Softbank Withdraws from Funding for the Nusantara IKN Project

Jakarta, IDN Times – In the midst of the plan to move the new national capital (IKN) to Penajam Paser Utara (PPU) Regency, East Kalimantan, suddenly a potential investor from Japan decided to withdraw from the IKN funding project. The potential investor in question is a venture capital company, Softbank.

In 2020, the Coordinating Minister for Maritime Affairs and Investment, Luhut Pandjaitan, once said Softbank would disburse investment funds worth 100 billion US dollars or equivalent to Rp. 1,432 trillion. However, Softbank suddenly decided to withdraw. In fact, Softbank CEO Masayoshi Son has been appointed by President Joko “Jokowi” Widodo as a member of the IKN steering committee board.

Quoted from the page BloombergLuhut said, Saturday (12/3/2022), Softbank’s withdrawal from funding the IKN project was conveyed when interviewed on Wednesday, March 9, 2022. “There are no more stories about Masayoshi. He has left (from IKN funding),” said Luhut.

However, according to Luhut, Softbank did not provide an explanation as to why they canceled the investment funding at IKN Nusantara. Then, what is Softbank’s comment about their withdrawal from the IKN Nusantara project? What is the IKN Task Force’s response to Softbank’s withdrawal? Will it interfere with IKN development?

1. Softbank will continue to invest in Indonesia, but will not participate in funding IKN development

Softbank Withdraws from Funding for the Nusantara IKN Project, Why?IKN Palace Design by Nyoman Nuarta (instagram.com/nyoman_nuarta)

Softbank Group spokesman confirmed that his party canceled plans to invest in the IKN Nusantara development project in Indonesia. However, Softbank will continue to invest in Indonesia through companies in the Vision Fund portfolio.

This is not the first time that Son has decided to quit a big government project. In 2018, Saudi Arabia and Softbank signed a memorandum of understanding (MoU) on a $200 billion solar power project. It was the largest project agreed to be undertaken. However, in the end, the project stalled.

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2. Luhut relies on foreign investment from the UAE and Saudi Arabia

Softbank Withdraws from Funding for the Nusantara IKN Project, Why?Coordinating Minister for Maritime Affairs Luhut Pandjaitan when embraced by Saudi Arabia’s Crown Prince Mohammed bin Salman Abdulaziz in Saudi on March 3, 2022 (www.instagram.com/@luhut.pandjaitan)

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Now, Luhut is relying on investments that are expected to be disbursed by Saudi Arabia and the United Arab Emirates (UAE). Bloomberg reported that the UAE has committed to spend around US$20 billion to fund the early-stage construction of the Nusantara IKN.

Meanwhile, previously, through his Instagram account, Luhut showed off his photo with the Saudi crown prince, Prince Mohammed bin Salman bin Abdulaziz. In his uploads on social media accounts, Luhut seemed to signal that Saudi Arabia was interested in being involved in the IKN Nusantara project in East Kalimantan.

“I told him that we were preparing for the construction of a new National Capital (IKN). I also said that we are open to cooperation in new and renewable energy to cooperation in environmental conservation. One remark was thrown after the meeting finished. The crown prince said that if Indonesia advances, Saudi Arabia will also advance,” Luhut wrote on March 3, 2022.

He said he came to Saudi last week at the invitation of MBS directly. While there, the former Presidential Chief of Staff (KSP) also met with the Saudi Minister of Investment, Khalid Al-Falih, and several CEOs of Saudi companies to discuss the realization of a number of investment plans in Indonesia.

“In the middle of the meeting, I conveyed my wish that the potential investment from the Saudi Kingdom and Indonesia’s investment opportunities could go hand in hand,” he said.

3. The commitment of foreign investors is still in the early stages

Softbank Withdraws from Funding for the Nusantara IKN Project, Why?Softbank CEO Masayoshi Son at the State Palace Complex, Central Jakarta, Friday 10 January 2020 (IDN Times/Teatrika Handiko Putri)

Meanwhile, the Head of the National Capital Communications Team (IKN), Sidik Pramono, also responded to SoftBank’s departure from the new capital city project. Sidik said the government would still rely on funding for the capital mega-project in North Penajam Paser, East Kalimantan, from various sources.

“In principle, IKN development financing can come from the APBN and other legal sources of funding according to the provisions of the law,” Sidik said to the media on Saturday (12/3/2022).

SofBank confirmed that the company will not invest in the IKN project. The decision was delivered on Friday, March 11, 2022.

Sidik said that the commitment of investors or parties outside the government regarding IKN financing is still in the early stages. “In the realization later, of course everything will be discussed in more detail with the government,” said Sidik.

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