The progression of the Ibu Kota Nusantara (IKN) construction persists with robust momentum, propelled by significant interest from both foreign and domestic investors. Recently, the Capital City Authority (OIKN) has documented a minimum of 10 projects, boasting an investment value of approximately Rp10 trillion, poised to commence groundbreaking in December 2023.
These developmental endeavors within the IKN have evolved into a magnet for business entities and investors, recognizing substantial potential in the region’s infrastructural and economic expansion. To entice investors, the government has extended various conveniences, including a comprehensive corporate income tax exemption of up to 100% for local investors, permitting foreign workers to operate and reside within Nusantara for a decade, extending land use rights (HGU) within Nusantara for an impressive 190 years, and validating building permits for a remarkable 80 years.
These extraordinary incentives have garnered considerable attention from foreign investors, positioning this project as a unique opportunity to actively contribute to the establishment of a region anticipated to serve as a pivotal economic hub in Indonesia. Concurrently, the fervor exhibited by domestic investors bolsters the steadfast support necessary to actualize the ambitious vision of the IKN development.
President Joko Widodo affirmed that the aggregate investment from diverse domestic sources for the IKN projects reached an impressive Rp45 trillion by December 2023. Such heightened investor enthusiasm fosters a collaborative synergy between the private sector and the government, accelerating the project’s advancement and ensuring its enduring success.
10 Construction Projects Set for Groundbreaking in IKN Next Month
The Capital City Authority (OIKN) has meticulously documented at least 10 projects with an accumulative investment value reaching Rp10 trillion, poised to inaugurate groundbreaking ceremonies in December 2023. Bambang Susantono, the Head of OIKN, elucidated that these projects, likely to precede in the groundbreaking, primarily involve public facilities spearheaded by various environmental foundations.
“The groundbreaking is not solely a physical endeavor but encompasses aspects related to the environment. The exact timing, whether it transpires in December, hinges on the President’s schedule, but a commencement in January is assured,” he asserted in Jakarta on the 15th of November 2023. Additionally, Bambang indicated that two shopping and wholesale centers are earmarked to initiate groundbreaking ceremonies in December 2023.
Furthermore, categorized by sectors, the envisioned projects slated for groundbreaking next month encompass a spectrum ranging from leisure facilities and hotels to the construction of several government offices.
Foreign Investment in IKN Construction Projects to Be Temporarily Restricted
Amidst a surge of pronounced interest from foreign investors spanning various nations, President Joko Widodo unexpectedly imposed a temporary restriction on foreign investments pertaining to the development of the Indonesian Capital City (IKN).
This unforeseen directive unfolded during the inauguration of the Superblock Pakuwon Nusantara in IKN, East Kalimantan, on Tuesday, the 1st of November 2023. Despite the presence of 130 investors from Singapore and 30 investors each from Japan, Malaysia, and the United Arab Emirates, all expressing a keen interest, Jokowi articulated that this strategic move was enacted to prioritize the active participation of domestic investors in the ongoing IKN development.
Jokowi asserted that he had communicated to Bambang to accord precedence to domestic investments, although he didn’t outright reject foreign capital. Nevertheless, the recourse to international funding would only be considered if a specific project faced challenges in securing local financing.
“We are momentarily hitting the brakes. I conveyed to the Head of the Authority to momentarily pause foreign investments, allowing room for local endeavors. If feasible, collaboration with local entrepreneurs should be explored,” Jokowi communicated at IKN on Wednesday, the 1st of November.
However, he underscored the persistent availability of opportunities for foreign investments, emphasizing that the overarching goal was to ensure that domestic entrepreneurs were not excluded from contributing to the unfolding narrative of the IKN project.
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