A Brief
Indonesia, a nation boasting a population of more than 270 million, is a sprawling archipelago comprising over 17,500 islands. With an impressive economic size exceeding one trillion dollars, it stands proudly as a member of the exclusive G20 and holds the chair among the ASEAN nation states. The country’s vast size, youthful demographic, and strategic location contribute to its exceptional standing within the global community, rendering Indonesia truly unique among the elite nations of the world.
The capital is by definition a seat of power and a place of decision-making processes that affect the lives and the future of the nation ruled, and that may influence trends and events beyond its borders.” (Gottmann and Harper 1990, 63)
Indonesian daring and superb plan to change the capital from Jakarta to Nusantara is not an unprecedented decision. It is also not the first country in the world to change its capital. For example, Egypt has outlined plans to build a new administrative capital that would cover an area of about 270 square miles near Cairo. Nigeria transferred its capital from Lagos to Abuja in 1991. In the same vein, Myanmar’s military rulers moved the capital 200 miles north from Rangoon (Yangon) in 2005, to Naypyidaw. Russia has switched between Moscow and Saint Petersburg. In 1959, Pakistan also shifted its capital from its south in Karachi, to Islamabad in the north of the country. Another new capital seat is Astana, a planned city that became the capital of Kazakhstan in 1997. It took over from Almaty, which is still the country’s commercial center and largest population center.
Where the new capital is located and why it was needed?
While addressing Conference of Parties, COP27 summit, UN Secretary-General Antonio Guterres termed climate change as “collective suicideâ€. Indonesia is grappling with the deep impacts of climate change, particularly evident in its capital, Jakarta. Flooded streets, overwhelmed sewerage systems, and congested thoroughfares underscore the urgent challenges faced by the nation. Moreover, the looming threat of rising sea level has compelled Indonesia to make a pivotal decision, to relocate its capital from Jakarta to Nusantara in East Kalimantan. Recent studies indicate that Jakarta, situated on Java, the most densely populated island, could be submerged by 2050 due to increasingly severe rainfall, flooding, and land subsidence. In response to this pressing concern, Nusantara, a purpose-built city located 620 miles away in Borneo’s East Kalimantan province, is poised to replace Jakarta as the country’s political center by late 2024. The ambitious relocation plan involves a substantial $35 billion investment, reflecting Indonesia’s commitment to addressing the complex interplay of environmental and urban challenges.
How Nusantara will impact Jakarta in future?
The impending shift of the capital to Nusantara heralds a myriad of challenges. The city faces the grim prospect of dwindling attention from policymakers and a dearth of funds for its essential rehabilitation. The relocation poses a daunting predicament for Jakarta’s inhabitants, as not everyone can feasibly move to the new capital. The anticipated resource scarcity and apprehensions about the relocation process compound the worries of the city’s residents. The challenges extend beyond mere funding constraints; the move threatens to divert attention away from critical infrastructure development in Jakarta, leaving its current denizens to bear the brunt of the consequences. The looming question pertains to the fate of their resources and how they can safeguard their assets. Jakarta’s vulnerability to floods adds another layer of complexity, with insufficient measures in place to mitigate these issues.
“People need to be attracted to come to a new place. They first need to see robust infrastructure like schools, hospitals, and housing facilities or it won’t be attractive for them to move there,†(Melinda Martinus, lead researcher for Socio-Cultural Affairs at the ISEAS-Yusof Ishak Institute)
How Nusantara will impact Indonesia in future?
The Indonesian government aims to relocate up to 1.9 million people to Nusantara by 2045, with some civil servants moving as early as 2024, would have to face a bumpy road ahead.
The prospect of Nusantara serving as Indonesia’s new capital presents a dichotomy of positive and negative impacts for the nation’s future. On the positive side, a deliberate shift towards green and clean energy dependency positions Indonesia as a trailblazer for environmental sustainability. This transformative move not only enhances the country’s international image but also augurs well for its burgeoning tourism sector. Nusantara’s emergence promises a boon in employment opportunities, particularly in the realm of infrastructural development, vital projects such as main roads and water sanitation systems. However, amidst these promising prospects, challenges loom on the horizon. The perpetually congested and challenging conditions in Jakarta pose an ongoing hurdle for policymakers, compounded by the economic strains associated with the relocation. The hefty estimated cost of $35 billion for constructing Nusantara raises concerns, especially when the government’s commitment stands at a modest 20%, potentially impacting economic stability in Jakarta.
