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Volume 37.3 May 2013 83448

International Journal of Urban and Regional Research

DOI:10.1111/j.1468-2427.2013.01209.x

Decentralizing Indonesian City

Spaces as New Centers
MICHELLE ANN MILLER

Abstract
Since the introduction of regional autonomy legislation in 1999, Indonesia has embarked
on the worlds biggest experiment with democratic decentralization. The intertwined
processes of democratization and decentralization have dismantled Indonesias
centralized authoritarian system and reordered its governmental structures. These
conjoined processes have set in motion conditions for the transformation of a number of
Indonesias secondary cities into regional centers through the influx of new peoples,
funding and ways of interacting within localized contexts and with the outside world. In
this 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 to
highlight the array of urban spaces that coexist in the era of decentralization. Second, I
describe how Indonesias decentralization laws have structurally privileged cities by
bypassing the provincial level and devolving most state powers directly to sub-provincial
administrations. Third, I explore how Indonesian cities compete and cooperate over
limited state resources under the decentralized system and why some cities have been
able to reinvent themselves as new centers in planning, practice and innovation, and why
others continue to lag behind.

Introduction
Since the 1990s, national governments across Asia have looked towards various models
of decentralization to address the challenges presented by rapid urbanization, burgeoning
populations, industrial development and fragmentation in divided societies. In Indonesia,
the push to decentralize was precipitated by the 1997 Asian financial crisis and
subsequent collapse of President Suhartos centralized authoritarian New Order regime
(196698). These events weakened Indonesias governing presence nationwide and
impaired Jakartas independent decision-making capacity, as international lending and
donor agencies prescribed policy advice in exchange for financial disbursements. In
particular, the World Bank and the International Monetary Fund (IMF) were consulted
throughout the drafting of two laws passed in 1999 on decentralization, or regional
autonomy (otonomi daerah) as it is called in Indonesia (Miller, 2009: 45).
For Indonesian cities, regional autonomy brought new opportunities as well as
challenges. 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 in
NovemberDecember 2009); and (3) Bartlett School of Planning, University College London, in a grant
led by Nick A. Phelps (with co-collaborator Tim Bunnell) entitled Investment Promotion and Local
Economic Development in Indonesia (for eld research conducted in August 2010).
2013 Urban Research Publications Limited. Published by John Wiley & Sons. 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main St, Malden, MA 02148, USA

Decentralizing Indonesian city spaces as new centers

835

devolved state powers and resources were transferred directly to cities/municipalities

(kota) and districts (kabupaten), thereby fundamentally altering Indonesias governing
system that had previously located authority at the sub-provincial level under a
Jakarta-appointed governor. When the 1999 autonomy laws came into effect from
January 2001, city and district administrations found themselves in the liberating
position of having unprecedented control over their own administrative, political and
economic affairs. With government closer to the people and within a democratizing
national framework, policymakers, donors and community stakeholders alike hoped
that decentralization would promote economic recovery while ushering in a new era of
more responsive and efficient government with greater public participation at the local
level (Usman, 2002: 1; World Bank, 2003: 7884; White and Smoke, 2005: 4). More
portentously, central government officials saw decentralization as necessary to stem the
specter of national disintegration by forcefully resurgent armed separatist movements
in Indonesias troubled peripheral provinces of Aceh, Papua and East Timor (Miller,
2006: 297).
Indonesias experiment with decentralization the largest in the world1 was
neither a smooth nor a straightforward process. The realignment of central and local
government structures and functions produced mixed and often unintended results, with
some problems from the old authoritarian order being alleviated or resolved while others
were exacerbated. Whereas some city and district governments seized the political
moment created by rising public pressure for reform to implement aspects of good
governance, others became embroiled in allegations of mismanagement and corruption.
In many cases, new irritations flared in the absence of a single governing body to oversee
and implement big projects, leading to disconnect between tiers of government in
regional planning. Without a cross-jurisdictional structure, horizontal tensions also
surfaced in intergovernmental relations across administrative boundaries, especially in
densely populated urban areas over policy issues such as transport, solid waste
management and water supply (Clark et al., 2009: 12).
This article traces the mixed trajectories of decentralization in Indonesias cities. The
focus is not only on neatly demarcated city (kota) administrative units, but also on
extended urban regions that cut across sub-provincial jurisdictions to complicate
the overlapping pictures of decentralization and urban development. Drawing from
primary source interviews and secondary literature (books, newspapers, journals,
non-governmental organization reports and Indonesian legislation), I map the broader
structural issues and localized contextual conditions that assist and constrain the
capacities 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 of
democratic innovation and agency in fostering informal networks with non-state actors
and organizations.
To this end, the article begins by canvassing the spatial dimensions of Indonesian
cities within the context of contemporary urban discourses. I do not privilege either of the
polemic strains of current urban theorizing that tend to locate the Indonesian experience
within a singular (Western-dominated) urban discourse or as a uniquely Asian or
Indonesian model. Instead, a more nuanced urban paradigm is required to recognize the
points of correspondence with and departure from each polemic. In the next section, I
sketch the contours of such a paradigm by elaborating on this symposiums introductory
essay. Indonesias decentralization legislation is then described to illustrate how cities
are positioned to benefit from the new system. The remainder of the article deals with

While national decentralization projects in India and China have been implemented on a far bigger
scale than in Indonesia since the late 1970s and early 1990s respectively, Indonesias democratic
decentralization 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.

