President Joko Widodo (Jokowi) has taken a monumental step by granting land use rights (HGU) permits to investors in the Capital City of Nusantara. This regulation opens wide doors for long-term investments with permit durations reaching up to 190 years for two cycles. This article will elaborate on the implications of this policy and its potential impact on Indonesia’s economy and the future development of the new city.

President Jokowi’s decision to grant long-term HGU permits for the Capital City of Nusantara marks the government’s strong commitment to advancing infrastructure development in Indonesia. The Capital City of Nusantara is expected to become a new center for economic growth, innovation, and sustainability in Indonesia.

The selection of the Capital City of Nusantara as a primary investment location was not made lightly. With the potential to become a new economic hub, it offers strategic access to domestic and international markets. The decision to grant HGU permits for up to 190 years demonstrates the government’s commitment to providing long-term legal certainty and stability for investors. This not only enhances investor confidence in investing in Indonesia but also sends a strong signal to the global business community about Indonesia’s seriousness in promoting economic growth through modern infrastructure.

With these long-term HGU permits, investors are provided with adequate legal certainty to undertake large-scale investments in the development of the city, including transportation infrastructure, housing, and public facilities.

Land Use Rights (HGU) in IKN Nusantara

The land use rights permits for investors in the Nusantara Capital City are outlined in Presidential Regulation (Perpres) Number 75 of 2024 on the Acceleration of Nusantara Capital City Development signed by Jokowi on July 11, 2024. Article 9 of the Perpres states that the granting of HGU permits for investors in Nusantara Capital City will be conducted over two cycles, spanning nearly two centuries.

“The land use rights for a maximum period of 95 years in the first cycle and can be renewed for a second cycle with a maximum period of 95 years based on criteria and evaluation stages,” reads Article 9 paragraph 2a of the regulation.

Furthermore, the regulation also governs the granting of building use rights (HGB) for a maximum period of 80 years for the first cycle and can be renewed for a second cycle with a maximum period of 80 years, totaling 160 years.

Read also: High Cost of Physical Office Rental in Indonesia? Virtual Office is the Solution!

As for building usage rights, it mentions a maximum period of 80 years in the first cycle and can be renewed for a second cycle with a maximum period of 80 years based on criteria and evaluation stages.

“The granting of land rights in the first cycle as referred to in paragraph 2 is carried out by the Ministry responsible for agrarian land governance based on a request from the Nusantara Capital City Authority,” reads Article 9 paragraph 3.

Meanwhile, the Nusantara Capital City Authority will conduct evaluations within 5 years after the granting of rights in the first cycle under several conditions.

Firstly, the land is still cultivated and utilized in accordance with its condition, nature, and the purpose of granting the rights.

Secondly, the rights holder still meets the qualifications as a rights holder.

Thirdly, the conditions for granting the rights are fulfilled by the rights holder.

Fourthly, the land use is still in accordance with the spatial planning.

Fifthly, the land is not indicated as abandoned.

It should be noted that the rules on granting HGU for nearly two centuries are also stipulated in Law No. 21/2023 on Amendments to Law No. 3 of 2022 concerning the Capital City.

Article 16A of the Law states that in terms of land rights (HAT) promised in the form of land use rights, granted for a maximum period of 95 years in the first cycle and can be renewed for a second cycle with a maximum period of 95 years based on criteria and evaluation stages.

Land Use Rights (HGU) in IKN Nusantara to Facilitate Investors

Furthermore, Minister of Trade (Mendag) RI Zulkifli Hasan or Zulhas hopes that the land use rights (HGU) permits in the Nusantara Capital City (IKN) up to 190 years for two cycles signed by President Joko Widodo (Jokowi) will facilitate potential investors in making investments.

According to him, many investors are interested in investing in IKN but there is no clarity about land certificates. The granting of HGU is considered to provide certainty and clarity of land status to investors when making investments.

“Because yesterday there was no clarity about the status, so how can people build without land? Yesterday the rules were just completed, signed by the president,” said Zulhas when met at the PAN DPP office, Jakarta, Sunday (14/7/2024), as quoted from Kompas.

He added that currently there are many investors placing investments in IKN. For example, investments in the banking sector, culinary arts, and hospitality. “That alone is a lot, there are banks, hotels, restaurants, there are schools. Now building, the status of the land is unclear, imagine, many have been built, what more if later granted a slightly longer HGU,” said Zulhas.

However, Zulhas ensures that the ownership status of the land granted for HGU remains unchanged: the land still belongs to the state.

“Look, HGU can be extended continuously like in Singapore it can be 90 years. If we are, how many, 20 years 20 20 20 yes, but still owned by the state, it’s called land rights. Belongs to Indonesia, belongs to the country,” concluded Zulhas.

Future of Nusantara Capital City (IKN)

The granting of HGU also has significant implications for regional development. Amid efforts by the government to reduce disparities in regional development, the Nusantara Capital City is expected to become a new model for sustainable and inclusive infrastructure development.

With the issuance of HGU permits for the Nusantara Capital City, President Joko Widodo has not only created a new momentum in national infrastructure development but also paved the way for sustainable and inclusive economic growth. This step is not just about physical development but also about building a strong foundation for a brighter future for future generations. With full support from the central government, the Nusantara Capital City is positioned to become a key hub in the global economic map, driving innovation, and improving the quality of life for its residents.