Layered land rights under government-led decentralization: Implications for land value capture implementation in Jakarta, Indonesia

Multiple land rights holders and layered land rights structures create fundamental challenges for implementing land-based financing methods such as land value capture (LVC). In a decentralized governance system, overlapping land rights and fragmented planning complicate coordination and limit the effectiveness of LVC for financing transport infrastructure development. This study examines how different rights holders contribute to implementing land value capture within a layered land rights and multi-level governance system in Indonesia, using the Jakarta Mass Rapid Transit (MRT) project as a case study. In Indonesia’s decentralized system, multiple levels of government apply different planning tools to regulate land use and development, complicating coordination between planning, land rights, and LVC mechanisms. Qualitative data from semi-structured interviews and policy analysis show that overlapping land rights and fragmented regulations create legal and administrative uncertainty. This uncertainty acts as a barrier to cross-governmental coordination and private stakeholder engagement, both of which are necessary for a workable LVC framework. Although a formal LVC framework exists, unclear rules on which rights holders should contribute, combined with complex administrative procedures, limit its practical use. This study contributes to the LVC literature by linking instruments to specific land rights holders and by extending the bundle-of-rights perspective. It explains why LVC remains underutilized in contexts with layered land rights and decentralized governance. The findings highlight the need for policy reforms to clarify contribution obligations, improve coordination across governance levels, and simplify the administrative process.