Indonesia’s Agrarian Reform Bill Becomes a DPR Initiative. What Could It Mean for Land Certificates and Credit?

Indonesia’s House of Representatives, or DPR, approved the Agrarian Reform Regulation Bill as a DPR initiative during a plenary meeting on September 8, 2026. The draft prepared by the DPR’s Legislation Body contains 70 articles across 16 chapters.

Its proposed scope includes land restitution and redistribution, agrarian-conflict resolution, legal recognition for eligible communities, and the establishment of a National Agrarian Reform Agency, or BRAN.

The process has since moved forward. On September 16, the DPR and the government began level-one deliberations. The government submitted its official list of issues, known as the DIM, and the meeting approved the bill’s deliberation mechanism and the formation of a working committee.

This status requires an important distinction. The bill is now an official DPR proposal, but it has not become an enforceable law. Existing land certificates do not automatically change, expire, or require reissuance simply because the DPR approved the proposal.

Any practical impact will depend on the final text agreed by the DPR and the government, plenary approval, enactment, promulgation, and any implementing regulations that follow.

The DPR approved the Agrarian Reform Regulation Bill as a DPR initiative on September 8, 2026. The proposal contains 70 articles across 16 chapters and includes a proposed National Agrarian Reform Agency. Source: DPR Secretariat General Legal Documentation and Information Network, September 8, 2026. Approval as a DPR initiative is not the same as enactment into law.

What Is the Bill Intended to Change?

Agrarian reform is often reduced to the distribution of land certificates. The underlying policy is much broader. It covers unequal land control, overlapping claims, communities located within designated forest areas, conflicts involving concession holders, and redistributed land that lacks economic support.

The current framework is based primarily on Indonesia’s 1960 Basic Agrarian Law and Presidential Regulation No. 62 of 2023 on Accelerating Agrarian Reform. The presidential regulation identifies five strategies:

• Asset legalization.

• Land redistribution.

• Economic empowerment of agrarian-reform beneficiaries.

• Institutional strengthening.

• Community participation.

The new bill is intended to provide a statutory foundation for those policies and integrate conflict resolution across sectors. Land disputes may involve forestry, mining, plantations, coastal areas, spatial planning, state assets, and customary rights. A certificate or physical occupation record may not resolve a conflict when government institutions rely on different maps or legal frameworks.

According to official DPR explanations, the bill would cover the identification and verification of agrarian-reform objects, renewed surveying, restitution, redistribution, legalization of land rights, conflict resolution, and beneficiary empowerment.

It would also establish BRAN as an institution reporting directly to the president. BRAN would manage planning, implementation, monitoring, and evaluation.

A clearly defined institution could reduce fragmented coordination. Poorly defined authority, however, could create new overlap with the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency, local governments, sectoral ministries, and the courts.

A DPR Initiative Is Not Yet an Enforceable Law

Each stage of legislation carries a different legal effect.

Approval as a DPR initiative means that the bill has become the DPR’s official legislative proposal. The next stages include joint deliberation with the government, article-by-article discussion, a level-one decision, and final approval at a plenary meeting.

The bill must then complete enactment and promulgation before it can take effect. Certain provisions may also require government, presidential, or ministerial regulations before they can be implemented.

On September 16, 2026, the Ministry of Administrative and Bureaucratic Reform confirmed the beginning of level-one deliberations. The government submitted its DIM, and a working committee was established to review differences and proposed amendments.

A political target to complete the bill before September 24 does not guarantee that every legislative step will be concluded by that date. The substance may change as ministries, lawmakers, local governments, customary communities, farmer groups, academics, and other stakeholders submit their views.

Proposals discussed during drafting should therefore not be treated as binding obligations.

Will Existing Land Certificates Change?

There is no verified basis at this stage to conclude that all existing land certificates will be cancelled, replaced, or subjected to mass re-registration.

A certificate records a land right under Indonesia’s land-registration system. The bill is primarily directed at agrarian-reform objects and beneficiaries, conflict resolution, redistribution, restitution, and the legalization of land whose status remains unclear.

The immediate effect may be limited for land with a valid certificate, clear boundaries, no dispute, and no inclusion in an agrarian-reform process. The final answer will still depend on the bill’s transitional provisions and its definition of agrarian-reform objects.

Four groups may face a more material impact.

A. Communities Occupying Land Without a Certificate

Some residents hold village letters, customary records, old transaction documents, or evidence of physical occupation without a fully registered land right.

A clearer process for identification, verification, surveying, and legalization could strengthen their legal position. Physical occupation alone, however, would not automatically produce ownership. Authorities would still need to examine area status, historical records, spatial plans, competing claims, and beneficiary eligibility.

B. Land Subject to Overlapping Claims

The same parcel may be claimed by residents, companies, government bodies, concession holders, or other institutions. Even an issued certificate may be disputed when boundaries, issuance procedures, or legal objects overlap.

