(Singapore 8 June 2023)Indonesian President Joko Widodo (Jokowi) has reassured investors that the country’s ongoing inter-island capital relocation will proceed despite next year’s presidential succession.

“So, everything will be fine, no need to worry, your investment in Indonesia will be safe, and also the sustainability of the development of the Nusantara Capital City,” the President said yesterday while attending Singapore’s Ecosperity Week 2023.

He referred to the two-decade capital relocation project from the current overcrowded and rapidly sinking capital of Jakarta to Nusantara, some four times bigger, on the east coast of Borneo — the world’s third largest island shared by Malaysia and Brunei.

Unlike other planned cities, Nusantara, which means “archipelagos” in Indonesian, is expected to become a green metropolis run on renewable energy, with a total investment of US$32 billion (S$43 billion). The Indonesian government will commit to some 20% of the projected cost while the rest of the funding would mainly come from the private sector.

The president explained that as a world-class smart city, Nusantara will prioritize the environment during its development, with the eventual purpose of becoming Indonesia’s first carbon-neutral city with world-class education and health facilities.

Indonesian President Joko Widodo Addresses Singapore’s Ecosperity Week 2023  Photo: Nusantara National Capital Authority

“It will be a comfortable city, for living and for business… currently, the construction of Nusantara is underway, basic infrastructure and the Government Center Core Area, will be completed next year using the state budget,” he added.

The president also said the private sector that has entered in the initial stage, will be prepared with 300 investment packages with a total value of US$2.6 billion. Among the sectors that can be explored by investors: housing, transportation, energy, and various hitech industries.

Besides, the Indonesian Government will provide Nusantara Investors with a slew of incentives, including tax holidays, non-collective value-added tax, super deduction tax, and import duties.

In connection with this, Head of the Nusantara National Capital Authority (NNCA) Bambang Susantono, said: “We will invite many business investors to participate in the development of this city… There are at least five countries that are in the process (of agreement), including South Korea, then Japan, China, Germany, and also the UAE (United Arab Emirates).”

He said the current cooperation agenda carried out by NNCA with various institutions is to create a blueprint and master plan for the archipelago.

By 2024, there will be a toll road connecting Nusantara with Balikpapan, a major seaport city located on the east coast of Borneo, with a time span of 40-50 minutes. Currently, it is approximately a two-hour drive between the two places.

Some 200,000 people are expected to start living in the new capital city by 2024, although the country has no plan to build a new airport in its new capital.

In a recent interview with Fortun Times, Johan Sulaeman, an associate professor at NUS Business School, said that the future of Nusantara is still grappling with uncertainties regarding future political elections, investment funding, and the difficulty in measuring environmental impact.

“While it would be impractical to reverse the decision, the extent to which political and economic activities will be relocated remains uncertain,” he said, emphasizing that the success of the capital relocation ultimately lies in the hands of Indonesia’s future leaders, not just the next term.