Building a foundation for sustainable urban and regional development

Indonesia formulates development plan for three cities in its new metropolitan area.

2026.09.09

Indonesia is undertaking a national project to relocate its capital from Jakarta to the eastern part of Kalimantan Island. The new capital aims to become a city with a population of approximately 1.9 million by 2045, but if the development of the new capital and its surrounding areas is not carried out appropriately, the new capital concept itself, which aims to correct the over-concentration in Jakarta and achieve balanced development of the country, will become difficult. How the new capital will cooperate with the surrounding areas to create a new economic zone is one of the major themes of the capital relocation. We spoke with five people from PACIFIC CONSULTANTS Global Company, which is working on the JICA technical cooperation project "Indonesia New Capital Region 3-City Development Plan Formulation Project," including Yasuo KANNAMI, Vice President of Global Company and Project Management Dept. Masato AKASHI, Tetsu MATSUDA, Hidefumi TSUKAMOTO from the Urban and Transportation Section of the International Smart Planning Department, and Masahiro ABE from the International Projects Section.

INDEX

What is the goal of relocating the capital?
Towards the creation of a mutually complementary and sustainable economic zone
Clarify the development vision under four pillars.
Supporting human resource development and organizational development.

What is the goal of relocating the capital?

In August 2019, former Indonesian President Joko Widodo (who was succeeded by current President Prabowo Subianto in 2024) announced a plan to relocate the capital. Jakarta's living environment was rapidly deteriorating due to chronic traffic congestion caused by population growth and land subsidence due to excessive groundwater pumping. Another reason was that 54% of Indonesia's total population and 58% of its GDP are concentrated on Java Island, creating a large economic disparity within the country. The proposed new capital will be built in a wilderness area in East Kalimantan province on Kalimantan Island, 1,200 km east of Jakarta. The reasons for this choice included its geographical center, the relatively well-developed infrastructure due to the proximity of cities like Balikpapan and Samarinda, the low risk of natural disasters such as earthquakes and volcanic eruptions, and the availability of sufficient land for government use.

Location of the proposed capital relocation
source: Development status of Indonesia's new capital, "Nusantara," and surrounding cities (JICA)

The new capital project was approved by parliament in January 2022, and construction of the new capital, later named Nusantara (meaning "Archipelago" in Old Indonesian; abbreviated as IKN), has already begun in part, prioritizing the "core area" centered on government-related institutions. A political relocation of the capital is planned for 2028, and development will continue in stages, with the new capital expected to have a population of 1.9 million by 2045.

Towards the creation of a mutually complementary and sustainable economic zone

This relocation project is not simply about building a new city. If the new capital, Nusantara, becomes excessively concentrated in terms of population and social and economic functions, the same problems that are occurring in Jakarta will be repeated, placing a heavy burden on surrounding cities. That would defeat the purpose of the relocation. The capital relocation is being undertaken to create a new economic zone in the East Kalimantan region through broad cooperation with surrounding cities, and to connect this to the balanced development of the country.

JICA has already been conducting an "information gathering and verification survey for regional and urban development support in East Kalimantan Province, including the new capital," at the request of the Indonesian government, for over two years starting in June 2022. Building on that, the "New Capital Region Three-City Development Plan Formulation Project" was launched in April 2025, with PACIFIC CONSULTANTS acting as the lead company. Kannami, who is in charge of overseeing the entire project as the project Chief Engineer, explains:

