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.
-
A junior ISA could turn your child’s pocket money into thousands of poundsPersuading your child to put their pocket money in a junior ISA might be difficult, but the pennies could quickly grow into pounds – and teach them a valuable lesson about money
-
Cost of Christmas dinner jumps 6.5% as grocery price inflation rises againThe average Christmas dinner for four now costs £32.57 as grocery price inflation increases - but what does it mean for interest rates?
-
Japan’s medium-sized stocks provide shelter from trade warsNicholas Price, portfolio manager of Fidelity Japan Trust, tells us where to invest in Japan
-
What South Korea's martial law turmoil means for the economyA shock declaration of martial law in South Korea was swiftly put down, but it exposed the nation's vulnerable democracy. What happens now?
-
India's stock market drops - why it's thrown investors into frenzyNifty 50, India's stock market index, has dropped 8% from a September record amid concerns of an economic slowdown and foreign investors pulling out
-
Is India still a good investment?India's long-term story is compelling, but after a spectacular bull run, warning signs are starting to show. Is investing worth the risk?
-
Rouble hits two-year low against the dollar – what does it mean for Russia's economy?New US sanctions have plunged the rouble to its lowest level since 2022. Why are investors spooked and how will this affect Putin's economy?
-
Has Javier Milei succeeded in transforming Argentina's economy?Javier Milei won an election last year on an “anarcho-capitalist” platform, promising to take a chainsaw to the overbearing and bloated state. How’s it going?
-
Brazil booms – but why do investors remain wary?Brazil is booming, but you wouldn’t think so from looking at the stock market. What's behind the market paranoia?
-
Sri Mulyani Indrawati: Indonesia’s Iron LadyKeeping Sri Mulyani Indrawati on as Indonesia's finance minister has steadied the ship after the election of a former military general spooked financial markets
