What does Indonesia’s new capital mean for Jakarta and the ASEAN headquarters?

The election of Prabowo Subianto as Indonesia’s next president means the current Joko Widodo administration’s plan to move Indonesia’s capital from Jakarta to the new capital city of Nusantara, or Ibu Kota Nusantara (IKN), in East Kalimantan will continue.

Despite the surprise resignation in early June of the chairman and deputy of the IKN Authority, President Jokowi remains steadfast in moving the capital. He plans to move his office to IKN this July and will commemorate Indonesia’s independence anniversary there in August.

An issue no less important is the future direction of Indonesia’s current capital – Jakarta. The loss of its capital city status means the city stands at a cross roads.

So, what does the future hold for Jakarta?

Jakarta to become a ‘global city’

According to Law No. 2 of 2024 on the Special Region Province of Jakarta, which President Jokowi signed on April 25, Jakarta will become a ‘global city’. Article 4 directs it to become “a city that has the function of a national economic centre and a global city that functions as a trade centre, a centre for service activities and financial services, as well as a centre for national, regional and global business activities.”

It is a bold vision, and one open to many interpretations. But it is not yet clear how Jakarta can strengthen its global standing while at the same time ceding its capital city status.

One strategy to build Jakarta’s international standing is the promote the city as a centre for ASEAN regional integration.

Jakarta already has a long history with ASEAN. Since 1974, all ASEAN member states have supported the city to host the ASEAN Secretariat, recently renamed the ASEAN Headquarters. Two years later, the Indonesia Government began constructing a complex to serve as the association’s headquarters.

Since then, Jakarta has solidified its informal status as the “Capital of ASEAN.”  In 2019, the Indonesian government announced the construction of two 16-story towers on the site, expanding the total floor space of the ASEAN Headquaters to a huge 49,993 square meters.

But it is still unclear whether the ASEAN headquarters will remain in Jakarta or be moved to Nusantara. In 2019, it was stated that the ASEAN Headquarters would remain in Jakarta,. However, Article 5(1) of the Nusantara Capital City Law states that as well as being the center of government, Nusantara will also become a diplomatic city, hosting representatives of foreign countries and international organisations. In 2022, there were already discussions among several foreign embassies about the ASEAN Headquarters moving to Balikpapan, a city in East Kalimantan, close to Nusantara.

How to build a global city?

Jakarta should draw inspiration from New York. The city was selected as the first capital of the United States in 1789. But the city did not lose its lustre when it ceded its capital status to Philadelphia and subsequently Washington DC. Instead, it went on to become the unofficial capital of the world – or at least the 20^th century – by developing  the world’s largest stock exchange and becoming the host of the United Nations Headquarters in 1946.

Just as New York become the centre of globalisation, so Jakarta needs to position itself as the centre of regional integration in Southeast Asia.  It is already the undisputed economic capital of Indonesia, the largest economy in Southeast Asia. The city’s economic importance will only increase as Indonesia develops –  and the country is forecast to become the 4^th largest economy in the world by 2045.

Economic integration and creating a single market through the ASEAN Economic Community  is a key focus of ASEAN regional integration. This is clear from the ASEAN Charter, the foundational instrument that guides the organisation’s purpose and values.

Jakarta is well placed to drive forward the ASEAN Economic Community.

The city has already been influential in shaping the regional economy. For instance, Jakarta hosts the Indonesian Tax Court, which has ruled on many cases related to ASEAN free trade agreements that Indonesia has ratified, like the ASEAN Trade in Goods Agreement (ATIGA), the ASEAN-China Free Trade Agreement (ACFTA) and the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA). The experience of the Jakarta-based Tax Court can offer lessons to other ASEAN member state domestic courts seeking to comply with ASEAN legal instruments. Jakarta should continue to function as a gathering place for judges to discuss the implementation of ASEAN agreements in each country.

However, when discussing ASEAN regional integration, it’s important to remember there is more to it than the ASEAN Economic Community. The ASEAN Community also includes two other pillars – the ASEAN Political-Security Community and ASEAN Socio-Cultural Community.

The Indonesian government should design the future Jakarta not only as a place to host the ASEAN Secretariat and its related bodies, but also as a melting pot for ASEAN citizens to collaborate on all three pillars of regional integration. A global city needs global expertise and perspectives.

In many ways, regional integration is also bigger than Southeast Asia. The region is increasingly finding itself at the centre of strategic competition between China and the United States. The region’s strategic importance is a key reason why several non-ASEAN countries – like the United States, China and Australia – maintain two ambassadors in Indonesia: an ambasassador to Indonesia and an ambassador to ASEAN.

Jakarta and ASEAN need clarity

The historic relationship between Jakarta and ASEAN should not end after Jakarta loses its status as Indonesia’s capital. Instead, the Indonesian government should use the city’s strategic position to fulfil its commitment to ASEAN Regional Integration.

However, lingering doubt over ASEAN’s future headquarters is undermining both Jakarta and ASEAN. The outgoing Jokowi administration and incoming Prabowo administration need to clearly resolve these uncertainties.

It is of utmost importance that Jakarta’s commitment to ASEAN and regional integration be explicitly stated in the Special Region Province of Jakarta Law or its derivative regulations in the future. This includes expanding the Jakarta’s governor’s authority to serve the ASEAN Headquarters and other facilities that showcase Jakarta as the center of ASEAN regional integration. Without adequate authority, the directive to make Jakarta a ‘Global City’ will remain just an aspiration.