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The city with that sinking feeling

The city with that sinking feeling

01-05-2020 | Stunning statistics
If the mountain will not come to Muhammad, then Muhammad must go to the mountain. This old Islamic proverb is coming true in the world’s most populous Muslim nation, whose capital city has had that sinking feeling for many years.

What has happened?

Jakarta, originally built on a swamp, is sinking by up to 20 cm a year while the Java Sea has already risen by 8cm since the city was built in the 16th century. At the current rate, most of northern Jakarta will be underwater by 2050.

As the city cannot ultimately be saved as nature takes its inevitable course, the answer was simple: move the capital instead 2,000 km to the east to a new purpose-built home in East Kalimantan on the island of Borneo. The new coastal capital with plans for five satellite towns will occupy about 2,500 square kilometers, making it almost as large as Paris.

Construction has already begun, with plans to complete the initial phase by 2025, and start moving over inhabitants from the most threatened parts of Jakarta. A budget of USD 34 billion has been allocated to creating a ‘green city’ with plenty of open spaces, electric-based transport, and solar-powered housing.

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Why is it important?

However, it has also produced the equally inevitable sustainability issues of environmental damage in the new location, led by extensive deforestation. Borneo is one of the most biodiverse places on Earth and home to some of the last pristine tropical rainforests.

The initial phase of construction has already run into problems over future supplies of electricity and water. Hydroelectric power cannot generate enough to serve an influx of millions of people, so three new coal-fired power plants are planned. This comes at a time when the UN has called for coal to be phased out as an energy source to combat climate change.

Meanwhile, Indonesia was already the world’s largest exporter of thermal coal that is abundant on its archipelago of islands, and has issued 1,500 mining permits in East Kalimantan spanning more than 50,000 sq. km. – an area bigger than Belgium. This is set to exacerbate both the environmental destruction and the country’s contribution to global warming at the same time.

What does it mean for investors?

“Indonesia’s problems reflect how difficult it can be for many emerging economies to meet their most pressing and manifold challenges in a sustainable way,” says Max Schieler, author of the RobecoSAM Country Sustainability Ranking (CSR).

“Indeed, sustainable development consists of a complex and well-balanced relationship between economic growth, social progress and environmental conservation. Certainly, Indonesia’s socio-economic performance over the past two decades has been impressive, with millions of people lifted out of poverty, and per capita income doubled.”

“However, this economic success has come at a high environmental cost, as all the natural resource-based activities, such as agriculture, forestry, fishery and mining put severe pressure on ecosystems, reflected in Indonesia’s mediocre ranking (92 out of 150) for the environmental dimension in the CSR. This also indicates a need for the country to tackle these environmental pressures if it is to avoid putting its economic achievements and its population’s well-being at risk.”

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