THE INDONESIAN JOURNAL OF

BUSINESS ADMINISTRATION
Vol. 2, No. 15, 2013:1827-1840

LAND ACQUISITION STRATEGY OF PT. KRAKATAU INDUSTRIAL ESTATE

CILEGON TO ACQUIRE LAND WITH REASONABLE PRICE AND WITHOUT ANY
FUTURE PROBLEM
Maryono and Alibasjah I Soedjarno
School of Business and Management
Institut Teknologi Bandung, Indonesia
maryonokiec@yahoo.co.id

Abstract—As an industrial estate company PT KIEC’s performance still very dependent on the industrial land
sales. Ratio of land sales to non‐land sales was around 70:30 and the ratio of land and non‐land profit is 85:15.
With this business profile condition, PT. KIEC faced a problem with land banking that becomes very limited.
Balance of the land to be sold by December 2012 was 80 ha. This condition is feared could disrupt corporate
business sustainability. PT. KIEC must immediately undertake land acquisition proces, but until the end of year
2012 the process cannot run well. It faced many obstacles such as limited land supply, land allocated as
industrial area occupied by resident, the existence of land speculators, land acquisition method, ability to
approach the society and limited fund. To start land acquisition, KIEC needs to analyze and decide the location
and release the strategy which is considering the existing obstacles. Site location selection is done through a
rating analysis of several alternative locations. The primary parameters to be analyzed are land allotment base
on the spatial planning, site potential to grow, accessibility, availability of infrastructure and utilities,
availability of waste water receiving bodies, land contours, distance from housing, current land use and land
prices. Besides, it also conducted a brief study of the feasibility study, which calculates estimated investment
cost and its returns. From the several location alternatives, it was selected two priority locations, those are
Tegalratu and Makamaja village, with potential land to be acquired are 70 ha and 40 ha respectively. But only
Tegalratu location will be deployed in detail. Land acquisition strategy is prepared by considering the analysis
of legal aspects, social aspects and risk analysis. Transactions of land acquisition should be done with the
legitimate owners of the land, as evidenced by certificate of ownership (underlying right). In order to do land
acquisition quickly, it needs to learn the characteristics of the relevant stakeholders. And to minimize the things
that are not desirable in the future, it needs to conduct risk analysis to map the potential risks and its
mitigation measures. By considering these things hence land acquisition is done by using the services of an
arranger. Land price is estimated by considering land transaction price around the location in recent month
and analyzed further by appraiser consultant To acquire the land at Tegalratu village with total area 70 ha, it
needs investment cost about Rp. 176 billions and it will take time about 1 year. The executor of land acquisition
is an arranger that needs to be selected further. And as a partner from the internal is Land acquisition team of
PT. KIEC.

Keywords: land acquisition, prudent, fair price

1. Introduction

PT. KIEC is a subsidiary of PT. Krakatau Steel (Persero), Tbk. (PT KS), was established on June 16,
1982 with the mission to manage some portion of PTKS’s land as an Industrial estate. Currently PT.
KIEC has main business in property industries with 3 (three) business areas, those are the Industrial
property (Industrial Estate, Warehousing), Commercial (hotel, Golf & Sport Facility, Office Building)
and Residential Property (Housing Development). The business unit and its performance can be
seen in table 1.that PTKIEC performance still strongly influenced by the industrial land sale. For
recent years Industrial Land sales contributes about 70% of the total sales and 85% of the total
profit.

1
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

Table 1. KIEC’s Business Unit and its Sales Performance

Years
No Business Unit
2008 2009 2010 2011 2012
1 Land
Industrial Estate 94,761 73,772 131,876 206,866 616,749
2 Non Land
- Industrial Estate 10,152 18,054 19,584 20,836 15,911
- Warehousing 6,615 7,343 9,345 10,557 16,642
- Hotel 16,609 16,461 24,044 29,250 38,536
- Golf 5,851 3,983 4,484 6,434 9,074
- Sport Facilities 0 2,671 2,926 2,925 3,429
- Office Building 280 279 364 361 466
- Building Mgmt 7,556 7,434 7,782 8,381 9,409
- Housing 5,882 9,172 10,480 6,411 12,496
Sub Total Non Lahan 52,943 65,398 79,009 85,155 105,963
Total 147,704 139,170 210,885 292,021 722,712
Note : Industrial land lease revenues included in the non land revenue

