Indonesia will Soon Get a New Capital

In August 2019, the Indonesian government announced to move its capital from Jakarta to Borneo Island. The present capital of the country is prone to flood due to increasing sea water level. Moreover, it is also vulnerable to volcanos and tsunamis. The new capital has a higher ground level compared to Jakarta and will be capable of inhabitant seven million people in an area of around 2,600-square-kilometres. The cost of the relocation would be around $33 billion by 2024. 20% of the total budget was from the state government whereas the UAE and the United States International Development Finance Corporation (IDFC) will invest $22 billion through a sovereign wealth fund.

The required funding will be sourced from the state, public-private partnerships and private investment. At initial, a large portion of the budget will be used for the development of 55-square-km-downtown which will include the new presidential palace and other government buildings.

On March 9, the government selected three global companies to develop a master plan for the city which includes AECOM; an engineering company, McKinsey & Co.; consulting firm and Nikken Sekkei, an engineering firm. The new capital will have an emphasis on developing a clean and green city. The new city will be designed in a way that benefits the area’s indigenous Dayak tribe and preserves the abundant natural resources. The government is also evaluating the possibility to host the Olympics 2032 in the unnamed new capital.

About Jakarta

At present, Jakarta is the major commercial hub for Indonesia and generating around one-fifth of the country’s GDP. The population of Jakarta is more than 10 million which is expected to reach 35.6 million by 2030 and will be the most populated city toppling Tokyo. Even after shifting the capital, the capital is expected to be a major source of revenue as a large number of companies will not shift the facility from Jakarta.