Indonesia's new capital, Nusantara, granted to investors for 190 years
Outgoing President Joko Widodo signed a decree to this effect. Yet, despite government efforts, foreign investors are reluctant to get involved in the project. Widodo’s successor Prabowo does not seem keen on prioritising the new capital. The transfer of the first administrative offices, scheduled for this month, has been postponed.
Jakarta (AsiaNews) – After events associated with the inauguration of Nusantara, Indonesia’s new capital, were scaled down, or even postponed, President Joko Widodo signed a presidential decree granting 190-year land leases to Indonesian and international investors.
The Indonesian government will finance only 20 per cent of the total costs of building the new capital, while the rest will come from the private sector, Widodo said; for this reason, he travelled to the United Arab Emirates on 15 July to get new investors to finance the project.
The Indonesian president is also trying to refurbish Nusantara's image after some key figures involved in its development resigned with the government unable to explain why.
In early June, Bambang Susantono, a former Asian Development Bank official who headed the project, and his deputy, Dhony Rahajoe, an architect, quit without motive.
After Jokowi's announcement, Indonesian social media were flooded with sarcastic posts about Ibu Kota Nusantara (Capital City of Nusantara in Indonesian, IKN) being up “for sale”. Several Indonesian lawmakers slammed the president's decision, calling it a “bad marketing gimmick”.
Jokowi’s decision to grant 190-year land leases to investors will create serious problems, warns the Center for Economic and Law Studies (CELIOS). For Jaya Darmawan, a researcher at CELIOS, few business entities are keen to invest there.
“Financial return and business risks are certainly key issues for any investor,” Darmawan explained, but “Essential living issues [are] becoming serious concerns for all parties.”
The new capital, expected to cover an area of about 2,000 square kilometres, will be built in East Kalimantan province, replacing Jakarta, which is struggling with pollution, devastating floods, and overcrowding.
The cost was estimated at 460 trillion rupiahs, or about US$ 35 billion, but by January this year, less than 48 trillion rupiahs had been raised, according to the government agency in charge of the project.
According to the original plans, some administrative offices, including the presidential palace, should have been moved as early as this month. But by Jokowi's own admission, water and electricity supplies are not yet available and are unlikely to be available by the end of the month.
Last week, Widodo blamed heavy rains for the delay, saying that it is “normal for big projects”. However, some experts believe it will take 20 to 30 years before the city can be said to be fully operational.
The region chosen is prone to malaria and flooding, and is home indigenous peoples. and few civil servants are eager to move 1,200 kilometres away from Jakarta.
Still, the inauguration of the new capital, even on a reduced scale, will go ahead on 17 August, Indonesian Independence Day.
According to some commentators, the ceremony will be mostly symbolic, led by outgoing President Widodo, and his successor, President-elect Prabowo Subianto (who will take office in October), while outgoing Vice President Ma'ruf Amin and Vice President-elect Gibran Rakabuming Raka (Widodo's son) will oversee the transition ceremony in Jakarta.
Despite being on the record saying that he wants to continue the project, Prabowo has not yet discussed the transfer to Nusantara with his team.
According to sources familiar with the matter, it is likely that the capital will be built at a much slower pace because the city, at least for now, is not among the priorities of the president-elect.
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