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Land Use Policy 17 (2000) 29
}
37
Growth, crisis and spatial change: a study of haphazardurbanisation in Jakarta, Indonesia
Charles Goldblum
, Tai-Chee Wong
*
 Institut Francais d 
'
Urbanisme, Uni
v
ersity of Paris VIII, 4 rue Nobel, Cite Descartes, 77420 Champs Sur Marne, France
 Di
v
ision of Geography, Nanyang Technological Uni
v
ersity, 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 haswitnessed substantial in
#
ow of international capital into property-development activities. The crisis in Jakarta is characterised bya typical suburbanisation sprawl along development corridors extending beyond the scope of its Master Plan. Both the public andprivate sectors have been associated in the development programmes whereby a large number of new towns and industrial estateshave been constructed. Adverse e
! 
ects are obvious as a result of ine
! 
ective urban management and a lack in infrastructure andcommitment to the planning principles. Jakarta
'
s CBD expansion has also initiated the move of industries and low-income groupstowards the peripheral zones. Consequently, the traditional urban villages face demolition, replaced by more lucrative and intensiveland use. The
kampung 
restructuring policy, once a symbol of social welfare, has virtually stopped to function under the impact of theglobalisation and international capital. The high vulnerability of the speculative property market and its inherent urban problemsquestion the sustainability of the Indonesian economic growth model. Educational upgrading, however, is seen as one of thefundamentals for supporting this model.
2000 Elsevier Science Ltd. All rights reserved.
 Keywords:
Globalisation; Centre-periphery; Urbanisation; Crisis; Land-use; Speculation; Spatial e
! 
ects
Introduction
Before the outbreak of the Southeast Asian crisis inJuly 1997, the economic prospect of Indonesia appearedto many to be quite promising despite the well-acknow-ledged ine
$
ciency of its public services and widespreadurban poverty. Optimistic views that Indonesia wasabout to join the newly industrialising nations were notrare (for example, see Yeung and Lo, 1996). The 1997crisis hit Indonesia really hard and for more than twoyears from the downfall of Suharto to the election of a new president Abdurrahman Wahid in November1999, 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)
This paper examines a speci
"
c issue of haphazardurbanisation and spatial change in Jakarta and its ad- joining districts where the impact of the crisis is mostsigni
"
cant. In the analysis, the hypothesis whether peri-pheralisation or marginalisation of the globalisationprocess 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
'
smetropolising 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 urbannetwork of East Asia (Goldblum, 1996a).Jakarta and its network extension have required us toconsider the emergenceof a new centre-peripherysystem,as well as con
#
icts arising between this system, whichimposes stringent demands, and those in charge of In-donesia
'
s politics and administration in Jakarta. Thistwo-dimensional problem is centred around the urban
&
territoriality
'
issue characterised by economic
#
ows, anda property investment process which seemingly ignoresthe limitations of politics over territorial development.
0264-8377/00/$-see front matter
2000 Elsevier Science Ltd. All rights reserved.PII: S0 2 64 -8 3 7 7 (9 9 ) 0 0 0 43 - 5
 
For understanding this issue, the globalisation impactwhich has led to a dynamic physical land-use changeincluding a rapid residential and industrial suburbanisa-tion is
"
rst investigated.
Marginalised urbanisation and urban dynamics in the glo-balisation process
Since globalisation began to accelerate in the 1980s, itse
! 
ects have been widely analysed (see Henderson, 1989).Hessler (1993) has demonstrated that going global hasadvantages, given that a world-wide strategy is conduc-ive to working out an organised plan for products, mar-keting, logistics and research and development, selectionof strategic alliances, reducing the negative e
! 
