Jakarta, Indonesia Sentinel — Despite ongoing government efforts to cut spending, Indonesia’s House of Representatives (DPR) has discreetly approved an additional Rp8.1 trillion ($520 million) for the development of the country’s new capital, Nusantara (IKN), in East Kalimantan.
The extra funds will go toward constructing legislative and judicial complexes as well as supporting infrastructure for the capital’s Planning Area 2 (WP 2), according to Rifqinizamy Karsayuda, Chairman of DPR’s Commission II, on Thursday, February 13, 2025.
Budget Negotiations and Presidential Approval
The Nusantara Capital Authority (OIKN), responsible for overseeing the project, discussed the budget increase in a closed-door hearing with DPR’s Commission II. The session focused on efficiency measures outlined in the 2025 State Budget Implementation List (DIPA).
OIKN head Basuki Hadimuljono stated that the initial DIPA budget for 2025 was Rp6.39 trillion ($410 million) but was later adjusted to Rp5.24 trillion ($340 million) following an efficiency review.
This move aligns with Presidential Instruction No. 1 of 2025, which mandates reductions in overseas travel, seminars, ceremonial events, and office supplies to cut government expenses.
However, in a January 21, 2025, cabinet meeting, President Prabowo Subianto approved an additional Rp8.1 trillion ($520 million) for IKN’s development. This funding aims to accelerate construction and ensure that Nusantara becomes Indonesia’s political capital by 2028.
Balancing Budget Cuts and Infrastructure Priorities
The Rp8.1 trillion boost raises the total 2025 IKN budget request to Rp14.4 trillion ($920 million), factoring in earlier allocations. Basuki clarified that this increase reflects the real needs for ongoing infrastructure development.
To ensure smooth progress, OIKN has coordinated with the Ministry of Public Works (PU), which will continue existing infrastructure projects, while OIKN will oversee new construction.
A December 18, 2024, letter from the Minister of Public Works confirmed that the ministry and OIKN would share responsibilities to avoid overlap in the capital’s second-phase construction.
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Political and Public Reactions
The surprise approval of additional IKN funding comes at a time when President Prabowo has been pushing for budget austerity in other sectors, even cutting government officials’ foreign travel expenses.
While the government insists the increased budget is necessary to meet IKN’s 2028 completion target, critics argue that funds could be better spent on urgent priorities such as education, healthcare, and poverty reduction.
With Indonesia’s economy facing uncertainty, the latest budget maneuver raises questions about the government’s true fiscal priorities—and whether Nusantara’s development should continue at full speed amid broader financial constraints.
(Becky)