PT. KIEC has 2 locations of industrial estate, the Industrial Estate I (550 Ha), which is located in
Cilegon as a result of PT. KS’s land inclusion and Industrial Estate II (75 Ha), which is located in
Ciwandan, as a result of land acquisition by PT. KIEC itself. The Krakatau Industrial Estate map can
be seen in figure 1 below.

Figure 1. Krakatau Industrial Estate Maps

Main facilities owned by Krakatau Industrial Estate include public road, port, utilities network
(water, electricity and gas) and other commercial facilities (hotel, golf, sport center, office building).
Now, there are 84 companies located in Krakatau Industrial Estate with the investor profile are steel
related industries (36%), various industries(32%), chemical industries (16%), services industries (9%)
and Feed & food industries (7%).

Important Issues in Industrial Estate Business Unit

The industrial estate business is highly dependent on the condition of the national investment
climate, in which it is influenced by macro economics and national politics conditions. Currently, the
national macro economics condition is good so do the national investment climate. It has a good
impact on industrial land sales. Actual sales of industrial land in greater Jakarta increase sharply in
the last 3 years, and so do the KIEC’s land sale as shown in Figure 2 below.

LAND SALES PERFORMANCE

1,400 12.00%
1

1,200 10.00%
1,000 8.00%
800 6.00%
600 4.00%
6
5

400 2.00%
200 0.00%
0
6
2

2
1

20082009201020112012
Jabodetabek Industrial Land Sales, Ha 220225661,200636
KIEC Land Sale, Ha20.914.019.827.561.0 2
KIEC Market Share, %9.50%6.31%3.50%2.29%9.59%

Figure 2. Industrial Land Sales in Jabodetabek Banten & KIEC

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

But in a pretty good market conditions, PT. KIEC’s land reserves decrease significantly since the land
acquisition program cannot perform well. With land balance on by end of 2012 at 80 Ha (see figure
3.) and average sales rate at 20‐25 hectares per year, then KIEC industrial land will be exhausted in
3‐ 4 years. To maintain the business continuity PT. KIEC must immediately to start land acquisition
process. Land acquisition process is relatively difficult. It is caused by the land allocated as industrial
area in Cilegon is limited if any its location too close to resident or the contour is too steep. In
addition, land speculators make it more difficult because of increasing price.

250 350,000

03

188
2
300,000

169
200

11
150 200,000
150,000

80
100

43 .
0
50

4.2
3.8
250,000

0.8

0.4
50,000

0 0
2008 2009 2010 2011 2012
Land Balanced of PT.KIEC, Ha 203 188 169 141 80
Land Acquisition, Ha 3.8 0.8 0.4 4.2 43.0
Land Acquisition Price (IDR) 163,840 170,201 216,850 322,938 240,000

100,000

Figure 3. PT.KIEC’s Land Balance and Land Acquisition Performance

2. Exploration of Business Issues

To explore the business issues it is required to do a business situation analysis that consist of external
and internal environment analysis to find the root cause and its solution
External Environment Analysis
The external environment consists of the macro environment, the industry environment and the
competitive environment.

