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Commentary: Indonesia's plans to move its capital out of Java may not solve underlying issues

The decision to move Indonesia's capital must be supported by evidence and a comprehensive analysis of its implications, says SMERU Research Institute's Rendy A Diningrat.

Commentary: Indonesia's plans to move its capital out of Java may not solve underlying issues

The skyline of Indonesia's capital Jakarta. (Photo: AFP/Romeo Gacad)

JAKARTA: Indonesia has long considered moving its capital Jakarta, a low-lying city on the northwest coast of the island of Java. 

The idea has been floated since the days of the first president, Sukarno, who declared the country’s independence from the Dutch colonial rule in 1945. 

President Joko “Jokowi” Widodo, recently elected for a second term, seems serious about moving the capital. 

He has visited several possible locations in Kalimantan in Indonesia island of Borneo. The country’s Development Planning Agency (Bappenas) have also revealed that moving the capital has been included in the nation's 2020-2024 National Development Plan.

Indonesian President Jokowi Widodo addressing the media on Apr 17, 2019. (Photo: Jack Board)

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The government argued that Jakarta is overburdened by population growth. Moving the capital will reduce the development gap between Java and other islands. But, as an observer in urban and rural issues, these reasons to move the capital is weak.


Data from the Country’s Statistics Agency in 2018 shows economic activity in Java has contributed 58.5 per cent of Indonesia’s gross domestic product (GDP). 

Meanwhile, the eastern part of Indonesia, which includes Kalimantan, Sulawesi, Maluku and Papua, and covers 64 per cent of the nation’s total area, contributes only 16.8 per cent of GDP. 

This situation has not changed much since 2010.

The government argues that moving the capital out of Java will support equitable development in eastern Indonesia, but this alone will not be enough. 

To support growth in less developed areas the government needs to distribute more new centres of growth and economic opportunities, chiefly to eastern Indonesia. 

While the government’s 2015-2019 Development Plan have included policies to create these new growth centres, we’ve yet to see how the policies have been implemented.


Research on decentralisation has shown that regional development has the potential to reduce poverty and inequality. Decentralisation allows the emergence of new economic growth poles such as Bantaeng (South Sulawesi) and Banyuwangi (East Java).

But, in its effort to support villages, the central government often carried out rushed interventions and did not consider the diversity of context and local needs, studies have shown.

File photo of the city skyline in Jakarta, Indonesia. (Photo: AFP/Bay Ismoyo)

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The government should avoid creating the impression that all problems can only be overcome by central intervention.

The idea that moving the capital will solve inequality is centralistic and runs against the spirit of equitable development.


The second reason the government uses to support its plan to move the capital relates to Jakarta's population and environmental pressure. The capital has been considered unconducive for the government.

Bappenas argues that Jakarta, due to urbanisation, continues to experience population pressure. 

Earthquake, floods and water shortages threatens the capital. Jakarta's river is heavily polluted. Traffic congestion in Jakarta has resulted in economic losses, reaching 56 trillion rupiah (US$3.8 billion) per year.

It also argues that moving the capital will reduce Jakarta’s burden as the new capital city will be designed as a government centre and separate from the business centre, a concept similar to in Australia, with Canberra and Sydney, and Malaysia, with Putrajaya and Kuala Lumpur.

However, it is important to know that they government activities contribute to only 10 per cent of the capital’s burden. This makes the government's argument weak. 

Moving the capital seems like an attempt to escape the chronic problems in Jakarta that need to be addressed immediately. Activities in Jakarta will be paralysed if its problems are left unattended and this will disrupt the Indonesian economy where 70 per cent of the country’s money circulation occurs in Jakarta.

A bundle of Indonesian rupiah banknotes are seen at a money changer's office in Jakarta on Aug 27, 2015. (Photo: AFP/Adek Berry)

Indonesia also aims to make Jakarta a centre of global business.

But to become a global city, a city must be home to international-scale activities, such as being a financial centre, global tourism destination, have international organisation offices, and host of world events. Cities such as London in England, Tokyo in Japan, and Paris in France are some examples.

Meanwhile, the new capital, which will only carry out government functions, so will not be effective as a new growth centre. 


Bappenas, which is responsible for Indonesia's plan to move the capital, has never actually publicised its study of the capital transfer to the public. 

As a result, many parties question the urgency of the plan, and even see it as an attempt to distract from other issues during the election campaign.

Before arguing about the right location for the new capital city, Indonesia must be sure that the decision to move the capital has been supported by evidence and a comprehensive analysis of its implications. 

Otherwise, they'll risk repeating the same mistakes and creating problems in the new capital.

Rendy A Diningrat is researcher at SMERU Research Institute. A version of this commentary first appeared on The Conversation. Read it here

Source: CNA/nr(sl)


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