Small settlements dot Penajam District, North Penajam Paser, East Kalimantan, where the new capital will be constructed. (Photo: thejakartapost.com)Jakarta (VNA) - Indonesia’s new capital city will contribute only anadditional 0.02 percentage point to the country’s economic growth, and theimpact will also be short lived, according to Institute for Development ofEconomics and Finance (Indef) research.
The researchestimates that in the short run, the new capital city will contribute 0.17percentage point to the total investment, 0.02 percentage point to the totalexports and imports and 0.05 percentage points to the total employment rates.
This isbecause the new capital city is about housing the government and notbusinesses, said Indef economist Rizal Taufikurahman at law firm Dentons HPRP'sdiscussion forum on the future of doing business in Indonesia on January 22.
Moreover, thenew capital city was estimated to increase the total short-term output growthof the construction industry by 0.15 percentage point, mineral and steelindustries growth by 0.1 percentage point and leather and sea transportationindustries by about 0.07 percentage point, among other things.
The newcapital city, to be developed in a 256,000-hectare area in the North PenajamPaser and Kutai Kartanegara regencies in East Kalimantan, will therefore bringabout little economic impact, Rizal reiterated.
The capitalwould likely cause East Kalimantan's inflation rate to increase slightly bynearly 0.1 percentage point in the short term and 0.04 percentage point in thelong term.
The Indonesiangovernment estimated that the development of the new capital city would cost466 trillion Rp (34 billion USD), of which 54.4 percent would come frompublic-private partnership schemes, 26.4 percent from the private sector and19.2 percent from the state budget./.
VNA
