Jakarta is sinking. That isn't a metaphor or some clickbait headline from a tabloid; it's a literal, geographic reality for the city that has served as the heart of Indonesia for centuries. If you ask someone today, "What is the capital of indonesia?" the answer is still Jakarta. But that answer comes with a massive asterisk.
The Indonesian government is currently pulling off one of the most ambitious urban planning stunts in human history. They are building a brand-new city from scratch in the middle of a jungle on the island of Borneo. It's called Nusantara, or IKN (Ibu Kota Nusantara), and it’s meant to replace the overcrowded, waterlogged metropolis of Jakarta.
It's a bit of a mess, honestly. You have a city of 10 million people (Jakarta) that is the economic powerhouse of Southeast Asia, yet it's suffocating under its own weight. Traffic is legendary. The air quality often hits "hazardous" levels on your weather app. And because of excessive groundwater extraction, some parts of North Jakarta are dropping by up to 25 centimeters every single year. You can’t just "fix" that with a few new pipes or a sea wall.
The Long Goodbye to Jakarta
For decades, Jakarta has been the undisputed center of gravity for the Indonesian archipelago. It’s where the money is. It’s where the power sits. But the city was never really designed for this. Originally called Batavia by Dutch colonists, the city was built on marshland, crisscrossed by 13 different rivers.
The Dutch loved canals, but canals in a tropical, monsoon-heavy environment are basically just flood invitation letters.
Today, Jakarta contributes about 17% of Indonesia’s entire GDP. That is an insane amount of pressure for one plot of land. People from all over the country—from Sumatra to Papua—flock there looking for work. The result? A concrete jungle where the average commute can take three hours. It’s a grind.
But here is the thing about the question of what is the capital of indonesia: the transition isn't an overnight flick of a switch. President Joko Widodo officially inaugurated Nusantara as the future capital during the Independence Day celebrations in August 2024. However, the legal and administrative "move" is happening in phases. Until the President signs a formal decree (a Keppres), Jakarta remains the official capital.
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Why Borneo? The Logic Behind Nusantara
You might wonder why they picked East Kalimantan. It seems random, right? It's not.
Borneo is relatively stable. Unlike Java, Sumatra, or Sulawesi, it doesn't sit right on the "Ring of Fire" fault lines. It’s generally safe from the earthquakes and volcanic eruptions that regularly rattle the rest of the country. Plus, it’s geographically central. If you look at a map of the 17,000+ islands that make up Indonesia, East Kalimantan is pretty much the bullseye.
The government wants to shift the "Javanocentric" mindset. For too long, Java (the island where Jakarta sits) has held all the cards. It has the best infrastructure, the most schools, and the most development. By moving the capital of indonesia to Borneo, the goal is to spread the wealth to the eastern part of the country.
The Forest City Concept
Nusantara is being branded as a "Green Forest City." The vision is pretty wild:
- 65% of the area will be reforested.
- Buildings will be powered by renewable energy.
- Public transport and walking will be the primary ways to get around.
- Smart technology will monitor everything from trash to water usage.
It sounds like a sci-fi movie. But the reality on the ground is a lot of mud, heavy machinery, and massive construction cranes. Building a city in a tropical rainforest isn't exactly a walk in the park. Environmental groups like WALHI have raised serious red flags about the impact on local wildlife, specifically orangutans and long-nosed monkeys who call that forest home.
The Problems Nobody Wants to Talk About
It’s easy to look at a 3D render of a futuristic city and get excited. Actually living there is another story.
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Finances are a huge hurdle. We are talking about a project estimated to cost roughly $32 billion. The Indonesian government is only footing about 20% of the bill. The rest? They’re hoping for private investors. While countries like the UAE have shown interest, the global economy is shaky. Convincing a CEO to move their regional headquarters to a jungle clearing is a tough sell when Jakarta already has the skyscrapers and the fiber-optic cables.
Then there’s the human element.
Civil servants are currently being told they have to pack up their lives and move. Imagine living your whole life in a bustling city like Jakarta—with its malls, street food, and social circles—and being told you’re moving to a construction site 800 miles away. There’s a lot of "wait and see" happening in the government offices right now.
Is Jakarta Just Going to Disappear?
Absolutely not. Even when Nusantara is fully operational, Jakarta will remain the New York City to Nusantara’s Washington D.C.
Jakarta will stay the financial hub. The banks, the stock exchange, and the major corporations aren't going anywhere fast. The government is actually planning to spend billions more on Jakarta to try and save it from sinking. They're building a "Great Giant Sea Wall" and trying to improve the mass transit system (the MRT) so the city doesn't just become an underwater ruin.
It’s a tale of two cities. One is a legacy of the colonial past, struggling to breathe under the weight of its own success. The other is a clean slate, a dream of what Indonesia wants to become in the 21st century.
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What This Means for Travelers and Businesses
If you're planning a trip or looking at business opportunities, you need to keep your eye on the "Twin Cities" strategy.
For travelers, Jakarta is still the primary gateway. Soekarno-Hatta International Airport (CGK) isn't losing its status as the main hub anytime soon. However, keep an eye on Balikpapan and Samarinda. These cities in East Kalimantan are seeing a massive surge in infrastructure. New toll roads, airports, and hotels are popping up daily to support the construction of the new capital of indonesia.
For businesses, the opportunities in Nusantara are mostly in green tech, construction, and infrastructure. But don't sleep on Jakarta. The "Special Region of Jakarta" is likely to get new laws that make it even more business-friendly once the burden of being the administrative capital is lifted.
Actionable Steps for Navigating the Change
The transition of the Indonesian capital is a multi-decade project. It won't be "finished" until at least 2045. Here is how to stay ahead of the curve:
- Monitor the Keppres (Presidential Decree): Until the President signs this specific document, Jakarta is officially the capital. Check Indonesian news outlets like The Jakarta Post or Antara News for updates on this legal milestone.
- Verify Logistics: If you are dealing with government ministries, clarify where their primary offices are located. Many are currently split between Jakarta and temporary offices in Nusantara.
- Investigate East Kalimantan Property: If you're an investor, the "buffer cities" around Nusantara, like Balikpapan, are seeing significant land value increases.
- Environmental Due Diligence: For companies looking to enter the Nusantara market, environmental compliance is the top priority. The government is being very strict about the "green" requirements for any new builds in the zone.
The move is happening. It’s messy, it’s expensive, and it’s incredibly ambitious. Whether Nusantara becomes a thriving sustainable utopia or a quiet monument to overreach remains to be seen, but for now, the story of the capital of indonesia is a story of a nation trying to outrun the rising tides of the Java Sea.