Indonesia Moved Its Capital to Borneo and the Land Was Already Spoken For

Eight indigenous communities watched ancestral graves get bulldozed to make room for a presidential palace. The state said nobody lived there.

Landlord Ledger Publications • Profile • 2026-06-01

In August 2025, aerial photographs showed the gleaming frame of Indonesia's future presidential palace rising over the East Kalimantan jungle, project signboards staked into what had been, just years before, the sacred territories of eight distinct indigenous groups. The Indonesian government had announced its plan to relocate the national capital from Jakarta to a new city called Nusantara in 2022, launching the world's largest active capital relocation project: 256,000 hectares, a net-zero carbon brief, and a target to be fully operational by 2045. The official pitch was about national unity and environmental ambition. The real estate story underneath it was something else entirely.

The Land That Was Already Spoken For

The Sepaku district of North Penajam Paser Regency, the core zone of the new capital, has been home to at least 21 distinct indigenous communities for generations. Within the government's designated development footprint alone, researchers at the ISEAS-Yusof Ishak Institute documented eight principal groups: the Paser Balek, Tonyooi, Semoi, Mentawir, Pemaluan, Maridan, Basap, and Kenyah Lepo Jalan. Their customary land, tanah adat in Indonesian law, predates the Indonesian state itself.

That legal reality has been consistently ignored. Indonesia's Constitutional Court acknowledged customary land rights in 2013, but the 1999 Forestry Law was never revised to match. It still classifies the majority of indigenous territory as state forest, a contradiction that has left communities in legal limbo and made large-scale acquisition a formality. The National Indigenous Peoples' Bill, which would have provided an overarching framework for recognition, has stalled in parliament for more than fourteen years.

The land acquisition process for IKN has been characterized by what researchers and rights groups describe as a pattern of intimidation and coercion rather than genuine consultation. A December 2025 ISEAS analysis found that residents living near or within the central government core area reported a complete absence of meaningful involvement in decision-making. Darmawi, a member of the Balik and Paser Maridan peoples in Sepaku District, described being forcibly displaced from ancestral land without any consent process. Burial grounds and sacred ritual sites, including Batu Tukar Nondoi and Bakau Lemit, were destroyed or placed under threat. Some of the project signboards now staked across former community land are labeled "Property of the National Police Headquarters."

The official government position, stated as recently as December 2021 by East Kalimantan governor Isran Noor, was that no one lived in the development core area. This claim was false. The ISEAS researchers, along with the Alliance of Indigenous Peoples (AMAN), documented more than 20,000 indigenous residents at risk of displacement across the broader IKN zone.

The Concession Structure That Was Ready and Waiting

The displacement of indigenous communities is one layer of the story. The other is the private land structure that had already taken shape around the IKN footprint before the government's relocation announcement.

Forest Watch Indonesia's spatial analysis found that 51 percent of the IKN area was already controlled by private concession holders in agriculture, forestry, and mining at the time the project was announced. That includes 83 active mining business permits covering nearly 68,000 hectares, 16 palm oil plantation permits covering 55,000 hectares, and forestry concessions controlled by just four large companies. Over two-thirds of East Kalimantan's total land area, 69 percent, is under some form of investment permit. The overlapping claims across the province amount to 3.6 million hectares.

The political economy underneath these permits attracted significant scrutiny. Reporting by New Naratif and others documented that one major coal mining concession in the IKN area had been obtained from Hashim Djojohadikusumo, brother of current President Prabowo Subianto, who later oversaw construction of the dam that will supply water to the new capital. The IKN Law itself established a unique administrative structure, otorita, whose leadership is appointed directly by the president rather than elected, removing even the nominal check of local democratic governance.

The Indonesian government's designation of IKN as a National Strategic Project effectively overrides local and provincial laws that previously governed the area. For concession holders already positioned adjacent to a $30.3 billion infrastructure corridor, this designation was an extraordinary windfall.

The Secondary Speculation Layer

Beneath the primary acquisition story, a secondary land market has exploded along the Balikpapan-Samarinda corridor.

The $15.3 billion in state budget allocated for IKN infrastructure has catalyzed a broader regional speculation cycle. ISEAS researchers documented the emergence of land brokers in the IKN zone buying and reselling parcels at prices up to 30 times their pre-announcement value. Coastal plots in Kalimantan carry significant title risk; only around 60 percent are formally certified. Developers with patient capital and government relationships have moved aggressively.

Sinar Mas Land, through its East Kalimantan subsidiary Grandcity Balikpapan, secured a contract to build 1,500 civil servant housing units for IKN's incoming bureaucratic class. The project targets echelon I civil servants relocating from Jakarta, spanning three residential typologies priced from Rp 1.6 billion per unit. The housing push accelerated in November 2025, when the IKN Authority opened a Rp 5.5 trillion tender for two additional civil servant housing projects. By mid-2025, 47 residential towers had been completed, housing more than 1,200 civil servants already relocated to Nusantara. Presidential Regulation No. 79/2025 outlined a gradual migration schedule targeting up to 4,100 additional civil servants in 2026.

The beneficiaries of the infrastructure corridor and its secondary real estate boom are not indigenous communities. Modern infrastructure and services remain concentrated in the KIPP core zone. Surrounding villages have been largely bypassed.

The Cost to Communities Still Being Counted

AMAN's Year-End Report for 2025 recorded 135 cases of customary land grabbing across Indonesia during the year alone, covering 3.8 million hectares of indigenous territory across 109 communities. Of those, 69 cases involved mining projects and 34 involved plantation projects, the same sectors that dominate the IKN concession map. A total of 162 indigenous individuals were documented as victims of criminalization or violence in the same period, a figure AMAN's Secretary General Rukka Sombolinggi described as a sharp increase over the prior decade's average.

The IWGIA's 2026 report on Indonesia noted specifically that the Balik Sepaku indigenous people face a risk of cultural extinction from the pace of displacement in the IKN zone. Language preservation programs have stalled as young people shift to construction and informal work. Adat governance structures are eroding under rapid urbanization and incoming migrant labor. The project's gender dimension adds another layer: indigenous women, who traditionally held central roles in land stewardship and decision-making within their communities, have been almost entirely excluded from IKN consultations, a pattern the ISEAS researchers described as running contrary to their own cultural norms.

President Prabowo Subianto has continued his predecessor's project, approving a Rp 48.8 trillion allocation for IKN's 2025-2029 phase and pledging to begin working from Nusantara on August 17, 2028. He has shown less personal enthusiasm than Jokowi, not having visited Nusantara since taking office in October 2024. The Jakarta Post observed in July 2025 that Prabowo's actions suggest limited genuine commitment to the relocation, even as the institutional momentum and the capital already deployed by the concession holders and property developers positioned to benefit make reversal increasingly unlikely.

The land was spoken for twice before the government arrived: once by the indigenous communities whose customary claims predate the Indonesian state, and once by the corporate interests whose permits covered the same ground. In the contest between those three parties, the outcome has not been ambiguous.