PALMOILMAGAZINE, JAKARTA – The House of Representatives’ passage of the Agrarian Reform Bill into law on Sept. 22 signals an era of close alignment between the executive and legislative branches, a convergence made evident by the swift enactment of this highly strategic legislation.
However, such expedited lawmaking inevitably raises concerns regarding the thoroughness of the legislative process. In particular, questions remain over meaningful public participation and the accommodation of affected stakeholders, both of which are critical to preventing substantive legal deficiencies.
A national agrarian policy governing millions of hectares of land and trillions of rupiah in investments should not be the product of haste. The ramifications of this decision will ripple directly through the palm oil sector, a backbone of the national economy that generates tens of billions of dollars in foreign exchange annually and supports millions of livelihoods.
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An industry of this scale remains acutely vulnerable when left without clear spatial and land-use certainty. Its trajectory hinges on the government’s resolve to restructure land governance into a framework that is equitable, predictable, and conducive to long-term investment. While legislative deliberations offered initial promise in resolving ambiguities, critical gaps remain.
From a governance and budgetary efficiency standpoint, lawmakers made a defensible choice in dropping the proposed Agrarian Reform Implementing Agency (LPRA), originally proposed as the National Agrarian Reform Agency (BRAN), along with its supervisory board, thereby avoiding further institutional bloat. Yet delegating the establishment of LPRA to a presidential regulation (Perpres) creates distinct legal vulnerabilities.
An agency instituted via Perpres possesses far less institutional legitimacy, executive authority, and budgetary security than one established by statute. This arrangement leaves agrarian governance susceptible to the whims of shifting political cycles rather than anchoring it within a permanent statutory body equipped to arbitrate inter-ministerial conflicts.
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More positively, the mechanism for determining priority areas for agrarian reform has shifted toward a more proactive posture. The burden of verification no longer rests solely on local communities; the state is now obligated to systematically identify and verify land data. This transition is crucial for safeguarding smallholder farmers who, despite managing the majority of the country’s oil palm acreage, are frequently locked out of formal supply chains due to administrative discrepancies or unilateral state forest demarcations.
Even so, the new law carries significant potential for regulatory friction due to incomplete harmonization with pre-existing legal frameworks, notably the 1960 Basic Agrarian Law (UUPA), the Forestry Law, the Plantation Law, and the land provisions of the Job Creation Law. Without clear jurisdictional boundaries between technical ministries and new regulatory instruments, the law risks prolonging land disputes on the ground rather than resolving them.
To ensure this legislation genuinely advances agrarian rights and public welfare without compromising the investment climate for the palm oil sector, four conditions must be met.
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First, hierarchy of title and conservation clarity. Legally issued Land Ownership Certificates (SHM) held by communities prior to the issuance of Business Use Rights (HGU) must be recognized as valid titles. Conversely, legally issued HGU that predate competing claims must be accorded equal and incontrovertible legal standing. Furthermore, High Conservation Value (HCV) and High Carbon Stock (HCS) areas within concessions must be explicitly exempt from classification as “abandoned land,” ensuring that corporate conservation commitments do not invite punitive state sanctions.
Second, equitable protection and dispute resolution. Equality before the law must be upheld. Legitimate HGU holders and community titleholders alike require equal protection against unlawful occupation. All land disputes must be adjudicated through the formal judiciary or institutional mediation mechanisms, rather than resolved through discretionary administrative decrees.
Third, flexible operational ceilings. Restrictions on plantation acreage must avoid rigid, one-size-fits-all caps. Instead, limits should align with established statutes while accounting for economies of scale, regional agroclimatic variations, and capital-intensive commitments to downstream processing infrastructure.
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Fourth, non-retroactivity and partnership consistency. To maintain investor confidence, new rules must strictly adhere to the principle of non-retroactivity. Regarding the mandatory facilitation of 20 percent community-managed plantations, the regulatory framework must align strictly with the productive partnership models established under the Plantation Law.
Finally, the successful implementation of the Agrarian Reform Law depends on the integration of an open, transparent, and unified land registry. Without a reliable single-map framework, overlapping boundaries among commercial concessions, conservation zones, and customary lands will persist.
Agrarian reform cannot be reduced to a mechanical land-distribution exercise; it must serve as the foundation for an equitable economic transformation that balances public welfare with commercial viability. Given the speed of the law’s enactment, rigorous public and legislative oversight of its implementing regulations is indispensable.
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The national palm oil sector requires enduring legal certainty, one that safeguards smallholders’ rights while shielding strategic investments from perpetual disputes. Striking this equilibrium will be a definitive test of Indonesia’s agrarian governance and its capacity to anchor sustainable, inclusive growth. (*)
By: Edi Suhardi / Sustainability Analyst
