Indonesia's New Capital Runs Short of Money and People

Indonesia's plan to build a brand new capital city, Nusantara (also called IKN), in the forests of East Kalimantan is running low on both money and people, The Diplomat reports. The budget for the project fell about 85 percent, from roughly $2.7 billion in 2024 to around $390 million in this year's draft budget. That is a quiet but clear signal that Prabowo's government is pulling back from a project his predecessor Jokowi promised would cost about $30 billion by 2045.

The idea was to move the capital away from Jakarta, which is overcrowded, polluted, and slowly sinking into the sea. Private and foreign money was meant to do most of the building. That money has not really arrived. The capital authority says it holds about $13.6 billion in signed investment promises, but only around $4 billion has turned into real construction, roughly 15 percent of what was pledged. Most of the cash that did come is from Indonesian state firms, not the international investors the plan needed.

On the ground, the gap is easy to see. About 10,000 people live there now, mostly construction workers and civil servants, far from the 1.2 million residents once promised. Many officials told to move have simply not shown up, and key infrastructure is behind schedule. The article argues the whole plan rested on hopeful assumptions about private interest that never matched reality, leaving Prabowo with an expensive promise he did not make.

Why it matters

If you pay taxes in Indonesia, this is about where your money goes. Every rupiah spent on a half-empty capital is one not spent on schools, health, or the local budgets Prabowo is already cutting elsewhere. Watch the next budget: a further cut would suggest the government has quietly given up on Nusantara, while a sudden top-up would raise questions about who really benefits.