In 2024, Indonesian capital might change from Jakarta to... (Image via: The Strait Times)

Moving Our Capital Means No Debt: Minister

Alfonsus Adi Putra
Politics & Economic
International
Jun 27, 2019
5522
After the re-election of the Indonesian president, Joko Widodo, a plan to transfer the capital from Jakarta is buzzing around. Rumour has it that the capital will be transferred to outer Java. With the plan, come mixed feelings. Most of them are bad.

Some people think that moving the capital to another place means more debt. Especially, by the current issue that Indonesia is drowning in the sea of debt, Indonesian people are getting paranoid with the plan. However, what does the government have to say about it?

Indonesian Minister of National Development Planning, Bambang Brodjonegoro, stated otherwise. Interviewed at his office on Wednesday (26/6), the minister said that the transfer did not have to put Indonesia in debt.

“On the contrary, we will not rely on the State Budget. This means we are minimizing the possibility of putting our country in debt,” stated Brodjonegoro, adding that usage of State Budget in the funding scheme came from the cooperation in utilizing state assets. Therefore, it will not disrupt other priorities, nor did it make any special debt.

Despite being partially funded by State Budget, Brodjonegoro rejected the fact that the fund would be dominated by it. He added that the transfer would require joint support from private and state-owned enterprises, and Public-Private Partnership (PPP).

The cooperation came from private and state-owned enterprises to attract investors, he said. In exchange, investors will get the benefit of investing in the new capital. Taking an example from Brazil’s capital transfer from Rio de Janeiro to Brasilia, he pointed out that the transfer would result in multiplier effects, resulting in an increase in the price of capital and labor. In other words, it will narrow the gap between regions by the encouragement of trading and investment. Therefore, other provinces do not have to worry.

Furthermore, Brodjonegoro said that the capital transfer would, in turn, benefitting Indonesia, expecting a 0.1% increase in GDP.

“Indonesia has Rp15,000 trillion. Add 0.1% to the number, and we got additional Rp15 trillion to our GDP,” calculated he.

In order to realize the plan as soon as possible, by the end of 2019, the exact location of the transfer should have been decided. Next year, the government should prepare a masterplan for the transfer. By 2021, consumption issues must be resolved, so that in 2024, the transfer could be executed as targeted.

Source: https://www.cnnindonesia.com/ekonomi/20190626204916-532-406771/bambang-brodjonegoro-pemindahan-ibu-kota-tak-bikin-utang

Politics , ASEAN , Indonesia , Capital , Transfer , Jakarta