Heavyweights to boost new Indonesian capital project

  • ASEAN+
  • Sunday, 19 Jan 2020

Jakarta: President Joko “Jokowi” Widodo explained that his recent move to invite world-renowned figures to join a steering committee for the relocation of the country’s capital to East Kalimantan was made to win the trust of investors as the government seeks greater participation from the private sector to finance the multibillion-dollar project.

During a recent official visit to the United Arab Emirates (UAE), Jokowi invited UAE Crown Prince Sheikh Mohammad bin Zayed al Nahyan to join the steering committee, which also includes the chief executive officer of a Japan-based diversified conglomerate, the Softbank Group, Masayoshi Son, and former British prime minister Tony Blair.

He told reporters he was hoping to tap into the wealth of experience of these people, adding that it would hopefully also attract more private investors to help develop the new capital.

“We want to build trust. The established trust would make it easier for us to cooperate (through) public-private partnerships (PPP) or other (forms of) cooperation, ” said Jokowi at the Merdeka Palace on Friday.

“I perceive Sheikh Mohammad bin Zayed, Masayoshi Son and Tony Blair as people with good reputations internationally.”

Jokowi emphasised that the move did not mean the government would take up loans or provide some form of guarantee through the steering committee.

South-East Asia’s largest economy attracted global attention when it announced in August that it would move its capital from flood-prone and sinking Jakarta on Java Island to a 256,000ha forested area straddling the regencies of North Penajam Paser and Kutai Kartanegara in East Kalimantan on Borneo, an island that it shares with Malaysia and Brunei.

The Indonesian government has estimated that the new capital would cost 466 trillion rupiah (RM139bil) and declared it would finance one-fifth of that with the state budget.

Jokowi said public money would fully fund the 5,600ha downtown area of the new capital, where the new presidential palace and other government buildings would sit.

For the rest of the project’s funding, the government has been campaigning for public-private partnership schemes and private investment to support the plan, which is expected to be completed by 2024.

Previously, Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said the UAE government had prepared US$22.8bil (RM93.4bil) to invest in Indonesia through a sovereign wealth fund together with SoftBank and the United States International Development Finance Corporation.

“During the tête-à-tête the president talked about the sovereign wealth fund and the crown prince repeatedly said that Indonesia is a close friend and that Indonesia is the country with the largest Muslim population (in the world), ” Luhut said.

The crown prince has been touted to lead the steering committee that would oversee the construction of the new capital.

At the Jakarta palace on Jan 10, Son met Jokowi and expressed an interest in participating in the project and, according to Luhut, offered up to US$40bil (RM164bil) for the development. — The Jakarta Post/ANN

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