Why Isn’t Indonesia Seeking China’s Funding for Its New Capital?

[striver44]

ASEAN BEAT | DIPLOMACY | ECONOMY | SOUTHEAST ASIA[/paste:font]

Indonesia prefers to partner with other countries, not China, in building its new capital city. That’s a wake-up call for Beijing.

By Muhammad Zulfikar Rakhmat and Dimas Permadi
April 03, 2020

Credit: Pixabay
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Other funding will come from public-private partnerships (PPP) worth 265.2 trillion rupiahs or as much as 54.6 percent of the total cost. The private sector will also contribute a portion of 26.2 percent for the construction of transportation systems, telecommunications, and renewable energy projects.

To realize this gigantic plan, Jokowi formed a new capital steering board consisting of the Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al Nahyan, Softbank CEO Masayoshi Son, and former British Prime Minister Tony Blair.

There are several reasons behind the choice of the steering committee for the new capital; most notably Jokowi wants to gain international trust in the development. It is crucial to note that these figures are well known around the world. Mohammed bin Zayed Al Nahyan is currently developing the world’s first zero-carbon city in Masdar. Meanwhile, Masayoshi Son is the CEO of a large telecommunications and media company from Japan and Tony Blair was prime minister of Britain for 10 years, from 1997 to 2007.

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It is also important to note that domestically Jokowi’s plan to move the capital has been a contentious issue, which has taken a toll on the president’s image. In fact, a survey carried out by the KedaiKOPI survey institute revealed that 95.7 percent of Jakartans reject the plan. Scholars have also argued that the plan is not feasible and would not solve the underlying issues the government aims to address.

Therefore, Jokowi seems to be taking more careful steps so as to minimize debate over the already contentious subject. For him, partnering with China, which is also a controversial topic in Indonesia, would make the plan for the new capital doubly contentious. And Jokowi appears to want to avoid that.

This reality should indeed be a wake-up call for Beijing. Indonesia, one of its major trade partners and investment destinations, is turning elsewhere for a major project.

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Alongside strengthening its economic footholds in the archipelago, there is also a need for China to mend its image in Indonesia. If Jokowi is really avoiding partnering Beijing because it will make the capital relocation plan more contentious, it means that something has to be done.

This can be done through a variety of soft power avenues such as increasing state exchanges, cultural and educational exchanges, and media efforts. These have been increasingly apparent in recent years, but have to be strengthened and expanded.

If this is not realized by Beijing, there is a possibility that Indonesia will more and more seek to strengthen partnerships with other countries, but not China.

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[FairAndUnbiased]

Indonesian government is behaving like a typical 3rd world banana republic.

 

[nufix]

Indonesian government is behaving like a typical 3rd world banana republic.

for not looking investment from specific countries? Cmon you can do better than that.

Anyway, no final decision yet regarding partners. The article mentioned several names yes, but they are there to assist Indonesia as individuals, not the organizations they are attached to. If China can offer a good deal, China could get it the way it was selected for HSR project.

 

[ohmrlobalobayeh]

Hahahahahahaha the contents of the article made it sound like as if the title should have been 'Why isn't China seeking funding from Indonesia for its new capital?'

 

[Type59]

I said it before, but Indonesians get upset.
This capital move is a scam, its there to enrich big construction companies. Its gonna be way over budget. There will be new billionaires emerging from new capital. Construction companies are always pushing for projects that make little sense.

https://www.bbc.co.uk/news/science-environment-52388352

 

[Yankee-stani]

I said it before, but Indonesians get upset.
This capital move is a scam, its there to enrich big construction companies. Its gonna be way over budget. There will be new billionaires emerging from new capital. Construction companies are always pushing for projects that make little sense.

https://www.bbc.co.uk/news/science-environment-52388352

Jakarta Is a sinking ship at this point and is very overcrowded and prone to tsunamis

 

[vi-va]

Indonesian government is behaving like a typical 3rd world banana republic.

No need to be triggered,friends.
I seriously doubt @striver44 is Indonesian. I believe he is false flagger.

@eldarlmari , @nufix , @Tom99

 

[nufix]

By your definition, every construction project is a scam then.

But isnt it the whole point of construction projects? Keynesian model rely heavily on government spending to incite economic activities and one of the easiest way to jumpstart this is through construction. But construction, as with any other projects, need fundings and what better way to court investment than promising return?

