August 23, 2023
JAKARTA – The government has submitted a revision to the Capital City Law to the House of Representatives, in which it proposes preventing the next president from ditching the project.
The construction of a new capital city, which would span nearly 260,000 hectares within the jungles of East Kalimantan is President Joko “Jokowi” Widodo’s flagship project.
Indonesia is set to officially declare the city, called Nusantara or IKN, as its new capital in the first half of 2024, replacing the current overcrowded and rapidly sinking capital of Jakarta.
However, with an estimated overall cost of Rp 466 trillion (US$30 billion) and the COVID-19 pandemic delaying progress, some investors have expressed concern that development may lose momentum after Jokowi ends his second and final five-year term in office in 2024. The capital’s success hinges on private sector involvement, with only 20 percent of costs shouldered by the state.
National Development Planning Agency (Bappenas) Head Suharso Monoarfa said that revising the current law was crucial to give investors a guarantee that the construction of the new capital city would continue as planned until 2045.
“Without this revision, there’s a risk that the construction of the new capital city could be halted or stopped at any point,” he said during a hearing with the House’s Commission II overseeing home affairs on Monday.
Aside from ensuring project continuity, the government also seeks to strengthen the role of the IKN Authority through the proposed revision.
If lawmakers agree with the government proposals, the IKN Authority will be able to manage funds for the new capital. The revision will also allow the Nusantara authority to control the commercial land management in the city.
The government proposed that the IKN Authority not only employs civil servants, but also non-bureaucratic professionals. The revision suggested that the House should oversee the IKN Authority.
IKN Authority deputy head Dhony Rahajoe previously mentioned the need to strengthen the authority’s institutional role and its capacity. “If there is strong support and we have a professional team, we will be successful, but if support is weak and our staff are not ready, the project could stall,” Dhony told lawmakers in February, stressing the need for capacity building and “top talent”.
Progress on the construction of what is to become the core region of Nusantara is now 38 percent complete, according to IKN infrastructure construction task force head Danis Hidayat Sumadilaga.
He said all the IKN construction projects were currently “on schedule” and the government was aiming to complete the development of the Core Government Area (KIPP) next year. The KIPP includes the presidential palace, vice presidential palace, office buildings and roads as well as water supply and sewage systems.
The government is planning to allocate a staggering Rp 40.6 trillion in next year’s proposed state budget for Nusantara projects, with at least Rp 35 trillion, or 86.2 percent of the total amount, earmarked for the Public Works and Housing Ministry to develop vital infrastructure, including a VVIP airport.
The remaining funds are designated for other relevant ministries to develop the necessary facilities in the new capital, including a hospital, critical infrastructure for the nation’s administrative complex and housing for some 1 million civil servants who will be relocated from Jakarta.
Jokowi’s term ends in October 2024, which means this is the last year he can direct resources toward the new capital.
The government allocated Rp 26.72 trillion in 2023 and Rp 5.24 trillion in 2022 to the project.
Public policy expert Trubus Rahadiansyah said the plan to revise the law only a year after it was passed by the House in January of last year was “clearly motivated by politics instead of public interest”.
“This shows that the government is concerned about the project’s fate after Jokowi steps down,” he said on Tuesday.
He said none of the three current presidential hopefuls had shown a firm commitment to continue the project, even those who Jokowi supported.
“[The new president] will probably anticipate the public’s opposition to the project, especially considering the country’s growing debts and the uncertainty of global political situations,” Trubus said.