New Regulation Allows Long-Term Land Leases to Attract Investment in Aceh

BANDA ACEH - The Acting Governor of Aceh recently issued a new regulation allowing long-term leases of state-owned land and buildings to boost investment. Governor's Regulation No. 22/2023 on Procedures for Leasing Aceh Government-Owned Land and Buildings for Certain Business Activities enables leases longer than five years for businesses meeting certain criteria.

Head of Aceh’s Investment and Integrated One-Stop Service Agency, Marthunis, said the regulation will increase Aceh's investment appeal and support key sectors like fisheries, agriculture and renewable energy. “These are strategic sectors with huge potential for increasing value-add, economic growth and job creation,” he stated on Wednesday (2/8/2023).

Marthunis said certainty over long-term land use is a major consideration for investors. “With clear laws on leasing land and buildings, interest in investing in Aceh is expected to rise,” he added. Previously, state asset leases were limited to five years maximum.

This was seen as unattractive for large-scale ventures requiring long-term access to land and infrastructure. The new regulation aims to encourage investment in capital-intensive and high-tech sectors like fish processing zones, integrated farming and renewable power generation.

Lease applications start with a proposal to the governor or an appointed official. After feasibility studies and valuation, the first five years' rent must be paid before contract signing. The provincial government will regularly monitor compliance and asset condition. Lessees must maintain assets in good order and return them at lease expiry. With this clear legal framework, the Aceh administration hopes to create an increasingly conducive investment climate, boosting the economy and public welfare.

Download the document here (7MB)