Supporting IKN project, HK and 5 SOEs establish joint venture
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.
Investor Daily - Dukung proyek IKN, HK dan 5 BUMN bentuk perusahaan patungan
17 March 2023
By: Tri Murti
Jakarta - Hutama Karya (Persero) or HK with five other construction state-owned enterprises (SOEs) is establishing a joint venture, PT Karya Logistik Nusantara (PT KLN), to support Nusantara Capital City (IKN) development. The five SOEs are PT Adhi Karya (Persero) Tbk, PT Wijaya Karya (Persero) Tbk, PT Pembangunan Perumahan (Persero) Tbk, PT Brantas Abipraya (Persero), and PT Nindya Karya (Persero).
“The joint venture, PT KLN, has been ratified by the Law and Human Rights Minister with the number AHU-0011167.AH.01.01 of 2023. The authorised capital of the joint venture reaches Rp340 billion, while the capital that has been placed and paid off reaches Rp85 billion,” Hutama Karya Corporate Secretary Executive Vice President (EVP) Tjahjo Purnomo said in his official statement in Jakarta on Thursday (16/3/2023).
HK with five other construction SOEs cooperated to establish a joint venture called PT KLN on 10 February 2023. The joint venture will provide basic construction materials and focus on precast concrete business and construction material trade.
“PT KLN is expected to support IKN development by guaranteeing the supply and the quality of construction materials,” Tjahjo said.
Tjahjo said that the capital city relocation plan demands massive construction in IKN, so the construction material requirement is quite large, especially of concrete. Seeing this opportunity, six construction SOEs established a special company to ensure the fulfilment of basic construction materials during IKN development.
“With its operational office in Balikpapan, PT KLN is currently operating to supply concrete for projects in IKN. PT KLN can also support corporate activities,” Tjahjo said.
Meanwhile, the Public Works and Housing (PUPR) Ministry is allocating US$4.5 billion or Rp62 trillion for 63 construction projects in IKN from 2022 to 2024. The PUPR Ministry has also invited investors, including business partners from Japan, to invest in IKN.
“Until the second week of February 2023, several projects worth US$1.58 billion have been contracted,” Human Settlement Director General of the PUPR Ministry Diana Kusumastuti said recently.
Diana explained that the first phase of IKN development will be carried out from 2022 to 2024, and it will focus on the construction of Development Area (WP) I or Central Government Core Area (KIPP) that reaches 6,671 hectares (ha) in size. From that size, 49% or 3,271 ha will be maintained as a forest area.
KIPP is divided into three zones, namely Zone 1A (Central Government), Zone 1B (Government-Education-Housing), and Zone 1C (Government-Health-Housing).
“All of the construction is carried out by utilising building information modelling (BIM) and geographic information system (GIS),” Diana explained.
Furthermore, the PUPR Ministry has invited investors and business partners from Japan to invest in IKN as it has been guaranteed by a strong legal foundation, which is Law No. 3 of 2022 on State Capital City. The statement was revealed at Japan-Indonesia Economic Committee of Keidanren in Tokyo in Japan at the end of last month.
The Indonesian government has also established IKN Authority (OIKN) that will prepare, develop, relocate, and manage IKN.
“OIKN will fully support investors who want to participate in IKN development using the public-private partnership (PPP) mechanism,” Diana said.
During the occasion, IKN Infrastructure Development Task Force Chairperson Danis Hidayat Sumadilaga said that IKN development includes the concept design, land use and zonation development, as well as basic infrastructure provision that incudes road, clean water, sanitation, waste management, and main government facilities. He also said that the development of IKN as an urban ecosystem is carried out to be an integrated city, especially in terms of its functions, visuals, and environment towards Smart Forest City IKN.
“The PUPR Ministry had constructed various infrastructures in IKN as proof of the government’s seriousness in constructing IKN,” Danis said.
