Indonesia's new capital is being built in East Kalimantan province on the island of Borneo. Photo: Nikkei Asia

According to Reuters, on June 9, Said Abdullah, Chairman of the Indonesian Parliament's Budget Committee, announced that the committee had approved an additional 15 trillion rupiah (US$1.01 billion) to accelerate the construction of the new capital, Nusantara, in East Kalimantan province on Borneo island. The additional funds will be used for construction this year, in addition to the previously allocated 22 trillion rupiah. "Therefore, by June 2024, the president could be living there," Abdullah emphasized during a hearing.

This decision comes as Indonesia is accelerating the construction of key administrative buildings in its new capital, including the presidential palace and buildings for major ministries, with the goal of having at least 16,000 civil servants, military personnel, and police officers relocate there next year.

Indonesian President Joko Widodo has pledged that the government will only invest 20% of the estimated $32 billion cost of the new capital city project, with the remainder coming from the private sector. However, investors remain concerned about the feasibility and continuity of the project despite numerous incentives offered by the government. On June 7th, during the 2023 Eco Week in Singapore, President Widodo called on global investors to provide significant investments in the new capital, Nusantara, while affirming the safety of these investments. Before introducing the plan to transform Nusantara into a world- class smart city covered in vast green spaces, President Widodo emphasized: “Your investment in Indonesia will be safe, as will the continuous development of Nusantara.” He also committed to providing attractive investment incentives for Nusantara.

Building a new capital city is an ambitious plan of President Widodo. Shortly after beginning his second term in 2019, President Joko Widodo announced plans to relocate the capital as Jakarta faced severe traffic congestion, pollution, and flooding. However, the Covid-19 pandemic stalled the plan. Construction of the new capital began in mid-2022.

The new capital is located 2,000km northeast of Jakarta. Nusantara is designed as a green city, with forests covering 65% of its area, and is the country's first carbon-neutral city equipped with world-class educational and medical facilities. President Joko Widodo hopes that residents will no longer have to worry about traffic jams and can comfortably walk or cycle in the new capital. Nusantara is also planned to be a high-tech city, with the expectation of attracting the younger generation, especially "digital nomads" from around the world. Last May, Mr. Widodo unveiled the logo for the new capital, named "Tree of Life." The Nusantara logo is inspired by the tree of life, symbolizing the source of life, with 5 roots representing the Pancasila doctrine, 7 branches representing Indonesia's 7 major islands, and 17 blooming flowers representing eternal independence. Speaking at a ceremony televised live from Merdeka Palace, President Joko Widodo said that, in accordance with the philosophy of the logo, Nusantara will become a new source of life for all people.

After the capital is moved, Jakarta will remain Indonesia's financial and commercial center. Embassies and representative offices of international organizations are expected to join government agencies in relocating their offices to the new capital within 10 years of the relocation beginning.

President Widodo's term will end in 2024. Therefore, he doesn't have much time left to implement his ambitious plan to relocate the capital.

LAM ANH