Foreign investors remain cautious about Indonesia’s new capital Nusantara, despite Prabowo Subianto winning the presidential election. The government is still in need of the US$30 billion required to build the city, with no foreign investors signing any agreements so far. The results of the election are not enough to sway investors, as there are still election disputes and uncertainties around Prabowo’s leadership style. The government’s plan is for a majority of the funding to come from the private sector, with only a portion from the state budget.
The move to Nusantara is set to take place on Indonesia’s 79th Independence Day on August 17, but financial concerns continue to linger. Foreign investors were said to be waiting for the election results before committing to the project, but with no movement on that front, questions remain on what more the government can do to attract investors. Without foreign investment, the government may face difficulty in financing the new capital city.
The Central of Reform on Economics (CORE) Indonesia, a research-based think tank, has highlighted the importance of resolving election disputes and understanding Prabowo’s leadership style for investors to feel confident in committing to Nusantara. Challenges from losing presidential candidates and uncertainty around Prabowo’s approach to governance are holding back potential investors from showing interest in the mega project. The constitutional court’s ruling on the election disputes is expected to provide more clarity on the political landscape.
Mr. Faisal, executive director of CORE Indonesia, emphasized the need for investors to understand Prabowo’s vision and decision-making process before committing to Nusantara. While Prabowo has expressed his commitment to continuing the project started by President Widodo, investors are looking for more details on how he plans to lead and execute it. The lack of clarity may be a factor in investors holding back on signing MOUs with the Indonesian government for the new capital city project.
With no foreign investors onboard as of yet, the government faces a challenge in securing the necessary funding for Nusantara’s development. The reliance on private sector funding for the majority of the project cost puts pressure on attracting investors to make significant financial commitments. As the timeline for the move to Nusantara approaches, the government may need to address concerns and uncertainties to ensure that the new capital city project can proceed as planned.
