Foreign Investment Still Evacuates Legal Certainty At IKN

Photo by Andry Winarko VOI

The resignation of the Head of the Archipelago Capital Authority (IKN) Bambang Susantono and his deputy Dhony Rahajoe simultaneously took many parties by surprise.

The resignation of important people in the implementing ranks of the IKN Authority has caused various speculations. It is a question of whether the resignation of the two OIKN officials will have an impact on the continuity of the National Strategic Project (PSN). Especially it will have an impact on decreasing investor confidence which will invest in IKN.

Various speculations have accompanied the alleged resignation of OIKN officials, but the public believes that the resignation of the two figures is the tip of the iceberg, from the many problems in IKN in North Penajam Paser Regency, East Kalimantan. It's not just a matter of land supply that is currently visible in the IKN issue so far.

It is known that so far OIKN is facing land problems, there are 2,084 hectares of land that have not been cleared, where the land is intended for toll roads and partly for flood buffers. The land is highly expected to be clear about its legal status, because it will be used for the IKN project.

The land intended for toll roads is land that is very much needed to accelerate IKN. Because the toll road land is blocked because the acquisition is still constrained, as a result of obstructing access to heavy equipment to the core area of IKN.

In addition, OIKN also continues to encourage the creation of an investment climate to IKN. Various efforts to mobilize investment in IKN, the government has made various efforts between lqin to disburse initial funds from the APBN to build a core area. Its Alibi disbursed APBN funds of up to Rp. 89 trillion to attract investors to invest in IKN. However, up to the APBN funds disbursed reached Rp. 75.4 trillion during the period 2022-2024 or 16.1 percent of the current total budget.

The government has not yet obtained foreign investors who have invested in IKN. The Nusantara Capital Authority (OIKN) in its release reports that until June 2024 investment realization has reached IDR 51.35 trillion, but the entire investment is still in the form of domestic private investment. This investment is in the form of construction of hospitals, schools, residences, offices and commercial offices to sports facilities.

President Joko Widodo (Jokowi) said that so far there have been 300 Letter of Intent (LOI) commitments signed by foreign investors to invest in IKN. According to him, of the 303 investors, around 172 came from within the country, the remaining around 133 were from abroad. However, the investment is still in the form of LoI not yet in the form of reel investment.

The Nusantara Capital Authority (OIKN) in the release reported that the realization of investment for the development of the City of Nusantara from 2023 to 29 January 2024 had reached IDR 47.5 trillion. According to the Head of the Authority before resigning, Bambang Susantono said the majority of the IKN investment realization came from private investors, which reached more than IDR 39.5 trillion. Meanwhile, investment realization from State-Owned Enterprises (BUMN) amounted to IDR 8 trillion.

Meanwhile, the Deputy for Funding and Investment at OIKN, Agung Wicaksono, said that there have been investment commitments from 9 companies. The investment value reached Rp 45 trillion. Including foreign investors from countries including China, Malaysia, United Arab Emirates. "Currently they are carrying out feasibility studies as an investment stage," he said. They are included as a government and business entity (KPBU). To build new and renewable housing and energy projects.

Acting IKN Authority (Plt) Basuki Hadimuljono said they were targeting an investment of 100 trillion by 2024. According to him, the investment target can be achieved by providing certainty about land status. He acknowledged that the obstacle to attracting investment in IKN is an obstacle on land status. According to them, currently investors only have land rights in the form of Building Use Rights (HGB) on land rights to land management (HPL).

To spur this target, the government has provided various incentives. Among other things, the formation of Government Regulation no. 12 of 2023 in the form of ease of investing in IKN. This regulation collaborates with various existing incentives. For example, the Right to Use Business (HGU) in IKN can reach 95 years, or the Right to Build (HGB) for 80 years multiplied by two, by following the cycle of Law no. 5 of 1960 concerning Basic Regulations of Agrarian Principles. And incentives for Building Permits for up to 80 years.

Next follows PMK regulation Number 28 of 2024 as a derivative of PP 12 / 2023 concerning the Provision of Business Licensing, Ease of Doing Business, and Investment Facilities for Business Actors in the capital city of Nusantara. Where it includes arrangements in the field of finance, taxes and customs. In Article 2, it is stated that the Income Tax Facility (PPh), Value Added Tax (VAT), Sales Tax on Luxury Goods (PPnBM), and customs are given in IKN and partner areas. So there are government incentives that are prepared in terms of tax convenience. This investment facility is enforced until 2045.

There are at least 9 types of tax incentives given to IKN investors. Among them, Incentive Tax Holiday Investment Facility reduction of corporate income tax which will be given 100 percent, There is a reduction in corporate income tax by 100 percent and 85 percent of the amount of debted corporate income tax for business activities in the financial sector in the Financial Center is enforced for up to 25 years, reduction of corporate income tax on the establishment and/or transfer of the Head Office, facilities for reducing gross income for the implementation of work practice, apprenticeship, and learning activities for the development and development of certain competency-based human resources.

Super Deduction Research and Development Requires Domestic Agency Taxes that carry out research and development activities (research and development), Super Deduction Donations for Public Facilities/Social, as well as PPh Article 21 Finals Borne by the Government (DTP) Income of certain employees at IKN, Final PPh 0 Percent for Domestic Taxpayers MSMEs that invest in IKN, and Reduction of Land Rights Income Taxes or Buildings with a reduction of 100 percent.

However, although various policies and incentives have been disbursed by the government, this effort has not encouraged the realization of foreign investment in IKN.

This Is The Confession Of A Bahlil Lahadalia

The Minister of Investment, Head of BKPM, Bahlil Lahadalia, in a working meeting with Commission VI of the DPR admitted that until now there has been no foreign investment entering IKN. Admitting that until now there are no foreign investors entering IKN. Because of their insistence, they are included in the second tap for IKN development. In Phase one development is designed to build basic infrastructure.

Bahlil revealed that until now there has been no realization of the entry of foreign investment in the capital city of the archipelago. Because the design of foreign investment will enter in the second phase. The first stage is the construction of an elementary instructor to build a government core area, if the construction of the first phase has been completed.

In this second stage, investors will enter. They have not entered because the perma stage infrastructure has not been completed, now it is still in the process of accelerating.

"They asked us when we could make it, I answered after August 17 we could only see it. Because at that time we could see the infrastructure process in tahab one was completed," said Bahlil. when questioned by members of Commission VI of the DPR, last week.