Jakarta – The government has appointed the country's property companies association Real Estate Indonesia, or REI, to participate in developing Indonesia's new capital city in East Kalimantan, aiming to smooth cooperation between the public and private sector in the $32-billion project.
An REI representative told the Globe on Sunday that the association has established a task force to discuss the government master plan for the new capital. The task force would identify parts of the projects that private developers can help carry out based on their feasibility, legal certainty, and sustainability.
"National Development Planning Minister Suharso Monoarfa has appointed REI to participate in supporting the development of the new capital," REI chairman Paulus Totok Lusida said in a statement on Saturday, after a breakfast meeting between the minister and REI's executive board members in Bali.
Totok also stated REI's readiness to be involved in a special authority body to handle the development of the new city that would replace Jakarta as the new capital. "We hope that REI representatives will sit as ex officio in that authority," Totok said.
REI said that the minister had assigned one of his special staff, Chairil Abdini, to liaise with the association. REI proposed Samuel Stephanus Huang, the association's treasurer, to be in charge of attracting local investors. Rusmin Lawin, REI's deputy chairman for foreign relations, would be responsible for recruiting potential foreign investors.
Since announcing the plan in 2019, President Joko "Jokowi" Widodo has envisioned the new capital as a project that would pull foreign funds to Indonesia. The government realized from the start that the state budget only enough to finance less than a fifth of the cost needed to build the new capital.
REI's Rusmin Lawin said the Covid-19 pandemic might further undermine the government's ability to fund the project.
"What I see here is that everybody is waiting for the others to make a move first. The government waits for the private sector, and the private sector waits for the government," Rusmin told the Globe on Sunday.
"And based on my interaction with foreign investors, they would be reluctant to put their money down if there is nothing concrete on the ground," he said.
Rusmin believed that REI's task force would identify a part of the project that the association members could carry out soon to showcase that Indonesia's new capital project is feasible for foreign investors.
"For foreign investment, we will utilize some networks. One of them is through the International Real Estate Federation (FIABCI), where REI has been an active member," Rusmin, who also serves in the federation's board of directors representing the Asia Pacific region, said.