Call Us Now +62 21 390 8271
Call Us Now +62 21 390 8271
[News] New Capital, New Economic Bump?
Posted at: 28 August 2019


The site of the new unnamed Indonesia's capital, 2,000 km (1,250 miles) northeast of Jakarta, is one of the regions least prone to the natural disasters that regularly hit the archipelago of 17,000 islands.

There are also economic and political reasons for moving the capital from Java, which Widodo said was home to 54% of Indonesia’s 260 million people and generated 58% of its gross domestic product.

“Investors will need to see what the return on their investment would be,” Hariyadi Sukamdani, chairman of the Indonesian Employers Association, told Reuters.

Indonesian Chamber of Commerce deputy chair Shinta Kamdani hailed the new capital as a “positive” for Indonesia, but urged that companies be informed of the timeline for the move of each government office to limit disruptions.

Indonesia is not the first Southeast Asian country to move its capital.

In 2005, Myanmar’s ruling generals moved to Naypyidaw, a town in hills some 320 km (200 miles) away from the colonial era capital, Yangon. In the 1990s, Malaysian leader Mahathir Mohamad built an administrative capital in Putrajaya, about 33 km (20 miles) from Kuala Lumpur.

Widodo said the government would soon submit a bill and the result of a feasibility study to parliament, so as to to secure approval for the new capital, a measure that analysts expect will be passed quickly.

Land acquisition will start next year, Planning Minister Bambang Brodjonegoro said. ($1=14,210.0000 rupiah). (source: Financial Post)