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) Point Change(%) 50 45 40 35 30 25 20 15 10 5 0 Korea,Rep. Malaysia China Indonesia EAP(high-income) Thailand Philippines Vietnam India 0 20 40 60 80 100 Number of urban dwellers increased by 113 million (2x population of South Africa) Jakarta s population more than doubled from 4.8 million to 10.3million Source: World Bank, 2014, Selected countries with different periods Source: WDI 2
More advanced urbanization in Java 1 SUMATERA 51,697,225 PEOPLE 39.1% URBAN / 60.9%RURAL 1 JAKARTA 3 2 SURABAYA 4 6 2 3 4 KALIMANTAN 14,105,730 PEOPLE 42.2% URBAN / 57.8% RURAL JAVA 138,311,286 PEOPLE 58.6% URBAN / 41.1%RURAL SULAWESI 17,663,879 PEOPLE 33.6% URBAN / 66.4%RURAL 5 5 BALI AND NUSA TENGGARA 13,327,280 PEOPLE 39.2% URBAN / 60.8%RURAL 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 6 Tier 1 Metropolitan >1,000,000 Tier 2 LargeCity 500,000 1,000,000 MALUKU AND PAPUA 11,972,106 PEOPLE 29.4% URBAN / 70.6% RURAL Tier 3 Medium City 100,000 500,000 Tier 4 SmallCity <100,000 Source: World Bank, 2015 (data from Bappenas, 2010) 3
Log GDP Per Capita (2010 Constant USD) Urbanization without growth 12 11 10 The better leveraged is urbanization, the more it will benefit national economic growth 9 8 7 6 5 4 Indonesia y = 0.0482x + 5.8855 R² = 0.5674 0 20 40 60 80 100 Urban population share (%) But if badly managed, there is a risk of urbanization without growth Log of GDP per capita v urbanization, 2015 Source: World Bank, 2017 (based on WDI data 2016) 4
Chronic shortages in access to basic infrastructure 72% 42% access to improved water supply access access to public water supply 11.4mio 11.6mio 10.8mio Household have no house Households live in homes with physical buildings unfit for habitation Households who must live to share the roof with other families 77% 1% 14 access to improved sanitation facilities serve by sewerage systems cities having substantial sewerage networks IDR 128T 9% 5-20% IDR 28T yearly loss because of traffic congestion annual growth of rapid motorization public transport share air pollution cost Source: Bappenas Source: Yayasan Pelangi, 2015 5
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 6
Principles of New Urban Agenda Sustainable and inclusive urban economies by levering agglomeration of benefits of wellplanned urbanization Leave no one behind by ending poverty, by ensuring equal rights and opportunities, socioeconomic 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 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 7
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 8
Integrating NUDPS, SDGs and NUA Mission Strategic issues SDGs, targets Programs? Activities? Executing NUA agencies? NUDPS policies and strategies Budget and schemes? 9
Elements for Integrated Development Planning Capital Investment Development Facilitation How will we improve statutory plans and their implementation for integrated planning? Urban Mangement Monev Urban financing? What tangible benefits and impacts will we see? Source: World Bank, 2017 10
Issues in urban financing in tackling inadequate urban infrastructure Cities are not self reliant revenue is not enough to cover expenses Absence of financial investment plans Lack of financial viability weak creditworthiness Low recognition for private investment s to support the mission toward liveable cities high recognition for competitiveness 11
Urban financing Financial management Transfer from Central Government Public private partnership Local government budget Zakat Creditworthiness Bank and institutional loans Long term municipal bonds Capital investment planning Projects for sustainable cities 12
Financing Urban Infrastructure Different sources of financing to answer Local Government s different infrastructure investment needs Addressed by Regional Infrastructure Development Fund (RIDF) 13
Investment needs exceeds financing capacity Investment need gap Borrowing capacity Surabaya 2,954 Revenue (excl. Salary, earmarked and contingency fund) Batam 825 Bangka 449 Pontianak 361 Banjarmasin 651 Balikpapan 339 Makasar 860 Semarang 1,262 Bogor 521 Surakarta 279 Gresik 642 Sidoarjo 875 Denpasar 606 Lombok Barat 339 Investment needs, borrowing capacity, and total revenue for 14 qualified subnational governments, USD Millions Source: World Bank, 2015; Directorate General Fiscal Balance Ministry of Finance, 2015 14
Why RIDF? Before Top-down approach, limited LG access to financing, inadequate project preparation & appraisal, weak loan monitoring led to defaults & distressed projects Eligible sectors Water & sanitation Environmental infrastructure Eligible sub-projects (examples) WTP, pumping stat Sanitary landfill, waste processing fac RIDF Demand-based, increase access to financing, rigorous appraisal, thorough monitoring including safeguards standards to ensure low default & good quality infrastructures Low income housing and slum upgrading Productive and logistic infrastructure Public housing, integrated urban upgrading Road construction, flyovers Social infrastructure School rehab 15
Local Governments with immediate needs for infrastructure investments, and have expressed their interest in issuing Regional Bonds (8/93) E. Kalimantan Province Jakarta Semarang Balikpapan Surabaya Makassar Bandung Yogyakarta Prov. 16
Thank you perkim@bappenas.go.id 17