When a nation decides to build a new capital city, we often think of grand government buildings and smart technology. But what happens to the farmers on whose land this new city is built? A recent study by researchers from ¶«¾©ÈÈ reveals a surprising truth: the decision to move Indonesia’s capital to East Kalimantan has directly caused the welfare of local farmers to swing like a rollercoaster. By analyzing monthly data from January 2014 to July 2023, the team found that while the plan initially boosted farmers’ purchasing power, controversial land laws later sent it into a decline, proving that a single government policy can either lift up or pull down those who grow our food.
To understand this impact, researchers used a powerful statistical tool called penalized spline think of it as a smart magnifying glass that detects hidden turning points in trends over time. They focused on the Farmer Terms of Trade (FTT), a simple but crucial number. If this number is above 100, farmers are doing well because the prices they get for their crops are rising faster than the prices they pay for daily goods. Below 100, they are struggling. The study discovered two major shifts. First, after President Jokowi officially confirmed the capital relocation plan in August 2019, the FTT climbed sharply. For a while, farmers earned more. This makes sense: new projects meant new demand for local food. However, the good news didn’t last. In early 2022, when the government passed the Nusantara Capital City Law (Law Number 3 of 2022), everything changed. The law included rules restricting land rights transfers. Many farmers panicked, fearing they would lose their ancestral land without clear, fair compensation. Consequently, the model showed the FTT immediately started falling. In fact, the farmers’ exchange rate worsened by 0.24% for each passing month after that. The researchers calculated that their model is 92% accurate, meaning these ups and downs were not random they were directly linked to government actions. Essentially, a policy meant to provide legal clarity ended up creating fear, proving that even good intentions can backfire if farmers are not properly consulted.
So, what is the lesson from East Kalimantan? Building a “smart city” is not enough. A truly sustainable capital must also be a fair city. The researchers strongly suggest that the government must provide clear, explicit, and legally binding protection for farmers’ land rights before it is too late. Without public trust and fair compensation, the dream of a new capital could turn into a nightmare for the very people who provide the nation’s food. Future policies must treat farmers as partners in development, not as obstacles to progress. Only then will the new capital genuinely improve welfare for everyone.
Author: Dita Amelia
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