If you ask me, I as an Indonesien thought this capital move is almost purely business. If you see the funding structure, you would see that the majority of the funds will not be taken from state budget, but rather from investors.

so I suggest we see this project as a massive real estate project.

I said it before, but Indonesians get upset.
This capital move is a scam, its there to enrich big construction companies. Its gonna be way over budget. There will be new billionaires emerging from new capital. Construction companies are always pushing for projects that make little sense.

https://www.bbc.co.uk/news/science-environment-52388352

 

[Type59]

Jakarta Is a sinking ship at this point and is very overcrowded and prone to tsunamis

I know that but reality people wont move if livelihoods are in Jakarta. Look at Karachi, Pakistan, Burma new capital, so many examples. People will remain hence you will divert resources that could be spent on current capital.

 

[nufix]

Jakarta Is a sinking ship at this point and is very overcrowded and prone to tsunamis

Sinking ship? Yes, prone to Tsunami not really. At least no historical data shows Jakarta was hit by Tsunami since the day it was founded.

I know that but reality people wont move if livelihoods are in Jakarta. Look at Karachi, Pakistan, Burma new capital, so many examples. People will remain hence you will divert resources that could be spent on current capital.

The whole idea is not to replace Jakarta. Jakarta will remain as economic centre for Indonesia. The new capital will focus on housing Government institutions and to some extent, government owned companies. So, Jakarta will still get its massive infra funding and there is no plan to divert the money from it.

 

[Type59]

By your definition, every construction project is a scam then.

But isnt it the whole point of construction projects? Keynesian model rely heavily on government spending to incite economic activities and one of the easiest way to jumpstart this is through construction. But construction, as with any other projects, need fundings and what better way to court investment than promising return?

If you ask me, I as an Indonesien thought this capital move is almost purely business. If you see the funding structure, you would see that the majority of the funds will not be taken from state budget, but rather from investors.

so I suggest we see this project as a massive real estate project.

Well it is in this case the corrupt will benefit. My post to osama explains it risks becoming a white elephant, when current capital and other urban areas need investment. Shops, factories, banks are not gonna close and relocate immediately.

 

[nufix]

Well it is in this case the corrupt will benefit. My post to osama explains it risks becoming a white elephant, when current capital and other urban areas need investment. Shops, factories, banks are not gonna close and relocate immediately.

And they dont need to move to the new capital. Indonesian government in its planning of the new capital excluded shops factories etc. because the new capital was never meant to be another Jakarta.

 

[Nike]

Sinking ship? Yes, prone to Tsunami not really. At least no historical data shows Jakarta was hit by Tsunami since the day it was founded.



The whole idea is not to replace Jakarta. Jakarta will remain as economic centre for Indonesia. The new capital will focus on housing Government institutions and to some extent, government owned companies. So, Jakarta will still get its massive infra funding and there is no plan to divert the money from it.

the only time Jakarta hit by Tsunami is when her name still Batavia though, during Krakatoa eruption century and half ago. New capital will act as Government center and center of military power of Indonesia, as many had indicated there is will be large scale armed forces formation and infrastructure will be built in and around the new capital. Why no Chinese investor being invited? Naturally one will not invited the potential adversary to build your own fortress

 

[nufix]

the only time Jakarta hit by Tsunami is when her name still Batavia though, during Krakatoa eruption century and half ago. New capital will act as Government center and center of military power of Indonesia, as many had indicated there is will be large scale armed forces formation and infrastructure will be built in and around the new capital. Why no Chinese investor being invited? Naturally one will not invited the potential adversary to build your own fortress

Yes but not the way Banten was hit by the Karakatoa tsunami. Aside from Anak Karakatau, there is no real natural threat to Jakarta right now.

The new capital will of course have defense structures as you described, but the construction of critical facilities will likely be funded by the government via relevant ministries. However, the bigger chunk of the investment is aimed at the basic urban facilities like road, support buildings etc. and that is where non government money is coming.

 

[Type59]

Sinking ship? Yes, prone to Tsunami not really. At least no historical data shows Jakarta was hit by Tsunami since the day it was founded.



The whole idea is not to replace Jakarta. Jakarta will remain as economic centre for Indonesia. The new capital will focus on housing Government institutions and to some extent, government owned companies. So, Jakarta will still get its massive infra funding and there is no plan to divert the money from it.

Resources are already spread thinly. As original posts states money needs to be lent from abroad. I had this debate before, Indonesians dont care about the costs because they have been convinced that project will be an instant success.