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 - Proyek giant sea wall harus libatkan pihak ketiga
16 June 2025
By Heru Febrianto
The government must involve third parties, such as regional governments and foreign investors, to realise the development of the giant sea wall, a National Strategic Project (PSN) spanning 500 kilometres from Banten to Gresik, East Java.
Although the project has been listed as a PSN under Presidential Regulation No. 12 of 2025 on the 2025–2029 National Medium-Term Development Plan (RPJMN), current fiscal conditions limit the government’s ability to finance it independently.
According to Centre of Reform on Economics (CORE) Indonesia Executive Director Mohammad Faisal, the inclusion of the giant sea wall in the PSN list underscores its status as a government development priority. However, the feasibility of its implementation depends heavily on the capacity of the state budget (APBN).
“As we know, APBN funding is very limited at present—especially with allocations now directed to programmes like Danantara and Free Nutritious Meals (MBG). Forcing APBN to fund this project outright would be risky,” Faisal told Investor Daily on Sunday, 15 June 2025.
In addition to the MBG and Three Million Homes Programmes, continuing the giant sea wall has been a campaign promise of the president elected in the 2024 election.
Faisal believes the central government should collaborate with regional governments, particularly the Jakarta Provincial Government, to support the initial phase of the Jakarta Bay segment, which is expected to cost between US$8–10 billion.
“Jakarta’s regional budget (APBD) also faces constraints, but it is still relatively larger than most other regions,” he explained.
However, funding the giant sea wall will still place a burden on Jakarta’s APBD. The province already has strategic priorities, including job creation and purchasing power improvement, especially for residents in the capital.
“This requires careful, calculated planning. It should be implemented in instalments—each year aligned with Jakarta’s fiscal capacity,” he added.
Separately, Digital Economy Director at the Centre of Economic and Law Studies (Celios), Nailul Huda, noted that the project’s budget—estimated at Rp1,300 trillion—exceeds the cost of building the new capital (IKN). Given the state’s limited revenues, he said it is unlikely that the APBN can finance the seawall alone.
“Even though it is listed as a PSN, I believe it is unrealistic to expect the APBN to fund it. President Prabowo’s priority programmes—free meals, health checks, and IKN—already require enormous funding. Forcing this project could inflate the fiscal deficit and increase debt, undermining budget health,” he warned.
Nailul also argued that not all PSNs deliver meaningful economic returns. In his view, the giant sea wall’s benefits may be short-lived, with economic activity peaking during the construction phase but offering limited national impact after completion.
“In fact, there may be more cost-effective alternatives to mitigate coastal disasters,” he added.
From an investor perspective, Nailul noted that profitability will be a key factor in deciding whether to participate—whether returns are direct or indirect.
“With limited guarantees from the government, the project risks ending up like IKN, which is also competing for the same pool of investors. Despite having its own authority body, IKN has struggled to draw funding. I suspect this project will face similar challenges,” he concluded.
Establishing a dedicated authority
In his keynote speech at the 2025 International Conference on Infrastructure at Jakarta Convention Centre (JCC) on Thursday, 12 June, President Prabowo reaffirmed the government’s commitment to launching the giant sea wall as a PSN. He described it as a vital infrastructure project to protect Java’s northern coast from tidal flooding and extreme climate change.
“I want to emphasise—this is one of the most strategic and vital infrastructure projects for our country. It is a megaproject, but we must pursue it,” said Prabowo, as quoted on setkab.go.id on Sunday, 15 June 2025.
He revealed that the project has been in planning since 1995 and is expected to stretch 500 kilometres from Banten to Gresik, at an estimated cost of US$80 billion. The initial phase in Jakarta Bay is forecast to take 8 to 10 years, while the full project may take up to 15 to 20 years.
“To reach East Java may take 20 years—but that is fine. As the old saying goes, a journey of a thousand miles begins with a single step. And we will begin now,” President Prabowo declared.
To oversee implementation, he announced plans to establish a new entity: the North Coast Sea Wall Authority (Badan Otorita Tanggul Laut Pantai Utara Jawa).
He also stressed the importance of close collaboration between central and local governments—especially DKI Jakarta—in funding the Jakarta Bay phase.
“For the Jakarta Bay segment, we are looking at US$8–10 billion. I believe we can handle it. I have spoken with the Governor of Jakarta, and we have agreed—Jakarta and the central government will share the cost. If it is US$8 billion over eight years, that is US$1 billion per year. The Finance Minister looked tense when I said that—‘Relax, Jakarta will contribute,’ I said. So it is half from Jakarta, half from the central government,” he added.
President Prabowo reiterated his openness to international partnerships, while affirming that the project will start with domestic resources.
“We welcome interest from companies in China, Japan, Korea, Europe, and the Middle East. But we are not waiting. We will proceed with our own capabilities,” he concluded.
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