This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Ibu Kota Baru: Mengerek tinggi target investasi IKN
29 January 2024
By Alifian Asmaaysi and Hendra Wibawa
The Nusantara Capital City (IKN) Authority aims to secure investments exceeding Rp100 trillion this year, constituting 21.5% of the total budget required for the development of the new capital city in East Kalimantan, which amounts to Rp466 trillion.
It looks like the political landscape of 2024 is not a challenge for the IKN Authority to secure new investors for IKN in East Kalimantan.
The hard work of the IKN Authority is required as the total investment value committed to the new capital city project in North Penajam Paser Regency in East Kalimantan has only reached Rp47.5 trillion as of January 2024.
The investment value represents the cumulative capital injected by investors, spanning from the initial groundbreaking phase to the fourth phase, covering the period from September 2023 to January 2024.
The data from the IKN Authority shows that, out of the total investment of Rp47.5 trillion, private investors have injected Rp36 trillion, while private investors have contributed Rp35.9 trillion. The capital from private investors is actively contributing to projects that have already undergone groundbreaking, indicating their ongoing progress.
IKN Authority Head Bambang Susantono said that the political year associated with the 2024 elections in Indonesia would not affect the willingness of investors to invest.
Furthermore, the concurrent global elections are not anticipated to impact the eagerness of investors to channel their capital into East Kalimantan.
He noted that there were at least 57 countries holding elections in 2024. The countries include South Africa, the United States of America, India, the UK, and several European countries.
According to him, investments from overseas will come flooding in, in accordance with the massive development of basic infrastructure projects built in the first phase.
“I think that there will be other positive sentiments that we can create, especially with those who have entered,” he said at Nusantara Fair 2024 on Saturday (27/1).
Nusantara Fair 2024 that was held until Sunday (28/1) is one of the efforts carried out to introduce IKN to the people and attract new investors.
He hopes that people can actively contribute to spread the purpose of IKN, which involves promoting equitable economic growth throughout Indonesia.
To offer assurance to foreign investors, Bambang plans to designate domestic investors who have invested in IKN as ambassadors. They will serve as spokespersons to communicate the market certainty and advantages of the new capital city to potential foreign investors.
He also guarantees that foreign investors will be attracted to invest after seeing the number of domestic investors that have carried out groundbreaking in IKN.
“We hope that [they] will be our spokespersons to communicate with those who have not participated in the market. You can say that we will create the market,” he said.
Bambang's statement appears to contradict the remarks made by Thomas Trikasih Lembong, the co-captain of the Anies-Muhaimin (AMIN) campaign team. Lembong mentioned that investors remained hesitant to invest in IKN due to the unclear profit margin.
Besides that, Bambang also stated that the market share in IKN continued to accelerate in accordance with the massive development in the would-be new capital city of Indonesia.
Furthermore, the smart city design of IKN will incorporate eco-friendly smart technologies. Bambang believes that this policy will turn IKN into an economic magnet.
“The market size will develop as it is a capital city. What we are building is a city, not a real estate. The city will be a sophisticated capital city with smart and green technologies,” he stated.
Hence, Bambang is also targeting the investment process in IKN to continue this year.
He mentioned that IKN’s investment target for 2024 was to surpass Rp100 trillion.
“The investors could be public and private [investors]. Public investors include state-owned enterprises (SOEs) and non-governmental institutions,” Bambang said.
The 2024 investment target of Rp100 trillion encompasses the construction of various public facilities, such as four hospitals, six hotels, and four shopping centres.
IKN Authority Funding and Investment Deputy Agung Wicaksono noted that the committed direct foreign investment in IKN reached Rp55 trillion.
According to him, the committed foreign direct investment will be mostly allocated for the housing sector, especially for the procurement of housing for civil servants.
“[The amount of investment] to construct housing for civil servants has reached around Rp55 trillion. The housing will be constructed using the PPP (public-private partnership) scheme,” Agung said.
The banking sector's enthusiasm for IKN development is also evident, as demonstrated by entities like PT Bank Mandiri (Persero) Tbk.
Bank Mandiri Vice President Director Alexandra Askandar said that Mandiri had taken steps to support IKN development, such as issuing IKN-themed E-money.
“We are making IKN versions of E-money with the aim of introducing IKN to a wide audience,” Alexandra said.
