decentralizing indonesian city.pdf

Decentralizing Indonesian CitySpaces as New Centers

MICHELLE ANN MILLER

AbstractSince the introduction of regional autonomy legislation in 1999, Indonesia has embarkedon the worlds biggest experiment with democratic decentralization. The intertwinedprocesses of democratization and decentralization have dismantled Indonesiascentralized authoritarian system and reordered its governmental structures. Theseconjoined processes have set in motion conditions for the transformation of a number ofIndonesias secondary cities into regional centers through the influx of new peoples,funding and ways of interacting within localized contexts and with the outside world. Inthis article I consider Indonesias decentralization processes through the lens of the city,focusing on three key areas in the rising profile and development of urban centers. First,I look at the framing of Indonesian cities within contemporary urban discourses tohighlight the array of urban spaces that coexist in the era of decentralization. Second, Idescribe how Indonesias decentralization laws have structurally privileged cities bybypassing the provincial level and devolving most state powers directly to sub-provincialadministrations. Third, I explore how Indonesian cities compete and cooperate overlimited state resources under the decentralized system and why some cities have beenable to reinvent themselves as new centers in planning, practice and innovation, and whyothers continue to lag behind.

IntroductionSince the 1990s, national governments across Asia have looked towards various modelsof decentralization to address the challenges presented by rapid urbanization, burgeoningpopulations, industrial development and fragmentation in divided societies. In Indonesia,the push to decentralize was precipitated by the 1997 Asian financial crisis andsubsequent collapse of President Suhartos centralized authoritarian New Order regime(196698). These events weakened Indonesias governing presence nationwide andimpaired Jakartas independent decision-making capacity, as international lending anddonor agencies prescribed policy advice in exchange for financial disbursements. Inparticular, the World Bank and the International Monetary Fund (IMF) were consultedthroughout the drafting of two laws passed in 1999 on decentralization, or regionalautonomy (otonomi daerah) as it is called in Indonesia (Miller, 2009: 45).

For Indonesian cities, regional autonomy brought new opportunities as well aschallenges. The structure of the 1999 legislation was such that the great majority of

This project was funded by three sources: (1) Asia Research Institute, National University of Singapore;(2) Institute for Citizenship and Globalisation, Deakin University (for eld research conducted inNovemberDecember 2009); and (3) Bartlett School of Planning, University College London, in a grantled by Nick A. Phelps (with co-collaborator Tim Bunnell) entitled Investment Promotion and LocalEconomic Development in Indonesia (for eld research conducted in August 2010).

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Volume 37.3 May 2013 83448 International Journal of Urban and Regional ResearchDOI:10.1111/j.1468-2427.2013.01209.x

2013 Urban Research Publications Limited. Published by John Wiley & Sons. 9600 Garsington Road, Oxford OX42DQ, UK and 350 Main St, Malden, MA 02148, USA

devolved state powers and resources were transferred directly to cities/municipalities(kota) and districts (kabupaten), thereby fundamentally altering Indonesias governingsystem that had previously located authority at the sub-provincial level under aJakarta-appointed governor. When the 1999 autonomy laws came into effect fromJanuary 2001, city and district administrations found themselves in the liberatingposition of having unprecedented control over their own administrative, political andeconomic affairs. With government closer to the people and within a democratizingnational framework, policymakers, donors and community stakeholders alike hopedthat decentralization would promote economic recovery while ushering in a new era ofmore responsive and efficient government with greater public participation at the locallevel (Usman, 2002: 1; World Bank, 2003: 7884; White and Smoke, 2005: 4). Moreportentously, central government officials saw decentralization as necessary to stem thespecter of national disintegration by forcefully resurgent armed separatist movementsin Indonesias troubled peripheral provinces of Aceh, Papua and East Timor (Miller,2006: 297).

Indonesias experiment with decentralization the largest in the world1 wasneither a smooth nor a straightforward process. The realignment of central and localgovernment structures and functions produced mixed and often unintended results, withsome problems from the old authoritarian order being alleviated or resolved while otherswere exacerbated. Whereas some city and district governments seized the politicalmoment created by rising public pressure for reform to implement aspects of goodgovernance, others became embroiled in allegations of mismanagement and corruption.In many cases, new irritations flared in the absence of a single governing body to overseeand implement big projects, leading to disconnect between tiers of government inregional planning. Without a cross-jurisdictional structure, horizontal tensions alsosurfaced in intergovernmental relations across administrative boundaries, especially indensely populated urban areas over policy issues such as transport, solid wastemanagement and water supply (Clark et al., 2009: 12).

This article traces the mixed trajectories of decentralization in Indonesias cities. Thefocus is not only on neatly demarcated city (kota) administrative units, but also onextended urban regions that cut across sub-provincial jurisdictions to complicatethe overlapping pictures of decentralization and urban development. Drawing fromprimary source interviews and secondary literature (books, newspapers, journals,non-governmental organization reports and Indonesian legislation), I map the broaderstructural issues and localized contextual conditions that assist and constrain thecapacities of cities to realize their potential as new centers through decentralization.In this, the idea of new centers refers not only to cities as models of best practice,management and planning in formal modes of governance, but also to cities as centers ofdemocratic innovation and agency in fostering informal networks with non-state actorsand organizations.

