Construction costs soar for Indonesia's new capital Nusantara | DW News

Summary

Indonesia's ambitious project to build a new capital city, Nusantara, is facing significant delays and funding challenges. The city, located on Borneo, is meant to alleviate issues like overpopulation and pollution in Jakarta. Although key buildings like the presidential palace are nearly completed, foreign investment has not materialized, leaving the government to rely on its own budget and local investors. President Joko Widodo's legacy project may continue under President-elect Prabowo Subianto, but financial experts warn of the significant challenges ahead. Despite the obstacles, the government is committed to completing the project, albeit at a slower pace.

Takeaways

• 😀 Indonesia is celebrating its 79th Independence Day with ceremonies in the new capital city, Nusantara, but construction delays and cost overruns have impacted the celebrations.
• 😀 The Nusantara project, a legacy initiative by outgoing President Joko Widodo, is centered around creating a new capital on the island of Borneo.
• 😀 Key government buildings, including the presidential palace, are under construction, but many buildings and infrastructure are still unfinished, affecting the scale of the celebrations.
• 😀 The budget for Nusantara's construction is about $3 billion, with only 20% of the funding expected from the national budget, relying on domestic and foreign investors for the remainder.
• 😀 So far, no foreign investors have committed funds to the Nusantara project, leaving the government struggling to secure the necessary financing.
• 😀 The first phase of the project is about 88% complete, but bad weather and other delays have pushed back timelines, making it difficult to complete the project on schedule.
• 😀 Despite challenges, the government insists the project will continue, though experts predict it will proceed slowly due to financial limitations and political transitions.
• 😀 The new capital is being developed as a response to Jakarta's severe urban issues, including pollution, overpopulation, traffic congestion, and sinking land due to groundwater extraction.
• 😀 The project's long-term cost is estimated at 32 billion euros, raising concerns about the financial burden it will place on future administrations.
• 😀 While President-elect Prabowo Subianto has pledged to continue the project, the lack of foreign investment and the overall financial challenges raise questions about its future viability.

Q & A

Why is Indonesia building a new capital city?

Indonesia is building a new capital city to address major issues faced by Jakarta, including pollution, overpopulation, severe traffic congestion, and sinking due to excessive groundwater extraction. The new capital is meant to alleviate these problems and provide a more sustainable location for government operations.

What are the key features of the new capital's infrastructure?

The new capital, Nusantara, will feature government buildings, a housing complex, and basic infrastructure like electricity and water lines. The centerpiece is a presidential palace shaped like Indonesia's national emblem, with other government offices surrounding it.

What is the current status of construction in Nusantara?

As of July 4th, construction in Nusantara is about 88% complete. However, weather delays have pushed back the completion of key buildings, including the presidential palace, which is still under construction.

How much has the Indonesian government allocated for the new capital project?

The government has allocated approximately $3 billion USD for the construction of Nusantara, with 20% of the budget coming from the national budget. The rest is expected to come from domestic and foreign investors, although no foreign investors have committed so far.

What financial challenges is the Nusantara project facing?

The project faces significant financial challenges, including the lack of foreign investment, which was expected to fund a large portion of the construction. The government will need to rely on the national budget and local private investors to continue the project.

What did President Joko Widodo say about the future of the capital city project?

President Joko Widodo has made the construction of Nusantara a key part of his legacy, with plans to start government operations in the new capital during his tenure. He has also emphasized the need for international investment to complete the project.

Why has the Nusantara project faced criticism?

The Nusantara project has faced criticism due to concerns over a lack of public input, transparency, and its ambitious scope. Critics also argue that it is financially unfeasible, especially given Indonesia's current economic challenges, including mass layoffs.

How will the new Indonesian president handle the Nusantara project?

President-elect Prabowo Subianto has pledged to continue the construction of Nusantara after taking office, although experts warn that it could be a significant financial burden. The project’s cost is estimated at 32 billion euros, and securing sufficient investment remains a key challenge.

What role do foreign investors play in the Nusantara project?

Foreign investors are critical to the Nusantara project as they were expected to provide a significant portion of the funding. However, despite discussions with countries like Japan and the United Arab Emirates, no foreign investments have been made yet.

What is the current situation with foreign investment in the Nusantara project?

Despite efforts to attract foreign investment, such as discussions with Japanese and UAE investors, no foreign investors have committed to funding the Nusantara project. This has put the financial burden on Indonesia’s state budget and local private investors.