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JAKARTA: “Do you have land to sell?”
That was the million-dollar question in Penajam Paser Utara and Kutai Kartanegara last year following President Joko Widodo’s announcement that the country’s capital would move from megacity Jakarta to the underdeveloped districts of East Kalimantan province.
The plan to relocate the capital was deemed necessary as Jakarta, a crowded and polluted city of 10 million people, has been battling for years with traffic congestion that costs $ 7 billion in economic losses each year.
It is also one of the fastest sinking cities on Earth, with experts predicting that it could sink in 2050 if current rates continue.
The districts of Penajam Paser Utara and Kutai Kertanegara, meanwhile, have a minimal risk of natural disasters, the president said in his announcement and is geographically located in the center of the country where the government already owns about 180,000 hectares of land.
The government’s announcement last August triggered an increase in demand for parcels of land in the new capital. But with the COVID-19 pandemic and development delays, demand appears to have cooled for now.
That said, those interviewed by CNA noted that the land around the capital site is still sought after and is seen as a solid investment for the future.
The COVID-19 pandemic has caused the government to shift its priorities, delaying development of the 466 trillion rupee ($ 32 billion) project.
Now, a year later, the new capital remains a plan on hold and the government has stated several times that it will still be developed when the time is right.
In this sense, the sale of land is no longer the talk of the city.
“Nobody talks about land anymore, unlike last year when a lot of people from out of town dined at my restaurant talking about it,” said Eko, a restaurant owner in Penajam Paser Utara who, like many Indonesians, has only one name. .
When CNA met Mr. Eko at his restaurant last year, he said that all of his clients talked about land prices every day.
In Penajam Paser Utara, East Kalimantan, a welcome sign has been put up for visitors to Indonesia’s new capital, in this photo taken in September 2019 (Photo: Kiki Siregar).
Debi, a resident of the oil city of Balikapan, about 80 kilometers east of Penajam Paser Utara, agreed.
He also witnessed an increase in demand for land in his city last year, but said enthusiasm has waned for now.
INVESTORS FOLLOW SANGUINE: MINISTER
Although there are currently no construction works in progress, Mr. Suharso Monoarfa, the minister who oversees the new capital, explained that the master plan is still being worked on.
“It will follow the detailed plan, then we will include basic infrastructure works in cities that will support the future capital of the country, for example, Balikpapan, Samarinda,” the minister of national development planning told CNA in a recent exclusive interview.
A road has been built to connect Balikpapan with East Kalimantan’s provincial capital, Samarinda.
The Minister of National Development Planning also revealed that investors are still interested in the new capital.
“There are still some investors, including domestic ones, who are still interested. And in fact they keep asking when it can start.
“I think this is also important because, after COVID-19, the economic recovery (will focus on) investment destinations that promise high and rapid capitalization, one of them in Indonesia is the capital city project.”
Mr. Monoarfa welcomed other countries to invest, especially members of the Association of Southeast Asian Nations (ASEAN).
“In my opinion, because later on (the new capital) will also be a symbol of friendship in ASEAN, why shouldn’t there be a legacy from ASEAN countries contributing to this capital?”
Mr Monoarfa is hopeful that the new capital project can resume next year, once COVID-19 has been contained.
STRATEGIC ISLANDS NEAR EAST OF KALIMANTÁN WANTED LATER
A recent case of alleged illegal land sales involving the Malamber Islands near East Kalimantan province, which was reported by local media, suggests that there are still people looking at land in the region despite uncertainties in the relocation schedule.
The Malamber Islands case came to the attention of authorities after it was reported in June that a man allegedly sold the 6.4 ha island for 2 million rupees to the Regent of Penajam Paser Utara, who is also a businessman.
Inhabited by about five families, Malamber is part of the Balabalakang island chain that is technically located in West Sulawesi province, but closer to Balikpapan Bay and the East Kalimantan coast.
Malamber consists of Big Malamber Island and Small Malamber Island. (Photo courtesy of Ridwan Alimuddin)
Under the Constitution, island sales and purchases are illegal in Indonesia as they belong to the state.
