In the heart of Borneo’s forest, a pristine multilane highway opens onto the shimmering façade of a winged-eagle topped palace — the symbol of Indonesia’s bold ambition to shift its seat of government. Yet three years after launching the plan, the new capital Nusantara (also known as the “Ibu Kota Nusantara” or IKN) is showing worrying signs of life fading.
The project – initiated by former president Joko Widodo to replace Jakarta – was envisioned as a modern, green, decentralised capital where 1.2 million residents would be living by 2030. But today there are reportedly only about 2,000 civil servants and 8,000 construction workers on‐site, far from the target figure and suggesting large areas of the city remain eerily empty.
Financial signals add to concern. In 2024, the government allocation for the project stood at roughly £2 billion; in 2025 that was already reduced to £700 million and next year the allocated budget is pegged at about £300 million — only a third of what was requested. Meanwhile, private sector investment has fallen over £1 billion short of the stated target. In May of this year, President Prabowo Subianto quietly re‐classified the project as a “political capital” rather than a fully functioning national capital — a shift only publicly acknowledged in September.
Observers who have studied the development believe the downgrade signals a lack of political urgency. Professor Herdiansyah Hamzah of Mulawarman University described the site as “already a ghost city” and questioned the legal and practical significance of the “political capital” label. On the ground, local businesses that had relied on the influx of workers report steep downturns. “At first our laundry was full every day, but when the workers went home everything stopped,” said one stallholder.
Beyond economic disappointment, serious environmental and social concerns have emerged. The new city location, chosen in the dense forests of East Kalimantan, has entailed deforestation and ecosystem disruption. The environmental NGO Walhi reports that over 2,000 hectares of mangrove forest were cleared in just two years to make way for infrastructure. Indigenous communities in the region say they have faced deteriorating conditions. One local farmer and fisher noted that since a water treatment plant and dam were built nearby, his harvests have been halved and clean river water no longer accessible. Government officials deny the allegations, but the conflict remains.
Despite these challenges, the project’s chief official, Basuki Hadimuljono, head of the Nusantara Capital Authority (OIKN), insists the project remains on track. He maintains that the funding realignment is not a cut but a reallocation, adding that political commitment remains strong. Yet analysts remain sceptical, pointing out that Prabowo’s priorities appear elsewhere — especially his flagship free school meals programme, which is slated to command an annual budget of £15 billion by end-2026.
Some visitors to Nusantara describe a futuristic city in waiting. One tourist compared it to Singapore: “Clean, modern – like something impossible in the middle of the jungle,” she said. “But it’s also strange and quiet. There’s nobody here yet.” For many in Indonesia’s eastern regions, the move of the capital offers hope of greater recognition and decentralised governance away from Java’s dominance. Yet the current vacuum of activity calls into question whether that hope will translate into reality.
In sum, Indonesia’s ambitious urban gambit stands at a crossroads. With major budget cuts, disappointing occupancy, mounting environmental and social concerns and a change in strategic positioning, the risk is growing that Nusantara might become not the vibrant hub it was promised to be, but a monument to unfulfilled ambition.
