The efforts saw Jokowi’s Nusantara vision discussed “at length”, Lee said, and culminated in 20 letters of intent from Singapore’s private sector to invest in the project. Observers, however, cautioned that those expressions of interest offered no guarantee of concrete action.

President Jokowi has approached a number of Indonesia’s diplomatic partners in recent years to seek investment in the capital city project, which is expected to cost some Rp 466 trillion (US$32.6 billion). The project was designed to be funded primarily by public-private partnerships and private investments, with state coffers covering only 19 percent of the costs.

Following the withdrawal of SoftBank Group last year, the government has been scrambling to fill the US$30 billion hole left by the Japanese conglomerate’s departure, appealing to countries like China, Finland, Germany, the Netherlands, Singapore, the United Arab Emirates (UAE) and the United Kingdom for funding.

Yet a year later, no private deals have been signed despite more than 100 letters of intent having been signed by companies hailing from Malaysia, China and the United States.

A similar pattern was observed in Jokowi’s latest visit to Singapore, with Lee seemingly hesitant to pledge any financial support for Jokowi’s project.

“President Jokowi and I discussed [...] his vision for a ‘green’ and ‘smart’ Nusantara. It is a major priority for the President and for Indonesia. Singapore is happy to support the President’s vision. We will contribute toward knowledge-sharing and joint R&D activities,” Lee said in a joint press statement after their bilateral meeting.

The fresh pledges were nonetheless welcomed by Jokowi.

“I heartily welcome [...] the significant interest of Singaporean investors in the development of [the new capital],” Jokowi said in the joint statement as broadcast on YouTube.

Some memorandums of understanding (MoUs) were also signed, including one on collaboration on knowledge sharing, capacity building and research “to support the planning and development of Nusantara”. A forum to discuss the collaboration has been planned for May, Lee said, adding that he would “encourage” Singaporean businesses to participate in the event.

“We signed the MoU on sustainable urban and housing development, which will facilitate cooperation in developing innovative financing for smart and sustainable infrastructure development and, significantly, will include the Nusantara capital city as a pilot,” Lee announced.

Few bites

Noting that the capital city project had yet to see any definitive commitments from foreign investors, a number of analysts expressed skepticism that Jokowi’s goal of making Nusantara the country’s capital in the first half of 2024 would succeed.

Earlier this year, the Nusantara Capital City (IKN) Authority claimed it was surprised by the huge interest in the project, adding that the 921 hectares of land made available for initial investment had been “oversubscribed by 44 times”. Yet businesses have said that they are unlikely to invest any money until a new government has been formed after the 2024 election.

Last week, to attract a much-needed investment boost, Jakarta issued a regulation “with the maximum possible incentives”, granting investors years of corporate income tax exemptions, decade-long permits for bringing in foreign workers and land rights nearly a century long.

Economic experts have suggested that such generous stipulations are an indication that the government is struggling to overcome a lack of interest in the project.

Last year, Investment Minister Bahlil Lahadalia also lobbied Singapore to invest in Nusantara, without any concrete results.

Singapore has been Indonesia’s largest source of foreign direct investments (FDI) for years, with a total investment of $3.1 billion in the second quarter of 2022.

Tying up loose ends

Besides the new capital, the two leaders discussed bilateral economic, sociocultural and security cooperation, as well as MOUs on energy, sustainability, health and human capital development.

Agreements reached during Jokowi’s one-day visit included the Tech:X Program, a work exchange arrangement for young tech professionals, and the Renewable Energy Cooperation initiative.

The two sides also followed up on the Expanded Framework Agreements signed last year, which include an agreement to realign two Flight Information Regions (FIRs), the defense cooperation agreement (DCA) and the extradition of fugitives treaty (ET).

The FIR agreement allows Indonesia to delegate operational control of its air navigation services to Singapore for the next 25 years in airspace within the realigned Jakarta FIR. It also saw control of the airspace above Riau and the Natuna Islands restored to Indonesia after decades under Singapore’s management.

In September, the Transportation Ministry said the airspace of the aforementioned areas was still under Singapore’s control until the International Civil Aviation Organization (ICAO) endorsed the new FIR boundary.

On this front, Lee said Indonesia and Singapore had “jointly applied” for the ICAO’s approval last week, which would be followed up by a date for the three agreements to be implemented simultaneously.

Jokowi left Singapore for South Kalimantan shortly after the leaders’ retreat.

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