Government Adds Rp5.1 Trillion to Budget for Basic Infrastructure Development in IKN

The Indonesian government has increased the budget for basic infrastructure support in the new capital city, Nusantara (IKN), to Rp5.1 trillion (approximately US$340 million) this year.

Public Works and Public Housing Minister Basuki Hadimuljono stated that IKN construction will commence this year. This involves awarding contracts for 20 construction packages and approximately 30 software packages.

Basuki explained that the additional funds are largely allocated to the Directorate General of Cipta Karya (Rp2.36 trillion), earmarked for the construction of Phase 1 of the Water Treatment Plant (IPA), the KIPP Wastewater Treatment Plant (IPAL), KIPP waste management, and the development of the National Axis area.

Furthermore, the funds will also be used for the construction of the Presidential Palace, the Vice Presidential Palace, the Coordinating Ministry offices, the State Secretariat Ministry, other ministries/state institutions, and the State Mosque.

The Directorate General of Bina Marga will receive Rp2.11 trillion for the construction of IKN (KIPP) access roads and logistics roads, road construction within KIPP, widening of the IHM Junction - Riko Junction road section, the Pulau Balang Short-Span Bridge, toll road construction, duplication of the Pulau Balang Short-Span Bridge, the Sepaku Market bypass road, and the construction of a pier.

The Directorate General of Water Resources will receive Rp110 billion for flood control in the Sanggai River Basin, the Sepaku Semoi Dam, reservoirs in the KIPP, and the Sepaku River intake.

The Directorate General of Housing will receive Rp480 billion for the construction of official residences and housing for construction workers.

"So, we will house the workers in the apartment buildings we are building, so they will no longer build makeshift houses around the construction site," said Basuki, as quoted by Katadata.co.id on Thursday (August 25, 2022).

The Directorate General of Construction Bina Konstruksi will receive Rp4 billion for procurement management of goods and services, and training for construction workers in IKN.

Generally, the first phase of IKN construction, or the construction of the KIPP (Core Central Government Area) of IKN Nusantara, will last until 2024. The construction of the entire IKN is scheduled to continue until 2045.

In total, the cost of IKN construction is estimated at Rp466 trillion, with less than 20% funded by the state budget (APBN). State funds can be used directly or through a state asset management scheme with a non-tax state revenue (PNBP) mechanism. More than 80% of the financing for the new capital city will be through Public-Private Partnerships (KPBU), private investment, and SOEs (State-Owned Enterprises) and regional SOEs (BUMD).