Fresh start for disaster-free Indonesian capital

Published on: Sunday, February 28, 2021

By: David Thien

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This aerial picture shows vehicles stopped at the edge of a flooded road in Jakarta on February 20.

WHILE Sabah’s capital was rocked by earthquake in the past from Mount Kinabalu area, East Kalimantan was chosen as the new site for Indonesia’s administrative capital, due to its low-risk factor.

It has no major volcanic earthquake, coupled with a heterogeneous population expected to be a low racial and religious conflict zone.

The threat of another record Krakatoa magnitude earthquake and resultant tsunami are far removed from the new capital of Indonesia in Kalimantan.

This is a far cry from the sinking, overbuilt and densely populated Jakarta which is a crowded and polluted city of 10 million people, on Java Island which is expected to remain for the foreseeable future, Indonesia’s business hub.

This gives the government the freedom to design a modern city compared to Jakarta’s Dutch dominated heritage buildings and layout of the past centuries. Kalimantan, the Indonesian side of Borneo has five provinces, known for their rainforests, orangutans and coal reserves.

The Indonesian government has 3,000-hectare (7,413 acres) of land in the East Kalimantan province for the first stage of development from 2021 that includes new government offices and homes for about 1.5 million civil servants expected to pack up and start moving by 2024.

Tri Dewi Virgiyanti, Director of Urban, Housing and Settlement of the Ministry of National Development Planning (Bappenas), Indonesia said this in her presentation at the 16th World Islamic Economic Forum (WIEF) 2020 Roundtable Series in Kota Kinabalu, recently, pertaining to “Indonesia’s Shifting Capital: Opportunities for Borneo”.

In her special address presentation: “Indonesia’s New Capital: Moving to Borneo”, Virgiyanti said “the development of the new capital will be done inclusively with controlled growth from 182,462 state officials and police and military personnel with family members to an initial total estimated population of 1,500,000 after growth management.”

Virgiyanti said that the new capital will be situated close to two big cities – Balikpapan and Samarinda both of which also have airports, and with advances in infrastructure development for transportation and logistics hub, as Java is overpopulated with around 57 per cent of Indonesia’s population is concentrated in Java. For better connectivity in the archipelago, the capital must be near a port city like Balikpapan which is situated along the Alki II: Lombok Strait – Makassar Strait – Sulawesi Sea.

This condition is mentioned as important as Indonesia’s struggle for international recognition on archipelago concept has succeeded by the acceptance and incorporation of the Archipelogo State principle in Chapter IV of UN Convention concerning Law of the Sea of 1982.

Moreover, Indonesia has to consider and recognise the rights of other states, especially for passage of military ships/sea fleet through Indonesian waters, particularly through the regions, which are usually used for international shipping.

This concession is given by an archipelago state in the form of archipelago sea-lanes as mentioned in Article 53 of the Convention.

To comply with the above stipulation through the International Maritime Organisation situated in London, Indonesia proposed sea lanes of the Indonesia archipelago consisting of three North-South Alki, Alki I, Alki II and Alki III which in the southern part have three branches, namely Alki III-A, Alki III-B and Alki III-C.

The archipelago sea-lanes passing through the Indonesian sea territory are:

- Alki I: Sunda Strait – Karimata Strait – Natuna Sea – South China Sea.

- Alki II: Lombok Strait – Makassar Strait – Sulawesi Sea.

- Alki III-A: Sawu Sea – Ombai Strait – Banda Sea (Western part of Burn Island) – Seram Sea (Eastern part of Mongole Island) – Maluku Sea – Pacific Ocean.

- Alki III-B: Timor Sea – Leti Strait – Banda Sea (Western part of Burn Island) – Seram Sea (Eastern part of Mongole Island) – Maluku Sea – Pacific Ocean.

- Alki III-C: Arafurn Sea –Banda Sea (Western part of Burn Island) – Seram Sea (Eastern part of Mongole Island) – Maluku Sea – Pacific Ocean.

The background of the proposal of the three Alki’s is based on the consideration of various sectoral interest as well as defense and security, hydro-oceanographic and natural aspects of each ALKI; the problems of marine environment and marine conservation areas, exploration and natural resources exploitation (oil and gas), fish catching; the importance and safety of national shipping and aviation; the existence of submarine pipes and cables; and the importance of international marine traffics through the Indonesian territorial waters.

The gap of economic distribution between Java Island with other islands in Indonesia must be narrowed, Virgiyanti mentioned, with the building of the new capital adding 0.1 to 0.2 per cent to national economic growth in reducing the gap between regions.

As for the percentage multiplier effect on the national economy, it is 2.3 for output multiplier and 2.9 for employment multiplier as the expected economic impact is that, “more than 50 per cent of the regions will receive the benefit of increased trade between regions.”

