SEPAKU, Indonesia : A top Indonesian official pledged on Wednesday that construction on a new capital city deep within the jungles of Borneo island would not stall when the presidency changes hands next year as new incentives were unveiled to encourage investment.
Southeast Asia’s largest country will officially declare the city, called Nusantara, its new capital in the first half of 2024, the head of the Nusantara authority Bambang Susantono said during a visit to the site in Kalimantan in eastern Borneo.
He was speaking from Sepaku, a district within the capital where over 7,000 workers operating excavators and cranes were laying foundations for a new presidential palace in an area surrounded by eucalyptus forests for pulp and paper production.
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Nusantara is President Joko Widodo’s flagship project and is envisioned as a green, smart city spanning nearly 260,000 hectares (642,474 acres) to replace the current overcrowded and rapidly sinking capital of Jakarta on Java island.
However, with a $32 billion price tag and the COVID-19 pandemic delaying progress, some investors have expressed concern that development may lose momentum after Widodo ends his second and final five-year term in office in 2024.
Under an incentives’ package announced on Wednesday, the government will remove corporate tax for companies investing at least 10 billion rupiah ($647,660) in some sectors for 10 to 30 years, with the longest tax holiday applied to infrastructure and public services up until 2035.
Research and development costs will be tax deductible, while import taxes on capital goods will be removed, among other incentives.
The capital’s success hinges on private sector involvement, with only 20 per cent of costs being shouldered by the state.
“I think that investors would love to see that the government goes first, so that’s why most of the buildings and facilities in 2024 is being paid by the state budget,” Bambang said.
Source: Reuters
