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Softbank says won’t invest in Indonesia capital city project
The founder and CEO of Japan-based SoftBank Group has backtracked on a commitment to invest in Indonesia’s new national capital city to be built from scratch in East Kalimantan.
Citing Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan, Bloomberg reported on March 11 that Masayoshi Son would no longer be an investor in the project.
“There’s no more story on Masayoshi. He’s out,” Luhut said in an interview on March 9, according to the March 11 report. The minister reportedly did not elaborate on why talks with the Korean-Japanese billionaire had ended.
“SoftBank Group is passing on the project but continues to invest in Indonesia through the Vision Fund’s portfolio companies,” a SoftBank Group spokesperson told the Jakarta Post, referring to the company’s venture capital fund managed by SoftBank Investment Advisers.
The news comes just over two years after Luhut announced in January 2020 that Softbank had offered to invest $30 billion to $40 billion in the project, following a meeting between Son and President Joko “Jokowi” Widodo a few days earlier.
That same month, the government enlisted Son as a member of the steering committee overseeing the city’s construction, along with Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahyan and former British Prime Minister Tony Blair.
The move of the central government capital has been estimated to require 466 trillion rupiah ($32.6 billion). Just under one fifth of that amount, according to government plans, will come from the state budget, leaving the remainder to come from the private sector and foreign investors.
The exit of a major foreign investor is a blow to government efforts to attract private sector capital for the project. The news comes a day after the president inaugurated Bambang Susantono and Dhony Rahajoe as the head and deputy head, respectively, of the new capital city authority.
The government received a commitment worth around $20 billion from Abu Dhabi to help fund initial infrastructure development and plans to offer more projects to other investors in the near future, Bloomberg citied Luhut as saying.
Investors from Saudi Arabia and China had also expressed interest, the report citing Luhut continued, and would invest through the Indonesia Investment Authority (INA), Indonesia’s sovereign wealth fund. The plan was to offer projects by blocks, including an education block, a hospital block and one for other non-government buildings.
Five or six state-owned companies may take part in the construction projects, Luhut was cited as saying.
The National Development Planning Agency (Bappenas) projected last year that 15 to 20 years would be needed to relocate the nation’s capital. The mega project has been delayed by the coronavirus pandemic, but a bill serving as its legal foundation was approved by the House of Representatives in January.
The new capital city is set to occupy 256,000ha in the East Kalimantan regencies of North Penajam Paser and Kutai Kartanegara and is intended to take some of the pressure off Jakarta, which currently serves as the country’s political centre and business hub.
THE JAKARTA POST/ASIA NEWS NETWORK