Land Use Policy 17 (2000) 29}37

Growth, crisis and spatial change: a study of haphazard

urbanisation in Jakarta, Indonesia
Charles Goldblum!, Tai-Chee Wong",*
!Institut Francais d'Urbanisme, University of Paris VIII, 4 rue Nobel, Cite Descartes, 77420 Champs Sur Marne, France
"Division of Geography, Nanyang Technological University, 469 Bukit Timah Road, Singapore 259756, Singapore

Abstract

The 1997 economic crisis in Indonesia has a close relationship with the e!ects of globalisation as characterised by in#ows of
industrial and "nancial capital, originating from the global shift since the 1980s. In Jakarta especially, metropolitan expansion has
witnessed substantial in#ow of international capital into property-development activities. The crisis in Jakarta is characterised by
a typical suburbanisation sprawl along development corridors extending beyond the scope of its Master Plan. Both the public and
private sectors have been associated in the development programmes whereby a large number of new towns and industrial estates
have been constructed. Adverse e!ects are obvious as a result of ine!ective urban management and a lack in infrastructure and
commitment to the planning principles. Jakarta's CBD expansion has also initiated the move of industries and low-income groups
towards the peripheral zones. Consequently, the traditional urban villages face demolition, replaced by more lucrative and intensive
land use. The kampung restructuring policy, once a symbol of social welfare, has virtually stopped to function under the impact of the
globalisation and international capital. The high vulnerability of the speculative property market and its inherent urban problems
question the sustainability of the Indonesian economic growth model. Educational upgrading, however, is seen as one of the
fundamentals for supporting this model. ( 2000 Elsevier Science Ltd. All rights reserved.

Keywords: Globalisation; Centre-periphery; Urbanisation; Crisis; Land-use; Speculation; Spatial e!ects

Introduction This paper examines a speci"c issue of haphazard

Before the outbreak of the Southeast Asian crisis in
July 1997, the economic prospect of Indonesia appeared
to many to be quite promising despite the well-acknow-
ledged ine$ciency of its public services and widespread
urban poverty. Optimistic views that Indonesia was
about to join the newly industrialising nations were not
rare (for example, see Yeung and Lo, 1996). The 1997
crisis hit Indonesia really hard and for more than two
years from the downfall of Suharto to the election of
a new president Abdurrahman Wahid in November
1999, there have been persistent riots, ethnic and relig-
ious violence, and the re-emergence of regional claims of
greater autonomy or even independence. Economic re-
covery is far from being obvious. Almost all these distur-
bances have an urban origin.
* Corresponding author. Tel.: #65-460-5168; fax: #65-469-2427.
E-mail address: tcwong@nie.edu.sg (T.-C. Wong)
urbanisation and spatial change in Jakarta and its ad-
joining districts where the impact of the crisis is most
signi"cant. In the analysis, the hypothesis whether peri-
pheralisation or marginalisation of the globalisation
process is directly associated with Jakarta's urban devel-
opment is used as the theoretical framework. The frame-
work assumes that with a dominating economic and
"nancial status and a population of 10 million, Jakarta's
metropolising sphere is responsible for a great scope of
in#uence nation-wide, but the capital city itself is in-
#uenced by its integration in a supra-national urban
network of East Asia (Goldblum, 1996a).
Jakarta and its network extension have required us to
consider the emergence of a new centre-periphery system,
as well as con#icts arising between this system, which
imposes stringent demands, and those in charge of In-
donesia's politics and administration in Jakarta. This
two-dimensional problem is centred around the urban
&territoriality' issue characterised by economic #ows, and
a property investment process which seemingly ignores
the limitations of politics over territorial development.

0264-8377/00/$ - see front matter ( 2000 Elsevier Science Ltd. All rights reserved.
PII: S 0 2 6 4 - 8 3 7 7 ( 9 9 ) 0 0 0 4 3 - 5
30 C. Goldblum, T.-C. Wong / Land Use Policy 17 (2000) 29}37

For understanding this issue, the globalisation impact In retrospect, economic globalisation accelerated in
which has led to a dynamic physical land-use change the aftermath of the 1974 oil crisis, leading to widespread
including a rapid residential and industrial suburbanisa- recession in developed countries, which saw interna-
tion is "rst investigated. tionalisation of "rms as an outlet from domestic impasse
(Drakakis-Smith, 1996). What followed were rising inter-
national "nancial #ows from the developed core to
Marginalised urbanisation and urban dynamics in the glo-
selected peripheral countries as overseas ventures ex-
balisation process
panded. Bene"ting from the crisis as a key regional oil
producer, Indonesia became more exposed to external
Since globalisation began to accelerate in the 1980s, its
capital penetration and manufacturing investments.
e!ects have been widely analysed (see Henderson, 1989).
