Private sector investments in entertainment and real estate flourish in Indonesia’s new capital

INDONESIA: The Otorita (Authority) of Ibu Kota Nusantara (IKN), overseeing the development of Indonesia’s new capital city, has revealed a significant influx of private sector investments in the entertainment and real estate sectors.

These investments, totalling Rp20 trillion (approximately US$1.4 billion), represent nearly a quarter of the private funding allocated for development in the new capital.

Agung Wicaksono, Deputy Head of Financing and Investment at the Otorita (Authority) of IKN, disclosed this information during his presentation at the ASEAN Investment Forum on Sunday (3 Sept).

He stated, “The private sector has already contributed Rp20 trillion, primarily in entertainment, hotels, and green spaces.”

Agung Wicaksono, Deputy Head of Financing and Investment at the Otorita (Authority) of IKN. (Photo: The Ministry of Communication and Information Technology)

Robust investor interest from domestic and international players fuels momentum for Indonesia’s new capital development

Furthermore, Agung highlighted that IKN has received 270 Letters of intent (LoI) from potential investors, including both domestic and international parties.

The majority of these expressions came from Indonesia’s leading companies, followed by investments from ASEAN nations such as Singapore and Malaysia. Japanese and Korean investors have also shown interest in the project.

In a special focus on Malaysia, two property companies, IGM and Maxim Global Berhad, have committed to constructing 20 residential towers in IKN.

These companies are currently conducting feasibility studies and await government evaluation before receiving permits to commence construction.

“They have submitted the letter, it’s being evaluated, meets the criteria, and then they can receive a letter to proceed from us. Now, it’s the feasibility study, and once we evaluate it with the government, they can start,” said Agung.

Agung mentioned that Singaporean investors have shown a particular interest in renewable energy and waste management. Some companies have progressed to the non-disclosure agreement (NDA) stage, indicating substantial commitment to their investment plans.

In addition to these developments, ten private companies have expressed readiness to construct residential towers in Ibu Kota Negara (IKN) Nusantara in East Kalimantan. These firms include Indonesian companies, a consortium of Chinese and Indonesian enterprises, and South Korean investors.

Notable names among them are Sumarecon, PT Nindya Karya (Persero), Wika Gedung, Intiland, Triniti Land, and Ciputra.

Agung shared insights into the financing requirements for IKN as per the National Medium-Term Development Plan (RPJMN) 2020-2024.

The funding is estimated at Rp466 trillion, distributed among three categories: Rp90.4 trillion from the state budget (APBN), Rp123.2 trillion from private enterprises, and Rp252.5 trillion through Government-Business Cooperation (KPBU).

Aerial photo of the development process in the Core Government Center Area (KIPP) of the National Capital of Nusantara (IKN), Penajam Paser Utara, East Kalimantan. (Photo: ANTARA)

Most of the private funding, predominantly from domestic sources, is allocated to Zone 1A, which encompasses the Presidential Palace and various ministry offices.

Agung explained, “Zone 1 focuses on areas like the Presidential Palace, the National Monument, and others. This area covers approximately 6,000 hectares, and our target for 2024 is Zone 1A. After that, there are many more areas to focus on.”

The private sector’s significant contributions to the development of Indonesia’s new capital underscore the growing interest and confidence in this ambitious project, signalling a promising future for the city’s development and economic growth.