Too Risky; Indef Suggests Delaying Capital City Relocation



Laila Afifa

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  • TEMPO.CO, Jakarta - The Institute for Development of Economics and Finance (Indef) said that the government should reconsider plans to relocate the capital city to Kalimantan. Indef believes it is not an urgent agenda to push amidst the health and financial crisis caused by the Covid-19 pandemic.  

    Indef economist Bhima Yudhistira Adhinegara said the government can take notes from Malaysia's experience when relocating their capital from Kualalumpur to Putrajaya during the 1998 monetary crisis. This year, Indonesia is also facing a financial crisis.

    "The IMF even said that this is the worst global crisis since the 1930s Great Depression," he said.

    "There are enormous risks in investing during the crisis. Rationally, this is not the time for investors to put money in a lighthouse project," he said.

    However, Piter Abdullah from the Center of Reform on Economics (Core) disagrees. Piter predicts that the government might push through with the new capital city program, based on two considerations. 

    "The optimistic scenario is that by next year the pandemic would be over, and the economy would recover quickly," he said on Wednesday, June 17.

    The pessimistic scenario, he added, is that the pandemic would not be over by next year and so the government would still focus on containment.  

    On Tuesday, June 16, 2020, Finance Minister Sri Mulyani Indrawati ensured that President Joko Widodo will deliver his plan to relocate the nation's capital.

    However, Sri asserted that right now the president and the government are focusing on overcoming Covid-19 and restoring Indonesia's social and economic state. She added that Indonesia needs to secure the economy until the end of 2020, to make sure it will not weaken further.   

    Read: Jokowi Upbeat about Capital City Relocation in 2024