Huge oil gains accumulated throughout the 1970s and
Hessler (1993) has demonstrated that going global has
1980s also encouraged Indonesia to import greater vol-
advantages, given that a world-wide strategy is conduc-
umes of capital goods and allocate more resources for
ive to working out an organised plan for products, mar-
infrastructure and support agricultural activities. More
keting, logistics and research and development, selection
signi"cantly, there was a resultant expansion of state-
of strategic alliances, reducing the negative e!ects of time
owned and private "nancial institutions which were later
and distance, enjoying the sensitivity of the local cus-
found to be heavily involved in the rampant govern-
tomer needs and greater opportunities for new applica-
ment}private land speculative activities until the out-
tions and services. Dramatic restructuring has taken
break of the crisis in 1997.
place by multinational corporations (MNCs) in accom-
In assessing the impact of economic globalisation,
modating new requirements in the production systems
Sassen (1995, pp. 38}56) observes that the "nancial sector
which are persistently changing nature (Thrift, 1996; Cof-
which can generate more pro"t than manufacturing as
fey, 1996; Daniels, 1996; Sassen, 1995). In competitive
a whole has the potential to impose through international
globalised markets, many MNCs from developed coun-
transactions `a new valorisation dynamic, often with de-
tries have to rely increasingly on international customers
vastating e!ects on large sectors of the urban economya.
to derive the bulk of their revenues.
Two spatial e!ects that may arise are those of centrality
Daniels (1996) asserts that there are four driving forces
and marginality in the international shift of manufacturing
in the globalisation of production, namely the search
and "nancial transactions. In the developed core, on one
for market, cost reduction, competition enhancement
hand, it could result in a rising concentration of economic
through sub-contracting in overseas locations specialis-
power in global cities against a decline of its old manufac-
ing in producing components of quality, and "nally
turing centres being marginalised. On the other hand,
favourable government policies to foreign direct invest-
major urban centres in selected developing or peripheral
ments (FDI). Obviously globalisation requires MNCs to
zones receiving manufacturing investment from the dein-
establish strategic alliances in which co-operation from
dustrialising core would witness the transfer of this mar-
business partners is a crucial factor of success or failure.
ginality from core to periphery. In Southeast Asia, foreign
Nonetheless, strategic alliances in peripheral countries
manufacturing capital has been most concentrated in capi-
may merely involve sales and management partners,
tal cities with high indexes of primacy which have seen
whose local investment interests may still be focused on
a rapid rise in their position in the national economic
the lucrative property development with fast returns.
power (Wong, 1999).
Here, there is conversion process in turning revenues
Nonetheless, in the recipient peripheral countries such
acquired from business links with MNCs to property
as Indonesia, the generally low-skilled and labour-inten-
development where market is predominantly local.
sive manufacturing plants generate relatively low levels
Global links and their ewects on peripheral of pro"t. This is also true of the limited scope of producer
metropolitan centres services (legal, "nancial, consulting, advertising, market-
ing, production technology, design etc) which fail to
As mentioned above, economic globalisation is an operate e!ectively due to the lack of strong middle classes
extended stage of world capitalism. Its processes which and domestic industrial entrepreneurs. Consequently,
in#uence changes in FDI recipient territories have orig- major cities such as Jakarta which have deregulated their
inated in developed countries. Global links o!er growth "nancial system for international transactions have in-
opportunities but could create setbacks. A good example evitably seen a considerable level of real-estate specula-
is demonstrated by the burst of the economic bubble in tion facilitated by easy access to bank loans.
Thailand in July 1997 as a result of excessive capital
surplus and low interest rates, ignited by collapse of the Financial capital from East Asia to Indonesia
housing market due to falling demand mainly in
Bangkok and its surrounding provinces (Goldblum, From the 1980s, the property market mechanism in
1998). Jakarta has been considerably a!ected by in#ow of
 C. Goldblum, T.-C. Wong / Land Use Policy 17 (2000) 29}37
capital from Japan and the four &newly industrialising
economies' (South Korea, Taiwan, Hong Kong and
Singapore). By Wallerstein's classi"cation, these are
semi-peripheral economies lying between the core and
periphery and they have an expansive nature of capital
accumulation like the core (Hout, 1993, pp. 113}114).
