Revision of the Capital City Law: IKN Authority 'eyes' central authority
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Revisi UU Ibu Kota Negara: Otorita IKN ‘incar’ wewenang pusat
7 August 2023
By: Tegar Arief
Jakarta - It looks like Nusantara Capital City (IKN) Authority is not satisfied with their authority. The new capital city leader is asking for a special right to handle affairs that are originally handled by the central government.
The request is stated in the draft amendment for Law No. 3/2022 on Capital City, specifically for Article 12. In their request, IKN Authority (OIKN) is asking for a special authority to handle affairs of the central government and a regional government to prepare for and implement governance in Nusantara.
The special authority includes all aspects related to construction and relocation that currently concern the central government, except for absolute administration affairs.
OIKN is also asking for the ability to issue norms, standards, procedures, and criteria (NSPK) that is currently the authority of the central government, specifically of ministries and institutions.
OIKN Development Control Deputy Thomas Umbu Pati Tena Bolodadi explained that there were several reasons why OIKN requested the change in authority. One of the reasons is to affirm the special authority of OIKN to realise a dexterous governance.
“We do not have to talk too much about the authority. We will work with our full power, and only with the authority can we work in an agile manner,” he said last weekend.
Thomas added that OIKN needed to prepare different NSPK from other institutions to accelerate the construction and the relocation of IKN.
If they do not prepare their own NSPK, then OIKN will refer to the NSPK issued by ministries and institutions. “We need to issue different NSPK.”
Even though they have a strong argument, academicians are suggesting OIKN to still refer to Law No. 3/2022 in implementing their governance by not taking over the authority of the central government.
Universitas Andalas Faculty of Law Law Science Professor Yuliandri said that, even though OIKN excluded absolute administration affairs, the request was still not suitable.
According to him, OIKN must continue to act as a special regional government, similar to the regional governments of many regions in Indonesia. “OIKN must remain a special regional government.”
Yuliandri added that the handling of the central government’s affairs by OIKN must be in line with the OIKN Head’s framework as the representative of the central government in Nusantara with decentralisation.
According to him, the Capital City Law needs an update to affirm the substance so that OIKN’s authority does not interfere with absolute administration affairs.
To affirm OIKN’s position as a special regional government, Yuliandri is suggesting the new Capital City Law to accommodate the preparation of OIKN Regulations that must be harmonised like other ministerial or institutional regulations. They must also be evaluated, similar to regional government regulations.
“If they are forced, the norms will not be synchronised with OIKN’s status as a special regional government,” he stated.
If closely observed, there are many authorities of ministries and institutions that have been taken over by OIKN to facilitate Nusantara development.
Besides collecting tax and special retributions, the OIKN Head also holds full control to grant investment permits as well as fiscal and non-fiscal incentives that has always been the domain of the Investment Ministry/Investment Coordinating Board (BKPM) and the Finance Ministry.
The authority is stated in Article 12 of Law No. 3/2022, which states that OIKN as the organiser of regional government in IKN is granted a special authority.
The special authority includes the right to provide investment permits, ease of business, and special facilities for parties that support financing.
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