Infrastructure: IKN project progress increasingly massive
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Infrastruktur: Laju proyek IKN kian masif
1 November 2022
By: Muhammad Ridwan and Hendra Wibawa
In days, new capital city (IKN) Nusantara project in North Penajam Paser in East Kalimantan will progress more massively after the Public Works and Housing Ministry has accelerated tenders.
This week, the Public Works and Housing (PUPR) Ministry office at Blok M in Jakarta will be crowded.
There are at least two important events that will be held by the PUPR Ministry regarding IKN Nusantara project. The events are contract signing for the construction of the presidential palace and the state palace area in the core government area (KIPP).
Bisnis’ source who is close with the PUPR Ministry mentioned that the signing of both contacts would be held on Wednesday (2/11) or Thursday (3/11).
Based on the data from the PUPR Ministry’s electronic procurement service system (LPSE), the construction of the presidential secretariat building and the supporting buildings in the presidential palace area in IKN that has a package value of Rp1.38 trillion has been won by PT Waskita Karya Tbk with a bid price of Rp1.35 trillion.
The tender for the construction of the state palace building and the ceremony field in IKN was won by PTPP with a bid price of Rp1.34 trillion with the package value of the project reaching Rp1.5 trillion.
PTPP also won the tender for the construction the presidential office building in the presidential palace area in IKN. The state-owned company was chosen to be the tender winner with a bid price of Rp1.56 trillion with the package value reaching Rp1.93 trillion.
PUPR Minister Basuki Hadimuljono confirmed that the signing of the contract for the construction of the presidential palace in KIPP will be conducted soon. “The contract for the new palace [will be signed] this week,” Basuki said in Jakarta on Monday (31/10).
The PUPR Minister also stated that there was an increase in the required budget to construct IKN by Rp15 trillion from the initial plan.
Basuki said that the budget increased due to the extension of the KIPP construction area to areas 1B and 1C.
According to him, the government has provided lots for facilities that will be built by investors.
The lots will determine the locations of hospitals, schools, and other supporting facilities from investors.
“[Areas] 1B and 1C will require an additional budget Rp15 trillion. There are two production paths so that, in the first quarter of 2023 when the President arrives, there will be investors,” Basuki said.
Currently, in KIPP, there are lots used for coordinating ministry offices, the Indonesia National Armed Forces (TNI) headquarter, the Finance Ministry, and the State Secretariat that will be expanded to 1B, while commercial facilities will be expanded to 1C.
In Presidential Regulation Number 63/2022, the KIPP is planned to be developed into three areas. Sub-planning area (WP) 1A reaches 2,876 ha with a development area of 921 ha, and its main functions are to be a centre of government and accommodate national-scale activities as well as housing.
Sub-WP 1B reaches 2,037 ha with a development area of 488 ha, and its main functions are to be educational, training, and human resources development centres as well as provide housing.
Sub-WP 1C reaches around 1,758 ha with a development area of around 351 ha, and its main functions are to be a healthcare centre and provide housing.
Initially, the planned budget to construct IKN could surpass Rp466 trillion. From the total requirement, President Joko Widodo (Jokowi) stated that around 20% would be provided by the APBN (state budget) or around Rp93.2 trillion.
From the start, the government has affirmed that the budget to construct IKN will not come out from a single pocket, but it will be provided by related ministries in accordance with their tasks to construct IKN. For example, the PUPR Ministry has obtained a budget of Rp46 trillion to construct IKN.
Many interested parties
On another occasion, IKN Nusantara Management Authority Head Bambang Susantono stated that 130 companies had stated their interest to invest in the construction of the new capital city.
These interests were stated after a market sounding was carried out. Currently, Bambang is currently holding further discussions with the potential investors.
“Not bad. Yesterday, I heard that until two days ago there were 130 [companies] interested,” Bambang said on Friday (28/10).
Later, he explained that the investors will also be offered other investment schemes, such as public-private partnership (PPP) that is currently being disseminated.
According to him, investors will be offered work packages that will be collaborated with the government, such as toll roads, airports, as well as financial centres.
He revealed that his agency is still preparing attractive options to be offered to investors using the PPP scheme.
“We are open if [the investors] want to enter using PPP, other kinds of investment are also acceptable,” Bambang explained.
Previously, Bambang said that investment interest for the construction of IKN was 25 times greater than the lands available in the early stage. He explained that, in the early stage, his agency had provided lands in the core government area.
