Indonesia: Land Ownership At Nusantara Capital City IKN (Ibu Kota Nusantara)

A. Introduction

In February of 2022, the Government of Indonesia enacted Law No. 3 of 2022 on Capital City ("Law No. 3/2022") to relocate the current Capital in Jakarta on Java Island to the new Capital in Borneo Island, called Nusantara Capital City ("IKN"). Law No. 3/2022 also mandates the establishment of the Otorita Ibu Kota Nusantara ("Authority"), as a state institution equal to a ministry that carries out the Government of IKN. To develop the IKN, the Government of Indonesia is using the State's Budget ("Anggaran Pendapatan dan Belanja Negara Indonesia"), including the participation of private businesses.

With the involvement of private business players, the Government of Indonesia understands the potential occurrence of land speculation. Hence, the Government of Indonesia enacted a different set of land regulations specifically in Ibu Kota Nusantara. In this article, we will provide you with further information on this new land ownership regulation at Ibu Kota Nusantara.

B. Land Status in IKN (Ibu Kota Nusantara)

The Land in IKN has been strictly classified into two, which are:

• State Property ("Barang Milik Negara")
• Assets under the Authority Possession ("Aset Dalam Penguasaan")

Article 1 number 14 Law No. 3/2022 further defined Badan Milik Negara as all assets that were purchased or obtained Article 30 of Law No. 3/2022 further stipulated that Badan Milik Negara is the land that shall be utilized for governance affairs. Whereas the Aset Dalam Penguasaan is the land that shall be utilized for non-governance affairs.

According to Article 16 paragraph (1) of the Government Regulation No. 12 of 2023 on Business Licensing, Business Ease, and Investment Facilities for Business in Nusantara Capital ("GR No. 12/2023") and Article 13 paragraph (1) of the Presidential Regulation No. 65 of 2022 on the Obtainment of Land in Nusantara Capital ("PR No. 65/2022"), the BMN shall be managed by the Authority and will be registered under Right-to-Use ("Hak Pakai"). In contrast, the ADP will be registered under Right-to-Manage ("Hak Pengelolaan"). However, the Aset Dalam Penguasaan shall still be managed by the Authority, which Authority shall have the following rights upon the land with HPL:

• To allocate.
• To use.
• To transfer and/or
• To release or erase

The allocation of land may be given to business actors in the form of the following land titles:

• Right-to-Cultivate ("Hak Guna Usaha")
• Right-to-Build ("Hak Guna Bangunan")
• Hak Pakai

The allocation will be made into an agreement between the Authority and the business actor. The land titles will be given on the HPL and will be registered under the business actor's name. Article 17 paragraph (3) of GR 12/2023 expressly stated that the Authority gives a period guarantee of the HGU, HGB, and the Hak Pakai, and the guarantee will be stated in the agreement.

C. Land Ownership Period

The land ownership period of the land titles in IKN is specifically regulated under GR No. 12/2023 and PR No. 65/2022, which regulates several different provisions for the land ownership period compared to existing regulations.

Hak Pakai

Under Article 13 paragraph (2) of PR No. 65/2022, the ownership period for Hak Pakai in IKN is indefinite if the land is being used and utilized for its purpose.

HGU (Hak Guna Usaha)

The land ownership period for HGU is regulated under Article 18 GR No. 12/2023, which stated that HGU shall be given for 35 (thirty-five) years and can be extended for another 25 (twenty-five) years and can be renewed for another 35 (thirty-five) years. Hence, the total period is 95 (ninety-five) years. This period shall be given after 5 (five) years of use of the HGU and/or has been utilized accordingly.

However, GR No. 12/2023 added a period, which gives the HGU owner a second period of HGU ownership with the same total period length as the previous period, which is 96 (ninety-five) years. Generally, this additional period shall be given not later than 10 (ten) years before the end of the first period, after being approved by the Authority and Ministry of Land and Spatial Planning.

This HGU ownership period differs from the provisions under the Government Regulation No. 18 of 2021 on Right-To-Manage, Land Titles, Multistory Housing Units, and Land Registration ("GR No. 18/2021"), which only gave HGU ownership 95 (ninety-five) years of the ownership period.

HGB (Hak Guna Bangunan)

The land ownership period for HGB is regulated under Article 19 GR No. 12/2023, which stated that HGB shall be given for 30 (thirty) years and can be extended for another 20 (twenty) years and can be renewed for another 30 (thirty) years. Hence, the total period is 80 (eighty) years. This period shall be given after 5 (five) years of usage of the HGB and/or has been utilized effectively and accordingly.

Like HGU, the HGB ownership period also may be given for a second period with the same total period as the first period, if agreed upon and after going through an evaluation process by the Authority and Ministry of Land and Spatial Planning.

Additionally, in Article 19 paragraph (6) GR No. 12/2023, the HGB that is used for housing purposes may also be upgraded to Rights-to-Own ("Hak Milik") and Multistory Housing Units, after approval by the Authority and after the cancellation of ADP through the release of the HPL.

Hak Pakai

The land ownership period for Hak Pakai is regulated under Article 20 GR No. 12/2023, which stated that HGB shall be given for 30 (thirty) years and can be extended for another 20 (twenty) years and can be renewed for another 30 (thirty) years. Hence, the total period is 80 (eighty) years. This period shall be given after 5 (five) years of usage of the HGB and/or has been utilized effectively and accordingly.

Like HGU and HGB, if the Hak Pakai ownership period is expiring, the ownership period may be given for a second period with the same total period as the first period, if agreed upon and after going through an evaluation process by the Authority and Ministry of Land and Spatial Planning.

D. The Authority's Control Upon the Land in Ibu Kota Nusantara (IKN)

The Government of Indonesia strives to control land speculation by giving the Authority broader control over the land in IKN. According to Article 19 paragraph (2) PR No. 65/2022 this control of the transfer of land by the Authority includes the land that has been registered and the unregistered land. Article 20 paragraph (2) of PR No. 65/2022 further stipulated that the making of all deeds regarding the transfer of land shall be done only after permitted by the Authority, this includes the deed that is made by a notary, land deed official (PPAT), chief of village and other officials.

The Authority's control also includes the registration of mortgage rights ("Hak Tanggungan"). All the land titles in Ibu Kota Nusantara (IKN) that will be registered for Hak Tanggungan shall obtain prior approval from the Authority.

Key Takeaways

The new regulation for land ownership in IKN differs from the general land ownership. The ownership by private entities is only toward the land with ADP status and is highly dependent on the approval of the Authority for the Authority holds the right to manage the land in IKN. On the other hand, the land ownership period for HGU, HGB, and Hak Pakai in IKN is more extensive compared to the general land ownership period provisions. However, due to the Government of Indonesia's effort to control land speculation, the transfer of land and the encumbrance of Hak Tanggungan on IKN requires approval from the Authority, which may create challenges for business actors in utilizing land within the IKN.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.