To this end, the article begins by canvassing the spatial dimensions of Indonesiancities within the context of contemporary urban discourses. I do not privilege either of thepolemic strains of current urban theorizing that tend to locate the Indonesian experiencewithin a singular (Western-dominated) urban discourse or as a uniquely Asian orIndonesian model. Instead, a more nuanced urban paradigm is required to recognize thepoints of correspondence with and departure from each polemic. In the next section, Isketch the contours of such a paradigm by elaborating on this symposiums introductoryessay. Indonesias decentralization legislation is then described to illustrate how citiesare positioned to benefit from the new system. The remainder of the article deals with

1 While national decentralization projects in India and China have been implemented on a far biggerscale than in Indonesia since the late 1970s and early 1990s respectively, Indonesias democraticdecentralization project is the largest in the world in terms of the wide range of powers,responsibilities and resources that have been devolved to sub-national administrations.

Decentralizing Indonesian city spaces as new centers 835

International Journal of Urban and Regional Research 37.3 2013 Urban Research Publications Limited

some of the key challenges and opportunities facing Indonesian cities in the era ofdecentralization and what this might mean more broadly for Indonesias democraticdevelopment.

New urban frontiersIndonesias decentralization legislation has been mapped onto a series of rapidlychanging and multilayered urban landscapes. Like other parts of Asia, decentralizationin Indonesia was preceded by a period of sustained economic development andurbanization, although patterns of urban growth have fluctuated considerably within thecountry. Since 2000, Indonesias population has increased from 209.17 million to anestimated 234.2 million in 2010 (BPS, 2010; United Nations, 2010). Over the sameperiod, urban growth has averaged 4%, rising from 42% in 2000 to about 54% in 2010(CIA, 2010; United Nations, 2010). By contrast, Indonesias rural population has beendeclining at an annual rate of about 0.3% since 1985. While this suggests thaturbanization has mainly stemmed from internal migration (indeed, in the 1980s netmigration accounted for about 60% of Indonesias urban growth), in 2005 Indonesia stillhad one of the worlds largest rural populations at 117 million people (Comola and deMello, 2010: 3). A steady national rate of urbanization since the 1990s also indicates thatmore recent trends of rapid urbanization are tied to Indonesias burgeoning population(Granado, 2009: 136).

Spatially, the patterns of Indonesias urbanization process have been highly unevenwith profound consequences for decentralization. In 2000, some 60% of Indonesiaspopulation lived on the island of Java while the remaining 40% were scattered across thearchipelagos 70,000 islands (BPS, 2010). With more than half of the national population(over 121 million people) inhabiting Indonesias fourth-largest island, urban density inJava occurs on a scale not replicated anywhere else in the country. At the same time,towns and intermediate cities in Indonesias outer islands have experienced higherpopulation growth than Java over recent years, which may be related to increasingeconomic opportunities and development through decentralization (Firman, 2004).Population density also varies considerably within and between Indonesian cities. Ingeneral, however, Indonesian cities follow a global trend whereby populations on theoutskirts of urban centers are increasing at a faster rate than those in inner-city areas asthe cost of living rises and as space contracts.

The creeping expansion of Indonesias urban spaces has created a number of practicaland conceptual dilemmas for the national decentralization process. Urban areas are noteasily contained within the administrative boundaries of autonomous regions and tendto spill over into adjacent jurisdictions, thus complicating interdistrict cooperation,networks and communications. Gauging census-based urbanization trends is alsoobscured by changing classifications between urban and rural areas, as well as by thearray of formal and informal networks connecting them (Leaf, 1996: 1617; Comola andde Mello, 2010: 3) For instance, Indonesias expansive mega-urban regions typicallyinclude two or more urban cores that are linked by transportation routes which sustaina myriad of rapidly urbanizing peri-urban and ruralurban lands and livelihoods (Firman,2009).

Urban discourses that attempt to make sense of Indonesias urbanization process tendto be dominated by two sets of polemic claims. The Southeast Asian model advocated byMcGee is premised on the idea that postcolonial cities in Southeast Asia have developeddifferently from Western industrialized cities. According to McGee (1967: 223),Southeast Asian cities have a common colonial heritage of economic fragmentation,reflected in the varying economic levels and systems of urban places to produce uniquepatterns of spatial settlement including squatter communities, urban kampung (off-streetneighborhoods) and in-between spaces of ruralurban convergence called desakota (an

836 Michelle Ann Miller


amalgamation of the Malay Indonesian terms for village desa and city kota).The counter polemic, led by Dick and Rimmer, posits that the post-second world warperiod of decolonization which gave rise to the perception of a distinct and separateSoutheast Asian phenomenon is antiquated and irrelevant in the era of globalization. Thislogic follows that there should be a singular urban discourse because emerging urbanforms in Southeast Asia take after North American patterns to a remarkable degree thathas yet to be recognized (Dick and Rimmer, 1998: 2319).

