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Politics

Jokowi formally proposes moving Indonesia's capital to Borneo

Government says move from Jakarta to Kalimantan may take just five years

Indonesia President Joko Widodo delivers a speech in parliament in Jakarta on Friday.   © Reuters

JAKARTA -- President Joko "Jokowi" Widodo formally proposed to parliament on Friday a plan to relocate Indonesia's capital from Jakarta to Kalimantan on the island of Borneo.

"I ask for your permission and support, respected members of the parliament, and the entire people of Indonesia ... to relocate the nation's capital to Kalimantan island," Widodo said in a speech in parliament to commemorate the 74th anniversary of Indonesia's independence, which is on Saturday. "The capital will not just serve as a symbol of national identity, but also representation of the nation's advancement. This is for the sake of even [development] and economic justice."

The president had previously said Central Kalimantan, East Kalimantan and South Kalimantan -- three provinces on Indonesia's parts of Borneo island -- were among potential sites for the new capital.

Bukit Soeharto, an undeveloped forest area in East Kalimantan, is reportedly one of the top candidates as it sits at the midpoint of a key toll road that runs between the province's two largest cities, Balikpapan and Samarinda. The area is about a two-hour flight from Jakarta. Palangkaraya, the capital of Central Kalimantan province, is another contender.

The national development planning ministry has estimated that the project would cost 466 trillion rupiah ($32.5 billion). Less than 10% would be financed by the state, with public-private partnerships expected to cover the bulk of the development costs.

National Development Planning Minister Bambang Brodjonegoro said last week the capital relocation might take just five years to complete. Basic infrastructure will be built in 2020-21, while construction of government offices and supporting facilities will be carried out between 2022 and 2024, which would be Widodo's last year in office.

Plans to move the capital were initiated by Indonesia's first President Sukarno in the early years of independence.

The revived plan has drawn both supporters and critics alike. Backers share the government's concerns about Jakarta's chronic traffic congestion and air pollution, as well as subsidence and soaring property prices. Many support Widodo's vision of jump starting the economy in the less developed eastern parts of the country.

Critics, however, question the feasibility of such a massive project. They also cite concerns over corruption, an issue that commonly afflicts lucrative public projects in Indonesia, as well as rising debts stemming from Widodo's ambitious infrastructure plans.

Later Friday, Widodo unveiled his plans for the 2020 state budget. Spending will rise at the slowest pace in three years, showing the government is exercising caution in the face of global uncertainties stemming from factors such as the simmering U.S.-China trade war.

Next year's budget is slated at 2,528.8 trillion rupiah, an increase of 2.75% from the current year. The rise is much smaller than the 10.8% in 2019 and the 6.7% in 2018.

"We're facing continually fluctuating global economic dynamics, as well as geopolitical shifts -- with economic crises afflicting some parts of the world," the president said in his first speech in the parliament since winning reelection in April.

The increase in education spending was lower than expected, at 2.7%. This is despite Widodo's pledge to boost human capital development as one of his priority programs for his second -- and final -- five-year term.

"We must support our education and training institutions to implement major overhauls in the face of change," he said. "Global competition is getting tighter and disruptions [are happening] across various sectors. Therefore we need quality human resources."

The budget shows that he plans to push ahead with his signature infrastructure plans, under which Widodo will make development projects outside Java, where Jakarta is located, the main focus. Infrastructure spending is to grow 1% to 419.2 trillion rupiah, after significant boost in the first few years of his presidency.

Widodo also said he would shore up the social safety net to cushion the impact from the slowing global economy.

The government maintained its economic growth target at 5.3% for 2020, up slightly from this year's projection of 5.2%. It is seeking to lower the budget deficit to 1.76% from the projected 1.93% this year -- with plans to pursue digital taxation from e-commerce companies and other tech players as part of efforts to boost the country's tax revenue.

Nikkei staff writer Ismi Damayanti contributed to this story

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