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IKN New Space for Medium and Long Term Investment


By: Rika Prasatya)*

The government is optimistic that the National Capital City (IKN) is a new big space for medium and long-term investment. IKN development is part of the system to achieve the 2045 vision for Indonesia to become a developed country.

The plan to move IKN to East Kalimantan will become a reality after Law Number 3 of 2022 concerning the State Capital (UU IKN) is passed. President Joko Widodo has also held thanksgiving events as well as traditional rituals for the unification of land and water from across the country as well as camping with the Ministers and Governors of Kalimantan Island at the zero point of IKN as proof of his seriousness in moving IKN to East Kalimantan.

Deputy for Economics at the Ministry of National Development Planning ()/ National Development Planning Agency (PPN/Bappenas), Amalia Adininggar Widyasanti, said that the transfer of IKN would create a new economy and as an effort by the government to balance the economy between regions of Indonesia to be more equitable than previously concentrated in Java.

“The relocation of the capital city as an investment area is not only for the government but we want to provide investment facilitation as a medium and long-term investment,” said Amalia.

Amalia explained that investment and exports will be the key to recovery. This means that in the midst of our recovery, the government must provide good facilities, a large playing field for investors to invest in Indonesia in the future.

Not only creating new investment fields, IKN is also a national identity that becomes a benchmark for a smart, green, beautiful and sustainable modern capital city with international standards. This effort is also part of accelerating the recovery and transformation of the national economy after being affected by the Covid-19 pandemic.

“One of the things that can encourage the movement of the economy in IKN is infrastructure development in IKN itself and its surroundings, including logistics infrastructure, other supporting infrastructure, as well as basic infrastructure,” said Amalia.

Furthermore, he explained that the government has prepared an economic development strategy in IKN and East Kalimantan which will be supporting development. Samarinda will be the heart or center of the sustainable energy sector and a manufacturing base for renewable energy. Meanwhile, Balikpapan will become the muscle, namely the node, one of which is the downstream process of the oil and gas processing industry into petrochemical products.

“This is the main port for provinces and regions, meaning that this IKN must provide new investment opportunities, both medium and long term, which of course creates new work agreements and becomes a new source of economy,” he continued.

The area around the IKN will be developed into six clusters, namely integrated pharmacy, ecotourism, clean technology industry, sustainable agriculture, chemicals and chemical products, as well as a low-carbon energy cluster.

The Deputy Secretary General of the Alliance of Indigenous Peoples of the Archipelago (AMAN), Erasmus Cahyadi, said that the IKN in North Penajam Paser and Kutai Kartanegara would be big magnets that would attract many interests. This is connected with business interests, not only in the two regencies, but also in other areas of East Kalimantan.

It should be noted that the development and transfer of IKN is a continuous process. The transfer of IKN will not only run during the administration of President Joko Widodo and Vice President Ma’ruf Amin. The Main Expert at the RI Presidential Staff Office, Wandy Tuturoong, emphasized that with the passing of the IKN Law, it shows that the development and transfer of IKN is designed to continue. This responds to concerns that the construction and transfer of IKN will only be carried out during the period of President Joko Widodo’s administration.

“With the existence of the law, one of the efforts to ensure its sustainability. Because the President, both current and future, must implement this law,” said Wandy.

IKN development also places Indonesia in a more strategic position in world trade routes, investment flows, and technological innovation.
“In addition, IKN is a model for sustainable city development that is driven by the application of the latest technology,” he explained.

On the other hand, recently there was news that SoftBank Group Corp. had resigned from being an investor in the Indonesian IKN relocation project. There are no details on the reasons for the cancellation of the investment, but SoftBank’s management said it still supports the development of start-ups in Indonesia.

Research Director of the Center of Reform on Economics (CORE), Piter Abdullah explained that the cancellation of Softbank’s investment in the IKN project was actually a natural thing to happen. The reason could be Softbank’s internal related to their financial condition.

“So far, many of Softbank’s investments have not provided a good enough return if it can’t be said to have failed. So Softbank itself is not necessarily ready with investment funds and risks that can occur in IKN,” explained Piter.

Piter believes that Softbank’s decision is not expected to affect other investors. This is because each investor has different internal conditions with different calculations. Under these conditions, Softbank’s decision should not affect other investors.

President Joko Widodo believes that the development of IKN attracts various parties, both from within and outside the country, to invest. To that end, the President expects the fast action of the newly inaugurated Head and Deputy Head of the IKN Authority, namely Bambang Susantono and Dhony Rahajoe as Head and Deputy Head of the IKN Authority.

The transfer of IKN from Jakarta to East Kalimantan will not only transfer government administration, but will be carried out by developing economic sectors in the area around IKN. The IKN development process will be an opportunity for domestic business actors to take part in various sectors, either as partners in providing goods and services or as investors.

Thus, entrepreneurs and investors can prepare themselves, which sector to enter, both for the short, medium and long term in accordance with the development targets proclaimed between 2020-2045.
Investors and the business world also don’t need to be afraid and worried to invest their capital in IKN development, because the development and transfer of IKN will not stop at the government of President Joko Widodo, but is an ongoing process. The IKN Law and its derivative regulations will also open up medium and long-term business and investment opportunities, thereby potentially driving Indonesia’s economic transformation.

)* The author is a contributor to the Indonesian Institute for Strategic Information Studies (LSISI)

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