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Private sector won’t commit to Nusantara unless govt does: Business groups
Domestic firms want to see the state commit more funds to the future capital city before they themselves feel confident about investing, as they believe the megaproject’s development remains heavily dependent on fiscal support.
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A worker stands at a promenade during Indonesia's 79th Independence Day near the site of the future presidential palace in the planned new capital city of Nusantara, East Kalimantan, on Aug. 17, 2024. (Reuters/Willy Kurniawan)
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usinesses want to see the state allocate more funds to Nusantara’s development before they themselves feel confident about investing in the future capital city.
Indonesian Employers Association (Apindo) labor affairs chair Bob Azam told The Jakarta Post on Monday that the megaproject’s pace of development was still dictated by state spending and firms needed to be convinced of the government’s commitment before the project could move entirely into private-sector hands.
“I think [Nusantara] still needs big budget [allocations],” as the infrastructure installed so far was still “very, very basic”, said Bob, pointing out that only the future state palace had been erected, while premises for ministries and the House of Representatives were yet to see the light of day.
The state budget draft formulated by the outgoing government only earmarks an allocation of Rp 137 billion (US$8.9 million) for the Nusantara Capital City (IKN) Authority, the special governing body for the future capital.
At least some Rp 4 trillion is to be redirected from the Public Works and Housing Ministry next year, but the total of those two allocations still pales against this year’s allotment of about Rp 40 trillion.
Divided into several stages of development until 2045, the centenary of Indonesian independence, the future capital city requires an estimated Rp 466 trillion to build, only about 20 percent or Rp 93 trillion of which is to come from the state coffers, which leaves the lion’s share to the private sector.
Over the last three years, President Joko “Jokowi” Widodo’s government has spent around Rp 75 trillion on Nusantara, which means there is now only roughly Rp 18 trillion in possible public funding left if the government wants to stick with its initial plan for public and private investment.
