Indonesia's Economy
Nusantara: Building a New Capital
Why Indonesia is moving its capital from sinking, congested Jakarta to Nusantara in Borneo, the costs, and doubts about the project.
Indonesia is building a new capital, Nusantara, in East Kalimantan on Borneo.
Why move
- Jakarta is sinking, partly due to groundwater extraction; parts sink several centimetres a year.
- Congestion and flooding.
- Spreading development beyond Java.
The plan
- Announced by President Jokowi in 2019.
- Estimated cost around 30 billion dollars, with most expected from private investors.
- Ceremonies held there on Independence Day in 2024.
Doubts
- Private investment has been slower than hoped.
- Environmental impact on forests.
- President Prabowo Subianto (from October 2024) cut its budget priority.
Other examples
Brazil moved its capital to Brasília (1960); Nigeria moved to Abuja (1991).
Economic question
Can a planned capital attract enough people and business to thrive?
The sinking coast
A neighbourhood in north Jakarta sits below sea level behind a seawall, as the ground keeps sinking.
Thinking new capitals quickly become thriving cities
They often grow slowly and need huge investment.
Key takeaways
- Indonesia is building a new capital, Nusantara, in Borneo.
- Jakarta is sinking and congested.
- Costs are about 30 billion dollars; private investment lags.
- The project's priority fell after 2024.
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