Protected Paddy Fields as a New Variable in Land Due Diligence and Investment

Abimanyu Rhesa Agatha

Introduction

Business activities in the property, mining, industrial estate, infrastructure, and other sectors generally require land as a key asset. In land acquisitions, reviewing land title and compliance with spatial plans is an important part of legal due diligence. However, valid land ownership and compliance with spatial planning requirements do not always mean that the land can be developed as intended.

Under Presidential Regulation No. 4 of 2026 on the Control of Paddy Field Conversion (Presidential Regulation 4/2026), the Government has strengthened the protection of Protected Paddy Fields (Lahan Sawah Dilindungi or LSD) as part of its efforts to maintain national food security.

Land included in the LSD Map may be subject to restrictions on changes in land use, which may affect development plans, licensing, and project feasibility. Therefore, LSD status has become an important regulatory risk that should be assessed separately as part of land acquisition due diligence.

Presidential Regulation 4/2026 as a Policy Instrument for Controlling Paddy Field Conversion

Presidential Regulation 4/2026 serves as a government policy instrument to control the conversion of paddy fields in order to safeguard national food security. Among other matters, the regulation provides for the establishment of the Integrated Team for the Control of Paddy Field Conversion (Integrated Team), the designation of the LSD Map, and controls over changes in land use.

A key process in the designation of the LSD Map is the verification and synchronization of various supporting datasets, including spatial, land administration, spatial planning, irrigation, forest area, and other sectoral data. The results of this process form the basis for the designation of the LSD Map and its integration into applicable spatial plans.

In this context, LSD should be distinguished from Sustainable Food Agricultural Land (Lahan Pertanian Pangan Berkelanjutan or LP2B) and Sustainable Food Agricultural Areas (Kawasan Pertanian Pangan Berkelanjutan or KP2B). Land included in the LSD Map is not necessarily designated as LP2B and/or KP2B. This distinction is important, as the applicable status determines the mechanism and degree of restriction imposed on changes in land use.

LSD as a New Variable in Land Acquisition Due Diligence

Following the enactment of Presidential Regulation 4/2026, the status of a parcel of land under the LSD Map has become an important factor to be considered in the due diligence process. The inclusion of land within an LSD area may restrict potential changes in land use and may affect spatial utilization and licensing processes, including the issuance of an Approval for the Conformity of Spatial Utilization Activities (Persetujuan Kesesuaian Kegiatan Pemanfaatan Ruang or PKKPR), which is required to confirm the conformity of the proposed activity with the applicable spatial plan.

Accordingly, the review of a proposed investment site should not be limited to the validity of legal documents, land title status, encumbrances or disputes, and compliance with spatial planning requirements. Businesses should also assess the land’s status under the LSD Map, its LP2B/KP2B status, its existing land use, and whether a change in such use is legally permissible.

This is particularly important because certainty of land ownership is distinct from certainty that the land may be developed for the intended investment purpose. A parcel of land may be supported by a valid land title certificate and may legally be transferred under private law, yet its use for non-agricultural purposes may still be restricted where changes in land use are subject to regulatory limitations.

Accordingly, a clean title does not necessarily mean a clean development status. LSD status should therefore be treated as a distinct regulatory risk when assessing the feasibility of an investment.

Corporate Strategies for Addressing LSD Risks Following Due Diligence

Where the due diligence process identifies that the land is included in the LSD Map, the company should first determine whether the land has also been designated as KP2B and/or LP2B.

If the land has not been designated as KP2B and/or LP2B, a change in land use may still be possible by obtaining a recommendation from the Minister of Agrarian Affairs and Spatial Planning/Head of the National Land, subject to compliance with the requirements under Presidential Regulation 4/2026. However, where the land has already been designated as KP2B and/or LP2B, such recommendation mechanism is not available.

Where a change in land use remains permissible, businesses may consider obtaining the relevant recommendation or other regulatory certainty before proceeding with the proposed investment. Where the due diligence is conducted in connection with a transaction, its findings may also serve as a basis for determining transaction conditions, the parties’ respective obligations, and appropriate mitigation measures in the event that the required regulatory certainty cannot be obtained.

Accordingly, LSD status does not necessarily mean that an investment must be abandoned. A company should first assess whether the land can still be utilized in accordance with the intended investment plan. If so, the transaction may proceed once the necessary regulatory certainty has been obtained. If not, the company may consider alternative land or decide not to proceed with the transaction.

Conclusion

LSD has become an important variable in land acquisition due diligence. Valid land ownership does not necessarily guarantee that the land may be developed in accordance with the intended investment plan. The review should therefore include not only the land’s LSD status, but also whether it has been designated as KP2B and/or LP2B, as each status may have different implications for changes in land use. Early identification of these matters enables businesses to better assess the feasibility and regulatory risks of an investment before proceeding with a transaction.

Keywords: investment, due diligence, Lahan Sawah Dilindungi, PKKPR, LP2B, KP2B