Indonesia proposes crowdfunding to co-finance new capital

The planned new Presidential Palace in Nusantara: Paid for by crowdfunding?

The Indonesian government is not ruling out the use of crowdfunding to raise funds for the development of the planned new capital Nusantara in East Kalimantan on Borneo island.

Bambang Susantono, nead of the new capital authority IKN said this would “allow the community to participate in the project”, according to the Tempo.co newsportal.

“It is possible to be financed through crowdfunding. We are exploring any creative funding models,” Bambang said on March 21.

The announcement immediately prompted ridicule from critics and questions about what crowdfunding would mean for the ownership of the planned city.

This caused IKN spokesperson Sidik Pramono to clarify on March 25 that a crowdfunding programme for the construction of the new capital would only be “one of a wide array of funding alternatives outside the country’s state budget.”

He elaborated that crowdfunding would give “an opportunity for the public to actively participate financially in the construction of public and social facilities” of Nusantara. Getting the people to participate in the project would help “building trust and confidence among potential investors.”

State funding in a first step

In a first step, the new capital development would likely use funds from the state budget which would serve as “leverage to encourage market confidence,” he noted.

The unorthodox proposal of a crowdfunding programme for the new capital was made after it came to light that Japan’s SoftBank Group would not invest in the project, more than two years after Indonesia’s investment minister Luhut Pandjaitan announced the firm had pledged $40 billion for the project.

Unclear reciprocity of a crowdfunding programme for Nusantara

Critics say that the idea of crowdfunding for the new capital is tantamount to having the public co-pay for it in times when they are already burdened with high taxes, high education expenses, rising energy and food costs and inflation. They also point out that the state budget to be used for the project is already made up of taxes paid by the public.

Furthermore, crowdfunding, which is typically employed by individuals and small startups to finance a business venture and involves soliciting small donations from a large number of people, usually involves some kind of “rewards” or compensation in form of equity in a company or project. In case of the crowdfunding proposal for the new capital, a potential reciprocity for donors remains unclear.



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[caption id="attachment_38332" align="alignleft" width="300"] The planned new Presidential Palace in Nusantara: Paid for by crowdfunding?[/caption] The Indonesian government is not ruling out the use of crowdfunding to raise funds for the development of the planned new capital Nusantara in East Kalimantan on Borneo island. Bambang Susantono, nead of the new capital authority IKN said this would “allow the community to participate in the project”, according to the Tempo.co newsportal. "It is possible to be financed through crowdfunding. We are exploring any creative funding models," Bambang said on March 21. The announcement immediately prompted ridicule from critics and questions about what...

The planned new Presidential Palace in Nusantara: Paid for by crowdfunding?

The Indonesian government is not ruling out the use of crowdfunding to raise funds for the development of the planned new capital Nusantara in East Kalimantan on Borneo island.

Bambang Susantono, nead of the new capital authority IKN said this would “allow the community to participate in the project”, according to the Tempo.co newsportal.

“It is possible to be financed through crowdfunding. We are exploring any creative funding models,” Bambang said on March 21.

The announcement immediately prompted ridicule from critics and questions about what crowdfunding would mean for the ownership of the planned city.

This caused IKN spokesperson Sidik Pramono to clarify on March 25 that a crowdfunding programme for the construction of the new capital would only be “one of a wide array of funding alternatives outside the country’s state budget.”

He elaborated that crowdfunding would give “an opportunity for the public to actively participate financially in the construction of public and social facilities” of Nusantara. Getting the people to participate in the project would help “building trust and confidence among potential investors.”

State funding in a first step

In a first step, the new capital development would likely use funds from the state budget which would serve as “leverage to encourage market confidence,” he noted.

The unorthodox proposal of a crowdfunding programme for the new capital was made after it came to light that Japan’s SoftBank Group would not invest in the project, more than two years after Indonesia’s investment minister Luhut Pandjaitan announced the firm had pledged $40 billion for the project.

Unclear reciprocity of a crowdfunding programme for Nusantara

Critics say that the idea of crowdfunding for the new capital is tantamount to having the public co-pay for it in times when they are already burdened with high taxes, high education expenses, rising energy and food costs and inflation. They also point out that the state budget to be used for the project is already made up of taxes paid by the public.

Furthermore, crowdfunding, which is typically employed by individuals and small startups to finance a business venture and involves soliciting small donations from a large number of people, usually involves some kind of “rewards” or compensation in form of equity in a company or project. In case of the crowdfunding proposal for the new capital, a potential reciprocity for donors remains unclear.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

 

 

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