The investment of Indonesia on a mega project for relocating the capital city has been kept on hold as the nation shifted its focus for spending on containing the deadly novel coronavirus or COVID-19 outbreak. But the relocating work may resume in the come year, Finance Minister Sri Mulyani Indrawati stated on Thursday.

President Joko Widodo's $33 billion project for relocating the capital of one of the largest economy of Southeast Asia out of the main Java island to that of Borneo is yet to be approved by the parliament. However, the government did allot some funds for the land acquisition last year.

Indonesia's relocation of capital put on hold due to Coronavirus crisis

Indonesia
Jakarta, Indonesia capital Pixabay

The public-works ministry, which is responsible for the project, has reallocated most of its spending, including the portion allocated for infrastructure projects, for the COVID-19 outbreak response, Indrawati said. "They have shifted their budget to upgrade hospitals, including expenditure related to the new capital city," she told media in a video conference.

However, Indonesia's planning ministry is going ahead with a tender for the masterplan of the new city, which is yet to be named and will be built in a remote area in East Kalimantan province, close to the port city of Balikpapan. "I've asked the president whether we want to allocate some funds in the 2021 budget and he said judging from the current situation, we must remain careful," the minister said.

Civil servants are expected to pack up and start moving by 2024

"But if the project is going to be supportive for economic recovery and it sparks confidence, then why not," she added. Jakarta, the current capital, is now home to 10 million people and is prone to floods, traffic gridlock and faces the risk of earthquakes. Among other reasons, the East Kalimantan site was selected since it is a well-known part of the archipelago that is least prone to natural disasters.

The original timeline for the project is for the government to seek parliamentary approval this year and begin basic construction. Civil servants are expected to pack up and start moving by 2024. Widodo has shifted state spending to make room for a greater allocation on healthcare and welfare amid an outbreak, which has so far infected 7,775 people and caused 647 deaths in Indonesia.

(With agency inputs)