Indonesia’s first planned independence day celebrations at its multi-billion-dollar new capital city were a damp squib, say A. Anantha Lakshmi and Diana Mariska in the Financial Times. The government was forced into an “embarrassing climbdown” and had to scale back plans and withdraw invitations to foreign dignitaries as it became obvious the new city would not be ready on time.
What's causing Indonesia's new capital to be delayed?
Nusantara, a “legacy project” of the outgoing president Joko Widodo (known as Jokowi), is being carved out of the jungle in Borneo at an estimated cost of $30 billion, but has been “beset by delays, land acquisition problems and an absence of foreign investors”. That shouldn’t be a surprise, says Daniel Moss on Bloomberg.
Capital cities develop slowly over decades, perhaps centuries, and “economics has an annoying habit of intruding” on the dreams of those in a rush to create them. Erecting a city from scratch in an equatorial forest was “always going to be arduous”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
During a visit 18 months ago, actual construction work was not much in evidence. The roads leading to the nearest urban area, Balikpapan, were narrow. And “looming over the project” is the approaching end of Jokowi’s second term in October. His successor, Prabowo Subianto, says he is committed to Nusantara. But the capital “isn’t coming cheap and Prabowo has plenty of his own grand plans”.
Meanwhile, Jakarta, the current capital, is sinking, says The Economist. No big city in the world faces more climate-related threats and some parts could be submerged by 2050.
But Nusantara’s triumph is far from inevitable. The distance between the two cities is about 800 miles and it will be a big ask for people to up sticks and move there. When fully completed in 2045, Nusantara was supposed to mark Indonesia’s arrival as a developed country. For now, it remains an open question whether Nusantara is “a giant vanity project doomed to fail”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
Apple loses court battle over €13bn tax bill - should you invest?The case against Apple was brought by the European Commission and ends an eight-year dispute
-
“Fast-track justice” goes off the rails: is it time to rethink the system?Single Justice Procedures, or fast-track justice, designed to deal with minor offences, have become increasingly heavy-handed. Is it time for an overhaul?
-
Paetongtarn Shinawatra becomes Thailand's youngest-ever PM – will she succeed?Paetongtarn Shinawatra is joining the family business: both her father and aunt have governed the country. She has promised to “end a cycle of coups”. Can she?
-
Beijing targets the boom in bondsStocks and property in Beijing have disappointed, but bonds are performing well
-
Japan's stock market crashes – what it means for investorsJapan's stock market crash could ultimately mean “lower prices and better valuations” for investors
-
Why is the Japanese yen weak?The yen has weakened far more than expected, even though the economy and stocks are looking much healthier
-
Billionaire entrepreneur Brian Kim arrested over K-pop stock manipulationBrian Kim caught the wave that propelled Korean pop stars and actors to global stardom. Now accused of financial wrongdoing, he is in for the fight of his life.
-
Maduro clings to power in Venezuela – can he last?While Maduro clung to his presidential seat, Venezuela's election protests paint a different picture
-
CrowdStrike IT outage: a global meltdownMillions were affected by the CrowdStrike IT outage recently, which grounded flights and took the news off the air. Was this just a hiccup or a warning of much worse to come?
-
What does a weak yen mean for Japanese stocks?The Japanese yen has hit its lowest level against the US Dollar since 1986. What does it mean for its stock market?