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

New urban frontiers

Indonesias decentralization legislation has been mapped onto a series of rapidly
changing and multilayered urban landscapes. Like other parts of Asia, decentralization
in Indonesia was preceded by a period of sustained economic development and
urbanization, although patterns of urban growth have fluctuated considerably within the
country. Since 2000, Indonesias population has increased from 209.17 million to an
estimated 234.2 million in 2010 (BPS, 2010; United Nations, 2010). Over the same
period, 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 been
declining at an annual rate of about 0.3% since 1985. While this suggests that
urbanization has mainly stemmed from internal migration (indeed, in the 1980s net
migration accounted for about 60% of Indonesias urban growth), in 2005 Indonesia still
had one of the worlds largest rural populations at 117 million people (Comola and de
Mello, 2010: 3). A steady national rate of urbanization since the 1990s also indicates that
more recent trends of rapid urbanization are tied to Indonesias burgeoning population
(Granado, 2009: 136).
Spatially, the patterns of Indonesias urbanization process have been highly uneven
with profound consequences for decentralization. In 2000, some 60% of Indonesias
population lived on the island of Java while the remaining 40% were scattered across the
archipelagos 70,000 islands (BPS, 2010). With more than half of the national population
(over 121 million people) inhabiting Indonesias fourth-largest island, urban density in
Java 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 higher
population growth than Java over recent years, which may be related to increasing
economic opportunities and development through decentralization (Firman, 2004).
Population density also varies considerably within and between Indonesian cities. In
general, however, Indonesian cities follow a global trend whereby populations on the
outskirts of urban centers are increasing at a faster rate than those in inner-city areas as
the cost of living rises and as space contracts.
The creeping expansion of Indonesias urban spaces has created a number of practical
and conceptual dilemmas for the national decentralization process. Urban areas are not
easily contained within the administrative boundaries of autonomous regions and tend
to spill over into adjacent jurisdictions, thus complicating interdistrict cooperation,
networks and communications. Gauging census-based urbanization trends is also
obscured by changing classifications between urban and rural areas, as well as by the
array of formal and informal networks connecting them (Leaf, 1996: 1617; Comola and
de Mello, 2010: 3) For instance, Indonesias expansive mega-urban regions typically
include two or more urban cores that are linked by transportation routes which sustain
a myriad of rapidly urbanizing peri-urban and ruralurban lands and livelihoods (Firman,
2009).
Urban discourses that attempt to make sense of Indonesias urbanization process tend
to be dominated by two sets of polemic claims. The Southeast Asian model advocated by
McGee is premised on the idea that postcolonial cities in Southeast Asia have developed
differently 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 unique
patterns of spatial settlement including squatter communities, urban kampung (off-street
neighborhoods) and in-between spaces of ruralurban convergence called desakota (an
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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 war
period of decolonization which gave rise to the perception of a distinct and separate
Southeast Asian phenomenon is antiquated and irrelevant in the era of globalization. This
logic follows that there should be a singular urban discourse because emerging urban
forms in Southeast Asia take after North American patterns to a remarkable degree that
has yet to be recognized (Dick and Rimmer, 1998: 2319).
The view that Southeast Asian cities tend to look towards geographically and
culturally remote North American models is somewhat misleading. Yet while Southeast
Asian cities are by no means the product of external forces and events that certain
Western scholars imagine them to be (Bunnell et al., 2002: 10), the region is replete with
examples of outside influences. These are evident, for example, in the spread of Western
architectural styles, in the proliferation of gated communities across leafy Asian city
suburbs and in the meteoric expansion of shopping malls, although the latter could be
said to be more the result of global marketing and production forces. In Indonesia, some
city planners also look to North America for solutions to common problems, such as how
to gradually replace the parasitic nature of desakota with compact cities that do not
impinge to the same extent upon fertile agricultural lands (interviews with Wicaksono
Sarosa, executive director, Kemitraan Partnership, and Anggriani Arifin, freelance urban
policy consultant, Jakarta, 19 August 2010).
Beyond Western influences, however, Southeast Asian cities look to and learn
from each other. With their close geographical proximity, many cities in the region
share physical and socio-cultural attributes, as well as common problems related to
rapid population growth, restricted space, heavy industrialization and environmental
degradation (Bunnell and Das, 2010). Transnational flows that reach beyond the Western
world also shape the social life, identity and built environment of Southeast Asian
cities (e.g. the influence of Middle Eastern and Islamic architecture and cultures in
predominantly Muslim Southeast Asian countries like Indonesia and Malaysia). Within
Indonesia too, cities face similar contextual conditions in a decentralizing national
system and share cultural traits and the lingua franca of Bahasa Indonesia which
facilitates the transfer of ideas, knowledge, technologies and modes of learning in ways
that do not occur in exchanges with other countries (interviews with APEKSI staff
members Dian Anggrenini, manager of local finance, Sri Indah Wibi Nastiti, manager of
capacity building and interlocal government cooperation, and Tri Utari, advocacy
manager, Jakarta, 20 August 2010).
Both of the polemics presented by McGee and Dick and Rimmer are illustrative of
different dimensions of cities in Indonesia and other parts of Southeast Asia, but neither
captures the nature of urban transformation in its entirety. Indonesian cities, like urban
environments scattered across Asia, combine a messy mix of tradition and modernity, of
urban kampung, slums and subsistence living, as well as skyscrapers, high-rise housing,
global financial districts, gated communities and industrial development estates (Evers
and Korff, 2000: 23). While particular frames of reference such as kampung (village or
off-street neighborhood) and desakota originate from within the region and are locally
associated with specific sets of characteristics, such phenomena obviously share an
equivalency with urban and rural forms elsewhere. Urban kampung have features in
common with poorer city neighbourhoods in the West, while rural kampung could be said
to loosely correspond with Western villages where agriculture and small business are the
primary means of employment. Desakota, too, share demographic and spatial
dimensions with Western urban sprawl or suburbanization, as well as with the types of
activities and networks that span across corridors connecting urban growth poles around
the world.
What these overlapping spheres of influence and interaction tell us is that while both
the Southeast Asian model and the universal (Western) urban paradigm speak to some
aspects of Indonesias ever-changing urban frontiers, they overlook the multilayered
and multiscalar dimensions of urbanization that fuse the reproduction of space and
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place-making. Moreover, to focus on such boundaries implies that globalisation

