Amy Sood – President Joko Widodo has delayed relocating his office to Indonesia's new 500 trillion rupiah (US$32 billion) planned capital city, citing missed deadlines for critical infrastructure, in a move observers say signals that development on his legacy project is significantly behind schedule.
Widodo last month said he would start working from the new capital – Nusantara – in July, hoping to restore confidence in the costly megaproject plagued by delays and insufficient funding.
"If the water is ready, if the electricity is ready, if the place is ready, we will move there," Widodo told reporters last week. "I have received a report that [Nusantara] is not yet ready."
The delay has cast fresh doubts on the project, highlighted last month when two top officials overseeing the development of Nusantara suddenly resigned.
Widodo's vision for this new capital involves transforming 2,560 sq km of land in East Kalimantan on the island of Borneo into a functional new green smart city over the next 25 to 30 years.
Initially, there were plans to relocate 12,000 civil servants to the new capital by September, but have been delayed twice as the government struggles to build the required infrastructure. Indonesia still plans to hold its Independence Day celebrations on August 17 in Nusantara.
"While it might be possible to complete basic facilities like clean water, electricity, lodging, and other essential amenities in time for the celebration, the daily operations of the government are still far from ready," said Nicky Fahrizal, a political and legal researcher at the Centre for Strategic and International Studies (CSIS) in Jakarta.
Political analyst Yohanes Sulaiman, noting the lack of progress thus far on the project, said the timeline appeared "unrealistic", adding that there had been whispers in political circles and among the public about the economic viability of the development.
"The political will to move, it is just not there... There are a lot of questions about how much money is going to be spent on the project or if people want to move there," said Yohanes from the University of Jenderal Achmad Yani in West Java.
According to analysts, uncertainty over the project has sowed doubt among investors, deterring foreign companies from committing funds.
Widodo has said 20 per cent of the project's budget will come from state coffers, with the remaining financed by private investors, both domestic and international.
However, foreign investors have remained hesitant, and some, such as Japanese conglomerate SoftBank, even withdrew their investments entirely as of 2022.
In November, Widodo acknowledged that while there had been letters of intent from foreign entities such as Singapore, China, and Japan, there had been "no real investment" made thus far.
In the 12 months from January 2023, total investments into the new capital amounted to just 47.5 trillion rupiah, all from domestic funding. The government has set a target of attracting 100 trillion rupiah in investments by the end of 2024.
In Prabowo's hands
Nusantara's future appears to depend on the ambitions of incoming leader Prabowo Subianto, who will come to power in October.
While Prabowo's path to victory in Indonesia's general elections hinged largely on his close relationship with Widodo, and his eagerness to continue the incumbent's programmes, analysts say it has become increasingly unclear if he will follow through on those promises.
Earlier this month, Soedradjad Djiwandono, Prabowo's brother-in-law and an economic adviser on his team, said the president-elect's promised free meal programme was a more financially viable project.
Set to cost at least 450 trillion rupiah (US$27 billion) annually by the time it is fully implemented in 2029, the programme aims to provide a free school meal to the country's 83 million children to curb malnourishment.
Prabowo's administration has said it will begin rolling out the scheme next year.
"As an economist, I cannot lie that I prefer the [free] meal programme, because I know it can be implemented immediately," Soedradjad told local newspaper Kontan. "We have calculated the costs in detail, as well as the eligible [recipients].
"Do we want to keep borrowing money? Do we want to build a new capital with debt?" he said.
According to Fahrizal from CSIS, it would be "risky" to implement both projects simultaneously, considering Indonesia's budget capabilities, adding that Prabowo also seems to favour his free lunch programme due to "its populist appeal at the grassroots level".
Hollow safeguards?
Prabowo failed to mention Nusantara in an op-ed he published last month outlining his agenda once he takes over the presidency, in a move analysts called a snub to Widodo's legacy project.
However, Widodo has put in a safeguard for Nusantara. In 2022, he enacted a National Capital City Law, which requires the completion of his flagship project, essentially preventing a new regime from backing out of its construction.
This law, as well as the money already put into Nusantara, might keep Prabowo from completely backing out of the project, said analysts. But, the incoming president might be able to find some loopholes.
"Jokowi might not have much political capital once he leaves office... Prabowo can basically put [this project] on the back burner," said Yohanes, referring to the president by his popular nickname.
According to Fahrizal, Widodo's capital city law is "fundamentally strong", but if Prabowo decides he wants to make changes to the law and the government's approach towards Nusantara, this is feasible given he is predicted to have "supermajority support in Parliament".
Fahrizal also pointed out that the spotlight will be on Gibran Rakabuming Raka – the vice-president elect – who also happens to be President Widodo's son – to see what role he will play in trying to further the Nusantara project.
"It will be interesting to observe Gibran's political communication with Prabowo and whether he has enough bargaining power to advance his father's legacy project," said Fahrizal. "This will reveal if Gibran can balance Prabowo's power and political influence.