Fate of Indonesia’s Nusantara in doubt again as Prabowo skirts around Widodo legacy project
- New manifesto makes it clear Prabowo’s focus is on his own policies, including a free lunch initiative, rather than the new capital, analysts say
The fate of Indonesia’s US$33 billion new capital city project is once again in question after president-elect Prabowo Subianto published a manifesto outlining his agenda that failed to mention the controversial legacy project of outgoing leader Joko Widodo.
In an op-ed published last week in Newsweek, the former special forces commander said he “intends to carry forth” his predecessor’s programmes but spent the piece detailing a new set of policies that he campaigned on, including an ambitious free school lunch programme.
Analysts said the op-ed made clear that building the new capital, which has been dubbed Nusantara, would not be one of Prabowo’s priorities.
“It’s clear that he will choose the free lunch programme [over the new capital] because that’s his political promise,” Mohammad Faisal, executive director at Jakarta-based Centre of Reform on Economics (CORE), told This Week in Asia.
“The free nutritious meals programme requires a large budget. With the existing fiscal limitations, of course it will be difficult for Prabowo to continue with the new capital project, and Prabowo really wants to push his [own] legacy programme.”
Arya Fernandes, head of department of politics and social change at Centre for Strategic and International Studies (CSIS) Indonesia, said Prabowo was “likely sending a message” on where his priorities lay, and it was not with the previous government’s agenda.
Prabowo’s manifesto has also sparked a great deal of speculation online. User @rayestu wrote on X on June 16: “Not sure if this is a popular opinion but free lunch is better than moving the capital. If the money to build the new capital is [used] for free lunch, I’ll support it.”
Prabowo’s Gerindra Party has sought to quell doubts about the president-elect’s commitment to the new capital. Sufmi Dasco Ahmad, the party’s executive chairman, said Prabowo did not mention Nusantara in the op-ed due to “limited space”.
“Even though it is not written in, that doesn’t mean we don’t continue the new capital project. Because that has been stipulated in the law, and it is binding and must be continued,” he said on Tuesday.
No money
While the development of Nusantara is set in stone by a 2022 law to ensure the continuation of the project after Widodo is no longer in power, analysts say the pace of progress is likely to slow down under Prabowo.
“That’s why until now there have been no foreign investors who have really committed to the new capital city project, despite Jokowi’s statement that there have been many people interested. This illustrates investors’ doubts about the future of the project,” Mohammad of CORE said, referring to Widodo’s nickname.
Nusantara, Widodo’s legacy project, has been hindered by a lack of foreign investment, on which the nation is relying to bring the new capital into completion.
When Widodo announced the relocation of the capital in 2019, he claimed that only 20 per cent of the project’s initial budget of 466 trillion rupiah (US$28.3 billion) would be covered by state coffers, with the rest would come from private funds, including foreign investment.
The government has now said it will need 501 trillion rupiah over the next 25 to 30 years to turn Nusantara into a full-fledged capital city.
Over a 12-month period from January last year, total investments into Nusantara only reached 47.5 trillion rupiah, all of it domestic. The government has targeted 100 trillion rupiah of investments by the end of this year.
Investment minister Bahlil Lahadalia told a parliamentary hearing on June 11 that foreign investors had begun inquiring when they could start investing, “but we said that they can start [investing] after August 17, because the infrastructure in the second ring [of the government core area] will [be completed] by then”.
Meanwhile, Prabowo’s free lunch programmes, which aim to provide nutritious meals to more than 78 million students and 4.4 million pregnant women, will need an annual budget of 450 trillion rupiah.
A recent report by Bloomberg claimed that Prabowo planned to boost the country’s public debt to 50 per cent of gross domestic product, but one of his senior aides, Thomas Djiwandono, quickly dismissed the report, saying that Prabowo “had not set any target for debt levels and would adhere to legal limits on fiscal metrics”.
“I think Prabowo and his economic team are aware that if the [new capital city and free meals programmes] are carried out simultaneously, it will drain the state budget enormously, and economic instability will occur,” Arya of CSIS said.
“Prabowo will have to choose between ensuring a high level of trust from the public or maintaining relations with Jokowi.”
Tension with Jokowi
If Prabowo ditched Nusantara, “his relationship with Jokowi could be fractured, but Jokowi also does not want to have a conflict with Prabowo”, Arya said.
There is still an opportunity for Widodo to safeguard the project, at least during Prabowo’s first year of leadership, which is by allocating some money in next year’s state budget for building basic infrastructure in the new capital, according to Arya.
Prabowo is set to take office on October 20, but Widodo’s administration will still be in charge of next year’s state budget, to be announced on August 16.
Widodo has tried to ease investors’ concern about Nusantara’s future by making the move to work in the new capital next month, amid plans to celebrate Independence Day there with Prabowo on August 17.
In September, 11,916 civil servants are set to move to the new capital in the first wave of relocation. Project authorities said earlier this month that the development of Nusantara’s central government area was “80 per cent complete”.
