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The development of Indonesian IKN in East Kalimantan is attracting interest from foreign investors


By Martha Alinda )*

The Indonesian government has announced major plans to move the country’s capital from Jakarta to the East Kalimantan region, with a vision of supporting economic growth, environmental sustainability and redistribution of national development. This decision is not only a strategic breakthrough in public administration, but also creates great potential for foreign investors who are interested in contributing to Indonesia’s infrastructure and economic development.

Many foreign investors have shown significant interest in investing in the IKN Nusantara development project. One of the main reasons is the huge opportunities offered by this project in terms of long-term economic growth and high profit potential. Due to the infrastructure having to be built from scratch, this project promises extensive investment opportunities, especially in the construction, technology, transportation, energy and real estate sectors.

The government has again received a funding commitment for the development of IKN Nusantara. This time the commitment came from the United States (US) government through the US Trade and Development Agency (USTDA). USTDA Director, Enoh T. Ebong, said that the funds that will be granted to Indonesia to be used as technical assistance in building the IKN Nusantara is US$ 2 million, or the equivalent of Rp. 31.3 billion.

Enoh said the funds would be used to develop detailed designs, to develop technical specifications, documents, procurement and strategies for developing smart cities and green cities. Apart from that, his party will invite representatives of the Indonesian government to visit various smart cities in the US, such as New York, Texas and California on a study tour , as well as introduce Indonesia to a number of potential investors.

Government policies that are friendly towards foreign investment have given investors confidence to get involved in this project. Measures such as regulatory simplification, fiscal incentives, and government support in overcoming bureaucratic obstacles have increased investment attractiveness for international market players.

It is important to recognize that foreign investment can provide a significant boost to a country’s economic growth. In the case of IKN Nusantara, funds from foreign investors could be a catalyst to accelerate the development of the infrastructure needed to support the new government center. This includes building roads, public transportation, clean water systems, and others.

Head of the IKN Authority, Bambang Susantono, said that Indonesia really needs funding support to build the IKN Nusantara smart city. Thus, funds from USTDA are considered a breath of fresh air for the Indonesian IKN development process. Moreover, building a green smart city requires very large funds, of which around 80% of the funding must be obtained from the private sector.

Deputy for Funding and Investment at the IKN Authority, Agung Wicaksono, said that there were already a number of foreign investors who had entered into residential development at IKN. The first is from a Chinese consortium that is partnering with an Indonesian consortium, while the other two are from Malaysia (IJM Land Berhad). A number of investors in the housing sector have been included in the seven consortium initiators for residential development in IKN, both flats and landed houses.

Agung said that in his exploration of looking for smart city investors, there were dozens of companies that had looked at him from twelve countries. So the potential for foreign investment is also very large. However, his party cannot yet estimate the investment value, because it will depend on the proposals of these companies.

However, there are several challenges that need to be overcome for foreign investors interested in the IKN Nusantara development project. One of them is political and policy risks that may arise along with changes in government or national policies. The government continues to strive to ensure policy stability, amidst the potential for political uncertainty that may affect long-term investment.

The social and environmental implications of foreign investment in developing the Indonesian IKN are also being considered by the government. The government is committed to applying extra caution in ensuring that this development project takes into account environmental sustainability and its impact on local communities. For this reason, the government guarantees that the development of IKN Nusantara is environmentally friendly, by carrying out the Smart Forest City concept . Apart from that, community participation in the decision-making process and transparency in the use of foreign investment funds also remain the main things.

Accepting funding commitments from foreign investors for the development of the National Capital of the Archipelago is a step that can provide positive potential for Indonesia’s progress. These steps are always followed by wise policies, which take into account both the economic benefits and associated risks, and ensure environmental sustainability and the welfare of local communities. In this way, the government ensures that the development of IKN Nusantara is not only a symbol of economic progress, but also has a positive social and environmental impact.

So, even though many foreign investors are interested in investing in the development of Indonesian IKN in East Kalimantan, they also need to consider both the opportunities and challenges that exist. With cooperation between the Indonesian government and foreign investors, this project has great potential to be an important achievement in national development while generating sustainable economic benefits for Indonesia and the world.

)* the author is a student in Samarinda

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