Will Indonesia's new capital finally get the go-ahead?

Not original, but certainly visionary, the plan for a new capital city to replace Jakarta is one of those ambitions that could make or break the legacy of Indonesia’s president, Joko Widodo, who secured a second term in the April 2019 elections.

The $33bn project officially became part of the government agenda in a cabinet meeting in late April, a few days after polling day. Mr Widodo, widely known by the abbreviated name Jokowi, gave the initial thumbs-up to a project that has been attempted several times in the past by different parties, all of which failed. Its final specifics are now under assessment and a definitive decision by the president is still pending – parliament will have to provide backing too – but some details have already emerged.

Sinking feeling

“The president decided he prefers the option of a new capital city outside Java,” says national development planning minister Bambang Brodjonegoro, who recalls the meeting where he presented three possible locations for the new city to the cabinet. The first entailed a new administrative district within Jakarta, the second a new site not far from Jakarta, and the third was a city outside the island of Java. “During the meeting we hadn't come up with the location just yet. We also presented a report about the estimated costs that will occur for the moving of the capital, which are in the order of $33bn, as well as the possibility of the financing resources,” adds Mr Brodjonegoro.

The list of reasons to move Indonesia’s capital away from Jakarta is lengthy. Home to 10 million people, over the decades the city has become overpopulated, dysfunctional and polluted, and is also considered the fastest sinking city in the world. The city has sunk by 2.5 metres in the past decade due to extreme land subsidence, and a study by the local Bandung Institute of Technology argues that 95% of north Jakarta may be submerged by 2050.

Besides, Jakarta’s foundation traces back to the Dutch colonial era, which envisioned the site as a major trading hub in north-west Java, a function the city has retained till modern days, but not necessarily as a site for capital practices. In fact, the same Dutch tried to move the capital in the early 20th century. After this, then-president Sukarno first flirted with the idea in the 1950s. Others followed, yet the scale of the project, combined with the opposition of established local interests from the business community and other sectors of the Indonesian elite, have so far prevented it from materialising.

Financing strategy

“Many people think this will absorb our annual budget, but we have learnt a lot about financing such developments. We have learnt that we can involve third parties – both from the private sector and our state-owned companies. There will be government budget for it, but mostly for basic infrastructure such as water, sewage, some connecting roads, and perhaps some public transport," says Mr Brodjonegoro.

"For other infrastructure, including social infrastructure, we have a public-private partnership scheme that has already been used for many infrastructure developments. And then the private sector will invest in their own property development and real estate,” Mr Brodjonegoro says.

Should the move go ahead, it’s “likely” that it will take another 10 years to come to fruition, according to Mr Brodjonegoro. Mr Widodo has the leadership to bring together major interests across Indonesian society to back the move. The urgency of Jakarta’s environmental situation may add some urgency to matters. But he will have to put his neck on the line to make it happen. This means the success or failure of the project may define how he will be remembered by history.