Prabowo-Gibran IKN Project: Challenges and Promises for Indonesia’s Future

ANALYSIS

Dela Naufalia | CNN Indonesia

Thursday, 07 Mar 2024 07:50 WIB

A number of observers said that Prabowo faced many challenges in continuing IKN, such as; investor interest and APBN limitations if the project has minimal investment. Nasa Satellite Photo of the IKN Project. (NASA).

Jakarta, CNN Indonesia —

Pair of presidential and vice presidential candidates Prabowo Subianto-Gibran Rakabuming Raka promised to continue the development of the capital city of the archipelago (IKN), which began during the era of President Joko Widodo’s administration (Jokowi), if they succeed in winning the 2024 presidential election.

Prabowo-Gibran is committed to continuing this project as part of their national priority program in the future. And now, the quick count results of a number of survey institutions and the KPU’s real count put Prabowo-Gibran in first place as the pair that received the most votes.

Even from the survey results and real counts, they have the potential to win the 2024 presidential election in one round. So, returning to IKN, the construction of this project is one of Jokowi’s efforts to encourage equitable national development, reducing geographical and economic imbalances which have so far tended to focus on the island of Java.

The IKN project is expected to create new growth centers outside Java, accelerate national economic transformation, and stimulate equitable economic growth.

Gibran emphasized several times that IKN development would continue as part of his commitment to creating a center for more equitable economic growth.

On various occasions, Gibran said that this project will also involve private investment, and it is hoped that more investors will come after the 2024 elections end, or when there is political certainty that IKN development will continue.

As part of Prabowo-Gibran’s vision and mission, the development of IKN is expected to be a stimulus for equitable economic growth, creating jobs and moving related economic sectors such as housing, infrastructure, energy, transportation and others.

IKN development involves a financing scheme from the state revenue and expenditure budget (APBN) as well as private participation.

Deputy Chair of the Prabowo-Gibran National Campaign Team (TKN), Ahmad Muzani, said that Prabowo would increase the budget for IKN development if he was elected as the next president of Indonesia.

“Pak Prabowo is determined to increase the cost of building the IKN. We want to move from Jakarta to East Kalimantan. This is a joint determination, a political determination that has been approved by all parties and national political elites,” said Muzani, quoting a press release, Friday (24/11 ).

So can this promise be realized?

Center of Economic and Law Studies (Celios) economist Nailul Huda assesses that the IKN project still has the potential to continue if Prabowo becomes president. However, there are some big risks lurking.

One of them is related to investor interest. Prabowo’s narrative, which so far seems anti-foreign, will impact the interest of foreign investors in IKN.

This anti-foreign narrative has indeed been captured several times in Prabowo’s statements. One of them was during the open campaign at the Kridosono Stadium, Yogyakarta during the 2019 presidential election.

During the campaign, Prabowo carried out pounding on the podium table. Prabowo did this when he reminded active police and TNI officers not to become tools of a handful of elites, including foreign henchmen.

On the podium, before hitting the table, Prabowo first reminded the crowd present not to be easily lied to.

Prabowo said that as the people’s army and police, you cannot defend a few people. “Especially foreign minions,” he said in an increasingly high voice.

He said that if foreign investors were ‘fascinated’ by this narrative it would definitely have an impact on their interest in IKN. If that happens, IKN development will only rely on domestic investors and state-owned companies.

This will certainly have a big impact. In relation to BUMN, for example, of course the big role in IKN will also have an impact on the APBN.

The reason is, as in the past, BUMN always needs additional capital from the state to carry out government projects. Patches are certainly not small.

So, with Prabowo-Gibran’s various ‘lighthouse promises’, this will certainly cause the APBN to collapse. Moreover, Prabowo-Gibran also promised to implement a free lunch program for 82.9 million people.

The program requires a budget of up to IDR 400 trillion.

“I think the burden on the APBN is getting heavier because IKN will also use the APBN more and more,” he told CNNIndonesia.com, Wednesday (6/3).

Not only the APBN, he said, with no investors coming in, IKN also only becomes a busy city during working hours. Moreover, IKN could become a ghost town, so that its development fails.

On the other hand, Executive Director of the Center of Reform on Economics (CORE) Mohammad Faisal feels that Prabowo will keep his promise in continuing Jokowi’s policies, especially for IKN.

He believes that Prabowo has the same interest and commitment as Jokowi in this matter. Nevertheless, continued Faisal, if Prabowo becomes president later, he needs to prove to investors by continuing the development of basic infrastructure and relocating residents to IKN well.

“Because of that investor wait and see“, because we want to see certainty in terms of future policies, and also certainty in terms of the current opportunities for IKN development progress,” he said.

“So in terms of basic infrastructure development, then also later in terms of, not only the infrastructure, but the relocation of residents, especially ASN,” continued Faisal.

Faisal explained that investors are confident that their investments will benefit from this progress. This is what makes investors wait and see. As long as progress is good and fast, investor confidence will be higher.

According to him, not many investors have invested in IKN because the construction has not been completely completed and there are no residents. In fact, some investments depend on the existing population.

“For example, for retail, to build supermarkets, minimarkets there, for example, it depends on the population there,” he added.

Faisal said that the anti-foreigner perception towards Prabowo could fade in the future if IKN development really continues effectively. Therefore, Prabowo needs to prove the sustainability of development to increase the confidence of foreign investors.

“Because, all of this has not been proven, so this means that if he really wants to provide opportunities for foreign investors, or increase the confidence of foreign investors, Prabowo will have to prove it in terms of the execution of his policies later.” he explained.

Meanwhile, Member of the Prabowo-Gibran National Campaign Team (TKN) Expert Council, Drajad Wibowo, said that in fact the champion had prepared various policies so that IKN could run well and invite many investors by ensuring that the population and traffic levels in the project were more than adequate.

It is hoped that this policy will increase the circulation of money in large IKN projects.

“In this way, investors believe that IKN is a large market for all forms of investment in the city’s economy,” he said.

“Another step is to cut bureaucracy and various obstacles that result in high economic costs so that investors want to come in.”

“And also accelerating development in the central area of ​​the IKN government, and various other steps,” he said.

(agt)

2024-03-07 00:50:28


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