This nature is characteristically re#ected by their
property "rms' activities whose &insecure position' as late
comers encourages them to compete to survive in a core-
dominating global market. Speculative activities in the
property market are part and parcel of their production
processes.
The spatial dynamics as a result of global "nancial
movements are therefore dictated by outcome of invest-
ment evaluation, land availability in selected urban sites
and the assessed gain in the land and property market. It
is a complex mechanism involving, for instance, physical
planning decision-making processes * urban dispersal
or decentralisation, ease of tra$c #ows along potentially
congested growth corridors, need for residential zones to
accommodate workers in the formal and informal sectors
who will participate actively in the economic diversi"ca-
tion strategy in favour of industrialisation as a response
to manufacturing shift of the multinational corporations
from core to periphery. Within Jakarta and its adjoining
rapidly urbanising and industrialising districts, a new
core-periphery relationship has similarly appeared,
marked by di!erent social forces including the urban
poor, government authority and the private developers.
This global/local dialectic relationship (Dear and Flusty,
1998) is now discussed in the context of Jakarta.
Jakarta: a high-risk property development centre
Being the capital of a vast insular and multicultural
state, Jakarta has been known for a long time for its
particularity among the Southeast Asian capital cities,
which links its large population size with its particular
feature earning it a name as a `conglomerate of villagesa.
This has been so in terms of economic #ows and in its
relation to the territory under its sphere of in#uence.
With a long tradition as a Javanese centre of trade,
Jakarta became a major seaport during the Batavia times
and also a strategic place in the expansion of the Dutch
colonial rule. Located in the middle of a large group of
islands which were to form the world's largest archipel-
ago-state (Charras, 1995), the future capital city of
Indonesia was then exposed to the speci"c di$culties
encountered in unifying lands dispersed and culturally
diverse, as well as in organising their economic space in
accordance with the Dutch protectionism. After In-
donesia's independence, the country's con#icts with its
neighbours (notably during the &confrontation' against
the formation of Malaysia in 1963), and domestic politi-
cal tensions have reinforced Jakarta's representative role
31
in national unity. Incorporation of the national ideology,
placed under &unity in diversity', as a place "lled with
symbols of sovereignty and prestige, Jakarta is distinct
from the other large Indonesian cities in this aspect. It
also enjoys an administrative status accorded by a 1974
decree, as a special territory covering "ve municipalities
in an &autonomous' region of 650 square kilometres
managed by a governor.
As the capital city, Jakarta bene"ts from its special
position and is earmarked as a special city region deserv-
ing protection and safeguarding from outside intrusion,
similar to any national territory. This feature corres-
ponds with the &closed city' concept which Jakarta's gov-
ernor, Ali Sadikin, tried to put into practice in 1970
within the &new order' (Orde baru) framework whilst
undertaking an open and economically liberal policy.
Indeed, the kampung restructuring policy, a symbol of
social welfare, represents supposedly a pribumi image of
the city administration and "gures as a counterpart to
social control. Nevertheless, the policy currently falls
within the &regional' #ows and international investments
including those in the internationalised and sensitive
property market, a strong indication of the capital city's
extensive spatial development distinct from other parts of
the country. It appears like a re-emergence of pre-colo-
nial port cities in the archipelago, where local people and
foreign traders were ruled by a distinct power system.
Under present circumstances marked by a heavy multi-
national in#uence upon local centralised politics, how
would this trend a!ect the function of the capital city as
a symbol of national unity?
Jakarta and its three adjoining districts
The present Jakarta and its extended surrounding
zone (known as Jabotabek comprising Jakarta, Bogor,
Tangerang and Bekasi) cover a total of 7500 km2. This
extended metropolitan area is exposed to both economic
and urban crises as a result of the accelerated sprawl and
suburbanisation, the great magnitude of construction
activities and a discontinuity between physical develop-
ment and social conditions.
Hardly 20 years ago, private housing development
in Indonesian cities was still weak, characterised by
insu$cient support in the sector such as limited capabi-
lity of developers, lack in demand and a complex land
market system. The oil sector, which was then domina-
ting the national economy but was poorly redistributive,
made local capitalists hesitant to move into the property
market (Goldblum, 1987). Up to the present, supported
by economic growth in the last 20 years, a diversi"ed
economy adopted as an &anti-oil shock' measure in 1982
as well as an expansion of middle-income groups,
property development takes a dominating role, ignoring
all risks of oversupply (Bouteiller and Fouquier, 1995).
