Government relocation: Indonesia’s capital move

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A move from Jakarta to the island of Borneo might not be all that it seems.

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This week brought news on the planned location of Indonesia’s new capital city. The plan, announced in April, to move government functions out of gridlocked and sinking Jakarta will see construction commence in 2021, with government starting to move from 2023.

The location, we now know, will be East Kalimantan, on the island of Borneo, near to the city of Balikpapan.

This all sounds pretty exotic from a distance, and there seems to be some belief that the government will be relocated to remote jungle, rubbing shoulders with unknown tribes and orangutans.

We hate to take the sheen off this dreamy image, but Balikpapan is actually quite a big place, and has been for some time. It has non-stop flights from Singapore. It has a Sheraton and a Novotel. It has at least two Irish pubs that we’re aware of.

Granted, the plan seems to be to build a new city near Balikpapan, rather than turning the existing port city into the capital, but it’s not likely to be quite the hardship posting some are already fearing. And given that the benchmark for custom-built government capitals in Asia is set by the weird and empty Naypyidaw in Myanmar, the hurdle for relative success is quite low.

If the relocation goes ahead, there will be big business in it for banks. Costs for the new city have been estimated at Rp466 trillion ($32.7 billion), much of it having to come from the private sector or in private-public partnerships.