Indonesia Faces Challenges with $33 Billion Capital Relocation to Nusantara Amid Investor Withdrawals and Construction Delays

Indonesia’s ambitious $33 billion plan to relocate its capital from Jakarta to Nusantara in Borneo is facing significant challenges. Jakarta, the current capital, is sinking rapidly, with predictions stating about a third of the city could be underwater by 2050. Nusantara, promoted as a modern, environmentally sustainable city, aims to alleviate Jakarta’s congestion and environmental issues while fostering economic growth across Indonesia. However, the project is now at risk due to financial difficulties, logistical setbacks, and growing concerns over its impact on local communities and the environment.

• Jakarta is sinking at an alarming rate, with 40% of its area already below sea level.
• The Indonesian government plans to move the capital to Nusantara in Borneo, a project estimated at $33 billion.
• Nusantara aims to be a high-tech city powered by renewable energy, with housing for around 2 million people.
• The relocation is intended to reduce regional inequalities and promote environmental sustainability.
• Challenges include investor pullout, project heads resigning, and concerns about meeting construction deadlines.
• SoftBank of Japan withdrew from investment negotiations in 2022, and no significant investments have materialized despite government efforts.
• Critics argue the project could displace 20,000 indigenous people and accelerate deforestation.
• There are concerns the new capital won’t address Jakarta’s existing problems and could distance the government from its people.
• The future of the project is uncertain, with the project’s leadership changing and the possibility of a new president redirecting priorities.

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