Indonesia Capital City of Nusantara: New Regulation Establishes Special Authorities of IKN Authority

The Indonesian government continues taking steps to ensure legal certainty over Indonesia’s plan to relocate its capital from Jakarta to the Capital City of Nusantara (Ibu Kota Nusantara or “IKN”), as it recently issued Government Regulation (“GR”) No. 27 of 2023 dated May 15, 2023, regarding the Special Authorities of the IKN Authority (“GR 27/2023”). GR 27/2023 came into force on May 15, 2023, and is the second implementing regulation of Law No. 3 of 2022 dated February 15, 2022, regarding IKN (“IKN Law”). It was issued less than three months after the first implementing regulation, GR No. 12 of 2023.

As background, Article 12 of the IKN Law provides that the IKN Authority is given special authorities to carry out duties as the regional government of IKN, namely the authority to issue investment licenses, provide ease of doing business, and provide special facilities to parties that support the financing of activities for the preparation, development, and transfer of the national capital of Indonesia, as well as for the development of IKN and partner areas.

With the enactment of GR 27/2023, the government has further established the special authorities of the IKN Authority as the regional government of IKN. We highlight some of GR 27/2023’s most notable provisions below.

General Government Affairs Within IKN

The IKN Authority is responsible for carrying out general government affairs within IKN. As per Article 5 of GR 27/2023, general government affairs within IKN shall be carried out by the Head of the IKN Authority, together with the ministry in charge of domestic government affairs, namely the Ministry of Home Affairs of the Republic of Indonesia.

The elucidation of Article 5 of GR 27/2023 further clarifies the scope of the general government affairs to be carried out by the IKN Authority, which include:

fostering national insight and national resilience in the framework of consolidating the practice of Pancasila (the Indonesian state philosophy), implementing the Constitution of the Republic of Indonesia, preserving Bhinneka Tunggal Ika (the official national motto of Indonesia), and maintaining the integrity of the Republic of Indonesia;
fostering national unity and integrity;
fostering harmony between tribes and intra-tribes, religious communities, races and other groups to create local, regional and national security stability;
handling social conflicts in accordance with the provisions of laws and regulations;
coordinating the implementation of tasks between government agencies in the IKN territory to resolve problems that arise by taking into account the principles of democracy, human rights, equity, justice, privileges and specificity, potential, and diversity in the IKN territory;
developing democratic life under Pancasila; and
implementing all government affairs that are not under the authority of the IKN Authority and are not carried out by work units of ministries/agencies in the IKN territory.
Specific Government Affairs Under the Special Authorities of the IKN Authority

Article 3 paragraph (1) of GR 27/2023 provides that the IKN Authority also has special authorities in the following matters:

spatial planning, land use, environment, and disaster management as stipulated in the IKN Law;
regulation, guidance, implementation and supervision of spatial planning in the national strategic area of IKN; and
coordination of the implementation of cross-sectoral and cross-stakeholder spatial planning in the national strategic area of IKN.
Furthermore, the Attachment to GR 27/2023 lists the various sectors of government affairs under the special authority of the IKN Authority, namely:

education;
health;
public works and spatial planning;
housing and residential areas;
public peace, public order and public protection;
social;
labor;
women’s empowerment and child protection;
food;
land;
environment;
population administration and civil registration;
population control and family planning;
transportation;
communication and informatics;
cooperatives, small and medium enterprises;
capital investment;
youth and sports;
encryption;
culture;
libraries;
public records management;
maritime affairs and fisheries;
tourism and creative economy;
agriculture;
management of water resources;
forestry;
energy and mineral resources;
trade;
industry; and
transmigration
In implementing the special authorities listed above, Article 8 of GR 27/2023 provides that the IKN Authority shall cooperate with partner areas or other areas and/or carry out international cooperation by taking into account the provisions of the prevailing laws and regulations.

If for any reason the IKN Authority is not yet able to perform the government affairs listed above, such government affairs shall be carried out by the relevant ministry/government body as stipulated under Article 11(1) of GR 27/2023.

Government Affairs Excluded from the IKN Authority’s Special Authorities

Government affairs outside the authority of the IKN Authority include affairs related to foreign policy, national defense and security, judicial authority, national monetary and fiscal policy, religion, and other authorities of the Indonesian Central Government that may not be listed in GR 27/2023’s Attachment.

Any government affairs in IKN that are the authority of the Central Government shall be carried out by the relevant ministry/government body in accordance with the provisions of the prevailing laws and regulations. With respect to this, the IKN Authority will only play a role if a working unit is needed to be established in IKN to carry out the authorities of the Central Government in IKN. The establishment of the working unit must first be approved by the Head of the IKN Authority and the Ministry of Administrative and Bureaucratic Reform of the Republic of Indonesia.

By SSEK, Indonesia, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact indonesia@transatlanticlaw.com

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