Financing the National Capital Integrated Coastal Development (NCICD) Project in Jakarta (Indonesia) with the Private Sector

Abstract

This paper is about using land and other financial options to finance urban infrastructure, to prevent Jakarta from flooding. It summarizes and criticizes the ideas of the National Capital Integrated Coastal Development (NCICD) project, which wants to protect Jakarta from the sea through a big dam, which would create new land. According to the Indonesian authorities should be financed by the private sector. Based on research the conditions for a successful private financing of infrastructure at this scale are studied. The framework developed shows that some components can be financed by the private sector, but the government will have to create the conditions and contribute to the initial investments. In particular, a transparent and competitive tendering procedure is required and a functioning land market, allowing the government to capture the value increase due to the project, which is necessary for financing certain components of the project, which the private sector may not want to finance.