As Jakarta sinks, Nusantara rises as the next Indonesian capital

In old Javanese, Nusantara means ‘archipelago’.

It is also the fitting name of the new capital of Indonesia, an archipelago of over 1,700 islands in Southeast Asia – the most populous Muslim country in the world.

August 16 marked a momentous occasion for Indonesia as the country celebrated its 79th Independence Day in the new capital city for the first time, with simultaneous celebrations at the Merdeka Palace in Jakarta.

President Joko Widodo and incoming president-elect Prabowo Subianto attended the ceremony at the new presidential palace in Nusantara, built in the shape of the mythical eagle-winged figure Garuda.

The celebrations in Nusantara mark not just the nation's independence but also a pivotal moment in Indonesia’s response to an urgent crisis facing Jakarta – the megapolis of nearly 30 million people is sinking.

Dubbed the fastest sinking megacity in the world, Jakarta has sunk more than 16 feet due to the rise of the Java Sea triggered by the growing climate crisis.

The impact is most apparent in North Jakarta, which sank at an average of one to 15 cm annually over the past decade. Almost half of North Jakarta is submerged below sea level.

In 2018, experts warned that by 2050, as much as 95 percent of North Jakarta would sink below sea level, with uncontrolled groundwater extraction compounding the problem.

For Southeast Asia’s largest economy with a population of about 275 million, Indonesia’s shift from Jakarta to Nusantara – about 1,200 km (745 miles) apart - signals a transformative, though somewhat controversial, chapter for the country's future.

Capital gains

The new capital city, costing the government an estimated US$32 billion, is still under construction in East Kalimantan on the island of Borneo and is likely to be fully complete by 2045, coinciding with the 100th anniversary of the country's independence from Japanese rule.

Jakarta will remain the capital until a presidential decree is issued naming Nusantara as its new capital, which is expected to happen later this year. In March, Indonesia’s parliament designated a special status for Jakarta, maintaining its position as the nation’s economic centre.

The new capital is the flagship project of President Widodo, better known to Indonesians and the rest of the world as Jokowi.

Widodo’s incentives for attracting investment to the new capital include land rights lasting up to 190 years and a generous tax regime.

The new capital spanning 180,000 hectares will host government offices and housing units for an estimated 1.5 million civil servants and their families who would relocate to the new capital.

According to an analysis by Oxford Economics, the relocation of government administration will boost the country’s real estate sector, with total construction work growing by an average of 8.5 percent per annum between 2024 and 2028.

A legacy or mistake?

However, there have been some concerns over the new capital, especially the potential environmental impact in the East Kalimantan province, which is home to Indonesia’s indigenous people and is also a habitat of exotic wildlife.

Carmelo Ferlito, an economist and a Senior Fellow at the Institute for Democracy and Economic Affairs (IDEAS) in Kuala Lumpur, describes the capital shift as a “bad move”.

“Cities are organic entities that come to light in a spontaneous bottom-up process. Furthermore, cities are a complex and evolutionary mix of culture, politics, and economy,” Ferlito tells TRT World.

One example was of Malaysia, which moved its capital to a new ‘city’ Putrajaya in 1999, but the relocation was considered a failure. The prime minister’s office now operates from Putrajaya, but the business centre and parliament building are still in Kuala Lumpur.

D. Nicky Febriani, a political analyst from Indonesia’s Centre for Strategic and International Studies, however, believes that the relocation of the capital city represents a strategic legacy for Jokowi’s administration.

Looking through a business lens, Febriani says the new capital city is expected to generate significant economic benefits for its people.

However, for privately run businesses, it made more sense to remain in Jakarta.

A Jakarta-based public relations and content writing agency said the move to Nusantara would not make much difference to its operations.

Randy Mulyanto, founder of RadVoice, said moving operations to East Kalimantan would be a hassle, especially with the nature of his business, which included national and foreign clients headquartered in Jakarta.

The Jakarta native said that “it makes most sense if I run a business from the base in Jakarta”.

As the new capital continues to grow in Borneo, the government has rolled out plans to ensure that Jakarta remains the country's economic hub.

A new master plan unveiled by the city council envisages solving current issues Jakarta faces, like transportation, flooding and environmental degradation.

There are hopes that in the near future, the old and new capitals will rise together and stand as symbols of the past, present and the future of Indonesia.