A Vision in the Forest
Deep within the tropical forests of East Kalimantan, on the island of Borneo, Indonesia is attempting to build its future. The construction site of Nusantara, the planned new capital, sprawls across nearly 1,000 square miles of land, an area roughly three times the size of New York City. At its center stands a 250-foot-tall metal structure shaped like Garuda, the eagle-like mythical bird that serves as Indonesia’s national emblem. This towering monument overlooks the presidential palace, surrounded by white office buildings draped with plants and a futuristic bank that resembles a spaceship.
The city represents an ambitious attempt to start anew. Indonesia’s current capital, Jakarta, has become the world’s most populous city, home to more than 40 million people in its greater metropolitan area. It suffers from chronic traffic congestion that costs an estimated $4.5 billion annually in economic losses, severe air pollution, and a more existential threat: the ground is sinking. Each year, parts of Jakarta drop by 3 to 10 centimeters, and approximately 40 percent of the city now sits below sea level, making it increasingly vulnerable to flooding and rising seas.
In 2019, then-President Joko Widodo announced the solution: a completely new capital built from scratch, powered by renewable energy and managed through advanced technology. Construction began in 2022, with initial hopes of inaugurating the city by August 2024. That deadline passed with scaled-back celebrations and incomplete buildings. Today, the core government district is nearly complete, yet the broader metro area houses only around 150,000 people, mostly construction workers and long-established villagers. The new city’s core contains merely 10,000 residents, including roughly 1,000 civil servants.
From National to Political Capital
President Prabowo Subianto, who assumed office in October 2024, made his first visit to the site this January, more than a year after taking power. The highly choreographed trip included an overnight stay, intended as a clear message about his commitment to the project. During the visit, Prabowo reaffirmed his support for the roughly $32 billion development and set fresh targets for completing Parliament and court buildings by 2028.
Bank Permata economist Josua Pardede described the president’s overnight stay and high-profile optics as a deliberate message to observers.
“a political signal of ownership and irreversibility”
However, the visit came amid growing concerns about funding and political will. State funding for the project was cut in half for 2026 compared with the previous year. Additionally, Prabowo signed a regulation designating Nusantara as Indonesia’s political capital by 2028, a subtle but significant shift from previous language calling it the national capital. This change confused lawmakers and policy experts, who worried it signaled a de-emphasis on the project.
Basuki Hadimuljono, head of the Nusantara Capital City Authority, has dismissed concerns that the city could become a ghost town.
“Don’t worry. It will be continued.”
Once legislative and judicial buildings are completed next year, the president plans to move to Nusantara in 2028. Authorities aim to relocate 4,100 more civil servants this year, though this falls far short of the original goal of moving 1.2 million residents by 2029. Essential infrastructure such as schools, housing for married civil servants, shopping malls, and entertainment venues remain largely absent.
Environmental Promises and Ground Realities
Nusantara is marketed as a forest city, with master plans mandating that 65 percent of its area remain forested through reforestation, alongside 10 percent for parks and food production. The government aims for the city to become a net carbon sequestration sink before 2030 and achieve carbon neutrality by 2045, outpacing the national net-zero goal of 2060. President Widodo called it a manifestation of Indonesia’s commitment to tackling climate change.
Yet environmental groups paint a different picture. WALHI, the Indonesian Forum for the Environment, reports that construction has already caused mangrove deforestation around Balikpapan Bay. Fathur Roziqin Fen, executive director of WALHI East Kalimantan, identifies the ecological toll on vulnerable species.
“The most impacted will be what we call silent victims, including the mangrove ecosystem, the proboscis monkey and owa Kalimantan.”
The owa Kalimantan is an endangered primate native to the region. Construction materials sourced from Sulawesi have reportedly caused increased flooding and dust pollution in that region, contradicting the green development narrative.
Illegal mining presents another challenge. A special task force reports that over 13,000 hectares of forest around Nusantara have been damaged by illegal mining and farming operations. Inspector General Edgar Diponegoro states that 8,338 hectares were destroyed by unlawful farms and 4,236 hectares by illegal mines. The government has established monitoring stations and promises rehabilitation of degraded lands, but critics question the enforcement resolve against powerful mining interests.
Indigenous Rights and Sacred Lands
The development threatens Indigenous communities who have inhabited these forests for generations. The Alliance of Indigenous People of the Archipelago (AMAN) estimates that over 20,000 Indigenous individuals could face displacement. Approximately 800 families of the Balik people live on the site, including the village of Sepaku Lama.
Fifty-one-year-old Syamsiah and her husband Pandi, both Balik people, live in a concrete-block house on their farm in Sepaku Lama. They grow cassavas, bananas, green beans, and fruit trees. For them, the land holds deep family history; both Syamsiah’s parents and grandparents are buried in the village graveyard. Nearby, a rhino-shaped rock in the Sepaku River known as Batu Badok serves as a sacred site for the Balik people. Today, that rock sits inside a water treatment compound, cut off from the community by a concrete wall built for flood mitigation.
The wall blocks the village from using the river water to bathe and wash clothes as they traditionally did. While the city provides free filtered water, residents must pay to install pipes in their homes. Many opt to collect rainwater or buy delivered tanks instead. City officials have already informed residents like Syamsiah and Pandi that they will eventually need to sell their land to the project. Pandi, 53, remains unwilling.
“Maybe the government can compensate me for the plants or even the house. But my memories, my history, can the government replace that?”
