27-Aug-2019: Indonesia announced its new capital

Indonesia’s president, Joko Widodo has announced the national capital will move from Jakarta, on the island of Java, to the province of East Kalimantan, on Borneo.

The government has conducted in-depth studies in the past three years and as a result of those studies the new capital will be built in part of North Penajam Paser regency and part of Kutai Kertanegara regency in East Kalimantan.

This is a plan that has been suggested by various Indonesian presidents over decades. The government will prepare a bill to be considered by the House of Representatives. If approved, construction could start next year.

The move would see the government’s administrative functions moved from Jakarta to a yet-to-be-built city in Kalimantan, more than 1,000 km away. Kalimantan is the Indonesian portion of the island of Borneo, which is also shared with Malaysia and Brunei. However, Jakarta will continue to be the nation’s commercial and financial centre, and it is believed that the majority of its nearly 10m residents would stay in Jakarta.

Moving the capital would cost 466 trillion rupiah ($32.7bn), of which the state would fund 19%, with the rest from public-private partnerships and private investment. The price tag includes new government offices and homes for about 1.5 million civil servants.

If parliament approves the bill, construction on the new capital would begin next year on a plot of 40,000 hectares. The government expects to start moving some of its bureaucrats by around 2024.

The relocation is about addressing inequality and relieving some of the burden on Jakarta, and the island of Java. Java is home to 60% of the country’s population and more than half of its economic activity. Kalimantan is almost four times bigger, but accounts for less than a tenth of the gross domestic production.

Kalimantan is also much more central in Indonesia’s archipelago of 17,000 islands.  The location is very strategic – it’s in the centre of Indonesia and close to urban areas. The burden Jakarta is holding right now is too heavy as the centre of governance, business, finance, trade and services.

Jakarta is also struggling under a huge environmental burden. Air quality in the city has plunged over the last few months, recording worse conditions in June than notoriously polluted cities such as Delhi and Beijing, prompting a group of activists and environmentalists to sue the government to take action.

Indonesia’s capital is also sinking. Areas of north Jakarta, including the seawall designed to protect them, are falling at an estimated 25cm a year, due to subsidence. The city does not pipe in enough drinkable water, so Jakartans rely largely on wells which extract water from shallow aquifers, leading to the land above it collapsing. The problem has been exacerbated by the explosion of new apartment blocks, shopping malls and even government offices and increases in the risk of a catastrophic flooding.

Kalimantan is home to major mining activities as well as rainforests, and is one of the few places where orangutans live in their natural habitat. The new city would be built on state land near the existing urban centres of Balikpapan and Samarinda and has promised the environmental impact will be positive.