a. Macro Environment Analysis

Political Factor National political and security is now stable enough, it is very supportive to the
investment climate in Indonesia. At the local level, political and security conditions are also quite
conducive to the investment. Although, currently there are NGO organizations or associations
which sometimes demonstrated, in general security situation in Cilegon is supportive to the
investment climate.
Economical Factor National macroeconomic conditions those are GDP that likely increase, interest
rates & inflation that likely to decrease are favorable to the investment climate. Besides, as a
developing country and has a fairly large population, Indonesia becomes the investment destination
of developed country. At the local level, the economic growth in Cilegon and especially with the
presence of Posco also has a positive impact on the investment climate and industrial estate
business.
Socio ‐ Cultural Factor The large population of Indonesia (250 million) becomes the potential
market for the industry. Besides, the availability of trained Human Resource with relatively low
wages, it supports the national investment climate. At the local level, social conditions in Cilegon
which has grown into the industry are also quite supportive investment climate in Cilegon. But
more educated people make land acquisition more difficult.
Technological Factor Technological developments, globalization and outsourcing concept makes
multi‐national companies relocate or build plants in developing countries, this situation also
potential to support the investment climate in Indonesia.
Ecological (Environment) Factor The concern for environmental sustainability makes the industrial
estate business more attractive. This is because the construction of factories in the industrial area
can minimized the environmental impact. The negative impacts such as industrial waste can be
localized and well‐managed in an industrial area.
Legal and Government Regulations Factor Publication of government regulation No. 24 year 2009
regarding the industrial estate, that require companies which will build a plant should be located in
industrial areas, encourage the growth of the industrial estate market.

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

b. Industry Analysis Of Industrial Estate

The today condition of the industrial estate business environment can be described by the following
figure 4. The intensity of Rivalry among competitor at medium level since both number of
competitor and demand are big. The threat of new entrants was relatively at low intensity due to
the high entry barriers. Power of Supplier at high intensity due to limited land supply. Power of
Buyer at medium since increasing number of buyer but also there are many choices of industrial
estate. Threat of Substitutes low since the establishment of PP 24 year 2009 that enforces investor
to build its plant in an industrial estate. In overall the business is still attractive to run.

Figure 4. Industry analysis of Industrial Estate Business

c. Competitive Analysis
In Indonesia there are about 61 industrial e state ith a total industrial area
approximately 31,812 hectares, of which 41 of thcompaniesRoad, port n the island of Java, and are
concentrated in Greater Jakarta, East Java and Banten. In Banten, it is relatively a few numbers of
industrial estates, about four (4) industrial estate companies.
Compare to competitors, KIEC’s industrial estate has strength in port facility and utility supply but
has weakness in road quality. KIEC land price relatively at medium position.
Internal Environmental Analysis
Internal environment analysis is conducted through value chain analysis of company. The result is
KIEC has strength in operation that is supported by infrastructure (port) and utility (water and
electricity) from its own group. In Marketing KIEC also has advantage from the existence of Anchor
Investor PTKS and Krakatau POSCO. But KIEC has weakness in land procurement. Human resource in
KIEC has experiences in Industrial Estate Management but not in land acquisition. Value chain
analysis result can be seen in figure 5.
Root Of Problems.
Based on the analysis results of the external environment and internal environment, can be
summarized the key success factors for the industrial estate businesses investment climate,
competitive conditions, the supply of land, infrastructure and marketing programs as shown in
figure 6.

Figure 5.Value chain analysis of PT.KIEC

National investment climate is influenced by macroeconomic conditions, social conditions, politics,

and national security and government regulations. Based on previous analysis results, the current

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

condition of the national investment climate is pretty good. Competitive conditions are influenced
by the number of players, substitution of product, power of the customer and consumer behavior.
The results of the analysis showed that the level of competition today is medium level. Land
banking affected by quota industrial land, site selection and land acquisition procedures. Based on
the analysis, land banking factor is still a problem that must be resolved by PT. KIEC.

Figure 6. Key success factors of Industrial Estate Business

Infrastructure includes the transportation for products such as roads and ports, supply of utilities
such as water, electricity, gas and telephone, as well as other supporting facilities (warehouse,
hotel, office, residential, shopping malls, hospitals, banks, sports facilities). Based on the above
analysis, the infrastructure owned by PT. KIEC is relatively good enough. Marketing program
includes product positioning, anchor investor and marketing network. Based on the analysis,
currently marketing activities of PT. KIEC is pretty good.

