In this episode, Professor Tom Pepinsky from Cornell University and the Brookings Institution explains Indonesia’s ongoing campaign, led by President Joko Widodo, to move its capital away from Jakarta and the political reactions to this. Located on the low-line areas of the Java Island, Jakarta is facing more storm surges and floods than ever. An increase of population, underdevelopment of infrastructure, and overexploitation of local groundwater, put Jakarta at greater risks as sea levels continue to rise…
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
(You can listen to the podcast by clicking here)
In this episode, Professor Tom Pepinsky from Cornell University and the Brookings Institution explains Indonesia’s ongoing campaign, led by President Joko Widodo, to move its capital away from Jakarta and the political reactions to this. Located on the low-line areas of the Java Island, Jakarta is facing more storm surges and floods than ever. An increase of population, underdevelopment of infrastructure, and overexploitation of local groundwater, put Jakarta at greater risks as sea levels continue to rise. The Indonesian government therefore decided to de-centralize its administrative functions to the Eastern Kalimantan region. This new capital is effectively moving to a less convenient area to all of the nation’s ethic groups. Pepinsky sees this as a way for Indonesia to emphasize itself as a multicultural country and downplay biases towards any demographic group (a key challenge traditionally faced in Indonesia is the divide between Muslim and religious minorities over the relationship between state and religion in Indonesian politics). Pepinsky finally suggests paying attention to the state of Indonesian democracy, as well as how mobilization in Indonesian politics is used to voice different opinions.
Why does this matter? The proposal to move the Indonesian capital is similar to Brazil’s construction of Brasilia on the Amazon. This brings forward investment opportunities in government-led infrastructure projects and, given the current state of the economy in Indonesia, this could be greatly rewarding. However, it’s also important to pay attention to the socio-political risks that might incur given the current division within the Indonesian society.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)