There were 100 letter of interest from domestic and foreign investors in building the new capital city

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STRATEGIC ASSESSMENTS. The development of the new capital city (IKN) in East Kalimantan continues to be carried out. Minister of Finance Sri Mulyani Indrawati emphasized that the government had prepared a large amount of funds for the construction of IKN. The former Managing Director of the IMF at Grand Jatra Balikpapan, East Kalimantan said that in the 2023 fiscal year, IKN will receive a budget allocation of IDR 23.9 trillion from the state budget. The majority of the money will be used to build infrastructure in the new capital city.

The IKN itself will be built in stages until 2045. The first phase has been carried out since 2022 until 2024. Danis Sumadilaga, Head of the IKN Nusantara Infrastructure Development Implementation Task Force, explained that in this first phase the focus of development will be on basic infrastructure, starting from the supply of drinking water, electricity to waste management.

To date, there are 29 projects at IKN Nusantara East Kalimantan have signed contracts. The project is included in the infrastructure development under the Ministry of Public Works and Public Housing phase I from 2022 to 2024.

In the series of projects, there is the construction of the minister’s house, the IKN Toll Road, the President’s Office, the Office of the Presidential Secretariat, to a number of Ministry offices. So, 29 project packages will be built and targeted for completion in 2024. The 29 projects that have signed contracts are valued at Rp 25 trillion. Meanwhile, a total of 34 PUPR project packages are planned with a total budget of IDR 46 trillion.

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Overall, the progress of infrastructure development in the New Capital City (IKN) in East Kalimantan has only reached 12-15%. For now the PUPR Ministry is focusing on building basic infrastructure for IKN, starting from water sources (dams), roads, and also starting to build the State Palace of IKN.

The government claims that investors’ interest in investing in the New Capital City (IKN) is many times the initial investment target. For example, from the Initial Socialization of Investment Opportunities at IKN (Pre-Market Sounding) on August 22th 2022 it was stated that the demand was higher than the initial offer than was offered by 38 hectares (ha), land requests from potential investors (based on Letters of Interest) reached 965 ha or 25 times.

Furthermore, during the Market Sounding with the President of the Republic of Indonesia on October 18th, 2022 the results were that until early January 2023, land requests had reached 1,693 ha or 44 times as much. A total of more than 100 letter of interest from domestic and foreign investors, of which 71 have provided Letters of Intent from various sectors which were received by the IKN Investment Team with details on education (18 investors), Infrastructure and Utilities (18 investors), 9 investors working on Mixed Use and Commercial; 9 real estate investors; 6 Consulting Services investors; 5 health investors; 3 private and state-owned office investors, 2 government office investors and 4 technology investors.