The “forest city, open space” concept is an integral part of the new capital’s development to mitigate concerns over the potentially harmful impacts the major project would have on the region’s lush forests, it was reported that the new capital would only occupy 56,000-hectare of the available 256,000-hectare of land.

The rest of the region will remain populated with lush vegetation in order to avoid any negative effects on the environment.

Construction on Indonesia’s new capital city is expected to cost Rp466 trillion (US$33.6 billion/RM130 billion), according to Bappenas, with the government footing about half of the bill. The rest is to be sourced from the private sector.

By 2025, an estimated 68 per cent of Indonesians will live in cities. But Indonesia has not benefited fully from the positive returns to urbanisation that other countries in the region have experienced.

Rapid urbanisation has placed cities at the centre stage of Indonesia’s development trajectory but returns from urbanisation have not reached their full potential.

Indonesia has a well-developed, intricate planning system with a suite of statutory plans at national and central levels mandated by law.

From an urban planning perspective, two laws are key.

First is the development planning system, based on the National Development System Law 32/2004, which forms the basis for the development of city level Medium-term Development Plan (RPJMD) with a five-year time horizon.

RPJMD reflects the vision of the elected mayor along with socio-economic indicators and targets that set the agenda for governance, social services, infrastructure priorities, and other aspects of socioeconomic development.

With the Spatial Planning Law 26/2007 the planning system acknowledged the critical role of spatial planning in rapid urbanisation.

This law governs the city level spatial plan (RTRW) as well as the detailed spatial plans for priority areas (RDTRs).

Together, these spatial plans provide the policy direction and strategy for land use, zoning, public transport, pedestrian networks, settlement expansion and density, and the allocation of green open spaces, among others.

Both spatial plans are valid for 20 years and can be revisited every five years that also allows an opportunity to align with the RPJMD cycle, in principle.

Under RPJMD, city governments have the mandate develop a five-year capital investment plan under the coordination of the local planning agency (BAPPEDA).

However, the list of investments in most RPJMD documents remain indicative without clearly defined spatial prioritisation (e.g. 500m of local roads without a specified location). The indicative investments in RPJMD are also not linked with a robust exercise of matching investments with proposed sources of finance in the medium term.

With city budgets approved annually, these investment lists without a strong rationale for prioritisation often do not materialise into actual investments with a medium-term development perspective.

RPJMD targets for service provision and socio-economic development are mostly numeric and often aggregated at the city level, without a spatial distribution, further weakening the links between spatial plans and development outcomes.

Moreover, the timing to update RPJMD and RTRWs are not always well aligned, although both should technically be on the same revision cycle every five years.

Indonesia ranked among the top ten fastest urbanising countries in the world from 1990-2014 and has the second-largest urban population in East Asia after China.

The country has approximately 137 million urban dwellers that make up 53.7 percent of the total population. The urban population of Indonesia increased at an average rate of 4.1 percent per year between 2000 and 2010, faster than in any other country in Asia.

From 1970 to 2006, every one percent increase in share of urban population correlated with an average of 6-10 per cent increase in several middle-income Asian countries such as China, Thailand, Vietnam and India.

In Indonesia, similar rates of increase in urbanisation resulted in less than 2 percent increase of per capita GDP.

A persistent infrastructure gap remains a significant barrier to an enabling economic environment that will enhance prosperity for all urban populations.

The last decade has seen little increase in infrastructure investment with combined total investments by the central government, subnational governments, state-owned enterprises and private sector remaining consistently at only 3 to 4 per cent of GDP.

As a point of comparison, China and India invested 10 per cent and 7.5 per cent of GDP respectively.

Firms consistently identify inadequate infrastructure as a constraint on their operations and investment in Indonesia.

If the infrastructure capital stock had grown by 5 per cent annually over 2001-2011 instead of the actual rate of 3 percent, real GDP growth would have averaged at estimated 5.8 per cent, a difference of 0.5 percentage points.

If the infrastructure stock had grown by 10 per cent annually, annual real GDP growth would have reached 7 per cent.

Under-investment in infrastructure is coupled with inadequate spatial prioritisation and weak management of existing infrastructure.

Diagnostics carried out during preparation reveal a disconnect between spatial and capital investment planning and budgeting, resulting in outcomes far below expectations and contributing to rising inequality in urban areas.

Between 1995 and 2011, income inequality as measured by the GINI coefficient increased from 0.35 to 0.42 in urban areas. Evidence from the World Bank’s work in Denpasar city in 2016 revealed that municipal services are concentrated in wealthier wards (kelurahans).

Many urban poor wards lack accesses to multiple municipal infrastructure networks (including water supply, sanitation system and schools), becoming hotspots of depravation and highlighting intra-urban multidimensional inequality.

Efficient implementation and maintenance of infrastructure are further impeded by bottlenecks ranging from inefficient procurement methods, insufficient multi-year contracting, low quality project management, cumbersome land acquisition procedures, and chronic issues of sub-standard regulation and lack of transparency.