Indonesia’s Upcoming Project: IKN (Ibu Kota Negara)

Indonesia with its population of over 270 million people, is the largest economy in Southeast Asia. And what makes more attractive for business investment in this one of the fastest-growing economies in the world is its ambitious plan to relocate the country’s capital from Jakarta to a new capital city in East Kalimantan. IKN stands for Ibu Kota Negara, or if translated to English is Country’s Capital City.

Currently, Indonesia offers many opportunities for businesses across a range of sectors and with a growing market of large and young population, there are many opportunities for start-ups as well. Here are some examples of profitable businesses in Indonesia:

    • E-commerce: Indonesia has a large and growing middle class, and internet usage is increasing rapidly. This has created a huge market for e-commerce businesses, especially in areas such as online shopping, digital payments, financial technology (fintech) and logistics.
    • Renewable energy: Indonesia is rich in natural resources, including coal, gold, nickel, tin, geothermal, hydro, and solar power. Indonesia government has set ambitious targets to increase the use of renewable energy, and there are many opportunities for businesses in areas such as renewable energy generation, distribution, and installation.
    • Tourism: Indonesia has a rich cultural heritage, beautiful views, and a various range of wildlife. The tourism industry is a major contributor to the Indonesian economy and offers many opportunities for businesses in areas such as hospitality, travel agencies, F&B (food and beverages, as rich cultural heritage brings diverse culinary heritage).
    • Property and real estate: There are an increased demand for housing and commercial property in Indonesia. The property development industry is a profitable business, particularly in big cities such as Jakarta, Surabaya, and Bali.
    • Healthcare: The healthcare industry in Indonesia is growing, as Indonesia seeks to improve healthcare access and quality. Businesses in areas such as hospitals, clinics, medical equipment, and pharmaceuticals can be profitable.
    • Education: Indonesia has a large and young population, which has created opportunities in the education sector. Profitable businesses in areas such as private schools, language training, and vocational training.
    • Agriculture: Indonesia is the world’s largest producer of palm oil, and it is also a major producer of other agricultural products such as rubber, coffee, cocoa, and spices. Several opportunities for businesses in the agriculture sector, including farming, processing, and exporting.
    • Manufacturing and infrastructure: Indonesia government has implemented policies to attract foreign investment in manufacturing, and there are many opportunities for businesses to establish manufacturing plants or partner with existing companies, for example in: textile, automotive, and electronics.

From points mentioned previously, we can see that some sectors are become more interesting in the IKN project, for example tourism, real estate, and agriculture. East Kalimantan will be more attractive for tourists with its new IKN city, which will create opportunities for hospitality and tourism related business. Thus, will lead to construction of hotels, housings, buildings, commercial property, public spaces, and of course the government buildings. The IKN project will also require a significant amount of food to support the new capital city’s population. This presents opportunities for businesses in agriculture, food processing, and distribution.

The Indonesian government has announced several incentives and benefits for investors who participate in the IKN project. Here are some examples:

1. Tax incentives: For companies that invest in the IKN project, the Indonesian government has offered tax incentives, including reduced corporate income tax rates and exemptions from value-added tax (VAT) on certain goods and services.

2. Land acquisition: The acquisition of land for the IKN project will be facilitated by the Indonesian government, providing investors with access to land for development.

3. Simplified regulations: Making it easier for companies to obtain permits and licenses, in participating in IKN project.

4. Special Economic Zone status: IKN Project will be designated as Special Economic Zone (SEZ), which will provide investors with additional incentives such as tax exemptions, simplified regulations, and streamlined procedures.

5. Infrastructure development: The Indonesian government has committed to developing infrastructure in the region surrounding the IKN project, including transportation, water supply, and electricity. This will improve the business environment and make it easier for companies to operate in the region.

Indonesia’s upcoming project: IKN (Ibu Kota Negara)Overall, IKN project presents many opportunities for businesses in various sectors and the Indonesian government has offered several incentives and benefits to encourage investment in the IKN project. However, it is important to note that the project is still in the planning stages, and the government’s policies may change as the project progresses.

Indonesia’s upcoming project: IKN (Ibu Kota Negara)


The opinions expressed in this article belong to the author and do not necessarily reflect the views of our website. We do not claim ownership of the content presented in this article, and it is being shared with the author’s permission. This article belongs to Primasari Iskandar – [email protected] Partner in KAP Slamet Riyanto, Aryanto & Rekan (member of UC&CS Global) 

Your One Stop For Corporate Service Solutions