land parcels and plots from
each project. Some of the projects would subdivide the project sites into the final
layout of roads and serviced building ,rlots, and some projects would convert the
project sites into layouts of roads, public utility lines and reshaped parcels of
subdivision land. Every LC project should be designed to make all the new land
parcels and plots acccssiblc and usable for urban development and, therefore.
more marketable and valuable than the original land parcels.
The LC programme for Jabotabek would be made up of a mix of the various
types of LC projects as outlined that would complement and extend the existing
formal land development processes and reduce the amount of informal land
development. The LC programme would bc designed to improve the process
and pattern of urban expansion in Jabotabck by:
l bringing unused dcvelopmcnt land under the exccssivc location permit
designations into early development:
0 enabling the farmer Inndowners to participate in the urban dcvclopment of
their land and to obtain longer term benefits;
l increasing the production of planned layouts of subdivision land and building
land equipped with roads, drains. and utility service lines;
l increasing the supplv of serviced subdivision land and building land on
registered title that *is suitable for self-build housing development in the
formal sector:
 Urban Land Consolidatiorl for Metropolitan Jakarta Expansion, 1990-2010 51

l filling the gaps between the real estate company projects, the Perumnas
housing projects, the kampung settlements and the other areas of informal
urban development; and
l improving the structure of urban development by specific purpose LC projects
to establish networks of secondary roads, urban sub-centres, etc.
As local government is the main governmental beneficiary of LC projects, the
Jabotabek regencies and municipalities should be the lead governmental agencies
in the LC programme. They would prepare and implement the LC projects
within their jurisdiction in cooperation with BPN.5 However, the regencies
and municipalities do not have any experience and capability with LC so that
this would have to be developed. There is also the need to design the format
and procedural guidelines for landowner cooperative LC projects, and for joint
real estate company and landowner cooperative LC projects. Therefore, the
proposed LC programme would have to be preceded by a programme to build-up
an LC capability in Jabotabek.
This Jabotabek LC capability programme could be undertaken by BPN as
a joint activity of its central, provincial (West Java Province) and local level
offices. The programme would include:
The formation, staffing and training of land development project units/teams
in each regency and muncipality.
Design of organizational arrangements and procedures for preparation and
implementation of LC projects as a regency/municipality and BPN joint
activity.
Preparation and implementation of LC projects in each regency and municipality
as pilot/demonstration projects.
Public information campaigns on LC to inform government officials, land-
owners, real estate companies and professionals (including consultancy firms)
of the LC technique, its potential benefits, and the principles and procedures
of LC projects.
Design of the format and procedures for landowner cooperative LC projects,
and for joint real estate company and landowner cooperative projects.
Promotion and participation in some of these projects as pilot and demonstra-
tion projects.
One of the important features of LC is that the rural landowners become
participants in the urban development process by contributing their rural land
parcels to the LC project for unified design, servicing and subdivision, and
exchanging them for the reshaped parcels of subdivision land or building plots
which they can sell and/or develop and/or hold. The landowners are mainly
farmers and this is an opportunity for them to convert their land value gain into
capital for their transition from rural to urban life. They should be encouraged
and assisted to use this capital to achieve a prosperous urban life by measures
such as using part of it to construct rental housing or other rental buildings or
a workshop on part of their land, or to invest it %t other productive ways for
long-term benefit to themselves and their families.

NOTES
1. This paper draws on the author’s work on the Jabotabek Metropolitan Development Plan Review.
See for example Rav W. Archer. Land Management for Jabotabek Urban Develooments I99012010.
(Directorate of Urban and Regional Planning, Directorate-General for Human Settlements, Jakarta,
1993). p. 69. The paper also draws on the author’s continuing study of urban land consolidation in
Asia-Pacific region countries. For a more complete discussion of LC see R.W. Archer, “Introducing the
Urban Land Pooling/Readjustment Technique into Thailand”. Public Administration and Development
12. 2 (1992). pp. 155-174; and R.W. Archer. “Transferring the Urban Land Pooling/Readjustment
Technique to the Developing Countries of Asia”. Third World Planning Review 11. 3 (1989).
52 Rqy W. Archer

pp. 307-331. See also, Gerhard Larsson. Land Readjustment: a Modern Approach to Urhunization.
(Avebury, Aldershot. U.K.. 1993), p. 146.
2. BPN (Badan Pertanahan Nasional) is used in this paper to cover the current State Ministry of
Agrarian Affairs/National Land Agency (since 1992). the National Land Agency (1988/1992) and the
Directorate-General for Agrarian Affairs (to 1988). For information on LC in Indonesia see Soedjarwo
Soeromihardjo, The Main Aspects ofLand Readjustment Practices. Paper presented to the Seventh
International Seminar on Land Readjustment and Urban Development, (National Land Agency.
Jakarta, 1993). p. 14; S. Soeromihardjo, “Land Consolidation in the Urban-Fringe. Indonesia”,
Land Readju.~tment and Urban ~eveiopmeni Seminar Proceedings, I989$ (Federal Department of
Town and Country Planning, Kuala Lumpur. 1990). pp. 199-214; David Bray, Experience with Urban
Lund Conso~jdatjon in ~ndo~zesia, (Housing Policy Studies Project, State Ministry for Housing. Jakarta,
1988). pp. 45; R.W. Archer. Land Cons~i~dation forUrban ~eveiopment in Indonesia, HSD Research
Report No. 11, (Asian Institute of Technology, Bangkok, 1986). p. 45; and D.H.V. Consulting
Engineers, Medan Urban Land Management Study, Mebidang 2000 Final Report, Vol. 2: Parts 1-5. and
Vol. 4: Technical Paper on Urban Land Consolidation, (Directorate-General for Human Settlements,
Jakarta, 1986). pp. 413-34 and p. 39, respectively.
3
_ The large number of land parcels and landowners is due to the commencement of urban land
subdivision in many of the LC project sites, so that the “parcels” are actually a combination of
land parcels and building plots. See the maps of 19 LC projects shown in Land Consolidation in
Indonesia, (National Land Agency. Jakarta, 1993). p. 83.
4. See Ray W. Archer. “Lessons from the PB Selayang Land Consolidation Project in Medan, Indonesia”,
Land Use Policy 9. 4 (1992), pp. 287-299.
5. Denpasar Mumcipality, Bali, provides an example of the sequential use of LC projects for planned
urban expansion. See I. Gusti Bagus Alit Putra, Experience on Land Conso~idatior~ lnzp~e~nentaf~otl
for Urban development. Paper presented to the Seventh International Seminar on Land Readjustment
and Urban Development, (National Land Agency. Jakarta, 1993). p. 14.