Don’t expect windfall from Jakarta’s new capital shift
Published on: Sunday, September 15, 2019
By: Datuk John Lo
Text Size:
While Indonesia is powering ahead, Malaysia is being bogged down. Indonesia is now like a sleeping lion woken up like China as the woken-up dragon. Indonesian economy will be 4th largest by 2050, same as Japan, just behind USA.
Chinese and Indian will be 1st and 2nd respectively.
Malaysia in general and Sabah, sharing common boundary with this country, in particular should have a clear plan for Indonesia’s rise so that we can benefit from it. So far, Putrajaya’s conduct of economic relation with Indonesia is mostly W Malaysian centric. Sabah’s interest has been ignored by and large.
https://www.pwc.com/gx/en/issues/economy/the-world-in-2050.html#keyprojections
After years of preparation and assessment, President Jokowi has announced Indonesia’s new capital will be in East Kalimantan on 26 August 2019. Initially, about 1 million civil servants and related personnel will move to this new capital.
In view of the abundance of natural resources and over crowding in Java, the population shift will gather momentum very quickly. Sabah’s population of 4 million with our low productivity, will become insignificant in no time!
The new Jakarta will dominate the island of Borneo socially, economically and politically. Our present leadership in palm oil, tourism will be short lived.
https://asia.nikkei.com/Politics/Jokowi-announces-Indonesia-s-new-capital-in-East-Kalimantan
Construction of the new Jakarta will begin in 2021 and to be completed by 2024. The timing is imminent and there will be implications for Sabah [also Sarawak]. Not wanting to be “doom and gloom” about this, I think it is rather naïve to think that this new capital can only benefit Sabah or to talk about barter trade with Kalimantan in future. Sabah must buck up and acquire some economic sophistication very quickly if we want to be actively engaged and derive economic benefits from a fast-emerging Kalimantan Borneo as a direct result of the new Jakarta.
How should Sabah cope with Kalimantan’s economic rise? Foremost, we must change our attitude. In a very short time, Kalimantan Borneo will be transformed before our very eyes. As I have said, barter trade will be hopelessly out of date.
The shift of Indonesian population to Borneo Island, mainly from Java, will bring in a great number of hard working, business savvy and economically aggressive Javanese. Sabahan businessmen are no match for these sophisticated Javanese. There is a more than 50% chance that Sabah may experience reverse flow in favour of new Jakarta.
Moving the capital to East Kalimantan is a logical economic progression for Indonesia. The Javanese are starved for land and natural resources. Kalimantan have plenty of both. With the infusion of hard-working and business savvy Javanese and combination of land and natural resources, pace of development will be very fast.
Sabah must recognize that Indonesia has been putting in place infrastructures like airports, roads and telecommunication in Kalimantan Borneo for some years now. Recently, Jokowi announced setting up tourism zones for Kalimantan to attract investments in tourism, with emphasis on beach hotels and marinas for rich men’s yachts.
Sabah must remember that once Kalimantan Borneo is open for tourism in a big way, Sabah’s present competitive edge will dwindle into insignificance. For starters, Kalimantan has many more natural attractions than Sabah. Sabah is taking its sweet time in this vital economic sector. We must very quickly produce a new tourism plan to maintain our leading tourism position for the next 10 to 20 years.
What we need is dynamic economic leadership for this imminent challenge.
POIC has been set up for downstream industry for oil palm in this region. Kalimantan Borneo will have more planted acreage than whole of Malaysia. Kalimantan Borneo is larger than Malaysia. Sabah’s acreage is insignificant. POIC’s positon is in real danger of being overtaken in the near future, unless we can produce a genie soon.
Already the reverse flow of labour back to Indonesia has damaged our oil palm industry. We can expect less and less Indonesian workers when this new capital is being set up. Sabah must look for a long-term solution. The ultimate worst scenario is for a big number of Sabahans seeking employment and business opportunities in this new Jakarta.
Needless to say, Indonesian handicraft, batik etc are much better. So are other sectors like marine and aqua cultured products, food, cultural attractions etc.
Our political leaders and policy makers should be aware of the potential “economic suction” effect that new Jakarta will have on Sabah. It is not true that this new Indonesian capital will bring us economic benefits automatically. It may and is more than likely, suck away our competitive edge in tourism and oil palm as examples. For investors, the new Jakarta will become a better choice destination than Sabah.
The message is simply this, Sabah better wake up and be prepared for potential adverse economic impacts as well as looking for way to synergise and generate economic benefits from the setting up of the new Jakarta in East Kalimantan.
For far too long our political leaders have over-indulged and are obsessed with political “hide and seek” at the expense of Sabahans’ economic interest. They have become oblivious to the Sabah’s many past and present economic challenges. They have been ensnared and ensconced in their little world, fighting for entrenchment of their political positions and self-interest.
Hopefully, they will pay attention to the looming economic challenges by the new Jakarta. Don’t take it for granted that all will be rosy. It won’t be! Much hard thinking and much hard work will be required to meet these challenges. Not much time —-New Jakarta’s completion date is 2024.
ADVERTISEMENT
