Indonesia has assembled a star-studded team to oversee the construction of its new capital city on the island of Borneo – a move that’s intended to alleviate some of the pressure on rapidly-sinking Jakarta.
Indonesian President Joko Widodo, known to millions as Jokowi, has selected Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan, the man whom the NYT recently described as the Arab world’s most powerful ruler, comparing him favorably to Saudi Arabian Crown Prince MbS, to chair the committee responsible for overseeing the construction of the capital.
Also joining the board: Former UK PM Tony Blair, and – get this – SoftBank Chairman and founder Masayoshi Son.
Indonesia is counting on a mix of private and state-owned entities to bear about 80% of the cost of building the capital, a “cost” that has been estimated at $34 billion. The city’s precarious situation was highlighted again last week after a brutal monsoon flooded Jakarta and the surrounding area.
The crown prince accepted Jokowi’s offer to lead the committee during a meeting in Abu Dhabi this week where investment deals worth $22.8 billion were signed between companies from the UAE and Indonesia.
The fact that the plan to build a new capital is a public-private partnership suggests that these board members were likely picked for one reason: They either have connections around the world, or direct control over billions of dollars of capital.
Does this mean that SoftBank sees an opportunity to profit in Indonesia? Investing in a new capital city is a bold move, there’s not much in the way of precedent, but a hefty return would help revive SB’s reputation, which took another hit last week following reports that robot-pizza maker Zume, another one of SB’s portfolio companies, has burned through most of its working capital, including a $350 million investment from the company.
But there’s no question that the government needs to make this new capital work. As one of the world’s largest megacities, Jakarta is extremely overpopulated given the fact that the entire city is build on top of a swamp.
Jokowi is hoping private industry and state-run companies will step up and cover at least 80% of the cost of the new city, presumably leaving the Indonesia state on the hook for the rest.
Hopefully, this process will be better-managed than the WeWork IPO…