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Jakarta Post

Softbank eyes $40b investment in new capital city: Luhut

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Fri, January 17, 2020   /   03:38 pm
Softbank eyes $40b investment in new capital city: Luhut SoftBank Group founder and CEO Masayoshi Son (center) walks with Grab CEO Anthony Tan (left) after attending a meeting with President Joko "Jokowi" Widodo on Jan. 10. (Kompas.com/Ihsanuddin)

The Japan-based Softbank Group has offered to invest from US$30 billion to $40 billion in the development of Indonesia's new capital city, according to a senior minister.

Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said on Friday that President Joko “Jokowi” Widodo had yet to make a decision regarding investments connected to the project.

“The President will decide on the matter in February,” Luhut told a press briefing in Jakarta. “We will meet again with [Softbank CEO and founder] Masayoshi Son in Davos and in Tokyo.”

Son met Jokowi in Jakarta last week and expressed an interest in participating in the project. He has been appointed to the steering committee overseeing the capital city’s construction together with Abu Dhabi Crown Prince Mohammed Bin Zayed and former United Kingdom prime minister Tony Blair.

"We won't discuss the specific number yet, but a new smart city, the newest technology, a clean city and a lot of AI [artificial intelligence] — that's what I'm interested in supporting," said Son when asked about how much he would invest in the new capital city after the meeting with Jokowi.

The billionaire is a major investor in well-known technology companies such as international marketplace Alibaba and coworking space WeWork, as well as ride-hailing app Grab. 

The United Arab Emirates and the United States had also expressed interest in funding a new capital city in North Penajem Paser and Kutai Kertanegara regencies in East Kalimantan, to diversify away from and ease the burden of the densely populated Jakarta and the broader Java Island.

The new capital city is expected to cost about Rp 466 trillion ($34 billion). In the initial plan, the government expected 54.4 percent of the Rp 466 trillion to come from private-public partnership schemes, while 26.4 percent would be financed by the private sector. The remaining 19.2 percent is expected to be covered by the state budget.

Luhut added that the government was planning to remodel the financing structure in a bid to accommodate foreign investors.

The new city is to host world-class educational institutions, botanical gardens, modern hospitals and an environmentally friendly transportation system, according to government officials.