From then on, pioneer players active in sales of
32 C. Goldblum, T.-C. Wong / Land Use Policy 17 (2000) 29}37
subdivided land parcels have given way to large develop-
ment companies strongly linked to "nancial conglomer-
ates which are a business circle of the Chinese diaspora in
favour of an open policy and economic deregulation
(Bouteiller, 1997; Trolliet, 1994). Their scope of develop-
ment varies, ranging from sale of hundreds of hectares of
residential plots to thousand-hectare new town develop-
ments. Development has extended beyond the adminis-
trative boundary of the Jakarta Special Region,
transforming the adjoining districts (Botabek: Bogor,
Tangerang and Bekasi) into its privileged development
area.
Hence, between 1991 and mid-1992, Bekasi District
alone recorded 235 private housing development projects
* a total of 500,000 housing units were constructed in an
area of over 8000 ha. The development trend becomes
clear when the land area used for some 30 new town
projects is considered. For instance, to the west of
Jakarta in the Tangerang District, Serpong has taken up
6000 ha, and Tigaraksa 3100 ha. To the east of Jakarta in
the Bekasi District, Cikarang Baru adjoining Cikarang
stretches over 5400 ha, and Bekasi 2000 an area of
2000 ha (see Fig. 1). The middle and higher-income
groups are key targets of these housing projects. New
towns are often built adjacent to industrial estates. Ser-
vice-oriented facilities such as hotels and o$ces in Lippo
Cikarang are welcomed in new towns, and even exclusive
leisure facilities like the golf course in Cikarang Baru are
no exception (Djoko, 1996).
Fig. 1. Jakarta Special Region (DKI) and the Three Adjoining Districts.
An urban development between regulation and
deregulation
This economic and spatial dynamic is not just a conse-
quence of private property developments. The dynamic is
fundamentally facilitated by government policies involv-
ing the public sector to provide large infrastructure pro-
jects. Such large projects are the follow-up actions of the
urban development programme adopted by the Fourth
National Development Plan (Repelita IV, 1984}1989).
To an extent, their development falls within the jurisdic-
tion of the Jabotabek Metropolitan Development Plan of
1981, from which the Master Plan of Jakarta DKI
1985}2005 is derived. Fig. 1 shows the hierarchical
growth centres proposed by this Master Plan for the
Jabotabek Metropolitan Region which comprises the
Jakarta Special Region and the three adjoining districts.
One of the major tasks as de"ned by this planning
document aims to release load along the Jakarta}Bogor
north-south axis, Jakarta's growth corridor, a projected
heavily used route leading towards the capital and con-
tributing to environmental degradation (water pollution,
erosion, subsidence). To this end, the planning intention
is to impose a balance on the east}west axis by strength-
ening its focus on the Bekasi District to the east, and on
the Tangerang District in the west of the capital city. This
strategic action involves the government authorities dir-
ectly in road infrastructure provision, notably toll high-
ways linking key axes of development, as well as to an
 C. Goldblum, T.-C. Wong / Land Use Policy 17 (2000) 29}37
integrated new town to be built in an area of 1300 ha in
Bekasi.
Apparently this form of suburban development is
a typical feature in the Southeast Asian countries on their
way in joining the newly industrialising nations &club'. It
is also the symbol in integrating urban development with
the diversi"cation strategy of the big conglomerates (e.g.
Salim Group, Lippo Group), indeed a diversi"cation
whereby new towns and industrial zones are physically
integrated at a high level.
The basic feature, however, is that in this economic
diversi"cation process, all initiatives come from the gov-
ernment authorities. Since the 1980s, policy has aimed to
free Indonesia from its overwhelming dependence on oil
revenues by promoting manufactured exports such as
textiles, electric and electronic goods, metal and chemical
products. As a result of the policy, the State welcomes
industrial investments in the fringe of Jakarta along
Botabek and beyond for manufacturing activities pre-
viously concentrated in the capital or for selected new
ones.
In three years following the adoption of the Presiden-
tial Decree of 1989 (Keppres 53/1989), 119 foreign "rms
were set up, among them 76 in West Java Province in an
area of some 20,000 hectares. They all were given propri-
etary rights to industrial land, and the management
authority to run them. Later, under pressure for more
industrial land, the West Java provincial government
released an additional 18,000 ha of land, concentrated in
the key sites of Botabek and Bandung.
Industrial concentration in the West Java Province,
albeit serving in part to decentralise the capital city, tends
to put additional load to its development. Between 1967
and 1991, West Java received two-thirds of the approved
foreign invested projects. Since the early 1990s, it has
won 45% of the approved projects, and nearly half of the
private investments from both foreign and national sour-
ces. However, industrial expansion has now entered into
a phase in need of the support of large infrastructure
works and new- town programmes to meet the pressing
demand for workforce growth and the incessant in#ux of
migrants to the extended metropolitan region of
Jabotabek.
