Annual Budget Speech

Funding to relocate capital city sourced from privates, SOEs

Funding to relocate capital city sourced from privates, SOEs

President Joko Widodo (Jokowi) delivers address of the 2020 state budget bill, before the House of Representative (DPR) members at the Parliamentary Complex in Jakarta on Friday (August 16, 2019). ANTARA FOTO/Sigid Kurniawan/pras.

Jakarta (ANTARA) - Funding to relocate the capital city in Kalimantan Island will be sourced from the collaboration between private companies and state-owned enterprises (SOEs) by utilizing the Public Private Partnership (PPP) scheme.

The National Development Planning Agency (Bappenas) has pegged the cost of moving the state's capital city at nearly Rp466 trillion, of which some Rp30.6 trillion is derived from the state budget.

"Funding support for relocating the capital city will utilize minimum amount from the state budget," President Joko Widodo (Jokowi) remarked while delivering his address of the 2020 state budget bill before the House of Representative (DPR) members at the Parliamentary Complex in Jakarta on Friday.

Apart from the state budget, the PPP scheme, worth Rp340.6 trillion, and private sector funds, worth Rp95 trillion, will total Rp466 trillion required for the transfer of the state capital.

Based on the estimates compiled by Bappenas, the Rp30.6 trillion from the state budget will be utilized to build state palaces and military and police strategic buildings as the principal functions, green open spaces as facilitating functions, and for land acquisition.

Funds from the government and business entity cooperation will be utilized for the construction of government buildings (legislative, executive, judiciary), official housing (multi-storey and house-to-house for State Civil and Military/Police Apparatus), educational facilities (at the elementary-, middle-, and high school-level), health facilities, correctional institution, and infrastructure comprising roads, electricity, telecommunications, water supply, drainage, waste treatment, and sports facilities.

Moreover, funds from the private sector will be utilized for building educational facilities at the university level and health facilities.

The president further explained that the new capital was designed not only as a symbol of identity but also as a representation of the nation's progress by applying modern, smart, and green city concepts and utilizing new and renewable energy and not relying on fossil energy.

The state spending in 2020 will be focused on reducing regional disparities.

Hence, the government will continue to develop various economic zones outside Java island, continue industrialization in mining and plantation downstreaming, and develop several metropolitan areas outside Java island, so they can become new economic sources.

"So far, the pulse of economic activity, in general, is yet concentrated in Jakarta and Java. Hence, Java has become densely populated, and this creates inequality with islands outside Java," Jokowi stated.

The president believes that inequality will worsen if the economic concentration in Java continues.

Hence, the plan to move the capital to Kalimantan Island is put in this context, so that it will encourage new economic growth while at the same time spurring economic equity and justice outside Java.

To increase the quality of human capital, which will become the focus of Jokowi's administration for the 2019-2024 period, the government continues to develop infrastructure and connectivity between regions, especially in the country's outermost, frontline, and disadvantaged regions.

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