Proposed New Mechanism for Calculating Subdivided HGB under the Draft Bill on Industrial Estates

The Ministry of Industry (“Kemenperin”) has proposed a new mechanism for calculating subdivided Right to Use (Hak Guna Bangunan – “HGB”) under the Draft Bill on Industrial Estates.

The Director General of Industrial Resilience, Regionalization, and International Industrial Access at Kemenperin, Tri Supondy, proposed that the validity period of subdivided HGB for each plot be calculated from the date on which the transfer of the subdivided HGB to each investor or tenant is issued.

To date, the validity period of subdivided HGB within an industrial estate has followed the remaining term of the parent HGB. If a tenant holding subdivided HGB wishes to extend its validity period, the tenant must submit an extension application independently. In addition, tenants may not establish a validity period that extends beyond the expiry date of the parent HGB without a valid extension and renewal decision.

Tri considered the proposed new calculation mechanism for subdivided HGB to be important in ensuring that investors in industrial estates receive certainty over the full validity period of their rights, so that their investments are not impeded by the remaining term of the parent HGB held by the industrial estate organizers. “This is important to provide legal certainty for investors in industrial estates,” he stated.

Tri also proposed the imposition of fees for the extension of HGB over land subject to right-to-manage for industrial estates. He stated that the imposition of such fees aims to ensure a fair market mechanism.

Separately, the Chairperson of Commission VII of Indonesia’s House of Representatives (“DPR”), Saleh Partaonan Daulay, stated that the parliament would review the proposals on Draft Bill on Industrial Estates, including provisions relating to HGB for industrial estates. The Commission will invite relevant stakeholders, including the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (“ATR/BPN”) and experts, to discuss the proposed provisions.

“We will first hear all views and input submitted. All relevant parties will be invited to discuss this Draft Bill,” Saleh told Hukumonline.