Emma Connors, Jakarta – The Indonesian government is betting three high-profile figures from the UK, the United Arab Emirates and Japan will help it win global backing for its plan to shift the nation's capital.
Earlier this week the government announced that former UK prime minister Tony Blair and Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed would join Masayoshi Son, the founder of Japan's SoftBank, on the New Capital Steering Committee.
"The government wanted an international figure on the Committee," Indonesia's Coordinating Minister Luhut Pandjaitan said in Jakarta on Wednesday, when asked about the appointment of Mr Blair.
Indonesia's President Joko "Jokowi" Widodo wanted foreigners involved because he views the new capital as an offering to the world, added presidential spokesman, Fadjroel Rachman.
Since Jokowi announced in August his plan to move the nation's capital from Jakarta – the poorly planned, overcrowded city of 10 million in Java – to East Kalimantan on the island of Borneo, the government has been pitching the project as a massive opportunity for public-private partnerships and direct investments.
External funding is crucial, given only 19 per cent of the expected $US34 million ($49 billion) cost will come from government coffers.
While the government hopes the new committee, which will provide "advice and direction", will increase investors' confidence, Jokowi believes international involvement will go beyond funding. The presidential spokesman said on Wednesday that the new capital will break new ground in technology and environmental research.
Crown Prince Sheikh Mohammed bin Zayed said it would be "an honour to play a role in the development of the largest Muslim-majority country", according to a statement released on Tuesday. The UAE has also pledged $US6.8 billion for various infrastructure and development projects in Indonesia in what Luhut said "might well be the biggest deal" in the nation's history.
Softbank's Masayoshi Son is also well known in Indonesia having met with Jokowi in Jakarta last week, and is closely connected with the Crown Prince. The two men are also involved in the creation of Indonesia's new sovereign wealth fund, which will be the subject of another, unspecified investment from the UAE.
Neither the Japanese billionaire nor Tony Blair, who was Britain's prime minister from 1997 to 2007 and now runs the Tony Blair Institute for Global Change, have made a public statement about their appointment.
Planning phase
Surveyors have since October been swarming over the 180,000 hectares where the sprawling new '"forest city" will be located, but construction cannot begin until parliament gives the legislative go-ahead.
A draft bill on the new capital is being prepared, as are required changes to other laws, the National Development Planning Agency's (Bappenas) deputy for regional development, Rudy Soeprihadi Prawiradinata, told The Australian Financial Review.
A new government agency will be created to manage the new city. It will co-ordinate the various ministries involved and house an executive body, a steering board and an executive board, all of which will report to the President.
Bappenas forecasting suggests the creation of the new capital and accompanying infrastructure, including a toll road from the nearest big city of Balikpapan, will add 0.2 per cent to GDP growth and 3.9 per cent to the East Kalimantan economy during the construction years.
The new sovereign wealth fund should also be finalised by mid-year, according to a timetable outlined by Luhut. Later this month Jokowi is due to meet with Masayoshi Son and the Crown Prince in Tokyo to finalise the structure.
"Independent international auditors may be involved so as not to damage the trust of fund owners," said Luhut.
"The UAE has experience in managing sovereign wealth funds in other countries, such as Egypt and India, so that they can anticipate any problems that usually arise."
– with Natalia Santi