Economist: Budget Allocation For Second Stage IKN Is Lower Is A Reasonable Thing

Photo: Doc. Antara

JAKARTA - Executive Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira views that the second phase of the budget allocation for the development of the Capital City of the Archipelago (IKN) which is lower than the first stage is a natural decision by President Prabowo Subianto.

This, said Bhima, is because the Prabowo government has a focus or priority on food self-sufficiency and self-sufficiency in energy for the next five years.

Prabowo is natural to allocate a lower budget to IKN than in the Jokowi era because future development priorities for the next 5 years focus on food self-sufficiency and self-sufficiency in energy. For example, MBG (to eat free nutrition) needs a budget that is more priority than IKN," said Bhima, quoted by Antara, Friday, January 31.

He added that the IKN project in the Prabowo era certainly experienced a modification that was not the same as the phase of the development of the 7th President Joko Widodo (Jokowi) era, both in terms of fiscal support and private investment participation.

Seeing the condition of the fiscal space and development priorities, Bhima recommended three schemes that the Prabowo government could implement in the issue of IKN development.

The first scheme is to evaluate planning by focusing on strategic infrastructure first.

"As long as the Presidential Palace at IKN can be held a cabinet meeting, development can be postponed for supporting infrastructure such as ASN apartments, shopping centers and other facilities. In parallel, the transfer of ASN to IKN can be postponed first," he said.

Furthermore, the second scheme, according to Bhima, is that IKN can be placed as the Presidential Palace in Bogor or Bali. In this case, the Presidential Palace at IKN is only used for ceremonial purposes and visits from delegations from neighboring countries.

"Saving will be very significant because there is no need for further development," said Bhima.

Finally or thirdly, the government can carry out active diplomacy in attracting investment into IKN, including through Danantara.

"The 2025 APBN portion can be cut for IKN and focus on the realization of internal and foreign investment. Of course this is the most rational way to build IKN which requires a large budget," said Bhima.

President Prabowo approved the budget for the continuation of IKN development for the 2025-2029 period of IDR 48.8 trillion.

This was conveyed by the Head of the Archipelago Capital Authority (IKN) Basuki Hadimuljono after a limited meeting with President Prabowo at the Jakarta Presidential Palace Complex, Tuesday (21/1).

The President targets IKN to become the capital of politics in 2028. According to Basuki, the second phase of development does not only cover ecosystems for legislation and judiciary, but also supporting ecosystems and access to IKN.

Meanwhile, according to the Ministry of Finance (Kemenkeu) records, the total allocation budgeted for IKN from 2022 to 2024 is IDR 75.8 trillion.

In detail, the realization in 2022 is IDR 5.5 trillion, the realization in 2023 is IDR 27.0 trillion, and the temporary realization in 2024 will reach IDR 43.3 trillion.

Deputy Minister of Finance Suahasil Nazara, Monday (6/1), said that the budget was used for various strategic projects at IKN, including building construction in the State Palace Area, the Coordinating Ministry, and other ministries.

Then the construction of the IKN Authority Building (OIKN), flat towers for State Civil Apparatus (ASN) and TNI-Polri, landed house projects for ministers, IKN hospitals, to the construction of toll roads, main roads, bridges and airports at IKN.

In addition, the allocation from the APBN is also used to organize the Sepaku Semoi Dam area, KIPP Embung, and flood control in the IKN area.