President's muted Nusantara support chills investment
The President made no mention of the country’s future capital city under construction in East Kalimantan in his State of the Nation address last Friday.
President Prabowo Subianto omitted any reference to the upcoming capital city, Nusantara, in his recent State of the Nation address. The absence of top-level endorsement has dampened investor confidence as they await concrete government action to relocate people and economic activity from Jakarta to the new city in East Kalimantan.
The 2027 state budget proposal, leaked by the government on Monday, allocates Rp 6.7 trillion (US$377 million) for Nusantara's development, a slight increase from this year's Rp 6.3 trillion. However, this pales in comparison to the Rp 89 trillion invested in the project from 2022 to 2024 during the Joko "Jokowi" Widodo administration. Only Rp 5.3 trillion of the 2027 budget will be dedicated to ongoing construction of government buildings, the rest allocated to project management.
The IKN Authority, which oversees Nusantara's progress, noted that the relocation of the capital is not a priority for Prabowo, and they are treating it as a sunk cost. Center of Economic and Law Studies (CELIOS) director Bhima Yudhistira expressed disappointment, stating that the government has shown no signs of accelerating the move of civil servants or channeling new investments through the state asset fund Danantara.
As it stands, Nusantara risks becoming a financial burden on the state budget without substantial new investment. The project's operating and maintenance costs are steadily increasing, and the government is still paying off the debt incurred during its construction.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
