Nusantara: Indonesia's New Capital Project

Current Situation in Jakarta

• Jakarta is one of the world's most populous cities facing an existential crisis.
• By 2050, about 1/3 of the city is projected to be underwater.
• Currently, 40% of Jakarta is below sea level.

Relocation of the Capital

• The Indonesian government plans to move the capital from Jakarta to Nusantara, located over 800 miles away on Borneo.
  • This move is aimed at combating the city's sinking issue and promoting modernization.
• The budget for Nusantara is set at $33 billion, with an initial completion goal by 2045.

Objectives of Nusantara

• Modernize Indonesia and reduce regional inequalities.
• Promote environmental sustainability and establish a smart city powered entirely by renewable energy.
• Intended to house around 2 million people, representing 1/5 of Jakarta's population.

Strategic Location

• Nusantara is located in East Kalimantan, chosen for its lower risk of natural disasters and its central position in Indonesia.
• The move aims to redistribute wealth and resources from Java, which currently accounts for 60% of the national economy.

Investment Challenges

• Despite interest from over 400 investors, significant investments have not materialized.
• SoftBank withdrew from negotiations in 2022 due to concerns over safe returns for shareholders.
• The Indonesian government has only pledged 20% of the $33 billion budget and struggles to secure additional funding.

Public Opinion and Criticism

• Opinions are divided: Some view the move as progressive, while others see it as a vanity project.
• Critics highlight potential displacement of 20,000 indigenous people and deforestation due to construction.
• Experts point out that renewable energy plans are unrealistic given current capacities.

Phase One of Construction

• Construction of the governmental zone set to complete by August 2024, costing around $3.4 billion (1/10th of the total budget).
• Severe weather and logistical issues have hampered progress.
• The government claims to be about 80% through phase one, but significant infrastructure work remains.

Long-term Viability Concerns

• The project’s success depends on financing, political will, and public support.
• The recent resignation of project heads raises concerns about its future.
• A change in presidency could realign priorities, complicating the project's continuation.
• Risks of overspending and budget shortfalls could threaten the initiative.

Conclusion

• The Nusantara capital city project remains uncertain, with many challenges ahead that will impact its long-term viability and the fate of Jakarta.