Jokowi govt sets final Rp 40.6 trillion tranche for Nusantara next year

At least Rp 35 trillion is earmarked for the Public Works and Housing Ministry to develop vital infrastructure, including a VVIP airport.

Ruth Dea Juwita

Ruth Dea Juwita

The Jakarta Post


Cranes stand on June 8, 2023 as construction continues on the administrative center of Nusantara, the country’s new capital in East Kalimantan. PHOTO: ANTARA/THE JAKARTA POST

August 18, 2023

JAKARTA – The government plans to allocate a staggering Rp 40.6 trillion (US$2.6 billion) in next year’s proposed state budget for the construction of the country’s Nusantara Capital City (IKN) project in East Kalimantan.

At least Rp 35 trillion, or 86.2 percent of the total amount, is 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.

Finance Minister Sri Mulyani Indrawati told reporters on Wednesday that the funds were intended to develop critical infrastructure for the nation’s administrative complex, as well as housing for civil servants required to relocate from Jakarta to the new capital.

“Our priority in 2024, ahead of moving the capital, is for us to see that the government complex and supporting [facilities] can be [completed] next year,” Sri Mulyani told a press briefing on the proposed 2024 state budget.

President Joko “Jokowi” Widodo’s second and final term ends in October 2024, which means this is the last year he can direct resources toward erecting the new capital. The President aims to celebrate next year’s Indonesian Independence Day in Nusantara.

Public Works and Housing Minister Basuki Hadimuljono also addressed the briefing on Wednesday, saying that the IKN development project was estimated to cost at least Rp 65.5 trillion between 2022 and 2024.

In previous years, the government allocated Rp 26.72 trillion in 2023 and Rp 5.24 trillion in 2022 to the project.

Sri Mulyani also made assurances that, considering that the new capital was a long-term project, the role of the state budget would gradually diminish and give way to other funding sources beyond the state coffers.

“We have been supporting the IKN Authority to design projects that use public-private partnerships, thus reducing immediate reliance on state budget [funds] and aligning with the long-term fiscal capacity of the state budget,” she said.

Public works minister Basuki said the Nusantara development project had reached 30 percent completion and vowed that the priority stages of the project would be completed by next July.

These encompassed the presidential palace, a ceremonial space for hosting new year’s Independence Day celebrations, the offices of the four coordinating ministers and the state secretariat, as well as vertical housing for civil servants, members of the Indonesian Military (TNI) and National Police personnel.

Basuki also announced that construction would commence next month on 47 towers as dedicated housing for civil servants, though only 12 towers were expected to be completed by July 2024.

To date, the ministry had finished construction on Sepaku Semoi Dam, which would supply water to the new capital, and planned to proceed with building the city’s water treatment plant.

Earlier on Wednesday, President Jokowi announced the government’s plan to allocate Rp 422.7 trillion out of next year’s infrastructure budget for development purposes that included the new capital, stadium renovations, roadwork and healthcare facilities.

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