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Politics

Jokowi likely to place Indonesia's new capital in eastern Borneo

Move is part of an effort to address economic inequality across the country

Indonesian President Joko Widodo plans to move the nation's capital to East Kalimantan on the island of Borneo, at a cost of around $32.7 billion.    © AP

JAKARTA -- The administration of Indonesian President Joko "Jokowi" Widodo is likely to move the country's capital to East Kalimantan Province on the island of Borneo, according to a government official.

"It will probably move to East Kalimantan," a senior official involved with state planning told reporters on Thursday.

There are three sites under consideration near Balikpapan and Samarinda, the province's two largest cities. All of the sites are in forested areas owned by the government, so there will not be difficulties acquiring privately owned land. The terrain also means earthquakes and flooding are less common.

Balikpapan is home to oil refiners and a port, making it the island's economic center. Compared with other cities, much of the necessary infrastructure is already in place. Both cities host an international airport, so they could be connected to the rest of the island via highways and railways.

Widodo has said he wants the new capital to be a green, smart city, meaning he wants it to be 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.

The Widodo administration decided in late April to move the capital further east from Java in an effort to reduce economic inequality across Indonesia's many islands. In an interview with Nikkei Asian Review in June, Widodo said the capital would be moved to Kalimantan.

The administration plans to finalize the location by the end of the year. It wants to draw up development plans by 2021 and begin the move in 2024. While many government agencies will relocate, the central bank and other economic agencies are set to stay in Jakarta.

The move is estimated to cost 466 trillion rupiah ($32.7 billion). Plans call for less than 10% of the cost to be financed by the government, with public-private partnerships expected to cover the bulk of the development costs. 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.

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