Chinese companies have submitted 36 letters of interest (LoI) to invest in Indonesia’s new capital, Ibu Kota Nusantara (IKN), according to the Otorita Ibu Kota Nusantara (OIKN).

Deputy for funding and investment at OIKN Agung Wicaksono confirmed that most proposals involve the Public-Private Partnership (PPP) model.

As of May 26, 2025, 32 of the LoIs are targeted at PPP schemes. Meanwhile, four propose foreign direct investment (FDI).

OIKN reported that Chinese investments in IKN have reached nearly 70 trillion rupiah (US$4.67 billion), including 500 billion rupiah (US$30.76 million) from the Delonix project and 68.4 trillion rupiah (US$4.21 billion) in planned PPP investments for housing, integrated transport systems, and road construction.

The investment interests cover sectors such as energy, housing, digital technology, waste management, transportation infrastructure, green industry, lifestyle, and media.

🔗 Source: Bisnis Indonesia

🧠 Food for thought

1️⃣ Indonesia’s capital relocation represents a unique public-private funding experiment of unprecedented scale

The Nusantara project stands out globally for its distinctive funding structure, with the Indonesian government providing only 20% of the estimated $35 billion cost and seeking private investors for the remaining 80% 1.

This approach contrasts with historical capital city developments that were primarily state-funded, making Indonesia’s new capital one of the world’s largest infrastructure public-private partnerships.

The government’s receipt of 345 letters of intent from potential investors shows substantial interest, though the 36 commitments from Chinese companies highlighted in the article represent only a portion of the total investment needed 2.

The heavy reliance on private capital creates both opportunities and vulnerabilities, as any significant withdrawal of investor interest could potentially delay or derail the massive project.

Indonesia’s approach to financing Nusantara through investment incentives, including tax holidays for investments above $647,000 and land rights extensions up to 190 years, represents an innovative but untested model for funding critical national infrastructure 2.

2️⃣ China’s growing investment presence signals shifting economic influence in Southeast Asia

China’s substantial interest in Nusantara, with 36 letters of intent and approximately 70 trillion rupiah in investment commitments, reflects its broader strategy of expanding economic influence in the region through infrastructure investment.