IKN Authority Confident Phase 2 Development Will Further Boost Surrounding Economy

The Nusantara Capital City (IKN) Authority is confident that the second phase of development for Indonesia’s new capital, located across parts of North Penajam Paser Regency and Kutai Kartanegara Regency in East Kalimantan Province, will further stimulate the surrounding regional economy. “The economic impact is expected to increase during the second phase of IKN development (2025-2029),” said Mia Amalia, Deputy for Planning and Land Affairs at the IKN Authority, when asked about projections in Sepaku, North Penajam Paser, on Saturday. A study of the first phase of the new capital’s development (2022-2024 period) conducted by the IKN Authority recorded that the economy of North Penajam Paser Regency, as the core development area, grew by approximately 19.9 per cent, higher than other districts and cities in East Kalimantan Province. Mia Amalia stated that East Kalimantan Province’s economy also grew by around 3.7 per cent, quite high compared to other provinces on Kalimantan Island, triggered by government spending and a surge in investment, with the construction sector becoming one of the main drivers of the Gross Regional Domestic Product (GRDP) structure after the IKN development commenced. According to her, the GRDP is projected to provide a significant additional contribution to the surrounding areas, with a sustainable positive impact on economic growth. She said the impact of the IKN development is managed from construction activities towards strengthening local supply chains, workforce capacity, the involvement of regional business actors, and the development of other sectors. She continued that this projection is important amidst global geopolitical dynamics and the needs of East Kalimantan Province to strengthen economic transformation from the extractive sector towards more productive and value-added sectors. According to her, this management direction aligns with the development concept through the Nusantara Economic Superhub (SEN) to expand the long-term impact of the IKN development. Mia explained that through the linkages between the new Indonesian capital, North Penajam Paser and Kutai Kartanegara Regencies, the cities of Balikpapan and Samarinda, and surrounding areas, the IKN development is directed as a new growth centre. The new growth centre is directed to boost the economy of East Kalimantan Province, she said, moving towards more productive, value-added, and sustainable sectors. The impact of the IKN development has begun to flow to surrounding areas through the demand for goods and services, logistics, accommodation, transport, trade, and other supporting sectors. She clarified that IKN development activities are beginning to form economic linkages with buffer zones in the Kalimantan Province region, not solely concentrated in the Central Government Core Area (KIPP) of the new capital. “The success of IKN is not only measured by the number of buildings, but also by the economic growth and benefits felt by surrounding residents,” she added.