Indonesia Offers Investment Opportunity for New Capital City Development

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Indonesia's National Development Planning Board (Bappenas) is offering foreign partners an opportunity for cooperating with the Indonesian government to develop a new Indonesian capital city in Kalimantan. (more)

Bappenas is drafting a concept to develop the new capital city as part of the efforts to specify the model of cooperation with foreign partners, Bappenas Deputy for Development Funding Leonard Tampubolon stated in Jakarta on Friday.

"In fact, we are open, but we still have to look at the model of cooperation in detail. The concept is being drafted. Only after the concept is ready, we will see the requirement," he remarked in Jakarta on Friday.

President Joko Widodo (Jokowi) has reached a decision to relocate the capital city of Indonesia from Jakarta to East Kalimantan and to this end appointed Bappenas as coordinator to plan the concept of the new capital city.

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Indonesia is likely to choose the Beijing-based Asian Infrastructure Investment Bank over more established multilateral institutions to help fund construction of the south-east Asian country’s proposed $31bn new capital city. (more)

The AIIB could offer more flexible options for financing, such as funding public-private partnerships, compared with multilateral lenders including the Washington-headquartered World Bank or the Manila-based Asian Development Bank, said Kennedy Simanjuntak, Indonesia’s deputy minister for infrastructure affairs.

“If I need it, I will go first to the AIIB,” Mr Simanjuntak told the Financial Times. “If we utilise old-style multilaterals, we cannot achieve our target” of starting relocation to the new capital by 2024.

The project to move Indonesia’s capital from Jakarta on the heavily populated island of Java to East Kalimantan province on the island of Borneo is considered one of the most ambitious since independence for south-east Asia’s largest economy.

Joko Widodo, Indonesia’s president, has made the plan a priority in a bid to relieve overcrowding and congestion in Jakarta and to give an extra boost to an economy that is growing at about 5 per cent a year.

But support from the Beijing-backed AIIB could open Mr Widodo to attacks from the opposition, which in the past has labelled him as an apologist for Beijing.

Beijing is the biggest shareholder in the AIIB, which was launched three years ago. Its 100 members also include India, Russia, the UK and Australia.

“If the government is interested in engaging us, we’d be very happy to provide support,” Jin Liqun, president of the AIIB, told the FT.