(MENAFN- Asia Times) JAKARTA – Whether it is the crowning achievement of his already impressive legacy, or he genuinely believes it will re-balance economic development away from dominant Java, President Joko Widodo is clearly determined to do all he can to move the Indonesian capital to East Kalimantan.
In the end, however, it will depend on his successor, who will be determined at next year's elections. Will he or she take up the cause with the same fervor, or will they consign the futuristic forested city known as Nusantara to a lingering coma, unconvinced the US$33 billion price tag is worth the benefits?
By way of an answer, Bambang Susantono, chairman of the Nusantara Capital City Authority (IKN), points to the Capital City Law, passed by 95% of Parliament in January last year, which essentially compels the next president to keep the dream alive.
That, he told a US-Indonesia Society webinar this week, provides the legal basis for the move.“To us, it is the certainty and priority of the law,” he said in discussing concerns over the continuity of the project beyond 2024.
While a slowdown is a distinct possibility as the new president ponders his priorities, Susantono feels a reversal is not on the cards:“If you want to change the law you must go through a political process that I believe is not easy. Almost impossible maybe.”
New capitals aren't built in a day. Australia's Canberra was founded in 1913, but it took another 14 years before the Commonwealth Parliament was established in what was then derisively called“several suburbs in search of a city.”
In fact, slowed by the Great Depression and World War II, it was four decades before bucolic Canberra became a properly functioning seat of government. In Nusantara's case, the pace of progress is likely to be determined by the level of private-sector funding.
Unlike Canberra and the other tailor-made capitals around the world, such as Naypyidaw (Myanmar), Brasilia (Brazil), Nur-Sultan (Kazakhstan) and Abuja (Nigeria), Indonesia's new capital is the first to be moved from one island to another.
Computer-generated imagery of Indonesia's future presidential palace in East Kalimantan, as part of the country's relocation of its capital from slowly sinking Jakarta to a site 2,000 kilometers away on jungle-clad Borneo island that will be named Nusantara. Photo: AFP / Nyoman Nuatra
It may also be the first to rely on foreign and private capital and not on the state budget, a source of controversy given the uncertainties over the ambitious project's future.
Although Susantono says IKN has received 167 letters of intent, half from domestic interests and half from companies in 16 countries, the looming change of government will deter any actual deals until the project's future becomes clearer.
Continuing the new capital plan could well be the price of Widodo's endorsement, expected to be a telling factor in the February 14, 2024, presidential race where popular Central Java Governor Ganjar Pranowo is now the front-runner.
Widely believed to be Widodo's favored candidate, Pranowo has already thrown his support behind the move, stating last December that if it is not pursued“we will simply be breaking the law.”
Of the other leading candidates, former Jakarta governor Anies Baswedan, who has had his tiffs with Widodo, uses the same legal argument. Defense Minister Prabowo Subianto, who is also expected to run for the presidency in 2024, has urged Widodo to continue the project but with a touchless enthusiasm.
Public opinion is mixed, with one survey showing 48.5% of respondents in favor and 44% against, including – perhaps surprisingly – the majority of Jakartans who suffer through the pollution, flooding and traffic congestion that is often cited to justify the move.
Politicians and bureaucrats hate the prospect, particularly their wives whose social lives will be disrupted. Countries like the United States and Australia won't be happy either after together lavishing up to $1 billion on new embassies in recent years.
But Widodo's determination to make it work was shown once again in the way it was discussed“at length” – and not for the first time – when he met with a cautious Singapore Prime Minister Lee Hsien Loong at their annual retreat last week.
While the meeting may have resulted in 24 LOIs from Singapore investors and a memorandum of understanding on sustainable development and urban housing, there are no guarantees at this point anyone will stump up the money.
As originally conceived, the new capital venture was to have been funded by mainly public-private partnerships and private investors, with the government picking up only 19% of the overall cost.
But when Japanese conglomerate Softbank Group withdrew from the project last March, citing return-on-investment issues, the Widodo administration was left trying to fill a huge funding hole.
Officials claimed Softbank had offered to invest between $30-40 billion, but the company itself never publicly mentioned a figure, only that it was interested in supporting the concept of a new smart, green city.