"Balikpapan is about 90km from Nusantara, but it is a region that has prospered from oil refining since ancient times. It also has an airport and has the potential to develop significantly as a gateway to the new capital. Samarinda, located about 110km north of Balikpapan, is the capital of East Kalimantan province and is a core city with a population of approximately 1.04 million, where the coal industry and other industries have flourished. Our mission is to focus on Nusantara and these two cities in a Tri-City Development project. Our goal is to support the formulation of the Indonesian Development Planning Agency (TCDP). We aim to contribute to the promotion of mutually complementary and sustainable urban development across regions, working in cooperation with relevant organizations such as the Indonesian National Development Planning Agency (BAPPENAS), the Nusantara Metropolitan Government (OIKN), the East Kalimantan Provincial Government, Samarinda City, Balikpapan City, Penajam Paser Utara Regency (PPU), and Kutai Kartanegara Regency. How can we integrate the industries, unique culture, and lifestyles that this region already possesses with the power of the new capital? Nurturing next-generation industries is a major theme in Indonesia today, and in that sense, this is a significant project that will predict the future of Indonesia.

Traditional JICA projects have often focused on supporting infrastructure development in specific sectors, such as roads, railways, power plants, and water supply facilities. However, this time, the project will consider all sectors and operate on a broad scale, comprehensively examining industrial development, environmental conservation, energy supply, and waste management. Matsuda, one of the project members, explains:

"In the areas surrounding the new capital, key themes include developing new urban functions, addressing the impact of population growth on infrastructure and public services, and managing a sustainable environment. We believe it is crucial to constructively synchronize the diverse development visions of various stakeholders, including the national, state, and surrounding municipalities, including mutually complementary roles. How to build the new capital is certainly a major challenge, but if it were to be built on undeveloped wilderness, planning wouldn't be so difficult. However, forming a new metropolitan area while involving existing cities is no easy task. PACIFIC CONSULTANTS has a wealth of experience in regional cooperation among municipalities and PPP, so we believe we can provide technical cooperation that leverages Japan's strengths."

Comprehensive development plans for 3 cities and 2 other cities are required.
source: Development status of Indonesia's new capital, "Nusantara," and surrounding cities (JICA)

Clarify the development vision under four pillars.

The "New Capital Region Three-City Development Plan Formulation Project" is underway as a three-year plan until June 2028. In addition to the three cities of the new capital, Balikpapan, and Samarinda, it supports the formulation of a broader development plan that also involves Penajam Paser Utara PPU (PPU) Regency, a small city with a population of approximately 200,000 located between Nusantara and Balikpapan, and Kutai Kartanegara Regency, with a population of approximately 800,000 located on the outskirts of Samarinda (in Indonesia, both regencies and cities are independent administrative units, and there is no relationship like in Japan where cities are located within regencies).

The project is progressing based on four pillars: (1) urban development and infrastructure development, (2) economic development and industrial development, (3) environmental and climate change countermeasures, and (4) socio-cultural and gender issues. For each of these pillars, the plan will be formulated through analysis of the current situation and challenges, and discussions with stakeholders.


Regional spatial structure planning + land use planning Regional Integrated Transportation and Logistics Plan Affordable housing and slum improvement Rural Development + PPU/Kukar Integration Water resource development + infrastructure Sewerage and waste management	Promoting low-carbon and renewable energy Promotion of Advanced Chemicals and Pharmaceuticals Promoting Clean Technology and Green Industries Promoting ecotourism and wellness tourism Human Resource Development Promoting sustainable agriculture, forestry, and fisheries	Restoration and redevelopment of former mining sites Forest habitat and resource management Water source protection + resource development Flood control/disaster prevention Data-driven environmental policy development Strategies for an environmentally sustainable society	Human resource development (healthcare/school education) Reducing the disparity between urban and rural areas (income/quality of life) Reducing gender inequality (income/health) Improving living standards in slum areas e-Governance + Citizen Participation Promotion of local and tribal cultures

For example, in urban development, the following things are discussed, according to Matsuda, the person in charge.

"To realize the vision of a 'World City for All' in the new capital development, securing a good living environment is crucial. To prevent uncontrolled urban sprawl and create a safe and comfortable urban environment, it is necessary to coordinate infrastructure development, such as transportation, with the planned provision of housing and urban development. Also, people working for companies based in the new capital will have to live in Balikpapan or other areas and commute for five or ten years until the private housing market is established. However, if everyone relies on cars, it will lead to severe traffic congestion similar to that in Jakarta. I believe we need to consider promoting Transit-Oriented Development (TOD), centered around areas around public transportation stations, where Japan has expertise."