So from the five key success factors, the constraint factor is land banking, which is facing problems
with land acquisition. Furthermore, based on the analysis of the external environment and the
internal, root of the problem can be identified using a fishbone diagram and concluded that the
root causes of less performance of land acquisition are:
1. Limited land supply
2. Land allocated for industrial area is occupied as residential
3. Land is as livelihood and resident
4. The existence of land speculators
5. Land acquisition procedures using directly method require so long time to settle
6. The ability of the approach to society ( land owner) remains low
7. The limited allocation of the fund

3. Business Solutions
1. Width Of Land Acquisition
To calculate the width of land to be acquired it is use inventory management approach, the
calculation of re‐order point and economic order quantity. It is then matched with the ability to
finance by the company. Using the past 5 years performance the result of the calculation is Re‐
Order Point equal to 141 Ha and Order Quantity equal to 88 Ha.
2. Site Selection
The first step of land acquisition process is to fix site location. Location is one of the most important
factors that determine the success of the business.
a. Key Criteria for location selection
To decide the location it needs to analyze several major criteria as follows:
‐ Land allotment in spatial planning (must)

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

‐ Area potential to grow (want)

‐ Accessibility (want)
‐ Availability of infrastructure and utilities (want)
‐ Availability of water bodies for receiving wastewater (must)
‐ Contour of land (want)
‐ Distance from residential / housing (want)
‐ Land use (want)
‐ Price of land (want)
b. Alternative Locations For Land Acquisition
Taking into account the above mentioned several factor, it has been conducted site surveys resulting
the potential industrial area locations ollows: (1)Tegalratu village, (2)Makamaja village, (3)Tonjong
as village,(4)Eastern Serang

Figure 7. Map of Land Acquisition Plan

Alt. 1. Tegalratu Village
Land to be acqu red at Tegalratu village located next to an industrial area 2. The current usage of
land is cultivated land and no irrigated rice fields. This location is close to residential and some
portion is occupied as residential. It need to do a resettlement to relocate about 70 houses if want
to obtain a sufficient area. The potential wide that can be acquired is about 70 Ha.
Land contours relatively flat, even there is little land with high contoured, but in overall the
contours is flat. The advantage of this location is located close to the industrial area 2. The access
road to this location can be connected directly to the access road of industrial area 2. So the
infrastructure development costs can be cheaper. Supply of water and electricity can use existing
network.
The disadvantage of this location is too close to the housing so that it has risk of social dispute.
Besides, the price of land around the site is relatively high.
Alt. 2. Makamaja Village
Field site was located next to industri1. Land to be acquired is in the form of non‐irrigated rice
fields. This location is close to residential and most populated necessitating resettlement around 5
houses. Relatively flat land contours. The potential wide that can be acquired is 40 Ha. The
advantage of this location is located close to the industrial area 1. The access road to this location
can be connected directly to the access road of industrial area 1 so that the infrastructure
development costs can be cheaper. Supply of water and electricity can use existing network.
The disadvantage of this location is too close to the housing area so that it has risk of social dispute.
In addition, this location is passed by a high‐voltage power network (SUTET) so that it can reduce
the effective salable area. Price of land around the site has also been relatively high.
Alt.3. Tonjong Village
Tonjong village located about 15 km eastern from industrial area 1. Land to be acquired is farm and
non‐productive land. This location is about 5 km to East Cilegon Toll Gate, but the road to the site is
still a small road (district road), that necessary to expand. Relatively flat land contours. The
potential area that can be acquired is about 500 hectares. The advantage of this location is
relatively far from residential and non populated, thus no need resettlement, while the

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐
disadvantage of this location is

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

far from the existing industrial area so that the cost for infrastructure development more
expensive. Besides, allotment of land is not for the industry area, so it is necessary to change the
spatial planning.
Alt. 4. Eastern Serang
Eastern Serang site is located approximately 30 km east from industrial area 1. Land to be acquired
is non‐cultivated and non irrigated rice fields. Relatively flat land contours, but some part has very
low levels and little swampy, so the cost for land development can be expensive. The potential wide
that
can be acquired is about 500 hectares, which includes existing industrial zones that are less
developed. This location is approximately 10 km from the Ciujung Toll Gate, but the road to the site
is too congested with traffic flow, resulting in frequent congestion. The advantage of this location is
not populated and thus no need resettlement, while the disadvantage of this location is far from
the existing industrial area so that the costs for infrastructure and utilities development are more
expensive. For water supply industry it should build its own water treatment plant (WTP).

