Posted On : The Jakarta Post, 15 October 2019
Harizul Akbar Nazwar, B.Eng., M.Ec.Dev., MAPPI (Cert.)

In recent times, discourse related to relocation of National Capital become a warm discourse that is almost always heard. Despite reaping the many pros and cons, President Jokowi has announced that the location of the new National Capital will be in some administrative areas of North Penajam Paser Regency and Kutai Kartanegara Regency, East Kalimantan Province.

In short, relocation plans of the National Capital are motivated by two reasons: physical-empirical and political-economic. The physical-empirical reason signifies the increasingly poor carrying capacity of the environment, congestion, urban sprawl, water crisis, and land conversion. While the economic and political reasons include symbols of national identity, reflection of diversity, and equitable development.

Jakarta As the National Capital and the Center of Everything
As of now, aside from being the center of government administration, Jakarta has become the center of nearly everything. As the base of country’s trade center with a contribution of 20% to the National GDP of the trade sector, financial services center with a contribution of 45% to the National GDP of the financial services sector, and the largest is services center which contributes 68% to the National GDP of services sector.
Geographically, the most strategic Central Business District in Jakarta is known as the golden triangle areas including MH. Thamrin, Jenderal Sudirman, and Gatot Subroto. Not only that, the CBD structure has also expanded to areas outside the golden triangle, namely Rasuna Said, T.B Simatupang, and MT. Haryono. Not only filled with high-rise buildings such as office towers, hotels, shopping centers, and luxury apartments, along the CBD area mentioned above, many buildings are additionally used as government offices, ranging from state institutions, government institutions, non-ministerial institutions, embassy offices, and regional government representative offices.
After the decision was made by the government that the National Capital would be relocated from Jakarta to East Kalimantan, all government activities would also move to the new National Capital. Therefore, all government buildings in Jakarta will become vacant. Whereas economically, most of the government buildings are scattered in the area referred to as prime areas.

Assets Optimization as Alternative Financing
Challenges that will emerge for relocating the National Capital would be financing. The National Development Planning Agency (Bappenas) predicts that the relocation of the National Capital requires at least 466 Trillion Rupiah. The financing scheme will be divided into three sources, State Budget (APBN) of 89.4 Trillion (19.2%); Public Private Partnership (PPP) of 253.4 Trillion (54.4%); and Private-SOE amounting to 123.2 trillion (26.4%). Based on the proportion of available financing, the government leans to reduce the portion of state budget in this scenario. Instead, the PPP scheme charged as the largest portion.
From here, I consider that alternative financing is required by optimizing state assents in Jakarta which are expected to become idle when the National Capital relocated. One way is by using state assets to become recurring income as non-tax state revenue. This alternative can be used as a source of funds for financing the project under the PPP and Private-SOE’s scheme in the new National Capital.
The Directorate General of State Wealth (DJKN, 2019) noted that the estimated revaluation results of total state assets in Jakarta reached around 1,123 Trillion rupiah. Meanwhile, the valuation of state assets which located in prime area such as Medan Merdeka, MH. Thamrin, Jenderal Sudirman, Gatot Subroto, Rasuna Said and MT Haryono are estimated to reach more than 150 Trillion with an estimated land area of 3 million square meters.
The schemes that will be carried out according to Government Regulation 27 of 2014 are the Lend-Use, Build Operate Transfer/Build Transfer Operate, and Long Leases. Those available schemes will provide royalties as recurring income. Based on my estimation, the potential revenue from state assets utilization could reach 4.2 trillion per year. This value could be allocated as rent payments from state assets built under the PPP scheme and private-SOE cooperation in the new National Capital.
To be able to realize this alternative, several strategic steps are required. The first is to value the assets that will be cooperated with private sector and/or SOE. This is absolutely necessary because Government need to know the real market value of the assets that have potential to be collaborated with. The valuation must be carried out by an independent party, that is by a Public Valuer. Therefore, the role of the valuer become crucial because the valuer is the only profession that has the competence to issue an opinion on the market value of an asset.
Secondly is zoning modification at the location where the state assets are located. Based on the DKI Jakarta Spatial Planning, almost all state assets in Jakarta are in the Government Zone. Therefore, if we want to attract private sector to use the assets, zoning modification is a must just after government activities moved to the new National Capital. Not only zoning changes, land use intensity also need to be increased in order to be able to build a financially-feasible property such as an increase in building floor coefficient and building base coefficient.
Third, the provision of incentives. Incentives are needed as a stimulus to increase investor interest in exploring asset utilization with the government. Incentives can be tax breaks and ease of permission. This also could be an answer the anxiety of the property market players about the sluggishness of the property market over the past few years.

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