Indonesian President Joko “Jokowi” Widodo has requested China to accelerate its investment in the construction of Indonesia’s new capital city, Nusantara, during his visit to Beijing. Jokowi held talks with Chinese President Xi Jinping and Premier Li Qiang during his three-day visit, where China is hosting the third Belt and Road Forum for International Cooperation.
The new capital, estimated at U.S. $33 billion, is being built on Borneo island. However, Indonesia’s administration faces challenges in attracting foreign investors for this ambitious project. China has encouraged its enterprises to invest in Indonesia and expressed willingness to cooperate in new areas such as the digital economy and green development.
Indonesia’s President Widodo has promoted Nusantara as a necessary alternative to Jakarta, which faces traffic congestion, air pollution, and rising sea levels. Despite personal pitches to businessmen during his previous trips to China, Singapore, and Germany, Jokowi has not secured significant deals.
Indonesia and China have partnered on a 990 square mile city project, marking the beginning of a Belt and Road Initiative (BRI) partnership. The project, which is expected to be completed by 2045, was initially billed at $6 billion but was later re-allocated to $1.2 billion due to rising construction costs and land compensation.
The project, which spanned 990 square miles and was financed by a loan from the China Development Bank and equity from Indonesian and Chinese shareholders, was initially scheduled for completion by 2019. Indonesia was one of the first countries to support China’s Belt and Road Initiative. The project’s construction began in 2016 and is expected to be completed by 2045.
Indonesia has been criticized for its involvement in the Belt and Road Initiative (BRI), which has led to the construction of power plants, industrial parks, ports, and bridges. This has raised concerns about the impact on natural resources and the rising debt from Chinese loans. According to Bhima Yudhistira, executive director of the Center of Economic and Law Studies, China’s financing in Indonesia has primarily focused on infrastructure projects, with 86% of it going towards coal-fired power plant development. Indonesia’s debt to China surpassed $20 billion in 2022.