ects of timeand distance, enjoying the sensitivity of the local cus-tomer needs and greater opportunities for new applica-tions and services. Dramatic restructuring has takenplace by multinational corporations (MNCs) in accom-modating new requirements in the production systemswhich are persistently changing nature (Thrift, 1996; Cof-fey, 1996; Daniels, 1996; Sassen, 1995). In competitiveglobalised markets, many MNCs from developed coun-tries have to rely increasingly on international customersto derive the bulk of their revenues.Daniels (1996) asserts that there are four driving forcesin the globalisation of production, namely the searchfor market, cost reduction, competition enhancementthrough sub-contracting in overseas locations specialis-ing in producing components of quality, and
"
nallyfavourable government policies to foreign direct invest-ments (FDI). Obviously globalisation requires MNCs toestablish strategic alliances in which co-operation frombusiness partners is a crucial factor of success or failure.Nonetheless, strategic alliances in peripheral countriesmay merely involve sales and management partners,whose local investment interests may still be focused onthe lucrative property development with fast returns.Here, there is conversion process in turning revenuesacquired from business links with MNCs to propertydevelopment where market is predominantly local.
Global links and their e
 w 
ects on peripheral metropolitan centres
As mentioned above, economic globalisation is anextended stage of world capitalism. Its processes whichin
#
uence changes in FDI recipient territories have orig-inated in developed countries. Global links o
! 
er growthopportunities but could create setbacks. A good exampleis demonstrated by the burst of the economic bubble inThailand in July 1997 as a result of excessive capitalsurplus and low interest rates, ignited by collapse of thehousing market due to falling demand mainly inBangkok and its surrounding provinces (Goldblum,1998).In retrospect, economic globalisation accelerated inthe aftermath of the 1974 oil crisis, leading to widespreadrecession in developed countries, which saw interna-tionalisation of 
"
rms as an outlet from domestic impasse(Drakakis-Smith, 1996). What followed were rising inter-national
"
nancial
#
ows from the developed core toselected peripheral countries as overseas ventures ex-panded. Bene
"
ting from the crisis as a key regional oilproducer, Indonesia became more exposed to externalcapital penetration and manufacturing investments.Huge oil gains accumulated throughout the 1970s and1980s also encouraged Indonesia to import greater vol-umes of capital goods and allocate more resources forinfrastructure and support agricultural activities. Moresigni
"
cantly, there was a resultant expansion of state-owned and private
"
nancial institutions which were laterfound to be heavily involved in the rampant govern-ment
}
private land speculative activities until the out-break of the crisis in 1997.In assessing the impact of economic globalisation,Sassen (1995, pp. 38
}
56) observes that the
"
nancial sectorwhich can generate more pro
"
t than manufacturing asa whole has the potential to impose through internationaltransactions
`
a new valorisation dynamic, often with de-vastating e
! 
ects on large sectors of the urban economy
a
.Two spatial e
! 
ects that may arise are those of centralityandmarginalityinthe international shiftof manufacturingand
"
nancial transactions. In the developed core, on onehand, it could result in a rising concentration of economicpower in global cities against a decline of its old manufac-turing centres being marginalised. On the other hand,major urban centres in selected developing or peripheralzones receiving manufacturing investment from the dein-dustrialising core would witness the transfer of this mar-ginality from core to periphery. In Southeast Asia, foreignmanufacturingcapital hasbeen mostconcentratedincapi-tal cities with high indexes of primacy which have seena rapid rise in their position in the national economicpower (Wong, 1999).Nonetheless, in the recipient peripheral countries suchas Indonesia, the generally low-skilled and labour-inten-sive manufacturing plants generate relatively low levelsof pro
"
t. This is also true of the limited scope of producerservices (legal,
"
nancial, consulting, advertising, market-ing, production technology, design etc) which fail tooperatee
! 
ectivelyduetothe lackof strongmiddleclassesand domestic industrial entrepreneurs. Consequently,major cities such as Jakarta which have deregulated their
"
nancial system for international transactions have in-evitably seen a considerable level of real-estate specula-tion facilitated by easy access to bank loans.