Urban sprawl and the core issues
The development dynamism discussed above and in-
itiated by the government authorities has involved com-
plex forces at stake. As far as planning is concerned,
a large number of private projects fall within the jurisdic-
tion of the Bogor District (e.g. Bogor Lakeside, Sentul,
Rancamaya) where the local governments are hardly
equipped to handle any adverse e!ects of urban develop-
ment. Without proper administrative institutions, the
areas sandwiched between development zones are ex-
posed to negative impacts of industrial developments.
33
Though the Jabotabek Master Plan was meant for less
intensive land use, the peopling of the new urban areas
outside Jakarta has grown swiftly. Consequently, the
annual growth rate of the Jakarta population has dra-
matically dropped in the last two decades, falling from an
annual average of 4.1% in 1971}1980 to 2.4% in
1981}1990. Conversely, in the last 10 years, the Districts
of Bekasi and Tangerang have seen an annual growth of
6.3% and 6.1% respectively. As to Bogor, despite an
in-principle safeguarded development plan, it recorded
an annual average growth rate of 4.1% during the same
period.
This migratory movement is a combination of popula-
tion out#ow from the capital city * higher income
groups in search of better living quality and those evicted
from &urban villages' (kampung) and exodus of migrants
from Java itself. The latter groups have been attracted by
the improved infrastructure and facilities in Jakarta's
peripheral areas in the development process. The migra-
tory #ows have largely #ooded the adjacent districts
around Jakarta. In Tangerang and Bekasi, it has again
become possible to restart or simply create labour-inten-
sive industries as well as earn a living in the informal
sector in situ (e.g. trishaw). Only 10% of the Botabek
population is estimated to work in Jakarta.
Rapid growth along the Jakarta-Bogor-Bandung axis
which stretches over 200 kilometres in an unprecedented
rhythm gives rise to a metropolitan region characterised
by uncertainty and heterogeneity; with an enormous sub-
urb where urban functions reinforce each other. The
metropolitan region is indeed becoming a major pole in
the urbanisation process of Java.
Origins of the urban expansion
If metropolitan urbanisation is propagating in an
ever-growing expanse, where the residential development
mentioned above might appear as an arti"cial but in-
creasingly visible and exclusive facet (Labrousse, 1988),
its real matrix is still the capital city. More importantly,
the capital's downtown core, focal point of high-level
services and image of a Central Business District, shares
common features and trends with other great Southeast
Asian capital cities which enjoy the bene"ts of a central
place and a centre of political and economic power. In
fact, it is above all in the perspective of specialisation and
internationalisation of key functions that the Jakarta
Special Region has set out for a planned urban expan-
sion. It is out of the concern to protect itself against an
in#ux of migrants, tra$c congestion, and to expand the
city core area that eviction procedures to clear densely
populated zones have been introduced. It is a result of
rising land values in the city core in the context of global
tertiarisation marked by in#ow of large volumes of glo-
bal funds that industries and people move towards the
peripheral zones. Yet, little analysis has been done
34 C. Goldblum, T.-C. Wong / Land Use Policy 17 (2000) 29}37
regarding these key determinants associated with
Jakarta's suburbanisation process.
It is estimated that in the mid-1980s, three-quarters of
the jobs in Jakarta came from the service sector.
From then on, the &formalisation' and internationalisa-
tion of the service jobs have developed in parallel
and have begun to be incorporated in the typical
high-level service sector as adopted in Singapore since
the 1970s * o$ce blocks, shopping complexes and inter-
national hotels and condominium blocks. Physical trans-
formation of Jakarta's central area, like other Southeast
Asian metropolises, is both an expression and a factor of
this pattern of spatial change. The transformation has
also provided opportunities for intensive speculative ac-
tivities: in the early 1990s, it was admitted that about
40% of the lands in the central area were controlled by
speculators who jacked up land prices and constructed
large numbers of high-rise o$ce buildings. Since then,
however, property prices in the central area have been
largely "xed by international capital. The withdrawal of
the &most favoured nation' status granted to the four
dragons (South Korea, Hong Kong, Singapore and
Taiwan) by the United States of America has induced
industrial investments to relocate to Indonesia (in a
broader sense an &Asian refocus' by moving towards
Southeast Asia and China), as well as urban-based in-
vestments including those related residential and services
developments.