The view that Southeast Asian cities tend to look towards geographically andculturally remote North American models is somewhat misleading. Yet while SoutheastAsian cities are by no means the product of external forces and events that certainWestern scholars imagine them to be (Bunnell et al., 2002: 10), the region is replete withexamples of outside influences. These are evident, for example, in the spread of Westernarchitectural styles, in the proliferation of gated communities across leafy Asian citysuburbs and in the meteoric expansion of shopping malls, although the latter could besaid to be more the result of global marketing and production forces. In Indonesia, somecity planners also look to North America for solutions to common problems, such as howto gradually replace the parasitic nature of desakota with compact cities that do notimpinge to the same extent upon fertile agricultural lands (interviews with WicaksonoSarosa, executive director, Kemitraan Partnership, and Anggriani Arifin, freelance urbanpolicy consultant, Jakarta, 19 August 2010).

Beyond Western influences, however, Southeast Asian cities look to and learnfrom each other. With their close geographical proximity, many cities in the regionshare physical and socio-cultural attributes, as well as common problems related torapid population growth, restricted space, heavy industrialization and environmentaldegradation (Bunnell and Das, 2010). Transnational flows that reach beyond the Westernworld also shape the social life, identity and built environment of Southeast Asiancities (e.g. the influence of Middle Eastern and Islamic architecture and cultures inpredominantly Muslim Southeast Asian countries like Indonesia and Malaysia). WithinIndonesia too, cities face similar contextual conditions in a decentralizing nationalsystem and share cultural traits and the lingua franca of Bahasa Indonesia whichfacilitates the transfer of ideas, knowledge, technologies and modes of learning in waysthat do not occur in exchanges with other countries (interviews with APEKSI staffmembers Dian Anggrenini, manager of local finance, Sri Indah Wibi Nastiti, manager ofcapacity building and interlocal government cooperation, and Tri Utari, advocacymanager, Jakarta, 20 August 2010).

Both of the polemics presented by McGee and Dick and Rimmer are illustrative ofdifferent dimensions of cities in Indonesia and other parts of Southeast Asia, but neithercaptures the nature of urban transformation in its entirety. Indonesian cities, like urbanenvironments scattered across Asia, combine a messy mix of tradition and modernity, ofurban kampung, slums and subsistence living, as well as skyscrapers, high-rise housing,global financial districts, gated communities and industrial development estates (Eversand Korff, 2000: 23). While particular frames of reference such as kampung (village oroff-street neighborhood) and desakota originate from within the region and are locallyassociated with specific sets of characteristics, such phenomena obviously share anequivalency with urban and rural forms elsewhere. Urban kampung have features incommon with poorer city neighbourhoods in the West, while rural kampung could be saidto loosely correspond with Western villages where agriculture and small business are theprimary means of employment. Desakota, too, share demographic and spatialdimensions with Western urban sprawl or suburbanization, as well as with the types ofactivities and networks that span across corridors connecting urban growth poles aroundthe world.

What these overlapping spheres of influence and interaction tell us is that while boththe Southeast Asian model and the universal (Western) urban paradigm speak to someaspects of Indonesias ever-changing urban frontiers, they overlook the multilayeredand multiscalar dimensions of urbanization that fuse the reproduction of space and



place-making. Moreover, to focus on such boundaries implies that globalisationrepresents an exogenous force impacting upon a definitive region (Kelly and Olds, 1999:2), when for practical purposes it is the juxtaposition of scales of the global, thenation-state and the city and the connections binding them that provide the layers anddiverse strands of space and place. Just as urban theorists emphasize the hybridity of theruralurban desakota formation, these hybridized Western and Asian urban forms andmultiscalar dimensions forge new urban frontiers in the linkages between the local andthe outside world (Massey, 1993: 68; Olds, 2001: 45). And, it is these new urban frontiersthat open opportunities for secondary cities to emerge as regional centers and to shapetheir political agency in hybrid ways.

Restructuring Indonesian cities through decentralizationNothing has transformed the scales of interaction within and between Indonesian citiesand the outside world over recent years more than decentralization. As noted earlier,Indonesian cities (kota) and districts (kabupaten) are the primary beneficiaries ofregional autonomy. The introduction of two autonomy laws on 23 April 1999reconfigured intergovernmental relations and eliminated the hierarchical relationshipbetween Indonesias provincial and sub-provincial governments. Laws 22/1999 onRegional Government and 25/1999 on Fiscal Balance between the CentralGovernment and the Regions (which were later amended by laws 32/2004 and 33/2004respectively) realigned governmental relations in favor of sub-provincial administrationswhile virtually overlooking provincial administrations. Under the new system, whichcame into effect from 1 January 2001, city and district administrations received increasedresponsibility over political, administrative and economic affairs within their ownjurisdictions. Provincial administrations that had previously been responsible forcoordinating Jakarta policy directives under a centrally appointed governor duringSuhartos New Order2 gained no new powers except in Aceh, Papua, Yogyakarta andJakarta, which are governed by separate special autonomy arrangements that devolvemost state authority to the second-tier provincial level (Miller, 2009: 178; Phelps et al.,2011: 424).

Law 22/1999, as amended by law 32/2004, grants sub-provincial administrationsauthority in the areas of local investment, trade and industry policy, public works,education, health, labor, agriculture and the environment. Foreign affairs, defense andsecurity, national planning, religious affairs, international diplomacy and the law remainunder central government control. Local elections for mayors (walikota) and regents(bupati), which were introduced via law 22/1999 in the form of indirect elections bysub-provincial legislatures, were amended through law 32/2004 to allow direct electionsfor local government heads. In July 2007, a Constitutional Court ruling further revisedlaw 32/2004 so that independent candidates as well as party cadres could contest directlocal elections (Miller, 2009: 168).

