28 ASIAN LEGAL BUSINESS – NOVEMBER 2023 WWW.LEGALBUSINESSONLINE.COM INDONESIA “It remains to be seen when these detailed regulations will be issued, or if they are issued, whether in practice they would be sufficient for the immediate implementation of the existing general rules,” she adds. Soraya explains this with an example. “Under the Regulation which grants investment incentives and facilities in IKN, no land registration duty (BPHTB) will be payable for granting of the title over land areas allocated to investors in IKN. Also, transfers of allocated land areas from the original investors to a third party will also be free from BPHTB. However, the regulation limits the 0 percent BPHTB to a certain period of time, which is to be determined under a regulation of OIKN. That regulation has not been issued.” “These issues will depend more on how the government progresses with the regulatory framework in relation to IKN, while our law firm is focusing more on what will benefit investors from the current regulatory framework and raising awareness about aspects of IKN-related regulations that may impact the investors,” Soraya says. POLITICAL CALCULATIONS Potential investors eyeing IKN projects also express apprehension due to the upcoming elections and the consequent uncertainty surrounding the continuity of current investment policies. The looming question of whether the new administration will uphold similar policies or veer towards alternate strategies creates a sense of unease, leading many to adopt a wait-and-watch approach. “As the current government has kickstarted the process for attracting investment in IKN, we also hope to see the continuity within the next government (as Indonesia is holding a Presidential election in February 2024). Changes in law after the change of the administration is always a big concern for investors,” Soraya says. Jokowi has assured foreign investors at a meeting in Singapore that continuity should not be a concern. “Everything will be fine, no need to worry, your investment in Indonesia will continue to be safe and (there will be) continuity in the development of Nusantara capital city,” he said while presenting images of a futuristic city. To address such concerns, Soraya says HHP keeps its foreign clients wellinformed and updated on changing policies. “Our law firm keeps track of every newly issued regulation. For regulations that may impact investors, we usually publish regulatory alerts or similar publications to raise clients’ or prospective investors’ awareness. It is also our usual practice to invite clients to discuss new important issues or matters to look out for, which can be in a one-on-one setting or a seminar format.” LAWYERS NEEDED While the regulation seeks to streamline and facilitate foreign investments, there are critical areas where foreign businesses frequently seek legal counsel, experts say. Bintang Hidayanto, a partner at Indonesian law firm Guido Hidayanto & Partners (GHP), says that the firm frequently advises foreign clients on investment thresholds, ownership structures, land acquisition rights, environmental and sustainability compliance, taxation, labour law and dispute resolution in relation to investment in IKN. “The Indonesian government’s concerted efforts to promote foreign investments in IKN present a plethora of opportunities. Law firms, with their legal acumen and in-depth knowledge of the regulatory landscape, are instrumental in ensuring that clients can leverage these initiatives effectively while remaining compliant,” Hidayanto says. “One of the primary areas of interest for foreign investors is understanding the specific monetary thresholds and criteria that determine their eligibility to invest in Ibu Kota Nusantara. The regulation provides certain guidelines, but ensuring compliance necessitates a deep dive into the specifics,” he adds. “In the context of Ibu Kota Nusantara’s ecological significance, understanding the environmental regulations, sustainability commitments, and associated compliances is paramount for investors, especially those in the infrastructure and construction domains,” Hidayanto notes. He emphasizes that to navigate the intricacies of the regulation, a comprehensive understanding of its provisions, coupled with sector-specific insights, is indispensable. “Law firms and legal advisors play a pivotal role in demystifying these complexities, ensuring that foreign businesses can make informed decisions and remain compliant while optimizing their investment strategies in Ibu Kota Nusantara,” Hidayanto explains. To mitigate these concerns, a multifaceted approach is essential, explains Hidayanto. “Comprehensive due diligence, particularly in the realm of land “We are seeing growing interest from investors, including foreign investors, in investing in and developing projects in IKN. However, most investors are currently at the wait-and-see stage. Some would like to see whether whoever is the front runner of the presidential election pledges to continue the program of the incumbent administration with regard to IKN. Others seem to be waiting until the next President is elected to see whether there will be any changes to the plan for IKN.” — Nadia Soraya, Hadiputranto, Hadinoto & Partners
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