New Capital City May Boost Kalimantan Growth by 3.7 Percent

TEMPO.CO, Jakarta - Bambang P.S. Brodjonegoro Minister of National Planning and Development (PPN) or Bappenas said that the new capital city project could boost Kalimantan's economic growth. Bambang said the capital relocation can, in the long run, push the island's growth by 3.7 percent.

"As for the short term, [growth] is estimated to be up to 3.6 percent," Bambang said when visiting Tempo on Tuesday, September 10.

On the national scale, the new capital city is estimated to drive economic growth up to 0.1 percent in the long run and 0.05 percent in the short run. In terms of employment, the project is expected to increase employment by 9 percent at the national level and 10.5 percent on the island of Kalimantan.

Bambang said that in terms of investment the three provinces that would receive the most benefits from the capital relocation are East Kalimantan, Central Kalimantan and South Kalimantan. According to a Bappenas study, capital development can attract investments of 5.1 percent, 0.5 percent, and 0.1 percent respectively in the three provinces.

Separately, Institute for Development of Economics and Finance (Indef) analyst Bhima Yudhistira Adhinegara disagreed with Bambang. He said that the capital relocation is not a positive catalyst for the provincial or national economic growth.

Based on a recent Indef study, he said, the capital relocation project will only boost East Kalimantan's economy, "which means that it won't mobilize the entire island's [economy], let alone the nation," he said in Jakarta, Wednesday, September 11.

DIAS PRASONGKO