Fiscal decentralization via law 25/1999 (as amended by law 33/2004) entitles citiesand districts to funding from three main revenue streams. First, reflecting the leading rolethat sub-provincial administrations play in public service delivery, cities and districts areawarded 90% of an equalization block grant for routine expenditure called a GeneralAllocation fund (Dana Alokasi Umum DAU), while provincial administrations,which play a relatively minor role in the provision of public services and facilities,receive just 10% (law 25/1999, chapter 3, articles 67). The DAU comprises a minimumof 25% of the national budget after tax-sharing and was created to reduce economic

2 The former authority of provincial administrations and governors is outlined under law 5/1974 onThe Principles of Regional Government Administration (Miller, 2004: 335).



disparities between resource-rich and poor regions (interviews with APEKSI staffmembers Dian Anggrenini, manager of local finance, Sri Indah Wibi Nastiti, manager ofcapacity building and interlocal government cooperation, and Tri Utari, advocacymanager, Jakarta, 20 August 2010). The funding formula accounts for both revenuecapacity (i.e. potential own-source revenues plus shared-tax revenues, plus 75% ofshared natural resource revenues) as well as expenditure needs based on population,poverty levels, land mass and construction expenses as an indicator of geographicalcircumstances (Hofman and Guerra, 2005: 71). Because cities have limited or no naturalresources and growing expenditures the DAU finances some 70% of local governmentspending (ibid.; World Bank, 2003: 82).

Second, sub-provincial governments receive 80% of revenues generated within theirborders through an Original Regional Revenue fund (Pendapatan Asli Daerah PAD)that is administered (collected and redistributed back to local governments) by theFinance Ministry. For city governments, which have large populations and limitedrevenue sources, the PAD amounts to less than 10% of public expenditure (Comola andde Mello, 2010: 3).

The third revenue stream which sub-provincial administrations receive on a needsbasis is a Special Allocation fund (Dana Alokasi Khusus DAK). DAK monies arespecial-purpose transfers typically earmarked for sectoral projects, although to datethese have not been implemented in any consistent or systematic fashion. Since theimplementation of decentralization began in 2001, DAK projects have diversified froman initial emphasis on health, education and infrastructure (such as roads, irrigation andgovernment office buildings for new administrations) to a growing focus since 2006 onpotable water, agriculture, fisheries and the environment (World Bank, 2008: 123). Whilethe DAK has expanded dramatically and is expected to become more important as itcontinues to reach into new sectors such as poverty alleviation and minimum standardsachievement, it currently constitutes the smallest revenue-earner for local governmentsat around 3%. The only provinces where the DAK forms a significant portion ofthe budget are Papua and Aceh, which have special autonomy arrangements and wheresub-provincial administrations receive approximately 20% and 30% of the DAKrespectively (ibid.; Hofman and Guerra, 2005: 71).

In addition to the 1999 autonomy laws that form the backbone of Indonesiasdecentralized system, the framework of autonomy has been embellished by a rash ofcentral and local government regulations and presidential and ministerial decrees. Ratherthan adding clarity to Indonesias decentralization system and processes, much ofthis supporting legislation has compounded the confusion amidst contradictoryinterpretations of the regional autonomy laws at the local level (ADB, 2005: 28). Of anestimated 11,000 bylaws related to business activity that have been issued by city anddistrict administrations since 2001 alone, the Home Affairs Ministry has cancelled morethan 1,800 local regulations that have contravened national legislation (interviewwith Agung Pambudhi, executive director, Komite Pemantauan Pelaksanaan OtonomiDaerah/Regional Autonomy Watch, Jakarta, 18 August 2010). To add to the confusion,central line ministries have enlisted the help of a bewildering array of governmentagencies including departments within the National Development Planning Agency(Bappenas) and the Advisory Council on Regional Autonomy (Dewan PertimbanganOtonomi Daerah DPOD) and donor agencies such as The World Bank and itsInternational Finance Corporation (IFC), the German Technical Cooperation (DeutscheGesellschaft fr Technische Zusammenarbeit GTZ), the United Nations DevelopmentProgramme (UNDP), AusAID and USAID many of which do not cooperate orcoordinate their decentralization programs and activities in Jakarta or in the regions(interviews with Raden Siliwati, director, Directorate for Political Affairs andCommunication, Bappenas, 5 December 2009, and GTZ staff members Rino A.Sadanoer, senior national advisor, Regional Economic Development, and FrankBertelman, technical advisor, Jakarta, 19 August 2010). Unclear legal instrumentshave also strained vertical relations between central government ministries and agencies



and the associations representing local governments such as APEKSI (Associationof Indonesian Municipalities) and APKASI (Association of Indonesian DistrictAdministrations). According to APEKSI (2008: 8), which sees itself as a bridge in thedecentralization process between its city members and the central government, thereremain substantial challenges in connection with the rules and regulations aboutregional governments which still need synchronization and harmonization within thesector.

