Indonesia Injects US$1bn More into New Capital ‘Nusantra’

• 21 July 2023
• Construction Focus
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The Indonesian government has approved the injection of an additional US$1 billion for the development of the nation’s new capital city ‘Nusantra’ which is located in East Kalimantan province on Borneo island.

The Nusantra mega project is projected to cost US$32 billion, 80% of which is expected to be sourced from private investment. The Indonesian government, however, has not yet secured the investment necessary despite offering huge tax incentives for investors and already injected US$1.47 billion earlier in the year.

The construction of a new capital for the world’s most populous Muslim nation comes as the current capital Jakarta struggles with traffic congestion, overpopulation, poor infrastructure, lack of planning, and flooding as it slowly sinks below sea level.

Construction of key government buildings has only progressed around 5%-8% with a planned deadline of mid-2024 for 16,000 staff to move in. President Yoko Widodo now faces the challenge of an election in February 2024 when his costly new capital city flagship project may be a factor in the voter’s decisions.

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