Djakarta Theater, October 18, 2022, witnessed the moment when President Joko Widodo “challenged” a representative of one of the country’s major developers to state their commitment regarding the amount of land for real investment in the Nusantara Capital City (IKN).

When the developer mentioned a figure of 300 hectares, around 500 guests welcomed it with applause, and Jokowi emphasized that it was equally important for the development to begin immediately.

As the idea of developing IKN began to be realized, one of the main factors attracting investor interest was the availability of land in the Nusantara Area, located in East Kalimantan.

The land offers adequate size, long tenure periods, and relatively economical prices.

These aspects were emphasized once again when the government revised the Capital City Law, which had not yet been two years old, by including, among other things, additional provisions related to land affairs.

The new clauses are contained in Article 15A and Article 16A of Law Number 21 of 2023, which amends Law Number 3 of 2022 on the Capital City.

In essence, the duration of land rights is allowed to take place under a two-cycle scheme, which cumulatively can reach up to 190 years for Cultivation Rights (HGU) and 160 years for Building Use Rights (HGB) and Use Rights, provided that each period passes an evaluation.

Since the revision process of the IKN Law began, many parties have questioned the duration of land rights in IKN, particularly its conformity with Law Number 5 of 1960 concerning Basic Agrarian Principles (UUPA).

There is a view that the duration of land rights in the IKN Law is even longer than that provided under the Agrarische Wet of 1870, a colonial product that granted concessions for only 75 years.

Amid public debate, the revision of the IKN Law was nevertheless jointly passed, with only one of the nine factions in the House of Representatives opposing it.

Approximately three years later, the Constitutional Court, with three justices expressing dissenting opinions, in Decision Number 185/PUU-XXII/2024 read out on Thursday (13/11/2025), declared that several provisions in Article 16A of the IKN Law were contrary to the 1945 Constitution.

As a consequence, land rights in IKN in the form of HGU are granted for a maximum of 35 years, which can then be extended for a maximum of 25 years and renewed for a maximum of 35 years, based on evaluation criteria and stages.

The Constitutional Court is of the opinion that regulations on land rights constitute one of the elements supporting investor attractiveness.

However, the government must also be able to create a conducive investment climate in various aspects based on the constitution, including ensuring legal certainty, upholding law with justice, streamlining convoluted bureaucratic chains, and reducing high-cost economic practices.

The question that then arises is whether this decision will affect private investment in IKN.

Although it can be assumed that the government will state that the Constitutional Court’s decision will not shake investor interest in coming to IKN, to some extent these changes will become a serious go-or-no-go consideration for investors in designing their business plans.

When the Nusantara Capital City was conceived and its regulations formulated, a key concern was how to ensure that its development would not rely on the State Budget.

Of the total estimated requirement of Rp 466 trillion, only around 20 percent is projected to come from the State Budget.

The remaining funding will be covered through various schemes involving business entities. According to OIKN records as of April 2025, the value of investment in IKN has reached Rp 62.08 trillion from 42 companies.

For public–private partnership schemes (KPBU), investment has reached Rp 158.72 trillion for road and multi-utility tunnel development, as well as housing construction in the IKN area.

To attract investors, numerous efforts have been undertaken by the government and the Nusantara Capital City Authority (OIKN), including a series of market sounding activities initiated by President Jokowi in 2022.

Considering lessons learned from various investment cases, land issues are acknowledged as complex matters that play a central and crucial role in investment decisions.

Proper land management will enhance the economic landscape. Conversely, high-risk land management will reduce incentives for investment.

Taking these considerations into account, land rights in IKN were designed under a model that emphasizes state control over land and the granting of limited use rights with long durations to attract investors.

Land rights with long durations provide a sense of security for responsible investors, especially given the potential for value appreciation as a region develops.

Following the Constitutional Court’s decision, in order to keep IKN attractive for investors, particularly in relation to land issues, several matters require greater attention.

First, as a consequence of the Constitutional Court’s decision, the government and OIKN must follow up by formulating clear and unambiguous implementing regulations, including adjustments to existing provisions.

After all, private investors who have been encouraged as the main pillars of IKN development require certainty and stability, both regulatory and political, in designing their business plans.

There must be an in-depth review of land rights that have already been granted to pioneer investors who are currently operating in IKN, to ensure that no legal norms have been violated.

Second, referring to OIKN’s promises regarding investment advantages in Nusantara, issues of ease of doing business, special incentives, stability guarantees, and fiscal benefits must be properly realized.

Promises of granting land rights directly in a single cycle or priority rights for extension guarantees may “disappear” as an impact of the Constitutional Court’s decision; however, OIKN must ensure that other incentives remain optimal so that investment in IKN remains attractive.

The realization of attractive incentives can offset perceptions of risk that may arise due to changes in the land rights scheme.

The government must also ensure the availability of basic infrastructure to create a ready-to-use investment environment, enabling investors to operate as easily as “plug and play” when investing in IKN.

Third, efforts to attract private investment must also be carried out by optimizing all existing institutions, including through OIKN-owned enterprises (BUMO) that are mandated to handle business activities and to partner in deal-making, structuring, or financial engineering with investors and other business actors.

Even though their origins lie in state-owned enterprises, “classic and conventional” approaches should not be continued, in line with the frequently proclaimed innovative credo: not merely thinking out of the box, but thinking without a box.

Equally important, fourth, is the awareness that building a city cannot be accomplished in a single day.

This is especially true for a global city for all such as IKN, which is full of guidelines and principles aimed at becoming a smart, environmentally friendly, and sustainable city.

The IKN Development Master Plan includes guidance as well as targets for the development of the new national capital.

Supporting urban ecosystems must also grow and develop, progressing in tandem and underpinning the development of IKN.

Stakeholder synergy, including with surrounding regions, will be a decisive factor in how IKN continues to develop in the future.

Successful development, supported by non-state investment, requires broad collaboration involving the government, investors, and society in mutually beneficial situations and conditions.

A classic question that continues to recur concerns political stability and commitment. Although not as aggressive as in previous years, government discourse on preparing the relocation of civil servants (ASN) and plans to designate IKN as the political capital by 2028 at least demonstrate a commitment to continue the development of IKN.

By: Dr. Sidik Pramono, S.T., M.A.
Lecturer, Faculty of Administrative Sciences, Universitas Indonesia (FIA UI).

Source: https://kaltimpost.jawapos.com/opini/2387014217/soal-tanah-dan-daya-tarik-investasi-di-ikn