Recent legal developments have complicated land acquisition. In November, the Constitutional Court struck down a 2024 decree that granted investors land cultivation rights of up to 190 years, ruling the privileges unconstitutional. The petition was filed by Stepanus Febyan Babaro, a Dayak Indigenous representative, and another resident. The court ordered Nusantara to adhere to national regulations limiting cultivation rights to 95 years maximum. While Indigenous groups welcomed the ruling, developers view it as a potential deterrent to investment.
International Investment and China’s Role
With an estimated total cost of $33 billion, the state budget can cover only about 19 percent of the bill. The remainder must come from private and foreign investment, a target that has proven elusive. Critics have dubbed the project a white elephant, citing failure to attract sufficient private backing.
China has emerged as a prominent international partner. As of May 2025, Chinese companies have invested nearly 70 trillion rupiah (approximately $4.3 billion) in Nusantara. In late 2024, Delonix Group became the first foreign investor to break ground, investing in a mixed-use commercial complex. Chinese firms have expressed interest in transportation, energy, digital systems, and industrial development.
Two major Chinese-led consortia are advancing integrated transportation projects through public-private partnerships: the China Harbour Engineering Company-IJM consortium and the China State Construction Engineering Corporation-China Railway Group Limited consortium, valued at roughly 27 trillion rupiah each. Huawei has expressed interest in supporting the city’s ICT ecosystem. These investments align with China’s Belt and Road Initiative, which has already transformed Indonesian infrastructure through projects like the Jakarta-Bandung High-Speed Railway.
However, heavy reliance on Chinese financing raises concerns about debt sustainability and strategic dependency. Environmental and social safeguards remain paramount as industrial projects risk deforestation and community displacement. Indonesia must balance the use of foreign capital with environmental stewardship and inclusive development.
Learning from Other New Capitals
Indonesia is not the first nation to build a new capital. Planners are studying previous attempts through a United Nations-supported mechanism called the Voluntary Local Review (VLR), the first such review for a new city. This process aims to integrate sustainability actions and human rights principles during the development stage rather than after construction.
Malaysia’s Putrajaya offers lessons in sustainability. Designed as an intelligent garden city south of Kuala Lumpur, it incorporated existing Malay villages into its plan rather than separating Indigenous residents from their land. South Korea’s Sejong City demonstrates the advantages of phased development and incremental administrative relocation away from Seoul. Kazakhstan’s Astana shows the importance of comprehensive long-term vision, having transformed through sustained infrastructure investment into a thriving city of 1.3 million.
Key takeaways for Nusantara include the need for transparency and accountability, data-driven decision making, and meaningful stakeholder engagement. The VLR process requires breaking down silos between government departments and documenting how community feedback shapes development. It also serves as a tool to attract investors by showcasing progress and risk mitigation strategies.
Housing and Infrastructure Challenges
Beyond the gleaming government buildings, basic infrastructure remains inadequate. The city currently lacks sufficient schools, entertainment facilities, and crucially, housing for married civil servants. This gap threatens to create the very problems the new capital seeks to escape.
To address worker accommodation, the government has built Hunian Pekerja Konstruksi (HPK) housing for construction workers, managed by the Nusantara Capital City Authority and Badan Usaha Milik Otorita (BUMO), with assistance from the Ministry of Public Works and Housing. While this step aims to prevent the informal settlements that have plagued other new capitals, researchers from MIT note possibilities of quantitative inadequacy in both short and long terms. If housing fails to keep pace with worker influx, the city could develop slums before it even officially opens.
Legal and Governance Obstacles
The project faces significant legal headwinds. Indonesia’s controversial Job Creation Law, or omnibus law, is currently under judicial review by civil society groups who argue it weakens environmental protections and enables forced evictions. Passed in 2020 and reaffirmed in 2023 despite being previously ruled procedurally unconstitutional, the law restricts public participation in environmental impact assessments and eliminates environmental permits in favor of self-declared approvals by developers.
Projects designated as being of strategic national importance (PSN), including Nusantara, receive fast-tracked licenses and weakened safeguards around land rights. Article 173 allows private entities, not just the government, to acquire land in the name of public interest. A parallel case at Rempang Eco City, where residents face eviction for a glass factory and ecotourism resort, illustrates the violent crackdowns that can result, including police firing rubber bullets and arresting protesters.
Environmental groups like WALHI continue to challenge these frameworks, arguing that policy decisions cause environmental damage as surely as bulldozers. They demand the restoration of public participation rights and stronger definitions of public interest that respect community welfare and rights.
What to Know
- Nusantara is Indonesia’s planned new capital in East Kalimantan, Borneo, intended to replace sinking, overcrowded Jakarta by 2028
- The $33 billion project has seen state funding cut in half under President Prabowo Subianto, with its status downgraded to political capital rather than full national capital
- Only 10,000 residents currently live in the city core, far below targets, while essential infrastructure like schools and civil servant housing remains incomplete
- Environmental groups report mangrove deforestation and damage to 13,000 hectares from illegal mining, contradicting the forest city and net-zero claims
- Over 20,000 Indigenous people, including the Balik tribe, face displacement, with sacred sites now cut off by water treatment facilities
- The Constitutional Court struck down 190-year land rights for investors, ruling them unconstitutional and limiting rights to 95 years maximum
- Chinese companies have invested $4.3 billion through Belt and Road Initiative connections, becoming key foreign backers
- The UN-supported Voluntary Local Review process is helping planners learn from other new capitals like Putrajaya and Sejong, focusing on sustainability and transparency
