Initially, the Indonesian government, through Government Regulation No. 12 of 2023¹, introduced a “two-cycle” framework for land rights in IKN applicable to business actors, under which:

• The Right to Cultivate (HGU) could be granted for up to 95 years per cycle; and
• The Right to Build (HGB) and the Right to Use (HP) could be granted for up to 80 years per cycle,

with the possibility of a second cycle being granted subject to the fulfilment of specified criteria and the successful completion of evaluations, resulting in potential aggregate terms of 190 for HGU and 160 years for HGB and HP.

This framework was subsequently reshaped by later measures including: (i) the enactment of Law No. 21 of 2023 (Law 21/2023), which amended Law No. 3 of 2022 on IKN (IKN Law); and (ii) Constitutional Court Decision No. 185/PUU-XXII/2024 (Decision 185/2024).

What Was Challenged?

When enacted in February 2022, the IKN Law did not stipulate the “two-cycle” land right construct. This concept was first introduced by regulation in March 2023 and later incorporated into the IKN Law through an amendment (Law 21/2023) in October 2023. The amendment introduced by Law 21/2023 was subsequently challenged before the Constitutional Court.

Constitutional Court’s Findings

The Court identified ambiguity between the main text of the provision introduced by Law 21/2023 and its elucidation.

The main text stipulates only the “two-cycle” framework and the maximum permitted period per cycle (i.e., 95 years for HGU, 80 years for HGB and HP), without specifying the mechanism by which such rights are to be granted (i.e., in stages or upfront). By contrast, the elucidation provided the following staged granting mechanism (Land Right Stages):

• For HGU: an initial period of up to 35 years, an extension of up to 25 years, and a renewal of up to 35 years (an aggregate period of up to 95 years); and
• For HGB and HP: an initial period of up to 30 years, an extension of up to 20 years, and a renewal of up to 30 years (an aggregate period of up to 80 years).

This discrepancy gave rise to concerns regarding inconsistency and legal uncertainty as to whether land rights in IKN could be granted for the maximum permitted period per cycle upfront, rather than being granted in stages.

Constitutional Court’s Decision

The Court removed the elucidation of the relevant provision under Law 21/2023, applying the principle that “an explanatory note may clarify a provision but cannot introduce new norms or create ambiguity”.²

The Court then formulated a new interpretation of the main text by incorporating the Land Right Stages mechanism previously set out in the elucidation. As a result, the relevant provision under Law 21/2023 is now construed as conditionally unconstitutional unless interpreted to require that the granting of HGU, HGB, and HP in IKN be carried out in stages (i.e., in accordance with the Land Right Stages), based on specified criteria and evaluations.

The new interpretation aligns with the three-stage time structure (i.e., the Land Right Stages) already applied under the relevant sectoral regimes.³ It also clarifies that the maximum permitted period of HGU, HGB, and HP in IKN is to be granted in stages, rather than upfront.

Possibility of a Second Cycle

The revised interpretation no longer refers to the “two-cycle” framework. A conservative reading suggests that Decision 185/2024 may now preclude the granting of a second cycle of land rights in IKN, at least until further laws or regulations are issued.

Conclusion

Decision 185/2024 clarifies that land rights in IKN are not granted upfront for the maximum permitted period. Instead, they are granted in stages, while still allowing the same maximum period within a single cycle (i.e., 95 years for HGU; 80 years for HGB or HP) in accordance with the applicable sectoral regimes.

However, the absence of the “two-cycle” framework in the revised interpretation allows room for the argument that Decision 185/2024 limits land rights in IKN to a single cycle.

Notwithstanding this, Decision 185/2024 reinforces the State’s supervisory role and ensures that land administration in IKN complies with constitutional principles for sustainable land management.

Footnotes

1.  Government Regulation No. 12 of 2023 on the Granting of Business Licensing, Ease of Business, and Investment Facilities for Business Players in the Capital City of Nusantara.
2. The principle under Law No. 12 of 2011 on the Formation of Laws and Regulations.
3. Government Regulation No. 18 of 2021 on Right-To-Manage, Land Titles, Multistory Housing Units, and Land Registration (GR 18/2021).