September 25, 2023
JAKARTA – The Asian Development Bank (ADB) has shared ideas for repurposing government buildings that will be left vacant in Jakarta as government functions are moved to the future capital city.
The status of national capital is to be officially conferred on Nusantara in Kalimantan by mid-2024.
Given the strategic location, heritage qualities and high value of the properties to be vacated, the ADB urged the government to devise an asset-repurposing strategy that is aligned with livability criteria, which matches people’s economic interests and is financially feasible at the same time.
“It is crucial that we view the relocation to the new capital as an opportunity for making a positive impact to enhance Jakarta for the benefit of all its residents,” Joris van Etten, a principal portfolio management specialist at ADB’s Indonesia Resident Mission, told The Jakarta Post at the 2023 Jakarta Architecture Festival on Friday.
He said the gradual process of Jakarta government buildings being vacated over the next four to five years provided the local government with a window to strategize and optimize the economic benefits for all citizens.
However, he asserted: “This goes beyond simply converting these assets into revenue-generating possibilities; it’s about creating a livable Jakarta.”
The ADB has been assisting the Finance Ministry in planning Jakarta’s asset-repurposing strategy with the aim of improving the city’s livability and maximizing the country’s economic interests, according to a report on the ministry’s website.
The development financier urged the government to forge long-term partnerships with investors and property developers to ensure the sustainable maintenance of these assets.
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The total value of government assets in the city amounts to Rp 1.464 quadrillion (US$95.23 billion), comprising land, housing and buildings, according to the ADB.
During the relocation to Nusantara, all ministries and agencies will be mandated to formally transfer their assets, according to the Finance Ministry.
The Finance Ministry’s State Assets Directorate General (DJKN) will be tasked with overseeing and managing these assets in Jakarta once they are vacated, adhering to the principles of “highest and best use”, according to the State Assets Director General Rionald Silaban.
The directorate general is in charge of managing state property, government investment, state debt and receivables.
Though Van Etten did not specify the ideal ratio between public and private investment to maximize economic benefits, he noted: “When it comes to financing, cities are primarily funded by the private sector through real estate development.”
He recommended repurposing the government assets to serve functions including high-class apartments, logistical hubs, data centers, hotels, hospitals and other core living facilities.
Read also: Local investors kick-start commercial projects in Nusantara
At the same event, Jakarta Investment and One-Stop Integrated Service (PTSP) head Benny Agus Chandra pointed out that, despite the state’s ownership of those vacant government buildings, the local government retained the authority to propose and advocate for ways to repurpose and redesign them for the city’s improvement, including for affordable housing initiatives.
“The local government is confident about developing Jakarta. Despite the land ownership held by the ministries, we can assert our authority [to develop the properties],” Benny stated.
He suggested that relocating the nation’s capital offered an opportunity to centralize residential and business zones in Jakarta’s various districts to transform the city into a global business hub.
Benny added that ongoing expansion of the city’s transit system had spurred growth in areas outside the city center, such as Halim in East Jakarta, an airport and new modes of public transportation like the high-speed rail connecting Jakarta and Bandung, which had in turn increased the value of land.
Iwan Kurniawan, head of the Jakarta Development and Environment Bureau, said the government was currently drafting a law on the Jakarta Special Region, which aimed to secure and facilitate in the city’s future development. The bill included alternative financing methods for future infrastructure projects to reduce reliance on the regional budget.
Iwan added that draft provisions on spatial planning in Jakarta sought to center business activities and residential settlements around transit hubs, with a residential density target of 70 percent.
These transit hubs connect networks operated by the Jakarta MRT, the Greater Jakarta LRT and the Commuter Line that connect the city with its suburbs.