Indonesia seeks Saudi investment in new capital city project

Special Indonesia seeks Saudi investment in new capital city project
The President of Indonesia Joko Widodo and the Governor of East Kalimantan Isran Noor visit the location of Indonesia’s future capital city, Nusantara, Dec. 17, 2019. (Wikimedia Commons)
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Updated 01 September 2022

Indonesia seeks Saudi investment in new capital city project

Indonesia seeks Saudi investment in new capital city project
  • $32bn Jakarta plan similar to Vision 2030, says envoy in Jeddah
  • Focus on Mideast and Chinese investors after SoftBank withdrawal

JAKARTA: Indonesia is seeking investment from Saudi Arabia for the development of its new capital city in Borneo, a massive $32-billion project that Jakarta’s envoy to Jeddah said on Thursday is in line with the Kingdom’s Vision 2030 program.

The Southeast Asian nation is planning to move its capital from slowly sinking, traffic-clogged Jakarta to a location about 2,000 kilometers away in East Kalimantan, with the new city set to be called “Nusantara,” which means “archipelago” in old Javanese.

The government in January signed a new law to move ahead with the relocation plan, paving the way for construction to begin. Officials said the project will take decades and will help redistribute wealth across Indonesia, as Java, the island on which Jakarta is located, is home to about 60 percent of the country’s population and more than half of economic activity.

Indonesia’s consul-general, Eko Hartono, said his country’s project is similar to the Kingdom’s transformation plan which combines high technology with environmental concerns. Financial backing has been sought from several other nations, Hartono said.

“In our efforts to build the new capital, we want to attract investment from Saudi Arabia,” Hartono told Arab News in a phone interview.

Indonesia, which has been trying to attract investors to fund the mega project, has turned its focus on Middle Eastern and Chinese investors after Japan’s SoftBank Group founder Masayoshi Son pulled out in March.

Indonesia’s officials said the new capital will be built with environmental sustainability in mind, in line with the country’s target of net zero carbon emissions and 100 percent new and renewable energy by 2060.

Hartono said those goals are in line with Saudi Arabia’s Vision 2030, a reform plan aimed at diversifying the Kingdom’s oil and gas economy.

“These match the Saudi Vision of 2030 of clean, renewable energy and high-tech (development),” Hartono said. “That’s where we want to come in.”

Hartono said Saudi Arabia had made an initial commitment to invest in Nusantara when Indonesia’s Coordinating Minister of Investment and Maritime Affairs Luhut Pandjaitan met with Crown Prince Mohammed bin Salman in Riyadh earlier this year.

Though nothing has been formalized yet, Indonesia is hopeful that Saudi Arabia will be investing in Nusantara. The government is also optimistic about attracting investors from the Kingdom for the country’s renewable energy projects, and for the development of a mangrove forest near the new capital, Hartono said.

Indonesia has also sought investment from the UAE, with both countries’ foreign ministers discussing the matter during a meeting in Bali in July, on the sidelines of G20 meetings held on the holiday island.

The Gulf country had said earlier that it would invest in the new capital city through an existing $10 billion funding commitment to the Indonesia Investment Authority.