Indonesia offers 95-year rights in new capital to lure investors

INDONESIA is seeking to temper investor concerns over land use in Nusantara by offering long-term rights, a month before President Joko Widodo is expected to inaugurate the new capital.

The local authority will be given more power to resolve any property disputes and overlapping claims, while investors would be able to get up to 95-year rights to using the land, according to a rule signed by the president on Thursday (Jul 11).

Pioneer businesses could be exempt from local city tariffs and may be allowed to pay for properties in instalments.

Widodo, who will step down in October and hand over to his successor Prabowo Subianto, has urged the government to accelerate Nusantara’s development to get it ready to host Independence Day celebrations on Aug 17.

He has since signalled that Indonesia’s move to its new capital may be delayed, as construction lags behind targets and no foreign investor has stepped in despite a slew of fiscal incentives.

The rule signals Widodo’s concern over land disputes that have plagued the project since construction began in 2022. More than 2,000 hectares around the new capital is controlled by parties other than the central government, according to a Supreme Audit Agency report. Infrastructure building has also been constrained by the process of releasing land from their designation as a forest area.

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The government aims to complete the first phase of Nusantara’s construction by year-end, said Imam Santoso Ernawi, head of the infrastructure task force.

The presidential palace, along with clean water and electricity, will be functional in July, while grounds will be ready to accommodate about 8,000 guests attending the Independence Day celebrations.