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Jakarta Post

Govt asked to involve small contractors in building new capital city

  • Riza Roidila Mufti

    The Jakarta Post

Jakarta   /   Wed, October 23, 2019   /   11:29 am
Govt asked to involve small contractors in building new capital city North Penajam Paser regency (above) and the neighboring regency of Kutai Kartanegara in East Kalimantan will become the location of the new capital city. (JP/Gede Dharma)

The Indonesian Chamber of Commerce and Industry (Kadin) has asked the government to involve small and medium-scale contractors and local construction workers in the development of the new capital city in the regencies of North Penajam Paser and Kutai Kartanegara, East Kalimantan. 

Diding S. Anwar, the head of Kadin’s permanent committee on infrastructure financing, said that although most parts of the projects in the development of the capital city would be financed and conducted by large companies under public-private partnerships (PPP), small and medium enterprises should be prioritized in the construction work.

“Looking at the large financing requirement, questions have emerged about the fate and position of local, small and medium contractors in this new capital city development," Diding said at a seminar on infrastructure development in Jakarta on Oct. 15.

The state budget will only cover about 19.2 percent of the estimated total cost of Rp 485 trillion (US$34 billion) for the new capital city's development. More than half (54.6 percent) is to be covered through the PPP scheme and the remaining 26.2 percent is expected to come from the private sector.

Diding said many small-and-medium-scale construction companies had to close down because they could not compete with state-owned construction companies in the development of infrastructure projects. He expressed hope the government would find a solution that would involve small and medium construction in infrastructure projects, such as in the development of the new capital.  

According to data from East Kalimantan's Kadin Indonesia and Construction Service Development Agency (LPJK), there are around 6,000 contractors and 12,000 certified local construction workers in East Kalimantan who are ready to be employed for the new capital city development.

The government is currently finalizing a master plan for the new 180,000-hectare city, aiming to start development at the end of next year with the first stage of development covering 6,000 ha and the next stage 40,000 ha.

The new capital is to be a green, smart and compact city with an integrated transportation system that implements the latest IT applications to achieve sustainable development goals.