Building Nusantara: the rationale, implementation, and challenges of Indonesia’s new capital

We are thrilled to announce that our paper titled "Building Nusantara: the rationale, implementation, and challenges of Indonesia’s new capital" co-authored by Febry Wijayanti, Erlyn Yuniashri, and me has been published in R-Economy. 

This study analyses the relevance of the relocation of national capitals as an important instrument of regional policy and territorial development. It focuses on the rationale for the relocation, its implementation to date, the challenges it faces, and the trends emerging from its development. It asks whether Nusantara can become a new regional growth centre or will remain primarily an administrative capital. 

By using qualitative comparative policy analysis, we found that the relocation is driven by several substantive considerations: a longstanding political objective of redistributing national power, the economic and infrastructural diseconomies associated with Jakarta’s concentration, and persistent spatial disparities between Java and other parts of Indonesia. 

Implementation, however, remains partial and slower than initially envisaged. Public funding has been substantially reduced since 2024, the project’s ambitions have been narrowed from the development of a globally oriented green city toward a more focused administrative and political capital, and Jakarta remains the legal capital pending the required presidential decree.

Hence, the central challenge is one of economic geography rather than engineering or financing alone. Nusantara is being developed primarily as a seat of government, while its productive and economic base remains underdeveloped. A regional growth centre needs more than administrative functions to sustain it. Unless this gap is addressed, the relocation may produce a new administrative centre without substantially altering Indonesia’s existing spatial-economic imbalance.

How to cite:

Wijayanti, F., Soseco, T., Yuniashri, E. (2026). Building Nusantara: the rationale, implementation, and challenges of Indonesia’s new capital. R-Economy, 12(3), 321–337. doi: 10.15826/recon.2026.12.3.019

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