Indonesia’s government officially announced plans to move its capital from Jakarta to East Kalimantan on Borneo. The move is expected to begin in 2024 with an expected total cost of US$30-35 billion.

Our thoughts: Talk of moving the Indonesian capital has been going on for years with the formal announcement now setting those plans in motion. The move was driven mainly by the need to reduce the reliance on Jakarta as not only the country’s economic but governance nerve center. Furthermore, Jakarta’s sinking problem and proneness to natural disasters (e.g. flooding) is a going concern for the government. Going forward, while the government moves out to East Kalimantan, Jakarta will continue to remain the country’s economic and technological hub and real estate prices should remain largely unaffected; similar global examples would be Canberra and Sydney in Australia.