Indonesia puts capital relocation on hold, shifts spending to fight virus

Jakarta

INDONESIA'S investment on a mega-project to relocate its capital city has been put on hold, as the country shifts focus to spending to contain the coronavirus outbreak, but may resume next year, said Finance Minister Sri Mulyani Indrawati.

President Joko Widodo's US$33 billion project to relocate the capital of South-east Asia's largest economy out of the main Java island to the island of Borneo has yet to be approved by Parliament.

However, the government has already allotted some funds for land acquisition this year.

The public works ministry, which is responsible for the project, has reallocated most of its spending, including the portion allocated for infrastructure projects, for the Covid-19 outbreak response, Dr Sri Mulyani said.

However, Indonesia's planning ministry is going ahead with a tender for the masterplan of the new city, which is yet to be named and will be built in a remote area in East Kalimantan province, close to the port city of Balikpapan.

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The original timeline for the project is for the government to seek parliamentary approval this year and begin basic construction. Civil servants are expected to pack up and start moving by 2024.

Mr Joko has shifted state spending to make room for a greater allocation on healthcare and welfare amid the virus outbreak. REUTERS