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Investors seek high return from govt-private apartment project in IKN
The cost of the public-private partnership (PPP) apartment projects could be two to three times higher than the total investment value.
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Work continues on the core government area (KIPP) of the new future capital city Nusantara on March 8, 2023, in Sepaku, East Kalimantan. (Reuters/Willy Kurniawan)
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nvestors had been asking for high returns from apartment projects in Nusantara built through public-private partnership (PPP) schemes, the government said, saying this had hampered the development of vertical housing for civil servants in the future new capital city.
The Public Works and Housing Minister Basuki Hadimuljono said on Thursday that the ministry was reviewing the figures asked for by investors, while mulling other financing alternatives. The ministry is also discussing this with the Finance Ministry.
“The apartments for civil servants [in Nusantara] are expensive. The costs to fund [the PPP] can be two to three times higher than the total investment value,” said Basuki, who is also the acting Nusantara Capital City (IKN) Authority head, as quoted from Antara.
Basuki gave an example of a Callender Hammilton bridge, which utilizes a modular portable construction method. While building such a bridge in the country should cost around Rp 700 billion (US$42.44 million), a PPP scheme would require the government to repay the business entity building it Rp 1.5 trillion within 15 years.
“So, we are still calculating it carefully. It is better to take a loan because the interest rate is still [relatively] lower. Maybe it's around 1 percent,” he said.
Read also: Govt halves target for moving civil servants to Nusantara this year
The relocation of civil servants from Jakarta to the country’s future capital Nusantara is to proceed at a slower pace than initially planned, as the government has nearly halved its target for 2024.