Challenges and opportunitiesFor practical purposes, outstanding inconsistencies and areas of ambiguity in Indonesiasdecentralization legislation have generated numerous problems in the implementation oflocal development programs and activities. Legal grey areas have enabled opportunisticsections of Indonesias state bureaucracy to exploit and undermine the new system fromwithin, especially at the local level where government officials have been able touse ambiguities in the legislation to absolve themselves of responsibility for themismanagement of state resources and for failed development projects. Confusion overthe delegation of authority has enabled most line ministries to hold considerable swayover local development projects, despite the formal transfer of central state authority tosub-provincial governments (Brodjonegoro, 2009: 209).

Because of the legal uncertainties inherent in Indonesias decentralized system andnascent democratizing institutions, strong, effective and innovative leadership isconsistently cited as the most critical factor in good governance and successfuldevelopment at the local level. Cities that have become more adept at public servicedelivery and attracting investment have consistently benefited from accountable andresponsive leadership. The most famous case of responsive and innovative leadership inIndonesia today is the city of Solo in Central Java. Mayor of Solo Joko Widodo wasawarded Best Mayor 2011 for his sensitive and consultative handling of the relocationof hundreds of street vendors (after 54 meetings with them over several months). Therelocation, which has become widely cited as an example of best practice in goodgovernance, helped to clean the streets of Solo while increasing the vendors profitmargins (Bunnell, 2011). By contrast, cities that have lagged behind have typically beenplagued by allegations of financial mismanagement, as predatory or personalized eliteinterests and clientelistic networks have hijacked the decentralization process bydiverting the flow of material resources outside legal institutional frameworks andprocesses (see e.g. Hadiz, 2003; van Klinken, 2007).

A reoccurring theme in the Indonesian interviews conducted for this research inNovember December 2009 and August 2010 was that regional autonomy in its currentform is not conducive to intercity and interdistrict cooperation, especially in dealing withexternalities or overlapping areas of jurisdiction. Large-scale programs from the oldcentralized system like the Kampung Improvement Program, which began in 1969 andexpanded into the Integrated Urban Infrastructure Development Program (IUIDP) ofthe 1980s and 1990s, were abruptly abandoned during the 1997 Asian economic crisisand not subsequently revived after the initiation of decentralization. In the absenceof a coherent and coordinated public policy, fragmentation between sub-nationalgovernments and community stakeholders is on the rise, allowing Jakarta to retain a highdegree of authority in many regions.

There are at least three reasons for the current dearth of intercity and interdistrictcooperation; two are structural and the other is attitudinal. First, the existing regionalautonomy legislation contains no formal mechanisms for accommodatingintergovernmental cooperation at the third-tier sub-provincial level. As a result, localgovernments are unable to pool their resources through official channels to tackleongoing problems that intersect administrative boundaries such as public service



delivery in transport infrastructure, water, electricity and solid waste disposal (interviewswith Agung Mulyana, deputy minister for Home Affairs, and Made Suwandi, director ofRegional Autonomy, Ministry of Home Affairs, Jakarta, 18 August 2010).

The second structural problem is that it is impossible to physically contain Indonesiancities within decentralized administrative boundaries. This can be debilitating for citiesthat are heavily reliant upon industrial urban peripheries for income, as well as for urbanareas that have economic and social interests and networks spanning two or morejurisdictions. For this reason, regional autonomy has received mixed responses fromcities that are surrounded by industrializing desakota regions. In the city of Surabaya inEast Java, for example, the local government has gained increased control over its ownrevenues and budgetary processes. On the other hand, Surabayas development has beenhampered by the growing autonomy of adjacent districts in the Gerbangkertosusila (anacronym for the East Java districts of Gresik, Bangkalan, Mojokerto, Surabaya, Sidoarjoand Lamongan) greater urban planning region, where industrial development is mostheavily concentrated in the districts of Sidoarjo and Gresik and extends ribbon-likealong main highways (Dick and Rimmer, 2009: 117).

The third obstacle to intercity coordination has to do with attitudes in the statebureaucracy. In the absence of a coherent macro-policy, sub-provincial governments tendto channel their energies and resources into fortifying development within their ownadministrative boundaries rather than into coordinating cross-jurisdictional programs.Competition between autonomous regions is rife and the rare attempts by wealthier ormore powerful neighboring governments to form cooperative networks tend to beregarded with suspicion. For instance, in 2006 Jakartas then-governor LieutenantGeneral Sutiyoso (19972007) unsuccessfully tried to form an interregional networkbetween the governments of Jakarta, Tangerang and the West Java sub-provincialadministrations of Bogor, Depok, Bekasi and Cianjur (collectively known by theacronym Jabodetabekjur) to deal with the interconnected problems of public housing,solid waste, flooding and (monorail and busway) transport infrastructure (Depdagri,2006). The proposal failed because the governors, mayors and regents of West Java andBanten feared losing autonomy and funding if authority over key areas of public policywere to become jointly coordinated by an umbrella Jabodetabekjur metropolitan regionand a central government ministry (as Sutiyoso planned).

