Indonesia to offer incentives to attract investment in Nusantara

A JAKARTA Indonesia official said on Tuesday that it is preparing an incentives package to attract investment in its future $32 billion capital city of Nusantara in order to deliver on a key plank of President Joko Widodo's economic agenda.

The megaproject aims to move the capital of Southeast Asia's biggest economy from heavily congested Jakarta to an underdeveloped area on Borneo Island. The early stages of construction started a few months ago.

The government is finalising a regulation that will offer several fiscal and non-fiscal incentives for opening businesses in Nusantara, according to Bambang Susantono, head of the Nusantara National Capital Authority.

The government said it would only finance a fifth of the cost of the new capital and that investors would bankroll the rest.

The Asian Development Bank said it will help Indonesia raise funds.

Bambang said that the president would start an investment promotion campaign and talk about business prospects with potential investors.

He said that the government would explain what it wants to build and seek input on conditions that would be attractive for businesses in mid-October, and we will invite potential investors to hold a dialogue in mid-October.

The feasibility of the capital project is something that the government may need to counter.

Nearly 59 per cent of 170 experts were unsure whether Nusantara would materialise, citing uncertainty over funding and management, according to a June survey by the Indonesian Centre for Strategic and International Studies.