 Financial capital from East Asia to Indonesia
From the 1980s, the property market mechanism inJakarta has been considerably a
! 
ected by in
#
ow of 
30
C. Goldblum, T.-C. Wong 
/
Land Use Policy 17 (2000) 29
}
37 
 
capital from Japan and the four
&
newly industrialisingeconomies
'
(South Korea, Taiwan, Hong Kong andSingapore). By Wallerstein
'
s classi
"
cation, these aresemi-peripheral economies lying between the core andperiphery and they have an expansive nature of capitalaccumulation like the core (Hout, 1993, pp. 113
}
114).This nature is characteristically re
#
ected by theirproperty
"
rms
'
activities whose
&
insecure position
'
as latecomers encourages them to compete to survive in a core-dominating global market. Speculative activities in theproperty market are part and parcel of their productionprocesses.The spatial dynamics as a result of global
"
nancialmovements are therefore dictated by outcome of invest-ment evaluation, land availability in selected urban sitesand the assessed gain in the land and property market. Itis a complex mechanism involving, for instance, physicalplanning decision-making processes
*
urban dispersalor decentralisation, ease of tra
$
c
#
ows along potentiallycongested growth corridors, need for residential zones toaccommodateworkers in the formal and informalsectorswho will participate actively in the economic diversi
"
ca-tion strategy in favour of industrialisation as a responseto manufacturing shift of the multinational corporationsfrom core to periphery. Within Jakarta and its adjoiningrapidly urbanising and industrialising districts, a newcore-periphery relationship has similarly appeared,marked by di
! 
erent social forces including the urbanpoor, 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 multiculturalstate, Jakarta has been known for a long time for itsparticularity among the Southeast Asian capital cities,which links its large population size with its particularfeature earning it a name as a
`
conglomerate of villages
a
.This has been so in terms of economic
#
ows and in itsrelation to the territory under its sphere of in
#
uence.With a long tradition as a Javanese centre of trade,Jakartabecame a major seaport during the Batavia timesand also a strategic place in the expansion of the Dutchcolonial 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
$
cultiesencountered in unifying lands dispersed and culturallydiverse, as well as in organising their economic space inaccordance with the Dutch protectionism. After In-donesia
'
s independence, the country
'
s con
#
icts with itsneighbours (notably during the
&
confrontation
'
againstthe formation of Malaysia in 1963), and domestic politi-cal tensions have reinforced Jakarta
'
s representative rolein national unity. Incorporation of the national ideology,placed under
&
unity in diversity
'
, as a place
"
lled withsymbols of sovereignty and prestige, Jakarta is distinctfrom the other large Indonesian cities in this aspect. Italso enjoys an administrative status accorded by a 1974decree, as a special territory covering
"
ve municipalitiesin an
&
autonomous
'
region of 650 square kilometresmanaged by a governor.As the capital city, Jakarta bene
"
ts from its specialposition 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 1970within the
&
new order
'
(Orde baru) framework whilstundertaking 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 tosocial control. Nevertheless, the policy currently fallswithin the
&
regional
' #
ows and international investmentsincluding those in the internationalised and sensitiveproperty market, a strong indication of the capital city
'
sextensivespatialdevelopmentdistinctfrom otherparts of the country. It appears like a re-emergence of pre-colo-nial port cities in the archipelago, where local people andforeign traders were ruled by a distinct power system.Under present circumstances marked by a heavy multi-national in
#
uence upon local centralised politics, howwould this trend a
! 
ect the function of the capital city asa symbol of national unity?
 Jakarta and its three adjoining districts
The present Jakarta and its extended surroundingzone (known as Jabotabek comprising Jakarta, Bogor,Tangerang and Bekasi) cover a total of 7500 km
. Thisextended metropolitan area is exposed to both economicand urban crises as a result of the accelerated sprawl andsuburbanisation, the great magnitude of constructionactivities and a discontinuity between physical develop-ment and social conditions.Hardly 20 years ago, private housing developmentin Indonesian cities was still weak, characterised byinsu
$
cient support in the sector such as limited capabi-lity of developers, lack in demand and a complex landmarket system. The oil sector, which was then domina-ting the national economy but was poorly redistributive,made local capitalists hesitant to move into the propertymarket (Goldblum, 1987). Up to the present, supportedby economic growth in the last 20 years, a diversi
"
edeconomy adopted as an
&
anti-oil shock
'
measure in 1982as well as an expansion of middle-income groups,property development takes a dominating role, ignoringall risks of oversupply (Bouteiller and Fouquier, 1995).From then on, pioneer players active in sales of 
C. Goldblum, T.-C. Wong 
/
Land Use Policy 17 (2000) 29
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