Urban development: What to do and what can we expect?

Delik Hudalah and Tommy Firman
Published in the Jakarta Post, 12/20/2010, Review & Outlook 2011 suplement

City or urban areas, places where human activities are concentrated, significantly contribute to national economic achievements.

Indonesia has about 99 autonomous/administrative cities (kota) and nearly 400 regencies (kabupaten), most of which largely consist of rural areas.

The cities contribute 40-50 percent of Indonesia’s gross domestic product (GDP) (Samiadji, 2006). Urban areas also play a strategic role in improving the national fiscal performance, as a substantial amount of the state budget (APBN) is collected from taxes paid by companies and individuals who mostly reside in urban areas.

The role of urbanization in national economic development is widely recognized. However, it is important to investigate whether this trend is sustainable.

Do the benefits of urban development trickle down to other parts of the country, especially rural and poorer regions? Can urbanization in Indonesia meet the inevitable challenges of climate change and globalization?

If we look at the trend more closely, it seems that major urban development projects in Indonesia are largely market driven and are carried out without clear shared visions. The government can make beautiful plans, on paper. Nevertheless, in many cases it is the private sector that decides whether the plans are realized.

In practice these plans cannot lead development. In fact, the plans have become the true followers of the market — partly because the rule of law is weak.

There have been many cases in which plans could be revised arbitrarily to meet private developer’s desires of creating exclusive residential estates or new towns in conservation and water catchment areas.

The role of the private sector is very decisive in determining the direction of urban growth and expansion.

In addition, many key actors in urban development, beyond private companies, tend to be marginalized. When it comes to conflicting strategic projects, community leaders and organizations, NGOs, academics and other key actors are not involved in strategic phases of the decision making process.

In short, the market effectively rules over urban development and local people are forced to become spectators.

Private developers tend to be inward looking and opportunistic in their behavior. This results in fragmentation of urban development, especially in suburbs. Many housing development projects are not supported by necessary urban infrastructure and facilities. Different projects are not well-connected with each other. The rich are isolated and increasingly segregated from the poor.

Given these conditions, urban development in Indonesia currently faces a multitude of problems. At the regional scale, the competitiveness of Indonesian cities is lower than other major cities in Southeast Asia.

This is because urban development in Indonesia occurs spontaneously and is not supported by integrated infrastructure and amenities.

As an illustration, the Mercer 2010 Cost of Living Survey ranks Jakarta among the most expensive cities in the world. Expatriates in Jakarta have to spend more money to cover housing, transport, food, clothing, household goods and entertainment for standards found in Bangkok and Kuala Lumpur.

At the national scale, urban development is increasingly concentrated around large or metropolitan cities, especially Jakarta, Surabaya, Bandung, and Medan.

The current sectoral policy tends to be urban-biased, focused on infrastructure development in large cities in Java, especially Jakarta, instead of medium sized cities. The maintained urbanization of economies in Java encourages most investors to concentrate on these cities.

This development gap has created a huge economic disparity between large and small cities. Statistical figures imply that 30 percent of the national GDP comes from the 14 largest cities. It is also revealed that 50 percent of national revenue is abstracted from these largest cities alone.

At the local level, most of these cities cannot provide good basic services for their citizens. Traffic gridlock is a daily problem for major cities in Indonesia. This is due to the uncontrolled number of vehicles and limited capacity of local government to build new roads.

More importantly, public transportation is poorly managed and has not been given priority by most local governments. As the result, public transportation has become a source of, instead of a solution to traffic problems.

Green open spaces in major cities, especially in Java, is also lacking. In Jakarta, for example, the proportion of green open space is 9.6 percent. Bandung municipality can only dedicate 8.8 percent of its total area for green open space.

This means the cities have not been able to meet the spatial planning law requirement to allocate at least 30 percent of their total area for green open space.

In addition, with more than 17,000 islands, most major Indonesian cities are located in coastal zones. Most of these cities, including Jakarta, have not prepared to face the pressing challenges of climate change, such as rising sea levels, extreme weather and rising temperatures.

In fact, excessive urban development and uncontrolled use of ground water have increased both the occurrence and impacts of disasters, including floods, sea induced floods and land sinkage.

Urbanization is inevitable, especially in a developing country such as Indonesia. The question is, can we handle it? In order to meet the current and future demands to create more sustainable, livable and competitive cities, urban development in this country has to be more balanced.

Urban development needs to be encouraged in small and medium cities, especially outside Java. At the local level, provision of basic services, such as public transport, green spaces and flood control, should be prioritized.

Besides, urban governance, including metropolitan management and inter-local cooperation, should be strengthened to face urban development issues that are becoming increasingly more complex.


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