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Top official lays out way forward for planned new capital Nusantara
The head of the authority tasked with planning Indonesia's new capital offers insights into the culture of his organization as well as the challenges, opportunities and excitement surrounding the most ambitious project in the country.
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em>Ambitions for the country’s planned new capital extend far beyond the city's borders. The Nusantara Capital City (IKN) aims to be a model for Indonesia’s development and a blueprint for urban planners around the world on how to harmonize modern lifestyles with environmental sustainability. But none of that will come to fruition unless enough investors get involved.
Addressing their concerns is the prime responsibility of the IKN Authority, whose chief, Bambang Susantono, spoke to The Jakarta Post's Aditya Hadi and Mark Lempp on Tuesday about the chicken and egg conundrum and his task of being a visionary and a realist at the same time.
Below are excerpts from the interview, conducted at the authority's Jakarta offices, which have the flair of a young tech firm.
Question: Could you tell us about the idea behind this open-plan office area?
Answer: President Joko "Jokowi" Widodo mentioned the new capital of Nusantara as the place for new ways of working, living and learning. We tried our best to start it all.
Some of my friends said this organization was like a start-up. I said yes. We're a start-up for municipal government, a new organization that will be able to face the challenges of the future.
As a new body, how does the IKN Authority manage its budget?
Last year was a transition period, as we hadn't received any budget. That was still managed by the State Secretariat. However, this year, according to the law, we can start and run.
As a new organization, we could not manage a big budget. It has to be step by step. This year, we have a budget [to work on the] 4Cs: Coordination, Communication, Consolidation and Collaboration. It is not much, less than Rp 1 trillion.
However, those projects are still on the soft side, such as preparing new guidelines for green building as well as capacity-building and empowerment for local people so they can participate in the development process.
Meanwhile, construction projects are still handled by ministries, especially the Public Works and Housing Ministry, which is [handling] tenders and contracts for construction.
In 2024, the IKN Authority will be able to do everything by [itself], and we will start our own administration and development process. The President will also issue a presidential decree to move the capital city from Jakarta to Nusantara.
In a recent House of Representatives hearing, we heard that the IKN Authority lacked powers, such as on permits, budgeting, staffing. How do you solve that?
We are in the process of hiring deputies, which hopefully will be finished this month.
In parallel, we also have what I call a "capacity supplement". It's technical support and grants from various bilateral and multilateral agencies, such as the Asian Development Bank, the Islamic Development Bank and the Dutch government. […] Everybody has a lot of expectations, but we're still a baby. That's why we need help to run.
Some House members have questioned the IKN Authority's transparency. Are there any plans to address this?
For me, if people want to see everything that has happened on the ground, you can go there. Seeing is believing.
Since the beginning, I told everyone that we should have good transparency and accountability, which are part of the environment, social and governance (ESG) program.
It's an important thing, as it can help us when we want to raise funds through some bonds in the next five or ten years. A good ESG program can increase credibility and trust from investors. Otherwise, we will not have a good position for access to the global capital market.
So are you planning to issue municipal bonds?
We have a scenario for that. First, we need to build our reputation, as we are still a young organization. When we're five years old and our balance sheet is good, our audit results are good, people will see us as a credible organization. They will like our bonds.
Why is the IKN population only expected to reach 1.7 to 1.9 million by 2045?
The number comes from a study conducted by the National Development Agency (Bappenas) considering the city's environmental carrying capacity.
We don't want to have an overpopulated city. Our intention is to have a harmony between people, nature and culture.
What do you want changed in the upcoming IKN Law revision?
We need more certainty and clarity, for example in how we manage our own resources. If we're treated as a ministry [as is currently the case], we have to give the revenue to the Finance Ministry, who then will give it to us. However, if we're treated as local government, we can have local government revenue.
On top of that, we also want to have flexibility in hiring from the private sector. Nowadays, it is still a gray area, as we can only hire civil servants.
How do you decide who gets which plot for IKN projects?
In principle, we want to have the highest and the best use of the land, because this is government land. That's why there will be some competition in various shapes.
We will process all letters of interest that we receive. If they're serious, they usually ask for some data, which we will give to them with a nondisclosure agreement. Then, they may ask to visit the site before developing a feasibility study.
The procedure can vary for different projects. In some areas that were designed for social activity, for example, we can announce that we got a proposal from Company X and invite other parties who also have an interest in the same area.
What incentives or sweeteners could help attract more investors to the IKN?
We will have a new special government regulation on the incentives for IKN investors. It's in the final stage right now and will be released in the coming days. It can be in the shape of tax holidays, tax incentives or others.
I can say that the incentives will be really competitive compared to existing ones in Indonesia.
How can investors be sure that the next administration will continue the project?
There are two strengths of the IKN. The first is the IKN Law. To change the law, you need to go through [the House]. It's not easy to change that, as you need a political process to do that.
The second one is that investors will assume ownership of the city. They will defend the sustainability of the city, as they don't want their investment wasted.
In 2024, IKN Authority needs to have some showcase, perhaps a 12-hectare area with the palace, government offices as well as health, education and entertainment facilities.
The problem is, some investors may not want to come in if the population is not there. On the other hand, people may not come if the facilities haven't been built. It's a chicken and egg problem, right?
Smart investors will see that there are 17,000 construction workers that can be their market. Thus, they can start small and expand later on.
In 2024, there is a scenario to move in civil servants, as well as police and [military personnel]. There will be around 100,000 people there.
On top of that, you can also include the population of nearby cities like Balikpapan and Samarinda as your potential market.
We’re not building the IKN to be a boring city. We want to make it a livable and lovable city. In the next months, we will start to have events there, such as musical events and jungle trekking.
I hope there will not be a chicken and egg situation, because the egg is already there.