c. Analysis Of Site Selection

Based on these criteria, it conducted a rating analysis using a weighted technique and has the
following results.
Table 2 Rating Analysis for site selection
TEG LRATU MAKAMAJA TONJONG SERANG TIMUR
NO PARAMETER Weight A
weighted weighted weighted weighted
score score score score
score score core
s score
MUST
1 Allotment in spatial planning Go/No Go Go Go No Go Go
Availability of waste water
2 receiving body Go/No Go Go Go Go Go
WANT
1 Area Potential to Grow 10 4 40 4 40 0 0 3 30
2 Accessibility 20 4 80 5 100 0 0 2 40
Availability of Utility and
3 20 5 100 5 100 0 0 3 60
Infrastructure
4 Land Contour 15 4 60 4 60 0 0 3 45
5 Existing Land Use 10 3 30 2 20 0 0 3 30
6 Distance From Housing 5 2 10 2 10 0 0 3 15
7 Price Of Land 20 3 60 2 40 0 0 4 80

Total 100 380 24 370 0 0 21 300

Besides the rating analysis, it also conducted a brief feasibility study analysis with the result as shown
at table 3. below.

Table 3 Result of financial feasibility analysis

PARAMETER
NO LOCATION WIDTH PRICE INITIAL LD, Rp/ LD / m² ELLING PRICE SALES RATE INVESMENT
S IRR, %
Ha Rp / m² M2 efective, Rp / m² Ha / Th Rp Milyar
1 TEGALRAT U 70 250000* 22.6 130,000 1,000,000 10 220.8 22.6
2 MAKAMAJA 40 400,000 10.3 130,000 1,200,000 10 172,3 19.3

3 TONJONG 500 150,000 131 140,000 800,000 25 995.0 15.5

4 SERANG T IMUR 500 150,000 79 150,000 800,000 20 935.0 14.3

Based on the analysis above the selected location for industrial area 3 is the Tegalratu Village. But if
company has excess fund it can be continue to Makamaja. The development concept of industrial
estate at Tegalratu can be seen in the following figure.

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

Figure 8 Concept of Industrial Estate development at Tegal Ratu

3. Land Acquisition Procedures
a. Analysis of Legal Aspects
Permitting
To do land acquisition must first obtain a Location Permit (SIL) from local government. Location
permit is a license granted to the company to acquire the land in accordance with the spatial, as
well as the applicable permit to transfer of rights.
The other permit is Environmental permit after conducting an Environmental Impact Analysis
(AMDAL). But this permit can be obtained later after land acquisition process.

Mechanism of land transactions

Proof of Land Ownership
Land acquisition transactions should be made with the legitimate land owners. So, it is necessary to
determine the proof ownership of land or so‐called the underlying right (Alas Hak). Based on
previous experience, the Proof of Property ownership owned by land owners mostly in the form of
Girik or Land Tax invoice (SPT PBB), not yet has a certificate of property rights. Actually Girik and
SPT PBB is not a proof of land ownership. However, coupled with a letter from the Village Chief, the
Girik and SPT PBB can be used as proof of ownership of land, as the basis for the purchase of land.
Sale and purchase transactions
Sell and purchase of land should be based on the procedures of land acquisition for private
interests, which essentially have to meet such things as (1) Received approval from the government
and (2). Done directly with interested parties (land owners) with the agreed compensation. Sale
and purchase of land must be recorded in the deed of sale in front of the Land Deed Official (PPAT).
PPAT can be a notary or a sub‐district head. However for land that not yet has certificate of
property right (still a girik), deed of sale and purchase may be replaced with Waiver Letter (SPH)
from the owner to the State, after which the buyer must apply land use permit to the state.
Once the land acquisition is completed, the buyer applies a land use permit to the State and the
State will issue a certificate for the buyer. All transactions of land acquisition should be well
documented in order to avoid disputes in the future.
Documents that must be completed prior to land acquisition are as follows: (1) Certificate of Land
history, (2) Statement of Not Dispute Land Status, (3) Original Girik, Land Sale and purchase Deed or
Land Certificate, (4) Copy of Family Card and legalized land owners ID, (5)The power of attorney to
sell (if authorized), (6)Land Tax Invoice for the latest 3 Years, (7)Land location map prepared by the
landowner, (8) Measure Letter of Situation Picture (SU‐GS), (9) Waiver Letter, (10) Photo of the land
location and witnesses, (11) Waiver of not a grant land (wakaf) and (12) Wide Receiving Statement.
b.Analysis of Social and Cultural Aspects
The Main Stakeholders
To determine land acquisition strategies, it needs to analyze the major stakeholders associated with
the land acquisition process. It is necessary to make matrix of power and interest of stakeholders to
determine the communication method must be done. Power is the level of power owned by the
stakeholders to carry out its role, while the interest is the level of interest or expectations of
stakeholder to PT.KIEC
Table 4 Analysis Of Major Stakeholders Tegalratu

