JAKARTA -- President Joko Widodo on Monday announced the location of Indonesia's new capital in East Kalimantan Province, the Indonesian part of Borneo island. He cited the need to ease the burden on Jakarta and the rest of Java island, and to jump-start the economy in other parts of the archipelago nation.
The new capital location will straddle two districts: Penajam Paser Utara and Kutai Kartanegara in East Kalimantan Province. It is the site that the government had earlier said it was considering near Balikpapan and Samarinda, the province's two largest cities, which are a two-hour flight from Jakarta. The capital will be built on 180,000 hectares of land already owned by the government, thereby minimizing the cost of land acquisition. Earthquakes, flooding and volcanic eruptions are less common in that area.
"Why the urgency now? Because we cannot let Jakarta and Java island continue to carry burden that is getting heavier from population density, severe traffic jams and air and water pollution that need to be tackled," the president said in a speech broadcast live on TV.
"The economic gap between Java and outside Java has continued to widen despite the regional autonomy policy launched in 2001," he added. He noted that 54% of Indonesia's more than 260 million people reside on Java and 58% of the country's gross domestic product is produced on the island, despite it being the smallest of Indonesia's five major islands.
Balikpapan is home to oil refineries and a port, making it an economic center of Kalimantan. Samarinda is the capital of East Kalimantan Province. Compared with other parts of Kalimantan previously considered, much of the necessary infrastructure is already in place. Both cities have an international airport, and they could be connected to the rest of the island via highways and railways.
Widodo earlier said he wants the new capital to be a green, smart city, meaning he wants it wired with the latest information and communications technology. The aim is also to keep the city compact, so it does not harm surrounding tropical rainforests.
Widodo made formal his bid to build the new capital during a parliamentary speech on Aug. 16, when he urged lawmakers and the rest of the nation to support the capital move.
Meanwhile, the nation is still divided over whether the costly relocation is necessary. Backers share the president's concerns over Jakarta's worsening traffic congestion, air pollution, subsidence and high property prices -- as well as the need to jump-start the economy in the less developed eastern parts of the country.
Critics, however, question the feasibility of such a massive project. They cited concerns over rising debt, its vulnerability to corruption -- which often afflicts lucrative public projects in Indonesia -- as well as deforestation.
"Please consider this matter carefully -- we cannot throw away money only for the sake of something unclear, only for the sake of reputation," said lawmaker Bambang Haryo of the opposition Gerindra Party last week.
According to the International Monetary Fund database, Indonesia's general government gross debt is estimated at 29% of its GDP, the second lowest among the 10 member states of ASEAN only after Brunei, but the ratio has risen nearly 5 percentage points in the past five years.
Responding to environmental activists' outcry over deforestation concerns, National Development Planning Minister Bambang Brodjonegoro said on Monday that half of the total allotted 180,000 hectares will be "green space" and that protected rainforests in the areas will stay untouched. He also said the new capital will be concentrated on 40,000 hectares in Bukit Soeharto, a forested area between Panajam Paser Utara and Kutai Kartanegara districts.
Public Works Minister Basuki Hadimuljono said he expected the design of the new capital to be completed this year, with construction beginning next year. Public works -- including roads, water lines and dam construction -- are expected to be complete in three or four years, and construction of government offices to start in 2023. The government is targeting the capital move to begin in 2024 -- the year Widodo ends his second five-year term in office.
While many government agencies will relocate, the central bank and other economic agencies are set to stay in Jakarta.
National Development Planning Ministry said the move will cost an estimated 466 trillion rupiah ($32.7 billion), with the government intending to cover 19% of the cost. The rest is expected to come mainly from public-private partnerships, as well as direct investment by state-owned enterprises and the private sector. The plan will see about 1 million people move from Jakarta to the new capital, making construction of basic facilities such as housing and schools a challenge.
Nikkei staff writers Bobby Nugroho and Ismi Damayanti contributed to this story.