Indonesia picks area on Borneo for new capital, with relocation estimated to cost US$33 billion

Indonesia will build a new capital city on the island of Borneo, home to some of the world’s biggest coal reserves and orangutan habitats, as President Joko Widodo seeks to ease pressure on congested and sinking Jakarta. The new administrative headquarters will be built between North Penajam Paser and Kutai Kartanegara in East Kalimantan, Widodo told reporters in Jakarta on Monday. The relocation of the capital, some 1,400km away from Jakarta, will help spread economic activity outside the nation’s most populous island of Java, the president has said. Costs have been estimated to run as high as 466 trillion rupiah (US$32.8 billion). “The location is very strategic – it’s in the centre of Indonesia and close to urban areas,” Widodo said in a televised speech.,” Widodo said in a televised speech. “The burden Jakarta is holding right now is too heavy as the centre of governance, business, finance, trade and services.” Jakarta is bursting at the seams. So where should the new capital be? Widodo has displayed an urgency not shown by his predecessors in pressing on with the capital relocation plan, which has been periodically discussed for decades. With the greater Jakarta area, home to about 30 million people, nearing gridlock and pollution reaching unhealthy levels, efforts to decongest the city have made little progress as tens of thousands of cars are added to the roads every year. With more than 15,000 people per square kilometre in Jakarta – twice the density of Singapore – there is little space to build more without rehousing thousands of families. To make matters worse, about 40 per cent of the city is below sea level and parts of it are sinking 20cm a year. Environment experts warn that a substantial chunk of the current capital – first established by Dutch colonists nearly 500 years ago – could be submerged by 2050 if current rates continue. “Moving the capital off Java is a gesture that aims to solidify unity,” said Jakarta-based political risk analyst Kevin O’Rourke. “Jakarta will continue to be a megacity – as a centre for finance and commerce – for a few more decades, but ultimately it is at severe risk to climate change.” Jakarta’s heavy traffic is a result of its overwhelming importance in the nation’s economy. The metropolitan area generates almost one-fifth of Indonesia’s annual gross domestic product. Gridlock and public transport woes cost the city about 100 trillion rupiah (US$7 billion) a year in economic losses, according to official estimates. The cost of moving the capital is estimated at 466 trillion rupiah if it involved development of 40,000 hectares of land for an estimated 1.5 million residents, according to Planning Ministry estimates. The cost could be whittled down to 323 trillion rupiah if only part of the state apparatus was shifted to an area of 30,000 hectares, the ministry said in April. Widodo has argued shifting the capital will help address income disparity in the archipelago of more than 17,000 islands. While Java accounts for almost 60 per cent of Indonesia’s population and contributes about 58 per cent of its gross domestic product, Kalimantan accounts for 5.8 per cent of the population and contributes 8.2 per cent of GDP. With Widodo pitching the new capital as a symbol of Indonesian identity and progress, the project will be a significant part of his legacy. Authorities have talked about building a modern, smart and green city which can serve as the capital for a century. Widodo insists Jakarta’s giant sea wall ‘must be done quickly’ to protect sinking capital The government plans to begin construction of the new city from 2021 and may start relocating some offices from 2024, according to Planning Minister Bambang Brodjonegoro. “We will not disturb any existing protected forest, instead we will rehabilitate it. Initially, we need 40,000 hectares of land, and it is expandable to 180,000,” he said, noting that most of the land is already government-owned. Public Works Minister Basuki Hadimuljono said it will take three to four years to construct all the required roads and bridges, build a sanitation system and complete all the government buildings and housing. The project will be financed by the government as well as through private-public partnerships. Indonesia is not the first Southeast Asian country to move its capital. Myanmar and Malaysia have both moved their seat of government, while Brazil, Pakistan and Nigeria are among the nations that have also shifted their capital cities. Additional reporting by Agence France-Presse and Kyodo