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IKN Nusantara for Equal National Economic Growth

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The development of the National Capital City (IKN) of the Archipelago is the government’s effort to promote inclusive economic development, by spreading the magnet for new economic growth, so that it does not only focus on the island of Java. In this way, it is believed that it will create equal distribution of economic growth throughout Indonesia.

IKN Nusantara is expected to be able to provide economic development benefits. Apart from that, the development of IKN Nusantara will also reduce disparities between regions because moving the capital outside Java can encourage trade between regions, encourage investment in the new national capital province and surrounding provinces, and encourage economic diversification. In this way, economic added value can be created in non-traditional sectors in various regions outside Java.

Moving the country’s capital will shift the economic center from Java to other regions. The relocation of the country’s capital will also be accompanied by the development of economic clusters to trigger urbanization in East Kalimantan. In fact, moving the country’s capital from Jakarta to East Kalimantan is predicted to arouse the enthusiasm of business people in the region, encourage equitable economic growth, and increase trade to other regions by at least 50 percent.

The Central Statistics Agency (BPS) noted that the economy in the East Kalimantan region continues to show strength, as an effect of the development of the IKN Nusantara project. Kalimantan Island’s economic growth was recorded at 4.83% in the third quarter of 2023. Among the provinces within it, East Kalimantan was recorded as having the largest growth, namely 2.76%. East Kalimantan’s economic growth was driven by consumption growth of 16.26%, which was in line with IKN development.

Plt. Head of the Central Statistics Agency (BPS) Amalia Adininggar Widyasanri said that the high growth of the construction sector in East Kalimantan was driven by the IKN Nusantara development project. This is reflected in the increase in cement procurement realization. When compared with other provinces, East Kalimantan also recorded the highest growth in the construction sector. According to the PUPR Ministry, phase I construction progress reached 52.89%. Phase I construction is expected to be completed in 2024. This is because the government has targeted starting the transfer of ASN in July 2024.

Previously, President Joko Widodo (Jokowi) revealed that the total investment value in the Indonesian capital had reached IDR 45 trillion. The majority of investment comes from within the country. According to Jokowi, currently more and more investors are flocking to invest in IKN. Where you can see facilities starting to be built, such as 3 hospitals, schools, and 4-5 hotels. Seeing the flood of investment, Jokowi asked the Head of the IKN Authority to put a brake on investment from abroad.

At least 130 investors from Singapore have come and seen IKN directly several months ago, then there are investors from South Korea, Japan, Malaysia and the United Arab Emirates who also want to invest. However, President Joko Widodo put the brakes on foreign investors who wanted to invest their capital in IKN because too many were interested in joining and because he wanted to prioritize domestic investors.

President Jokowi said that his party had conveyed to the Head of the IKN Authority Bambang Susantono to prioritize investment from within the country, although he did not reject money from abroad. However, this is a last resort if a project is not willing to finance it. Currently the government is also building access to IKN to make it easier, starting from the Balikpapan – IKN toll road and IKN Airport. Both are targeted for completion in June 2024. The former Governor of DKI Jakarta also believes that having an airport and toll road directly to IKN will increase investors’ interest in investing capital.

In the short term, the economic impact during the IKN Nusantara construction period will encourage the economy through infrastructure investment. It also encourages economic growth through inter-regional trade in Indonesia, encouraging the output of other sectors, as well as creating job opportunities.

With the implementation of massive construction stages, the economic structure of East Kalimantan will gradually transform from the primary sector to the tertiary sector like the character of a city. Although currently the transformation is not very visible because the development of IKN Nusantara is still in the early stages.

Meanwhile, in the long term, the existence of IKN Nusantara is expected to act as an economic super hub and national economic value chain. The development of the economic super hub will be developed in six strategic, resilient and innovative economic clusters, including the clean technology industrial cluster, integrated pharmaceutical cluster, sustainable agricultural industrial cluster, ecotourism cluster, chemical and chemical derivative products cluster, and low carbon energy cluster. Apart from that, there are also two supporting clusters, namely 21st century education as well as smart city and Industry 4.0 Center. Moreover, the location of IKN Nusantara is in the North Penajam Paser and Kutai Kartanegara districts, which are geographically in the center of Indonesia. This position is said to represent justice. With development planned in four stages until 2045, East Kalimantan is directed to become a stimulus for equitable distribution of Indonesia’s economic growth in the future.

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