By: Marsanda Irma *)
The government of President Joko Widodo (Jokowi) has made an important achievement in Indonesia’s economic history by creating a new center of economic growth through the development of the Archipelago Capital City (IKN). This strategic step is not just a move of the country’s capital from Jakarta to East Kalimantan, but also an effort to build a solid foundation towards a more just and sustainable economic equality. IKN development reflects a long-term vision to distribute economic centers more evenly throughout Indonesia, while strengthening the country’s competitiveness on the global stage.
President Jokowi, on several occasions, emphasized that IKN development is not just an administrative effort. On the contrary, this is a strategic step to create a new government and economic center aimed at reducing inequality which has previously occurred more frequently on the island of Java. The President believes that this step will encourage economic growth not only in East Kalimantan, but also in various other regions in Indonesia.
When President Jokowi laid the first stone for the “Forest Terrace of the Archipelago Capital City by Plataran” project in the IKN area. The project is seen as a symbol of strategic investment that will attract more investors. The President expressed his hope that Plataran’s presence would encourage other investors to take part in IKN development. The commitment of world-class tourism companies such as Plataran shows confidence in the great potential of IKN as a new growth center.
Apart from Plataran, the construction of Nusantara Airport is also a special concern. In the future, Nusantara Airport will become the air gateway for IKN. The President shared his experience when he first landed at the airport. Even though the terminal and runway are not yet fully completed, the President is confident that these facilities will be ready by the end of December 2024, allowing wide-body aircraft to land at IKN.
Behind this infrastructure development, President Jokowi consistently underlines that investment in IKN is an investment in the future. Those who invest in IKN are actually buying an atmosphere and potential that will not be found anywhere else. Adequate infrastructure, supported by a green and smart ecosystem, will make IKN a modern and environmentally friendly government center, and able to attract global investment in various sectors.
IKN development also received support from the elected president for the 2024-2029 period, Prabowo Subianto, who expressed his belief that although this project takes time, the results will be very significant. Prabowo considers that the development of this capital city is in accordance with Indonesia’s vision towards more equitable and inclusive economic growth.
Meanwhile, the plenary cabinet session held last August at IKN was also an important moment to emphasize that the construction of this new capital city is part of the government’s big agenda in strengthening the national economy. During the session, President Jokowi highlighted that apart from being the center of government, IKN will also be an economic center that adopts the concept of a forest city and green economy.
However, economic challenges at the national level remain. The President emphasized the importance of paying attention to the contraction in Indonesia’s manufacturing Purchasing Manager’s Index (PMI), which was at level 49.3 in July 2024. Even so, the government remains optimistic and committed to maintaining the momentum of economic growth with strategic steps, such as strengthening the domestic market and seeking new export opportunities.
In the midst of IKN development efforts, the private investment sector also plays an important role. As of August 2024, as many as 55 companies have invested their capital in IKN with a total investment value of IDR 56.2 trillion. President Jokowi is optimistic that the investment target of IDR 100 trillion by the end of the year can be achieved, especially with the formation of the IKN Investment Acceleration Task Force which aims to make it easier for business actors to obtain permits and investment facilities.
In this context, IKN is also projected to become a new economic center that will strengthen Indonesia’s position on the global stage. Deputy for Funding and Investment at the IKN Authority, Agung Wicaksono, explained that IKN will not only become the center of government, but will also develop into a strategic economic center. Agung emphasized that with the existence of buffer cities such as Balikpapan and Samarinda, East Kalimantan will become one of the important economic growth areas outside Java.
Furthermore, President Jokowi emphasized that the development of IKN is the answer to the challenges faced by Jakarta as the capital city. Jakarta, even though it is no longer the center of government, will still play an important role as an economic and financial center. By moving the capital city, the government hopes to create equal distribution of development which has so far been dominated by the island of Java.
The structural transformation carried out by the government, including the development of IKN, downstreaming of natural resources, and regulatory reform, is expected to strengthen Indonesia’s competitiveness at the global level. In the long term, IKN will become a symbol of a modern, inclusive and sustainable Indonesia.
With this optimism, Indonesia is moving towards the grand vision of Advanced Indonesia 2045, where inclusive and sustainable economic growth is the foundation for the welfare of all people. Support from various parties, including the private sector and the wider community, is the key to realizing this great potential. IKN is a new spirit towards a brighter future.
*) Economist from Bangun Berkarya Institute