The outcome will depend on BRAN’s authority, its relationship with the land agency, and the role of the courts. An unclear division of authority could shift disputes into another administrative channel without resolving them.

C. Recipients of Redistributed Land

Redistribution may give beneficiaries a more formal land right, but the right may also carry use and empowerment obligations. Rules on use, transfer, abandonment, inheritance, and collateralization will need to be explicit.

During preliminary discussions, lawmakers considered a proposal under which rights could be transferred when beneficiaries deliberately leave the land unused for two consecutive years. Another proposal required prior verification, written warnings, assistance, an opportunity to restore use, and a right to object.

These proposals remain under deliberation. The two-year provision should not be presented as an existing legal requirement.

D. Owners in Areas with Conflicting Legal Designations

The bill is expected to address villages, settlements, and cultivated land that overlap with forest areas, state assets, or concessions. The impact on certificates will depend on the verification and resolution of each case.

A credible process could strengthen legal certainty. A process that lacks protection for good-faith right holders could instead create new uncertainty.

A Certificate Does Not Automatically Create Access to Credit

A land certificate can strengthen evidence of ownership, but it does not require a bank to approve a loan.

Indonesian banks generally use land as collateral through a mortgage right known as Hak Tanggungan. Under Law No. 4 of 1996 on Mortgage Rights, eligible rights include ownership rights, cultivation rights, and building rights. Certain registered and transferable use rights over state land may also qualify.

The process involves more than depositing a certificate with a bank. The land right must be verified, the property assessed, a mortgage deed executed through an authorized land-deed official, and the security interest registered.

The bank must also assess the borrower’s ability to repay. Valuable land does not compensate for the absence of sufficient cash flow.

A simplified process is:

1. The applicant demonstrates a legally valid land right.

2. The bank and land-deed official verify the parcel, owner, boundaries, and existing encumbrances.

3. An appraiser estimates the property’s economic and liquidation values.

4. The bank evaluates income, cash flow, credit history, and loan purpose.

5. If approved, the mortgage right is executed and registered.

6. The loan amount reflects repayment capacity and the bank’s collateral policy.

A certificate strengthens the first stage. It does not replace the remaining stages.

Regulatory requirements for property used in credit-risk mitigation include certificate validity, legally binding collateral, borrower repayment capacity, and property valuation. Source: Indonesia Financial Services Authority, Circular Letter No. 24/SEOJK.03/2021, page 26. A certificate is one component of the assessment and does not guarantee loan approval.

How Agrarian Reform Could Improve Access to Finance

The bill could improve financing access if it reduces the legal uncertainty that makes land difficult to accept as collateral.

There are three primary channels.

Legal Certainty

Unregistered land or land supported only by informal occupation records is more difficult for banks to verify. Accurate legalization can clarify the owner, location, area, type of right, and transaction history.

Dispute Resolution

Banks are cautious about land involved in active disputes. A certificate may exist, but a conflict can reduce collateral value because enforcement becomes slower, more expensive, and less predictable.

A final and enforceable resolution could reduce this risk. BRAN’s decisions would need a clear relationship with land registration and court judgments before banks could reliably use them.

Economic Empowerment

Access to credit requires more than an asset. Beneficiaries also need productive activity, infrastructure, training, market access, and cash flow.

Without empowerment, a certificate could become collateral for debt without improving the owner’s repayment capacity. In the worst case, a beneficiary could default and lose control of a newly acquired asset.

Agrarian reform should therefore be evaluated through reduced conflict, productive land use, higher beneficiary income, and responsible financing, not certificate numbers alone.

Why Banks May Remain Cautious

Land distributed under agrarian reform may not immediately receive the same collateral treatment as other property. Banks will examine whether the right can be transferred, mortgaged, and enforced after default.

Restrictions on sale or transfer could affect collateral value. An asset that cannot be readily transferred is harder to liquidate after a non-performing loan.

Banks could respond by:

• Applying a lower recognized collateral value.

• Offering a smaller credit limit.

• Requiring additional collateral.

• Limiting the type of available loan.

• Requesting confirmation from the land agency or agrarian-reform institution.

• Waiting for implementing regulations before accepting a new certificate category.

This does not necessarily make agrarian-reform certificates worthless. It reflects the bank’s need to determine whether its security right is legally clear and enforceable.

Transfer restrictions may also be necessary to prevent redistributed land from being immediately accumulated by larger investors. Legislators must balance that protection against beneficiaries’ need for productive financing.

Five Provisions That Will Determine the Credit Impact

The bill’s effect on financing will depend on how the final text addresses five issues.

The Type of Land Right

Will beneficiaries receive ownership rights, use rights, communal rights, or another form of legal recognition? The category determines duration, control, and mortgage eligibility.

