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Indonesia’s New Capital City: Public Funding and Public Support

Author

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  • Aichiro Suryo Prabowo
  • Thomas B. Pepinsky

Abstract

Indonesia’s new planned capital city of Nusantara is the most significant public works project in modern Indonesian history. This article examines the economics and politics of Nusantara from the perspectives of public budgeting and political economy. Combining data from official planning documents and media accounts with a large body of original public opinion data, we find that (1) the only feasible source of funding that can be mobilised for Nusantara is the Central Government Budget (APBN); and (2) while Indonesians across all age cohorts support the idea of relocating the capital, they do not support using public funding for this purpose. Given that the APBN is constrained for a project the size of Nusantara, our analysis highlights the trade-offs for the public between raising taxes, borrowing with future repayment obligations and reallocating funds from other government programs.

Suggested Citation

  • Aichiro Suryo Prabowo & Thomas B. Pepinsky, 2026. "Indonesia’s New Capital City: Public Funding and Public Support," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 62(2), pages 215-244, May.
    • Handle: RePEc:taf:bindes:v:62:y:2026:i:2:p:215-244
    DOI: 10.1080/00074918.2026.2646837
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