By: Tsania Nareswara )*
The presence of the Indonesian Capital City (IKN) in East Kalimantan has opened up great opportunities for the province to drive growth in the service sector. This transformation is not only a strategy to reduce dependence on the mining sector, but also a step forward towards sustainable economic diversification.
The East Kalimantan Provincial Government, under the leadership of the Acting Governor of East Kalimantan, Akmal Malik, emphasized that this transformation is a priority agenda by utilizing the momentum of the IKN development. Akmal Malik assessed that reducing dependence on the mining sector is an important step to create a more diverse economy.
The East Kalimantan Provincial Government hopes that the central government can provide regulatory support that allows regions to optimally utilize ex-mining areas. This regulation is also expected to open up collaboration space with Mining Business Permit (IUP) holders, so that East Kalimantan can use existing land to support regional economic growth.
With proper regulation, local governments do not need to rely too much on large funds. Instead, wider space for managing existing resources will be the key to success. However, Akmal emphasized the importance of data improvement as a foundation for formulating more targeted policies.
Valid and integrated data will provide a clear picture of the potential that can be utilized and the challenges that need to be overcome, so that the policies taken can be more effective.
In addition, funding support from the central government through the 2024 State Budget (APBN) of Rp 58 trillion is the main catalyst for accelerating development. This budget is allocated for regional spending and transfers to regions, which have shown significant realization.
Akmal is optimistic that this allocation will accelerate infrastructure development while improving the quality of life of the community. The infrastructure built will not only support the needs of IKN development but also become important capital for the growth of other sectors.
This step is expected to engage the private sector to contribute more to building the regional economy. Collaboration with the private sector is an important element, considering the government’s fiscal capacity is limited.
The positive impact of the IKN development is also felt directly by the service sector in East Kalimantan. A survey conducted by Bank Indonesia shows that this development project has created new economic opportunities, especially in the financial services, trade, transportation, and accommodation sectors.
Head of the Bank Indonesia Representative Office for East Kalimantan, Budi Widihartanto, said that the construction of the IKN not only increases economic activity but also strengthens connectivity between regions. This connectivity is important to facilitate the flow of goods and services, which ultimately drives local and regional economic growth.
The increase in demand for materials, heavy equipment, and labor is clear evidence that the development of the IKN has had a significant impact on the regional economy. The majority of business actors recorded an increase in profits of up to 25 percent as a result of the surge in demand. This shows a positive multiplier effect for local business actors.
However, Budi also highlighted the challenges faced, such as pressure on other sectors due to resource reallocation. The development of the IKN requires a large allocation of resources, from labor to materials, thus creating competition with other sectors that also require these resources.
This raises challenges in maintaining the stability of the performance of other sectors amidst increasing demand due to construction projects. However, Budi is optimistic that this challenge can be managed with strategic planning and coordination between stakeholders.
The development of the IKN has also attracted the attention of investors, both local and international. The Head of the East Kalimantan Investment and One-Stop Integrated Service Agency (DPMPTSP), Fahmi Prima Laksana, said that investment realization until the third quarter of 2024 had reached IDR 55.82 trillion. The IKN project has become the main attraction that has created high trust among investors.
Fahmi is optimistic that the investment target of IDR 76.02 trillion for 2024 has a great chance of being achieved, even exceeding the target. This belief is supported by great interest from various sectors, such as infrastructure, renewable energy, and technology. The presence of the IKN provides a positive signal for investors, who see great potential in this region to develop their business.
In addition, Fahmi saw that the presence of the IKN has strengthened the service sector while opening up opportunities for economic diversification in East Kalimantan. With increasingly modern infrastructure, East Kalimantan has the opportunity to develop sectors such as tourism, technology, and manufacturing.
This transformation is expected to reduce dependence on natural resources while creating new economic opportunities. This diversification is important to create a more resilient economic structure, so that East Kalimantan can be better prepared to face future economic challenges.
The development of the IKN is seen as a strategic opportunity that not only provides direct benefits to local communities, but also has the potential to create a domino effect for national economic growth. The success of this project is expected to be a model for other regions in developing a sustainable economy.
Overall, the existence of the IKN is a valuable momentum for East Kalimantan to encourage the growth of the service sector and accelerate economic diversification. The regional and central governments are expected to continue to synergize to ensure that this development provides optimal benefits for all parties.
With careful planning and full support from various stakeholders, the IKN is expected to become a symbol of Indonesia’s economic transformation towards a brighter and more sustainable future.
)* The author is a contributor to the Institute’s reading window
