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Politics

Indonesia to move capital out of Jakarta to jump-start economy

Government eyes alleviating pain of serious traffic jams with relocation off Java

Jakarta's Welcome Statue fountain at night. The capital and its surrounding cities are home to roughly 10% of Indonesia's population.   © Reuters

JAKARTA -- Indonesia's cabinet has decided to relocate the capital, moving the government out of Jakarta as President Joko Widodo looks to spur economic development in neglected areas of the populous archipelago nation.

The shift will take five to 10 years, said Bambang Brodjonegoro, the national development planning minister, who disclosed the decision to reporters on Monday. Among the options under consideration, he said that a development plan that accounts for 1.5 million residents would cost an estimated 466 trillion rupiah ($33 billion).

Widodo "has decided to relocate the capital from Java," the minister said, referring to Indonesia's crowded main island.

Jakarta's traffic problems keep worsening, Brodjonegoro said. He added that economic losses from traffic congestion in the capital was estimated to reach 56 trillion rupiah in 2013, and might inch closer to 100 trillion rupiah a year from now. The planned construction of new mass rapid transit lines is unlikely to solve the traffic problems.

"Commuting time now takes two to three hours one way, and four to five hours for a round trip," the minister said, "not to mention when traffic is more severe [than usual]."

The administration has yet to pick a destination for the new capital, but one candidate is Palangkaraya, a city 900 km northeast of Jakarta on the island of Borneo.

Widodo, who is known widely by the nickname Jokowi, told the cabinet that the relocation was designed to jump-start the economic engine in the country's more outlying regions. "We must plan a vision for national development," the president said.

Greater Jakarta is home to 30 million residents, over 10% of the population. Investments and other economic development have been concentrated in the area, leading Jakarta to gain the dubious distinction of having the world's worst traffic congestion. A severe housing shortage has emerged as well.

Jakarta also is one of the world's fastest sinking cities, and it is prone to flooding. Many have advocated for moving the seat of government to minimize the impact of natural disasters on state administrative functions.

Widodo is expected to be certified as the winner of the April 17 presidential election. Relocating the capital likely will become a defining policy decision for his second term in office. However, the nation has posted perennial budget shortfalls, which could hinder the infrastructure investment needed for such an expensive move. Brodjonegoro said the government wants to invite as many private sector companies as possible to minimize the use of state budget to finance the relocation.

The idea of moving the capital from Jakarta has been floating around for decades -- Indonesia's first president and founding father Sukarno actually prepared Palangkaraya as the new capital. Widodo's predecessor, Susilo Bambang Yudhoyono, also revived the idea halfway through his 10 years in office.

But this time Widodo has specifically requested the National Development Ministry conduct a feasibility study for the relocation plans. Brodjonegoro on Monday, however, refused to say if Palangkaraya remains on the table, citing worries it would fuel wild speculation on land prices in the area.

He only said it is supposed to be a completely "new city," and that the president wants it to be outside Java -- preferably in eastern Indonesia.

Indonesia would follow other Southeast Asian nations that transferred capitals in whole or in part for economic or national security reasons. Myanmar moved its capital from Yangon to Naypyitaw in 2006. Malaysia shifted certain central government organs from Kuala Lumpur to nearby Putrajaya starting in the mid-1990s.

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