No Stakeholder Role Power Interest

1. Mayor Give SIL Strong High
permission
2. District Chief Land Deed Moderate Moderate
Official
(PPAT)
3 Village Chief Verify the Strong Moderate
validity of

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

land
ownership
4 Secretary of Verify the Strong Moderate
Village Chief validity of
land
ownership
4 Haji Alwani MUI Cilegon Strong Moderate
chairman
5 Haji Muhri community Strong Moderate
figures
6 Haji Junedi community Moderate Moderate
figures
7 Bpk H.Jamudin community Moderate Moderate
figures
8 Bpk.H.Syamsudin landowners Moderate Moderate

The Tegalratu primary stakeholders who should be treated as partners is Cilegon Mayor, Chief of
Tegalratu Village, Village Chief Secretary, Mr Haji Alwani and Haji Muhri. Based on the land
document (letter C) from Tegalratu Village, there are more than 100 land owners in the area to be
acquired. Therefore it is suggested to use an arranger to do land acquisition.
The same way can be done to the land in the village of Makamaja to develop land acquisition
strategy.
c.Analysis of land prices
Estimation of land acquisition cost is calculated by considering the land transactions price or
offering price around the site in recent months. Based on the price of land transaction information
is then can be estimated the purchase price of land in the village Tegalratu as follows:

Table 5 Land Grouping

Estimate Price
of Land Estimat Total Price,
No Land Grouping
Extensiv e, Rp
e, Ha Rp/m2
1 Land has road 14 Ha 300.0 42.000.000.
access 00 000
2 Land without 56 Ha 200.0 112.000.00
road access 00 0.000

The estimated average price of land in Tegalratu village is Rp. 220.000/M2, while the estimates
price of land in Makamaja village is Rp. 350.000/m2. In addition to the base price of the land, there
is an additional tax expense as follows:
1. Cost of BPHTB, the amount is 5% of the taxable value of Object paid by buyer
2. Value Added Tax (VAT) Costs, 10% of the transaction value paid by Buyer
3. Cost PPH, the value is 5% of the transaction value paid by the seller. However, in case of
land acquisition, land owner usually don’t want to pay the PPH.
4. Cost of Notary / PPAT. The cost of making deed is about 1% of the transaction value.
However, for transactions in the form of SPH (Surat Pelepasan Hak), the SPH cost is determined
by the sub‐district head. The cost of making SPH in Cilegon currently is around Rp.2.500/m2.
d.Risk Analysis.
To anticipate the things that may happen in the future, it needs to do risk analysis of land
acquisition process. Risk analysis aims to identify the types of risk, sources of risk, the level of risk
and mitigation plans.

