New capital city: IKN budget absorption reaches 57.8%

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.

Bisnis Indonesia - Ibu kota baru: Serapan anggaran IKN tembus 57,8%

31 October 2024

By Alifian Asmaaysi

Bisnis, Jakarta – The budget absorption for basic infrastructure in Nusantara Capital City (IKN) in East Kalimantan has reached 57.8%, amounting to Rp24.22 trillion out of the total allocation of Rp41.9 trillion in the 2024 state budget (APBN).

Public Works Minister Dody Hanggodo stated that the development progress of IKN was recorded up until 25 October 2024.

“[The allocation] for infrastructure support in IKN in 2024 amounts to Rp41.9 trillion. As of 25 October 2024, the implementation of physical packages in IKN has reached 57.8% of the 2024 allocation,” he explained at the work meeting with House of Representatives (DPR) Commission V on Wednesday (30/10).

He stated that the largest budget allocation was disbursed to the Highways Directorate General, amounting to Rp19.2 trillion. This funding supports the construction of road access to the mosque in IKN and the logistics dock.

Additionally, the budget for the Highways Directorate General is also allocated to support the construction of several sections of the IKN Access Toll Road, specifically sections 1, 3A, 3B, 5A, 5B-1, 5B-2, 6A, 6B, and 6C, as well as the runway at Nusantara IKN VVIP Airport.

He mentioned that the second largest funding allocation for IKN development is designated for the Human Settlements Directorate General. This funding supports projects including the construction of drinking water installations, the development of the Sumbu Kebangsaan area, and the construction of offices for coordinating ministries, the Public Works Ministry, and the IKN Authority.

“Additionally, there is funding allocated for housing infrastructure, amounting to Rp8.37 trillion. This funding is designated for the construction of landed houses for ministers and housing for the Indonesian National Police, the State Intelligence Agency, civil servants, and the Presidential Security Detail,” he added.

The final allocation, amounting to Rp1.45 trillion, is for the Water Resources Directorate General in IKN. This funding supports the construction of flood control measures at DAS Sanggai 1A, Sepaku River, Sanggai River, Seluang River, and Tengin River. Additionally, the Water Resources Directorate General is constructing flood control at Pamaluan River and enhancing and organising the Sepaku Semoi Dam area.

Next year, the Public Works Ministry will allocate a budget of Rp13.21 trillion for IKN development, which is lower than the 2024 budget of Rp41.9 trillion.

Dody also stated that the Public Works Ministry received 51 recommendations from the Audit Board (BPK) concerning issues related to IKN development.

He confirmed that the BPK's recommendations related to IKN are detailed in the BPK's audit results for the second half of 2023. “There is a report from an audit on the work in IKN. There are a total of 51 recommendations,” he explained.

The Public Works Minister explained that the recommendations on IKN development issues generally pertain to administrative matters and warnings about improper processes. However, Dody assures that these recommendations are currently being addressed by the Public Works Ministry.

Additionally, the Public Works Ministry affirms that these 51 recommendations do not impact the efficiency of the IKN development project.

“Alhamdulillah (Praise be to God), there is no inefficiency in the IKN project. Based on the two reports, the ministry has followed up on the recommendations, although not yet 100%,” he affirmed.

The BPK has released its audit results on the government's IKN development efforts in the audit summary for the second half of 2023.

Firstly, the BPK observes that the ongoing infrastructure development has not yet fully aligned with the 2020-2024 RPJMN, the 2020-2024 strategic plan of the PUPR Ministry, and the IKN Master Plan.

Additionally, the funding plan has not yet been fully sufficient. For instance, alternative financing sources besides the state budget (APBN), such as public-private partnerships (PPP) and pure investments from the private sector, state-owned enterprises (SOEs), and regional state-owned enterprises (BUMDs), have not yet been realised.

Secondly, in practice, infrastructure development in IKN is still hindered by issues related to the acquisition of forest areas.

"2,085.62 hectares out of 36,150 hectares of land are still owned by other parties because the land management rights have not yet been issued. Moreover, the certification process for five areas that have been procured has also not been completed," the BPK wrote in the document.

IKN Authority overhaul

Meanwhile, the management of the IKN Authority reported that its leadership ranks are undergoing an overhaul.

The IKN Authority Secretary, previously Jaka Santos Adiwijaya, is now Bimo Adi Nursanthyasto.

Danis H. Sumadilaga, the Head of the IKN Infrastructure Development Task Force at the PUPR Ministry, has also been appointed as the Acting Deputy for Facilities and Infrastructure, replacing Silvia Halim.

Bimo Adi, now the IKN Authority Secretary, explained that he is still awaiting the appointment of the new IKN Authority Head.

“We would like to mention that we are still waiting for the appointment of the new IKN Authority Head. Therefore, we can currently only attend with the senior high-ranking officials of the IKN Authority,” he explained to DPR Commission V.

Previously, former PUPR Minister Basuki Hadimuljono was expected to be appointed as the IKN Authority Head. However, his appointment has not yet been realised.
 

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