President Widodo follows up with his plan to move capital city . . .
Indonesia’s President Joko Widodo, known as Jokowi, officially announced on Monday the move of Indonesia’s capital city from Jakarta, Java Island, to East Kalimantan. Discussions about a new capital have been going on for decades, but Jokowi made it clear in the past few months that he wanted to move forward with the colossal project. Growing environmental threats against Jakarta are at the root of the idea to move the capital. Not only is Jakarta extremely vulnerable to flooding and earthquakes, but the capital is heavily polluted. In contrast, the new capital will be built, from 2021, on the safer and greener province of East Kalimantan on Borneo Island. The government is planning to start moving agencies there as early as 2024, however, the central bank and core economic agencies will remain in Jakarta indefinitely.
High transitioning costs raising concerns . . .
While Jokowi has promised the new capital will be green, smart, and equipped with state-of-the-art information and communications technologies, critics of the project worry about its funding and the rising national debt. The land is owned by the government and much of the necessary infrastructure is already present, making East Kalimantan a strategic location to lower costs. Most of the expected costs will come from building additional infrastructure to accommodate the movement of about one million people from Jakarta. Cost estimates for the move, therefore, are as high as US$33B. The government expects to fund one-fifth of the budget and have the remainder covered through public-private partnerships, raising further concerns over potential corruption.
An opportunity for investment . . .
Such a large project has the potential to spur economic and middle-class growth in Indonesia by spreading wealth across the segmented nation. Investment in infrastructure projects from local companies and international actors is expected to kick start growth, while in the longer term there may be more efficiency savings from easing pressure on the overcrowded economic centre that is Jakarta. Meanwhile, Canada is looking to benefit from this growth. Just last week, the Canadian government launched its new education strategy with the main focus on diversifying sources of international students to Canada and specifically mentioned Indonesia. The Ontario Teachers’ Pension Plan, meanwhile, has also expressed interest in further investing in Indonesia.
- Nikkei Asian Review: Jokowi announces Indonesia's new capital in East Kalimantan
- The Jakarta Post: Jokowi announces East Kalimantan as site of new capital
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