represents 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, the
nation-state and the city and the connections binding them that provide the layers and
diverse strands of space and place. Just as urban theorists emphasize the hybridity of the
ruralurban desakota formation, these hybridized Western and Asian urban forms and
multiscalar dimensions forge new urban frontiers in the linkages between the local and
the outside world (Massey, 1993: 68; Olds, 2001: 45). And, it is these new urban frontiers
that open opportunities for secondary cities to emerge as regional centers and to shape
their political agency in hybrid ways.

Restructuring Indonesian cities through decentralization

Nothing has transformed the scales of interaction within and between Indonesian cities
and the outside world over recent years more than decentralization. As noted earlier,
Indonesian cities (kota) and districts (kabupaten) are the primary beneficiaries of
regional autonomy. The introduction of two autonomy laws on 23 April 1999
reconfigured intergovernmental relations and eliminated the hierarchical relationship
between Indonesias provincial and sub-provincial governments. Laws 22/1999 on
Regional Government and 25/1999 on Fiscal Balance between the Central
Government and the Regions (which were later amended by laws 32/2004 and 33/2004
respectively) realigned governmental relations in favor of sub-provincial administrations
while virtually overlooking provincial administrations. Under the new system, which
came into effect from 1 January 2001, city and district administrations received increased
responsibility over political, administrative and economic affairs within their own
jurisdictions. Provincial administrations that had previously been responsible for
coordinating Jakarta policy directives under a centrally appointed governor during
Suhartos New Order2 gained no new powers except in Aceh, Papua, Yogyakarta and
Jakarta, which are governed by separate special autonomy arrangements that devolve
most 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 administrations
authority in the areas of local investment, trade and industry policy, public works,
education, health, labor, agriculture and the environment. Foreign affairs, defense and
security, national planning, religious affairs, international diplomacy and the law remain
under central government control. Local elections for mayors (walikota) and regents
(bupati), which were introduced via law 22/1999 in the form of indirect elections by
sub-provincial legislatures, were amended through law 32/2004 to allow direct elections
for local government heads. In July 2007, a Constitutional Court ruling further revised
law 32/2004 so that independent candidates as well as party cadres could contest direct
local elections (Miller, 2009: 168).
Fiscal decentralization via law 25/1999 (as amended by law 33/2004) entitles cities
and districts to funding from three main revenue streams. First, reflecting the leading role
that sub-provincial administrations play in public service delivery, cities and districts are
awarded 90% of an equalization block grant for routine expenditure called a General
Allocation 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 minimum
of 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 on
The Principles of Regional Government Administration (Miller, 2004: 335).
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disparities between resource-rich and poor regions (interviews with APEKSI staff
members Dian Anggrenini, manager of local finance, Sri Indah Wibi Nastiti, manager of
capacity building and interlocal government cooperation, and Tri Utari, advocacy
manager, Jakarta, 20 August 2010). The funding formula accounts for both revenue
capacity (i.e. potential own-source revenues plus shared-tax revenues, plus 75% of
shared natural resource revenues) as well as expenditure needs based on population,
poverty levels, land mass and construction expenses as an indicator of geographical
circumstances (Hofman and Guerra, 2005: 71). Because cities have limited or no natural
resources and growing expenditures the DAU finances some 70% of local government
spending (ibid.; World Bank, 2003: 82).
Second, sub-provincial governments receive 80% of revenues generated within their
borders through an Original Regional Revenue fund (Pendapatan Asli Daerah PAD)
that is administered (collected and redistributed back to local governments) by the
Finance Ministry. For city governments, which have large populations and limited
revenue sources, the PAD amounts to less than 10% of public expenditure (Comola and
de Mello, 2010: 3).
The third revenue stream which sub-provincial administrations receive on a needs
basis is a Special Allocation fund (Dana Alokasi Khusus DAK). DAK monies are
special-purpose transfers typically earmarked for sectoral projects, although to date
these have not been implemented in any consistent or systematic fashion. Since the
implementation of decentralization began in 2001, DAK projects have diversified from
an initial emphasis on health, education and infrastructure (such as roads, irrigation and
government office buildings for new administrations) to a growing focus since 2006 on
potable water, agriculture, fisheries and the environment (World Bank, 2008: 123). While
the DAK has expanded dramatically and is expected to become more important as it
continues to reach into new sectors such as poverty alleviation and minimum standards
achievement, it currently constitutes the smallest revenue-earner for local governments
at around 3%. The only provinces where the DAK forms a significant portion of
the budget are Papua and Aceh, which have special autonomy arrangements and where
sub-provincial administrations receive approximately 20% and 30% of the DAK
respectively (ibid.; Hofman and Guerra, 2005: 71).
In addition to the 1999 autonomy laws that form the backbone of Indonesias
decentralized system, the framework of autonomy has been embellished by a rash of
central and local government regulations and presidential and ministerial decrees. Rather
than adding clarity to Indonesias decentralization system and processes, much of
this supporting legislation has compounded the confusion amidst contradictory
interpretations of the regional autonomy laws at the local level (ADB, 2005: 28). Of an
estimated 11,000 bylaws related to business activity that have been issued by city and
district administrations since 2001 alone, the Home Affairs Ministry has cancelled more
than 1,800 local regulations that have contravened national legislation (interview
with Agung Pambudhi, executive director, Komite Pemantauan Pelaksanaan Otonomi
Daerah/Regional Autonomy Watch, Jakarta, 18 August 2010). To add to the confusion,
central line ministries have enlisted the help of a bewildering array of government
agencies including departments within the National Development Planning Agency
(Bappenas) and the Advisory Council on Regional Autonomy (Dewan Pertimbangan
Otonomi Daerah DPOD) and donor agencies such as The World Bank and its
International Finance Corporation (IFC), the German Technical Cooperation (Deutsche
Gesellschaft fr Technische Zusammenarbeit GTZ), the United Nations Development
Programme (UNDP), AusAID and USAID many of which do not cooperate or
coordinate their decentralization programs and activities in Jakarta or in the regions
(interviews with Raden Siliwati, director, Directorate for Political Affairs and
Communication, Bappenas, 5 December 2009, and GTZ staff members Rino A.
Sadanoer, senior national advisor, Regional Economic Development, and Frank
Bertelman, technical advisor, Jakarta, 19 August 2010). Unclear legal instruments
have also strained vertical relations between central government ministries and agencies
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and the associations representing local governments such as APEKSI (Association

of Indonesian Municipalities) and APKASI (Association of Indonesian District
Administrations). According to APEKSI (2008: 8), which sees itself as a bridge in the
decentralization process between its city members and the central government, there
remain substantial challenges in connection with the rules and regulations about
regional governments which still need synchronization and harmonization within the
sector.

