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View all search resultsInvestors hold back as Nusantara plans scaled down
In a regulation signed in June, President Prabowo Subianto redefined the under-construction city of Nusantara as a “political capital”, marking a shift from former president Joko “Jokowi” Widodo’s vision of “global green city” built to international standards to symbolize the country’s transformation by 2045.
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An aerial photo taken on Aug. 15 shows civil servant apartments under construction in the Nusantara Capital City (IKN) project in North Penajam Paser, East Kalimantan. (AFP/-)
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rivate investors are reluctant to engage in the development of Nusantara, the future capital city under construction in East Kalimantan, balking at its sparse population and a string of policy pivots that have eroded confidence in the project’s long-term commercial prospects.
Under the original plan, private capital was expected to shoulder roughly 80 percent of Nusantara’s US$30 billion price tag through a mix of incentives and public-private partnerships.
But realized investment remains modest, with about Rp 65.3 trillion ($4 billion) in cooperation deals recorded as of September 2025 from 49 investors under 52 cooperation agreements, according to the Nusantara Capital City (IKN) Authority, the special governing body for the future capital.
Read also: Govt shrugs off Nusantara ‘ghost town’ concerns
“Population size determines whether building a shopping center is viable or not,” Alphonzus Widjaja, chairman of the Indonesian Shopping Center Association (APPBI), told The Jakarta Post on Thursday, adding that malls should follow demand, not precede it.
He stressed that retail development “must go hand in hand with population growth” as the main driver of commercial activity.
Budiharjo Iduansjah, chairman of the Indonesia Retail and Tenant Association (Hippindo), echoed that sentiment, saying retail players would only be ready to invest “once there was visible human traffic” or when offices, residents and tourist activities take shape.
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