Indonesia intensifies search for foreign investors to fund construction of new capital city

A design illustration of Indonesia's future presidential palace in East Kalimantan, as part of the country's relocation of its capital from slowly sinking Jakarta to a site 2,000 kilometres (1,200 miles) away on jungle-clad Borneo island that will be named "Nusantara". - AFP

JAKARTA, June 5 (Xinhua): In the past two weeks, the Indonesian government has been intensively wooing a number of potential investors to finance the construction of its new capital, the Capital City of Nusantara (IKN).

The mega project has been targeted to be completed by 2045.

While the current capital Jakarta is located in Java, the country's most populous island, the new capital will be built in an area covering 256,142 hectares of land of Kalimantan.

On Thursday, head of the IKN authority Bambang Susantono, met with British former Prime Minister Tony Blair in Jakarta, hoping that Britain "can help develop the new capital as it offers a lot of potential for investors."

Susantono invited Blair to visit Kalimantan to see the construction process of the IKN project in September this year.

On Tuesday, Indonesian Minister for Energy and Mineral Resources Arifin Tasrif paid a visit to German-based energy company Siemens Energy AG in Munich. He said that the company is interested in developing the renewable energy sector in the IKN, including building education facilities to support human resource improvement in the region.

On Monday, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan invited the Dutch government and business players to invest in the IKN during his visit to Den Haag, the Netherland.

He also met with Mark Harbers, the Dutch Minister of Infrastructure and Water Management, asking for green economy investment in the IKN through a blended-finance program.

"Indonesia and the Netherlands have long historical connections, thus this (more investment) will strengthen our bilateral cooperation," Pandjaitan said in a press statement released early Friday.

Indonesia's IKN mega project requires funds of at least 501.56 trillion rupiahs (US$35 billion), according to the National Development Planning Agency (Bappenas). The first phase of the project development will be carried out until 2024.

Previously, Japan's SoftBank Group was reportedly ready to invest no less than US$30 billion for the construction of the new capital but pulled out from the plan in March.

Pandjaitan said he had already approached Saudi Arabia, saying that the country "will invest a very big amount."

He also said that the United Arab Emirates (UAE) government had prepared US$20 billion through the Indonesian Investment Fund for the IKN construction.

Separately, Indonesian Minister of Investment Bahlil Lahadalia talked with Singaporean Minister for Trade and Industry Gan Kim Yong, in Jakarta about possible investments from Singapore to develop smart city, green industry and digital economy in the IKN.

Last week, Presidential Chief of Staff Moeldoko met with Ann-Mari Kemell, Finnish State Secretary to the Minister of Economic Affairs, in Jakarta, saying that Finland had stated its interest in helping Indonesia build IKN to be a green and environmentally-friendly city.

Indonesian Finance Minister Sri Mulyani Indrawati explained recently that there were two options of investment schemes for IKN projects that foreign investors could choose.

"First, the investors can join as shareholders. Second, the investors can be creditors and only lend us the money. All future investors can freely choose one of the options they think can benefit them the most," the minister told reporters.

Indrawati emphasized how important the foreign investors are in helping build the IKN, because Indonesia could not afford it with only its own state budget.

"Our state budget will mainly go to infrastructure construction, such as bridges and roads," she said. - Xinhua

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