Indonesia Passes Land Acquisition Bill

Jakarta Globe, December 16, 2011

Indonesian members of parliament approved the final draft of a long-awaited
 land bill on Wednesday that investors hope will speed up land acquisition for
 government infrastructure projects in Southeast Asia’s biggest economy.
(Antara Photo)     

         

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Jakarta. Indonesia’s House of Representatives on Friday approved a long-awaited land acquisition bill investors hope will give a big boost to government infrastructure projects in Southeast Asia’s top economy.

The bill is an attempt to break the bottleneck in infrastructure development that has long been seen as holding back growth in Southeast Asia’s top economy.

It also presents major investment opportunities in a country where roads, ports and airports are overloaded.

The House, also known as the DPR, on Wednesday signaled it would pass the bill. 

A day later, Fitch Ratings gave Indonesia an investment grade rating, which could act as a spur to much-needed investment. 

Fitch had cited weak infrastructure as one reason why it had delayed the upgrade.  

The controversial bill was passed despite a barrage of interruptions from members of the 560-strong parliament.

Shares in Indonesian construction, property and toll road firms have rallied this week on hopes the bill would be passed.

Bankers say the delay in passing the bill has been holding up the dispersal of loans to companies for infrastructure development this year.

The main toll road operator, Jasa Marga had described the impact of the delay on its business as like a race car waiting for a track.  

Sucorinvest sees the bill as positive for firms such as PT Wijaya Karya, PT Citra Marga Nusaphala Persada and PT Adhi Karya. 

Though the bill only applies to government projects, it is likely to benefit privately operated projects on government-bought land.

The government is relying on about $150 billion of private investment between 2010 and 2014 to overhaul its roads, railways and ports.

Without better infrastructure, analysts say the country’s growth may start to slow because of capacity constraints. 

Human rights groups say the bill disregards traditional land rights and could lead to more conflict over land and forced expropriation of property.

Reuters

Indonesia Legislators Give Green Light to Land Bill

Reuters