International Finance

Indonesia pledges $40 bn for Jakarta’s urban regeneration

North Jakarta is predicted to submerge into the Java Sea by 2050

The Indonesian government has pledged to spend $40 billion for Jakarta’s urban regeneration to minimise its chances of slowly sinking into the Java Sea in the next decade, media reports said.

Borneo Island will soon become Indonesia’s new capital city. The country is expected to spend more than $33 billion to build a new city in the East Kalimantan province on Borneo Island.

The government will begin shifting to the new capital city in 2024, media reports said. Currently, only 60 percent of Jakarta’s population have access to pipe water infrastructure. This has forced the remaining population and businesses to utilise groundwater affecting the landscape. In this context, the government is also expected to construct a new sewage system in the Jakarta city.

The government has planned Jakarta’s urban regeneration through better infrastructure development. There is a possibility to build massive infrastructure without subsiding the ground if all of the city’s residents stop using groundwater. However, a chunk of Jakarta’s urban regeneration spending will be used for the development of mass transportation such as extending the new mass rapid transit (MRT) system, loopline railway, bus-only lanes and flyovers.

Indonesia economist Bambang Brodjonegoro told Reuters “Jakarta is the centre of everything in Indonesia. What we are moving out of is the centre of administration, but finance (centres), businesses and trades will stay.”

Jakarta has more than a 10 million population and is one of the most heavily populated cities in the world. Brodjonegoro said that the plan to relocate the country capital stems from the government’s decision to reduce the population in the city.

Heri Andreas, who has examined Jakarta’s land subsidence for the last two decades warned that 95 percent of North Jakarta will submerge by 2050.

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