IKN Development Enters Second Phase in 2025, Focusing on Infrastructure and Civil Servant Relocation

The development of Indonesia’s new capital, Ibu Kota Nusantara (IKN), will enter its second phase in 2025, coinciding with the first year of President Prabowo Subianto's administration.

Unlike the first phase, which prioritized the Central Government Core Area (KIPP), the second phase will focus on enhancing public facilities, including primary and secondary public transportation, expanding residential areas for civil servants (ASN), military (TNI), and police (Polri), as well as constructing central government offices. The relocation of civil servants (ASN) to IKN will also be a key agenda.

President Prabowo has set a target for IKN to officially become Indonesia’s capital by 2028. To achieve this, the government will accelerate the construction of legislative and judicial buildings, following the initial focus on executive buildings.

Budget Efficiency Measures and Their Impact on IKN

Recently, President Prabowo issued Presidential Instruction (Inpres) No. 1 of 2025, mandating budget savings of up to Rp306.6 trillion. This was followed by Finance Minister’s Circular No. S-37/MK.02/2025, which directed ministries and agencies to limit spending, except for social assistance (bansos) and personnel expenses.

This budget-cutting policy includes reductions in operational expenses, such as office supplies, official travel, and seminars without tangible results.

This raised concerns about whether the IKN budget—initially launched under President Joko Widodo—would also be affected. However, the IKN Authority firmly denied such claims.

IKN spokesperson Troy Pantouw stated that construction is ongoing, focusing on legislative and judicial ecosystems as well as supporting infrastructure.

"There is no truth to reports that workers are being sent back to their hometowns," Troy told Antara on Friday (Feb 7, 2025).

IKN Funding Remains Secure Despite Budget Efficiency Measures

Despite temporary budget freezes in the Ministry of Public Works (PU), the government remains committed to IKN development.

Acting Deputy for Facilities and Infrastructure of IKN Authority, Danis Hidayat Sumadilaga, confirmed that the second phase (2025-2029) is progressing as planned.

The government has allocated Rp48.8 trillion to develop legislative and judicial office complexes alongside supporting infrastructure.

Additionally, funding will gradually shift from state budget (APBN) to private investments and public-private partnerships (PPP), following Government Regulation (PP) No. 17 of 2022.

"Initially, 100% of IKN’s funding came from APBN, but over time, private investors—both domestic and foreign—are recognizing the government's commitment and joining in," said Dedek Prayudi, spokesperson for the Presidential Communications Office.

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