Major Resignations Shake $32 Billion Indonesian New Capital City Project

The head and deputy head of the body overseeing Indonesia’s planned new capital have unexpectedly resigned, raising questions about the $32 billion project.

Indonesia is building a new capital, called Nusantara, in the jungles of East Kalimantan on Borneo – an island shared with Malaysia. Jakarta, the current capital with a population of 10 million, is overcrowded and plagued by massive traffic jams, chronic flooding, and sinking land.

The President has appointed the public works and housing minister and deputy agrarian minister as the acting head and deputy head. This decision was announced by State Secretariat Minister Pratikno on Monday. He mentioned that these appointments aim to accelerate construction projects, which had been delayed due to ongoing discussions about the resignations.

In a recent post on his official Instagram account, President Joko Widodo of Indonesia reassured the public that the development of the new capital project will proceed as planned.

He stated, "The development of the new capital will move forward in alignment with the shared vision that has been set."

Bambang Susantono, who previously worked at the Asian Development Bank and led the project, along with his deputy Dhony Rahajoe, an architect and former real estate developer, have not yet commented on the situation.

The government is working quickly to construct the necessary infrastructure for relocating the initial group of 12,000 civil servants by September. However, the timeline for the plan has been pushed back twice, and the recent resignations highlight the challenges of securing private funding for President Widodo's key initiative.

An aerial view shows the Jakarta skyline with poor air quality levels on August 11, 2023.

An aerial view shows the Jakarta skyline with poor air quality levels on August 11, 2023.

Bay Ismoyo/AFP/Getty Images

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"These resignations may cause doubt among the public regarding the project," explained Arya Fernandes, an analyst at Indonesia's Centre for Strategic and International Studies. The challenge now lies in reassuring investors that everything is under control.

One challenge we have faced is determining the ownership status of the land at the new capital site, according to Public Works Minister Basuki Hadimuljono during a news conference on Monday.

"We will be making a decision on the land status shortly," he mentioned.

We will make sure to expedite the process, whether it's selling, renting, or collaborating with the government and companies, to provide assurance to investors.

Jokowi, also known as the president, is scheduled to visit Nusantara on Tuesday for the inauguration of various projects, such as schools. The Independence Day celebrations of Indonesia are set to take place there on August 17. He will be leaving office in October after completing two terms as president.

President-elect Prabowo Subianto who is closely aligned with Jokowi, has pledged to continue developing the new capital.

Editor's P/S:

The resignations of the head and deputy head of Indonesia's new capital project raise concerns about the ambitious $32 billion endeavor. The lack of transparency and communication surrounding the departures has cast doubt on the project's viability, particularly with regards to securing private funding. The government's efforts to reassure investors and accelerate construction may be hampered by the uncertainty created by these resignations.

Furthermore, the challenges in determining land ownership at the new capital site highlight the complexities of the project. Resolving these issues is crucial for attracting investors and ensuring the project's success. The government needs to provide clear and timely information to address concerns and maintain confidence in the project's long-term prospects.