Developing new industries and promoting investment are also major themes in the development of the new capital region. East Kalimantan has primary resources such as oil and palm oil, but the ground is soft, making it difficult to construct plants and large-scale factories. Abe, who is in charge of this section, says:

"It's a difficult region to significantly develop manufacturing. However, the government wants to foster new industries. We are currently exploring directions by interviewing government and state officials, as well as local people, to determine what industrial resources the region has, and what the potential is for agriculture and tourism. Ensuring a continuous supply of food to feed the population of the new metropolitan area is also a crucial issue. The new capital is expected to become an economic zone of around 5 million people, including the surrounding area, so how do we support that population? It's important to procure food locally rather than importing it from other regions."

Tsukamoto, who is in charge of socio-cultural and gender studies, also reflects that investigating the current situation is extremely important.

"While a general hospital already exists in the new capital, transportation is currently inconvenient. In Balikpapan, when there is a shortage of specialists, people have to travel all the way to Samarinda, which is connected by a highway. Also, as is often seen in rural Indonesia, there are elementary schools, but because there is no transportation, parents have to bring their children and wait all day until classes are over. We have state-of-the-art hospitals and universities, yet these kinds of situations are occurring on the other side. We cannot leave this situation unaddressed in the new metropolitan area. We need to consider how to plan for the widespread deployment of medical care and education, and I think we can learn from the various initiatives being undertaken in Japan."

Supporting human resource development and organizational development.

This project, encompassing a wide area including three new metropolitan areas, involves all industrial sectors, resulting in a large number of stakeholders. Indonesian government officials, local municipalities, stakeholders from various sectors, and even Japanese private companies are showing great interest. Akashi, the deputy project Chief Engineer, says that this is what makes the job so appealing.

"This is a national project to build a new capital city, and at the same time, it is a project that will have a significant impact on Indonesia's future. The local people are also taking it very seriously. The Japanese government is also considering the possibility of continued support, and there is a high level of interest from the more than 1,500 Japanese companies that have already established a presence in Indonesia, with the number of participants at seminars far exceeding our expectations. It is very rewarding to be able to work with the local people to create a development plan that reflects the needs of the local people and is acceptable to both those who live in the area and those who will be newly coming to the new metropolitan area."

Matsuda says that because it starts with identifying the problems, it's challenging but also rewarding.

"This project starts from scratch, with no existing analytical data in any field, and no clear problems in sight. It requires walking around, listening to local people, identifying problems in a city, or considering potential development opportunities given the terrain, creating a narrative for solving those problems, and then compiling it into a proposal. This is an experience you rarely get in Japan. It's a job that tests your intuition, analytical skills, and conceptual abilities."

Starting from the wilderness (photographed in June 2023)

Government buildings also completed (photographed in September 2025)

PACIFIC CONSULTANTS' efforts continue towards the project's completion in 2028. Kannami concluded with these words.

"As construction of the new capital progresses, various regional issues will arise. I believe that a crucial output of this project is to complete a platform where local people can discuss and resolve these issues together. It's about creating a space where local people can discuss and implement solutions, and ensuring that this basic structure remains sustainable even after we're gone. Ultimately, it's about building organizations and developing people. I believe that this will be the foundation for Indonesia's development."

Support continues for Indonesia's ambitious national project, which is not merely about infrastructure development but looks ahead to 2045.

What is TOD?

