Jakarta. The government has prepared to set aside $1.9 billion to $2.1 billion in the next year's state budget for developing Nusantara, Indonesia's new capital in Kalimantan, a senior official at the Ministry of Finance said on Friday.
The fund would cover a fraction of the costs of the $35-billion megaproject, which was envisioned by President Joko "Jokowi" Widodo to shift the focus of the country's development outside its most populous island Java.
The government would use Rp 27-30 trillion ($1.9-2.1 billion) to develop the government core area (KIPP) in the capital, Suahasil Nazara, the deputy finance minister.
The Ministry of Public Works and Housing was tasked with constructing the core area's drinking water, clean water, sanitation facilities, and housing and roads. The ministry would also be responsible for building state palaces and office buildings for ministries and state agencies.
The Ministry of Defense and the National Police will prepare defense and security infrastructure. The Ministry of Transportation prepares terminals, ports, and airports.
The Ministry of Education and Culture and Research, Technology and Higher Education, and the Ministry of Health are preparing infrastructure and BUMN support for electrical energy and ICT.
Suahasil acknowledged that the state budget could only cover a fraction of Nusantara's construction costs. Therefore, he said the government was also preparing various schemes for the private sector to join in the project.
“The capital's strategic value will bring new economic growth to the center of Indonesia. We will finance the development with creative financing," Suahasil said.
Creative financing efforts are carried out through several schemes, namely the public-private partnership (PPP), Islamic bonds issuances, crowdfunding, and philanthropy.
"We created financing schemes from other non-state budget sources. Thus, the state budget can continue to be flexible in supporting Indonesia's development," he said.