Unachieved in 2024, Indonesian Govt Continues Rp100 Trillion Investment Target in IKN

TEMPO.CO, Jakarta - The Indonesian Capital Authority (OIKN) continues its investment target of Rp100 trillion in 2025 for the Nusantara Capital City (IKN). Previously, the Authority targeted Rp100 trillion in 2024, but the value realized at that time was only Rp58 trillion.

"The target continues in 2025-2029, the needs of which are formulated in the RPJMN (Medium-Term Development Plan)," said IKN Authority Spokesperson Troy Pantouw to Tempo on Tuesday, January 14, 2025.

The IKN Authority recorded an investment achievement of Rp58 trillion from 8 stages of laying the first stone or groundbreaking projects that took place in 2023 to 2024. The plan is for the groundbreaking of the IKN project to continue this year. Previously, the Head of the IKN Authority Basuki Hadimuljono had stated that he was ready to carry out the 9th stage groundbreaking in January. However, until now, the agenda is still waiting for confirmation of President Prabowo Subianto's schedule.

Deputy for Funding and Investment of the IKN Authority Agung Wicaksono claimed to have received many letters of intent (LoI) from prospective European investors. One of them is Finland, which has submitted four LoIs—one of which has already signed an MoU.

"Hopefully this MoU can result in realization so that investment from foreign investors continues to increase," said Agung through an official statement on Tuesday, January 14, 2025.

Agung conveyed this after receiving a visit from the Finnish Embassy to Indonesia together with Business Finland at the IKN on Tuesday. At that time, the Finnish Ambassador to Indonesia, Timor Leste, and ASEAN Pekka Kaihilahti expressed his desire to collaborate with the IKN Authority in developing smart cities. "We have the best expertise, experience, and applications in terms of smart cities and we want to share all of that with Indonesia," said Pekka.

In addition to Finland, the prospective investor who is said to be investing in the IKN is Sweden. Basuki Hadimuljono claimed that Sweden asked to invest in electric vehicles (EV) after a delegation from the Swedish Parliament visited the new capital on Thursday, January 9, 2025. "He (Swedish Deputy Ambassador to Indonesia) will bring several Swedish investors back here," said Basuki.

According to Basuki, President Prabowo Subianto ensured that the IKN development project would continue. The former Minister of Public Works and Public Housing (PUPR) said that there were three sources of funding to build the new capital city in East Kalimantan, namely from the State Budget (APBN), private sector investment, and Government and Business Entity Cooperation (KPBU).

"We have conveyed that there has been private sector investment of around IDR 58 trillion. KPBU has also been from proposals that are being processed for roads, MUT (Multi Utility Tunnel) and housing, from Intiland and Nindya Karya," said Basuki. Meanwhile, financing from the APBN to date has been recorded at IDR 68 trillion.

Flashback on Investment Issues in 2024

The investment trend in the IKN is in the spotlight in 2024. This is because investment for the new capital city project is considered slow. In fact, this issue prompted Commission VI of the DPR for the 2019-2024 period to grill the Minister of Investment during President Jokowi's era, Bahlil Lahadalia. Bahlil once stated that there would be a lot of foreign investment entering the IKN.

In a meeting at Commission VI on Tuesday, June 11, 2024, Member of Commission VI of the PKS Faction Amin Ak questioned the continuation of Tesla CEO Elon Musk's investment which was previously trumpeted by the government. However, instead of investing in the IKN, Elon came to Indonesia with the Starlink service.

Meanwhile, Bahlil said that foreign investment had not entered the IKN because the first phase of construction had not been completed. However, he claimed that foreign investors had communicated and asked when they could invest in the IKN. "But, we said after August 17, then we'll see," said Bahlil at that time.

Before the IKN Authority failed to realize an investment of IDR 100 trillion in 2024, Member of Commission V of the Indonesian House of Representatives 2019-2024 Suryadi Jaya Purnama had asked the government to evaluate the IKN project. According to him, investors were reluctant to enter the IKN because there were a number of problems in the mega project. He mentioned the issue of 2,086 hectares of land that had been conveyed by the government.

Suryadi also assessed that investment in the IKN could not increase because the project was a public infrastructure project. Meanwhile, there are no public yet. Even if there were, the population of the IKN is estimated to be less than 5 million people. "In fact, the investment calculation will only be profitable if there are at least 5 million residents in 10 years," he said in a written statement on June 14, 2024.

On the other hand, Suryadi said, investors from developed countries have environmental, social, and governance (ESG) standards that do not want deforestation and negative social impacts on local communities. These problems, according to Suryadi, increasingly burden the IKN Authority to meet the government's target in targeting investment. "So far, the investment that has come in has only been limited to government cooperation with business entities or KPBU," he said.

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