By: Muhibbin Gofar *)
The development of the Indonesian Capital City (IKN) is a government step to create inclusive economic development, by spreading new centers of economic growth that are not only focused on Java Island. The IKN initiated by President Jokowi is also a symbol of national identity that prioritizes green economy, green energy, smart transportation, and efficient and effective governance.
Since its inception, the IKN has been designed as a catalyst to unlock Indonesia’s overall economic potential, drive growth, create jobs, and reduce poverty. The IKN is expected to be a symbol of national identity and a new center of economic gravity, capable of producing a multiplier effect by making the epicenter of growth more evenly distributed to areas outside Java in order to support the Indonesia-centric vision towards Advanced Indonesia 2045.
The relocation of the IKN is predicted to spread the benefits of economic development. With good connectivity, trade flows in more than 50% of Indonesia’s territory can increase. The relocation of the capital city outside Java is also expected to reduce disparities between regions, encourage trade, investment, and economic diversification, thereby adding economic value to non-traditional sectors in various regions outside Java.
The development of the IKN certainly also offers great potential for the local economic sector, especially in agriculture. President Jokowi highlighted this promising opportunity for local farmers and agricultural producers. The economic potential of the agricultural sector in the areas around the IKN is expected to increase significantly.
Demand from new markets such as the IKN can be utilized by local farmers to send excess agricultural products, such as rice, to meet the demand of new markets in the IKN. Not only rice, the presence of the IKN is expected to increase demand for various other agricultural products, such as vegetables and onions, which can be supplied from surplus production in the surrounding areas. For example, the President mentioned that the current excess production of onions can easily be sent to meet the needs of the IKN and sold at a profitable price.
In addition, President Jokowi emphasized that the IKN will become a new center of economic growth that focuses on the principle of sustainability. Because, the vision of IKN development is to make it a model of a sustainable city that not only supports economic growth, but is also environmentally friendly. Therefore, it is important to carry out economic transformation, especially in relation to the green economy.
It is also important to shift from the old economic pattern to the new economic pattern in response to the rapidly changing global economic and geopolitical landscape. Global geopolitical changes require a significant transformation of the Indonesian economy, in which the IKN must be an integral part of this transformation.
The President appreciated the initiatives of several companies in developing digitalization in the IKN area. This step is expected to encourage people to adopt more digital technology in their daily lives, which can increase the competitiveness of local products.
The positive impact of the development of the IKN on the local economy is also seen in the tourism sector and the creative economy of the community. The Head of the East Kalimantan Provincial Tourism Office, Ririn Sari Dewi, stated that the increase in the tourism sector can be seen from the drastic increase in the number of visits. These visits include tourists and work visits from outside the region. Migration of residents working on national strategic projects also contributed. The occupancy rate and culinary business in the IKN and its surroundings continue to increase.
Ririn also explained that various types of tourism, ranging from culture, culinary, nature, forest, to religion, are currently selling well. The Tourism Office and the Authority Agency are working together to strengthen new tourism areas, one of which is Goa Tapak Raja in Penajam Paser Utara (PPU), which is being developed into the closest destination to the IKN after Bukit Bengkirai. This area not only offers tourist attractions, but also a souvenir center from local MSMEs.
Head of the East Kalimantan Industry, Trade, Cooperatives, and SMEs Agency (Disperindagkop), Heny Purwaningsih, said that the presence of the IKN must be used as a valuable moment for local SMEs to continue to compete better and utilize the great potential that East Kalimantan has to the maximum.
East Kalimantan’s achievement as the province with the second largest cooperative MSME spending in Indonesia shows a strong commitment from the government and the community in supporting the development of the local economy. This is the right time for the business sector, such as hotels and restaurants in East Kalimantan to use more local products, so that the benefits of the IKN development can be enjoyed by the entire local community, especially MSME actors.
The same thing was also expressed by the former Dean of the Faculty of Social and Political Sciences of Mulawarman University, Prof. Sarosa, who highlighted that the relocation of the IKN to East Kalimantan would distribute foreign exchange from the center to the regions. This will have an impact on the development of the regional economy and the central and eastern regions of Indonesia which have so far lagged behind the western region. Thus, the local economy will increase rapidly and equitable development in the regions of Indonesia will soon be achieved.
Increasing economic activity and investment in the IKN area and its surroundings, MSMEs and other local creative economies will directly benefit from increased demand and opportunities for business collaboration. Consistent support from the government and active participation from the community will ensure that the development of the IKN is not only a symbol of national progress, but also has a real positive impact on the local economy and community welfare. Thus, the development of the IKN can be a strong foundation for sustainable economic growth in the future.
*) Economic and MSME observer from East Kalimantan
