Indonesia’s vision for its future is taking shape through the construction of Nusantara, the new national capital in East Kalimantan. Designed as a model for Indonesia Smart City Development, Nusantara aims to lead in sustainability, connectivity, and digital innovation.
This transformation comes at a critical time. Over 56% of Indonesia’s population already lives in cities, with that number expected to surpass 60% by 2030. To handle this urbanization boom, the government has launched initiatives like the 100 Smart Cities Movement, with 25 cities already underway.
Market Growth and the Push Toward Carbon Neutrality
Indonesia’s smart city market is booming. It is projected to grow at a compound annual growth rate (CAGR) of 22.6%, reaching nearly USD 240 billion by 2035. At the heart of this is the commitment to carbon neutrality by 2060, with Nusantara positioned as a core driver of that goal.
From green buildings to renewable energy systems and digital governance, Nusantara is meant to embody what a future-ready city should be. Yet, achieving this vision comes with a cost—IDR 749.6 trillion in annual investments needed from 2025 to 2045 for decarbonization and infrastructure.
Indonesia Smart City Development: Built on Data and Sustainability
Central to the smart development is the rollout of IoT-enabled infrastructure. These systems will power everything from waste management to smart traffic control, improving both environmental performance and everyday life.
In 2025 alone, IoT infrastructure is projected to generate USD 778.59 million in revenue. In addition, smart citizen services, such as online healthcare, e-governance, and digital education, are expected to become a USD 90 billion market by 2035.
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Private Investment and Industry Readiness
This smart transformation isn’t happening in isolation. Public-private partnerships (PPPs) and foreign investments are vital. Major tech firms are already involved in areas like 5G deployment and industrial automation.
Evidence of readiness is clear: 27% of Indonesian industries already use robotics. These early adopters show how deeply digital technologies are being integrated into national development strategies.
Regional Impact of Indonesia Smart City Development: Kalimantan and Beyond
Beyond Jakarta, Nusantara is set to boost regional development. Located in Kalimantan, the new capital is expected to stimulate local economies, generate employment, and promote inclusive growth in a region that has long been underdeveloped.
Still, obstacles remain. Securing nearly IDR 750 trillion annually for two decades is a massive task. There are also logistical challenges in relocating populations and building infrastructure from scratch while ensuring environmental sustainability and social inclusion. In addition, issues like traffic congestion, pollution, and flooding persist in many urban centers. Nusantara must set new standards while also addressing legacy issues found in existing cities.
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The Road Forward
For urban planners, green tech providers, and IoT innovators, Indonesia is becoming one of the most exciting smart city markets globally. The USD 240 billion opportunity by 2035, combined with strong government backing, offers room for creativity and growth.
As Indonesia Smart City Development accelerates, Nusantara stands as a symbol of national ambition. One that blends sustainability, digitalization, and regional balance. With the right support, this vision could become Southeast Asia’s benchmark for future-ready cities.
