Nusantara Investors are to receive (more) incentives

In an effort to boost the development of Nusantara, the new capital of Indonesia, the government is trying to attract investments (both domestic and foreign) to Nusantara by offering some enticing incentives – an initiative that shows no signs of slowing down.

    

Initially, the government introduced, among others, a 30-year tax holiday (100 %), a 10-year work permit for expatriates (ten times longer than a typical work permit for expatriates) and a waiver of import duties and/or other import-related taxes for investors willing to invest in Nusantara. 

    

These incentives were offered in March 2023 by Government Regulation No. 12 of 2023 on the Granting of Business Licences, Ease of Doing Business and Investment Facilities for Entrepreneurs in Nusantara (‘GR 12/23’).

    

In July and August 2024, just over a year later, the government released another set of incentives by amending GR 12/23 and enacting the Regulation of Chief of National Capital Authority (NCA) No. 7 of 2024 (‘NCA Reg 7/24’).

     

The (amended) GR 12/23 and NCA Reg 7/24 provide that an investor in Nusantara is entitled to enjoy,     among others, the following incentives:

• ​Land and building acquisition fee: The acquisition and transfer of certain types of land will be subject to a land and building acquisition fee (locally known as “BPHTB”) in the amount of 0 % (instead of 5 %) from the acquisition cost. 
• The application for a building permit and building worthiness certificate will be subject to permit retribution in the amount of IDR 0 (nil) until 2035.
• The waiver of expatriate utilisation fee until 2035.  

Such incentives go beyond the borders of Nusantara, as the government also offers investors some facilities in certain business areas in Nusantara's partner regions. A ‘partner region’ is defined as a region in Kalimantan that was specifically established for the development of the economic superhub Nusantara, cooperating with Nusantara and determined through a decree by the Chief of the NCA. So far, no information is available on the officially established partner regions.

      

Despite delays in the construction schedule and a series of setbacks, the Indonesian government's commitment to the ‘Nusantara project’ appears to be unwavering. Although public investment in Nusantara is expected to decline in the 2025 financial budget, investment in Nusantara is still - at the very least - worth considering. Investors interested in Nusantara should carefully formulate a suitable business strategy to optimise the use of the numerous incentives and facilities that have been made available.

    

Rödl & Partner will monitor the situation closely and provide regular updates. Please do not hesitate to contact us if you have any questions on this topic.