View of the new presidential palace its future capital of Nusantara, a city still under construction on the island of Borneo, Saturday, Aug. 17, 2024. (AP Photo/Achmad Ibrahim)
JAKARTA: Indonesia is set to inaugurate its unfinished future capital city in the middle of a remote jungle on the island of Borneo, as funding struggles, missed deadlines and a change in the country’s leadership weigh on the multibillion US dollar project.
President Joko Widodo declared Nusantara open last Saturday as he marked the country’s independence day.
But the ambitious project remains a giant work in progress, with most roads and buildings far from complete, and Jokowi has indicated that Jakarta will still be the official capital when he leaves office in October.
Celebrations were muted, with thousands having been cut from the guest list because of a shortage of rooms, and Jokowi barely mentioned Nusantara in his final State of the Nation and budget speeches to parliament last Friday, except to say funding would continue.
To be sure, it’s only five years since the president announced the project, and just two years since construction began, thanks to the pandemic.
South-East Asia’s largest economy is constructing a new capital mainly because population growth and rapid urbanisation have overwhelmed existing infrastructure the country’s centuries-old commercial and political capital, with greater Jakarta teeming with about 30 million people.
Besides alleviating the problems of traffic congestion and pollution, Jokowi aims for Nusantara to help spread the nation’s wealth – currently concentrated in the island of Java – more evenly among its more than 278 million citizens.
The new metropolis is also meant to be the centrepiece of Jokowi’s legacy.
He embarked on an ambitious infrastructure spree costing hundreds of billions of US dollars during his decade in power, aiming to boost development and put the country on the path to becoming a high-income economy by 2045.
Located about 1,300km north-east of Jakarta, construction of Nusantara involves five phases, with the project scheduled for completion by 2045. By then, the government intends to shift some 1.9 million people from Jakarta to ease congestion.
But the project – with a price tag of roughly US$29bil, according to the official estimate – has been beset with problems from the start.
The administration wants to foot only 20% of the bill, with the rest to be borne by private investors. In the 2024 budget, it allocated 42.5 trillion rupiah, higher than the 26.7 trillion rupiah in 2023.
For some time, the new capital lacked major investments until a group of local tycoons invested.
Even so, that isn’t enough and the project has yet to secure binding foreign private investments even as the government has touted high interest from overseas companies and doled out special tax incentives.
Construction delays mean the government has missed the deadline for the project’s first phase – for the president, his cabinet and a clutch of civil servants to move in to the new capital this month. — Bloomberg
