Despite doubts, Indonesia’s new capital ‘proceeding as planned’, says govt

Indonesia said on Thursday development of its proposed new capital is going ahead as planned, despite several experts casting doubt over the viability of the US$32 billion megaproject.

President Joko Widodo has made the capital city relocation, from the densely populated metropolis of Jakarta to an underdeveloped area on Borneo island, a key part of his agenda.

But a survey of 170 experts including researchers, academics, professionals, businessmen, journalists, bureaucrats and lawmakers showed that 58.8% of them were unsure the project would materialise because of uncertainty over funding and management.

“The level of pessimism from the experts is quite high,” the Indonesian Centre for Strategic and International Studies (CSIS) said in a statement that accompanied the survey results on Monday.

Insufficient detail about how the project will be funded and managed has led to a lack of confidence in its viability, added CSIS researcher, Arya Fernandes.

Sidik Pramono, spokesman for the government authority established to manage the move, said development was proceeding as planned, with key infrastructure, including the construction of a dam, expected to begin later this year.

The CSIS survey, he said, was “motivation for the new capital city authority to work harder”.

In February, lawmakers had questioned the timing of the project as the government grappled with its economic recovery and fallout from the Covid-19 pandemic.

Indonesia’s National Development Planning Agency estimates that 19% of the financing for the new capital Nusantara will be covered by the state budget, with the remaining funds from public-private partnerships and private investments.

The finance ministry has allocated between 27-30 trillion rupiah (up to US$3.91 billion) from the state budget for the project next year.

In March, Japan’s SoftBank announced that it would not invest in the capital, despite earlier claims it had offered up to US$40 billion for the project.