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Indonesia’s Capital City Relocation too Nusantara
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Indonesia is relocating its capital city from Jakarta to Nusantara,a newly planned city in East Kalimantan on the island of Borneo,driven by concerns over Jakarta’s overcrowding,pollution,and sinking land.
Rationale for Relocation
The decision to move the capital stems from critical challenges facing Jakarta, including rapid urbanization, severe traffic congestion, and environmental degradation. Jakarta is sinking at an alarming rate – estimated at 5-10 cm per year in some areas - due to excessive groundwater extraction. The relocation aims to alleviate these pressures and promote more equitable regional development.
According to the Indonesian Cabinet Secretariat, the relocation is based on five key considerations: reducing the burden on Jakarta, promoting equitable development, strengthening national resilience, supporting environmental sustainability, and improving governance.
Nusantara: The New Capital City
Nusantara, meaning “archipelago” in Sanskrit, is located in the Penajam Paser Utara and Kutai Kartanegara regencies of East kalimantan. The site was chosen for its strategic location, minimal geological risks, and existing infrastructure. The city is envisioned as a “smart city” and a sustainable urban center.
The master plan for Nusantara, developed by the IKN Authority, prioritizes green spaces, public transportation, and technological integration. The initial phase of construction focuses on government buildings and essential infrastructure.
Timeline and Phases of Development
The relocation is planned in five phases,beginning in 2022 and expected to be completed by 2045. The first phase (2022-2024) focuses on infrastructure development and the relocation of approximately 120,000 civil servants. The second phase (2025-2029) will see the relocation of government ministries and agencies. Full relocation, including the Presidential Palace, is slated for 2045.
On August 17, 2023, Indonesia officially commemorated its Independence Day with the hoisting of the national flag, the Merah Putih, at the future site of the Presidential Palace in Nusantara, marking a symbolic milestone in the relocation process. The Jakarta Post reported on this event.
Financial Aspects and Investment
The relocation project is estimated to cost approximately $32 billion,funded through a combination of state budget allocations,private investment,and public-private partnerships. The Indonesian government is actively seeking foreign investment to support the development of Nusantara.
In February 2023, the Indonesian government secured approximately $20 billion in committed investment for Nusantara, primarily from the United Arab Emirates’ sovereign wealth fund and other investors, as reported by Reuters. The government aims to attract further investment to finance the project’s various components.
Legal Framework and Governance
The relocation is underpinned by Law No.3 of 2022 concerning the State Capital (Ibu Kota Negara). This law provides the legal basis for the relocation and establishes the Nusantara Capital Authority (Otorita Ibu Kota Nusantara – OIKN) to oversee the planning, construction, and management of the new capital.
The OIKN, led by bambang susantono as the Head of the Authority, has broad powers to manage land use, issue building permits, and attract investment. The IKN Authority’s official website details its structure and responsibilities.
Environmental Considerations
The Indonesian government has emphasized environmental sustainability as a core principle of the Nusantara project. The city is designed to be a “forest city,” integrating green spaces and preserving the surrounding rainforest. Efforts are underway to minimize the environmental impact of construction and ensure the long-term ecological health of the region.
An Environmental Impact Assessment (AMDAL) was conducted prior to the commencement of construction, and the government has committed to implementing strict environmental monitoring and mitigation measures. Mongabay provides reporting on the environmental aspects of the project.