Japan's SoftBank Group Corp., has prepared around US$40 billion to invest in new capital city - Photo by Insider Stories.

JAKARTA (TheInsiderStories) – Japan’s SoftBank Group Corp., has prepared around US$40 billion to build international standard research and development (R&D) centers, education and hospitals in the new Indonesian capital on Borneo Island, the senior minister has said on Friday (01/17). President Joko Widodo is scheduled to decide the tech giant’s investment commitment next month.

“Softbank was initially interested in investing up to $100 billion for the construction of a new capital city. But the government decided to use the state budget for government offices. While the clusters outside it were left to the private sector. And Softbank requested for R&D center, education and hospitals were handed over to them,” Coordinating Minister for Maritime and Investment Affairs Luhut Binsar Pandjaitan said in a media briefing at his office.

The tech giant’s founder and Chief Executive Officer Masayoshi Son, the minister went on, has met President Widodo and expressed conglomerate’s commitment to invest in Indonesia. The fund will be separate from SoftBank’s earlier pledge to invest $2 billion in Indonesia for over five years.

Indonesian representatives will meet Softbank officials later this month in Tokyo to discuss the investment structure including the possibility of whether it included in the sovereign wealth fund or a separate fund. The outcome of the meeting will be an important reference for Widodo to decide the investment commitment in February, Pandjaitan adds.

Son week ago has said to expand his tech’s investments in Indonesia, in remarks following a meeting with President Widodo. But the tycoon did not outline specific plans to invest in the new capital which will be constructed on the island of Borneo.

“We are discussing potentials. We didn’t discuss any specific number yet, but a new smart city, newest technology, a clean city and a lot of AI. That’s what I’m interested in supporting,” he told reporters.

SoftBank’s investments in the world’s fourth most-populous country include a $2 billion commitment announced in July via portfolio company Grab, Southeast Asia’s biggest ride-hailing firm. Those funds will be used to promote the use of electric vehicles in Indonesia, which is seen as a priority by the government as it attempts to improve congestion and air quality in traffic-clogged Jakarta.

SoftBank is also working on a smart city project at a township west of Jakarta, which will introduce technology like traffic monitoring cameras, in partnership with property developer PT Lippo Karawaci Tbk (IDX: LPKR).

The government has announced will start the construction of the new capital city in 2021, with a view to having the administrative center fully operational by 2024. The move will cost an estimated $32.82 billion, with the government intending to cover 19 percent of the cost. The rest is expected to come mainly from public-private partnerships, as well as direct investment by state-owned enterprises and the private sector.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com