Indonesia's Nusantara Capital Project Continues Despite Land Rights Cancellation

Constitutional Court Ruling Impacts Land Rights

The Indonesian government remains optimistic about the Nusantara Capital (IKN) project despite the recent cancellation of 190-year land rights for investors. Minister of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN) Nusron Wahid assured that this development will not deter investment in the mega-project. The cancellation follows a ruling by the Constitutional Court that declared the provision granting such long-term land rights unconstitutional.

Government's Response to the Constitutional Court Ruling

The Constitutional Court's decision was in response to a judicial review of the Law No. 3/2022 concerning the Nusantara Capital. The court ruled that the provisions allowing for Hak Guna Usaha (HGU) or Right to Use for up to 190 years, Hak Guna Bangunan (HGB) or Right to Build for 160 years, and Hak Pakai (HP) or Right to Use for 160 years were unconstitutional. Despite this setback, Minister Nusron expressed confidence that the government would introduce alternative incentives to attract investors.

Impact on Investment and Future Prospects

The cancellation of the long-term land rights was a significant aspect of the investment incentives offered to developers in the IKN project. However, Minister Nusron emphasized that the government is committed to ensuring that the project remains attractive to investors. He stated that the government would consider other forms of incentives to compensate for the loss of the long-term land rights. This approach is expected to maintain investor interest in the IKN project.

Conclusion

The IKN project, a flagship initiative of President Joko Widodo's administration, aims to relocate Indonesia's capital from Jakarta to East Kalimantan. Despite the recent legal setback, the government remains committed to the project's success. The introduction of alternative incentives is seen as a crucial step in maintaining investor confidence and ensuring the project's progress.