While the alleged seller has since clarified that he had sold the land on the island and not the island itself, local police in West Sulawesi are still investigating the case.
The attorney for the regent of Penajam Paser Utara dismissed the claims about his client’s involvement and told CNA that the regent does not know the alleged seller.
Environmentalists worry that the relocation of the capital to East Kalimantan will damage Balikpapan Bay and its coastal communities. (Photo: Kiki Siregar)
Meanwhile, the East Kalimantan coordinator of the JATAM Mining Defense Network Pradarma Rupang, who has studied land ownership in large parts of East Kalimantan, believed that the Balabalakang island chain would be strategic if the new capital was developed. .
“Its location, which is close to the new capital, makes it an important route, especially for logistics in central and eastern Indonesia, and would also make it a transit point,” Rupang said.
READ: Indonesia’s new capital offers opportunities for development, but environmental dangers abound
The environmentalist said that the practice of buying and selling land, in general, continues to prevail in the area.
“(The pandemic) did not prevent several businessmen from outside East Kalimantan from carrying out land studies in various villages in Penajam Paser Utara district and Balikpapan city,” Rupang said.
LAND OWNERS KEEP CLOSING
Mr. Sikbukdin, chief of the local Paser Balik tribe in Penajam Pasar Utara agreed.
He said he still receives calls from people interested in buying his land.
“Yes, there are still many people but it is not clear who they are. They (claim to be) speaking on behalf of the National Development Planning Agency, ”said Mr. Sibukdin.
“I responded by saying that the new capital is still not clear, it is impossible that the National Development Planning Agency is looking for land on its own,” said the 57-year-old man who does not want to sell his land.
READ: New Indonesian Capital: Indigenous Tribes Fear Further Marginalization
The exact location of the new capital has yet to be revealed, but many are betting on the Sepaku and Samboja sub-districts, which lie on the border of Penajam Paser Utara and Kutai Kartanegara.
The 57-year-old tribal chief owns land in Sepaku, Penajam Paser Utara.
The neighborhood of the Paser Balik indigenous tribe in Penajam Paser Utara. (Photo: Kiki Siregar)
Similarly, another Penajam Paser Utara resident also revealed that he still receives many requests from interested land buyers.
Farmer Hamzah, who regularly acts as an intermediary between the seller and the buyer of land, noted that the price of land has not decreased despite the pandemic, especially in the Sepaku sub-district, as land availability is scarce.
“People just think positively that the new capital project will start next year,” he added.
READ: What about Jokograd? Indonesians suggest names for the new capital
Originally, the government planned to begin construction of the new capital this year on an initial 40,000 ha site and transfer the central administration functions to the new capital site by 2024.
THE PROPERTY FOLLOWS A SOLID INVESTMENT
In the oil city of Balikpapan, Yoga Gunawan, general manager of the Borneo Bay City superblock, which comprises shopping malls, offices, a hotel and apartments, said sales are relatively stable.
When the president announced the relocation of the capital in late August last year, Borneo Bay City acted quickly and immediately ran a full-page advertisement for his property in a national newspaper the next day.
The Borneo Bay City superblock from real estate developer Agung Podomoro Land in Balikpapan. (Photo: Kiki Siregar)
Despite the reported 15 percent decline in property sales in Balikpapan for the second quarter of 2020, Gunawan is optimistic that the property remains a solid investment.
“According to the latest information, the new capital will still be developed … The people of Balikpapan are still optimistic about the relocation of the new capital,” he told CNA.
Ali Tranghanda, CEO of real estate consultancy and adviser Indonesia Property Watch, added that demand for land and properties in the area where the new capital is believed to be located has slowed, but the potential is still there.
“The price of land is still stable with a general correction of around 1% to 3%,” he told CNA.
READ: Commercial places – Countries that moved their capitals
He also stated that in the long term, the market potential remains very high.
“The plan (to relocate the capital) still exists, and there are parties that are skeptical about the large budget required for the relocation.
“However, the situation is not due to technical issues, but to the pandemic.”
Despite the uncertainty, Debi, the Balikpapan resident, is still hopeful that the new capital will come true soon.
“If the new capital is in East Kalimantan, it will boost the economy.”
