COMMENTARY

The New Capital City: Is It Worth Of The Investment?

Besides these physical characteristics, it would also feature integrated transportation system that would enable the city residents to choose between using public transportation, cycling or walking. Not only that, the city will also highlight smart and intelligent technologies to allow for future development such as international university, research centres and hightech industries. Most importantly, the new capital city can be a centre of smart technology with an ability to apply the IoT-based water management and waste management systems, with the underground installation for its power and gas supply.

The preparation of the capital city was already underway, spearheaded by McKinsey Consulting. It has been selected by the Indonesian government to assess the proposed relocation of the nation’s capital city. In addition, to examine the social, cultural, environmental and economic impact, McKinsey has been tasked to draft the required funding. Concurrently, the Ministry of Public Works and Housing selected a local architectural and urban design studio, URBAN+, for a concept design of the development. The firm was selected from hundreds of design companies with the price tag of IDR2 billion.

Earthquake in Indonesia (2014-2019) – Source: medium.com

RELOCATION BENEFITS
According the National Planning Agency (Bappenas), t he relocation will result in the following short-term and mid-tolong term Return of Investment (RoI). In the near future, the relocation would increase the economy of Kalimantan Island and the surrounding areas as a positive impact of the major investment in construction. For the next three to five years, real sector investment would increase by 48 per cent in East Kalimantan.

East Kalimantan is exactly in centre of Indonesia so transportation to and from the new capital city will be more affordable and efficient

The spill-over effect to the overall Kalimantan real sector will be 35 per cent. If we compare to the overall Indonesian real sector, the positive effect of this mega project will contribute to almost 5 per cent of the real sector increase nationwide. Similarly, the project will increase the economic growth by 0.6 per cent nationally, by 4.7 per cent in regional Kalimantan and by 7.3 per cent within the province. This will translate into job creation that will increase by about 10.5 per cent in Kalimantan and by almost 1 per cent nationally. In the mid-to-long term, the relocation will contribute to the increase in economy by 7.6 per cent, by 4.9 per cent and by 0.1 per cent on national level respectively.


ARI FIRMANDI
Ari has been in the infrastructure industry for 21 years, almost half of which was spent in the United when he worked on several major infrastructure projects. Upon returning to Indonesia, he joined a Houston-based engineering firm for its the Government and Infrastructure Division.

Then, he continued to work in a public sector assisting Asian Development Bank (ADB) and National Planning Agency (Bappenas) on their infrastructure development programs as Transaction Advisor Team Leader. Later in his career,  he focuses on the PPP scheme for the infrastructure sector on, where his primary roles are in financial and economic feasibilities, as well as transactions for several infrastructure projects.

Currently, he works for a multinational financial firm in Jakarta. He graduated from University of Indonesia for his Doctoral Degree in Strategic Management and Institut Teknologi Bandung (ITB) for his bachelor degree majoring in Civil Engineering, and earned Master of Business Administration and Master of Science in Civil Engineering from University of Southern California.



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