Nusantara, the new capital: what it changes and what it doesn't

Nusantara is the new national capital Indonesia is building in East Kalimantan. It has brought new roads, government buildings and a lot of attention to the province. It hasn’t yet moved the government, and it hasn’t changed what the provincial economy runs on.

For an investor, three things matter more than the headlines: what the law says today, how much money is actually being spent and which land rules apply in and around the capital area.

Where it is and who runs it

The capital area takes in parts of two East Kalimantan districts, Penajam Paser Utara and Kutai Kartanegara, between Balikpapan and Samarinda. The core government zone is in Sepaku, in Penajam Paser Utara. The legal basis is Law 3 of 2022 on the State Capital, amended by Law 21 of 2023.

The area isn’t run like a normal district. It’s governed by the Nusantara Capital City Authority (Otorita Ibu Kota Nusantara), a central government body with ministerial rank whose head is appointed by the president. The authority runs the area as a special regional government, so it plays the part a district government plays elsewhere.

Legally, the capital hasn’t moved yet. Law 3 of 2022 makes the move take effect only when the president issues a decree on it. None had been issued by mid-2025, when members of parliament were still pressing for one, and Jakarta stays the capital in law until it is. Check the current position before you rely on any date.

Land rights after the 2025 ruling

Law 21 of 2023 offered investors in the capital unusually long land rights. A right to cultivate (Hak Guna Usaha, HGU) could run for up to 95 years, and a right to build (Hak Guna Bangunan, HGB) or a right of use (Hak Pakai) for up to 80 years. Each could then get a second cycle of the same length, which could take an HGU to 190 years.

In November 2025 the Constitutional Court struck down the two-cycle scheme in decision 185/PUU-XXII/2024. HGB and Hak Pakai in the capital now run for up to 30 years, with an extension of up to 20 and a renewal of up to 30, and the renewal depends on an evaluation. The land minister said HGU has to go back to the national limits, which allow an initial grant of up to 35 years, an extension of up to 25 and a renewal of up to 35.

Two lessons follow. The terms changed twice in about two years, so check the rules in force on the day you sign. And every extension or renewal is a decision someone makes later, not a right you hold today. The guide to Indonesian land rights explains how these titles work outside the capital.

Budget and the 2028 target

The core government buildings are paid for from the state budget, and that budget has been cut. Presidential Instruction 1 of 2025 ordered spending cuts across the government, and the authority’s 2025 budget was trimmed. For 2026 the authority received about IDR 6.3 trillion, after asking for about IDR 16 trillion more. In March 2026 the government planned another round of savings, though the authority said its multi-year projects would continue. For the whole 2025 to 2029 period, the government has set aside IDR 48.8 trillion.

Presidential Regulation 79 of 2025, which updated the government’s 2025 work plan, sets the goal of making Nusantara the political capital in 2028. The targets behind it are modest: 800 to 850 hectares of the core area developed, office construction at 20% and housing at 50%, half the basic infrastructure in place and about 1,700 to 4,100 civil servants posted there. The authority’s stated aim is to finish the buildings for parliament and the courts by 2028. That’s a working government district with a few thousand officials, not yet a city.

What it means for Balikpapan and Samarinda

Balikpapan is the nearest city with a large airport and seaport, so contractors, suppliers, officials and visitors heading to the capital pass through it. Samarinda, the provincial capital on the Mahakam, is joined to Balikpapan by Kalimantan’s first toll road.

The capital adds demand at the margin. How much depends on the pace of building and on how many people actually move, and both depend on the national budget. For property in either city, look at the older drivers first: oil and gas, coal, the port and trade. The capital is an extra, and an uncertain one. The Balikpapan market article covers that city in more detail.

Why speculation near it is risky

Buying land near the capital in the hope that it will rise in value stacks several risks on top of each other.

• Inside the capital area, what can be built follows the capital’s spatial plan (Presidential Regulation 64 of 2022), not the seller’s description.
• Many plots near the capital are held only on village or sub-district letters, not registered certificates, and two letters can cover the same plot.
• Local communities have open land disputes in the area. Balik communities in Sepaku say concessions have taken over customary land, and residents of Telemow village, inside the capital area, are in an agrarian conflict of their own.
• The timetable depends on a budget that has already been cut, and on a decree that hadn’t been issued by mid-2025.

Before you buy near the capital

Treat a plot near the capital like any other land deal, with extra checks. Confirm where it sits against the capital’s boundary and spatial plan, and ask the land office whether any acquisition, freeze or transfer control applies to it. Buy only land with a registered certificate whose plot matches the map on the ground, and check it against the forest-area map before you pay anything. Ask who lives on or uses the land, and whether anyone has claimed it under customary law.

Price the plot on what it is today, not on what the capital might bring. The checklist for land near Nusantara goes through these checks one by one.