Sinking feeling in Jakarta as Indonesia mulls capital move

Isabelle Meere, Advisory Associate

Indonesia’s Planning Minister Bambang Brodjonegoro announced this week that the government has decided to relocate Indonesia’s capital city. However, the location of the new capital is still undecided. President Jokowi suggested on Tuesday that he is considering spending US$33 billion on the move, which would be financed by both the public and private sectors.

Jakarta has a population of around 10 million people – with triple that in the surrounding areas –  and is widely cited as the city with the worst traffic congestion problem in the world. Jakarta is also sinking at a rapid rate, with some areas sinking up to 25cm per year. Most of the city is sinking an average of 1 – 15cm per year. Studies show that some neighbourhoods in North Jakarta could be entirely submerged by 2050. This is due to over-extraction of ground-water as well as rising sea temperatures and the location of the city on an area criss-crossed with rivers.

The idea to move the capital has been mulled by Jokowi’s administration over the past few years and has been mooted several times by different presidents since Indonesia’s independence. The politically and logistically difficult move has never progressed passed the initial idea phase, as indicated by Jokowi in a tweet, when he asked his followers where the best location for Indonesia’s capital would be.

Bappenas, Indonesia’s National Planning Ministry, said that it is pushing for a location that is centrally located in the archipelago in order to address a sense of fairness to the whole country as well as promote economic development more evenly throughout the country. The eastern islands have often been left behind developmentally, as political and economic power is concentrated on Java.

The most likely location is Palangkaraya, the capital of Central Kalimantan on Borneo. It is centrally located and was created by Indonesia’s founding President Sukarno with a view to becoming the new capital. At this stage the proposal is just to move the administrative government functions, which will lead to Indonesia having split government and business capitals.

Implementing the move will be difficult as bureaucrats and private sector are likely to oppose the move. It would remove them from the luxuries and services of city life in Jakarta and could negatively effect private real-estate or other business interests in the current capital. Vested interests have prevented reform plans in the past.

If the reform does go through, the process will inevitably be slow. The Government has indicated it could take up to 10 years, an issue as Presidential terms only last 5 years. This could explain the timing of the announcement – straight after the elections – however the timing could also be to avoid political arguing over the issue as Jokowi is in a strong position, or to distract the population at a time when the fallout from the election is ongoing. Bappenas is set to announce further details after the official election results are announced later in May.