PETALING JAYA: Indonesia’s future capital in Kalimantan may not have all the economic buzz judging by the experience of other new capitals that have failed to stimulate local development, an economist says.
Hoo Ke Ping said a capital city requires sustainable economic activities to support its growth instead of merely brick and stone developments.
As such, he dismisses concerns about the economic impact of the new Indonesian capital on the two east Malaysian states of Sabah and Sarawak.
“There’s no point talking about the impact on Sabah and Sarawak because the impact on Kalimantan itself is negligible,” said Hoo.
Indonesian President Joko Widodo had formally proposed a plan to move the capital from Jakarta on the crowded island of Java to Kalimantan in Borneo.
Sabah Chief Minister Shafie Apdal expressed confidence that the move would benefit East Malaysia, adding that its strategic location would trigger an economic spin-off.
Hoo said while the population of Kalimantan will increase with the transfer of around half a million government servants, it would not be enough to stimulate the local economy.
“During the construction period with billions put in to build roads and so on, of course, a lot of people will come in but after that what?
“Just like Putrajaya, there are probably 100,000 government servants staying in and around Putrajaya, but they almost can’t even maintain the shopping complex there.
“Now you’re bringing around US$40 billion for brick and stone roads and so on, so what you expect? To invigorate the whole region? No way,” he said, downplaying how Sabah and Sarawak could benefit from the move.
Hoo also cited Rio de Janeiro and Brasilia, the former and current capital cities of Brazil.
He said Rio, despite prevalent problems like slums and squatters, had developed its own energy.
“Cities like Rio or Buenos Aires have developed over the years and even if they have slums, they have soul and that soul is their vibrancy. You can’t create vibrancy with just brick and stone,” he said.
In contrast, Hoo said Putrajaya, the federal administrative capital of Malaysia for 20 years now, and Canberra, Australia’s capital, were relatively “dead”.
Hoo predicted the palm oil industry to be the main focus once the new Indonesian capital was established, a development he acknowledged would benefit Lahad Datu’s container port.
“Before this, the new Sabah government already planned and approved a new container port in Lahad Datu because they already have the Palm Oil Industrial Cluster, a palm oil bulk handling centre, much before talk of the new capital came in.”
However, economist Madeline Berma agrees with Shafie’s view.
She expects the vast infrastructure development in Kalimantan to have a spillover effect on both Sabah and Sarawak, predicting an increase in the flow of goods and services from both sides.
Berma said the two states should expect an increase in tourist numbers from Indonesia to Sabah and Sarawak with the drastic increase in Kalimantan’s population.
She also highlighted a potential increase in health and educational tourism with the increase of the middle-class population there.
“Both state governments should develop more health and educational tourism facilities, and also commercial centres and logistic facilities,” said Berma.