Kalimantan rising – opportunities or threats?

Culture makes people understand each other better. And if they understand each other better in their soul, it is easier to overcome the economic and political barriers. But first they have to understand that their neighbour is, in the end, just like them, with the same problems, the same questions.
– Paulo Coelho, Brazilian lyricist and novelist

The news grabbed the headlines locally and regionally. Indonesian president Joko Widodo, popularly known as Jokowi, on Aug 16 at his annual State of the Union address announced that Indonesia will build a new capital city in Kalimantan, Borneo.

Over the years, going back to the rule of Sukarno, the founding father and first president of Indonesia, various similar aspirations had been mooted.

However, this time it appears that the move will take place. Some specifics related to the locations have been released.

Based on Wikipedia, Kalimantan comprise 73.3 percent of Borneo island and has a population estimated to be 16 million. Sarawak, in comparison, makes up 16.7 per cent of Borneo.

The specific area selected seems to be Bukit Soeharto, located midway between the cities of Samarinda and Balikpapan in East Kalimantan. Once realised, this new capital will become the hub of Indonesia bringing much development and investment to Kalimantan.

The neighbouring islands and also Sarawak and Sabah are already optimistically predicting various spin-off benefits. Tapping into these potential opportunities has already made headlines in Sarawak.

Sarawak needs to leverage its current competitive advantages to secure some of the spin-offs, such as the export of electricity mentioned by our Chief Minister.

He highlighted recently that the first interconnection to West Kalimantan had already been made as part of the Borneo Grid initiative. This first-mover advantage has the potential to place Sarawak Energy Berhad as a leader in Kalimantan overall.

Many other areas can be tapped into via investments by our state government and private investors.

It has been reported that the Indonesian government is intending to spend less than 10 percent of the USD33bil relocation cost. This leaves about USD30bil, the majority of the development cost, to be borne by public-private partnerships.

This provides significant opportunities, many of which might be taken up by China. However, Sarawak can always look for niche market opportunities.

Essential to Sarawak’s access to the benefits is the necessity for land and air connectivity that is minimal at the moment.

The current lack of infrastructure in such a vast place also brings opportunities to help build it. We have our private companies that have accumulated decades of expertise and skills. Therefore, connecting Pan Borneo to the Trans Kalimantan road network to create the Trans Borneo Highway can be accelerated.

Additionally, the relocation of the initial estimated 1.5 million people from Java to the new capital will bring opportunities for education, housing development, fast-moving consumer goods market etc.

Tourism is another area. There already exists some medical tourism, especially between Pontianak and Kuching. With improved connectivity, this could extend to the new capital and also other parts of Sarawak such as Sibu and Miri. The surge in the increase in population, I am sure will bring with it weekend getaway tourism to various parts Sarawak.

The fact that currently, trade is relatively low between Sarawak and Kalimantan is an opportunity to expand, especially with improved connectivity.

However, there are also some potential threats with the setup of a new capital on our doorstep. Indonesia being an economic powerhouse can potentially dwarf our own economic growth.

Shifting of potential domestic investments towards a more lucrative market has the potential to stunt our own growth.

It has also been highlighted that there could be some security issues between our borders, triggering a call for the Sarawak Rangers to be revived.

In addition to this, the manpower supply from Indonesia to our construction, plantations and maid services industry is already rapidly declining as their economy picks up. Surely, they will require their own citizens to build their own new capital and surrounding development.

Sarawak might, in fact, have to source for manpower from other non-traditional countries to fuel its own economic growth here.

Kalimantan also has several dams and many in progress financed by China to generate their own electricity and potentially nullifying Sarawak’s supply to them.

However, we must remain optimistic about the opportunities presented, but should not be blind to potential threats.

It would be great if funding is provided to our local universities here to do in-depth research into details of Strength, Weakness, Opportunities and Threats (SWOT) analysis now, the new capital will bring to Sarawak.

The important point being, if these are identified at an early stage, mitigating measures can be taken early to ensure Sarawak maximises the opportunities and minimises any potential threats.

Mutual ‘prosper thy neighbour’ policies and strategic alliances must be built. Our cultural similarities already provide a good foundation.

The spirit of collaboration between all the stakeholders in Borneo can ensure that we can build on each other’s strengths.

A Sarawak trade office could be set up in Balikpapan now, while the capital is being built. This could be a good move at this early stage.

Despite the fear of there being an economic giant on our doorstep, managed well, I am sure there will be a minimum of threats and a huge amount of spillover opportunities.

While our Malayan brothers are embroiled in factional politics, racial politics and Zakir Naik, we in Sarawak can carry on with our ‘Sarawak First’ initiatives and focus on building up Sarawak with this opportunity on our doorstep.

With the date set for 2024 to relocate to the first phase of the new capital, let’s get moving. Overall, Borneo is rising and Sarawak with it.

 

The views expressed are those of the author and do not necessarily reflect the official policy or position of the New Sarawak Tribune.