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Senior economist claims investors hesitant to enter IKN with 2 million residents limitation

Tempo - March 6, 2024

Riri Rahayu and Yohanes Maharso (Antara), Jakarta – Senior economist from Universitas Indonesia Faisal Basri said investors are hesitant to invest in the Nusantara Capital City or IKN if the residents are limited to two million.

"Investors calculated their internal rate of return (IRR) or the indicators of efficiency levels of an investment," said Faisal at Tempo Building on Monday.

Based on that calculation, Faisal explained, 1.9 to 2 million people won't attract many investors. "[The numbers] don't make sense," he claimed.

According to Faisal, this is also the reason why Softbank Inc. canceled its investment in IKN. However, Investment Minister Bahlil Lahadalia mentioned earlier that Softbank's withdrawal from IKN is proof that the government cannot be controlled by investors.

Softbank originally wanted to invest because it assumed that the population of IKN would reach 5 million within five years, Faisal said.

"Few residents mean few economic circulations," Faisal said. "But if you increase the number of residents, it will be like another Jakarta."

The Head of the IKN Authority Bambang Susantono, said that the population in the new capital city would not exceed 2 million people to avoid overcapacity. However, the IKN Authority clarified the statement, stressing that the government would not limit the number of residents.

The head of the economist of IKN Authority Fauziah Zen said the two million residents was a projection of population growth until 2045. "Isn't the number too rigid? Will we drive away people once we hit the 2 million limit? We won't," Fauziah said, as quoted by Antara.

According to Fauziah, there is a possibility that in 10 years, the environment and technology in IKN would change, and would allow more people to reside in the capital city while maintaining its sustainability.

"Remember, we are committed to achieving net zero carbon," Fauziah concluded.

Source: https://en.tempo.co/read/1841623/senior-economist-claims-investors-hesitant-to-enter-ikn-with-2-million-residents-limitatio