29 ASIAN LEGAL BUSINESS – NOVEMBER 2023 WWW.LEGALBUSINESSONLINE.COM INDONESIA acquisition, is of utmost importance. Continuous engagement with governmental agencies will facilitate clarity on evolving regulations. Furthermore, the crafting of contracts with built-in safeguards against potential regulatory shifts will be pivotal. Lastly, staying abreast of legal and regulatory updates will ensure that investors are wellinformed and can adapt to changes proactively.” Law firms first help foreign investors navigate different incentive packages, ensuring clients understand what is most beneficially aligned with their interests. Once selected, the next step is mapping compliance, obtaining relevant licenses and undertaking land acquisitions in IKN, particularly in various special economic zones. “Given the long-term nature of investments, law firms can craft contracts that offer clients protection against unforeseen regulatory shifts or potential disputes,” Hidayanto adds. Lastly, investors will also have to comply with environmental and sustainable development objectives set out by the government, which get more complicated in the IKN region, which is surrounded by Borneo’s jungles rich in biodiversity. “Law firms can assist clients in understanding and adhering to environmental regulations, ensuring their operations are sustainable,” Hidayanto says. NEED FOR CLARITY While the regulation does lay out incentives, a lot of key schemes under it are yet to be implemented. “GR 12/2023 is one of the measures and initiatives to attract investors in IKN by affording ease of business and providing incentives. To our knowledge, most (if not all) incentives and facilities have not yet been fully implemented in practice,” Soraya says. “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,” Soraya explains. Hidayanto at GHP believes that despite the hesitancy, investors will eventually pour in, creating a diverse legal market in the new capital. Certain trends will shape the legal market in IKN more than others, he explains. First, with the government policies still in regulatory flux, periodic amendments and changes in law are anticipated, “necessitating constant vigilance and adaptability”. Second, a spike in FDI will see increased client demand for corporate M&A and transactional work, intellectual property, land acquisition, and real estate compliance and contractual negotiations. Third, IKN could fuel the growth of environmental law practice in the country, with strict sustainability measures being put in place for IKN projects. Fourth, increased investment will also bring increased dispute resolution demand – increasing the need for lawyers and infrastructure to handle arbitration, mediation and litigation in the region. Hidayanto says that GHP also anticipates more collaboration with foreign law firms, given the increasingly crossborder nature of deals anticipated in IKN. “Recognizing the multifaceted nature of the project, we’re fostering collaborations with international legal entities, amalgamating global best practices with local insights.” GHP is also looking at various AIdriven legal tech tools to leverage technology focused on streamlining legal services in the new capital, Hidayanto says. The firm is also in the process of setting up specialised task forces comprising experts in each different facet of IKN investment. Hidayanto also explains the importance of community engagement for lawyers. “Engaging with the local communities, understanding their concerns and aspirations, will enable us to offer more holistic and grounded legal advice,” he says. NUSANTARA TIMELINE Phase I (2022-2024) Focuses on development of basic infrastructure, starting from the supply of drinking water, electricity to waste management. Phase II (2025-2029) Development of the core area, such as public transportation facilities, both primary and secondary. Phase III (2030-2034) Development of industrial areas and other sectors. Phase IV (2035-2039) and Phase V (2040-2045) “In the final stages, IKN will achieve net-zero carbon emissions and one hundred percent renewable energy, sustainable industrial development, and become the world’s leading city in terms of competitiveness.” Danis Sumadilaga, head of the IKN Nusantara Infrastructure Development Implementation Task Force Image: hendra yuwana/Shutterstock.com
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