Indonesia to Resume New Capital Project after COVID-19 Delay

The building of a new national capital on Borneo Island to replace Jakarta will move ahead with construction of a presidential palace beginning this year, the Indonesian leader’s spokesman announced Friday, after the coronavirus outbreak in 2020 stalled the ambitious project. 

The palace will be the first project to go up in Penajam Paser Utara, a regency in East Kalimantan province selected as the site for the future capital, said Fadjroel Rachman, spokesman for President Joko “Jokowi” Widodo.

“The minister of the National Development Planning Agency said during a meeting with the president that the construction of the presidential palace will start this year,” Fadjroel told an online news conference.

He said government officials were completing a set of regulations for construction, including a legislative bill for the new capital that is set to be passed this year.

In August 2019, Jokowi announced that the country would move its capital from traffic-choked and crowded Jakarta, on Java Island, to East Kalimantan, a densely forested and thinly populated province in Indonesian Borneo. The estimated cost to establish a new capital from the ground up was estimated at up to 466 trillion rupiah (U.S. $32.5 billion).

Last May, Suharso Monoarfa, the minister National Development Planning, announced that the project was postponed because the government had diverted resources to fight the COVID-19 pandemic.

In February 2021, Suharso said construction of the new capital, which Jokowi has touted to be a smart and green city, could attract investment and create up to 1.3 million jobs in the area.

“But, of course, this can only be achieved if we can control the pandemic,” he told reporters.

He said under the current COVID-19 vaccination program, government officials were optimistic that herd immunity could be achieved by September.

A deputy for regional development at the National Development Planning Agency (Bappenas), Rudy Soeprihadi Prawiradinata, said private companies would be invited to invest in the new capital.

Bappenas has said that traffic congestion, frequent floods and land subsidence caused by uncontrolled ground water extraction in Jakarta were the main considerations for the move.

About 40 percent of the current capital – which is home to about 30 million people – is below sea level and by 2050, the entire North Jakarta area will be submerged, according to experts.

In addition, economic losses caused by the city’s traffic jams are estimated at 100 trillion rupiah ($7 billion) annually, Bappenas said.

Under the plan, a public-private partnership scheme would account for 54.6 percent of the funding to construct the new city, while a second private scheme would contribute 26.2 percent and the state budget would cover the remaining cost.

‘Forget about things that are not important’

Bhima Yudhistira Adhinegara, an economist at the Institute for Development of Economic and Finance (INDEF), cast doubt on the government’s plans to attract private investment for the new capital.

“They are building government facilities, not commercial ones. How will this attract investment? This isn’t making sense. Investors are looking for safe investment with high returns,” Bhima told BenarNews.

China, Japan and the United States have offered to help build the new capital, the Public Works Ministry said last year.

China sought a role in designing urban landscapes and water management, while the U.S. wanted to help build infrastructure such as roads and bridges, the ministry said. Japan has expressed interest in building the future city’s transportation and energy system.

Under the initial plan, Jokowi had hoped the government relocation to the new city could start in 2024.

Going ahead with the project at this time shows the government has no strong commitment to battling the viral outbreak, Bhima said.

“All countries are now focusing on dealing with the pandemic, especially at a time when there is a new virus variant. Many countries are talking about allocating funding for research on vaccinations. But the government is having something else to focus on,” he said.

Bhima said the government’s priorities were apparent in the 2021 state budget, which allocates more funding for infrastructure, at 414 trillion rupiah ($28.9 billion), compared with 254 trillion rupiah ($17.7 billion) for the health sector.

Mardani Ali Sera, a lawmaker from the opposition the Prosperous Justice Party (PKS), urged the government to focus on tackling the pandemic.

“Forget about things that are not important for the next five years,” Mardani said.

“COVID-19 has made us realize that physical buildings are not a profitable investment. People have grown accustomed to doing things online,” he told BenarNews. “Human development is more important. Having a grand national capital means nothing if the people are vulnerable.”

Indonesia has recorded nearly 1.4 million COVID-19 cases and more than 37,000 deaths from the pandemic, according to the Health Ministry, the worst such figures recorded among all countries in Southeast Asia.