Founder of Japan venture capital' Softbank Corps., Masayoshi Son has interest to invest around US$100 billion at the new capital city projects, said senior minister on Tuesday (01/07) - Photo by the Company

JAKARTA (TheInsiderStories) – Founder of Japan venture capital’ Softbank Corps., Masayoshi Son has interest to invest around US$100 billion at the new capital city projects, said senior minister on Tuesday (01/07). Earlier, he has met President Joko Widodo and delivered his company desired to help Indonesia’ electric vehicle program.

Beside him, Japan Bank for International Cooperation (JBIC) and the United Arab Emirates (UAE) also expressed their interest in investing in Indonesia’ new capital city projects with worth $33 billion.

A project of this nature will present opportunities for companies engaging in soft and hard infrastructure, such as urban development, utilities, toll manufacturing, environmental consulting, as well as those in the business of designing smart cities.

Coordinating minister for maritime and investment affairs, Luhut Pandjaitan, has scheduled to met Son on Friday (01/10). Beside meet with Softbank, he would also meet United States (US) International Development Finance Corp., CEO Adam Boehler, who is interested in invest in the state own enterprises.

“We are open to all of them, they must compete and we will determine who is the best. The latest were JBIC, Softbank, and United Arab Emirates,” he told reportes at his office in Jakarta.

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 Rp466 trillion ($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.

The three financial sources are expected to meet the required funding needs, Pandjaitan said. The minister previously has announced the government currently is in talks with JBIC to establish a sovereign wealth fund, as it looks to double down on investment and boost economic growth.

“One of the points discussed by Indonesia and JBIC is considering, or in other words leading to an agreement to establish a sovereign wealth fund,” said Pandjaitain.

However, he adds, the fund he discussed with JBIC was different from one agreed with the UAE in September. That fund, he said, would collect money from overseas investment funds including the UAE, with the aim of attracting around $10 billion to be spent on infrastructure such as the development of the new capital.

“Such funding will be key for the establishment of the new city in East Kalimantan, as the state budget will only cover 19 percent of the $33 billion needed for development,” the minister noted.

Indonesia’ cooperation with Softbank has long been established. Recently, the Southeast Asian ride-hailing company Grab said it will invest $2 billion into Indonesia over the next five years using funds from SoftBank.

The investment will be aimed at speeding up the development of Indonesia’s digital infrastructure. That includes building a next-generation transportation network around electric vehicles in local cities and improving the way important services, such as health care, are delivered in the country.

“Indonesia’s technology sector has huge potential,” Son, chairman, and CEO of SoftBank said in a statement.

Panjaitan hopes three financial sources meet the qualifications set by the government. They are expected to be reliable for the construction of housing, schools, hospitals and commercial districts, also for infrastructure and government offices, such as the new presidential palace, legislative buildings, and police and military quarters.

Presently, East Kalimantan’s major infrastructure includes two international airports, a seaport, and the Balikpapan-Samarinda tollway. So there is still much to be built, and that requires the presence of investors, Pandjaitan ended.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com