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Private sector, taxpayers to pay bill for new capital
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Financing for new capital city development (JP/Swi)
T
he government is banking on state budget funds and private sector investments to finance its capital city relocation plan, which is expected to cost Rp 466 trillion (US$32.73 billion).
Most of the financing is expected to come from the private sector through public-private partnership (PPP) schemes, said National Planning Agency (Bappenas) head Bambang Brodjonegoro.
“The government will open a tender process for the private sector to join, which could be purely private companies, or state-owned enterprises [SOEs] or a consortium,” Bambang told a group of media leaders in Jakarta on Thursday.
The PPP schemes will be open to both local and foreign companies, Bambang said, but “we will implement affirmative action to prioritize local and state-owned companies”.
President Joko “Jokowi” Widodo announced earlier this week the plan to relocate Indonesia’s capital to North Penajam Paser and Kutai Kartanegara regencies in East Kalimantan to support efforts to ensure economic development is evenly spread across the country after being centered in Java for decades.
It is expected 54.4 percent of the Rp 466 trillion required to carry out the plan will come from PPP schemes and will be used to fund the construction of government offices, courts, schools, hospitals, correctional facilities and other related infrastructure.
Over a quarter, or 26.4 percent, will be financed by the private sector to build public housing, universities, shopping malls and improve existing infrastructure like airports and toll roads.
