Written by Lotte Troost – AIYA National Blog Editor
Indonesian translation by Thomas Shears – AIYA National Translation Team
The relocation of Indonesia’s capital has long been a topic of discussion among Indonesia’s leaders; plans for the move have, in fact, dated back to the 1950s when President Sukarno desired to relocate the capital to Palangka Raya, Central Kalimantan. However, in 2017, the Jokowi administration took the idea further than its predecessors by publicly announcing plans to relocate the capital out of Java. A 10-year plan to migrate all government offices to a new capital city on the island of Kalimantan was revealed two years later, in 2019. Then the pandemic hit and put the implementation of the plan on hold.
Fast forward three years later, Jokowi has taken another significant step towards realising the multibillion-dollar project. In January 2022, Indonesia’s Lower House passed the Capital City Bill into law, which provides a legal framework for constructing the country’s new capital Nusantara.
It only took 42 days until the bill was passed; a new record for the Indonesian parliament. After all, the government is on an ambitious and tight timeline of two years; the first public servants need to be relocated by the first quarter of 2024, while construction has only just begun.
The reality of the capital’s upcoming relocation surely generates plenty of questions. Let’s have a closer look at four of them.
A design illustration of how the state palace in Nusantara will look like. © Nyoman Nuarta/AFP/Getty Images
What’s in a name; why is the new capital named Nusantara?
Along with the enactment of the Capital City Bill, the government announced the long-awaited name for the new capital. After reviewing some 80 names proposed by among others historians and sociologists, the government chose the name Nusantara over other names such as Negara Jaya, Nusantara Jaya, and Pertiwipura.
Nusantara is an old Javanese word consisting of ‘nusa’ (islands) and ‘antara’ (outer). The term has been ever used since the rule of the Singhasari kingdom in East Java, although in a somewhat different form of Dwipantara, but also meaning ‘outer islands’. By that time, the term was more to refer to a military conquest effort, to unite the Southeast Asian kingdoms under Singhasari. Later in the 20th century, the term reappeared and was proposed by anti-colonial fighters to describe all Indonesian regions from Sabang to Merauke, as an alternative for the name Dutch East Indies.
According to Minister for National Development Planning, Suharso Monoarfa, Nusantara was chosen as the new capital name in an effort to reflect Indonesia’s national motto of Bhinneka Tunggal Ika (Unity in Diversity), as a nation of many islands and different ethnic groups united by the sea.
The term Nusantara is also part of Indonesia’s standpoint on its geopolitics. Wawasan Nusantara, or the archipelagic concept, is a way for Indonesia to look at itself; despite ethnic and cultural diversity across thousands of islands, the ocean between the islands should unite the archipelago.
Who will finance this multibillion-dollar project?
Relocating the capital city is not uncommon, as shown by examples from, amongst others, Pakistan, Myanmar, Brazil, and Australia. However, the major difference with the Indonesian case is that its capital will be relocated to another island. This is also one of the primary reasons why the relocation requires such an enormous budget.
The new capital will be located between North Penajam Paser and Kutai Kartanegara regions in East Kalimantan. Indonesia’s new administrative center will be built over more than 200,000 hectares of inland forest, approximately three times the size of New York City. A financial burden for the state yet an opportunity for investors from a wide range of industries.
President Jokowi and Governor of East Kalimantan Isran Noor standing on the area that should soon become Indonesia’s new capital. (Twitter/@jokowi)
The Indonesian government has announced that it will finance around 20% of the total Rp 466.9 trillion ($32.7 billion) that is required for the relocation, using its State Budget (APBN). According to Minister of Finance, Sri Mulyani Indrawati, the first expenditures will be on basic infrastructure such as a dam, the water system and roads near the central government area.
The remaining 80% of the costs will need to come from the public-private partnerships and private sector. In an attempt to boost the trust of investors, Jokowi has established a sovereign wealth fund and a steering committee of renowned figures to oversee the funding and construction operations.
Former British Prime Minister Tony Blair, SoftBank CEO Masayoshi Son, and Abu Dhabi’s crown prince Sheikh Muhammad bin Zayed Al Nahyan are among the steering committee members. According to Indonesia’s Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, the Abu Dhabi crown prince during a virtual meeting early February, expressed support for the funding of the capital’s construction with several billion dollars.
What will the project’s timeline be?
Construction projects have been scheduled to start in 2020, whereas relocation is planned to start in the first quarter of 2024, just before the new president and parliament take office. Core components of the government, such as the supreme court, the office of the presidency, the parliament, state defence together with strategic ministries (Foreign Affairs, Defence, Home Affairs), will be relocated in the first stage in 2024.
The remaining administrative organs will relocate gradually until 2027, with an estimated additional 25.000 public servants relocating per year. The whole relocation process should be completed by 2045.
According to Indonesia’s Ministry of National Development Planning, Nusantara’s population will increase from 100,000 to 700,000 by 2025 and 1.5 million in 2035.
What will Jakarta’s future role be like?
While Nusantara will serve as the administrative capital, Jakarta will continue to serve as Indonesia’s economic capital as well as a cultural and urban hub. Just like Rio de Janeiro and Rangoon kept having those functions when Brasila and Nyapyidaw were inaugurated as capital cities. But for now, Jakarta will remain Ibu Kota Negara, or the State Capital, until President Jokowi officially issues a Presidential Decree (Keppres).
The majority of the some 20 million Jakartans will thus likely just stay where they are. In that sense, Jakarta may remain plagued with the problems that have actually been one of the main reasons why the government prompted to relocate the capital, such as traffic congestion, bad air quality and routine flooding. On the other hand, once Jakarta will no longer serve as the administrative capital, the city may undergo less extractive development projects that exacerbate the city’s vulnerability for flooding.
Asides from costs for the capital’s relocation project, the government intends to invest billions of dollars on Jakarta’s urban regeneration, including infrastructure, public transportation, and improving waste management systems.
With Jakarta remaining the economic capital, buildings in Jakarta that are now used for governmental purposes, as well as other state assets such as the famous sports complex Gelora Bung Karno (GBK), are likely to be leased to avoid abandoned ‘ghost’ buildings. At the same time, leasing those buildings will generate funds for construction projects for Nusantara.