Indonesia’s new capital city, Nusantara, recently hosted the country’s independence celebrations, marking a significant step in the nation’s plan to reinvent itself. Jakarta, the current capital, faces numerous challenges, including sinking due to its location on swampland and frequent flooding. To address these issues, Indonesia aims to build a new capital city that embodies sustainable and inclusive development, with smart city initiatives and cutting-edge technology.
Nusantara, inspired by the capitals of Brazil and Australia, is designed to be pedestrian and bike-friendly, setting it apart from other major cities in Indonesia. President Joko Widodo believes that relocating the capital will reduce regional inequality and promote a green economy. The new city will prioritize low-carbon transport and aims to achieve net-zero emissions by 2045, 15 years ahead of Indonesia’s target. Plans include the construction of a 50-megawatt solar power plant and the exploration of additional solar and wind power projects.
Despite progress in building the new capital, the official proclamation of Nusantara as the capital city awaits a presidential decree, which may be issued by Widodo’s successor, Defense Minister Prabowo Subianto. This leaves Indonesia in a unique situation, as it technically has no capital at the moment. Jakarta will continue to function as the de facto capital until Nusantara’s completion in 2045.
Widodo, with just a few months left in office, is determined to push ahead with the project, which he sees as his lasting legacy. However, funding remains a challenge, as the government is limited to paying for only 20% of the estimated $29.3 billion cost. Private sector investment, including foreign investment, is crucial to bridge this gap. So far, Indonesian companies have committed most of the private sector investment, leaving the need for more foreign investment to avoid diverting resources from other sectors of the economy.
To attract foreign investment, the Indonesian government offers generous tax concessions to companies investing in Nusantara. Investments of at least $650,700 will receive up to 100% exemption from corporate tax for a maximum of 30 years. Tax deductions are also available for companies establishing headquarters, regional offices, and financial centers in the new capital. These incentives aim to encourage foreign investment and stimulate economic growth in Nusantara.
Although the project has received support, concerns have been raised about its environmental impact. Forest Watch Indonesia (FWI) claims that large areas of forest and ancient mangroves, which are rich in biodiversity, have already been destroyed. There are also concerns about land acquisition and the lack of public participation in the decision-making process. The government has pledged to protect and replant forests within Nusantara and allocate green spaces to preserve the environment.
As the incoming president, Prabowo’s commitment to the Nusantara project remains uncertain. While he has promised policy continuation, his focus has been on initiatives such as providing free meals for children and boosting the defense sector. It remains to be seen how he will prioritize and advance Widodo’s vision for the new capital city.
In conclusion, Nusantara represents Indonesia’s ambitious plan to reinvent itself and address the challenges faced by Jakarta. The new capital city aims to be sustainable, inclusive, and technologically advanced. While progress has been made, challenges such as funding, environmental concerns, and political support remain. The success of Nusantara will depend on attracting foreign investment, protecting the environment, and ensuring continuity in leadership and policy.
