26 ASIAN LEGAL BUSINESS – NOVEMBER 2023 WWW.LEGALBUSINESSONLINE.COM INDONESIA Indonesia’s seismic decision to relocate its capital from Jakarta to Nusantara Capital City (Ibu Kota Nusantara, or IKN) has sparked global attention, heralding a monumental shift in the country’s infrastructure and economic landscape. The plan is nothing if not ambitious. Located in the province of East Kalimantan and with an estimated budget of around $35 billion, IKN is expected to encompass an area of 2,560 sq. km., surrounded by hilly landscapes, a forest, and a natural bay. The Indonesian government aims to relocate up to 1.9 million people to IKN by 2045, with some civil servants moving as early as 2024. But even as Indonesian President Jokowi broke ground on Nov. 1 for construction of several projects ranging from an airport, a toll road and a hospital to a hotel in IKN, the plan is almost wholly reliant on private investment, with the state committing to fund only 20 percent of the project. And here lies the problem. While Indonesia forges ahead with its ambitious capital relocation with an aim to launch the city next year, the balance between promising prospects and regulatory and financial certainty remains a pivotal concern in the eyes of global investors. This uncertainty among potential investors has sparked a slurry of work for law firms, who are keeping track of the latest government regulations and incentives, the process and documents required to make such investments, tax concessions, business licensing requirements and, importantly, land ownership regulations and incentives in IKN. In April 2017, the Indonesian government led by Joko Widodo (better known as Jokowi) announced its plan to move the country’s capital from Jakarta to a new city called Nusantara. With the inauguration set to happen in August next year, the government has laid out a plethora of incentives to attract investment to the new capital. There is, however, uncertainty over the country’s political and regulatory landscape, which keeps law firms in Indonesia busy. BY NIMITT DIXIT MOVING TO NUSANTARA Image: REUTERS/Edgar Su
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