From Policy to Practice: How Public Land Policies Shape Private-Sector Housing Development — An Indonesian Case (Rahmawati, Samsura & van der Krabben, 2025)

Summary

"From Policy to Practice: How Public Land Policies Shape Private-Sector Housing Development—An Indonesian Case," by Dian Rahmawati, D. Ary A. Samsura, and Erwin van der Krabben, appeared in Land (MDPI), 2025, as open access. It examines land banking and public land policy implementation in Surabaya, Indonesia's second-largest city, evaluated against a legitimacy/effectiveness/efficiency/fairness framework.

The Policy Framework and Its Gap

Two national instruments frame the case: the Job Creation Law (Law No. 11/2020, the "Omnibus Law"), which restructured spatial-planning authority by centralizing planning decisions from local to central government, and Government Regulation 64/2021, which established the Land Bank Agency (Badan Bank Tanah) to manage state land, including for affordable housing. In practice, the paper finds private-sector land banking in Surabaya is "largely speculative, driven by profit-maximization... reinforced by inconsistent policy enforcement at the municipal level." Land prices run 300–700% above municipal assessed valuations, with market-to-regulated-price gaps developers describe as running "up to 15 times."

Discretionary Compliance in Practice

The paper's central mechanism is uneven enforcement by developer size: smaller and medium-sized developers comply with public-interest obligations only minimally, largely because they lack the legal and financial capacity to negotiate around them, while larger developers actively resist infrastructure-handover requirements — PSU obligations (prasarana, sarana, utilitas: infrastructure, facilities, and utilities that developers are required to hand over to the municipality). A municipal official is quoted directly: "We had to blacklist 20 developers who failed to hand over their PSU obligations, despite multiple warnings," adding that "enforcement remains difficult, especially with larger developers."

Relation to the Georgist Case

This is a concrete governance case study extending the wiki's land value capture and land banking coverage to a new country, and a useful companion to the wiki's existing Indonesian resource-rent page (which covers forestry, not urban land policy). The core lesson generalizes beyond Indonesia: a well-designed public land-banking instrument, on paper capable of capturing land value for affordable-housing purposes, can be substantially undercut by discretionary, capacity-asymmetric enforcement that lets larger, better-resourced developers resist obligations smaller developers cannot avoid — a design lesson for any land value capture regime about the criticality of consistent, well-resourced enforcement.

Nuances and Limits

• A single Indonesian city case study. Surabaya's specific institutional and legal context (the 2020 Omnibus Law's centralization, the 2021 Land Bank Agency) may not generalize directly to other Indonesian cities or other countries' land-banking regimes.
• Governance/implementation focus, not a quantitative outcome evaluation. The paper documents enforcement gaps and mechanisms rather than measuring aggregate affordable-housing delivery shortfalls.
• Full text read directly (A-claim). The complete open-access article was obtained (via a reader-proxy route after the standard MDPI URL was unexpectedly blocked) and read in full.

Bears On

• Concept: Land Banking — a governance case study showing how discretionary, capacity-asymmetric enforcement can undercut a land-banking instrument's public-interest intent.
• Concept: Land Value Capture — extends the wiki's country coverage with an Indonesian case centered on enforcement design rather than instrument choice.
• Research: Article 33: Indonesia's Forest Rent — the wiki's other Indonesian resource-rent page, covering forestry rather than urban land policy.

See Also

• Land Banking
• Land Value Capture
• Article 33: Indonesia's Forest Rent

Sources

1. Dian Rahmawati, D. Ary A. Samsura & Erwin van der Krabben (2025), "From Policy to Practice: How Public Land Policies Shape Private-Sector Housing Development—An Indonesian Case," Land 14(5): 916, DOI 10.3390/land14050916, CC-BY 4.0. mdpi.com — full text read directly 2026-08-31 (via a reader-proxy route after the standard MDPI URL was unexpectedly blocked to this session) — used for the Surabaya case, the Job Creation Law and Land Bank Agency framework, the 300–700% price-gap figures, the PSU-handover enforcement mechanism, and the municipal official's blacklisting quotation (A-claim; full text).