Indonesia court ruling deals fresh blow to new capital Nusantara

[JAKARTA] The future of Indonesia’s new national capital city Nusantara was dealt another blow after a constitutional court struck down a provision that would have extended land-right uses to the government for almost 200 years.

The decision issued on Thursday (Nov 13) states the government must now cap land-use rights at Nusantara at 95 years instead of 190 years and said even that will be subject to periodic review.

The earlier, longer arrangement violates constitutional principles requiring land rights be temporary and regularly evaluated, the justices said.

The case was brought by a Dayak community member and a resident of Sepaku in East Kalimantan, who argued the 190-year clause risked marginalising local communities and weakening the state’s obligation to manage land for public benefit.

The decision removes one of the most generous incentives Indonesia had offered to attract investors to the roughly US$30 billion project at the heart of Borneo.

And it puts a darker cloud over the future development of the city, a pet project of former president Joko Widodo that was inherited by his successor Prabowo Subianto,

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Although Prabowo has pledged to prioritise construction of the new capital, his administration is diverting an increasing amount of resources toward social-welfare spending and Danantara, the new sovereign wealth fund that’s expected to manage as much as US$1 trillion in state-owned assets.

Foreign investor interest in the capital remains limited and construction has faced delays. BLOOMBERG