Indonesia's new capital project to continue after leadership change, 'world-class' Nusantara a good place to invest: Jokowi

SINGAPORE — Indonesia will continue to develop its new capital city of Nusantara and it remains a good place to invest regardless of who becomes the country's next leader, said President Joko "Jokowi" Widodo on Wednesday (June 7) as he sought to reassure potential investors about the mega project.

“Everything will be fine, no need to worry. Your investment in Indonesia will continue to be safe and (there will be) continuity in the development of Nusantara capital city," said Mr Jokowi, as he is commonly known. 

Speaking in Singapore at Ecosperity Week, an annual conference on sustainable development organised by state investment firm Temasek Holdings, he added that Nusantara will be a "world-class smart city, surrounded by nature".

It will also be the first carbon neutral city in Indonesia with top-rate education and health facilities, said Mr Jokowi.

“Nusantara will be a comfortable city to live in and to do business.”

Mr Jokowi is reaching the end of his second and final term of presidency, with Indonesia due to hold a presidential election by next February.

In his speech on Wednesday, Mr Jokowi outlined the progress made in the development of the Nusantara Capital City in Kalimantan to replace Indonesia’s existing capital of Jakarta on Java island.

He said that basic infrastructure for the new city will be completed next year using the national budget.

In order to attract early phase private sector investment, the government has lined up 300 investment packages worth US$2.6 billion (S$3.51 billion), covering areas such as housing, transportation and energy.

He said that his administration has also prepared fiscal incentives, such as tax holidays, to pull in investments.

About 20 per cent of the US$32 billion development cost will come from the Indonesian government, with the remainder to be borne by investors.

Mr Jokowi first announced the relocation in August 2019 to alleviate the strain on Jakarta, and Nusantara is widely seen as his pet project to cement his legacy.

But some investors have expressed concerns that the development of the new capital city may lose momentum after Mr Jokowi's term ends.

Japan's Softbank Group, a major investor in Indonesia, for example, announced in March 2022 that it would not be investing in Nusantara despite expressing interest earlier to do so.

There have been no reports of other major investments for the ambitious project from the private sector to date.

On Wednesday, Mr Jokowi outlined why Indonesia has made a big push for Nasantara to be green.

"We have done everything, primarily on green energy and industry. We will facilitate it as best as possible because we believe economic success and sustainability must be worked on together,” he said.

He added that Indonesia has "very big potential" in new and renewable energy and can potentially produce 434 gigawatt of power from geothermal, wind, solar, biofuel and hydro sources.

He cited the example of how the country has 4,400 rivers, including 128 large rivers, and these can be sources for hydroelectric power plants.

Mr Jokowi was last in Singapore in March for a leaders' retreat with Prime Minister Lee Hsien Loong. 

During the retreat, the Singapore Centre for Liveable Cities and the Indonesian Nusantara National Capital City Authority signed a memorandum of understanding to enhance co-operation in areas such as integrated master planning and smart city development.

One notable area of cooperation between Singapore and Indonesia that drew interest from the private sector was the upcoming Nusantara Capital City, said PM Lee and Mr Jokowi during the retreat.

Mr Jokowi at that time announced that there were 20 letters of intent from private sector companies in Singapore expressing interest to invest in the project. 

On Wednesday, Mr Jokowi gave assurance that Indonesia's next leader and government will continue to focus on the country’s development.

“Our friends in Singapore know us so well, that whoever will lead Indonesia, will be focused on turning this magnificent country into the powerhouse and giant of Asia,” he said.

“So I suggest you don’t wait too long. Don't just sit and watch. This is a golden opportunity that is very captivating in Indonesia which all of you can be a part of.”

"OWNERS" OF NUSANTARA WON'T CHANGE

Following Mr Jokowi’s remarks, chairman of the Nusantara National Capital Authority Bambang Susantono gave further updates on the development in a question and answer session.

He told the session moderator Haslinda Amin, chief international correspondent for Southeast Asia at Bloomberg, that investments into the city will come from three sources — the government, domestic investors and international ones.

The government is “in the middle of sealing some deals” with developers of malls, hospitals and housing, he added.

Asked how Indonesia is addressing some investors’ concerns, Dr Bambang said that Indonesia had passed a law in 2022 to relocate the capital to Nusantara.

"It's a very solid law, a legal basis for us to continue and to guarantee the sustainability of this project."

Pressed further on how the country intends to further assure investors, given that laws and constitutions can change, Dr Bambang replied that the "owners" of the city, namely those people who live, work and invest in Nusantara, will not change.

He added that Nusantara is targetting not just big investors, but also small businesses.

“They will be the owners of the city. And they will be the ones that guarantee the sustainability of the city in the future.”