New capital law takes effect February 18 . . .
Following approval from the House of Representatives last month, Indonesia’s new capital law will come into effect on February 18, 2022. The new law marks the beginning of the development of the new capital in Sepaku District, East Kalimantan Province, following plans initiated in 2019 to relocate the capital from Jakarta (pop. 10.56 million), which is overcrowded and sinking due to rising sea levels. The new capital, Nusantara, will be led by a ministerial-level position appointed directly by the president for a five-year term. The move to Nusantara will cost an estimated US$32.5 billion and is scheduled for completion in 2045.
Developing Nusantara as a green city . . .
Nusantara is envisioned as a ‘green city’ and will be built as a superhub to spur green growth. Three city clusters will be dedicated to clean technology industries, sustainable farming, and low-carbon energy. This plan is aligned with the government’s focus on ramping up green investment in renewable energy (e.g. biomass, geothermal, hydro, solar, and wind power) and sustainable forestry, both important to Indonesia’s ambition to achieve net-zero emissions by 2060. However, building a sustainable city from scratch while keeping the construction process ‘eco-friendly’ will not be easy. Cutting down forests to clear the land for the new capital and its industrial clusters, if not managed correctly, could turn this earth-friendly effort into an ecological disaster. Kalimantan’s Indigenous communities are also concerned that the city’s development could threaten their culture and livelihood due to land grabbing and speculation.
Addressing socio-ecological challenges, attracting green investment . . .
There are three ways the Indonesian government could address the socio-ecological challenges in developing Nusantara. The first is to undertake intensive stakeholder consultations and incorporate socio-ecological considerations into Nusantara’s development. The second is to strengthen the law enforcement mechanism with timely remote sensing data to fight illegal deforestation. The third is to ramp up reforestation efforts elsewhere in Kalimantan to offset the development’s impact. These strategies, combined with stimulus initiatives, such as easing the international licensing process and creating financial incentives for green investment, will attract foreigners to invest in the development of the new capital and the renewable energy and sustainable forestry sectors in Indonesia.