Sutiyosos proposal was not a new idea, having been first put forward in the 1970s byJakartas then-governor Ali Sadikin (196677). It was given administrative teeth in 1976by the establishment of a cooperation agency for Jakarta Metropolitan Area (JMA) calledthe BKSP (Badan Koordinasi Antara Provinsi).3 Yet while the BKSP currently comprisesa membership of the governors, mayors and regents of West Java, Banten and Jakarta, thebody is understaffed and underfunded, and its role in coordinating and monitoring thedevelopment of JMA has been attenuated under decentralization as intergovernmentalcooperation has declined and as local support for an integrated region has waned.Cognizant of the need for more coordinated planning in Indonesias most populous andstrategically important region (which in 2000 supported some 21 million people andproduced 22% of the national gross domestic product), in late 2009 the Home AffairsMinistry began drafting a new law to revive the integrated system for Jakarta and theneighboring autonomous regions of Bogor, Tangerang and Bekasi (collectively knownby the acronym Jabotabek). At the time of writing, however, this bill is awaitingsubmission to the House of Representatives (DPR) and has not been passed as legislation(interview with Made Suwandi, director of Regional Autonomy, Ministry of HomeAffairs, Jakarta, 18 August 2010).

Meanwhile, the myriad problems that mire public service delivery in the Jabotabek/Jabodetabekjur region have only found partial solutions, or have worsened. Metropolitan

3 The BKSP was strengthened through Home Affairs ministerial decree 29/1980 and by the NationalPlanning ministerial decree 125/1984 (Asri, 2005: 2310).



Jakarta, which produces some 6,000 tons of solid waste per day, rents sanitary landfillfrom neighboring Bekasi and a waste-processing plant in Tangerang district to dispose ofits mountain of trash (The Jakarta Post, 23 October 2009; interview with Mas Wedar,deputy director for Local Economic Development, Directorate of Urban and RuralDevelopment, Bappenas, Jakarta, 18 August 2010). Sewage disposal has also becomeless effective in the era of decentralization as the 1.2 billion liters of sewage produceddaily by Jakartas growing population greatly exceeds the processing capacities of thecitys three treatment plants in Pulo Gadung (East Jakarta), Duri Kosambi (West Jakarta)and Setiabudi (South Jakarta). An integrated low-cost system of sewage managementthat was introduced under the old centralized system in the late 1980s and jointlycoordinated by the Public Works Ministry and the Sewage and Sanitation ManagementAgency (BPAL) has long since been discarded, putatively due to inadequate fundingalthough the main reason seems to be the lack of a coherent public sewage policy(Steinberg, 2007: 359; Bunnell and Miller, 2011: 42).

With public service delivery deteriorating in the era of decentralization, theprivate sector has played an increasingly prominent role, often with negative socialconsequences. For instance, in the city province of Jakarta, the dysfunctional publicsewage system has led large numbers of residents to install private septic tanks, many ofwhich are poorly designed. A burgeoning population and inadequate public transportsystem has also led to increased private car ownership and exacerbated the citys seriousproblem of macet (traffic jams), with the ratio of vehicles in Jakarta (143 per 1,000people) being nine times the national average (APEC, 2006: 77). Privatized developmentby rich conglomerates in a city with few controls on limited lands has also heightened thedisregard by the rich for the poor. Aggressive evictions to make way for shopping malls,high-rise housing estates and office buildings has worsened the problem of spontaneousinformal settlements by poor people whose illegal occupancy deprives them of basiccitizenship rights and access to public services and facilities (Winayanti and Lang, 2004:41; Steinberg, 2007: 363). Mushrooming megaprojects and growing private consumptionhave in turn reduced Jakartas capacity to develop effective response strategies forserious environmental issues like massive seasonal flooding along the banks of thepolluted River Ciliwung. Intersecting the city, this river also serves as a waste repositoryfor people who are not connected to a sewage system, with predictable detrimentalconsequences for public health (Bakker, 2007; Texier, 2008; Douglass, 2010).

In the face of the seemingly insurmountable public service problems plaguing Jakarta,some policymakers and planners have only half-jokingly proposed to move the nationalcapital to a less congested part of Indonesia, or to create a cluster of decentralizedmega-urban regions specializing in different aspects of national development (interviewswith Wicaksono Sarosa, executive director, Kemitraan Partnership, and Anggriani Arifin,freelance urban policy consultant, Jakarta, 19 August 2010). A 2010 opinion poll by theIndonesian magazine Tempo (2010) found that 77.34% of respondents wanted to movethe countrys capital, while only 21.67% disagreed and 0.99% expressed uncertainty. Yetalthough the idea of relocating Indonesias capital city has been supported in principle atthe highest levels of government including allegedly by President Susilo BambangYudhoyono and House of Representatives (DPR) Speaker Marzuki Alie it is widelyacknowledged that such a move could just as easily reproduce Jakartas problems onmultiple smaller scales elsewhere (ibid.).4

Indeed, while no other Indonesian city has experienced urban density problemsquite like metropolitan Jakarta, many cities face similar issues, especially in terms ofthe widespread dramatic decline in the quality of infrastructure and the growth ofunserviced slum and squatter areas where many urban poor lack adequate access to basicservices (ADB, 2005: 48). In many ways, these issues are not unique to urban Indonesia

4 The idea of moving the Indonesian capital to somewhere less congested and to an island that is notas at risk of experiencing earthquakes has been discussed periodically since the administration ofIndonesias rst president, Sukarno (195065).



as cities around the world with surging and increasingly polyglot populations struggle toeffectively respond to growing policy challenges within traditional planning frameworks.As Scott et al. (2001: 22) explain, the rising contemporary phenomenon of globalcity-regions, especially outside the developed world, has been accompanied by a declinein economic and social organization as cities continue to grow and expand at a ratethat makes it quite difficult for infrastructure supply to catch up to demand. In the caseof Indonesia, these challenges are to some extent exacerbated by the processes ofdecentralization, just as they are in Brazil and in other parts of the world where centralgovernment powers and resources have been devolved to sub-national administrations. InBrazilian cities, which are often compared with urban Indonesia, shortcomings in stateprograms under decentralization have also produced a burgeoning informal sector anda growing private sector role in the provision of public facilities, services andinfrastructure (World Bank, 2003).