A new city in the need of hour
The urgency for a new city has become important in the light of Jakarta’s current state. The capital of Indonesia depicts an image of overcrowding, congestion, environmental degradation, and imminent perils. The rapid expansion of Jakarta, from a population of less than a million to a staggering 30 million since Indonesia’s independence, has led to the construction of towering skyscrapers fueled by fortunes amassed from various resources like timber, palm oil, natural gas, gold, copper, and tin. However, this growth has come at a significant cost.
The city is now grappling with severe space constraints, exacerbated by heavy traffic and pollution. Jakarta is also sinking due to the over-extraction of aquifers by its inhabitants and the encroaching rise of sea waters along its shores. A staggering 40% of Jakarta now finds itself below sea level. In response to these challenges, the imperative for a new city arises—a city where Indonesians can breathe smoke-free air, enjoy access to clean water, revel in expansive and unpolluted spaces, and experience the vibrancy of a new, clean, and green urban environment.
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Depiction of the progressive outlook of Indonesia
“A capital city is not just a symbol of national identity, but also a representation of the progress of the nation,†he said, just one day before Indonesia’s 74th anniversary of Independence. “This is for the realization of economic equality and justice.â€(Indonesian President Joko Widodo)
Indonesia is characterized by immense diversity encompassing numerous languages and ethnic groups, it navigates a complex mix of regions governed by Islamic Shariah inspired principles, driven by separatist sentiments, or steeped in Indigenous traditions. Remarkably, it stands as a secular democracy, boasting the world’s largest Muslim population, a substantial Christian minority, and recognition of several official faiths. Despite historical episodes of deadly sectarian conflicts, Indonesia has demonstrated resilience and unity.
The prospect of a new capital city will bring an opportunity for profound reinvention, symbolizing Indonesia as a beacon of progress, development, and economic strength. This transformative endeavor reflects the nation’s commitment to inclusivity, portraying Indonesia as a state that embraces its diversities and presents a forward-looking, cohesive image to the entire world.
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Climate change Resilience
“Indonesia envisions its new capital to be the first city in the country to achieve net zeroâ€
(Nusantara National Capital Authority Chairman Bambang Susantono)
The Indonesian government is resolutely committed to cultivating Nusantara as a green, intelligent, inclusive, resilient, and sustainable city, recognizing that the development of the new capital is an integral part of Indonesia’s broader vision for 2045. In a significant move towards climate change resilience, the Asian Development Bank (ADB) and the Nusantara National Capital Authority (NNCA) have formalized a memorandum of understanding (MOU).
“Nusantara continues to strengthen its pathway to becoming the world’s first sustainable forest capital, as well as Indonesia’s first carbon-neutral city by 2045,†said Mr. Susantono
This collaborative agreement sets the stage for joint planning and development efforts to shape Nusantara into a carbon-neutral forest city. Under the MOU, the ADB and the Government of Indonesia have pledged to work together to ensure that the new capital is meticulously designed to minimize its environmental footprint, with a firm commitment to achieving net-zero emissions by 2045.
(D) Enhance FDI and Investor Confidence
Indonesia currently lags behind regional counterparts in attracting Foreign Direct Investment (FDI), accounting for only around 2 percent of its GDP. This stands in contrast to economies like Malaysia over 3 percent, Vietnam over 6 percent, and Cambodia over 12 percent. The shortfall in FDI deprives Indonesia of crucial sources of technology, knowledge transfer, and external funding. Export-oriented manufacturing FDI is linked to accelerated labor productivity, higher average wages, increased introduction of new products, and elevated investment rates.
“We are opening up our arms to foreign investors,†says the head of the Nusantara Capital Authority (OIKN)
The Nusantara Capital City Authority reports 182 letters of intent from investors, half of whom are international, signaling a growing interest since October 2022. Government representatives are actively engaging with potential investors globally, and recent regulatory updates in March aim to further boost investor confidence. These regulations streamline business licensing, offer tax breaks, and extend land rights in Nusantara, allowing for periods of up to 190 years—double that of other major cities in Indonesia.
(E) Provide growth prospective and new development opportunities for the whole country
“It is not just about wanting to relocate the capital. We don’t just want a place for government functions,” said Danis H. Sumadilaga, “We want to create a new economic growth center.”
Sumadilaga heads the task force overseeing infrastructure development implementation at Indonesia’s Ministry of Public Works and Housing.
In addition, Sumadilaga highlighted the government’s efforts to enhance businesses in key sectors such as renewable energy, health care, education, and agriculture.
