Will Indonesia's new capital city ever be finished?

It's not every week that a country gets a new capital city, but that's what is in line for Indonesia in the coming days — in theory at least.

August 17, 2024, the country's Independence Day, has long been marked in the calendar as the day when Nusantara, Indonesia's new capital city, will be officially inaugurated.

It's the signature project of outgoing President Joko Widodo, whose decade in charge of the world's fourth-most populous country has been defined by major infrastructure projects. Nusantara has been by far the most ambitious and controversial.

Widodo announced the plans to build a new capital in 2019, with construction eventually beginning in 2022. The idea behind it was not new. The long-time capital Jakarta is afflicted by too many problems: pollution, overpopulation, dire traffic congestion, and worst of all, severe flooding. The city is literally sinking, due to excessive levels of groundwater being pumped to alleviate water shortages.

Widodo has also spoken about Nusantara as a symbol of Indonesia's growing economic and geopolitical status and an opportunity for it to fashion its own national capital, distinct from the colonial-era government offices of Jakarta.

He has also emphasized from the start that Nusantara would be a "green city" and "zero carbon", messages he returned to this week when he held a cabinet meeting in Nusantara, amid heavy machinery and busy construction sites. "Cool air, clean air. As we dream of that we want a green capital city, be it its energy, electric vehicles, environment, air and everything," he told journalists at the event.

Unfinished Nusantara needs investment

The gathering of Indonesia's top political brass in Nusantara included Prabowo Subianto, who takes over from Widodo in October.

He insists he will carry on the project after he takes office. "I have said many times that I am determined to continue, if possible, to complete the project," he said at the event. "I believe in three, four, five years, the capital city can function."

However, the fact that he has to spell out that he will not abandon the plans to relocate the capital city points to the controversy and uncertainty that still surrounds Nusantara, just a few days out from its planned unveiling.

For starters, it's a long, long way from being finished. Although Widodo began working from the city two weeks ago, many estimates say the new capital won't be fully operational until the 2040s. Most of the core infrastructure is unfinished while many key projects have not been started yet. Construction delays have been a constant problem.

Located deep within the jungle on the island of Borneo, known as Kalimantan in Indonesia, it remains a mass of construction sites. The cost has been estimated at around $35 billion (€31.76 billion) but the government's plan is for private investment to fund around 80% of that total amount.

The country's finance minister Sri Mulyani told DW's recent Business Beyond program on Indonesia's economy that the government had spent 72 trillion Indonesian rupiah ($4.5 billion, €4.08 billion) on Nusantara over the past three years. She added that the key to financing it is establishing meaningful incentives for private investors, including significant tax breaks. Recently, Widodo announced that investors would have land rights for up to 190 years in the capital.

However, the project has so far struggled to attract sufficient foreign investment. Bahlil Lahadalia, Indonesia's investment minister, told lawmakers in the country in June that not enough foreign capital had so far been forthcoming. He blamed the fact that much of the core infrastructure is unfinished.

As well as doubts over its financial viability, the project has been the subject of significant criticism over its environmental impact. Despite being marketed as a green city, environmentalists and indigenous groups say the construction of Nusantara has sped up deforestation in a region already beset by it.

Capital ambition

Although the inauguration of Nusantara is still expected to take place on August 17, the event has been dramatically scaled back from what was originally planned. The guest list has been cut from 8,000 to just over 1,000. 

Widodo admitted this week that the list of invited diplomats and dignitaries had to be reduced as Nusantara still did not have adequate facilities. "The accommodation was not enough, as well as food, since the ecosystem has yet to be built here," he said.

It's an inauspicious start and it is increasingly clear that there will be a lengthy period of transition before Nusantara can truly function as the capital city. Although legislation has been passed paving the way for the capital's official relocation, inaugurating Nusantara will not automatically finish the job.

That official legal seal will come with a presidential decree naming Nusantara as the new capital. Widodo has admitted that may be something done by a future president, such as Subianto.

However, speaking in July, he left open the possibility that he would issue the decree before his term is up in October, saying the decision depends on whether or not water, electricity, and other infrastructure is ready.

"We would like to inaugurate it, that is actually still the most basic necessity for the city to develop and to function," Minister for Finance Sri Mulyani told DW when asked about the importance of the August 17 event.

Ben Bland, author of a biography of Widodo, told DW that the way in which the Nusantara plans were announced and then executed was typical of Widodo's presidency.

"Big idea first, details later — that embodies the way he's approached lots of other problems," he said. "So he wants to fix things, but he just wants action, action, action, rather than thinking, 'How do we best do that?'"

Bland also noted that while Widodo's ambitious visions are important for projects to ultimately be pushed through, there are still more questions than answers when it comes to Nusantara.  "Will the next President go ahead and still keep building it? Will it become a new megacity and will all the governments and embassies and major businesses move there? Or will it just be a backwater for certain government administrators? I think it's still too early to say."

For Widodo, there is no room for doubt. Speaking recently, he acknowledged that much of the city could take 20 years to complete, but there are no regrets. "The Nusantara capital is a canvas that carves the future," he said this week. "Not all countries have the opportunity and the ability to build their capital city starting from zero."

Edited by: Uwe Hessler