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The road to Nusantara just got longer: How the recent resignations are a wake-up call for Indonesian governance

Fulcrum - June 13, 2024

Yanuar Nugroho – The recent loss of the top two officials leading the new capital's construction and development process has thrown a serious wrench in the works for Indonesia's President Widodo's ambitious move. Pretending that all systems are still go is not the solution.

The 3 June resignations of the former Head and Vice-Head of Indonesia's Nusantara Capital Authority (OIKN), Bambang Susantono and Dhony Rahajoe, surprised many. Their abrupt departure raised questions about what happened behind the scenes and fuelled speculations about the future of Indonesia's new capital. For now, President Joko Widodo (Jokowi) has appointed in their stead his public works and housing minister and the deputy agrarian minister.

The construction of the new capital city (IKN) is one of the most ambitious projects in Indonesian history. There have been valid objections and criticisms from the start, and it has faced numerous challenges, including a rushed legislative process and the lack of public consultation of affected local communities at inception. There are also concerns about the environmental and social impacts of development in the East Kalimantan region. Bambang and Dhony's resignations just two months prior to Jokowi's plan to celebrate Independence Day (17 August) in the IKN exacerbate such negative perceptions. Further, they could affect not just public and political support but also investor interest.

No official reason has been given for the resignations except "personal" ones. Both men are well known, with proven track records and integrity. Bambang was vice then acting minister for transportation under President Susilo Bambang Yudhoyono, while Dhony, an architect, was linked to real estate developer Sinar Mas Land. In his farewell remarks, Bambang elliptically said that although people's roles could change, the stance of those with integrity remained intact. This suggests that the resignations might have been for political reasons, not just technical ones like delays in construction. Bambang's message to his staff before he resigned, pleading for them to "love and side" with the people (meaning the local communities), signals that a more serious clash probably did happen.

The president, in damage control mode, has tried to allay fears about Nusantara's future, claiming that it would go on regardless of the resignations and promising that a "big investment" was forthcoming.

Coordinating Minister for Maritime Affairs and Investment Luhut Panjaitan, soon after the resignations, assured that there was no problem with the IKN project, pointedly noting that the problem was with leadership. He added that Bambang could have simply executed the decision to clear land belonging to local communities even while the land's status was unclear or unsettled.

Luhut could have been referring to incidents like the one below, which illustrates two separate problems: unclear land ownership and delayed investments due to this lack of clarity. On 4 March 2024, the OIKN issued a letter to 200 residents of Pemaluan village, Sepaku, asking those living in RT05 (a housing group) to demolish their properties if they did not have a permit or were against spatial planning. The letter was withdrawn a few days later after catching public attention. This highlights the government's rush to clear land fast for the IKN and to quickly secure new investments. As confirmed by the Minister for Public Works and now Acting Head of the OIKN Basuki Hadimuldjono, the suspension of such land transactions has made the status of land to be developed unclear for investors. As a result, investors are unable to buy (meaning own) land in the IKN and can obtain only "Right to Build" (Hak Guna Bangunan) certificates.

These problems with land-use and land acquisition for the IKN's development reflect the need for better governance and transparency. There are other lapses, including insufficient regulatory support. For instance, the clearance of 2,086 hectares needs a Presidential Regulation on the Handling of Social Impacts Plus (Perpres Penanganan Dampak Sosial Kemasyarakatan Plus) – the 'plus' meaning that the local people might be relocated or resettled. Yet this regulation has not been issued.

The problem with land clearing seems to be the tip of the iceberg. Given the IKN's complexity, some believe that the timeline and resources that have been allocated for the first phase of the project were not realistic. Widodo has claimed Phase 1 is "80 per cent complete" and declared that he will move there by July but he has had to accept that the first batch of civil servants will not even be there until September 2024 (or later). For one, basic infrastructure, including fresh water in housing quarters, is incomplete or unavailable. Housing for the civil service (initially planned as 47 apartment towers) is incomplete. The planned number of personnel to be moved from Jakarta to the IKN has dropped from 11,919 to 1,740. (This could increase to 3,072 if some are willing to share apartments.)

Compounding this, expected foreign investments have not been realised and the state's budget is under strain. The socio-cultural and potential ecological challenges add to the difficulty. Although infrastructural development looks most promising, especially within the Central Government Zone (Kawasan Inti Pusat Pemerintahan), apparently some problems persist. In addition to the lack of clean water, services like electricity and waste management are not generally available, and some IKN zones face a flood risk.

The transfer of the nation's capital needs a presidential decree to officially announce it. However, even this decree is not ready, which opens up the possibility that the next president, Prabowo Subianto, could sign it after his inauguration in late October. Jokowi had wanted to sign the decree before Independence Day so that the celebrations could be held in Nusantara. Given this, the government has now announced a "hybrid" simultaneous commemoration in the IKN (attended by Jokowi and Prabowo) and in Jakarta (attended by their respective vice presidents, Ma'ruf Amin and Gibran Rakabuming Raka).

The mystery behind the two resignations remains: the government should not cover up or sugarcoat the reasons but could take them as a wake-up call for better governance. If not, more uncertainty about the IKN's future among investors and other stakeholders could develop. Stronger leadership and clear vision to overcome present obstacles and achieve development goals can only happen if Jokowi or Prabowo quickly fills the OIKN leadership gaps with individuals capable of handling political and operational pressures while ensuring better transparency and public participation.

[Yanuar Nugroho is a Visiting Senior Fellow at ISEAS – Yusof Ishak Institute, Singapore, and a Senior Lecturer at the Driyarkara School of Philosophy, Jakarta.]

Source: https://fulcrum.sg/the-road-to-nusantara-just-got-longer-how-the-recent-resignations-are-a-wake-up-call-for-indonesian-governance