TheJakartaPost
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Capital city relocation and government property management
The government has decided to relocate its capital city from Jakarta to East Kalimantan. The whole development is estimated to cost Rp 460 trillion (US$32.8 billion), of which about 20 percent is expected to be financed by the proceeds from asset optimization, particularly from property surplus in Jakarta.
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For sale: The Youth and Sports Ministry building on Jl. Gerbang Pemuda in Senayan, Central Jakarta, sits on state property under the auspices of the State Secretariat. The government is considering selling state assets to help fund the capital city’s relocation to East Kalimantan. (JP/Dhoni Setiawan)
T
he government has decided to relocate its capital city from Jakarta to East Kalimantan. The whole development is estimated to cost Rp 460 trillion (US$32.8 billion), of which about 20 percent is expected to be financed by the proceeds from asset optimization, particularly from property surplus in Jakarta. Currently, the unaudited total value of the central government’s fixed assets located in Jakarta is Rp 1.4 quadrillion.
Leading practices in public asset management adopt a centralized approach, particularly for general purposes assets, such as office buildings. The centralized approach entails the existence of an agency that owns and manages government assets.
Consequently, the agency acts as property caretaker or manager, provides or arranges workspaces and charges rent to other government agencies according to their occupancy.
Some developed countries, such as the United States and Australia, have adopted this approach. Meanwhile, the United Kingdom is attempting to transfer all government properties to a government property agency that was established in 2017.
The centralized approach heavily focuses on shared usage and benefits technology. It dissipates artificial boundaries among agencies and eases control of assets. The number of assigned workspaces declines and so does the operating cost.
According to Olga Kaganova (2018), optimized usage and a downsized portfolio would reduce associated costs by at least 10 to 15 percent. Additionally, surplus assets can be an alternative source of revenue. As evidence, the UK government earns $2 billion in revenue and 300 million pounds ($390 million) worth of yearly savings from sales of more than 1,000 properties.
In 2006, a specialized agency under the Finance Ministry, the Directorate General of State Assets (DGSAM), was established. It shows the government’s commitment to improving long-neglected public asset management.
