Jakarta. Australian investors are still in a wait-and-see mode before they decide to invest in Indonesia’s new capital city Nusantara, according to the economic think-tank INDEF.

“Australia is adopting a wait-and-see stance and taking their time when it comes to investing in Nusantara,” INDEF executive director Tauhid Ahmad said in a phone interview with the Jakarta Globe on Thursday.

“Even if Australian investors were asked to make an investment in Indonesia, they will gravitate towards the eastern part of the archipelago such as Papua, Maluku or Nusa Tenggara, which is closer to Australia,” Tauhid said.

Tauhid said Indonesia had been generous with the incentives given to the investors who would help the Southeast Asian country build a city from scratch in East Kalimantan. These incentives include tax holidays and super tax deductions, among others.

“The problem [in getting investors to Nusantara] lies in the land's status. Some of the lands that the government offers are not in a ‘clean and clear’ state. Investors wish to see some basic infrastructures being built before they invest. The government should use the state budget to work on the basic infrastructure,” Tauhid said.

“Population is also another thing that investors, in general, would take into account. They have their own calculations and would come if the population [in Nusantara] has hit a certain level,” he added.

President Joko “Jokowi” Widodo earlier this week went to Sydney to meet Australian Prime Minister Anthony Albanese. During the joint presser with Albanese, Jokowi said that Indonesia encourages the Australian private sector and the country's national capital authority to work with the Nusantara capital city authority body.

As of mid-June 2023, the new capital city has amassed over 200 letters of intent (LoI). About 106 of these LOIs came from domestic investors. Japan submitted 26 LOIs, while 22 Singaporean investors expressed interest in the megaproject, the city’s authority body reported.

According to initial government estimates, the construction costs of the new capital reach a whopping Rp 466 trillion ($30.9 billion). However, the state budget will only cover 20 percent of the costs, while the rest of the money is expected to come from the private sector.

Read More: With 5% Growth, Indonesia Needs 5 Decades to Become Developed Nation: Expert

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