Indonesia places Nusantara at heart of fintech aspirations

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Indonesia appears to be striking all the right notes. From laying out the red carpet for electric vehicle makers to boosting green initiatives for local manufacturers, the archipelago is looking to set the benchmark for developing economies to thrive in the globalized, modern-day world.

Perhaps its most eye-catching project is Nusantara – the new capital that is meant to relieve congestion and overcrowding in the sinking city of Jakarta. The estimated development cost of the project, which is set to be completed by 2045, is set to a mind-boggling US$32 billion.

But only time will tell if the country is merely sounding the trumpet or if it will actually turn its ambitious goals into a reality. For now at least, its intentions seem to be well-placed.

In today’s featured piece, we look at how Southeast Asia’s largest economy is adopting a domestic approach to challenge global fintech heavyweights such as Singapore and Hong Kong.

Further, the premium story dissects likely hurdles on its path to building a successful financial hub in Nusantara – including the difficult task of convincing companies and tech talent to relocate to the new capital from Jakarta.

Today we look at:

• How Indonesia’s new capital Nusantara will reshape its financial future
• Grab launching a new carpooling feature in Malaysia
• Other newsy highlights such as an SG firm launching Asia’s first funded trader program

Premium summary

Another joins the race

Image credit: Timmy Loen

Just 30% of the US$32 billion bill for Nusantara will be funded by government subsidies. The rest is expected to come from the support of both domestic and foreign private investors.

That is a lot of weight put on the investors’ shoulders, especially considering Japan’s SoftBank pulled out of the project last year. So far, the Nusantara Capital City Authority has received only US$2.8 billion in investments, though that figure doesn’t include the state budget.

• All about conversions: According to the authority, there are 182 domestic and international investors that have expressed their interest in Nusantara. However, only some of these parties have converted their intentions into actual investments, one of which is state-owned Bank Negara Indonesia.
• Playing it safe: Otoritas Jasa Keuangan, Indonesia’s financial regulator, and Bank Indonesia, the country’s central bank, will be moving to the new capital. However, both agencies will continue to serve non-fintech businesses in Jakarta.
• The hurdles: Joel Shen, head of tech at multinational law firm Withers, highlights two challenges that Nusantara will be facing: getting tech talent to move into the new city and making it easier to invest in fintech firms.

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