The new &golden triangle'
Situated close to prime business lands around the
Jalan Thamrin corridor, Jakarta's new core which has
spread to Kuningan where substantial land use change
has taken place, symbolises in particular certain mecha-
nisms * special functions which emerge as a result of this
long-standing change, a gradual shift of the core towards
the south of the capital, and the game of speculation
(Mohammad Saefudin, 1992). In fact, as a result of the
advantages granted to property investments there, land
prices have surged considerably, reaching in early 1990s
US$3,000/m2. Thus, land use in this area has shifted
rapidly to accommodate internationally invested high-
rise mega-blocks, such as Indonesia Plaza, The Paci"c,
Chase, BCA or Darmala Group Buildings (banks and
o$ces).
This selected transformation has targeted particularly
the &urban villages' which cover almost 50% of the total
Kuningan area, and part of which had bene"ted from the
start of the restructuring program in 1969 known as
Kampung Improvement Program (KIP). Even though the
KIP is seen as a model of restructuring in situ and
the upgrading of living quarters has been integrated in
the new urban planning principles in the early 1990s,
most of the kampung parcels situated along the expansion
path of this centre of commerce and international busi-
ness have been submerged and disappeared in the
large scale redevelopment process. Residential develop-
ment, mainly in the form of luxurious apartments,
takes up over 400 ha of land in accordance with the
plan brought forward by the regional planning o$ce
(Bappeda). All land in the central area has yet to face
a rising demand for o$ce, shopping, hotels in the capital
city, totaling hundreds of thousands of square metres
in #oor area. The demand for higher-level services
is obviously met at the expense of its inhabitants, and
it re#ects a great city's way of land reconversion
as a result of competition in the regional network of
capital cities.
A test of selection: end of kampung in the central area?
The fate of the Kebun Kacang &urban village', being
exposed to Jakarta central area's new development axis
has openly experienced this change of development on
a large scale, as Jellinek (1991) wrote about its fortunes
and misfortunes in the 1980s. Located at the extreme
south of Jalan Thamrin, Kebun Kacang, apart from the
pressure it faced in the past, has bene"ted from develop-
ment of this large avenue since the 1960s at least in terms
of informal activities, rental collection and job oppor-
tunities in construction works. Nonetheless, the urban
village has at the same time disquali"ed its own existence,
though involuntarily. Having participated in the Kam-
pung Improvement Program, and having an increased
population due to its locational advantages, Kebun
Kacang "nally had to face demolition, despite some
protest. Only one-"fth or 160 households accepted the
relocation o!er. The great majority left for the peripheral
zones.
Hence, the transformation of the central area is no
longer for improving the low-income residential form in
conformity with the new image of Jakarta's new centre
under construction. It is rather the need to accommodate
the international service sector expansion towards
the south, and where the area in question happens to be
located at the heart of the new CBD's extension. Under
these circumstances, it is understandable why the Na-
tional Housing Bank (BTN) is hardly concerned with
promoting home ownership by providing mortgage
loans to low-income groups in this new prime location.
This does not mean, however, that the residential func-
tion in the central area is removed, as almost 50,000
housing units were planned in the early 1990s for the
Kuningan &golden triangle'. But the target groups of this
housing programme, of which three-quarters were desig-
nated for condominiums, are those associated with the
high-level service sector and the internationalisation of
the economy: land appreciation results from high-rise
construction and price or rental levels also conform with
the service development standards. In the peripheral
areas, where population relocation has occurred, land
 C. Goldblum, T.-C. Wong / Land Use Policy 17 (2000) 29}37
prices have also surged following the development of
infrastructure and facilities there.
The globalisation headway
Population relocation arising from great projects in
Jakarta is certainly nothing new * the development of
the Senayan Sports Complex in 1962 for the Asian
Games had forced some 47,000 people to evacuate. In
situ resettlement schemes have been common when low-
cost #ats are proposed; a typical example is the
Kemayoran scheme, located at the north-east of the
capital city on the old airport site, which has been used to
house 5,200 households to be relocated from an adjacent
kampung.
During the 1960s and 1970s, when kampung inhabitants
were forced to leave, it was then relatively easy to "nd
a replacement site nearby, thus avoiding major disloca-
tions in their social network and daily activities. Further-
more, the government authorities were able to take
advantage with their actions to beautify and broaden
arterial roads in the capital as a source of legitimacy; they
even took interest in improving the living standards of
the &indigenous' population under Mohammad Husni
Thamrin's (MHT) kampung restructuring programme.
