This file screengrab taken from aerial video footage taken in on Aug 14, 2022 shows Titik Nol Nusantara (ground zero Nusantara), the future capital city for Indonesia, in Sepaku, Penajam Paser Utara, East Kalimantan. As plans by Indonesia's president to build a new $32 billion capital city on Borneo island slowly start to take shape, the once sleepy settlement of Sukaraja is being rapidly transformed. (PHOTO / AFP)

SUKARAJA, Indonesia – As plans by Indonesia's president to build a new $32 billion capital city on Borneo island slowly start to take shape, the once sleepy settlement of Sukaraja is being rapidly transformed.

Headman Rizki Maulana Perwira Atmadja, 38, said land prices around his village – 10 km from where a presidential palace is being built – had jumped four-fold. Some farmers had "suddenly bought a new car" after selling part of their palm or rubber plantations, he said.

Four years after President Joko Widodo announced plans for a new capital, a site spanning nearly 260,000 hectares named Nusantara, construction is picking up pace in its central area. While some may be cashing in, others fear the transformation

His own business, a guest house and a cafe in front of palm trees, has also thrived with an influx of workers, Rizki said. He has rented out rooms for constructions workers while nearby, several homes have been turned into shops.

Four years after President Joko Widodo announced plans for a new capital, a site spanning nearly 260,000 hectares named Nusantara, construction is picking up pace in its central area. While some may be cashing in, others fear the transformation.

Yati Dahlia, 32, of the area's indigenous Balik tribe, has been trying to purchase land somewhere nearby, knowing her current home is located where government buildings are due to be built.

But she said prices had soared to 700 million rupiah to 1.2 billion rupiah (around $45,500 to $78,000) for a similar size plot just outside Nusantara's main area, up 10 times the government compensation for her land and a blue plywood shack where she now sells food.

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"We feel like (the government) is killing us slowly," said Yati.

She and other members of the tribe are appealing for more, but many Balik people do not have proper documents for their land, which reduces leverage during negotiations with the government, Yati said.

Some people have also refused to move because they feel the land is their identity, said Balik tribe leader Sibukdin, 60.

"We only ask the government to give us special attention," said Sibukdin, who uses one name.

'For sale signs'

The project, being built in an area largely made up of forest interspersed with logging concessions, plantations, coal mines and villages, is envisioned as a green, smart city, but has been hit by delays due to the pandemic, while Japan's Softbank Group, which had promised funding, exited last year.

However, Jokowi, as the president is popularly known, has been adamant that his flagship plan to replace congested Jakarta is needed to spur economic growth in less developed parts of Southeast Asia's largest economy, outside the main island of Java.

This prospect of future growth has driven a land boom, with 'For Sale' signs every few kilometers along a dusty road just outside the designated city center.

Land prices in places near a water reservoir had risen over 16-fold, said Junaidin, the village chief of Tengin Baru, a settlement of around 4,000 people within Nusantara's development zone.

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In a bid to contain land speculation, Indonesian authorities have frozen administrative approval for land sales, though Junaidin, who goes by one name, said people had been conducting sales under the table.

Bagus Susetyo, head of the East Kalimantan chapter of the Real Estate Indonesia association, said transactions without land certificates were weak and could be cancelled if authorities ordered a crackdown.

He said large property companies had not sought to acquire land banks in Nusantara due to the moratorium on permits.

Land speculation

Numerous large projects in the country have faced delays due to land acquisition issues, including other key Jokowi projects such as a China-funded $7 billion fast-train project in Java and Jakarta's mass rapid transit railway.

However, the Nusantara authority said land speculation should not affect development plans as compensation for land would be measured fairly by an independent party.

"The government doesn't decide (prices) on its own, the same way that the residents can't decide for themselves. If price disputes happen, it will be resolved through the courts," the authority's secretary Achmad Jaka Santos Adiwijaya told Reuters.

During a visit in February, President Jokowi said all problems related to land acquisition have been resolved and payments to locals would be made this month, according to a statement from his office.

Jokowi has set an ambitious deadline for construction.

In the first half of 2024, Nusantara will be declared the capital. Key government buildings, including a palace and a presidential office, must be ready by August that year. More than 16,000 civil servants, police and military officers will move in from Jakarta next year.

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More than 7,000 workers are currently at the site, with thousands expected to reinforce later in the year.

There has also been an influx of people from other areas seeking work.

Alpian, 55, who quit his job at a coal mine in another part of Borneo to sell clean water from a dispenser in the soon-to-be capital area, said he was earning twice what he used to make.

"More and more water is needed… the supply from the state firm is not enough," Alpian said from the back of his silver pick-up truck.