The new capital city project has received 90 letters of intent from domestic and foreign institutions seeking to inject funds into the project, according to presentation material shown by IKN Authority head Bambang Susantono during the Mandiri Investment Forum on Feb. 2.

This figure was 17 letters more than Bambang had mentioned two weeks earlier at the World Economic Forum (WEF) in Davos.

A letter of intent is a written statement of an entity’s intention to enter into a formal agreement, but the document is non-binding, meaning institutions submitting a letter may still back out from the commitment.

"We have received many letters of interest. Up until last week, the number reached 142 and around 90 of those we have categorized as serious [to enter the project]," Bambang told lawmakers during a meeting with House of Representatives Commission XI, which oversees finance and the state budget, on Monday.

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Documents presented by the new capital chief showed that the infrastructure-utility and consulting industries had the highest increase in preliminary agreements since the pitch in Switzerland mid-January, both saw an increase of seven and eight letters, respectively.

Although infrastructure and utility firms made up the highest number seeking opportunities in Nusantara with a total of 25 letters of intent, consulting services were now in the third position with 14 of the kind.

Education and housing saw no change at 15 and 10 letters, respectively, from the mid-January figure announced by the IKN authority.  

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“The landscape is indeed challenging, which requires a lot of studying,” Institute for Development of Economics and Finance (INDEF) macroeconomic and finance head Muhammad Rizal Taufikurahman told The Jakarta Post.

A spike in utilities and consulting services could be attributed to the heavy resources needed by the government to “remodel” the area, from plantation land into a full-fledged city ecosystem in a short span of time, Rizal said.

Huge interest from construction firms does not necessarily translate into long-term capital injection, however, as when the project ends, these firms may only need to maintain a minimum presence, if none at all, in the new capital city, he added.

On the other hand, a possible lack of planning by the government might compel the IKN Authority to utilize consulting firms in assisting the city development, particularly as government officials are set to live there next year, he said.

“[Governance] in the first zone will certainly need supporting sectors, particularly in issues related to zone planning and land use,” Rizal said on Tuesday.

Tenggara Strategics, a think-tank group affiliated with the Post, wrote in its report that there may be more investors interested to take part in the project, but most of them chose to wait and see whether the new administration after 2024 would continue the capital city project.

Yusuf Wibisono, director at Indonesia Development and Islamic Studies (Ideas) said on Wednesday, actual interest from investors would only be observable after the government completed the core area of the new capital, which consists state buildings and housing complex.

Therefore, he expects investors’ role in the early stage of the new capital will be somewhat limited.

The government has committed to transferring 11,274 civil servants and 5,176 security apparatus to the new capital city next year, which spans 35 institutions, according to an Administrative and Bureaucratic Reform Ministry document seen by the Post.

Relocating the capital from Java Island to Kalimantan is one of the most ambitious projects that President Joko “Jokowi” Widodo has embarked on as a part of his “Indonesia-centric” development program.

To beef up the funding needs for the IKN project, the government will disburse Rp 9.4 trillion (US$624.1 million) this year to build 47 apartment blocks, with construction to start after the first half of this year and is targeted to be operational next year, Public Works and Housing Minister Basuki Hadimuljono said on Jan. 31 after a meeting at the state palace.

President Jokowi announced that Independence Day celebrations next year would take place in the new capital city, instead of the usual ceremony at the Presidential Palace in Jakarta.

The IKN Authority has disclosed its public-private partnership pinnacle for the 2024 target, which is the planned construction of 184 apartment towers for an estimated 17,000 civil servants and security services. 

China Construction First Group (CCFG) and Risjadson Brunsfield Nusantara are part of a construction consortium that is anticipated to invest around Rp 30.8 trillion.

Korea Land and Housing Corporation will follow with Rp 8.65 trillion and the publicly traded real-estate company PT Summarecon Agung will invest Rp 1.65 trillion.

The Public Works and Housing Ministry has given the three investors permission to move forward, with occupancy expected to start by the end of 2024.