The Future of Indonesia’s Cities Director for Urban Affairs, Housing and Settlement Ministry of National Development Planning/ National Development Planning Agency Indonesia 1
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The Future of Indonesia’s Cities
Director for Urban Affairs, Housing and Settlement
Ministry of National Development Planning/
National Development Planning Agency
Indonesia
1
Rapid urbanization, absolute change in share of population living in urban areas (1975-2015)
PointChange(%)
50
45
40
35
30
25
20
15
10
5
0
Number of urban dwellers increased by ≈ 113 million (2x population of SouthAfrica)
Jakarta’s population more than doubled from 4.8 million to 10.3million
Source: World Bank, 2014, Selected countries with different periods
Korea,Rep.
Malaysia
China
Indonesia
EAP(high-income)
Thailand
Philippines
Vietnam
India
0 20 40 60 80 100
Source: WDI
2
More advanced urbanization in Java
3
12
4
1
2
SUMATERA51,697,225 PEOPLE
39.1% URBAN / 60.9%RURAL
JAVA138,311,286 PEOPLE
58.6% URBAN / 41.1%RURAL
BALI AND NUSATENGGARA13,327,280 PEOPLE
39.2% URBAN / 60.8%RURAL
MALUKU AND PAPUA11,972,106 PEOPLE
29.4% URBAN / 70.6% RURAL
4
5
6
Tier 1 –Metropolitan
>1,000,000
Tier 2 –LargeCity
500,000 – 1,000,000
6
SURABAYA
3JAKARTA
5
Source: World Bank, 2015 (data from Bappenas, 2010)
Type of cities 2009 2010 2011 2012 2013 Share to GDP Growth (%)
Metropolitan 46.471 54.193 60.807 67.706 76.523 28% 13.02
Large 23.912 26.599 30.089 33.027 36.978 13% 11.96
Medium 27.529 29.710 33.202 36.632 39.737 14% 8.48
Small 13.149 14.622 16.156 17.822 19.965 7% 12.02
KALIMANTAN14,105,730 PEOPLE
42.2% URBAN / 57.8% RURAL
3
SULAWESI17,663,879 PEOPLE
33.6% URBAN / 66.4%RURAL
Tier 3 –Medium City
100,000 – 500,000
Tier 4 –SmallCity
<100,000
4
Urbanization without growth
• The better leveraged is urbanization, the more it will benefit national economic growth
• But if badly managed, there is a risk of “urbanization without growth”
y = 0.0482x + 5.8855
R² = 0.5674
4
5
6
7
8
9
10
11
12
0 80 100
Log G
DP
Per
Cap
ita
(2010 C
onst
antU
SD)
20 40 60
Urban population share (%)
Indonesia
Log of GDP per capita –v– urbanization, 2015
Source: World Bank, 2017 (based on WDI data 2016)
5
Chronic shortages in access to basic infrastructure
Source: Bappenas Source: Yayasan Pelangi, 2015
IDR 128Tyearly loss because of
traffic congestion
annual growth of rapid
motorization9%
public transport share5-20%
air pollution costIDR 28T
72% access to improved water
supply access
access to public water
supply42%
77%access to improved
sanitation facilities
1%serve by sewerage systems
14cities having substantial
sewerage networks
11.4mioHousehold have no house
11.6mio
Households live in homes
with physical buildings unfit
for habitation
10.8mio
Households who must live to
share the roof with other
families
6
Vision for urban areas…towards sustainable urbanization
Liveable Competitive Green and
Resilient
Local urban
identity
Instruments: Integrated planning Information
technology for
efficient urban
management
Transparent,
accountable and
responsive
governance
7
Principles of New Urban Agenda
Leave no one behind by ending poverty, by ensuring
equal rights and opportunities, socio-
economic and cultural diversity, integration in the
urban space, ensuring public participation, equal access for
all to physical and social infrastructure and basic
services, as well as adequate and affordable housing
Sustainable and inclusive urban economies by
levering agglomeration of benefits of well-
planned urbanization
Environmental sustainability by
promoting clean energy,
sustainable land use and resources,
protecting ecosystems
Drivers of change
Governance
Partnership
Innovative financing instruments
Implemented according to local conditions and adoption as needed
8
MDGs, lessons learned for SDGs
REGULATION PLANNING IMPLEMENTATION MONEV
Presidential Dec 3/2010
Minister PPN & Minister MOHA
Governor/Mayor Decree Prov/City
MDGs
Roadmap accelerate goal achievement
Guidelines for planning,
reviews, tech operational
Database
Acceleration framework
Urban financing
Reports of achievement
e-monev
Indicators
Dissemination
Integrating NUDPS, SDGs and NUA
9
MissionStrategic
issues
SDGs,
targetsNUA NUDPS policies and strategies
Programs?
Activities?
Executing agencies?
Budget and schemes?
10
Elements for Integrated Development
How will we improve statutory plans and their implementation for integrated planning?
What tangible benefits and impacts will we see?
PlanningCapital
Investment
Source: World Bank, 2017
Development
Facilitation
Urban Mangement
Monev
Urban financing?
Issues in urban financing in tackling inadequate urban infrastructure
11
Cities are not self reliant – revenue is
not enough to cover expenses
Lack of financial viability – weak
creditworthiness
Low recognition for private investment’s to
support the mission toward liveable cities’ –
high recognition for competitiveness
Absence of financial investment plans
Urban financing
12
Transfer from
Central
Government
Local
government
budget
Bank and
institutional
loans
Public private
partnershipZakat
Long term
municipal
bonds
Credit-worthiness
Financial management
Capital
investment
planning
Projects for sustainable cities
Financing Urban Infrastructure
13
Different
sources of
financing to
answer Local
Government’s
different
infrastructure
investment
needs
Addressed by
Regional
Infrastructure
Development Fund
(RIDF)
Investment needs exceeds financing capacity
14
Investment needs, borrowing capacity, and total revenue for 14 qualified subnational governments, USD Millions
Investment need gap
Borrowing capacity
Revenue (excl. Salary, earmarked
and contingency fund)Surabaya
2,954
Makasar860
Balikpapan339
Banjarmasin651
Semarang1,262
Pontianak361
Denpasar606
Sidoarjo875Gresik
642
Surakarta279
Bogor521
Bangka449
Batam825
Lombok Barat339
Source: World Bank, 2015; Directorate General Fiscal Balance Ministry of Finance, 2015
15
Why RIDF?
Before
• Top-down approach, limited LG access
to financing, inadequate project
preparation & appraisal, weak loan
monitoring led to defaults & distressed
projects
RIDF
• Demand-based, increase access to
financing, rigorous appraisal,
thorough monitoring including
safeguards standards to ensure
low default & good quality
infrastructures
Eligible sectors Eligible sub-projects (examples)
Water & sanitation WTP, pumping stat
Environmental infrastructure
Sanitary landfill, waste processing fac
Low income housing and slum upgrading
Public housing, integrated urban upgrading
Productive and logistic infrastructure
Road construction, flyovers
Social infrastructure School rehab
Local Governments with immediate needs for infrastructure investments, and have expressed their interest in issuing Regional Bonds (8/93)
16
Jakarta Semarang
Surabaya
BandungYogyakarta Prov.
Makassar
Balikpapan
E. Kalimantan Province
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