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 - Ibu Kota Baru: Pemanis baru bagi investor Nusantara
15 March 2024
By Alifian Asmaaysi and Hendra Wibowo
The investment momentum in Nusantara Capital City (IKN), East Kalimantan, appears to be gaining strength. This potential has opened up after President Joko Widodo directed IKN Authority to sell lands to investors.
The directive came after the President observed the need for accelerated investment in IKN. The Head of State requested lands for investment to be sold, with pricing determined by IKN Authority.
In principle, IKN Authority determining land prices in IKN does not violate applicable regulations. "That is also his [Jokowi's] statement. Work quickly without violating any regulation," said Minister of Public Works and Housing (PUPR) Basuki Hadimuljono on Wednesday (13/3).
A day after that, during the IKN Coordination Meeting in Jakarta, IKN Authority Head Bambang Susantono stated that, in certain cases, lands in IKN might be sold with a right of ownership. However, he emphasised that, in the initial stage, it would only involve the right to build (HGB) and the right to cultivate (HGU).
"What is being referred to as sold, for example, is the right to build above the land management right of IKN Authority," he explained.
Bambang revealed that the total investment in IKN, realised through five stages of groundbreaking ceremonies, amounted to Rp49.6 trillion. By the end of 2024, IKN Authority aims for investment from the private sector in IKN to reach Rp100 trillion. This indicates the government's serious commitment to developing infrastructure and public facilities in IKN.
"Eventually, a comprehensive ecosystem will be formed. That is the term used within the central government core area, which will serve as a model for further developments of IKN in the future," he added.
Bambang also mentioned that cooperation would be established with Stanford University and several other universities to build a research centre. This is a preliminary step before the full development of a university in IKN.
"The point is we want to establish a research centre first because building a university requires many components. So, we start with research. For this research, we are collaborating with Stanford alumni."
IKN Authority Deputy for Financing and Investment Agung Wicaksono added that IKN Authority held land management rights (HPL) over an area of 34,000 hectares in IKN.
He mentioned that in certain cases, IKN Authority was allowed to sell right to ownership certificates (SHMs) to investors. However, he emphasised that, in the initial stage, it will only involve HGB and HGU.
The granting of SHMs will specifically be given to investors intending to develop the housing sector in the form of landed houses.
"[Granting] SHMs will be possible later on as this is only for the lands. The process for obtaining SHM for housing construction, such as building a house, has its stages, but for now, what is important is for investors to acquire the HGB first," he said.
IKN Infrastructure Development Task Force Chairperson Danis H. Sumadilaga also explained that the Presidential Palace that will be the venue for Indonesia’s 79th Independence Day ceremony in IKN would be able to accommodate 8,700 people.
As of 7 March 2024, the construction of the State Palace and the IKN ceremony field have reached 58.85%. Danis mentioned that the State Palace, ceremony field, and podium were set to fully function in June 2024.
So, they can be used to support Indonesia’s Independence Day ceremony on 17 August 2024 that is planned to be attended by 8,700 individuals,” Danis explained.
The construction progress of the President’s office building has reached 78.68%. The PUPR Ministry is targeting the President’s office building and the Garuda’s blades to be installed in June 2024.
On the contrary, the construction of the Presidential Secretariat building and its supporting buildings has reached 69.68%.
Danis explained that the Presidential Secretariat building, which consists of the Presidential Security Detail (Paspampres) housing, the main generator building, the fire department building, the parking building, and several other supporting structures, was also set to be used in June 2024.
Not only infrastructure readiness, IKN Authority is also ensuring the availability of food supply and fuel in IKN approaching the Independence Day ceremony.
IKN Authority Facilities and Infrastructure Deputy Silvia Halim explained that she would ensure the provision of accommodation and transportation arrangements for guests attending Indonesia’s Independence Day ceremony in IKN.
“Fuel must also be available. The capacity of the city itself must also be ensured. It must be able to accommodate and receive extra guests as there will be a ceremony,” Silvia said.
Public transportation
On another occasion, Transportation Minister Budi Karya Sumadi met with Finance Minister Sri Mulyani. The meeting discussed the acceleration of transportation construction in the new capital city.
The Transportation Ministry is planning to construct smart, integrated, and eco-friendly transportation in IKN.
The Transportation Ministry is planning to construct an autonomous rail rapid transit (ART) system in IKN. The introduction of ART in IKN represents a breakthrough in transportation technology as the railway system is trackless.
An ART system is operated using batteries with road markings and magnets.
The railway system will be constructed in the East Side and West Side of the Sumbu Kebangsaan area. The construction will be carried out in two phases.
The ART system will consist of two trains with a total capacity of 324 passengers. The operational speed ranges from 40 km per hour with a maximum speed of 70 km per hour.
The route and the length of the ART system’s route in the first phase will span around 1.2 km. Meanwhile, the second phase is planned to span around 5.2 km.
When it operates, the Transportation said the route and the station of the ART system would be shared with the Bus Rapid Transit (BRT) system.
The Finance Ministry spent Rp26.7 trillion in 2023 or 97.6% of its budget ceiling to construct a complex in the core area.
Besides that, the funding was also used for constructing flats for civil servants and the defence staff, the IKN toll road, and the duplicate Balang Island Short-span Bridge.
This year, the Finance Ministry’s expenditure in IKN is set to increase to Rp40.6 trillion.
In total, the budget allocation for IKN from 2022 to 2024 has reached Rp72.8 trillion with Rp5.5 trillion realised in 2022, Rp26.7 trillion in 2023, and Rp50.6 trillion set in the 2024 State Budget (APBN).
