Via Financial Times

Indonesia has unveiled details of a high-level steering committee that includes a former UK prime minister, a business chief and a crown prince to oversee the creation of its planned new $31bn capital, in a bid to bolster investor confidence in the project.

Tony Blair, ex-UK premier, SoftBank chief Masayoshi Son and Abu Dhabi crown prince Mohammed bin Zayed al-Nahyan would join the group, the government said on Tuesday.

The crown prince would chair the committee and Joko Widodo, Indonesia’s president, would remain in overall charge, Luhut Pandjaitan, Indonesia’s co-ordinating minister for maritime affairs and investment, said in a statement.

Jakarta gave no further details on the involvement of Mr Blair, whose former advisory firm Tony Blair Associates counted Abu Dhabi investment fund Mubadala as a client, in the project. Mr Blair’s office declined to comment.

The announcement followed a meeting between Mr Widodo, the crown prince and Mr Son in Abu Dhabi. The formation of the committee was intended to boost investor confidence, Mr Pandjaitan said.

The statement comes a day after the United Arab Emirates committed to pump $22.9bn into Indonesia to help finance infrastructure and energy projects in south-east Asia’s largest economy.

Mr Widodo, who was re-elected to a second term last year, has made increasing foreign direct investment a priority. FDI is critical to finance Indonesia’s current account deficit and bankroll Mr Widodo’s $400bn infrastructure programme, including the proposed capital.

Proponents of the new city, a flagship initiative of Mr Widodo, argue it is needed to relieve congestion in the present capital Jakarta, which is built on a swamp and parts of which are subsiding. Flash floods killed more than 50 and displaced hundreds of thousands there earlier this month. The new capital will be built in East Kalimantan province on the island of Borneo.

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The UAE will channel its investment via a new Indonesian sovereign wealth fund. The structure of the fund, which the government plans to launch by mid-2020, would be finalised in Tokyo later this month, said Mr Pandjaitan.

After leaving office in 2007, Mr Blair set up Tony Blair Associates, which worked for a range of clients including Kuwait, Vietnam, Peru, Colombia and Kazakhstan. He shut the firm in 2016 amid accusations he had made millions of pounds from an array of controversial clients. But he said at the time he would retain an unspecified number of clients.

After meeting Mr Widodo in Jakarta on Friday last week, Mr Son told reporters he was interested in supporting a “new smart . . . clean city”, without disclosing a specific investment amount.

He added that this commitment would be in addition to the $2bn SoftBank earmarked in July for investment in Indonesia via Grab, the south-east Asian ride-hailing company.

Mr Widodo has made the plan to move Indonesia’s capital a priority in a bid to give an extra boost to an economy that is growing at about 5 per cent a year. Construction is scheduled to begin in 2021 and relocation in 2024.

External financing is critical to the capital city project — one of the most ambitious since independence for Indonesia — given that the state budget will cover just 19.2 per cent of costs.

Additional reporting by Kana Inagaki, George Parker and Jim Pickard

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