On August 17, 2024, Indonesia will undergo a significant transformation. Jakarta will relinquish its title as the nation’s capital, a role it has held for decades. In a historic move coinciding with Indonesia’s Independence Day, Nusantara (IKN) will be inaugurated as the new capital city.
But why is this monumental change happening?
Jakarta is facing an existential crisis. The megacity, home to over 10 million people, is sinking alarmingly. This dire situation has prompted the Indonesian government to relocate the nation’s capital to a new town named Nusantara on the island of Borneo.
The land subsidence phenomenon in Jakarta is not new, but its pace has accelerated in recent years. North Jakarta has sunk 8.2 feet in the past decade, and certain areas continue to descend over 11 inches annually. The average sinking rate across the city is between 0.4 to 5.9 inches annually. This rapid subsidence has resulted in nearly half of Jakarta being submerged under the sea level, posing a significant threat to its future.
The primary culprit behind this sinking is the excessive extraction of groundwater. Jakarta’s infrastructure was not designed to accommodate its explosive growth, leading to an inadequate piped water supply. As a result, residents and industries have resorted to illegally drilling for water, weakening the ground beneath them.
The consequences of Jakarta’s sinking are manifold. Infrastructure such as roads, bridges, and buildings are increasingly at risk of damage due to the uneven ground. The city’s geography, compounded by the subsidence, makes it highly susceptible to flooding, especially during the monsoon season. Economically, the cost of maintaining and repairing damaged infrastructure is soaring, and businesses are facing the tough decision of whether to stay and adapt or relocate.
The social impact is equally significant. Communities in the most affected areas are experiencing frequent flooding, which disrupts daily life and livelihoods. The fishing industry, which many locals depend on, is struggling as the coastal waters become more polluted and less accessible due to land changes.
The Indonesian government plans to invest an estimated $35 billion in the construction of Nusantara, which is expected to be completed by 2045. However, about 6,000 government workers are anticipated to move there for the next president’s inauguration in October. The site in East Kalimantan was chosen due to its proximity to the sea and relatively low risk of earthquakes, tsunamis, or volcanic eruptions.
Ranked as the 16th largest economy worldwide, Indonesia is prominent in the G20. Its gross domestic product (GDP) of $1.32 trillion accounts for over a third of ASEAN’s total output of $3.6 trillion. Projections indicate that Indonesia’s GDP will surge by more than 50% to surpass $2 trillion by 2028. With its expanding economic influence, Indonesia has actively pursued membership in the Organization for Economic Cooperation and Development (OECD) in recent years.
For President Joko “Jokowi” Widodo, Nusantara represents a new administrative hub and a transformative engine of economic vitality. This platform will lay the groundwork for a green economy, advanced technology, and knowledge-driven progress. Widodo has long advocated for decentralizing Indonesia’s development away from Java, which currently houses over half of the population and a proportional share of the economy, towards regions like Kalimantan, the Indonesian portion of Borneo, which presently contributes a mere 8% to the national GDP.
President Joko “Jokowi” Widodo envisions Indonesia’s new capital as a catalyst for a transformative chapter in the country’s economic trajectory: one characterized by sustainability, inclusivity, and a focus on industries essential for driving the transition to a zero-carbon future. Nusantara is poised to emerge as a pivotal nexus for education, innovation, and the cultivation of high-tech, low-carbon industries.
Specific initiatives include:
In the second phase of Nusantara’s development (2024-2029), plans include the establishment of educational and innovation hubs alongside world-class healthcare facilities. Hendricus Andy Simarmata, president of the Indonesian Association of Urban and Regional Planners, advocates for the swift relocation of institutions like the University of Indonesia to Nusantara. He envisions this move creating a vibrant intellectual, social, and economic ecosystem fueled by students’ expenditures and civil servants’ remittances to their families. Simarmata terms this phenomenon “crowd making,” underscoring the importance of attracting youthful energy to invigorate the new capital’s economy and society.
On November 15, 2023, the IKN Authority signed a Memorandum of Understanding (MoU) with Stanford Doerr School of Sustainability at Stanford University, California, with President Joko Widodo in attendance. The MoU aims to establish a world-class research center within IKN Nusantara. Bambang Susantono, Head of the IKN Authority, stated that the research would cover topics such as water management, sustainable urban development, and robotics.
The transition to Nusantara is a monumental task, and its success will depend on careful planning and execution. Meanwhile, Jakarta’s residents continue to grapple with the daily realities of living in a sinking city. How many residents will relocate to IKN over the next decade?
The new capital represents a leap into the future, embodying modernity and eco-friendliness. The 2020–2024 RPJMN outlines a well-structured financial plan, combining public and private investments for this 21st-century city.
Challenges persist, with Jakarta maintaining its cultural and economic significance despite environmental risks. Conversely, the new capital offers attractive prospects for private investment in infrastructure and services, promising shared benefits through various revenue models.
Success hinges on the government’s transparency and community engagement, ensuring decisions benefit the public. This landmark initiative could set a global example of integrating development with cultural and environmental stewardship.
