July 17, 2024
JAKARTA – President Joko “Jokowi” Widodo flew to the United Arab Emirates on Tuesday in yet another attempt to persuade investors into put their money into Nusantara, as the outgoing leader’s administration races to complete the capital relocation project amid lingering doubts.
Speaking to reporters at Halim Perdanakusuma Airport in East Jakarta moments before takeoff, Jokowi said that he would meet his UAE counterpart, President Sheikh Mohammed bin Zayed (MBZ), on Wednesday to explore more investment opportunities.
“In my meeting with President MBZ, I will discuss various efforts to increase economic cooperation and strategic investment. Of course, the implementation of this cooperation will be continued by the incoming administration,” Jokowi said, adding that Indonesia has had a long-standing and fruitful relationship with the UAE.
Jokowi also confirmed that he will meet with representatives of the UAE-based multinational real estate developer Emaar Properties, which he previously claimed to be an eager investor in the Nusantara project and which is willing to pour “a really big” investment deal into the new capital city.
“[A meeting with Emaar Properties] will be part [of the agenda]. There will be a few business-to-business memoranda of understanding signed and witnessed by both [the Indonesian and the UAE] governments,” Jokowi added.
During the UAE trip, the President will be accompanied by Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan, State Owned Enterprises Minister Erick Thohir, Foreign Affairs Minister Retno Marsudi and Public Works and Housing Minister Basuki Hadimuljono who also serves as the acting head of the Nusantara Capital City (IKN) Authority.
Jokowi will return to Indonesia on Wednesday following the series of meetings.
Sales pitch
Jokowi’s visit to the UAE comes at a time when concerns are growing over Nusantara’s long-term financial viability, as the government has opted to place the lion’s share of Nusantara’s total cost of Rp 541 trillion (US$35 billion) squarely on the private sector’s shoulders.
The President, who was a salesman before his entry into politics, has on numerous occasions capitalized on his audiences with world leaders to stage an investment sales pitch for Nusantara.
He did so when he met former Singaporean prime minister Lee Hsien Loong in March last year and Japanese Prime Minister Fumio Kishida during the ASEAN-Japan summit in December. Jokowi also pitched Nusantara to several heads of state on the sidelines of the Group of 20 (G20) Summit in India in November.
The meetings resulted in dozens of letters of intent, but no deals being signed, making the Emaar Properties deal the first of its kind, should Jokowi manage to get it over the line.
The UAE trip also comes shortly after Jokowi signed a presidential regulation to grant prospective investors land permits of up to 190 years, a move seen by many as short-sighted and designed simply for the sake of completing Jokowi’s megaproject.
Lingering concerns
In spite of the President’s vigorous efforts, critics have also expressed pessimism that the Jokowi administration will pull in any foreign investment deal anytime soon.
“The problem is that [Nusantara] has yet to take shape. Most private investors [source their money] through loans, and they need clear-cut figures. How can they invest in a project when there’s still a lot of uncertainties?” public policy expert Agus Pambagio told The Jakarta Post on Tuesday.
Agus went on to say that capital relocation projects, such as the one in Egypt, commonly take a few years’ worth of constant funding from state budgets or state-owned enterprises before they can generate investment interest from the private sector.
“Investors’ [considerations] are not only about land rights, but about when they can get a return on their investment. So I don’t think a presidential regulation in itself will be enough,” he added.
On the other hand, Agrarian and Spatial Planning Minister Agus Harimurti Yudhoyono has expressed his optimism that the presidential regulation will give prospective investors legal certainty to their land rights.
Jokowi insists that the recent policy on land rights is in line with the 2023 National Capital City (IKN) Law, and was designed to help the IKN Authority to pull in as big an investment deal as it can.
Racing to meet deadline
While Jokowi is busy attracting investors, his subordinates are racing against time to finish several key construction projects in Nusantara as the government is planning to hold the Independence Day celebration there next month. It is expected to be followed by the relocation of thousands of civil servants.
The construction work has apparently been delayed recently due to heavy rain, forcing Jokowi to postpone his relocation to the new city, which was originally slated for July.
The Public Works and Housing Ministry is upbeat that it can get water and electricity up and running in Nusantara by the end of the month.
The Transportation Ministry, meanwhile, is rushing to complete the development of the Nusantara airport and a stretch of toll road that will connect the new city to two major East Kalimantan cities of Balikpapan and Samarinda, although the heavy rain has also posed some difficulties.