Indonesia's Nusantara Capital Project Continues Amidst Land Rights Reversal

Government Response to Constitutional Court Decision

The Indonesian government is moving to reconfigure the legal foundation for land use in the Nusantara Capital (IKN) following a recent Constitutional Court ruling that annulled 190-year land use rights (HGU) previously granted under regulations introduced during former President Joko Widodo's administration. The court's decision, which also invalidated 160-year building use rights and land usage rights, has necessitated a comprehensive review of the existing legal framework governing land utilization in the new capital.

Presidential Commitment to IKN Development

Coordinating Minister for Economic Affairs Airlangga Hartarto provided assurance that President Prabowo Subianto remains fully committed to the IKN project, with plans to establish it as the political capital by 2028 as mandated by Presidential Regulation Number 79 of 2025. Airlangga emphasized that the government is actively exploring alternative legal pathways to ensure the continued development of the new capital.

Legal Reconfiguration and Infrastructure Development

The government is currently revisiting the legal groundwork for land use in IKN, with particular focus on creating a robust framework that addresses the Constitutional Court's concerns while maintaining the project's momentum. Concurrently, construction continues on critical infrastructure, including the parliamentary complex and judicial facilities, which are central to establishing IKN as the future political hub.

Implications for Investors and Future Development

While the Constitutional Court's decision introduces short-term uncertainty, government officials maintain that the development of IKN will proceed as planned. The situation highlights the complex regulatory environment surrounding major infrastructure projects in Indonesia, particularly those involving land rights and constitutional considerations. The government's ability to navigate these challenges will be crucial in maintaining investor confidence and ensuring the successful realization of the IKN project.