Will politics-obsessed Putrajaya waste Nusantara opportunity?

 

Indonesia’s decision to build a new capital from scratch in East Kalimantan can be a goldmine for Malaysian investors. It should also have spillover effects on Sabah and Sarawak, especially in years to come.

Indonesia’s vast, resource-rich hinterland, and a growing middle-class from among its population of 270 million, provides immense opportunities for trade and investment.

Although, this is not lost on the government – as seen by Prime Minister Ismail Sabri Yaakob’s offer of cooperation at a meeting with Indonesian President Joko Widodo (Jokowi) last Nov 10 and the signing of several memorandums of understanding (MoU) worth US$3.1 billion in investments in Indonesia – the question remains as to how hard Putrajaya is pushing to grab opportunities available by the decision to relocate the Indonesian capital.

Malaysia’s total investment in Indonesia in the second quarter of 2021 amounted to US$12.53 billion, while Indonesia’s investment in Malaysia amounted to US$1.16 billion. In 2020, total bilateral trade amounted to US$15.67 billion.

Other nations, especially neighbour Singapore, are aggressively moving into Indonesia. Bilateral relations between Indonesia and Singapore received a boost on Jan 25 when Jokowi met Singapore Prime Minister Lee Hsien Loong in Bintan, Riau Islands.

With the focus on economic recovery, officials of both nations signed several MoU, including on renewable energy, green economy development and financial cooperation. Singapore committed to new investments worth US$9.2 billion at the meeting.

Singapore is the largest investor in Indonesia today. Between January and September last year, it invested US$7.3 billion in the world’s most populous Muslim nation.

Singapore, just like several other countries, has been showing immense interest in the new capital – to be called Nusantara – from the moment in August 2019 when Jokowi said the capital would be moved from Jakarta to East Kalimantan.

The new capital is an ambitious project and will see Indonesia’s government institutions and the presidential palace move from Jakarta on Java Island to East Kalimantan. Construction work was supposed to begin last year but the Covid-19 pandemic disrupted the plan.

However, Indonesian authorities hope to complete the first phase, including construction of the presidential palace, by 2024. Nusantara will also house foreign embassies and international organisations and institutions, apart from being a hub for various socio-economic programmes, technology and education.

The entire development, over 256,142 hectares of land and costing 466 trillion rupiah (RM134 billion), is expected to take between 15 and 20 years to complete.

Businesses in Sabah and Sarawak would, I believe, use the advantage of close proximity to tie up with firms and traders in East Kalimantan to provide materials and services required. If they wait for Indonesia to call, Singapore, China and other nations will beat them to it.

The new capital city holds much promise for Malaysian investors. Infrastructure is an obvious need and Malaysian firms are known to be some of the best around in infrastructure construction. There is much scope in areas such as telecommunication, healthcare and tourism too.

Indonesia is also looking for investors in the education sector as it wants to narrow the quality gap between education in western Indonesia and eastern Indonesia. The United Arab Emirates is already showing interest in investing in this sector.

Nusantara, according to Indonesian officials, will also need facilities such as housing, hospitals, shopping centres, hotels, and entertainment centres. Malaysian firms have plenty of expertise in these areas and should consider making their presence felt in this part of Indonesia.

Putrajaya and the state governments, for their part, should make it easier for businesses to cross borders into East Kalimantan, and simplify bureaucratic processes.

Sabah and Sarawak stand to benefit the most by the siting of Nusantara in their backyard, so to speak. But I fear they will be unable to make full use of the investment opportunities because they themselves are grossly underdeveloped and lack financial resources.

It may, therefore, fall on the shoulders of businessmen and investors in Peninsular Malaysia to participate more aggressively in economic activities arising from the creation of Nusantara – whether in Indonesia itself or in Sabah and Sarawak.

And what about the federal government? It has established a joint task force, which held its first meeting last November, to plan and monitor border developments in Sabah and Sarawak with regards to the establishment of Nusantara.

It is co-chaired by ministers in the Prime Minister’s Department Maximus Ongkili ((Sabah and Sarawak affairs) and Mustapa Mohamed (economy).

Setting up a task force is easy, planning and implementing projects successfully to take advantage of the creation of Nusantara is another thing.

But does Putrajaya have time to ensure this happens? Aren’t our top politicians too embroiled in politics and power play to seriously think about such matters?

Right now, government leaders and top politicians are concentrating on the upcoming Johor state elections. But, I’m afraid, the political instability won’t end whatever the result of the state elections.

This is because PAS and Bersatu, which are part of the BN-led federal government, are set to contest against BN candidates in Johor.

Even before the state elections were called, there was bad blood between Umno, PAS and Bersatu. As polling day nears, the acrimony is rising to a crescendo with leaders of Umno, Bersatu and PAS hurling accusations, or making snide remarks, against each other. Surely, we can expect this bad blood to boil over during the campaign period.

The enmity generated will not evaporate in Johor but will be carried to Putrajaya, where it will make a messy situation even messier. There will be more politicking, with everyone waiting for the next general election to be called or for the current government to collapse.

We can therefore expect government leaders to prioritise politics over the economy and people’s welfare. In such a situation, we cannot expect the government to seriously consider how to benefit from the opportunities provided by the rise of Nusantara, or even nudge businessmen to avail themselves of such opportunities.

It would be enough, I suppose, if bureaucrats and politicians don’t place blocks in the path of Malaysian businessmen wanting to invest in Nusantara or partake in the spillover effects. It will be enough if they don’t set in motion regulations or unwritten instructions that will allow their cronies or party members to monopolise these opportunities, or insist that their cronies be given 20% or 30% of “partnership” in any such venture.

Sabah and Sarawak must keep applying pressure on the federal government to, at the very least, allocate funds so that they can do what is necessary to reap at least some benefit from the movement of Indonesia’s administrative capital to East Kalimantan.

It would be a shame if Malaysia, especially Sabah and Sarawak, waste this opportunity to gain from the creation of Nusantara – precisely because of their proximity.

It would be a shame for Malaysia, which shares borders with Kalimantan, to sit idly by or do the minimal while Singapore, China, the United Arab Emirates, South Korea and a host of other nations make a beeline for the proposed Nusantara.- FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.