Granting of Land Rights in the Indonesia’s New Capital City

Learn about the latest regulation on granting land rights for business actors in Indonesia's new capital city, Nusantara. The article highlights the different types of land rights available, including HGU, HGB, and rights to use, as well as the process of extension and renewal. The upgrade of land rights for residential properties is also discussed.

The new capital city of Indonesia, Nusantara (“IKN"), was formed based on Law No. 3 of 2022 on National State Capital. To accelerate the construction and development of IKN, on 6 March 2023, the Government of the Republic of Indonesia issued Government Regulation No. 12 of 2023 on Granting of Business Licensing, Ease of Doing Business and Investment Facility for Business Actor in the Nusantara Capital City (“GR 12/2023”). As part of the ease of doing business regulation, GR 12/2023 regulates, among other things, the granting of land rights for the business actor in the IKN.

There are two categories of land in IKN, namely:

1. state-owned land, which is used for governance administration; and
2. land assets under the control of the IKN Authority ("ADP Land") for use unrelated to governance administration.

The ADP Land is granted with Right of Management (“HPL”) under the name of the IKN Authority, where the IKN Authority has the authority to allocate, use, utilize, transfer, and/or relinquish and dispose of the assets of the ADP Land.

The ADP Land allocated to business actors may be granted land rights in the form of:

1. Rights to Cultivate (“HGU”);
2. Right to Build (“HGB”); and
3. Rights to Use,
   whose allocation is based on an agreement between the IKN Authority as the holder of HPL and the business actor as the applicant for land rights over HPL land of the IKN Authority (applicant for secondary right ).

The land rights applied by the business actor will be registered under the business actor's name, and the HPL land's status remains as ADP Land.


Rights to Cultivate

HGU over HPL is granted for the first cycle with a maximum period of 95 years, with stages of (i) granting rights for a maximum period of 35 years, (ii) extension of rights for a maximum period of 25 years, and (iii) renewal of rights, for a maximum period of 35 years, which are stated in the decision on granting of rights and recorded in the land certificate.

The Extension and renewal of HGU can be granted simultaneously after 5 years of the effective use and/or utilization, in accordance with the purpose of granting the rights. Within 10 years prior to the end of the first cycle, the business actor can apply for the second cycle of HGU, with a maximum period of 95 years in accordance with the land use agreement with IKN Authority as the holder of HPL.

Simultaneous extension and renewal as well as re-granting for the second cycle will be given after a joint evaluation between the IKN Authority and the Ministry of Agrarian and Spatial Plan/National Land Agency (“Ministry of ATR/BPN”).


Right to Build

HGB over HPL is granted for the first cycle with a maximum period of 80 years, with stages of (i) granting rights for a maximum period of 30 years, (ii) extension of rights for a maximum period of 20 years, and (iii) renewal of rights, for a maximum period of 30 years, the term of which is stated in the decision to grant the rights and recorded in the land certificate.

The extension and renewal of HGU can be granted simultaneously after 5 years of the effective use and/or utilization in accordance with the purpose of granting the rights. After the HGB period expires, the business actor can apply for the second cycle of HGB based on the agreement with the IKN Authority as the holder of HPL.

Simultaneous extension and renewal, and re-granting for the second cycle are given after a joint evaluation between the IKN Authority and the Ministry of ATR/BPN, and will be contained in the agreement between the business actor and the IKN Authority.

For the HGB land that is developed for residential properties for the public, then:

1. the land status can be upgraded to right of ownership if it is developed for the landed house; and
2. the ownership status can be granted with the right of ownership of a condominium unit, if it is developed for condominium.

The upgrade and change of land status are granted with the condition that the IKN Authority has given its approval and carried out the removal of ADP Land through the relinquishment of the HPL mechanism.


Rights to Use

The right to use over HPL is granted for the first cycle with a maximum period of 80 years, with stages of (i) granting rights for a maximum period of 30 years, (ii) extension of rights for a maximum period of 20 years, and (iii) renewal of rights, for a maximum period of 30 years, the term of which is stated in the decision to grant the rights and recorded in the certificate.

The extension and renewal of the right to use are granted at the same time after 5 years of the effective use and/or utilization in accordance with the purpose of granting the rights. After the period of right to use expires, the business actor can apply for the second cycle of right to use based on an agreement with the IKN Authority as the holder of HPL.

The extension and renewal at the same time and re-granting for the second cycle is given after a joint evaluation between the IKN Authority and the Ministry of ATR/BPN, and is contained in the agreement between the business actor and the IKN Authority.

Granting rights to use for foreigners can only be made for residential purposes.
Upon approval from the IKN Authority, the HGU, HGB, or right to use over HPL can be transferred, inherited, or mortgaged with mortgage rights. In addition, the granting and transfer of land rights over the HPL are subject to a Land and Building Rights Acquisition Levy (BPHTB) of 0% of the acquisition value for a certain period.