TEMPO.CO, Jakarta - President Joko Widodo or Jokowi signed Decree No. 75 of 2024 last week to expedite the development of the new capital city, Nusantara, or IKN. This decree grants the IKN Authority greater autonomy in attracting domestic and foreign investment. One key measure is the ability to offer investors business use rights (HGU) for up to 190 years.

“The state budget will only cover the development in the core government area. The rest of the development will rely on investment from both domestic and foreign sources,” Jokowi said during a press conference at Halim Perdanakusuma Air Base in Jakarta on Tuesday, July 16, 2024, before departing for a state visit to the United Arab Emirates as quoted from Presidential Secretariat’s YouTube channel.

The Presidential Decree, signed on July 11, 2024, outlines the development goals for the IKN. Article 2, paragraph 1, emphasizes the creation of a livable city ecosystem, especially in the Core Central Government Area. This includes establishing and managing essential services, social facilities, and commercial infrastructure.

Apart from the extended HGU terms, Presidential Decree 75 offers additional incentives. Article 7 allows for a zero-rate fee for investors who contribute to the management of assets under control (ADP) of the IKN Authority. Additionally, these payments can be made in installments.

In line with Jokowi, Minister of Public Works and Housing (PUPR) and Acting Head of the IKN Authority, Basuki Hadimuljono, emphasized that these regulations aim to attract investment, rather than sell land to investors.

“The principle is to attract investment, not sell land,” Basuki said at the PUPR Ministry on Friday, July 12. This is because only 20% of the IKN budget is allocated from the state budget. “So, it does require a lot of investment.”

However, Member of the House of Representatives (DPR) Commission V, Suryadi Jaya Purnama, expressed concerns about the effectiveness of these land rights alone in attracting investors. He argued that delays in investment for IKN development stem from factors beyond land rights.

The key investment needed is public infrastructure, while there is a lack of population. “Even if there is a population, it will be less than 5 million. Investment won't be profitable unless there are at least 5 million people within 10 years,” the Prosperous Justice Party (PKS) politician said in a written statement on Friday, July 12.

Furthermore, Suryadi highlighted the importance of environmental, social, and governance (ESG) factors because investors will likely avoid projects causing deforestation or negative social impacts.

“Investor confidence has also been undermined by the lack of a presidential decree for the official transfer of the IKN from Jakarta,” he added. “President J even suggested waiting for Prabowo’s administration to handle this.”

RIRI RAHAYU

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