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Evolutionary and Institutional Economics Review

, Volume 15, Issue 2, pp 315–340 | Cite as

Valuing unregistered urban land in Indonesia

  • Franklin Obeng-OdoomEmail author
Article
  • 78 Downloads

Abstract

According to new institutional economists, title registration is fundamental to estimate fair value of unregistered land. In turn, international organizations, such as the World Bank, the Asian Development Bank, and the German Development Bank, have funded expensive land title registration programmes in many poor nations. Ironically, such programmes have created much social disruption and economic marginalisation, prompting many to ask whether there is no alternative to neoliberal land title registration programmes. Based on interviews with registered valuers, officers of the land sector agencies responsible for registration, and academics who specialise in valuation and urban planning in Indonesia, we show that valuation practice in Indonesia provides an alternative path. Reflecting the application of J. R. Commons’ concept of ‘reasonable value’, Indonesian valuers have adapted established valuation methods to value different types of land/tenure—whether registered or unregistered. In this process, the estimation of fair compensation is not hindered by the lack of registration. There are major challenges to compensation and compensation valuation in Indonesia, but such failings are hardly related to the information asymmetries that land registration is supposed to correct. Instead, they are addressed by the Indonesian courts in ways that further reflect Commons’ concept of ‘reasonable value’. With so many tensions and contradictions in land tenure systems, the structural limitations in the legal process, and the wider political economy of land reform, as an institution, the court (the key advocate of ‘reasonable value’ in J. R. Commons’ institutional economics) is hardly a silver bullet, even though it is an important source of changing the working rules of society.

Keywords

Value Registration Asia Commodification Land Kampungs Marginal settlements 

JEL Classification

P48 Q24 O19 

Notes

Acknowledgements

Many thanks to RICS for funding this project. In particular, we acknowledge the support of Clare Eriksson, James Kavanagh, Amanprit Johal, and Julie Moore of RICS for their patience with us and passion for evidence-based global policy. Special thanks to Katherine Pitman for her detailed feedback and determination to ensure the successful completion of this study. Additional thanks to John Tracey-White and Prof. John Sheehan for very helpful feedback. Thanks also to Prof. (retired) Spike Boydell who initiated the project, brought the project team together, provided the direction for the project at its inception, and offered continuing support for the work. The University of Technology Sydney’s Design, Architecture and Building Faculty provided co-funding and offered the home for the project while the Research and Innovation Office provided research-budget and management advice. Anonymous reviewers from RICS provided detailed and constructive suggestions for improving the study for which we are mightily grateful. Special thanks to Dr. Michael McDermott, a valuer since 1974, who provided significant feedback for formulating, designing, carrying out, and interpreting the study. For helpful feedback, we are grateful to the editors (especially Prof. Hiroyasu Uemura) and reviewers of EIER. Without the research participants in Indonesia, the study could not have carried out the study. The work is dedicated to them.

Compliance with ethical standards

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest.

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Copyright information

© Japan Association for Evolutionary Economics 2018

Authors and Affiliations

  1. 1.Department of Political and Economic Studies, Development Studies, Faculty of Social Sciences, Helsinki Institute of Sustainability ScienceUniversity of HelsinkiHelsinkiFinland

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