Constitution and Private Participation in Toll Road Infrastructure in Indonesia

            Indonesian Constitution (UUD 1945) article 33 (2) stipulated that the entire product segments (goods) which significant for State and important for citizenship livelihood authorized by State. In its elaboration stated that, the economic, based on democracy, citizen welfare, so that all the products branch (goods) which significant for State and important for citizenship livelihood should be authorized by State. If not so, the authority of the product segments (goods) occupied by authority figure and then will pressure the citizens. Only the corporation that not important for citizenship livelihood could be held by persons individually to operate.

            Indonesian Constitution does not give a breakdown which one of the infrastructure fall within the category of the product segments (goods) which significant for State and important for citizenship livelihood that should be authorized by State. However, we could find the elaboration of infrastructure as the product segments (goods) under the regulation as to Public Private Partnership in Infrastructure Procurement (Perpres No. 67/ 2005) that gives the breakdown which one of the infrastructures could be cooperated by private sector, there are:

1. Infrastructure of transportation, airport, seaport, train.
2. Infrastructure of road, toll road, bridge toll.
3. Infrastructure of irrigation.
4. Infrastructure of water supply.
5. Infrastructure of waste.
6. Infrastructure of information and telecommunication.
7. Infrastructure of electricity power.
8. Infrastructure of oil and gas.

   Universally, the State should give the important role since such infrastructure defined as the facility and the need for economic and social function. We then defined it as “public infrastructure”.

            In the mid of 1980, most developing countries, commenced from Latin America and Caribbean, starting the significant economic reform. The large component of the reformation embrace private participation upon infrastructure services, the movement of significant parts of management and control of utilities operating from government to private corporations. Each private participation differs in the grade of participation of government, risk allocation, investment responsibility, operating standard, and the incentive to the operators. Most of the type of participation is privatization and concession, and the less is contract management. 

             In Indonesia, privatization is one of the tools likewise restructuring for increasing the performance of government enterprise (BUMN). Government divided the BUMN under 2 categories, at first BUMN which the intention to get the profit and accomplish with the company law (limited company), and the second, BUMN that established by government to execute the implementation of the government role to supply the goods to the peoples in its society. Theoretically, we can say as stated by Andrew Light, what the role of government in such BUMN is to provide the “pure public goods” or “public goods”.

            Regarding to the Indonesian Constitution under article 33 (2) as mentioned above, all infrastructure including toll road in Indonesia are public goods. As a public goods, the State should play its role; the State could have the preemptive right upon all sectors, to dominate, or together with private sectors working together side by side under the model of partnership, or change in administration and initiative of decision regarding the public property such as: land, building and other moveable goods owned by the State. Regarding the industrial organization, BUMN are the “public enterprise” of which conventionally is natural monopoly. Finally, as a public goods, such infrastructure connects to the subsidies which are paid by public through tax of government earning.

            Land status is a very important thing for the investor who wants to participate in operating the infrastructure. As stated by Michel Kerf, the regulation concerning land use and the ownership of land should be well considered by investors such as in order to get right of way before initiating the project. Indonesian Government, having issued the new regulation concerning development of toll road in Indonesia (UU No.38/2004), as well as the previous law, the status of land after concluded land acquisition action (both initiated by government or private sectors), registered as the asset of the State.

            In order to facilitate private participation, several countries like some countries in Western Europe and Soviet Union and as well as Vietnam, have amended their Constitution in order to give the right of ownership of land to private sectors. In these circumstances, should Indonesian government amend the Constitution in order to facilitate private participation?

According to my research dissertation in Postgraduate Program Faculty of Law University of Indonesia (2007-2011), the answer is, the government not needs to amend the Constitution. My dissertation make an attempt to give a solution by making the legal structure where the toll road infrastructure contract model remain as private goods but do not realese its status as public goods, of which, by giving to private investor the right of land use (Hak Pakai) upon the management right of land (Hak Pengelolaan) of Kementerian Pekerjaan Umum RI. By giving such the right of land during the concession period to private investor, the toll road infrastructure status could be as a private goods, of which, could be transferred, rent or could be put under collateral in debt financing (Hak Tanggungan), but still has its public dimension, where the Government (State) still have the right of authority through Hak Pengelolaan (management right of land).

In this circumstances, the regulation of Hak Pengelolaan (management right of land) should enhance under the law (by issuing the management right of land law), so that, legally equal like the other right of land as stipulated in article 16 of Indonesian Agrarian Law (UUPA).

(Dr. Iwan Erar Joesoef, SH., Sp.N., M.Kn).