IKN Bill ratification: The way is paved for investment in Nusantara
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 - Pengesahan RUU IKN: Jalan terbuka investasi di Nusantara
4 October 2023
By: Alifian Asmaasyu & Hendra Wibawa
Investors in Nusantara Capital City (IKN) will be granted a right to cultivate (HGU) of up to 190 years as the House of Representatives (DPR) have decided to ratify the IKN Bill to be a law.
DPR Deputy Speaker Sufmi Dasco Ahmad was the star at the 7th plenary session that was held on Tuesday (3/10). The DPR leader from Partai Gerakan Indonesia Raya (Gerindra) chaired the level II discussion that determined the Bill on the Amendment to Law No. 3/2022 on IKN to be passed as a law.
After Sufmi Dasco has affirmed his approval for the IKN Bill to be a law twice, the meeting participants agreed.
The process was relatively short with seven fractions approving the IKN Bill to be a law. The seven fractions are Partai Demokrasi Indonesia Perjuangan (PDIP), Partai Golkar, Partai Gerindra, Partai Nasional Demokrat (Nasdem), Partai Kebangkitan Bangsa (PKB), Partai Amanat Nasional (PAN), and Partai Persatuan Pembangunan (PPP). Only Partai Keadilan Sejahtera (PKS) denied the IKN Bill, while Partai Demokrat agreed with a condition.
The IKN Bill includes several important revision points, such as boundary determination, IKN Authority strengthening, housing provision acceleration, and land aspect strengthening in IKN.
The land point is crucial as it is longed for by all investors, including domestic and foreign private investors.
At the DPR building on Tuesday (3/10), PPN Minister/National Development Planning Agency (Bappenas) Head Suharso Monoarfa directly explained the crucial point.
According to him, the HGU granted to investors in Nusantara can reach 190 years, but it will be granted in stages. “For example, the hottest [revision point] is the one about lands. Lands are said to be granted for 95 years, then they will be extended for another 95 years,” Suharso said.
Later, he explained that the HGU would not be granted all at once, but in stages. The first stage of the HGU will be granted for 35 years, then after an evaluation, it will be extended by 25 years. Next, there will be another evaluation for the HGU to be extended by another 35 years. In total, the HGU will reach 95 years.
“However, we cannot put aside these things as they also apply to the Job Creation Law. It is what we heard. So, it is often read without the explanation,” he said. The HGU revision to 190 years was highlighted after it was denied by PKS as it would pamper the investors too much.
Suharso affirmed that it has been set in Article 18 of Government Regulation Number 12/2023 on Granting of Business Licensing, Ease of Doing Business, and Investment Facility to Business Players in Nusantara Capital City.
He claims that he will not put aside other applicable regulations in Indonesia even though the new IKN Law is lex spesialis. “So, not all at once, even though the law is lex spesialis,” he said.
At the forum, Suharso was thankful as the IKN Bill has been ratified as a law. He also thanked the stakeholders that have ratified the new IKN Law. “Finally, it is finalised. Alhamdulillah (Praise be to God), it has been achieved. There are obviously many questions for us,” he said.
Indonesia-centric vision
During the opening of the national work meeting of the Corps of Civil Servants of the Republic of Indonesia (Korpri), President Joko Widodo (Jokowi) stated that IKN in East Kalimantan was the embodiment of the Indonesia-centric vision.
Hence, the relocation of civil servants (ASNs) to Nusantara is inevitable.
From the start, Jokowi stated that ASN relocation to Nusantara would have its pros and cons. On one hand, there are parties that do not agree with the relocation to Nusantara, but there are also parties that agree. However, the President continued that Indonesia has more or less 17,000 islands. Java Island is currently inhabited by 56% of Indonesia’s population or 150 million people out of Indonesia’s total population of 278 million people.
Moreover, he also highlighted the inequality of the gross domestic product (GDP) that reaches 58% in Java. According to him, the condition must be addressed as soon as possible. “For starters, ASNs need to be relocated. It is a new future,” he said.
Jokowi stated that the government has implemented several strategies that include incentives so that ASN relocation to Nusantara can be realised excellently.
The incentives include official houses that are in the form of landed houses and apartments. Next, the relocation costs of husbands, wives, and children will also be provided. Moreover, there will also be other benefits and facilities that will follow suit.
“A pioneer is needed. A long time ago, they are fine about being placed outside of Java, but why is it complicated now? However, if the husband has been appointed to relocate, his wife will also relocate. I hope everything will be completed,” Jokowi said.
On another occasion, Investment Minister/Investment Coordinating Board (BKPM) Head Bahlil Lahadalia also revealed that a private investor was ready to conduct groundbreaking in Nusantara in November 2023.
“Later in November [there will be a follow-up groundbreaking]. I have to report it first to the President,” he said on Monday (2/10).
The information is in accordance with the plan of PT Pakuwon Jati Tbk (PWON) that is ready to construct several luxury hotels with Mariott International.
Pakuwon is a pioneer private investor that has revealed its intention to invest in IKN. Until the end of August 2023, PWON’s investment progress in IKN was still waiting for the confirmation of the land allocation and the contribution of bus interchanges.
In the middle of September 2023, PWON announced that its company would cooperate with Mariott International to build three luxury hotels in IKN.
The three hotels that will be built are Westin, Four Points, and Tribute Portfolio. Pakuwon Jati President Director Alexander Stegans Ridwan Suhendra explained that the plan to build the three hotels was part of PWON’s commitment to implement mixed-use development in IKN.
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