opportunity for investors

Indonesia’s New Capital: Opportunity for Investors

In 2019, President Joko Widodo announced that the political and administrative capital of the country was to shift to a new site on the eastern side of Borneo. This new city, Nusantara, is now under construction and will occupy 180,000 hectares, roughly the size of Singapore. Opportunity for major suppliers, designers and investors are immense. Asian Insiders investigates.

Jakarta is sinking each year and faces increasing issues with regards to flooding, congestion and insufficient infrastructure. Yet the population continues to grow and the Indonesian economy is expanding, placing increasing strain on political and central administrative resources.

Construction of a new capital city is a major investment for Indonesia, with a projected estimate of USD 33 billion and is expected to gain a population of around 1 million people. It will be home to the country’s government offices, embassies and other major institutions. With such a major undertaking the government is embracing opportunities to boost the economy by attracting investment and creating new jobs while its more central location is intended to improve national infrastructure. In addition, Nusantara will be a smart city, looking to the future by embracing smart technology in various ways to improve efficiency, productivity and work, and living quality for its people.

The city plans include a new international airport, a high-speed rail network and an eco-friendly road network, all built with ease of transit and sustainability in mind. The goal is to have 80% of transportation needs met by non-private transport means. By improving connectivity within and around the city, Nusantara aims to facilitate economic development, attract investment and provide better access to education, healthcare and other essential services. The government further plans to use the opportunity to promote eco-tourism, technology and the creative arts to reduce its reliance upon traditional sectors.

A chief consideration of the planners has been to prioritise sustainability and environmental preservation through leveraging renewable energy resources, a reduction of carbon emissions by deploying a smart power grid, sophisticated waste management systems, efficient water management and an abundance of green spaces and parks. The city design further incorporates green walk-ways and cycle paths and affordable housing schemes, with well placed hospitals and schools to encourage good living and a socially cohesive community.

The opportunities for international business should be evident. Building an entire city and its infrastructure requires a massive infusion of materials and labour – including various levels of technical specialisation. Technology companies in particular face opportunities as each part of the city will operate within a hi-tech framework, requiring design, set-up and operational expertise. The city’s services also will require partnership and collaboration including logistics, health, education, food supply, entertainment and more. Every sector seeks domestic and international collaboration.

The Nusantara Capital Construction Project will be completed in different stages, commencing with the development of the central government area with some 60,000 government employees scheduled to relocate by the end of 2023 and with construction overall largely completed within 15-20 years. President Joko Widodo has stated that he anticipates that Nusantara will be a preeminent representative of Indonesian progress and will set an example to the world of a modern, smart, green city.

But what about Jakarta? The old capital will remain as the commercial, financial and business centre of Indonesia, so there are plans to continue to add to the city’s skyline with several high-tech central office and hotel towers. Jakarta’s greater metropolitan area has a population of almost 30 million and is predicted to becomes the world’s largest mega-city by 2030 with a population nearing 36 million. Future plans include a giant sea wall, including multiple inhabited artificial islands, an extended metro rail network including a new central station and will be at the Jakarta end of a new rail service to Bandung, the fastest in South East Asia.

Asian Insiders is present in Indonesia and takes an active interest in Nusantara and the wide range of opportunities it provides. For any further information and a discussion about suitability, please contact Jari Hietala, Managing Partner: jari.hietala(at)asianinsiders.com or Primadi Soerjosoemanto, Indonesia Partner: primadi.soerjosoemanto(at)asianinsiders.com

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