Indonesia hopes development of new capital will restart next year, investors still keen: Planning minister

Indonesia hopes development of new capital will restart next year, investors still keen: Planning minister

Penajam Paser Utara
A sign welcoming visitors to the new capital of Indonesia has been put up at Penajam Paser Utara, East Kalimantan, in this photo taken in September 2019. (Photo: Kiki Siregar)

JAKARTA: Indonesia hopes the development of its new capital will restart next year, the minister in-charge of national development planning said on Thursday (Aug 27).

The 466 trillion rupiah (US$32 billion) project was supposed to start this year, but the COVID-19 pandemic has put the relocation of Indonesia’s capital from Jakarta to eastern Kalimantan on the back burner

However, National Development Planning Minister Suharso Monoarfa expressed optimism that the construction of the new capital would begin once COVID-19 is contained in Indonesia.

“I’ll describe it as the light at the end of a tunnel… When the light is brighter, the project will automatically resume. That’s what we are waiting for.

"Hopefully the light at the end of the tunnel will appear next year… then we will resume the new capital project,” Mr Monoarfa told CNA in an exclusive interview.

President Joko Widodo announced last year that the capital would move from heavily congested Jakarta to the underdeveloped districts of Penajam Paser Utara and Kutai Kartanegara in East Kalimantan province.

The plan to relocate the capital was considered necessary as megacity Jakarta, a city of 10 million people, has for years been battling with traffic congestion which costs US$7 billion in economic losses each year.

It is also one of fastest-sinking cities on Earth with experts predicting that it could submerge by 2050 if current rates continue.

READ: New Indonesian capital offers opportunities for development, but environmental pitfalls abound

Initially, the government planned to begin the construction of the new capital this year on a plot of 40,000 ha land and transfer the central administration by 2024. The government already owns about 180,000 ha of land in the area.

INVESTORS STILL INTERESTED IN THE NEW CAPITAL

Even though there is currently no construction work in progress, Mr Monoarfa explained that the master plan is still being worked on.

“The detailed plan will follow, then we will include basic infrastructure works in cities that will support the future capital of the country, for example, Balikpapan, Samarinda,” he said.

Oil city Balikpapan is about 80km east of Penajam Paser Utara, while Samarinda is the capital of East Kalimantan province. A highway has been constructed to connect both cities.  

Balikpapan Bay
Environmentalists are concerned that the capital's relocation to East Kalimantan will harm the Balikpapan Bay and its coastal communities. (Photo: Kiki Siregar)

The minister also revealed that investors are still interested in the new capital.

"There are still some investors, including domestic ones, who are still interested. And indeed they keep asking when it can start. 

"I think this is also important because, after COVID-19, the economic recovery will (focus on) investment destinations that promise high and fast capitalisation, one of them in Indonesia is the capital city project." 

READ: New Indonesia capital - Land prices set to soar but not all locals thrilled

Mr Monoarfa welcomed other countries to invest, especially fellow Association of Southeast Asian Nations (ASEAN) countries.

"In my opinion, because later it (the new capital) will also be a symbol of friendship in ASEAN, why should there be no legacy from ASEAN countries contributing to this capital city?"

Source: CNA/ks

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