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

Based on previous experience, the result of risks analysis are as follows:

Table 6 Risk Analysis Result

TYPES RISK RISK MITIGATION

No
RISK SOURCE LEVEL PLAN
1 High cost  Take long time EXTREME  Land
of land for decision‐ acquisition
acquisition making process by Arranger
(exceed and the land  Appointmen
the acquisition t of
budget) process. appraiser
 Information consultant
leakage on to appraise
land acquisition land price
plan
 The existence
of land
speculators
 Errors in Land
price prediction
2 Land  Land EXTREME  Involves
acquisition identification and village
take a document officials and
long time, verification too community
exceeded slow leader
the set  Land owners  Land
out target do not want to acquisition
sell land by arranger
 Land owners  Tight
want their other monitoring
land outside the of the land
location also acquisition
purchased (as process
the condition)
 The existence of
granted land
(waqaf )
3 Disputes  Dual land EXTREME  Establish
arise later ownership and more
invalid land prudent SOP
documents  Ensure that
 Land acquisition land status
team less and its
thorough in document is
checking land complete
ownership status and valid
using legal
consultant

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

Risk Analysis Result Continued

TYPES RISK RISK MITIGATION

No
RISK SOURCE LEVEL PLAN
3 Disputes  Bad control in  Good
arise later Land acquisition document
documents control of
 Land owner land
was not acquisition
received  Direct
payment of payments
land to
landowners
and well‐
documente
d
4 Land  The complexity EXTREME  Establish
acquisition / difficulty of more
process land acquisition prudent
violate the process SOP
applicable  Land acquisition  Ensure that
regulations task force the
(Arranger) lack designated
in understanding arranger
of the understand
procedures and the
regulations procedures
 The new and
regulations from regulations
the government  Monitor the
changes in
government
regulations
5 The  Determining land EXTREME  More
difference boundaries are thorough in
in less precise when measureme
cumulative measuring and nt process
land area Inaccurate
measurement  Land
 No physical of physical
land survey
6 Insufficient  Increasing of land EXTRIM  Allocation
funds prices of internal
 No bank financing funds
commitment  Funding
from banks

e.Proposed Land Acquisition Strategy

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

Based on the evaluation of legal, financial and risk analysis, it is proposed a strategy on land
acquisition which is divided into several steps that is preparation phase, implementation phase,
payment phase and documentation phase.
Preparation Phase
1. Apply Location Permit (SIL) to the government (Cilegon Mayor)*)
2. Make of aerial photographs
3. Identify landowners in more detail
4. Price appraisal by appraiser consultant to determine the fair price of land purchase
5. Master planning of land acquisition
6. Appointment arranger for land acquisition
*) This step may be postpone until appointment of arranger

Implementation Phase
1. Land acquisition schedule
2. Submission quotation and ownership documents from owner
3. Verification of land physical and land ownership document
4. Land price negotiations
5. Submission of other documents
6. Official report about land prices negotiation

Payment Phase
1. Verify payment documents
2. Signing Waiver Letter (SPH), take picture
3. Signing acceptance of the payment, take picture
4. Submission of payment voucher, take picture
5. Transaction documentation, land owner and PT. KIEC official take a photo together with handled
a land transaction information board, that content name of land owner, persil number, wide and
price of land

Documentation Phase
1. Entering all land transactions data into land information system
2. Arrangement land certificate to BPN
3. Recapitulation of land and land certificate
4. Safe keeping of land certificate and land acquisition document

4. Implementation Plan

Preparation of Action Plan

To implement the land acquisition process it should be drawn up an action plan, which includes the
type of activities, time schedule and the person in charge as can be seen in Table 7.

Table 7. Action Plan

2013 2014
No Activity 6 7 8 9 10 # 12 1 12 PIC
4 5 23 4 5 6 7 8 9 # 11

1 Preparation of Land Acquisition

a. Feasibility Study Business dev. Division
b Budgeting & Fund rising Business Dev General Mgr
c. Established more prudent SOP PSP Division
2 Implementation of Land Acquisition Land AcquisitionTeam (Team)
a. Appraisal of land prices Appraiser Consultant (KJPP)
b Taking aerial photo Team
c. Appointment of arranger Procurement Dept + Team
d. Application of SIL (Surat Ijin Lokasi) Team + Arranger
e. Land Acquisition & Resettlement Team + arranger
- Envolves village official & Community leader
- Tight progress monitoring
- Physical survey & measurement
- Document verification
- Direct Payment to land owner
3 Documentation
Input land documents into SIP (Land
a. Information Systems) Technical Division
b. Land Certificate Legal Div

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

Resource Needs
The main resources needed to carry out the land acquisition are Human Resource and Financial
Sources.

