Indonesian President Joko Widodo, also known as Jokowi, has been promoting his ambitious plan for a new capital city called Nusantara. The project aims to replace Jakarta, the current overcrowded and sinking capital, with a green and smart city in East Kalimantan province on Borneo island. While the Indonesian government is willing to cover 20% of the project’s costs, it is seeking private investors to fund the rest. However, securing funding for the project has proven to be a challenge, with no formal deals signed yet. This article explores the difficulties faced by the Nusantara capital city project and the concerns of potential investors.
Lack of Investment Enthusiasm Raises Doubts About Completion
Despite offering incentives such as tax cuts and land rights for 95 years, the Indonesian government has struggled to attract guaranteed investments for the new capital city. Experts, including Sulfikar Amir from Nanyang Technological University in Singapore, warn that building a city “in the middle of nowhere” poses an “extraordinarily high” risk of failure. Investors are hesitant due to a lack of clarity on how the project will generate profits and concerns about the government’s commitment to sharing the financial burden. The withdrawal of major investor Softbank from the project has further raised doubts about its completion.
Australian Support for Nusantara Capital City
Australian Prime Minister Anthony Albanese has expressed support for Indonesia’s new capital city project. During a meeting with President Widodo, Albanese offered Australian “expert technicians” to assist in planning the “clean, green, and high-tech city.” In addition, scholarships for Indonesians to study sustainable urban planning and collaboration between government authorities were announced. Central Queensland University also plans to expand into the new capital once it is established. The increased support from Australia aims to strengthen the partnership between the two countries and contribute to the development of Nusantara.
Concerns About Project Continuity After President Widodo’s Term Ends
Investors have expressed concerns about the continuity of the Nusantara capital city project after President Widodo’s final term ends in 2024. While President Widodo has reassured investors that the project will continue under new leadership, critics argue that laws can easily change, making it uncertain whether the project will be completed. The Indonesian government remains optimistic about the project’s future, with the head of the New Capital Authority dismissing investor concerns and affirming that the capital city will continue under a new leader.
Australia’s Investment Priorities and Opportunities
While Australia has expressed support for Indonesia’s new capital city project, it is not a major investor in the country. Tim Harcourt, an industry professor and chief economist at the University of Technology Sydney, explains that Nusantara is strategically important for Indonesia but may not be financially attractive to other countries. Australia has traditionally focused on trade with Indonesia rather than investment. However, Jennifer Mathews, national president of the Australia Indonesia Business Council, believes that Australian businesses can offer valuable insights into sustainable urban design and planning for the Nusantara project.
The Nusantara capital city project faces significant funding challenges as it seeks private investors to finance its construction. Despite offering incentives, securing guaranteed investments has proven difficult, raising doubts about the project’s completion. The support from Australia, including technical assistance and collaboration, aims to strengthen the partnership between the two countries and contribute to the development of the new capital city. However, concerns remain about the continuity of the project after President Widodo’s term ends. The future of Nusantara depends on overcoming these challenges and attracting the necessary investments to turn it into a reality.
Source : GVS