However, since the 1980s, the Jakarta Administration
has opted for globalisation, especially under the mandate
of Governor Wiyogo (1987}1992). Consequently,
urban redevelopment is no longer determined by local
factors, but above all by the regional dynamics of metro-
politan development. Placing itself in parallel with
Kuala Lumpur, Bangkok or Singapore within the
&golden triangle', Jakarta "nds itself interwoven in a
market mechanism set for quick investment returns,
extending beyond the basis of the Master Plan, more
signi"cantly when Jakarta's physical planning and land
systems o!er little resistance to such massive develop-
ment activities. As to the government's interventions,
they are hindered by ine!ective land-management ad-
ministration, shortage of infrastructure and facilities, and
land and "nancial fuzziness whereby land transactions
take place as well as by alliances between business and
politicians (or even some military interest groups). There-
fore, it is little surprising that The Jakarta Plan of 2005
links international capital (believed to have "nanced
more than one-third of the investments in Jakarta), as
well as transfer of construction and urban-based techno-
logy within the central area development in accordance
with new metropolitan functions, and with Jakarta's in-
tegration in the great regional metropolitan network. In
this connection, the Jakarta city government, on the basis
of the Decree 540 of 1990, has legally adopted procedures
allowing release of land for development of the central
area and sanctioned co-operation between the public and
private sectors, notably those from the real-estate
Indonesia (REI).
35
The question of extra-territoriality: Jakarta's
challenges
One of the primary issues might be called the question
of extra-territoriality; a question stemming from the
&Growth Triangle-SIJORI' involving Singapore, Malaysia
and Indonesia in Riau-Batam (Lee, 1991; Nur, 1997)
which brings the trade network to a political front. In
fact, who would have imagined 30 years ago at the climax
of the confrontation that Singapore would extend its
industrial growth on Indonesian soil in the form of trans-
border regions (Goldblum, 1996b)?
Certainly, Indonesia is far from being the only case in
East Asia to "nd itself in such a situation. The rise of
Taiwanese investments in Shanghai, in particular in de-
veloping the Pudong business centre in competition with
Hong Kong, raises even more inquiry. It is clear that
Batam makes up an important proportion of the
industrial and tourism investments outside Jakarta.
Nonetheless, the functional links established in the
&growth polygons' o!ering free trade and export-process-
ing zones, and &golden triangles' in the heartland of the
large metropolis have called for a reconsideration as to
how the urban space of these metropolises has developed,
and has led us to think about the extension of Jakarta.
Indeed, Jakarta has grown rapidly in the context of an
extended metropolitan region (McGee, 1995; Yeung and
Lo, 1996; Budhy Soegijoko, 1996).
In the heart and the peripheral zones of this growing
metropolis, old foothold spots have ensured if not
a simple symbiosis, at least some form of solidarity be-
tween the capital city and its peripheral zones. They used
to be represented respectively by kampungs in the central
area and rice-growing villages: both are now exposed to
a process of exclusion in favour of a new core-periphery
relationship, as a result of an unequal confrontation
between a village-based system and the dispersal forces
originating in the core of Jakarta. It matters little if these
forces arise from a planning strategy or that of a speculat-
ive land market. They have lost their role as an economic
and independent landholder.
Kampung eradication from the central zones to provide
room for international investments, like the well-justi"ed
provision of large-scale infrastructure, does not settle the
problem by a simple transfer of population and activity
to the periphery. Indeed, in the periphery, large industrial
and housing projects are being developed by converting
rapidly agricultural lands there (Nas, 1996). To the east of
Jakarta, the development of the Bekasi integrated new
town and an industrial estate adjacent to it has led to the
removal of 16,500 inhabitants and 12,000 farmers, respec-
tively. Construction of large branches of shopping com-
plexes close to new residential centres such as Hero
Supermarket at Ciledung, Tangerang and Bekasi has
required land conversion of this nature. The threat
imposed on small retail business and its often closely
36 C. Goldblum, T.-C. Wong / Land Use Policy 17 (2000) 29}37
associated informal sector is something additional to
examine. So new urban settlements have been formed
and planned to accommodate some hundreds of thou-
sands of dwellers linked to the capital city by large
tollways but isolated from their immediate surrounding
environment like satellites. They have emerged as a result
of mainly private property developments but are de-
prived of any institutional right to have their population
locally represented as such.
Policy implications and re6ections
Based on the above analysis with regards to the hap-
hazard growth of the Jabotabek region, some policy
implications are portrayed as follows:
(a) Economic globalisation originating from the de-
veloped core is a double-edged sword. It may bring
higher growth to peripheral countries but may also
stir up turmoil if the entrepreneurs in recipient socie-
ties plunge themselves into short-term speculative
pursuits by creating 'arti"cial' demand in the prop-
erty market. The role of the private sector should be
directed towards more productive areas of urban
development.
