Indonesia Sets 2024 Deadline to Move Its New Capital to Borneo
Indonesia Sets 2024 Deadline to Move Its New Capital to Borneo
(Bloomberg) -- Indonesia is moving ahead with the plan to relocate its capital to the island of Borneo in the first half of 2024, after the proposal languished for months amid the pandemic.
In the draft submitted in September, Southeast Asia’s biggest economy plans to move the capital from Jakarta to an area of 56,180 hectares in East Kalimantan province. The bill also states that the president, with approval from parliament, gets to decide who will govern the capital, scrapping the requirement for an election often marred by fierce political battles.
Parliament is expected to pass the bill into law this year, giving the 489 trillion rupiah ($34 billion) project the legal basis to proceed before the 2024 presidential election. While the move could help secure President Joko Widodo’s legacy in the last year of his final term, it has also sparked environmental concern over deforestation.
Indonesia, which has contemplated the idea for decades, would be the third country in Southeast Asia to relocate their capital cities. Next-door neighbor Malaysia moved its administrative capital to Putrajaya in 2003 and Myanmar changed its capital to Naypyidaw in 2006.
Widodo, known as Jokowi, said the relocation will help spread economic activities outside of the most-populous island of Java and narrow its income gap with the rest of the country. Java is home to almost 60% of Indonesia’s population and contributes more than half to its gross domestic product. Kalimantan, the Indonesian part of Borneo, accounts for 5.8% of the population and makes up 8.2% of the economy.
He deems the move necessary as the current capital of 10 million people is suffering from a traffic gridlock, frequent flooding and its pollution is reaching unhealthy levels. Jakarta is also sinking fast, with two-fifths of the area falling below sea level and some parts are submerging at a rate of 20 centimeters a year.
Not everyone is convinced it was a good call.
Environmental groups have raised concern about the potential damage to Kalimantan’s rainforests. Borneo, home to endangered species such as the orangutan, has lost 30% of its forests in a little over four decades, much of it to the paper and pulp industry and palm oil plantations.
Under the plan, state institution headquarters will be moved in stages in a process that may take two to four years, except for the central bank and the Financial Services Authority’s main offices, which will stay in Jakarta as the financial and commercial hub. Just a fifth of the cost is intended to come from the state budget, with the rest coming from private funding.
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