Challenges and opportunities

For practical purposes, outstanding inconsistencies and areas of ambiguity in Indonesias
decentralization legislation have generated numerous problems in the implementation of
local development programs and activities. Legal grey areas have enabled opportunistic
sections of Indonesias state bureaucracy to exploit and undermine the new system from
within, especially at the local level where government officials have been able to
use ambiguities in the legislation to absolve themselves of responsibility for the
mismanagement of state resources and for failed development projects. Confusion over
the delegation of authority has enabled most line ministries to hold considerable sway
over local development projects, despite the formal transfer of central state authority to
sub-provincial governments (Brodjonegoro, 2009: 209).
Because of the legal uncertainties inherent in Indonesias decentralized system and
nascent democratizing institutions, strong, effective and innovative leadership is
consistently cited as the most critical factor in good governance and successful
development at the local level. Cities that have become more adept at public service
delivery and attracting investment have consistently benefited from accountable and
responsive leadership. The most famous case of responsive and innovative leadership in
Indonesia today is the city of Solo in Central Java. Mayor of Solo Joko Widodo was
awarded Best Mayor 2011 for his sensitive and consultative handling of the relocation
of hundreds of street vendors (after 54 meetings with them over several months). The
relocation, which has become widely cited as an example of best practice in good
governance, helped to clean the streets of Solo while increasing the vendors profit
margins (Bunnell, 2011). By contrast, cities that have lagged behind have typically been
plagued by allegations of financial mismanagement, as predatory or personalized elite
interests and clientelistic networks have hijacked the decentralization process by
diverting the flow of material resources outside legal institutional frameworks and
processes (see e.g. Hadiz, 2003; van Klinken, 2007).
A reoccurring theme in the Indonesian interviews conducted for this research in
November December 2009 and August 2010 was that regional autonomy in its current
form is not conducive to intercity and interdistrict cooperation, especially in dealing with
externalities or overlapping areas of jurisdiction. Large-scale programs from the old
centralized system like the Kampung Improvement Program, which began in 1969 and
expanded into the Integrated Urban Infrastructure Development Program (IUIDP) of
the 1980s and 1990s, were abruptly abandoned during the 1997 Asian economic crisis
and not subsequently revived after the initiation of decentralization. In the absence
of a coherent and coordinated public policy, fragmentation between sub-national
governments and community stakeholders is on the rise, allowing Jakarta to retain a high
degree of authority in many regions.
There are at least three reasons for the current dearth of intercity and interdistrict
cooperation; two are structural and the other is attitudinal. First, the existing regional
autonomy legislation contains no formal mechanisms for accommodating
intergovernmental cooperation at the third-tier sub-provincial level. As a result, local
governments are unable to pool their resources through official channels to tackle
ongoing problems that intersect administrative boundaries such as public service
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delivery in transport infrastructure, water, electricity and solid waste disposal (interviews
with Agung Mulyana, deputy minister for Home Affairs, and Made Suwandi, director of
Regional Autonomy, Ministry of Home Affairs, Jakarta, 18 August 2010).
The second structural problem is that it is impossible to physically contain Indonesian
cities within decentralized administrative boundaries. This can be debilitating for cities
that are heavily reliant upon industrial urban peripheries for income, as well as for urban
areas that have economic and social interests and networks spanning two or more
jurisdictions. For this reason, regional autonomy has received mixed responses from
cities that are surrounded by industrializing desakota regions. In the city of Surabaya in
East Java, for example, the local government has gained increased control over its own
revenues and budgetary processes. On the other hand, Surabayas development has been
hampered by the growing autonomy of adjacent districts in the Gerbangkertosusila (an
acronym for the East Java districts of Gresik, Bangkalan, Mojokerto, Surabaya, Sidoarjo
and Lamongan) greater urban planning region, where industrial development is most
heavily concentrated in the districts of Sidoarjo and Gresik and extends ribbon-like
along main highways (Dick and Rimmer, 2009: 117).
The third obstacle to intercity coordination has to do with attitudes in the state
bureaucracy. In the absence of a coherent macro-policy, sub-provincial governments tend
to channel their energies and resources into fortifying development within their own
administrative boundaries rather than into coordinating cross-jurisdictional programs.
Competition between autonomous regions is rife and the rare attempts by wealthier or
more powerful neighboring governments to form cooperative networks tend to be
regarded with suspicion. For instance, in 2006 Jakartas then-governor Lieutenant
General Sutiyoso (19972007) unsuccessfully tried to form an interregional network
between the governments of Jakarta, Tangerang and the West Java sub-provincial
administrations of Bogor, Depok, Bekasi and Cianjur (collectively known by the
acronym 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 and
