Indonesia's parliamentary budget committee approves additional $1 billion for construction of new capital

Indonesia is all set to build its new capital Nusantara, and for that, the country's parliamentary budget committee approved an additional 15 trillion rupiah ($1.01 billion) on Friday to speed up its construction, Reuters cited a senior lawmaker as saying.

Said Abdullah, the committee's chair, said that previously, 22 trillion rupiah was allocated for developing Nusantara on Borneo island in 2023 and the recently allocated budget of 15 trillion will be utilised in this year's construction.

"Therefore, in June (2024) the president can live there," he told a hearing with the government's senior ministers.

Indonesia is planning to complete the capital's main administrative offices, which include the presidential palace and key ministerial buildings, by mid-2024.

At least 16,000 civil servants, military and police are scheduled to move to those respective buildings next year.

President Joko Widodo vowed that only 20% of the total project's cost, which is around $32 billion, will be from the government's fund, the rest all will be from the private sector.

However, as of now, no investment deal has been signed as the investors worry about the project's feasibility and continuity despite the fact government offering incentives.

President Joko promises high returns to investors

Earlier this week, President Joko Widodo promoted his country’s planned new $32 billion capital to global investors and promised high investment returns.

While speaking at a sustainability-focused conference hosted by Singapore's Temasek Holdings, he offered 300 development packages worth $2.6 billion to investors interested in building the city, Nusantara, amidst the jungles of Borneo Island, and promised high returns.

He said that Indonesia's economy which is growing steadily at around 5%, coupled with low inflation, should be enough to convince investors.

“Don't just sit and watch. This is a golden opportunity in Indonesia that is very captivating and which all of you can be part of,” he said at the event in Singapore.

"Everything will be fine, no need to worry, your investment in Indonesia will continue to be safe and (there will be) continuity in the development of Nusantara capital city," said Jokowi, as he is popularly known, while presenting images of the planned futuristic city.

(With inputs from agencies)

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