June 8, 2023
SINGAPORE – Indonesia’s President Joko Widodo made a strong pitch for investment in the nation’s upcoming new capital Nusantara on Wednesday, days after Singapore investors visited the site in the first roadshow for the city.
Nusantara is being built on forested land in the eastern part of Borneo Island, about 1,200km from Jakarta.
Indonesia’s new capital has become the signature project for Mr Widodo, whose drive to modernise the nation’s infrastructure is a hallmark of his administration.
He directly addressed concerns about the viability of the US$32 billion (S$43.3 billion) project in East Kalimantan province – whether it will attract enough investment and people to thrive, and whether it really is a green and carbon-neutral development.
“Everything will be fine. No need to worry. Your investment in Indonesia will continue to be safe,” he said in a speech at the Ecosperity Week conference in Singapore.
The conference is being held at the Sands Expo and Convention Centre from Tuesday to Thursday, with the focus on ways to speed up green transition.
Mr Widodo, who is popularly known as Jokowi, assured investors there will be continuity in the development of Nusantara, addressing fears that after his term ends in 2024, future Indonesian governments might not support it.
The plan is to build the city in phases, with completion set for 2045.
Indonesia has been stepping up efforts to secure funding for the capital. The 2,561 sq km project, about three times the size of Singapore, was announced three years ago by Mr Widodo.
It is meant to relieve pressure on rapidly growing Jakarta, which is vulnerable to floods and suffers from traffic jams and air pollution.
The state will bear 20 per cent of the costs of developing Nusantara, while Indonesia hopes the private sector will foot the rest. And as the deadline for the inauguration of the first phase draws near, the government is keen to lock in investors.
The first phase must be completed by August 2024, ahead of the official inauguration on Aug 17 – Indonesia’s Independence Day.
The new presidential palace, Parliament and other key government buildings – plus accommodation for civil servants – will need to be ready in this first of many phases of the project.
Mr Widodo said the government had prepared 300 investment packages totalling US$2.6 billion and involving housing, transportation, energy, technology and other areas.
Last week’s three-day trip, titled Singapore Mission to Nusantara, aimed to help Singapore businesses understand the potential opportunities in Indonesia’s new capital.
More than 130 government officials and businessmen from Singapore visited the site.
The visit was a collaboration between different agencies in Indonesia and Singapore, and was a follow-up to the leaders’ retreat between the two countries in March, Indonesia’s ambassador to Singapore Suryo Pratomo told The Straits Times last week.
Mr Widodo stressed the green credentials of the city, saying one of the first things to be built was a large nursery to plant millions of trees.
“We have prepared fiscal incentives, like tax holidays,” he said. “We have done everything. Especially regarding green energy and green industry. We will facilitate it as best as we can.”
In a separate question-and-answer session, Mr Bambang Susantono, chairman of the Nusantara National Capital Authority, said his agency was in the middle of a number of deals involving malls, international hospital brands and housing developments.
Asked about international investment interest, he said five nations were involved in “serious due diligence”. These were Japan, Canada, Germany, South Korea and the United Arab Emirates.
He said the city would have a population of about 200,000 by 2024, and would be connected by a toll road to the coastal city of Balikpapan.
He added that solar would be the main source of power during the first phase in 2024 and 2025, then hydropower would be added, and also gas to stabilise the grid.
These decisions will likely cause concern for environmental groups, who fear the project will not match the green ideals touted since its inception, leading instead to large-scale deforestation and displacement of local communities.
After his speech to the conference, Mr Widodo and First Lady Iriana Joko Widodo were hosted to lunch by Prime Minister Lee Hsien Loong and Mrs Lee.
Mr Widodo arrived in Kuala Lumpur on Wednesday afternoon to begin a two-day working visit. He is scheduled to meet Malaysian Prime Minister Anwar Ibrahim on Thursday.
Both leaders are expected to exchange views on regional and global issues, including the strengthening of Asean post-2025, discuss outstanding bilateral issues and witness the signing of several agreements.