President Joko Widodo (center) accompanied by Vice President Jusuf Kalla (right) and Minister of Agrarian Affairs and Spatial Planning / National Land Agency (ATR / BPN) Sofyan Djalil gave a press statement regarding the planned transfer of the State Capital at the State Palace, Jakarta, Monday (26/8) / 2019). Source: Antara/Akbar Nugroho Gumay

After a long time of discourse, finally this year the Indonesian government has determined to move the capital city. Planning to move the capital has been going on for a long time, even since the Bung Karno era in 1957 when Soekarno inaugurated the provinces of Central and East Kalimantan, there was a desire to move the capital to safer areas. At that time he saw East Kalimantan as a suitable capital city. Bung Karno’s thoughts would eventually be realized in the Jokowi government after going through a thorough study and calculation.

North Penajam Paser Regency and part of Kutai Kertanegara Regency, East Kalimantan, were chosen to replace Jakarta as the new capital. President Jokowi said that after this the government would start drafting a new capital law. In late 2020 the government will begin construction, and by 2024, transfers will be carried out in stages. Development will be carried out with the private sector. The National Budget only accounts for 19 percent of the total costs needed.

Studies on the determination of the transfer of capital have gone through lengthy discussions and processes, one of the most critical capital relocation factors is that Jakarta has been too heavy in accommodating the burden of being the center of government, business center, financial center, trade center and service center. In addition, geographical factors are also a consideration of the government because of its minimal location of potential disasters such as landslides, earthquakes, and others. In addition, Java also has reached 54% of Indonesia’s population, in the sense that the population of Java is already overpopulated.

President Joko Widodo explained the source of funding for the development of Indonesia’s new capital in East Kalimantan Province. Jokowi admitted, many asked him about the source of this funding. “We need to convey, the total needs for a new capital city is approximately Rp. 466 trillion,” said President Jokowi.
Later, 19 percent of the funding needs will come from the state budget.

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However, the intended APBN (State Budget) is not only sourced from the budget allocated specifically for the development of the national capital. “But it is derived from the cooperation scheme for managing existing assets later in the new capital city with those in Jakarta,” Jokowi said. “The remaining (budgetary requirements) come from Government Cooperation with Business Entities or PPP and private direct investment and SOEs,” he said.

At present, the legal basis for Indonesia’s capital city is Law 29/2007 concerning the Provincial Government of the Special Capital Region of Jakarta as the Capital of the Unitary State of the Republic of Indonesia. Previously the legal basis for the capital city was Law 34/1999. This old rule was replaced because “it is not in accordance with the characteristics of the problems of DKI Jakarta Province, the development of the situation, and the demands of the administration of government.”


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