Jakarta Sinking and the Nusantara New Capital — 2026-09-02

Top developments

IKN Funding Reaches Rp257 Trillion Amid Political Ambiguity

As of August 2026, total funding for the Nusantara new capital has reached Rp257.56 trillion, comprising Rp134.22 trillion from public-private partnerships (KPBU), Rp74.54 trillion from private investment, and Rp48.8 trillion from the state budget (APBN). This figure was disclosed by the IKN Authority (OIKN) head Basuki Hadimuljono, who emphasized that the project relies heavily on non-state sources. However, this financial milestone coincides with a notable political shift: President Prabowo Subianto’s recent State of the Nation address made no mention of Nusantara, leading business lobbies to call for "implementation certainty" to reassure investors.

OIKN Targets 16 Ministries for Civil Servant Relocation

The IKN Authority has formally identified 16 ministries and agencies whose civil servants (ASN) are prioritized for relocation to Nusantara to support core government functions. This move aims to accelerate the transition of the political capital, with a target of moving 4,100 more civil servants this year alone. The authority is also working to reduce maintenance costs by Rp500 billion annually through optimized facility management, signaling a push for operational efficiency even as the city remains under construction.

Rp6.7 Trillion APBN Allocated for Legislative and Judicial Hubs

The OIKN has secured an indicative budget of Rp6.7 trillion for 2026, with Rp5.3 trillion specifically earmarked for continuing the construction of the legislative and judicial districts. This allocation is critical for establishing the "core" of the new capital’s governance structure, which is essential for attracting further private investment and legitimizing the city’s status. The authority stated that these funds are part of a broader infrastructure development plan, aiming to speed up completion despite previous delays.

North Jakarta Subsidence Rates Remain Critical

Recent analyses confirm that land subsidence in North Jakarta continues at alarming rates, with some areas sinking by 10 to 30 centimeters per year due to excessive groundwater extraction and natural soil compaction. This rapid sinking exacerbates tidal flooding risks, making the "giant sea wall" project increasingly urgent but also more expensive and technically challenging. Experts warn that without strict enforcement of groundwater bans, even massive infrastructure projects may fail to keep pace with the sinking ground.

Local view

Kompas.id highlights the dilemma facing the North Coast (Pantura Jawa), noting that it is squeezed between sinking land and rising seas. The outlet argues that building higher sea walls is a temporary fix if groundwater exploitation is not curbed, emphasizing that academic consensus points to water management as the primary long-term solution.

Bisnis Indonesia reports on Minister AHY’s (Agus Harimurti Yudhoyono) warnings that Jakarta will be the most impacted by sea-level rise and subsidence. He proposed improvements to water flow systems alongside the giant sea wall, reflecting growing governmental recognition that structural defenses alone are insufficient.

Context & numbers

• Total IKN Funding: Rp257.56 trillion (as of Aug 2026).
• Funding Breakdown:
  • KPBU (PPP): Rp134.22 trillion (52%)
  • Private Investment: Rp74.54 trillion (29%)
  • APBN (State Budget): Rp48.8 trillion (19%)
• Subsidence Rate: 5–6 cm/year average in North/Northwest Jakarta; up to 10–30 cm/year in worst-hit areas.
• ASN Relocation Target: 4,100 additional civil servants scheduled to move in 2026; 9,500 total ASN target by 2029.

On the radar

• Investor Confidence: Watch for official responses from the OIKN regarding the President's silence on Nusantara in the State of the Nation address, as business lobbies demand clearer implementation timelines.
• Groundwater Enforcement: Increased scrutiny on illegal groundwater drilling in North Jakarta, which remains the primary driver of subsidence despite existing regulations.