The Constitutional Court (MK) stated that part of the stipulations in Article 22 Act No. 25/2007 on Investment (Act on Investment) was against the constitution. This was stated in the verdict readout trial for case No. 21-22/PUU-V/2007, Tuesday (25/3), at the Plenary Court Room of the Constitutional Court.

Part of the Article 22 of Act on Investment that violated the 1945 Constitution was Article 22 paragraph (1) so far as concerning the use of words “in advance entirely” and “in form of: a. Working Utilization Rights can be allowed to the ammount of 95 (ninetyfive) years by giving and extending in advance entirely for 60 (sixty) years and can be renewed for 35 (thirty five) years; b. Building Utilization Right can be given to the ammount of 80 (eighty) years by giving and extended in advance for 50 (fifty) years and can be renewed for 30 (thirty) years; and c. Utilization Right can be given to the ammount of 70 (seventy) years by giving and entended in advance for 45 (forty five) years and can be renewed for 25 (twenty five) years”.

Besides that, Article 22 paragraph (2) so far as concerning the word “in advance entirely” and Article 22 paragraph (4) so far as concerning the word “entirely in advance’ also stated as violating the 1945 Constitution.

Case No.21/PUU-V/2007 filed by Diah Astuti, cs. Was a petition for the trial of the explanation of Article 3 paragraph (1) letter d, Article 4 paragraph (2) letter a, Article 8 paragraph (1), Article 12 paragraph (4), and Article 22 paragraph (1) letter a, b, and c of the same Act. Meanwhile Daipin, cs. in case No.22/PUU-V/2007 filed a petition for trial of Article 1 paragraph (1), Article 4 pargraph (2) letter a, Article 8 paragraph (1) and (3) Article 12 paragraph (1) and (3) Article 21, Article 22 paragraph (1) and (2) of The Act on Investment. 

According to the Constitutional Court, of all the stipulation pleaded to be brought before the court, actually only some of the stipulation in Article 22 of Act on Investment were against the constitution. The argumentation made by the Constitutional related to the partial of the stipulation was that even though the Working Utilization Right (HGU), Building Utilization Right (HGB), and Utilization Right—that can be extended in advance entirely—the state can be considered to stop or cancel at any time, yet the reason had been set limitatively in Article 22 paragraph (4) Act on Investment.

In other words, state’s authority to stop or not to extend the HGU, HGB, and the Utilization Right could not be conducted under state’s free will. Still, the investing companies could legally questioned the legality of the stopping action or the cancelation of the rights on the land. Therefore, for the Constitutional Court, providing the extention to the rights on the land in advance had reduced and even weakened people’s sovereignty in economy.

Article 22 Act No. 25/2007 on Investment post The Constitutional Verdict becomes:

(1)  Simplicity of service and/or permit for the right on property as mentioned in Article 21 letter a can be given and extended and renewed on the request of the investor.

(2)  The right on property as mentioned in Article (1) can be given and extended for investment activity, with requirements as mentioned:

a. the investment conducted in long term and related to the change of Indonesian economic structure to be more competitive;

b. the investment with investment risk level requiring the return on investment in long term according to the kind of the investment activity conducted;

c. the investment does not require big area;

d. the investment by using the right of state’s property; and

e. the investment does not disturb the sense of fairness of the people and does not cause any loss to public needs.

(3)  The right on property can be renewed after conducting evaluation that the property can still be used and utilized well according to the condition, character and the aim of giving the right.

(4)  Providing and extention of the right on property provided and renewed as mentioned in Article (1) and Article (2) can be stopped or cancelled by the Government if the investing company abandon the property, disturbing public needs, use or utilize the land not accordingly to the purpose and aim of providing the right on property, also against the stipulation of legislations in property.

“As the result of being stated inconstitutional part of the stipulation, then, for providing simplicity and/or service to the investing company to gain the right on property, so long as concerning directly to the investment, the stipulation in use is the stipulation contained in other legislations” said Chief Justice of the Constitutional Court, Jimly Asshiddiqie, as he read the Conclusion of the Stipulation.

In the Conclusion, also stated the opinion of the Constitutional Court that Article 12 Paragraph (2) letter b Act on Investment was a conditionally constitutional so far as concerning “under the act”. The phrase should be interpreted similarly to “by law”.

Article 12 paragraph (2) Act No. 25/2007 on Investment becomes:

“Working field closed to investment is: a. weapon, arsenal, explosive production and war equipment, and b. working field explicitly closed based on legislation.”



To the Verdict of the Constitutional Court H.A.S. Natabaya had a concurring opinion. Meanwhile Constitution Justice Maruarar Siahaan had a dissenting opinion. Zainal Abidin, the Legal Counsel of the Petitioner for case No.22/PUU-V/2007, when met after the court said that even though only part of the petition granted, but the Verdict was a step of victory against capitalism on the basis of neo-liberalism. “We will step further by using legal passage available,” said the lawyer from Indonesian Legal Aid Foundation. (Luthfi Widagdo Eddyono/Yogi Djatnika)

Tuesday, March 25, 2008 | 20:26 WIB 270