Getting Ready to Govern Jakarta With Jokonomics
Pitan Daslani, Dion Bisara & Tito Summa Siahaan
As Jakarta’s next governor Joko Widodo prepares to take the oath of office in early October, business leaders and analysts have cautioned that his bottom-up approach on the capital’s economy should be in line with the development of the city’s actual economic potential.
Final results of the Jakarta gubernatorial election are due next Friday and — should the result of the official vote-counting by the election committee be accepted by incumbent Fauzi Bowo — the new governor, known as Jokowi, will be sworn in on Oct. 7.
Jokowi, 51, and born in Solo, Central Java, would be the youngest governor in the past decade. The late Ali Sadikin and Henk Ngantung were each appointed governor of Jakarta when they were 39 at separate times during the 1960s.
Jokowi’s actual policies will not be known until after he officially takes office. But based on remarks he and his running mate Basuki “Ahok” Tjahaja Purnama made during the campaign, the new governor will most likely implement what the Jakarta Globe calls Jokonomics, in reference to the economic policies of Jokowi that emphasize bottom-up empowerment of society through various economic programs.
His emphasis on the need to redesign the city’s spatial plan to allow for the establishment of low-cost apartments and integration of housing and transportation policies have created anxiety with some business leaders, especially in the property and retail sectors. Jokowi has said that, while not being specifically against the construction of new shopping malls, he would make sure that such establishments will not encourage materialistic and hedonistic behavior. Therefore, he plans to modernize traditional markets as viable alternatives for city shoppers.
Didik J. Rachbini, head of the Institute for Economic Research and Development (LP3E) at the Indonesian Chamber of Commerce and Industry (Kadin), said that in order to reduce unemployment, Jokowi must prioritize the development of small- and medium-scale businesses (SMEs) and limit the growth of modern retailers.
But Handaka Santosa, the Jakarta chairman of the Indonesia Shopping Center Management Association (APPBI), said that developers expect the new governor to comply with the existing spatial master plan bylaw. “The bylaw stipulates details of the parts of Jakarta that are meant for residences and the parts meant for business and commercial districts,” said Handaka, who is also the vice president of Agung Podomoro, one of the country’s largest property developers.
Agung Podomoro, controlled by billionaire Trihatma Kusuma Haliman, owns Senayan City and Kuningan City, both in South Jakarta, among other malls.
Handaka also called for the next governor to take into consideration that commercial districts are the main driver of the capital’s economic growth.
“Jakarta has no mineral resources or plantation business, but services, trade and tourism are flourishing here,” he added.
Jakarta’s economy grew 6.6 percent in the first half this year, faster than the national growth of 6.3 percent, driven by the logistics-communication sector, services sector and trade-hotel-restaurant sector. The province accounted for 13 percent of Indonesia’s $820 billion economy last year — equivalent to $107 billion.
On the flip side, the unemployment level stood at 10.7 percent in February, higher than the national level of 6.3 percent.
Stefanus Ridwan, the national chairman of APPBI, said that big vendors are only a small part of shopping malls’ business. “Actually, 90 percent of vendors in shopping malls are small- and medium-sized enterprises, and most of us use big vendors to attract them to set up shop,” he added.
Destry Damayanti, the chief economist at Bank Mandiri, Indonesia’s largest lender by assets, offered a different take on Jakarta’s economic development, saying that the capital already has enough malls.
“What Jakarta needs is to be more productive, which will be good for the economy. And this can be done by solving the traffic issues, not building more malls,” she said.
The Jokonomics concept that the new governor will implement is a broad-based economic empowerment strategy that includes streamlining of the bureaucracy and introduction of facilities to enable even the poorer walks of life to get better access to health care, housing and educational services — apart from government facilitation of SMEs.
The bottom-up planning will include introduction of health and smart cards to enable access to free health-care and educational services. Jokowi wants city residents to enjoy free education up to the high school level and for the poor to get free medication in all public hospitals.
He will allocate at least Rp 800 billion ($84 million) for such free cards.
He plans also to build vertical and horizontal residences for the poor to be called Kampung Susun and Kampung Deret that would replace all slum areas.
Instead of waiting for days to get an identification card or a business license that is often associated with bribing city officials, the Jokonomics concept will abolish all illegal levies and expedite licensing processes. He wants ID cards to be issued in one hour and business licenses in six hours’ time — the same length of process as in Solo.
He also will issue land certificates for residents who have occupied a certain area for at least 20 years. There will be no more stories of people being forcibly evicted from their homes because Jokonomics will ostensibly protect them.
To ease traffic jams, Jokowi plans to increase to 1,000 the number of TransJakarta buses, encouraging the use of public transportation. There are about 500 TransJakarta buses across the city. Housing and transportation policies will be integrated so that Jakarta residents do not have to travel far, thus alleviating traffic jams, to get to work.
The new governor will also provide Rp 2 million in burial funding for the city’s poor. Being a devout Muslim, the new governor is against free sex, abortion, divorce and drugs, so he may issue rulings to ban or restrict such practices. But much of the city’s revenue comes from the nightlife industry, which may become a bone of contention for the new governor.