Indonesia holds first cabinet meeting in planned new capital, Nusantara

By Ananda Teresia

JAKARTA (Reuters) - Indonesian President Joko Widodo held his first cabinet meeting in his planned new capital, Nusantara, on Monday, as the outgoing leader seeks to reassure investors his $32 billion mega-project remains on track before he steps down this October.

Years after announcing his flagship infrastructure project, intended to ease the burden on congested, sinking and overpopulated Jakarta, Nusantara has faced multiple problems, including construction delays and a lack of foreign investment.

Preparing to leave office after serving the maximum two terms, Jokowi, as the president is known, told his ministers the new capital marked a historic new chapter for the country.

"The new capital Nusantara is a canvas on which we can carve out the future. Not every country has the opportunity or ability to construct a new capital from zero," he said, speaking from the eagle-shaped new state palace.

Nusantara is being built in a forested pocket on the island of Borneo, about 1,200 km (745 miles) from the current capital, Jakarta.

The location was strategic and would promote equal development across Southeast Asia's largest economy, Jokowi said, adding that the country's population and economic activity has long been dominated by the island of Java which accounts for 58% of GDP.

Almost all 34 cabinet ministers attended Monday's meeting, including defence minister and president-elect, Prabowo Subianto, who will be inaugurated on Oct. 20.

Live streamed from a room with metallic-blue walls, the president and cabinet ministers discussed the development of Nusantara, and the transition to the next administration.

Jokowi said he is confident foreign investment will be forthcoming, and that incoming president Prabowo would remain committed to the project.

"At the very least, I'll continue it, I'll complete it if it's possible," Prabowo told reporters before the meeting.

"Although we are aware that new capital construction is not a quick job, it's a long job, and a difficult one."

(Writing by Kate Lamb; Editing by Michael Perry)