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Indonesia, the fourth most populous country in the world, announced a stimulus package to build the country’s new capital, expected to replace Jakarta in 2024. Nusantara, the old Javanese term for “archipelago”, is to be built from scratch in the eastern region of the island of Borneo.
The new capital is President Joko Widodo’s main project. With an estimated cost of $32 billion, Nusantara will be about 1,000 square miles, almost twice the size of New York City, as announced this Wednesday (8).
The promise is that by 2045 it will be some kind of “sustainable forest city” and smart, according to government officials, with zero carbon emissions.
Only 20% of the construction costs in the capital are financed by the state. The rest need support from the private sector. This week, Widodo announced an investment package to make moving to Nusantara’s financial district more attractive.
The set includes a 1030 year tax exemption policy for companies investing at least 10 billion rupees (equivalent to just over R$3 million) in building the city, tax cuts for companies settling in their zone, financial support and land concession for 95 years, renewable for the same period.
Although no agreements have been signed yet, there have been over a hundred expressions of interest from domestic and foreign companies, including from Malaysia, China and the United States.
More than 7,000 workers are currently working on the construction of a new presidential palace in the future capital. According to Budi Kurniawan, deputy manager of the building’s construction project, only 8% progress was made on the site.
According to Vallin Tsarina, head of the city planning sector, the palace, a presidential office, a plaza and four ministerial buildings should be ready by August 2024, when Indonesia celebrates 79 years of independence.
Investors are concerned about the continuity of the billionaire project, however, given that current President Widodo’s second and final term ends in 2024.
The decision to relocate the capital to the heart of the Borneo jungle owes much to the fact that overcrowded and polluted Jakarta on the island of Java is quickly sinking. According to forecasts, by 2050 a third of the city could be under water. The capital with around 10 million inhabitants is still prone to severe earthquakes.
However, environmentalists are critical of the project. According to a report by Forest Watch Indonesia, a nongovernmental organization that monitors the country’s environmental problems, “productive forests” make up most of the area on which the new capital will be built, meaning licenses for extractive activities could be granted lead to more deforestation.
The region, home to orangutans, leopards and several other wildlife, is also inhabited by indigenous people of the Balik ethnic group. At least five villages with more than a hundred indigenous people will be relocated because of the construction, and there are expectations that more communities will lose their territory as the work expands.
With Portal and The Associated Press