The Special Capital Region of Jakarta is Indonesia’s largest city that holds a status equivalent to a province. The city serves as the economic, cultural, political, and administrative center of Indonesia. With an exceptionally high population density, it stands among the most populous cities in the world. In 2023, Jakarta generated a
of more than three quadrillion Indonesian rupiah, the highest among all other provinces in the country. The wholesale and retail trade sector leads
, followed by manufacturing.
Urban challenges: from traffic to pollution
As a metropolitan city, Jakarta is faced with its own challenges, predominantly in the form of traffic congestion and pollution. Ranked among the world’s most polluted major cities, Jakarta consistently faces very low air quality, indicated by its high
PM2.5 levels. The bustling city also has one of the
highest traffic congestion levels in Asia. The recently launched Jakarta Light Rail Transit (LRT), increased number of public transportation services, and road infrastructure developments demonstrate the efforts to combat these challenges. However, despite these initiatives, persistent factors like the growing number of vehicles and ingrained
personal vehicle usage habits contribute to exacerbating Jakarta’s traffic issues.
Housing crisis in Jakarta
As Jakarta grapples with a housing crisis, land prices have kept soaring. As of 2023, the average land price of residential homes within the city reached nearly 16 million Indonesian rupiah per square meter. Limited affordable housing and
developed areas for landed houses has led many Jakartans to look for houses in Greater Jakarta’s satellite cities such as Bogor, Depok, Bekasi, Tangerang, and South Tangerang. Furthermore, robust infrastructure development in Tangerang over the past decades has attracted an extensive number of Jakarta residents, leading them to relocate, resulting in a lower
residential property sales rate in Jakarta compared to Tangerang.
Indonesia’s plan to relocate its capital
The Indonesian government is currently developing the Capital City of Nusantara (
Ibu Kota Nusantara/IKN), which is located in East Kalimantan, to replace Jakarta as its national capital. The decision stems from a long-standing economic imbalance between regions on Java Island, particularly Jakarta, and other regions in the archipelago. However, there were public objections among citizens disagreeing with this plan, with many showing skepticism about the
readiness of the new capital to start being occupied in 2024. Initially set for occupation in 2024, the project has faced delays as the government began reallocating funds and implementing budget cuts in early 2025 after President Prabowo Subianto took office. The Indonesian government is planning to execute the relocation in stages, now aiming for Nusantara to operate as the political capital by 2028. However, despite the relocation, Jakarta will remain Indonesia’s business hub and one of its primary economic contributors.
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