March 8, 2024
JAKARTA – The United States is providing a US$4 million grant to support the development of Indonesia’s future capital city Nusantara and to fund a study on power transmission lines connecting Indonesia and Malaysia.
The US Trade and Development Agency (USTDA) would provide the first $2 million to the Nusantara Capital City (IKN) Authority, which it would use as part of technical assistance in designing and developing smart city infrastructure for the new capital in East Kalimantan.
“This is the work that needs doing, to define the technical requirements and to attract the financing investment needed for further implementation,” said USTDA director Enoh T. Ebong in a press briefing on Thursday.
“On Friday, I will travel to the future site of Nusantara to see it firsthand and inform our future programming in support of its development.”
The agency also seeks to host a business forum in Jakarta this month to connect US companies with both Indonesian officials and the private sector interested in partnering on smart city projects for the new capital.
In April it plans to bring Indonesian officials to the US to learn about US smart city technologies and to explore potential financing and investment opportunities.
The government has planned the Nusantara megaproject to rely largely on the private sector, comprising 80 percent of the estimated total $30 billion cost, with the rest shouldered by the state.
Indonesia has approached multiple countries and foreign investors to participate in the project since the government started the physical development in 2022.
Despite admitting that the new capital had yet to draw in foreign funds in November last year, President Joko “Jokowi” Widodo said the project had received a lot of interest from many potential investors.
China and Malaysia are set to participate in the investment through foreign direct investment (FDI), contributing a total of Rp 40 trillion (US$2.5 billion) toward housing development in Nusantara.
IKN Authority funding and investment deputy Agung Wicaksono said on Sunday the tender offer for these two countries’ projects were targeted for April, as quoted from Bisnis.
USTDA also provided a grant of more than $2 million to state-owned electricity company PLN, which is to be used to fund the project preparation of two power transmission lines connecting Indonesia and Malaysia through Sumatra and Kalimantan.
The lines are part of broader initiatives of the ASEAN power grid, aiming to create regional electricity interconnectivity in the Southeast Asia region, including Singapore, Thailand, Cambodia, Lao PDR and Vietnam.
“We provide grant-based funding for project preparation assistance, including feasibility studies, technical assistance and pilot projects. […] These are the critical tools that define the technical requirements […] and to help in developing road maps for financing and investment opportunities,” Ebong said during a memorandum of understanding (MoU) signing with PLN on Wednesday.