Indonesia’s new capital Nusantara sparks controversy

Indonesia’s recently passed law on a new capital city has triggered criticism on all kinds of issues, from its name to a rushed parliamentary process and concerns over the state budget and corruption.

The House of Representatives passed the bill on the new capital into law on January 18. The name, Nusantara, was revealed only a day earlier, immediately sparking reactions on social media. The Indonesian word nusantara, originating from Sanskrit, refers to the entire Indonesian archipelago, so many people pointed out that the name of the new capital could easily be confused with the whole nation.

“Since a long time ago ‘Nusantara’ means the whole of Indonesia. If you use it as the name of the capital, it sounds a bit odd to me,” one viral tweet said.

The choice of name is intended to reflect President Joko “Jokowi” Widodo’s “Indonesia-centric” push to spur development away from the island of Java, including the plan to move the administrative capital from Jakarta to East Kalimantan Province on Borneo, closer to the geographic centre of the archipelago.

Java was for decades the development focus of Indonesia’s previous governments, leading to a disproportionately heavy concentration of economic activity and population on the smallest of Indonesia’s major islands.

A map of Nusantra

Critics argue, however, that the name defeats its purpose by being “Java-centric” because the term “nusantara” was historically introduced by the Majapahit kingdom, a Java-based empire from the 13th to 15th centuries that conquered all of Indonesia.

“There is nothing more Javanese colonialist than Nusantara as the name of the capital city when you can choose [a] Borneo . . . name,” read another viral tweet.

The controversy does not stop there. Many pointed out that after the House special committee on the capital city bill was formed on December 7, it completed its deliberations in only six weeks. Critics say the rushed process failed to include sufficiently wide public consultation.

“During the deliberation process . . . we of the PKS faction felt as though we were being chased down, [and] the deliberations weren’t deep and comprehensive enough,” said Hamid Noor Yasin, a member of the Prosperous Justice Party (PKS), the only one of the nine factions in the House that rejected the law.

Indonesia’s new capital Nusantara sparks controversy

This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.

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He added the law “still contains a lot of potential problems” on content and legality.

Concerns over burdens on the state budget have been voiced by many, especially with the economy just beginning to recover from the Covid-19 pandemic. When Widodo announced the move in 2019, the government said only 19 per cent of the estimated cost of 466tn rupiah ($32.5bn) would be financed through the state budget. The government hoped to attract enough private investment to cover the rest, including through public-private partnerships.

Before the pandemic, the project attracted interest from international figures such as Abu Dhabi Crown Prince Mohammed bin Zayed and SoftBank Group chair and chief executive Masayoshi Son. But their potential participation is no longer mentioned.

Instead, a display on the new official website of the future capital, at, said the state budget would cover half of the cost, before this information was removed following the latest controversy.

“The government will follow business and financing models that will not distress the state budget. We’ll also avoid long-term debts,” national development planning minister Suharso Monoarfa told reporters after the passage of the law.

Indonesian President Joko ‘Jokowi’ Widodo and Abu Dhabi Crown Prince Mohammed bin Zayed
President Joko Widodo’s government no longer mentions potential financial support for the project from people such as Abu Dhabi Crown Prince Mohammed bin Zayed © Willy Kurniawan/Reuters

Finance minister Sri Mulyani Indrawati added that the relocation of the whole capital would be a long-term project divided into five stages to 2045, and the focus over the short term would be on basic infrastructure work. The government is currently building a dam, water system and roads near the planned “core central government area”, which will occupy roughly 6,600 hectares, or 2.5 per cent of Nusantara’s total planned 256,000 hectares.

She said such work formed part of the government’s post-pandemic economic recovery programme because it would “trigger the next development momentums”.

The latest criticisms add to previous concerns over the project’s impacts on the environment and indigenous people living on the site, which straddles the East Kalimantan regencies of Penajam Paser Utara and Kutai Kartanegara.

Furthermore, the recent arrest of the Penajam regent over alleged bribery is sparking concerns over the vulnerability of such large infrastructure projects to corruption, as occurred in the past, leading to many costly projects being abandoned.

“Jokowi has been weakening law enforcement institutions and neglecting bureaucratic reform principles that would help implement the capital move with lower corruption risks,” consultancy Eurasia Group said in a December note. “Under current conditions, there are risks that the capital move would create conflicts of interest, mark-up and kickback scandals, legal recriminations, and delays.”

Additional reporting by Ismi Damayanti.

A version of this article was first published by Nikkei Asia on January 25 2022. ©2022 Nikkei Inc. All rights reserved

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