Jakarta, February 3, 2026 — Indonesia has become an urban nation, with the majority of its population living in urban areas. However, despite the increasingly central role of cities for economic growth, urban investment still faces various structural barriers. To address these challenges, the Indonesia Economic Summit (IES) 2026, an annual economic forum organized by the Indonesian Business Council, held a session on accelerating urban investment. Unlocking Investment for Sustainable Cities: What Does it Take to Accelerate City Investment at Scale?
In line with that, Governor of Jakarta Pramono Anung said, “It underscores the realities of managing a large city and emphasizes the importance of governance, public transportation, and trust as key assets. Public transportation is the backbone of Jakarta’s transformation—the expansion of the MRT, LRT, and integrated bus network is not just about mobility, but about changing behavior and improving quality of life. Sustainable cities reduce dependence on private vehicles,” he added.
This view is in line with the launch of the Indonesia City Investment Accelerator (ICIA), “so far, the challenge in implementing urban infrastructure has been project readiness. Investors need a clear project structure and transparent, consistent governance. That’s where ICIA comes in, helping cities prepare projects that bankable and ready to be executed,” explained IBC COO William Sabandar.
Indonesia’s urbanization is accelerating. More than 59% of the population now lives in urban areas, and this figure is expected to exceed 72% by 2045. This growth is putting increasing pressure on major cities. Traffic congestion erodes economic productivity, with Jakarta estimated to lose around US$6.5 billion annually. The housing gap remains wide, with the national backlog estimated at between 3.5 and 13 million units. At the same time, the risk of flooding and climate impacts is increasing in dozens of cities, with economic losses in some major incidents reaching more than Rp10 trillion. These pressures underscore the urgency of accelerating urban investment in Indonesian cities.
However, these acceleration efforts still face structural obstacles. Regional fiscal constraints limit cities’ ability to prepare and prioritize investment projects. Central transfers still account for 70–80% of regional budgets and are subject to certain restrictions, while local revenues generally account for less than 10% and are almost entirely spent on operating expenses. Furthermore, many city projects lack adequate feasibility studies and risk assessments, making it difficult to mobilize investment portfolios even when financing is available.
At this session of the 2026 Indonesia Economic Summit (IES), it was emphasized that the main problem accelerating urban investment lies not in a lack of vision, but in project readiness. Many city projects lack adequate governance, institutional clarity, and policy certainty, thus failing to meet the requirements to attract long-term financing from the private sector, development institutions, or international investors.
This session also discussed prerequisites for cities to accelerate large-scale investment, including strengthening governance, the readiness of key sectors such as transportation, housing, basic services, and digital infrastructure, and the importance of aligning central and regional policies to reduce investment risks. From the perspective of investors and financing institutions, clarity of project structures, implementation capacity, and policy continuity are key determinants of a city’s credibility and a key foundation for encouraging sustainable, large-scale urban investment.