Like Jakarta, plenty of cities across Indonesia suffer from varying forms of ineffectivegovernance and poor coordination of decentralization programs. One reason for this isthat since the initiation of decentralization there has been a 63% increase in Indonesiasautonomous regions, with 205 new administrations being created by partitioning existingregions, bringing the total number of autonomous jurisdictions to about 530 nationwide(Sugiharto, 2010; Wahyudi and Berindra, 2010). Many of these newly created localgovernments are ill-equipped for their roles and responsibilities, focusing more oninfrastructural development (office buildings) and equipment procurement (furniture,vehicles, etc.) than on training for civil servants and establishing appropriate systems forsub-provincial planning and management to fit the new structure. For its part, the centralgovernment has been overtaken by developments on the ground and has generallyadopted a hands-off approach in overseeing the implementation of regional autonomyrather than attempting to funnel resources into on-site training to support local fiscal andbudgetary systems.

Agency of autonomous citiesUnlike new districts with small or predominantly rural populations, city and urbandistrict administrations that have emerged as new autonomous jurisdictions are betterequipped to adapt to decentralization. With their established infrastructures and higherconcentrations of human and material resources, cities are strategically better placedto benefit from regional autonomy. The DAU formula, too, privileges cities that havesubstantial per capita public expenditure needs.

A number of Indonesian cities have used their increased access to state funding toreposition themselves as new centers of investment and as destinations. One way inwhich the central government has sought to strengthen the local agency of autonomouscities over their revenue-earning capacities has been through the establishment of onestop services/shops (OSS) for business licensing. Formalized via presidential instruction3/2006 on investment policy package,5 the purpose of OSS is to boost foreign anddomestic investment at local level through accelerated streamlined licensing centers,integrating government licensing procedures that used to span several departments in oneconsolidated facility (One Stop Service Center Indonesia, 2010). The impetus for OSSgrew out of the need to reform Indonesias cumbersome, costly and time-consumingbusiness licensing system, as well as the regulatory problems arising from

5 The idea of establishing OSS at the city and district levels was introduced in the mid-1990s, butthe realignment of central and sub-national government functions and processes throughdecentralization delayed its implementation. In 1997 the Home Affairs Ministry issued generalguidelines on the establishment of OSS but a formal legal framework was not provided until 2006(Asia Foundation, 2007: 6).



decentralization. Between 2000 and 2005, taxes and charges at local level spiraled outof control as autonomous sub-provincial governments used their increased authorityto collectively impose up to 6,000 new taxes in a bid to bolster their own revenues,the majority of which pertained to license user charges (LPEMFEUI, 2005; AsiaFoundation, 2007: 3).6 This poor policy environment dissuaded many local businessesfrom formally registering to avoid paying surplus charges. It also scared off foreigninvestors who had previously dealt only with Jakarta under the old centralized systemand now had to navigate a complex array of local regulations amidst an ongoingwidespread culture of corruption and favoritism for local firms which allowed hugeconglomerates to operate as monopolies (Sassen, 1999: 154).

The central government agency responsible for overseeing the OSS program, theBKPM (Investment Coordinating Board), hopes that OSS will be operational in allIndonesian cities and districts by the end of 2012 (interview with Ikmal Lukman, directorof sectoral investment promotion, Investment Coordinating Board Republic ofIndonesia, BKPM, Jakarta, 16 August 2010). Yet despite general enthusiasm for OSS atall levels of government, there remain several challenges regarding its actualization.Consolidated licensing processes can be, and often are, a lengthy and political process,since licenses are a means of control and revenue legal and illegal for departments(Asia Foundation, 2007: 6). While OSS could potentially reduce corruption and improvelocal bureaucratic efficiency, it is also currently difficult to measure the success of theprogram as OSS takes on many practical permutations, with centers varying considerablyin their authority to simplify licensing processes and maintain service standards (Steer,2006: 26). Furthermore, since OSS centers are still in the process of being establishedtheir longitudinal impacts on business growth, investor experiences and governmentalreforms cannot currently be properly evaluated.

The other main way in which autonomous Indonesian cities have used their increasedagency to sell themselves as sites of investment opportunity and as destinations hasbeen through city branding. The repositioning of cities as products with uniquecharacteristics has become increasingly popular as a marketing strategy in an age whencities aspire to attain the status of world cities or global cities that can connect to andcompete with globally networked metropolitan centers (Donald and Gammack, 2007:23; Kosnick, 2009: 29). In Indonesia, growing market competition and scarcity ofresources at the local level through decentralization and urbanization has led cities tobecome more entrepreneurial in their approaches to consumption and representation. YetIndonesian cities have been relative latecomers to the formal practice of place branding,with the central Javanese city of Yogyakarta only being labeled as Indonesias firstbranded city in 2002, the year after decentralization came into effect. The decision tobrand Yogyakarta as the cradle of Javanese culture was made by the citys governor,Sultan Hamengkubowono X, who was advised by the World Bank Groups InternationalFinance Corporation (IFC) in transforming Yogyakarta into Jogja, Never Ending Asia(informal interview, Jakarta, 18 August 2010; Salazar, 2006: 23).7 So successful wasthis branding in attracting tourists and investors to Yogyakarta that in 2007 the cityprovince set up a brand extension focusing specifically on luring foreign business (TheJakarta Post, 2007). This was followed by another concept of Jogja Incorporated thatwas influenced by a Japanese development approach based on publicprivate sectorpartnerships (informal interviews, Jakarta, 18 August 2010).

