(Bloomberg) — SoftBank Group Corp. founder Masayoshi Son will no longer be an investor in Indonesia’s $34 billion project to build the new capital in Borneo as the country shifts its focus to Middle Eastern and Chinese investors.
“There’s no more story on Masayoshi, he’s out,” according to Coordinating Minister for Investment and Maritime Affairs Luhut Panjaitan in an interview on Wednesday. He didn’t say why talks have ended.
Back in January 2020, Panjaitan named Son as a member of the steering committee overseeing the city’s construction, along with Abu Dhabi Crown Prince Mohammed Bin Zayed Al Nahyan and former British Prime Minister Tony Blair.
A Tokyo-based spokesperson at SoftBank Group confirmed the pullout from the project, though added that it continues to invest in Indonesia via its Vision Fund’s portfolio companies.
Read more: SoftBank Offers to Invest $40 Billion in Indonesia’s Capital
It wouldn’t be the first time Son has backpedaled from costly government-led initiatives. SoftBank and Saudi Arabia signed a memorandum of understanding in 2018 for a $200 billion solar power development — far larger than any comparable project at the time — that ultimately stalled.
The country that’s home to the world’s largest archipelago is building the new city from scratch on a piece of land in East Kalimantan province, some 1,400 kilometers (870 miles) northeast of the current capital Jakarta, in Java. The government has received commitment of around $20 billion from Abu Dhabi to help fund initial infrastructure developments and plans to offer more projects to other investors in the near future, Panjaitan said.
Read more: Jokowi Picks Senior ADB Official to Lead Indonesia’s New Capital
Overseas investors, including from Saudi Arabia and one from Abu Dhabi that’s partnering with Chinese funds, have expressed interest, and they will invest via Indonesia Investment Authority, the state wealth fund known as INA, said Panjaitan.
The plan is to offer projects by blocks, such as education block, hospital block, and for other non-government buildings, he said. About five to six state-owned companies, such as PP Persero and PT Total Bangun Persada, may take part in the constructions.
As much as $5 billion of state budget funds will be used to finance the development of mostly government buildings, said Panjaitan. Finance Minister Sri Mulyani Indrawati said in January that the government’s portion of funding for the new capital will come from either the economic recovery fund, a stimulus spending aimed at rebuilding mostly the sectors hit by the pandemic, or the budget allocated under the public works ministry.
President Joko Widodo wants to move the administration before the end of his final term in 2024. In January, parliament passed the law governing the new capital, giving the legal basis for the project to proceed.
(Updates with Vision Fund detail in fourth paragraph.)
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