Indonesia Caps New Capital Land Rights at 95 Years in Fresh Setback to Project

Source: Reuters | Editor: Yudho Winarto

NUSANTARA CAPITAL CITY - JAKARTA. Indonesia's Constitutional Court has capped the maximum duration of land rights for investors in its planned new capital city at 95 years, half the previous level, according to a new ruling, dealing another blow to the ambitious $32 billion project.

Former President Joko Widodo in 2019 unveiled plans to move Indonesia's capital from the overcrowded and subsiding Jakarta on Java island to Nusantara, a new city now being built in the Borneo jungle, but construction has been delayed by the COVID-19 pandemic.

The viability of the project has also been thrown into doubt after the project's budget was cut significantly by Prabowo Subianto, who took over the presidency last year, though he still pledged to turn Nusantara into the Southeast Asian country's political capital in the coming years.

A panel of Constitutional Court justices issued the ruling on Thursday after a petition filed by two Borneo locals, according to state news agency Antara.

The petitioners had argued that granting land rights for an excessively long duration could compromise the interests of future generations, according to court website.

Widodo intended to rely on investors to fund the construction of Nusantara, offering incentives like tax breaks and lengthy land rights of up to 190 years, far longer than elsewhere in the country.

A number of Indonesian firms have declared interest to invest in Nusantara, but there has been little interest shown so far by foreign companies.

The Constitutional Court's ruling is final and binding.