Procedure of Utilizing State-Owned Goods

Property Law

procedureBackground

The procedures to utilizing state-owned goods are regulated under Regulation of the Finance Minister of the Republic Indonesia No. 78/PMK/06/2014 on Procedure of Utilizing State-Owned Goods (“Minister Regulation”) which becomes effective since 30 April, 2014. This Minister Regulation revokes and replaces Regulation of the Finance Minister of the Republic Indonesia No. 96/PMK/06/2007 on the Procedure Using, Utilizing, Abolishing and Transferring State Owned Goods.

General Provisions

State-Owned Goods (“BMN”) is all goods bought or acquired at the burden of the state budget or originating from other valid obtainment.

Utilization of BMN is the empowerment of BMN which is not used to carry out the task and function of the ministry/institution and/or optimizing BMN without changing ownership status.

General Principles of Utilization of BMN

  1. The Utilization of BMN can be conducted as long as it does not disrupt the tasks and functions of state administration.
  2. The Utilization of BMN is conducted by considering state interests and public interests.
  3. The Utilization of BMN shall not change the status of BMN ownership.
  4. The usage status of BMN serving as the object of utilization is set by manager/user.
  5. The cost of safeguarding and maintaining BMN and operating cost related to the utilization of BMN are borne by the partner utilizing the BMN.
  6. State revenue from the utilization of BMN is state revenue that must be entirely paid to the account of the state treasury.
  7. BMN serving as the object of utilization shall not be used as collateral.

Executor of the Utilization of BMN

Parties that can do the utilization of BMN:

  1. Manager is the official who has the authority and responsibility to set policies and guidelines for and conduct the management of BMN, for BMN that is held by the manager.
  2. User is the official who holds the authority to use BMN, with approval from Manager, for BMN that is held by the user.

Objects of the Utilization of BMN

The objects of the utilization of BMN cover:

  1. Land and/or buildings; and
  2. Those other than land and/or buildings, held by Manager/ User.

The objects of the utilization of BMN as referred above can be done partly or entirely.

Models of Utilization of BMN

The models of the utilization of BMN cover:

  1. Lease

      Lease is the utilization of BMN by other party within a certain period of time and by receiving cash as compensation.

  1. Borrow-to-use

      Borrow-to-use is the act of transferring the use of goods from the central government to regional government within a certain period of time without receiving compensation and after the period of time has passed it is transferred to the Manager/ User.

  1. Utilization Cooperation

      Utilization cooperation (“KSP”) is the efficient use of BMN by other party within a certain period of time to increase non-tax state revenues and other financing sources.

  1. Build, Operate, and Transfer

      Build, Operate, and Transfer (“BOT”) is the utilization of BMN in the form of land by other party by constructing a building and/or its facilities, later used efficiently by the other party within a certain period of time already agreed upon, and later land and/or its facilities are transferred after the certain period of time has passed.

  1. Build, Transfer, and Operate

      Build, Transfer, and Operate (“BTO”) is the utilization of BMN in the form of land by other party by construct a building and/or its facilities, and later after the construction is finished it is transferred to be used efficiently by the other party within a certain period of time agreed upon.

  1. Infrastructure Supplying Cooperation

      Infrastructure Supplying Cooperation (“KSPI”) is cooperation between the government and corporate body to supply infrastructure according to the law and regulation.

Utilization Partners of BMN

The selection of utilization partners of BMN is done through a tender. Tender is the selection of partner to allocate BMN utilization rights through written bidding to obtain the highest bid.

The phase of tender covers:

  1. Announcement;
  2. Gathering selection documents;
  3. Submitting bid documents;
  4. Opening bid documents;
  5. Assessing qualifications;
  6. Inviting would-be partners;
  7. Realizing Tender; and
  8. Proposing and naming utilization partners of BMN.

If the tender fails then the selection will be implemented through the following steps:

  1. Repeat tender by at least 3 (three) prospective partners, the process shall be continued through tender mechanism.
  2. In case the number of prospective partners taking part in repeat tender is 2 (two), the selection committee shall declare the repeat tender fails and later conduct direct selection.
  3. In case the number of prospective partners taking part in repeat tender is 1 (one), the selection committee shall declare the repeat tender fails and later conduct direct appointment.

Officials/employees of ministries/institutions or parties having family relationship, either with Manager/ User, utilization team, or selection team, until the third degree, are banned from nominating for prospective partners.

Utilization Period of BMN

  1. The period of time for leasing BMN is a maximum of 5 (five) years since the signing of contract and can be extended with approval from the Manager.
  2. The period of time for Borrow-to-use is a maximum of 5 (five) years and can be extended once.
  3. The period of time for KSP is a maximum of 30 (thirty) years since the signing of KSP contract and can be extended. For the supply of infrastructures: (i) transportation, (ii) road, (iii) water resource, (iv) drinking water, (v) waste water, (vi) telecommunication, (vii) electricity, and/or (viii) oil and/or gas granted for 50 (fifty) years since the signing of KSP contract and can be extended.
  4. The period of time of BOT/BTO is a maximum of 30 (thirty) years since the signing of contract, only applicable to 1 (one) contract and cannot be extended.
  5. The period of time of KSPI is a maximum of 50 (fifty) years and can be extended. The period of time of KSPI can only be extended in case of government force majeure, such as the impact of government policy caused by economic, political, social, and security crises.

Sanctions

Partners will be subject to an administrative sanctions in the form of reprimand letter, warning letter, and fines.

If BMN utilized is not properly maintained, partner shall improve it up to the condition required in the contract where shall be completed no later than the end of utilization of BMN period.

If BMN utilized is lost, partner shall replace the object of utilization and result of BMN utilization with similar goods or goods of the same type where shall be completed no later than the end of utilization of BMN period.

If the improvement and/or replacement of BMN cannot be made, partner shall pay improvement and/or replacement cost by cash.  The payment of cost is made by paying to the account of the state treasury.

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