New Capital City Project Continues Amid Covid-19 Pandemic

New Capital City Project Continues Amid Covid-19 Pandemic image
The government is continuing the capital city relocation project from Jakarta to East Kalimantan, even though it has reallocated most of the state budget to mitigate the Covid-19 pandemic. The National Development Planning Agency (Bappenas) is now holding a tender for the master plan project for capital city relocation.
According to the information on the website of the National Public Procurement Agency (LKPP), Bappenas offered a non-tender package called the Preparation of the Master Plan and Development Strategy for the State Capital or the IKN Master Plan, coded 6740119 and dated March 24, 2020. Unlike in the Pre-Masterplan preparation project, this time, Bappenas is using a direct appointment system and not the tender scheme. The Rp 85 billion-project contract will be ready in early May 2020.

Bappenas’ deputy for regional development, Rudy Soeprihadi Prawiradinata, said that the master plan project had to continue so that the capital city relocation would not get pushed back too far due to the Covid-19 pandemic. The agency hoped to process the budget allocation, analysis preparation, and master plan for capital city relocation at the same time without hampering the pandemic mitigation process.

The government decided to continue the capital relocation project amid the Covid-19 pandemic. However, the auctioned project is in the form of planning or study. On the other hand, Bappenas appointed McKinsey Indonesia as the winner of the consultant tender for a thorough review (pre-masterplan) on the location of the new capital city in October. The project value is Rp24.9 billion.


McKinsey will carry out a preliminary study of site selection and planning made by the Public Works and Public Housing Ministry as outlined in the pre-master plan document. The pre-master plan document will contain the analysis of the new capital location from various aspects, such as population, financing, and socio-economic issues. This study will also finalize the phases of capital relocation and zoning the area that the government has prepared.

In the latest project, Bappenas will continue the preparation of the master plan based on the study prepared by McKinsey. Therefore, it is very likely that the agency will directly re-elect McKinsey as the executor of the creator of the master plan. The relocation and construction of a new capital city require a budget of Rp 466 trillion. About 19.2 percent or Rp 89.4 trillion will come from the State Budget (APBN), 54.4 percent, or Rp 253.4 trillion will come from the government-to-business cooperation (PPP), and 26.4 percent of it or Rp 123.2 trillion is from the private sector with government guarantees.

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