ADB to help Indonesia raise funding for new $32 bln capital city

JAKARTA, March 18 (Reuters) – The Asian Development Bank (ADB) will assist in Indonesia’s planned $32 billion capital city relocation by mobilising financing and assessing the project’s environmental and social impacts, the Manila-based lender said on Friday.

The multilateral bank said in a statement it will also help with the design of the new city, Nusantara, that President Joko Widodo wants to build in the eastern part of forested Borneo island.

When asked whether the ADB will extend a loan to Indonesia for the relocation, the lender said its support will be “technical, including in setting up an international conference” but did not provide further details.

“ADB will share international lessons learned to help NNCA design and fund construction of the new capital,” said senior ADB official Ahmed M. Saeed, referring to Nusantara National Capital Authority, a government agency in charge of the project.

The bank’s statement followed an announcement from Japan’s Softbank Group that it would not invest in Nusantara, despite previous remarks by an Indonesian minister that the group had offered billions of dollars for the project. nL2N2VE0K9

The NNCA is headed by Bambang Susantono, a former vice president for ADB and former deputy transport minister for Indonesia.

Susantono was quoted in Friday’s ADB statement as saying he was keen to learn about others’ experiences in creating carbon-neutral and inclusive cities.

Jokowi, as the president is commonly known, has said he wants the government to finance only about a fifth of the cost of the new capital city, and that private and foreign investors should bankroll the rest.

Indonesia’s sovereign wealth fund will invest in the new capital city if it sees the project as commercially viable, the head of the fund told Reuters this week. nL3N2VJ2UO

The government aims to start construction soon and civil servants are expected to move from the current capital, Jakarta, to Nusantara in 2024.

(Reporting by Stefanno Sulaiman
Editing by Gayatri Suroyo and Kanupriya Kapoor)

((Stefanno.Sulaiman@thomsonreuters.com;))