Singapore pledges support for Indonesia’s new US$34 billion capital Nusantara

If all goes to plan, Nusantara – located in eastern Borneo – should be transformed into Indonesia ’s political centre by the end of 2024
The two Southeast Asian nations also ratified landmark agreements made last year, covering airspace management, defence cooperation and extradition

Singapore

Kimberly Lim

Published: 6:15pm, 16 Mar 2023

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Singapore on Thursday pledged to support Indonesia’s planned new US$32 billion capital on Borneo island as the leaders of the two Southeast Asian nations presided over the signing of multiple pacts including an agreement on joint development of renewable energy during annual talks.

Prime Minister Lee Hsien Loong and President Joko Widodo – popularly known as Jokowi – said in a press conference following their meeting in Singapore’s Istana government complex that both sides agreed to cooperate in “knowledge sharing” and “capacity building” for the new Indonesian capital as construction began.

If all goes to plan, Nusantara – located in eastern Borneo – will transition into becoming Indonesia’s political centre by the end of 2024, replacing Jakarta, the heavily-congested and sinking capital of 10 million people, as the heart of the country.

After a pandemic-induced delay, the government has this year hastened plans to develop extensive infrastructure on the Borneo island site.

After a pandemic-induced delay, Indonesia has this year hastened plans to develop extensive infrastructure for Nunsantara. Photo: EPA-EFE

Lee said that the two countries have also “taken a major step forward to resolve three long-standing issues”, referring to the three landmark agreements that Indonesia and Singapore signed last year during the two leaders’ retreat on the Indonesian island of Bintan, a 60-minute ferry ride from Singapore.

The agreements covered airspace management, defence cooperation and extradition, and ended years of wrangling over issues that had coloured bilateral relations.

“I’m happy that both sides have now ratified all three agreements. We have discussed these issues many times over an extended period and have come a long way to get here,” said Lee.

Singapore and Indonesia last week jointly applied to the International Civil Aviation Organisation (ICAO), a United Nations (UN) body that oversees airspace management, to approve the countries’ realignment of flight boundaries.

Following the ICAO’s approval, the two states will agree on a date for the three agreements to be implemented simultaneously, said Lee.

The two leaders also discussed regional developments, such as the post-coup situation in Myanmar and East Timor’s admission to the 10-member regional bloc Asean. Photo: AFP

Widodo also reflected on progress from the leaders’ last retreat. “There has been much progress that we have gained since our meeting in Bintan in January 2022. Singapore’s investment in Indonesia has increased by more than 40 per cent and our trade volume has increased by 25 per cent.”

He added that Singapore investors have shown “high interest” in the development of Indonesia’s new capital city.

In a wide-ranging interview with Singapore’s national broadsheet The Straits Times, Widodo said that Singapore is “the most important partner for Indonesia” and that bilateral ties are “very good and must continue and improve”.

“We hope investments in Nusantara can become the focus,” he said, adding that if there are plans for a roadshow, “Singapore will be the first place we will go”.

Indonesia’s capital project could help unlock Asean’s economic potential

The two leaders also discussed regional developments, such as the post-coup situation in Myanmar and East Timor’s admission to the 10-member regional bloc Asean. Lee also expressed support for Indonesia’s Asean chairmanship.

Both leaders expressed their commitment to push for progress in the implementation of the five-point consensus, the agreement forged between Southeast Asian leaders and Myanmar’s junta leader Min Aung Hlaing to de-escalate his country’s post-coup crisis.

The plan requires the junta to, among other things, allow a regional envoy to hold talks with all parties including detained elected leader Aung San Suu Kyi.

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Lee said that both leaders “regretted the lack of progress in Asean’s five-point consensus” and will continue working with Asean members and partners, like the UN, to push for the full implementation of the peace plan.

Indonesia will also continue to engage with all relevant parties to pave the way for ceasefire and peace in Myanmar, said Widodo.

He said that Indonesia’s priority is to ensure that Asean maintains its importance and relevance to global affairs and can operate as an “engine for peace and stability to the region”.

On the digital economy, the two countries signed an agreement on a programme that will allow young professionals from Singapore and Indonesia to undergo work exchanges and learn from one another, which will also serve to strengthen Asean collaboration in this sector, said Lee.

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The two countries also signed an agreement on renewable energy, which will support commercial arrangements on the development of renewable energy capabilities of transmission infrastructure and cross-border electricity trading.

“It’s a win-win outcome,” said Lee, as the agreement will strengthen the energy infrastructure, energy transition and energy security for both countries and also support regional initiatives like the Asean power grid initiative.