Has corruption stalled ‘the Shenzhen of Indonesia’?

A spate of illegal payments and arrests involving developer Lippo Group has cast doubts over the future of the US$21 billion Meikarta megacity project

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An aerial view of apartments at the Meikarta project in Bekasi, Indonesia. Photo: Reuters

Published: 11:30am, 19 Oct 2018Updated: 11:18pm, 19 Oct 2018

With plans for dozens of gleaming skyscrapers that could eventually house a million residents, the megacity development Meikarta was sold to aspirational Indonesians as the antidote to Jakarta, the country’s notoriously congested and polluted capital.

The development was dubbed “the Shenzhen of Indonesia” in admiration of China’s innovative metropolis, while advertising slogans promised “the future is already here”.

But the future of the US$21 billion real estate project, in Bekasi, West Java, is no longer looking so bright as allegations of bribery and corruption have engulfed its developers and stoked the concerns of investors and customers who have already put down an advance payment.

Detectives from Indonesia’s anti-graft agency this week arrested staff and raided the homes and offices of senior executives from Lippo Group, the Indonesian conglomerate behind Meikarta, which also has significant business interests in Hong Kong and South Asia.

Shares in the group continued their downward trajectory on Thursday when the Corruption Eradication Commission (KPK) raided 12 locations, including the home of James Riady – the deputy chairman of Lippo and son of the conglomerate’s founder Mochtar Riady – who said he was cooperating with the investigation.