Indonesia Cancels 190-Year Land Rights for Nusantara Capital, Promises Alternative Incentives

Constitutional Court Ruling Impacts Investment Incentives

The Indonesian government has cancelled the 190-year Land Use Rights (HGU) for Nusantara Capital (IKN), following a recent Constitutional Court ruling that annulled the original land rights provisions. This decision, initially introduced by former President Joko Widodo as an investment incentive, has sparked concerns about potential negative impacts on investment in the new capital city project.

Government Response to Land Rights Cancellation

Minister of Agrarian Affairs and Spatial Planning/Head of National Land Agency (ATR/BPN), Nusron Wahid, has assured that the government will prepare alternative incentives to replace the cancelled HGU. In a statement, Nusron expressed confidence that the government would develop new incentives to maintain investor confidence in the IKN project. "As long as I'm concerned, I believe the government will think about providing other incentives besides HGU," Nusron stated.

Impact on Investment and Development Plans

The cancellation of HGU, along with other land rights such as Building Use Rights (HGB) and Land Use Rights (HP) for 160 years, has raised concerns among stakeholders about potential investment slowdown. However, Nusron expressed his support for the Constitutional Court's decision, stating that he believes it will not negatively affect investment in the new capital. "I believe it's better to have such a decision (following the Constitutional Court ruling). And I'm sure it won't affect (investment in IKN)," he added.

Constitutional Court Ruling Details

The Constitutional Court's decision to annul the extended land rights was made through ruling number 185/PUU-XXII/2024, which was partially granted. This legal development has significant implications for the investment landscape in Indonesia's new capital city project. The court ruling and subsequent government decision highlight the complex regulatory environment surrounding major infrastructure projects in Indonesia.

Future Outlook for IKN Development

The government's commitment to developing alternative incentives suggests a proactive approach to maintaining investor confidence in the IKN project. As the situation continues to evolve, stakeholders will be closely monitoring how these new incentives are structured and implemented to support the ambitious new capital city development plans.