Indonesia’s New Capital Sees US$4B in Investments

Posted by Written by Ayman Falak Medina Reading Time: 4 minutes
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Indonesia’s ambitious relocation of its capital to Nusantara in East Kalimantan has transitioned from vision to visible progress. As of May 2025, the project has attracted over US$4 billion in private-sector investment, marking a decisive shift from planning to construction. This milestone signals growing investor confidence in what will become the country’s new administrative and economic hub.

A diverse investment base powering growth

The Nusantara Capital City Authority (OIKN) reports that 42 companies have committed to development in the new capital, with six new agreements signed in May 2025 alone. These recent commitments — valued at 3.65 trillion (US$224 million) — build on a wave of sector-wide momentum and bring Indonesia closer to its broader goal of mobilizing 466 trillion (US$32 billion) in private capital to fund 80 percent of the city’s development costs.

Notably, some cornerstone investments originated in 2024 and are now advancing into implementation. Bina Bangsa School’s groundbreaking for its international campus took place in June 2024 with President Joko Widodo in attendance. Around the same time, Gunadarma University began constructing its advanced research campus, aiming to support Nusantara’s ambition to be a knowledge and innovation hub. These projects, while not new this year, are integral to Nusantara’s emerging ecosystem and are now entering critical development phases.

Healthcare infrastructure is also expanding, with both public and private stakeholders laying the groundwork for hospitals and wellness centers designed to meet international standards.

Building the foundations of a smart and sustainable city

Nusantara’s infrastructure development is advancing on multiple fronts. The construction of Nusantara International Airport, projected to cost 4.3 trillion rupiah (US$261 million), is progressing and will serve as a logistical cornerstone. The city’s urban mobility plan includes autonomous electric rail transit and electric bus systems, reinforcing its smart city ambitions.

Environmental planning is central to Nusantara’s identity. Over 65 percent of the city’s area is designated for green zones and conservation, and the government plans to deploy solar, hydro, and waste-to-energy systems to meet energy needs. These design elements reflect Indonesia’s broader goals for a low-emissions, climate-resilient future.

Infrastructure and construction: Building the backbone of Nusantara

The Ministry of Public Works and Housing has launched a dedicated infrastructure public–private partnership (PPP) program for Nusantara, focused on strategic assets such as roads, utilities, and transport systems. These infrastructure projects are expected to account for a substantial share of the government’s broader target of attracting approximately US$32 billion in private investment to fund 80 percent of the new capital’s development. With tenders now underway, the capital offers meaningful entry points for EPC contractors, infrastructure investors, and green technology providers.

Digital economy and smart city services

Nusantara is designed to be a fully integrated smart city, anchored by digital infrastructure and automation. The Nusantara Smart City Blueprint lays out plans for real-time data monitoring, AI-driven governance, and seamless public services. In a parallel move, Microsoft committed US$1.7 billion in April 2025 for AI and cloud infrastructure in Indonesia — its largest ever in the country.

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While not exclusive to Nusantara, these developments are expected to support key backbone infrastructure for the capital.

Foreign firms in AI systems, cybersecurity, e-ID platforms, and cloud engineering will find strong interest from Indonesian stakeholders.

Healthcare and education infrastructure

The education and healthcare sectors are central to Nusantara’s livability objectives. The OIKN has confirmed that private sector interest in education is gaining ground, with Al Azhar and a Malaysian university among the institutions securing land for campuses. These complement earlier projects from Bina Bangsa and Gunadarma University.

For healthcare, the government is prioritizing international-standard hospitals. These are expected to enter the tender phase by 2025–2026, creating pathways for foreign operators, hospital construction firms, and equipment providers to participate.

Renewable energy and sustainable utilities

The Nusantara Net-Zero Strategy 2045 aims to source 100 percent of the city’s energy needs from renewables. PT PLN Nusantara Renewables, a key player in this vision, has announced 910 MW of new clean energy projects, including floating solar and hydropower facilities.

This presents near-term opportunities for investors in grid integration, energy storage, smart meters, and utility-scale solar.

Ancillary services: Logistics, retail, and urban support

With construction staff and early government personnel relocating, demand is rising for supply chains, warehousing, food services, and local commerce. In January 2025, PosIND and PT Bina Karya launched the Nusantara Logistics Hub & Services to meet expanding logistics needs. This infrastructure will serve as a distribution backbone for retail, fast-moving consumer goods, and e-commerce providers.

Investors in urban services, retail chains, or facility management will find scalable ground-floor entry into a future city.

Government commitment ensures continuity

To ensure momentum, President Prabowo Subianto has pledged US$3 billion in government funding for Nusantara through 2029. This support will anchor public infrastructure while crowding in more private capital.

The OIKN has also been empowered through regulatory reforms passed in 2023, granting it authority over spatial planning, permitting, and public-private partnership approvals. Combined with fiscal incentives like tax holidays, customs exemptions, and streamlined licensing, these measures position Nusantara as one of Southeast Asia’s most attractive urban investment zones.

From commitment to construction

The US$4 billion in active investments marks a shift in the Nusantara narrative, from planning to delivery. With public and private sectors aligned, and early-stage projects visibly underway, Indonesia’s capital-in-the-making is becoming a tangible reality.

Foreign investors seeking long-term opportunities in Indonesia should monitor Nusantara’s development closely, as regulatory frameworks and project pipelines continue to take shape.

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