Banten feared losing autonomy and funding if authority over key areas of public policy
were to become jointly coordinated by an umbrella Jabodetabekjur metropolitan region
and a central government ministry (as Sutiyoso planned).
Sutiyosos proposal was not a new idea, having been first put forward in the 1970s by
Jakartas then-governor Ali Sadikin (196677). It was given administrative teeth in 1976
by the establishment of a cooperation agency for Jakarta Metropolitan Area (JMA) called
the BKSP (Badan Koordinasi Antara Provinsi).3 Yet while the BKSP currently comprises
a membership of the governors, mayors and regents of West Java, Banten and Jakarta, the
body is understaffed and underfunded, and its role in coordinating and monitoring the
development of JMA has been attenuated under decentralization as intergovernmental
cooperation has declined and as local support for an integrated region has waned.
Cognizant of the need for more coordinated planning in Indonesias most populous and
strategically important region (which in 2000 supported some 21 million people and
produced 22% of the national gross domestic product), in late 2009 the Home Affairs
Ministry began drafting a new law to revive the integrated system for Jakarta and the
neighboring autonomous regions of Bogor, Tangerang and Bekasi (collectively known
by the acronym Jabotabek). At the time of writing, however, this bill is awaiting
submission to the House of Representatives (DPR) and has not been passed as legislation
(interview with Made Suwandi, director of Regional Autonomy, Ministry of Home
Affairs, 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 National
Planning ministerial decree 125/1984 (Asri, 2005: 2310).
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Jakarta, which produces some 6,000 tons of solid waste per day, rents sanitary landfill
from neighboring Bekasi and a waste-processing plant in Tangerang district to dispose of
its mountain of trash (The Jakarta Post, 23 October 2009; interview with Mas Wedar,
deputy director for Local Economic Development, Directorate of Urban and Rural
Development, Bappenas, Jakarta, 18 August 2010). Sewage disposal has also become
less effective in the era of decentralization as the 1.2 billion liters of sewage produced
daily by Jakartas growing population greatly exceeds the processing capacities of the
citys three treatment plants in Pulo Gadung (East Jakarta), Duri Kosambi (West Jakarta)
and Setiabudi (South Jakarta). An integrated low-cost system of sewage management
that was introduced under the old centralized system in the late 1980s and jointly
coordinated by the Public Works Ministry and the Sewage and Sanitation Management
Agency (BPAL) has long since been discarded, putatively due to inadequate funding
although 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, the
private sector has played an increasingly prominent role, often with negative social
consequences. For instance, in the city province of Jakarta, the dysfunctional public
sewage system has led large numbers of residents to install private septic tanks, many of
which are poorly designed. A burgeoning population and inadequate public transport
system has also led to increased private car ownership and exacerbated the citys serious
problem of macet (traffic jams), with the ratio of vehicles in Jakarta (143 per 1,000
people) being nine times the national average (APEC, 2006: 77). Privatized development
by rich conglomerates in a city with few controls on limited lands has also heightened the
disregard 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 spontaneous
informal settlements by poor people whose illegal occupancy deprives them of basic
citizenship rights and access to public services and facilities (Winayanti and Lang, 2004:
41; Steinberg, 2007: 363). Mushrooming megaprojects and growing private consumption
have in turn reduced Jakartas capacity to develop effective response strategies for
serious environmental issues like massive seasonal flooding along the banks of the
polluted River Ciliwung. Intersecting the city, this river also serves as a waste repository
for people who are not connected to a sewage system, with predictable detrimental
consequences 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 national
capital to a less congested part of Indonesia, or to create a cluster of decentralized
mega-urban regions specializing in different aspects of national development (interviews
with Wicaksono Sarosa, executive director, Kemitraan Partnership, and Anggriani Arifin,
freelance urban policy consultant, Jakarta, 19 August 2010). A 2010 opinion poll by the
Indonesian magazine Tempo (2010) found that 77.34% of respondents wanted to move
the countrys capital, while only 21.67% disagreed and 0.99% expressed uncertainty. Yet
although the idea of relocating Indonesias capital city has been supported in principle at
the highest levels of government including allegedly by President Susilo Bambang
Yudhoyono and House of Representatives (DPR) Speaker Marzuki Alie it is widely
acknowledged that such a move could just as easily reproduce Jakartas problems on
multiple smaller scales elsewhere (ibid.).4
Indeed, while no other Indonesian city has experienced urban density problems
quite like metropolitan Jakarta, many cities face similar issues, especially in terms of
the widespread dramatic decline in the quality of infrastructure and the growth of
unserviced slum and squatter areas where many urban poor lack adequate access to basic
services (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 not
as at risk of experiencing earthquakes has been discussed periodically since the administration of
Indonesias rst president, Sukarno (195065).
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843