Transfer Restrictions

Can the land be sold, inherited, leased, or pledged? If temporary restrictions apply, how long will they last, and what exceptions will be available?

Mortgage Rights

Can redistributed land be encumbered with Hak Tanggungan? What happens after borrower default? Can the bank enforce its security, or will a special procedure apply?

Conflict Resolution

Will BRAN decisions operate as recommendations, administrative decisions, or the legal basis for amending land records? How will they interact with ongoing litigation or final court judgments?

Protection of Good-Faith Parties

What protection will be available to residents who acquired land through lawful transactions, creditors holding registered mortgage rights, or businesses operating on land later designated as a conflict object?

Without clear answers, a certificate may appear administratively complete while retaining legal risks that discourage financing.

Different Land Situations Will Produce Different Outcomes

Certified, Undisputed Land

There is no current basis to assume an automatic change. Owners should monitor the bill’s definitions and transitional rules, but the immediate effect is likely to be limited.

Occupied but Unregistered Land

Legalization may strengthen the occupant’s position. It will still require verification of area status, occupation history, parcel boundaries, and competing claims.

Certified Land Under Dispute

The bill may provide a new resolution channel. Its effectiveness will depend on BRAN’s authority and relationship with the courts and land agency. Until the dispute is resolved, banks are likely to continue treating the collateral as high risk.

Redistributed Land

Beneficiaries may obtain formal legal recognition and access to empowerment programs. Their ability to use the land as collateral will depend on the type of right, transfer restrictions, and enforcement rules in the final law.

The Risk of an Overly Accelerated Process

The stated ambition to complete deliberations before National Farmers’ Day creates a very short political timetable. Speed may address a long-delayed issue, but land law involves complex relationships among certificates, physical occupation, customary rights, concessions, state assets, and court judgments.

The process should avoid:

• An imprecise definition of agrarian-reform objects.

• Disconnected land, forestry, concession, and spatial-planning data.

• Overlapping authority between BRAN and existing institutions.

• Administrative decisions that conflict with final court judgments.

• Loss of rights without an adequate objection process.

• Recognition of customary rights without proper participation and verification.

• Transfer restrictions that unintentionally block productive financing.

• Uncertainty for existing mortgage-right holders.

Legal certainty requires more than rapid enactment. The final law must be implementable and must clearly explain how certificates, occupation records, customary rights, concessions, judicial decisions, and creditor rights interact.

What Landowners Should Do Now

Because the bill is not yet in force, landowners do not need to replace or re-register certificates solely because of the current legislative debate.

More relevant steps include:

• Check the registered owner, type of right, parcel area, and location.

• Compare physical boundaries with the survey document and actual conditions.

• Retain sale, inheritance, gift, tax, and occupation records.

• Check for registered mortgage rights, freezes, seizures, or disputes.

• Do not hand the original certificate to an unauthorized party.

• Use a verifiable notary or land-deed official for transactions and collateral registration.

• Follow official updates when the land is located in a disputed area.

• Do not assume that participation in agrarian reform guarantees bank financing.

A borrower must still assess repayment capacity. Collateral reduces a bank’s potential loss but does not reduce the borrower’s obligation. Default can result in enforcement of a registered mortgage right.

What to Monitor Next

As the DPR and government continue level-one deliberations, the most important developments include:

• The latest version of the government and DPR’s DIM.

• Definitions of agrarian-reform objects and beneficiaries.

• BRAN’s institutional form, mandate, and duration.

• BRAN’s relationship with the land agency, local governments, and courts.

• Rules covering unused land.

• Restrictions on selling or transferring redistributed land.

• The use of agrarian-reform land as collateral.

• Protection for good-faith certificate holders and creditors.

• Recognition and verification of customary rights.

• Transitional rules for existing disputes, certificates, and mortgage rights.

• Implementing regulations required after enactment.

The Agrarian Reform Bill could strengthen land certainty and expand financing access if legalization, conflict resolution, and economic empowerment work together. A legally clear certificate can reduce uncertainty and help banks evaluate collateral.

A certificate is still not an automatic route to credit. Banks require a valid mortgage right, a defensible property valuation, and a borrower with repayment capacity. If the final law does not clearly regulate transfers, BRAN’s authority, and creditor protection, the effort to expand financing could be slowed by new legal uncertainty.

The next issue to watch is therefore not only the targeted enactment date. The quality of the final provisions will determine whether the bill strengthens community rights or adds another administrative layer to an already complex land system.

Disclaimer

This article is for informational and educational purposes only. It does not constitute legal, credit, or investment advice. The Agrarian Reform Regulation Bill remains under deliberation, and its provisions may change before enactment. The impact on a specific parcel depends on the type of land right, area status, occupation history, disputes, registered mortgage rights, and the final legislation. Landowners and borrowers facing specific cases should verify their documents with the land office, an authorized land-deed official, their bank, or qualified legal counsel.