Government Extends Land Use Rights (HGU) in New Capital to 95 Years, Economist Reveals Negative Aspects

IKN development progress (photo: Zahwa Madjid - Katadata)

In a bid to amplify incentives, the Indonesian government has introduced an extension to the duration of Land Use Rights (HGU) within the ambit of the Nusantara National Capital (IKN). The previous period of 80 years has now been extended to 95 years. So, what are the impacts brought about by this policy? Is it more profitable or detrimental?

This significant alteration is explicitly outlined in Government Regulation (PP) No. 12/2023, which was issued on March 6, 2023. This regulation, addressing Business Licensing, Business Ease, and Investment Facilities for Business Actors in the National Capital of Nusantara, also anticipates further fortification through an impending revision of Law No. 3/2022, which currently resides in the phase of draft legislation.

While such an extension is intended to engender economic parity, it has incited a spectrum of reactions and opinions, both laudatory and critical.

Renowned economist and Public Policy Expert, Achmad Nur Hidayat from the Narasi Institute, has proffered his perspective on the nuanced implications of this policy change.

His stance underscores the potential ramifications of magnified Land Use Rights incentives, positing that they could potentially stimulate greater control over land resources by investors operating within the IKN framework. He articulated his viewpoint, referencing a report from Bisnis, which signals the intrinsic linkage between policy measures and their influence on investment dynamics.

However, this augmentation in incentives has led to considerable debate. The crux of the matter lies in the equilibrium between the palpable benefits for investors, the imperatives of environmental sustainability, and the imperative of achieving a holistic economic parity. Achmad Nur Hidayat, expressing his concerns, voiced his apprehensions in a written statement, wherein he contemplates the potential repercussions of this policy shift.

Notably, he underscored the probability of local communities being marginalized and the environment being compromised in the wake of these policy maneuvers. The multifaceted nature of these consequences, especially when it comes to the implications for national security and societal well-being, emerges as a pivotal point of contention.

Even though the eligibility criteria for obtaining Land Use Rights are designed to be stringent, there exists a considerable level of skepticism regarding the efficacy of oversight mechanisms in ensuring the judicious management of land resources.

Achmad Nur Hidayat identifies the necessity for a proactive approach to mitigate potential risks associated with the new policy landscape. In this regard, he recommends a three-fold strategy that the government should consider as a means of safeguarding public interest and averting potential pitfalls.

First and foremost, he underscores the significance of a comprehensive evaluation for each HGU extension, with an emphasis on a holistic understanding of the potential environmental and social impacts. He opines that any decision to extend HGU should be postponed, allowing the electoral process to be completed first. This, in his view, would lend a greater degree of legitimacy to such significant policy shifts.

Secondly, he underscores the importance of transparency in land management, particularly within the IKN context. He suggests that employing state-of-the-art real-time monitoring technologies could offer the much-needed vigilance to prevent any potential misuses or transgressions.

Lastly, he fervently urges the government to strike a balance between immediate economic advantages and the sustained long-term viability of such policies. In his perspective, policies should be predicated on a commitment to the broader welfare of the populace and not be seen as favoring only a select few.

As the debate rages on regarding the implications of these extended incentives, it becomes increasingly clear that the government faces a challenging task of finding the right equilibrium that ensures sustainable growth while safeguarding the interests of the entire nation.