What you need to know about Nusantara, the new capital of Indonesia

Indonesia declared independence from the Dutch in 1945 with Jakarta as its seat of government and administrative centre. But the city in western Java has grown into a heaving metropolis of at least 11 million people, and is plagued by some of the world’s worst traffic jams, thick smog and overcrowding. It is also reportedly sinking due to unregulated groundwater extraction, and Indonesia’s National Research and Innovation Agency has warned that by 2050, about 25% of the city could be submerged.

Nusantara was announced by Jokowi

Indonesian President Joko Widodo, known as Jokowi, first announced his surprise plan to move the capital to the jungles of East Kalimantan on the Indonesian part of Borneo island during his annual address to the nation on August 16, 2019.

“A capital city is not just a symbol of national identity, but also a representation of the progress of the nation,” Jokowi said. “This is for the realisation of economic equality and justice.”

But some have questioned the grandiose project, from the outset. They say Nusantara will be physically distant from the civil society that has been fundamental to the country’s democratic consolidation and it will disentangle the nation’s executive from the people.

Twelve thousand people will move until December 2024

The government plans to move 20,000 civil servants in total from Jakarta to Nusantara. An initial group of 12,000 employees from 38 government ministries are supposed to make the move by the end of December 2024. To house all the new staff, some 47 apartment towers are being built, 12 of which were ready last month.

By 2045, if all goes to plan, some 1.9 million people are expected to be living in Nusantara, more than the population of East Kalimantan’s provincial capital, Samarinda.

Nusantara needs a lot of money

Nusantara needs lots of money – 35 billion USD, according to the government. The World Bank said in June it expected Indonesia’s growth to remain resilient despite rising prices and geopolitical uncertainty with gross domestic product expanding an average 5.1% a year between 2024 and 2026.

From 2022 to 2024, 4.6 billion USD were allocated from the state budget for Nusantara, or about 14% of the total budget for the new capital. As of July 2024, investment in Nusantara had reached 6.2 billion USD, about 15% of the estimated total investment needed.

According to the government, it has received some 369 letters of intent from investors, most of them from Singapore. More than 130 government officials and businesses from the city-state visited Nusantara in May last year. Representatives from other countries including Finland, Kazakhstan and Malaysia also travelled to the site that month. To date, two Singaporean companies have signed Nusantara-related agreements including Nusantara State Power Investment Corporation (SPIC) and JOE Green, both of which will be involved in renewable energy and waste management.

The reliance on foreign investment revealed the contradictions of the new capital. Critics say that the national capital is built with foreign money, and that’s a disgrace for the country.

The construction of the capital will have five phases

Nusantara is expected to cover an area of 2,560 square kilometres.

The project will be completed in five separate phases, and the first phase began in August 2022, with the entire project expected to be completed by 2045.

A planned toll road spanning 47km will be built to connect the government central area with the newly constructed Naratetama airport and Balikpapan, the second-largest city in East Kalimantan Province.

According to the Indonesian government, the city is designed with sustainability in mind with 80% of journeys to be taken by public transport, bicycle or on foot. It says the surrounding forest will be protected, and the city will draw all its energy from renewable sources. Some 10% of its area is for food production. It is also supposed to be carbon neutral by 2045.

Critics say, on the contrary, the project will threaten the natural forests and biodiversity at the construction site and more broadly on the island of Kalimantan. Building the new capital will trigger migration and will also bring new investment, encourage deforestation and strengthen the extractive economy.

The work on the city’s first phase is about 80% complete and this week, Jokowi convened his cabinet for their first meeting inside the sprawling presidential palace, its design inspired by a garuda, Indonesia’s mythical bird-like creature. Later, he was pictured walking along an empty six-lane city highway with Prabowo Subianto, the man who will be sworn in as Indonesia’s next president in late October. Prabowo will be in charge of the fate of Nusantara starting next year.