as cities around the world with surging and increasingly polyglot populations struggle to
effectively respond to growing policy challenges within traditional planning frameworks.
As Scott et al. (2001: 22) explain, the rising contemporary phenomenon of global
city-regions, especially outside the developed world, has been accompanied by a decline
in economic and social organization as cities continue to grow and expand at a rate
that makes it quite difficult for infrastructure supply to catch up to demand. In the case
of Indonesia, these challenges are to some extent exacerbated by the processes of
decentralization, just as they are in Brazil and in other parts of the world where central
government powers and resources have been devolved to sub-national administrations. In
Brazilian cities, which are often compared with urban Indonesia, shortcomings in state
programs under decentralization have also produced a burgeoning informal sector and
a growing private sector role in the provision of public facilities, services and
infrastructure (World Bank, 2003).
Like Jakarta, plenty of cities across Indonesia suffer from varying forms of ineffective
governance and poor coordination of decentralization programs. One reason for this is
that since the initiation of decentralization there has been a 63% increase in Indonesias
autonomous regions, with 205 new administrations being created by partitioning existing
regions, bringing the total number of autonomous jurisdictions to about 530 nationwide
(Sugiharto, 2010; Wahyudi and Berindra, 2010). Many of these newly created local
governments are ill-equipped for their roles and responsibilities, focusing more on
infrastructural development (office buildings) and equipment procurement (furniture,
vehicles, etc.) than on training for civil servants and establishing appropriate systems for
sub-provincial planning and management to fit the new structure. For its part, the central
government has been overtaken by developments on the ground and has generally
adopted a hands-off approach in overseeing the implementation of regional autonomy
rather than attempting to funnel resources into on-site training to support local fiscal and
budgetary systems.

