PETALING JAYA: The planned new capital of Indonesia, Nusantara, brings diverse opportunities for businesses in different industries. However, for some, it’s a stroke of tough luck.
Shangri-La Jakarta director of sales and marketing Lucy Thurana told SunBiz that most would have concerns about the relocation of the country’s capital from Jakarta to East Kalimantan.
“We are expecting some business impact. It is not like Kuala Lumpur and Putrajaya where you can just drive to by car. To get to East Kalimantan from Jakarta, the fastest is via airplane, a flight that lasts two hours.”
East Kalimantan is located 1,400km by air from Jakarta while Putrajaya is a mere 35km from Kuala Lumpur by road. The cheapest way to travel from East Kalimantan to Jakarta is a bus-and-ferry trip which costs 550,000-800,000 rupiah (RM237-RM163) and takes 44 hours.
Thurana explained that Shangri-La does not have a branch in East Kalimantan, only in Jakarta and Surabaya. Additionally, there is no plan yet for expansion in the new capital. “We are not like banks that will benefit from loans and future developments in the area,” she said.
Meanwhile, Maybank Indonesia president director Taswin Zakaria said the bank has a strong franchise and footprint through its 26 branches or offices across Kalimantan, and it stands to benefit from this relocation plan.
“Jakarta will continue to be the centre of the economy, and as a main hub of the nation. This is similar to that of Canberra-Sydney, Washington DC-New York, and Kuala Lumpur–Putrajaya.
“But we do anticipate that the relocation will result in the decentralising of development and the redistribution of wealth to other parts of the archipelago,” he added.
A Malaysia External Trade Development Corp (Matrade) official said it is not necessary for businesses to relocate to East Kalimantan for another 10 years unless the planned development is completed much earlier. Besides, sudden relocation by businesses will change the overall business landscape.
“The effect will not be immediate to business due to the phase of the relocation that will be focusing on the administrative of the Indonesian government for the first stage. While the business centre will remain in Jakarta and Java,” the official said.
The project’s first phase development is set to begin in 2022 and last until 2024, with construction to continue until 2045.
Kalimantan is the Indonesian section of Borneo, which it shares with Malaysia and Brunei.
Despite the relocation, the majority of Jakarta’s 10 million residents are likely to remain in the city, which will continue to serve as the country’s economic and financial hub.
The new administrative capital will house all three branches of Indonesia’s government, namely the executive, the legislature and the judiciary, as well as the headquarters of the national police and the Indonesian military, foreign embassies and international organisations. Meanwhile, financial sector institutions, such as Bank Indonesia, the Financial Services Authority and the Investment Coordinating Board, will remain in Jakarta.
