Indonesia is in the process of shifting its seat of government from the gridlocked and sinking metropolis of Jakarta to a brand latest city carved out of the Borneo jungle. Known as Ibu Kota Nusantara, or IKN, the project aims to establish a new administrative center for an archipelago of 287 million people.
A Strategic Shift from Jakarta
The decision to move the capital is driven by severe environmental and urban pressures facing Jakarta. The current capital is plagued by heavy pollution, extreme traffic congestion, and the critical issue of land sinking, which has left much of the city vulnerable to the sea.
The new site in Borneo is currently a landscape of dense jungle, where construction crews must navigate challenges such as bridge washouts and the protection of endangered species, including sun bears. The transition is intended to alleviate the burden on Jakarta while distributing political power across the region.
The Influence of Chinese Investment
As Indonesia navigates a year of budget cuts, Chinese investors have grow a primary pillar for the construction of Nusantara. According to government figures, Chinese firms spent US$29 million in 2025 on development and have committed an additional US$3.08 billion.

Several major firms are leading specific infrastructure projects:
- Delonix: The Shenzhen-based group was the first Chinese firm to join the project and is developing a mixed-use commercial site.
- Huawei Technologies: Working with local partners to implement “smart city” infrastructure.
- Citic Construction: Focused on the development of residential housing.
Beyond these projects, Chinese firms are involved in mass transit initiatives worth 28 trillion rupiah and road and tunnel construction valued at 27 trillion rupiah (approximately US$1.57 billion).
Looking Toward 2028
While the city is currently dominated by forest and construction sites, We see due to start taking over government functions from Jakarta in 2028. The success of this transition may depend on the continued flow of foreign investment and the ability to overcome logistical hurdles in the Borneo interior.
Future developments could include the full realization of the “smart city” vision and the completion of the mass transit networks. However, the pace of growth is likely to be dictated by the balance between available funding and the environmental constraints of the region.
Frequently Asked Questions
Why is Indonesia moving its capital from Jakarta?
The move is intended to save Jakarta from overpopulation, extreme pollution, and the fact that the city is sinking into the sea.
What role are Chinese companies playing in Nusantara?
Chinese investors are providing significant funding and expertise, including the development of smart city infrastructure by Huawei, housing by Citic Construction, and commercial projects by Delonix, as well as funding for roads and mass transit.
When is the new capital expected to start operations?
Ibu Kota Nusantara is due to start taking over from Jakarta in 2028.
Do you believe moving a capital city to a new location is the most effective way to solve urban decay and environmental sinking?
