A vehicle convoy carrying President Joko Widodo inspects the area for the new capital city in North Penajam Paser District, East Kalimantan, on Dec. 17, 2019. (Antara Photo/Akbar Nugroho Gumay)

Indonesia Sets Up Special Agency to Deal with Investments in New Capital City


FEBRUARY 27, 2020

Jakarta. The Indonesian government will introduce a special agency whose main task is to handle foreign and domestic investments in the development of the country’s new capital city in East Kalimantan, officials said on Wednesday.

The new agency will have powerful authority to license potential investors without the consent of the existing Investment Coordinating Board, or BKPM, National Development Planning Minister Suharso Monoarfa said after a cabinet meeting led by President Joko Widodo at the State Palace in Central Jakarta.


"We want the new capital to have a special government run by a unitary authority, which we call the Capital Authority Agency,” Suharso told reporters.

“The agency will handle one-stop service of investments,” he said.

Investors from South Korea, Japan, Spain, the United States and Germany have expressed interests in taking part in the constructions of the new capital city, he said.

However, no deal has been made because the government is still working on selecting projects that need foreign investments and determining the financing schemes, he added. 

"The [investment] opportunity is open to anybody. We encourage other countries to come and leave their footprints in the new capital. They may choose investments depending on their specialty, be it public transportation, clean water supply or environmentally friendly power plant,” he said.

Chief investment minister Luhut Binsar Pandjaitan said the new agency will be led by an official of ministerial level.

The president is currently selecting candidates to lead the agency, he said.

Soft Groundbreaking

Suharso said the government expects to carry out “soft groundbreaking” -- his terms for the construction of basic infrastructures -- of the new capital later this year.

“Hopefully the master plan can be finalized by the mid of the year to determine the point of origin of the capital so we can carry out soft groundbreaking this year,” Suharso said.

The real construction works will begin in the end of the year at the soonest, he said.

“If everything goes as planned, by the first half of 2024, the new city will be able to function as the new capital,” he said.

The new capital city will be built in a new area that traverses the North Penajam Paser and Kutai Kartanegara districts in East Kalimantan, occupying a total area of around 180,000 hectares.

The capital relocation project is expected to cost the government around $33 billion, 19 percent of which to be paid for by the state budget and the rest by local and foreign investors.