Why Indonesia is building its new capital city in the heart of East Kalimantan

Countries & Cities · Published 30 September 2026 Swipe more like this →

In short: East Kalimantan is a vast, resource-rich province on the island of Borneo, historically defined by ancient kingdoms and dense rainforests. Now, it is becoming the site of Nusantara, Indonesia’s ambitious new capital city, marking a massive shift in the nation's political and economic center of gravity away from Jakarta.

East Kalimantan occupies the eastern portion of Borneo, a region historically shaped by diverse influences. It was home to the Kingdom of Kutai Martadipura, recognized as Indonesia's oldest Hindu kingdom, dating back to the 4th century CE. Over centuries, the area saw a complex succession of sultanates, including Kutai ing Martadipura and Pasir, before falling under the influence of the Sultanate of Makassar and eventually the Dutch East Indies in the 19th century. Today, the province remains a cultural mosaic, with a population that reached an estimated 4,267,600 by mid-2025.

The province's geography is defined by the Mahakam River, the longest in the region, and the Sangkulirang-Mangkalihat Karst, which houses cave paintings identified by scientists in 2018 as some of the world's oldest figurative art. Economically, East Kalimantan has long relied on earth resources, particularly coal, natural gas, gold, and oil. The Balikpapan oil refinery, originally constructed by the Dutch before World War II, remains a critical piece of infrastructure. However, the region faces significant environmental challenges, as illegal logging has depleted much of the original forest cover, prompting conservation efforts like the Samboja Lestari project.

The most significant modern development is the construction of Nusantara, the future capital of Indonesia. Situated within the Kutai Kartanegara and Penajam North Paser regencies, the project represents a massive state investment, with total costs estimated at 486 trillion rupiah. While the government initially faced budget hurdles due to the COVID-19 pandemic, the new capital was formally inaugurated in August 2024. This move aims to decentralize power from Jakarta, though it requires balancing large-scale infrastructure development with the preservation of the province's remaining tropical ecosystems and the diverse linguistic heritage of its people, including the threatened Kutai and Paser languages.

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