Human Resource
Currently, the implementation of land acquisition carried out by a team whose members come
from various functions in the company. For next land acquisition, it is done by arranger and
supervised by internal land acquisition team. The role of the team is to supervise the arranger
during land acquisition process, those are:
1. Prepare the master planning of land acquisition and its staging.
2. Verify land physic and land documents proposed by arranger
3. Do payment directly to land owner

Financial Sources
a. Capital Required
Capital required for land acquisition is calculated as shown at table 8. below.
Tabel 8 Land Acquisition Cost
Wide of Land
acquisition : 700,000 m2
Unit
No Items price Total Cost, Rp
Location
1 permit 5000 3,500,000,000
2 Aerial Photo ls 100,000,000
Appraiser
3 consultant ls 150,000,000
4 Land price 220,000 154,000,000,000
5 SPH 2500 1,750,000,000
6 VAT 10% 15,400,000,000
7 PPH 5% 7,700,000,000
8 BPHTB 5% 7,700,000,000
9 Arranger fee 1% 1,540,000,000
Total 191,840,000,000
VAT Deduction 15,400,000,000
Total Cost 176,440,000,000

b. Sources of Fund
Source of fund for land acquisition comes from equity and loan. To calculate the equity and loan
portion it needs to run a financial model to see the cash flow and cash balance. The required
minimum cash balance is Rp. 20.000.000.000. It is suggested to use equity fund as much as possible
since based on the information from finance department, it is difficult to get financing from bank
for land acquisition. Banks are only willing to fund the cost of land development.
The result of the corporate financial model run down gives two (2) alternatives to finance the land
acquisition. Alternative (1) land acquisition conducted in year 2014 with source of fund comes from
equity Rp. 61.000.000.000 and bank loan Rp 115.000.000.000. Alternative (2) land acquisition
conducted in year 2016 with source of fund 100% comes from equity. It is proposed to use
alternative (1) to leverage the performance with outsourcing fund.

References

Anthony E. Henry, 2010, Understanding Strategic Management, 2nd Edition. Oxford University Pres

18
 Maryono and Soedjarno / The Indonesian Journal of Business Administration, Vol.2, No.15, 2013:1827‐

Collier International, Research & Forecast Report Jakarta Real Estate, web address
http://www.colliers.com/engb/indonesia/~/media/files/marketresearch/apac/indonesia/jakart
amarketreport4q2012.ashx, Indonesia Market Reports
Duane Ireland, R., Robert E. Hoskisson & Michael A. Hit, 2011, The Management Strategy Concept
and Case, 9th Edition, South Western Cengage Learning
Indonesia Industrial Estate Asociation, 2011, Indonesia Industrial Estate Directory
KIEC PT, 2013, Laporan Keuangan 2012 Unaudited
KIEC, PT., 2009, Manual Manajemen Resiko
KIEC, PT, 2011, Rencana Jangka Panjang Perusahaan Tahun 2012 ‐2016
Lawrence J. Gitman, Chad J. Zutter, 2012, Principle Of Managerial Finance, Global Edition, 13th
Edition, Person
Mark W. Johnson, Clayton M. Christensen, & Henning Kagermann, 2007, Reinventing Your Business
Model, Harvard Business Review
Peraturan Pemerintah Republik Indonesia No. 24 Tahun 2009 tentang Kawasan Industri
Peraturan Menteri Perindustrian Republik Indonesia No. 35 Tahun 2010 Tentang Pedoman Teknis
Kawasan Industri
Robert Jacob, F. & Richard B. Chase, 2010, Operation and Supply Chain Management, Global Edition,
13th Edition, Mc Graw Hill Irwin

18