Agency of autonomous cities

Unlike new districts with small or predominantly rural populations, city and urban
district administrations that have emerged as new autonomous jurisdictions are better
equipped to adapt to decentralization. With their established infrastructures and higher
concentrations of human and material resources, cities are strategically better placed
to benefit from regional autonomy. The DAU formula, too, privileges cities that have
substantial per capita public expenditure needs.
A number of Indonesian cities have used their increased access to state funding to
reposition themselves as new centers of investment and as destinations. One way in
which the central government has sought to strengthen the local agency of autonomous
cities over their revenue-earning capacities has been through the establishment of one
stop services/shops (OSS) for business licensing. Formalized via presidential instruction
3/2006 on investment policy package,5 the purpose of OSS is to boost foreign and
domestic investment at local level through accelerated streamlined licensing centers,
integrating government licensing procedures that used to span several departments in one
consolidated facility (One Stop Service Center Indonesia, 2010). The impetus for OSS
grew out of the need to reform Indonesias cumbersome, costly and time-consuming
business 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, but
the realignment of central and sub-national government functions and processes through
decentralization delayed its implementation. In 1997 the Home Affairs Ministry issued general
guidelines on the establishment of OSS but a formal legal framework was not provided until 2006
(Asia Foundation, 2007: 6).
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Michelle Ann Miller

decentralization. Between 2000 and 2005, taxes and charges at local level spiraled out
of control as autonomous sub-provincial governments used their increased authority
to 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; Asia
Foundation, 2007: 3).6 This poor policy environment dissuaded many local businesses
from formally registering to avoid paying surplus charges. It also scared off foreign
investors who had previously dealt only with Jakarta under the old centralized system
and now had to navigate a complex array of local regulations amidst an ongoing
widespread culture of corruption and favoritism for local firms which allowed huge
conglomerates to operate as monopolies (Sassen, 1999: 154).
The central government agency responsible for overseeing the OSS program, the
BKPM (Investment Coordinating Board), hopes that OSS will be operational in all
Indonesian cities and districts by the end of 2012 (interview with Ikmal Lukman, director
of sectoral investment promotion, Investment Coordinating Board Republic of
Indonesia, BKPM, Jakarta, 16 August 2010). Yet despite general enthusiasm for OSS at
all 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 improve
local bureaucratic efficiency, it is also currently difficult to measure the success of the
program as OSS takes on many practical permutations, with centers varying considerably
in their authority to simplify licensing processes and maintain service standards (Steer,
2006: 26). Furthermore, since OSS centers are still in the process of being established
their longitudinal impacts on business growth, investor experiences and governmental
reforms cannot currently be properly evaluated.
The other main way in which autonomous Indonesian cities have used their increased
agency to sell themselves as sites of investment opportunity and as destinations has
been through city branding. The repositioning of cities as products with unique
characteristics has become increasingly popular as a marketing strategy in an age when
cities aspire to attain the status of world cities or global cities that can connect to and
compete with globally networked metropolitan centers (Donald and Gammack, 2007:
23; Kosnick, 2009: 29). In Indonesia, growing market competition and scarcity of
resources at the local level through decentralization and urbanization has led cities to
become more entrepreneurial in their approaches to consumption and representation. Yet
Indonesian cities have been relative latecomers to the formal practice of place branding,
with the central Javanese city of Yogyakarta only being labeled as Indonesias first
branded city in 2002, the year after decentralization came into effect. The decision to
brand Yogyakarta as the cradle of Javanese culture was made by the citys governor,
Sultan Hamengkubowono X, who was advised by the World Bank Groups International
Finance Corporation (IFC) in transforming Yogyakarta into Jogja, Never Ending Asia
(informal interview, Jakarta, 18 August 2010; Salazar, 2006: 23).7 So successful was
this branding in attracting tourists and investors to Yogyakarta that in 2007 the city
province set up a brand extension focusing specifically on luring foreign business (The
Jakarta Post, 2007). This was followed by another concept of Jogja Incorporated that
was influenced by a Japanese development approach based on publicprivate sector
partnerships (informal interviews, Jakarta, 18 August 2010).

