Indonesia signs decree on IKN development incentives

Jakarta, 12 July (ANTARA) - President Joko Widodo has signed a regulation on incentives for potential investors participating in building services and facilities at the new national capital (IKN) Nusantara.

The regulation has been included in Presidential Regulation Number 75 of 2024 concerning the Acceleration of Development of the Nusantara Capital City (IKN).

According to the regulation, the government will provide incentives and business licensing facilities to business actors developing the provision and management of basic/or social services and commercial facilities.

In the regulation, which was officially promulgated on July 11, 2024, the government has provided details on incentives and business licensing facilities offered through the IKN Authority (OIKN), ministries/institutions, and regional governments, in accordance with statutory provisions.

As per Article 5, Paragraph 1 of the regulation, the head of the OIKN will determine pioneer business actors with the criteria of their having expressed interest and signed a "letter of intent" with OIKN.

Currently, Minister of Public Works and Public Housing, Basuki Hadimuljono, has been appointed as the acting head of OIKN.

Pioneer business actors taking part in developing IKN with funding sources outside the National Budget (APBN) will have to start implementing development projects in IKN no later than five years after the enactment of Law No. 21 of 2023 concerning National Capital.

As per Article 7, pioneer business actors can be charged a fee for management assets under control (ADP) by the OIKN of up to zero Indonesian rupiah, or pay in installments.

Incentives for business actors will also be provided in the form of guarantees regarding the terms of land rights mentioned in Article 9.

As per Article 9, Paragraph 2, the right to cultivate will be granted for up to 190 years over two cycles — 95 years in the first cycle and 95 years in the second cycle.

Meanwhile, the government will also provide building rights guarantees with a maximum term of 80 years in the first cycle, which could be re-granted in the second cycle with a maximum term of 80 years, for a total of 160 years.

Building use rights will also be granted for a maximum period of 80 years in the first cycle and a further 80 years in the second cycle. All three land rights will be granted based on criteria and evaluation stages.

The government will also regulate the Tax Object Sales Value (NJOP), which will be determined by OIKN when organizing special regional government.

The accelerated implementation of IKN development is aimed at building a livable city ecosystem, especially in the Core Central Government Area.