Indonesia today revealed the site for its new US$33-billion capital on the island of Borneo to replace the crowded, polluted megacity of Jakarta, which is slowly sinking into the sea. President Joko Widodo told a news conference in Jakarta, the new capital will straddle the regions of North Penajam Paser and Kutai Kartanegara in Indonesia’s province of East Kalimantan on Borneo. President Widodo said that planning must start immediately if relocation is to begin in 2024. The site of the new capital, 2,000 km northeast of Jakarta, is one of the regions least prone to the natural disasters that regularly hit the archipelago of 17,000 islands. There are also economic and political reasons for moving the capital from Java, which Widodo said was home to 54% of Indonesia’s 260 million people and generated 58% of its gross domestic product. Officials said they want the new capital to be “a smart city in the forest” and have set aside 180,000 hectares of government land. President Widodo said moving the administrative center would cost just under US$33 billion, of which the state would fund 19 per cent, with the rest coming from public-private partnerships and private investment. The price tag includes new government offices and homes for about 1.5 million civil servants.
News of the move was welcomed by the developers’ association in the province, which said it expected a bump in investment. But national business groups were more cautious. “Investors will need to see what the return on their investment would be,” Hariyadi Sukamdani, chairman of the Indonesian Employers Association, told Reuters. Indonesian Chamber of Commerce deputy chair Shinta Kamdani hailed the new capital as a “positive” for Indonesia, but urged that companies be informed of the timeline for the move of each government office to limit disruptions.