6 In 2000, city and district governments issued on average two or three regulations per year, but one
year after the implementation of regional autonomy in 2002 this number rose to more than 16 new
regulations per local government per annum, with 90% of these related to new taxes, licenses and
fees (Steer, 2006: 3).
7 The decision to abbreviate Yogyakarta with Jogja was based on the belief that the letter Y and
four-syllable city name was more difcult for international audiences to digest than the letter J and
two-syllable abbreviation.
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845

Inspired by Yogyakartas success, a number of other Indonesian cities have started

aggressively place branding in an attempt to gain a competitive advantage in attracting
foreign and domestic investment, although to date this marketing strategy has been most
heavily concentrated on the island of Java. For instance, Semarang (regional capital of
Central Java) has copied Yogyakarta by adopting the brand Semarang, Pesona Asia
(Semarang, Charm of Asia), while Yogyakartas neighboring city of Solo has vied for
supremacy 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 a
cosmopolitan global city through the brand Enjoy Jakarta, which focuses on four key
strands 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 and
reposition themselves as destinations in the era of decentralization through such
strategies as one stop services and city branding will not be fully known for some years
to come. Many cities outside Java have yet to avail themselves of the types of innovations
and development strategies that are fast gaining currency on Indonesias most populous
island. Moreover, the extent to which the proceeds from such city administrationled 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 and
city branding are merely symptomatic of a wider shift in thinking about the opportunities
available to Indonesian cities under regional autonomy. Decentralization is compelling
Indonesian cities to look beyond their immediate neighbors to reinvent themselves as
political, cultural and financial centers that are regionally and globally networked. The
capacity of Indonesian cities to adapt to the new system through strategies like city
branding and OSS is in turn impacting upon the changing material fabric and lived
spaces of Indonesias urban environments. As shifting economic opportunities and
public service delivery standards divert internal migration flows away from traditional
urban growth poles, new cities are making the transition to become centers of best
practice in good governance and development.

Conclusion
Although Indonesian cities are better placed in some ways than rural and sparsely
populated areas to benefit from regional autonomy, it is important to remain mindful that
cities have been forced to adapt to the decentralized structure rather than the other way
round. That is, decentralization has not occurred on the terms set by Indonesian cities
themselves, as the mapping of regional autonomy onto existing urban environments has
introduced artificial divides across extended urban spaces that do not sit comfortably
inside the new jurisdictions of autonomous regions. Networks of cooperation that once
coordinated and connected urban, peri-urban and rural lands and livelihoods under
the old centralized system have eroded and been reconfigured as autonomous
administrations that compete over limited state resources.
This article has shown some of the ways in which Indonesias reordered autonomous
urban jurisdictions have navigated the challenges and opportunities presented by
regional autonomy. It has highlighted the increased agency of Indonesian cities to make
more empowered decisions about their own needs and interests. It has also illustrated
how the partitioning of urban spaces through regional autonomy has amputated
traditional forms of support and sustenance from adjacent regions, often with negative
consequences for public service delivery and locally generated revenues. In particular,
cities have suffered the dual loss of integrated public management systems and income
deriving from industrial urban peripheries that are themselves now emerging as
autonomous centers.
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Michelle Ann Miller

The rise of secondary cities as new centers has occurred via formal governmental
processes and structures as well as through informal networks with non-state actors and
agencies. In the struggle to adapt to a rapidly changing national landscape, these cities
have needed to look further afield in their engagements with the outside world to
establish a competitive identity. In the process, they are becoming increasingly
hybridized as Western universal influences are mapped onto existing and emerging
Asian urban forms. Hybrid urban spaces and places are in turn creating opportunities for
Indonesian cities to shape their own development programs, priorities and local political
cultures. As such, although Indonesias experiment with democratic decentralization has
produced mixed and unintended outcomes, some cities have been able to re-imagine
themselves and the range of opportunities available to them to rival the national capital
of Jakarta by emerging as centers in their own right.
Michelle Ann Miller (arimam@nus.edu.sg), Asia Research Institute, National University of
Singapore, NUS Bukit Timah Campus, 469A Tower Block #10-01, Bukit Timah Road,
259770 Singapore.

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