(F) Impact on the demography of Indonesia
“The demographic dividend refers to the accelerated economic growth that begins with changes in the age structure of a country’s population as its transitions from high to low birth and death rates†(Gribble and Bremner 2012:2).
Indonesia currently finds itself in the advantageous phase of its demographic transition, often referred to as the ‘sweet spot.’ With over 70 percent of its population in the prime working age group, the nation stands to benefit significantly. However, the true potential of this demographic dividend can only be realized if productive employment opportunities are created for those aged 15 to 55. The establishment of the new capital is poised to accelerate the harnessing of this demographic dividend to its fullest extent. By doing so, Indonesia aims to boost productive employment, mirroring the rapid progress observed in countries like Taiwan and South Korea.
(G) Nusantara: An effort to neutralize polarized politics
The establishment of the new capital transcends mere attempts to overcome the current challenges faced by Jakarta; it seeks to redefine the relationship between the seat of government and the heart of civic society. This endeavor aims to physically distance decision-makers from dissent, creating a space where the corridors of power are insulated from the tumult of public discord. Jakarta, historically pivotal in Indonesian politics, has witnessed significant moments, from student-led protests that toppled authoritarian leader Suharto in 1998 to 2016 and 2017’s Islamist demonstrations against then-Governor Basuki Tjahaja Purnama amid rising religious conservatism.
The envisioned new capital aspires to become a stage for a more harmonious and dissent-free political decision-making process. By relocating the seat of government, it seeks to establish a new narrative, rooted in fresh symbols of national pride, detached from the historical complexities of Jakarta. This strategic move aims not only to address the current challenges but also to set the foundation for a new era in the nation’s political landscape.
 (H) Provide strategic depth to Indonesia
The strategic advantages tied to the recently chosen capital city, Nusantara, are multifaceted. Notably, the new capital’s geographical location renders it less susceptible to natural disasters, positioned away from fault lines, seismic activity, storms, and floods. This strategic placement not only mitigates environmental risks but also serves to relocate the focal point of the country, thereby shifting its center of gravity. This includes the establishment of new infrastructure and the formulation of updated policies to safeguard the newly constructed Integrated Knowledge Hub (IKN) and the government operating within its confines. Designating the IKN as a new Center of Gravity (COG) underscores its pivotal role in national security, a matter of paramount interest.
Flip side
(a)Environmental set backs
Indonesia’s proposed new capital in East Kalimantan is envisioned as a “smart, green, beautiful, and sustainable city,” yet it has triggered concerns about extensive environmental repercussions for the island of Borneo, a crucial biodiversity hotspot and carbon sink.
Projections indicate that the direct footprint of the new capital may rapidly expand, reaching over 10 km from its core within two decades and exceeding 30 km before mid-century. The sensitive ecosystems at risk include forest reserves, mangroves, and peatlands.
Borneo, often referred to as the “lungs of the world,” harbors diverse wildlife such as long-nosed monkeys, clouded leopards, pig-tailed macaques, flying fox-bats, and the smallest rhinos globally. Despite the Indonesian government’s claim that Nusantara, the new capital, will accommodate 1.9 million residents by 2045, environmentalists express apprehension. They argue that building a capital in this ancient location could expedite deforestation in one of the world’s largest and oldest tropical rainforests, endangering the habitats of various endangered species.
Indigenous communities, residing in the area for generations, face the potential threat of displacement. Forest Watch Indonesia, a non-governmental organization monitoring forestry issues, highlighted in a November 2022 report that a significant portion of the forested areas in the new capital zone are categorized as “production forests.” This classification raises concerns about potential permits for forestry and extractive activities, contributing to further deforestation.
 (B) Cost associated with new capital in the prospect of global economic slow down
The anticipated completion of the new city is estimated to incur a total cost of $35 billion by the year 2045. The government has already allocated an investment of 32 trillion Rupiah to establish fundamental infrastructure, encompassing the construction of a dam and a toll road. However, the existing conditions pose potential risks, including conflicts of interest, allegations of mark-ups and kickbacks, legal repercussions, and possible delays in the capital relocation process.
(C)Widodo’s political tool to garner political support
The choice of name is intended to reflect President Joko Widodo’s “Indonesia-centric†push to spur development away from the island of Java, closer to the geographic center of the archipelago.
 (D) Exclusion not inclusion real face of new Indonesian capital
Concerns have been raised by the indigenous and local communities who fear the potential displacement of their homes and farmland. Additionally, residents of Borneo Island are apprehensive about the influx of new individuals into East Kalimantan, expressing anxieties about the impact on their local communities.