TOD was first proposed in the United States in the early 1990s. Over 30 years have passed since then, and various TOD initiatives have been undertaken not only in Japan but also around the world, further developing the original concept and adding new elements, with great results and new possibilities becoming apparent. Yasuo KANNAMI, Vice President of Global Company and General Manager of the International Project Management Dept. who engaged in both domestic and internal TOD projects in PACIFIC CONSULTANTS, Masaya NAKANO, General Manager of the Urban and Transportation Sec. of the International Smart Planning Dept. of Global Company, and Hidetoshi TAMAOKA, Chief Project Manager, talk about the present and future of TOD as seen through their initiatives.

TOD
Railway

<Mongolia> Data Collection Survey on Promoting Energy Transition

Mongolia, a signatory to Paris Agreement adopted in 2015, has set long-term goal for reducing greenhouse gas (GHG) emissions and is working to achieve it. However, given the country's abundant coal resources, it will be difficult to break away from its dependence on coal. JICA launched an Data Collection Survey Project in 2024 to determine what kind of assistance Japan could provide and to formulate guidelines. PACIFIC CONSULTANTS served as the prime partner of the joint venture responsible for the project, and Hironori KOBAYASHI of International Facilities Sec., Facility Engineering Dept., Transportation Infrastructure Div., worked on-site as an assistant to Project Manager.

<Pakistan, Punjab Province> Project for Improving Rural Road Network Maintenance Capacity

Punjab province, the most populous province in Pakistan, is said to have a total of 87,700 km of local roads within the province. However, maintenance was a major issue due to a lack of human resources and skills, as well as an underdeveloped database system. At the request of the Punjab provincial government, a JICA technical cooperation project was implemented, and PACIFIC CONSULTANTS participated as the prime company of a joint venture consisting of three companies. Shintaro Muto of Global Company International Infrastructure Development Department was appointed as Deputy Chief Engineer Consultant.

What is area management?

The term "area management" is by no means new. The government spoke of the need for such initiatives nearly 20 years ago, in 2008. Even before that, they had been considering central urban area revitalization, town management, and new roles for regional management. And now, the role that regions must play is becoming increasingly important, and there is a demand for comprehensive improvement of urban capabilities that encompass elements such as disaster prevention, decarbonization, and biodiversity. What does modern area management entail? We spoke with Daisaku TANAKA, General Manager of the Business Design Department, Solution Business Division PACIFIC CONSULTANTS, and Sayaka YAMAMOTO, Project Manager, who are working on various social experiments.

Redevelopment Project for Shinjuku - the Hub with the World's Highest Number of Passengers

In 1958, Shinjuku, along with Shibuya and Ikebukuro, was designated as a sub-center of Tokyo. Over 60 years later, it has grown into the world's busiest terminal. However, issues have emerged, including limited space for people to stay, complicated transfer routes, and the aging of the station and station building. In 2018, the Tokyo Metropolitan Government formulated the concept "Shinjuku Grand Terminal", which involves a large-scale reorganization of the area immediately surrounding the station. Construction began in 2021, with the goal of roughly completing the project by 2035 and completing it by 2046. PACIFIC CONSULTANTS has been supporting the project from an early stage, including through business plan review. Tetsuya KAWAMOTO and Takayuki YOSHIMI from the Project Management Dept., and Takuto MIKUNIYA from the Global Company's International Smart Planning Dept., talked about the progress of the ambitious Shinjuku redevelopment project.

Taking Responsibility for the "Once In a Century" Shibuya Great Renovation <Part 1>

The large-scale redevelopment of the area around Shibuya station is said to be a "once in a century" event, not because many skyscrapers will be built. It is because it is an attempt to reinvent the area into a completely new town through cooperation between the public and private sectors, moving the station, changing the flow of the river, and creating a new pedestrian network. Moreover, it is unprecedented in that it will be realized while maintaining the functions of a huge terminal. PACIFIC CONSULTANTS has been involved in this project since the early planning stages and continues to support it up to day. We talked to five people who have been central persons in the project for many years: Ryuji KOWAKI, Hisashi KUBO, Takayasu NIWA, Yoshio NAMIKI, and Terue KAMINO.