6 In 2000, city and district governments issued on average two or three regulations per year, but oneyear after the implementation of regional autonomy in 2002 this number rose to more than 16 newregulations per local government per annum, with 90% of these related to new taxes, licenses andfees (Steer, 2006: 3).

7 The decision to abbreviate Yogyakarta with Jogja was based on the belief that the letter Y andfour-syllable city name was more difcult for international audiences to digest than the letter J andtwo-syllable abbreviation.



Inspired by Yogyakartas success, a number of other Indonesian cities have startedaggressively place branding in an attempt to gain a competitive advantage in attractingforeign and domestic investment, although to date this marketing strategy has been mostheavily concentrated on the island of Java. For instance, Semarang (regional capital ofCentral Java) has copied Yogyakarta by adopting the brand Semarang, Pesona Asia(Semarang, Charm of Asia), while Yogyakartas neighboring city of Solo has vied forsupremacy as the cultural capital of Java by branding itself Solo, the Spirit of Java.Somewhat differently, the Indonesian capital of Jakarta has attempted to emerge as acosmopolitan global city through the brand Enjoy Jakarta, which focuses on four keystrands of marketing encompassing both the local (culture and heritage) and the global(cuisine and shopping malls) (Jakarta Tourism Board, 2010).

The extent to which Indonesian cities can attract investment, improve governance andreposition themselves as destinations in the era of decentralization through suchstrategies as one stop services and city branding will not be fully known for some yearsto come. Many cities outside Java have yet to avail themselves of the types of innovationsand development strategies that are fast gaining currency on Indonesias most populousisland. Moreover, the extent to which the proceeds from such city administration-led initiatives will translate into social improvements through what Castells (1977)calls collective consumption (state expenditure in social programs and infrastructure)remains unclear. At the same time, it is possible to conclude that one stop services andcity branding are merely symptomatic of a wider shift in thinking about the opportunitiesavailable to Indonesian cities under regional autonomy. Decentralization is compellingIndonesian cities to look beyond their immediate neighbors to reinvent themselves aspolitical, cultural and financial centers that are regionally and globally networked. Thecapacity of Indonesian cities to adapt to the new system through strategies like citybranding and OSS is in turn impacting upon the changing material fabric and livedspaces of Indonesias urban environments. As shifting economic opportunities andpublic service delivery standards divert internal migration flows away from traditionalurban growth poles, new cities are making the transition to become centers of bestpractice in good governance and development.

ConclusionAlthough Indonesian cities are better placed in some ways than rural and sparselypopulated areas to benefit from regional autonomy, it is important to remain mindful thatcities have been forced to adapt to the decentralized structure rather than the other wayround. That is, decentralization has not occurred on the terms set by Indonesian citiesthemselves, as the mapping of regional autonomy onto existing urban environments hasintroduced artificial divides across extended urban spaces that do not sit comfortablyinside the new jurisdictions of autonomous regions. Networks of cooperation that oncecoordinated and connected urban, peri-urban and rural lands and livelihoods underthe old centralized system have eroded and been reconfigured as autonomousadministrations that compete over limited state resources.

This article has shown some of the ways in which Indonesias reordered autonomousurban jurisdictions have navigated the challenges and opportunities presented byregional autonomy. It has highlighted the increased agency of Indonesian cities to makemore empowered decisions about their own needs and interests. It has also illustratedhow the partitioning of urban spaces through regional autonomy has amputatedtraditional forms of support and sustenance from adjacent regions, often with negativeconsequences for public service delivery and locally generated revenues. In particular,cities have suffered the dual loss of integrated public management systems and incomederiving from industrial urban peripheries that are themselves now emerging asautonomous centers.



The rise of secondary cities as new centers has occurred via formal governmentalprocesses and structures as well as through informal networks with non-state actors andagencies. In the struggle to adapt to a rapidly changing national landscape, these citieshave needed to look further afield in their engagements with the outside world toestablish a competitive identity. In the process, they are becoming increasinglyhybridized as Western universal influences are mapped onto existing and emergingAsian urban forms. Hybrid urban spaces and places are in turn creating opportunities forIndonesian cities to shape their own development programs, priorities and local politicalcultures. As such, although Indonesias experiment with democratic decentralization hasproduced mixed and unintended outcomes, some cities have been able to re-imaginethemselves and the range of opportunities available to them to rival the national capitalof Jakarta by emerging as centers in their own right.

Michelle Ann Miller ([email protected]), Asia Research Institute, National University ofSingapore, NUS Bukit Timah Campus, 469A Tower Block #10-01, Bukit Timah Road,259770 Singapore.

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