(b) Rapid urban development in the Jabotabek region
has revealed the lack of competent planning and
management sta! to ensure smooth implementation
of Master Plans. Stepping up of personnel training
and retraining has become a priority task for more
e$cient future implementation of plans and infras-
tructure development. Moreover, power devolution
from Jakarta to the three adjoining districts of Bogor,
Tangerang and Bekasi is conducive to planning and
implementation co-ordination. This will act as an
incentive and a means to remove the current bureau-
cratic barriers.
(c) Until educational budget, school facilities, teacher
quality and living standards of the poor households
are substantially improved, it is unlikely that
Jabotabek will be ready to attract high-technology
and knowledge-intensive foreign direct investments.
Educational upgrading is hence fundamental for gen-
eral socio-economic improvement in Indonesia.
(d) With a potentially high population density and an
expanding metropolitan region, the Jabotabek region
will have to resort to higher density residential hous-
ing for the urban poor, who now mostly live in
single-storey kampung houses. A higher density has
the advantage of freeing more land for infrastructure
development and provision for greenery in an in-
creasingly polluted urban environment.
(e) Given current trends, further expansion of the ex-
tended metropolitan region of Jabotabek is inevi-
table. The region is a catalytic zone for economic
growth, and with agglomeration economies gener-
ated, its further expansion should not be discouraged
(McGee, 1995).
Concluding remarks
Economic globalisation since the 1980s has had tre-
mendous impacts on urban space in the Third World,
including Indonesia. Typically, the two most signi"cant
consequences are spatial and "nancial. In the "rst aspect,
urban development in the extended metropolitan region
of Jabotabek has followed largely an identical pattern in
the West. Industrial dispersal has induced a shift from the
city core to the new towns in the suburban districts. In
Jakarta itself, prime lands with high business potential
have been transformed into o$ce blocks, retail and shop-
ping complexes. The characteristic single-storey &urban
village houses' (kampungs) housing the lowly educated
urban poor relying predominantly on informal sector
have become &formalised' as many now serve suburban
industries as low and semi-skilled workers. With poor
management co-ordination and ine!ective implementa-
tion of plans, the quality of physical planning is far from
being satisfactory.
The "nancial impact is characterised by large in#ows
of FDI in industries in general and in property market in
particular. The latter, being more lucrative than the for-
mer at times of high growth and accessible domestic and
international loans, has turned itself into a speculative
playing "eld, ignoring the e!ective demand. Besides these
"nancial weaknesses, the high vulnerability to economic
#uctuations inherent in this kind of property develop-
ment system (risk of overproduction exacerbated by the
economic crisis or relocation of property investments in
favour of other urban markets), raises the question of the
stability of the implicit alliance between the Indonesian
oligarchy and the business circle, a powerful network and
motor behind the urbanisation process. The stability is
doubted especially at a time where disturbances may lead
to a political shift (Far Eastern Economic Review, 10 July
1997, 28 August 1997). It is still questionable whether the
fall of Suharto in May 1998 would lead to a quicker
economic recovery and the elimination of the collusion
between business and politics. The present unstable pol-
itical situation has yet to provide clear signals of demo-
cratic and economic reforms, and non-interference from
the powerful military in the newly elected civilian govern-
ment. Indeed, a warning has been issued by the Defence
Minister Juwono Sudarsono that a military takeover
from the civilian coalition government led by Wahid is
possible if he proves incapable of maintaining order and
keeping separatist movements under control (Straits
Times, 24 November 1999).
In other words, if the on-going "nancial crisis is a con-
junctural event, it questions the sustainability of the
economic growth model, hitherto a successful one based
 C. Goldblum, T.-C. Wong / Land Use Policy 17 (2000) 29}37
on an export-led mechanism and foreign investments,
which has contributed to property-market turmoil. This
growth model is further threatened by the generally low
educational level of the Jabotabek population, the major-
ity of whom have only a primary education (Bambang
and Imron, 1996, p. 332). There is little opportunity in the
near future to upgrade the present labour-intensive and
low-skilled workforce to attract high-value added and
knowledge-intensive international investments. This
means local entrepreneurs are still inclined to resort to
the more lucrative but speculative property market.
Thus, the origins of such turmoil are more complex than
the e!ects of globalisation, which act merely as
exogenous factors.
Note
This paper is partly based on Goldblum (1998).
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