Officials have pitched the vision of a metropolis three times the size of New York City and four times bigger than Jakarta, focused on forested parks, clean and renewable energy, electric public transport and carbon neutrality by 2045.
About 65% of the new city will be transformed from production forest, as it mostly is now, back into tropical forest. A baseline biodiversity study is underway, as are plans to create an island sanctuary for 80 aging orangutans, some from European zoos.
Puzzling for many financiers, however, is why there is such a reliance on foreign capital and how international developers can see the megaproject as a viable investment when it lacks the potential to generate cash flows.
Indonesia has already approached China, Finland, the US, Germany, Netherlands, Britain and the United Arab Emirates without sealing any deals that offer Widodo hope his flagship venture is on the cusp of being realized.
Despite the IKN saying it was surprised at the interest being shown in the project, Widodo recently had to issue a regulation granting potential investors years of corporate tax exemptions, decade-long work permits and 95-year-long land rights as incentives.
Delayed by the Covid-19 pandemic, construction only began in the middle of last year, 20 months out from the next year's presidential and legislative elections – and only 29 months away from inauguration day on October 20.
Workers have completed about 15% of the infrastructure, most of it inside 1,000 hectares of the 6,700-ha core of the new capital which Susantono says will already have the“ambiance and soul of a liveable city.”
“We would like to create some confidence, both at the international level and in the private sector that we really mean business,” he said.“That's why we are using the state budget for now, to show this is really happening.”
Short of alternative funding, it is also to get the project over the start line, with the labor force ramping up from the existing 1,500 to a peak of 15,000 by the end of 2024.
Initial construction includes the new presidential palace, which is expected to be opened on August 17, 2024, Indonesia's 79th Independence Day, along with offices housing the State Secretariat and the home affairs, defense and foreign ministries.
With Widodo still overseeing progress, 17,000 government employees are scheduled to shift next year to Nusantara, including 12,000 civil servants and 5,000 military and police. Another 60,000 bureaucrats will move in stages after 2025.
Interestingly, Parliament does not appear to be a priority. In Malaysia, it remains in Kuala Lumpur, still the national capital despite the construction of nearby Putrajaya as the country's administrative and judicial center in the 1990s.
For all the media talk of a sinking, traffic-choked Jakarta as the main reason for the move, it clearly goes far beyond that, founded on what Widodo believes is an imbalance in national development and growing social inequality.
About 56% of Indonesia's 274 million population is concentrated on Java, which translates into 60% of the country's GDP. Jakarta contributes to a fifth of that, while Kalimantan's five resource-rich provinces add only 10%.
Indonesian President Joko Widodo (left) points to where the presidential palace will be in his new capital Nusantara. Photo: Handout
Widodo is selling Nusantara as part of his Indonesia 2045 Vision, whose objectives are human resource and technological advancement, sustainable economic development, social equality and the enhancement of national resilience.
There may also be a political imperative. While Widodo first proposed the idea in 2015, a year after taking power, it gained momentum during Jakarta's fraught 2017 gubernatorial election and became a fait accompli after the 2019 presidential race.
Both events, particularly the mass protests that brought down his ally, Chinese-Christian governor Basuki“Ahok” Purnama, showed how much Islamists have a grip on West Java, the province surrounding the capital.
Its central business district newly gentrified, Jakarta will remain Indonesia's financial and commercial center a two-hour flight away, while the complete relocation of the central government's 35 ministries won't be completed until at least 2035.
That will be followed by the development of an ecosystem merging Nusantara with the twin cities of Balikpapan and Samarinda, which are already connected by a 100-kilometer expressway, another of Widodo's nationwide infrastructure projects that will become part of his enduring legacy.
Nusantara, however, would put the icing on the cake and mark the one-time furniture maker as the president who achieved a historic landmark that past advocates Sukarno and Suharto could not.
A former deputy transportation minister and widely recognized expert in urban and infrastructure planning, Susantono feels it will go further than that, providing a unique opportunity for Indonesia to showcase what he calls the“city of tomorrow.”