The need for a national urban development policy in Indonesia

The need for a national urban development policy in Indonesia Tommy Firman  ;   A professor of urban and regional planning at the Bandung Institute of Technology (ITB). He is also a senior research fellow at the Ash Center for Democratic Governance and Innovation, Harvard Kennedy School Indonesia–Rajawali Foundation Program, Cambridge, Massachusetts

JAKARTA POST, 20 September 2014

                                                                                                                       

                                                      

Urbanization is one of today’s most phenomenal socioeconomic changes and it is believed that the level of urbanization in a country is strongly correlated to its economic development. As the process is unstoppable, what is needed is the ability to manage urbanization for the benefit of national social and economic development. According to the 2010 census, Indonesia’s urban population had reached nearly 120 million, almost half of the total population in the country at the time. Moreover, the National Development Planning Board (Bappenas) has predicted that urbanites will reach 152 million by 2025, about 67.5 percent of the total projected population. Nevertheless, the spatial distribution of our urban population is extremely uneven, with nearly 70 percent of the urban population living on Java, making this island the country’s most highly urbanized region. One-fifth of the nation’s entire urban population is estimated to live in Greater Jakarta. This is indeed a great challenge for the new government of 2104-2019: how to make urban development become a driver for national socioeconomic development. A World Bank study issued in 2011 showed that every 1 percent of growth in Indonesia’s urban population between 1970 and 2005 resulted in an average 2 percent increase in per capita gross domestic product (GPD). However, in Thailand and Vietnam, the figures were much higher, at 8 and 10 percent, respectively. For China and India, the figure was 6 percent. The study concluded that, “Indonesia is not leveraging urbanization to boost economic output per capita.” Nonetheless, Greater Jakarta plays a very important role in the national economy, in which about 25 percent of the nation’s total GDP (see table), excluding oil and gas, is produced. Other large metropolitan areas, including Surabaya, Bandung, Semarang, Medan and Makassar, altogether contributed about 15 percent to GDP. All provinces in Java have a relatively high proportion of urbanites, including Jakarta, West Java, Banten and Yogyakarta with more than 65 percent. However, some provinces outside Java also experienced great increases in the urban population from 2000 to 2010 under regional autonomy, including Riau Islands, East Kalimantan, Bali, Bangka Belitung, North Sulawesi and North Sumatra. Nevertheless, most of the provinces, especially in the eastern half of the country, still have relatively small urban populations. There is a relatively modest correlation (0.53) between the level of urbanization, measured by the percentage of urban populations, with the level of economic development, that is gross regional domestic products (GRDP) per capita in the provinces in 2010. The number of large cities with populations of more than 1 million has increased significantly. In 1950, Jakarta was the only city with a population of more than 1 million, but by 2014 there were 12 cities in this group. Seven, including Jakarta, Tangerang, South Tangerang, Bekasi, Depok and Bogor, are located in Greater Jakarta, which reflects the dominance of Greater Jakarta as the largest urban agglomeration in Indonesia, often referred to as a “primate city”. Urban development in Java has been marked by the formation of massive urban belts connecting large cities, including the Jakarta-Bandung, Yogyakarta-Semarang and Surabaya-Malang corridors, in which the distinction between “rural” and “urban” is increasingly blurred. Meanwhile, the rate of urban population growth in the central cities, including Jakarta, is undergoing a slowdown in growth, whereas the peripheries of big cities, such as Bogor-Tangerang-Bekasi-Depok are experiencing high urban population growth. The small and intermediate urban centers, namely those with populations of between 100,000 and 1 million, could have an important role in creating balanced urban development if managed and planned properly, as they could become a necessary link between rural and urban development. According to the 2011 World Bank study, the intermediate cities, or those with populations ranging from half to 1 million, have better-performing agglomeration economies than cities in any other class. Meanwhile, most of the smaller cities of 100,000 to 500,000 people have experienced declining productivity and negative rates of growth, indicated particularly by a decline in per capita GDP and decrease in population. Most likely this is due to a lack of infrastructure and skilled labor, as well as poor market access to ports and larger cities. A closer look, however, indicates that small towns and intermediary cities outside Java are growing more rapidly than those in Java, indicating that those outside Java play a more important role as centers of social and economic activity, including oil palm plantations, timber, coal, oil and gas. In short, despite growing rapidly, urban development in Indonesia remains greatly concentrated in Java’s large cities, namely Jakarta, Surabaya, Bandung and Semarang, as well as Medan in North Sumatra. Nevertheless, the 2010 national census showed that some natural resource-rich regions outside Java, such as North Sumatra, Riau, Riau Islands and East Kalimantan, showed significant increases in the proportion of their urban populations. This might also indicate a positive impact of Indonesia’s regional autonomy policy on urban development and urbanization, as now local governments have more authority and discretion to plan and manage their urban development. Therefore, there is a need for a national urban development and urbanization policy, which should address the disparities in urban and regional development; most notably, how to develop urban growth centers in eastern Indonesia. The government declared an official national spatial development plan (Rencana Tata Ruang Nasional) in the late 2000s to promote balanced urban development. However, it has not been effective enough to guide urban development because it has never been consistently integrated with investment and infrastructure plans. On the contrary, investment and infrastructure development has been increasingly concentrated in Java, most notably in Greater Jakarta, which in turn has widened the regional disparity between Jakarta and other cities in Indonesia. Moreover, the government has established a coordinating board for spatial development planning (Badan Koordinasi Penataan Ruang -BKPRN) at both the national and regional levels. However, this board seems undermined by policies such as those on investment and infrastructure, which have no concern or intention to address urban and regional disparity. Indeed, the national urban development policy should address not only balanced urban development per se but also some other pressing urban issues, including urban environmental sustainability, livability, poverty and urban governance and institutions; and also how to create balanced urban development and urbanization in the eastern part of the country. ●