Indonesia’s decision to relocate its capital from Jakarta to eastern Borneo is already attracting speculators and inflating land prices, according to a local industry body, which is urging President Joko Widodo to take measures to differentiate between pure profiteers and real developers.
I’ve heard that land prices are rising already, said Soelaeman Soemawinata, chairman of the Association of Indonesian Real Estate Companies which represents more than 5,000 member firms.
We must set developers and speculators apart. Speculators don’t develop anything as they just wait until land prices increase, and then sell. Developers expect the government to secure the land, which can be developed by them.»
The government controls about 180,000 hectares of land in the future capital, triple of Jakarta, in a $33 billion project to build the new landmark city from scratch with support from both the public and private sector. Indonesia plans to begin construction by 2020-end and start the relocation in phases starting from 2024.
Despite limited access to lands in the East Kalimantan province due to it mostly being protected and commercial forestry under government control, developers remain upbeat with various plans underway from basic infrastructure to luxury condos.
Still, the association and Soemawinata want further tightening to screen participants. He said the association wanted President Widodo to provide a legal basis for the participation of private developers» considering that construction could last through several regimes.
The move to relocate Indonesia’s capital is meant to ease pressure on the congested and sinking Jakarta and spread economic activity outside the island of Java.