Muhammad Husaini Fikri and Muhammad Rafi Bakri – Jakarta is exhausted from carrying the burden of being Indonesia's capital city. With a population that reached 10.6 million in 2022, the city struggles with overcrowding in its 661.5 square kilometres. Indonesia passed legislation in 2022 mandating the relocation of the capital to Nusantara.
According to research by the National Development Planning Agency, shifting the capital city to Nusantara will benefit the national economy by contributing to a 0.1 per cent rise in GDP. The movement of the centre of government will also enhance inter-regional commerce, particularly between the islands of Java and Kalimantan, where the new capital city is located. By enhancing productivity and innovation, the move is spruiked by the government as being economically beneficial.
But this strategy has sparked debate following Indonesia's Audit Board's Report Number 5/LHP/XVII/2/2024, indicating that the Nusantara project has diverged from its initial plan. These findings include that development is proceeding without being aligned with either the overarching national development plan, the Ministry of Public Works and Housing's strategic plan or even the new capital city's own masterplan. Additionally, several projects appear to have been initiated without prior planning.
The BPK, Indonesia's government auditor, discovered that the financing planning for the first phase of Nusantara development was insufficient. Initially anticipated to be 63.44 trillion Indonesian rupiah (US$3.9 billion), the budget has now become Rp 72.15 trillion (US$4.5 billion). The growing Nusantara construction budget could pose a risk to the state's financial health.
Concerns have arisen regarding the potential that Indonesia's capital relocation will fail. Myanmar is one of the countries that has tried this – though unsuccessfully. Naypyidaw was chosen as the new capital because Yangon's population density was deemed too high and Naypyidaw's more central position was expected to be capable of maintaining economic stability and state security.
But Naypyidaw appears deserted, largely abandoned with few inhabitants. The lack of community participation stems from the city's failure to provide comprehensive facilities for its citizens' needs. This inconveniences residents as the commercial, financial and cultural centre remains in Yangoon, while official matters must be handled in Naypyidaw. The large expenditure on developing this new capital city has had little impact on the scheme's effectiveness in serving the city's needs.
Something similar may happen in Nusantara. The expenses for the entire capital relocation scheme, estimated at roughly Rp 466 trillion (US$29 billion) with funding primarily drawn from the state budget, alongside other sources, could well result in a new capital with the same fate as Myanmar's.
The government must prioritise civil society participation so Nusantara becomes more than just a government-focused city, without community activities. To address this, the government must provide solutions to the reasons for the lack of community participation. One issue is that Nusantara is far from Java, particularly Jakarta, which will remain Indonesia's business centre. The government should implement policies to reduce inter-island transportation costs, facilitating community mobilisation to Nusantara.
The high prices of essential goods in East Kalimantan province, where Nusantara is located, may also contribute to people's reluctance to settle there. According to statistics from the National Strategic Food Price Information Centre, East Kalimantan has some of Indonesia's highest rice prices. The government needs to establish strategies to stabilise the prices of basic commodities, such as reducing government spending to manage inflation and controlling food exports and imports.
Nusantara still needs to expand the availability of clean water. The nature of Kalimantan's clay-rich soil makes groundwater high in iron and sulphide – unreliable to drink. In the long run, the government should implement the sponge city concept, envisioning Nusantara as a metropolis that collects and processes rainwater. But the BPK discovered that the water level in Nusantara's storage dam had only reached 50 per cent of its intended capacity.
Moving a nation's capital takes a long time. It took Nigeria around 25 years to prepare Abuja, its new capital, to support a government in 1991. Similarly, Brazil shifted its capital to Brasilia in 1960 to address issues in Rio. Yet, relocating the capital does not always alleviate the underlying problems. It takes decades to manage housing issues and economic inequality due to such relocations.
The development of Nusantara's first phase is a long way off. The Indonesian government should not rush the process to avoid overlooking important details. It is crucial to optimise the next stages to ensure Nusantara becomes a livable city and not a stalled project.
[Muhammad Husaini Fikri is a Graduate of Civil Engineering from the Sepuluh Nopember Institute of Technology, Indonesia. Muhammad Rafi Bakri is Data and Financial Analyst at the Audit Board of Indonesia.]
Source: https://eastasiaforum.org/2024/08/17/all-eyes-on-nusantara