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Prabowo, an IKN Investor, Vows More Investment to Follow

President-elect Prabowo Subianto has reaffirmed his promise to continue the development of the planned new capital Nusantara once he takes office. In an effort to dispel investors’ concerns about Nusantara's future, Prabowo has said he is an investor in the capital city project.

Prabowo made the promise during the first plenary cabinet meeting held in Nusantara, East Kalimantan, on Monday. He acknowledged the groundwork laid by President Jokowi in initiating the Nusantara Capital City (IKN) project and expressed his incoming administration’s commitment to continuing and completing the ambitious undertaking. On the same day, while accompanying President Jokowi on an inspection of the MBH reservoir, Prabowo disclosed his investment contributions to the IKN as a businessman.

Prabowo’s assurance of the IKN project’s continuity comes amid speculation among investors and the public that Prabowo may not continue the IKN project as expected, as rumors circulate that Prabowo plans to govern from Jakarta and not Nusantara and would instead ask his vice president, Gibran Rakabuming Raka, to work from the city.

President Jokowi has not signed the necessary presidential regulation to officially transfer the capital from Jakarta to Nusantara, as the latter is not ready to accommodate the full operation of the central government. Prabowo hopes that in three to five years, the core area of Nusantara, which hosts government offices, will be completed and capable of supporting full government operations.

The government has, since the project’s launch in 2022, spent Rp84.5 trillion (US$5.2 billion) from the state budget for the construction of the core area of Nusantara. The government hopes the state budget will fund only 20 percent of the total cost of the IKN project, totaling some Rp 541 trillion, and the rest will come from private investment.

According to IKN Authority acting chairman Basuki Hadimuljono, private investment has reached Rp 56.2 trillion in 55 projects. These projects include 14 office and banking projects, 10 in retail and logistics, nine residential and green areas, eight hotel projects, six in the education sector, three in media and technology, three in the health sector and two in the energy and transportation sector.

Four of these projects had their groundbreaking ceremonies on Monday. These four projects are from Intiland with a substantial investment of around Rp 2.6 trillion, the Royal Golden Eagle (RGE) Group with Rp 2 trillion, Swiss-Belhotel with an investment of Rp 300 billion and Bank Central Asia (BCA) with 75 billion. The IKN Authority is seeking some Rp 100 trillion from private investors by the end of the year.

So far, however, no foreign investors have put their money in the project. President Jokowi claims the government is prioritizing domestic investors over foreign investors.

Several sources within the government have mentioned that President-elect Prabowo Subianto is not particularly enthusiastic about discussing the continuation of the Nusantara Capital City (IKN) project. This became evident when Ridwan Kamil was asked to present the IKN Project to Prabowo not long ago. While listening to the nearly two-hour meeting, Prabowo showed little interest in the presentation.

Although Prabowo publicly committed to continuing the IKN project in front of President Joko Widodo, some sources within Gerindra's inner circle added that Prabowo is not likely to rush the development of the new capital. Especially since the state budget available for the IKN project is continuing to dwindle. Foreign investors who are interested in IKN are opting a wait-and-see approach, while private investors have only reached the groundbreaking stage. According to the source, Prabowo's main priority remains his flagship free school lunch program.

Other sources add that Prabowo’s statements were merely political niceties to appease Jokowi at the end of his administration. When Prabowo mentioned regarding himself as an investor in IKN, this statement could only be linked indirectly through his relationship with Arsari, which has been planning the construction of a dam located a few kilometers from IKN since 2016. At that time, Arsari Group appointed a Dutch water consultant, Witteveen Bos, to assess the potential water supply available for its business activities. After the feasibility study results were released, Arsari Group planned to supply clean water in East Kalimantan.

Initially, the dam project was planned to supply clean water and electricity to Balikpapan and Samarinda. The dam's capacity was estimated to be sufficient to meet meet water needs of between 1.5 to 2 million people. However, they were unable to get permits for this project at that time because Prabowo was still seen as Jokowi's political rival.

Since the IKN location was determined in North Penajam Paser, the water and electricity generated from the dam project would be sold to IKN and the construction of the dam there would be facilitated by The Omnibus Law.

The lack of clean water supply was also highlighted by the government's geology team. They expressed disapproval with the IKN location due to poor access to clean water and risks of floods, landslides, and fire hazards from minor oil and gas reserves in shallow layers. This team once proposed Palangkaraya as a candidate for the new capital. However, the government ignored this recommendation.

Long before the IKN location was determined, Hashim Djojohadikusumo already had Forest Management Rights (HPH) in East Kalimantan under the name ITCI Kartika Utama. This company, which is part of Arsari Group, a business group owned by Hashim Djojohadikusumo, is engaged in wood processing. ITCI Kartika Utama has held HPH over 173,000 hectares since the New Order era. ITCI Kartika Utama holds Building Use Rights (HGB) certificates in Maridan Village and Telemow Village, Sepaku District. The HGB land is state-owned, and its management was granted to ITCI Kartika Utama.

The HGB of ITCI Kartika Utama was originally set to expire in 2014. However, the business license was extended from 2017 to 2037. The company's activities revived after the government designated North Penajam Paser as the IKN location. The permit area of ITCI Kartika Utama falls within the core area of the Nusantara Capital City. ITCI Kartika Utama once had a dispute with residents from Maridan Village and Telemow Village, located in the core IKN zone. Some residents in these two villages claimed to hold HGB certificates.

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