In an exclusive interview, Lahadalia stressed the land permits in Nusantara, the name of the proposed new capital, would be for “a longer period compared to the other zones in Indonesia. The extended land permits can [reach] until 100 years for the new capital city.
“There will also be swifter licensing periods for investors coming to the new capital as well as competitive land prices.”
Lahadalia was speaking Thursday on the sidelines of the Indonesia Investment Forum in London. The event was organised by the Indonesian embassy, the Indonesia Investment Promotion Centre, and Bank Indonesia’s office in London, supported by Asia House, to promote the country as an investment destination to over 100 potential investors.
A key project among the investment opportunities is President Joko “Jokowi” Widodo’s ambitious 466 trillion Indonesian rupiah (US$31 billion) plan to relocate the capital of Indonesia from the sinking and overstretched Jakarta in Java to the island of Borneo.
Widodo’s plan is to have 80% of the construction costs come from private investors and foreign governments, but the grand project so far has failed to attract such backers.
Japan’s SoftBank Group pulled out of the project in March, and few deals with foreign companies have been announced since then. Only basic construction work has begun at the intended site, even though plans are for the Presidential Palace to be moved to Borneo by early 2024. This has left critics and potential investors skeptical.
Lahadalia, however, speaks in confident tones. “I’m 100% certain that we can fulfill the 80% target,” he told Nikkei.
He said “many discussions with potential European investors” have taken place and these are “currently being finalised.”
“Probably toward the end of the year, maybe December, we [will] have more announcements,” he said, mentioning support from former British prime minister Tony Blair.
Investment agreements are progressing in the electric vehicle and battery manufacturing sector, a key focus of the government.
In September, Taiwanese tech group Hon Hai Precision Industry, better known as Foxconn, announced the establishment of a joint venture with Indonesian coal miner Indika Energy to manufacture batteries and electric vehicles in Indonesia.
“They are currently finalising the plan to purchase land for their manufacturing facilities in Indonesia,” Lahadalia said.
Aside from the new capital, the government is also planning what it bills as the world’s largest green industrial park, one spanning 30,000 hectares in North Kalimantan that will be powered by renewable energy.
“We have now had many discussions with investors from the petrochemical, EV and aluminum smelting industries,” he said.
There is also a planned strategic green industrial zone in Batang in Central Java.
“We are very much open to all investors,” Lahadalia said, “including potential investors from the United Kingdom or from Europe. The ball is pretty much in their court.”
Lahadalia added he would “love to roll out the red carpet” to facilitate these investments.
Looking to the COP27 United Nations Climate Conference, which is fast approaching in November, he questioned the current state of fairness. Indonesia is a key player in climate matters as the custodian of vast rainforests, while also being reliant on coal and a major coal exporter.
While Indonesia “fully endorses” the global agreement to reduce carbon emissions, he said, “fairness and justice is a very critical component if you want to witness a true and effective transition globally.”
One problem from Indonesia’s perspective, he said, is “the vast disparity” in the price of carbon between developed and developing countries.