Jakarta. The government announced Monday that they had spent Rp 18.9 trillion (approximately $1.2 billion) on building Indonesia’s future capital Nusantara in 2024 as of the end of August.

The government plans on splurging no more than Rp 44 trillion on the Nusantara project with around Rp 40.7 trillion earmarked for infrastructure development. This means that Indonesia had only used up about 43.1 percent of this year’s entire budget for Nusantara.

“We have spent Rp 16.2 trillion on building Nusantara’s infrastructure so far. We used a portion of the money to build ministerial buildings, toll roads, and airports, to name a few,” Deputy Finance Minister Suahasil Nazara told the press in Jakarta.

Some of the spent Rp 16.2 trillion went into building apartment towers for civil servants, although President Joko “Jokowi” Widodo is mulling postponing the government workers’ move to the new capital until everything is all set. An undisclosed amount of the infrastructure-related expenditure went toward flood management.

“We have used Rp 2.7 trillion to fund the city’s non-infrastructure needs [throughout the first 8 months of 2024]. That includes supporting the Nusantara authority body’s operations as well as the city’s planning,” Suahasil said.

This year’s non-infrastructure spending for Nusantara is capped at Rp 3.3 trillion.

The government’s payments usually take place after the contractors have already done their job and the construction handover.

Suahasil added: “So the 2024 total spending for the new capital will significantly pick up pace when we get closer to the end of year.” 

The government has alloted a total of Rp 76.5 trillion in state funds for the new capital -- which lies in East Kalimantan -- for 2022-2024.

The megaproject is currently waiting for a presidential decree that will make the relocation even more official.  

Jokowi said recently he did not want to rush on signing the decree, saying that he prefers waiting until everything is ready. Jokowi also hinted that it might be his successor Prabowo Subianto, who will assume office next month, that would ink the presidential decree. Prabowo has pledged commitment to the capital relocation, although most of his attention will likely go into his signature policy of feeding Indonesian school children free meals when he takes over the presidential post. 

Over the past years, the capital development mainly focused on building the basic infrastructure and government facilities. The second round of development will kick off in 2025 and go on until 2029. It will focus on building what the government calls an “economic crowd”.  Facilities that fall under this economic crowd category will include shopping centers and schools, among others. Indonesia, however, wants private investors --both from home and abroad-- to mainly fund the second phase.

Nusantara is a project that will cost an arm and a leg. The government wants to move the capital away from the crowded Jakarta to drive growth beyond Java island. But the government is only committed to cover for 20 percent of the total $33 billion costs, while planning to rely on private investors to pay the rest.

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