Jakarta as capital city

Should the capital be moved from Jakarta to deal with the worsening problem of congestion in the city? The issue has become a topic of hot public debate.

If the issue is traffic congestion in Jakarta, which is considered the main reason for relocating the capital, the next thing to address is the main cause of congestion.

Relocating the capital might not be an effective solution if the root of the problem is overconcentration of socioeconomic activities in Jakarta, and not the government activity.

Relocating the capital from Jakarta can become a national policy — if there is a national interest and consensus that is not necessarily connected to the problem of congestion in Jakarta.

For instance, Germany moved its capital from Bonn to Berlin to create an image of a “reunified” East and West Germany, among other reasons.

Therefore, relocating the capital from Jakarta and solving the problem of congestion in the city are completely different issues.

According to official statistics, the Jakarta Greater Area’s (Jabodetabek) economy was dominated by the financial and real estate sectors, as reflected by its GDP (Gross Domestic Product) of Rp 754 billion (US$83.6 million) in 2009,. The two sectors accounted for nearly a third of Jabodetabek’s GDP, followed by trade, hotels and restaurants (a fifth) and manufacturing (a sixth).

Although there is no specific data, it can be inferred from the above that the government sector’s contribution to GDP has been relatively small.

Similarly, the figures for space and the number of people employed by the government sector in Jakarta are also most likely relatively small, as opposed to private sector services, trade and manufacturing.

The above figures indicate that the generators of and attractors for goods and people are dominated by the economic sector and also account for other routine traffic, such as commuting from home to school.

Traffic generated and attracted by the government sector is relatively low when compared to that generated and attracted by private economic activities.

This condition would imply that to overcome the problems of congestion there is a need to relocate economic activities systematically, gradually, and consistently from Jakarta to other cities regions in the country over the long run.

As Indonesia’s largest city, with population of about 9.5 million in 2010, Jakarta dominates Indonesia’s urban economy. In fact, the city contributed about 18 percent towards the national GDP in 2005.

In contrast, the contribution of the Surabaya Region (Gerbangkertasusila), the second largest urban area in Indonesia, only reached 7.1 percent (Dowall, 2010).

This reflects urban and regional disparities in Indonesia. It is not surprising that Jabodetabek has been the most popular destination for migrants from many regions in the country, which has made the city more crowded.

To reduce Jakarta’s domination and to have more balanced development, there is a need to redistribute economic activities from Jakarta to other cities and regions by creating incentives for investors to develop manufacturing industries, services and trade in those cities and regions especially in the outer islands.

The government has intended to do this from the Second Five Year Development Plan (1974-1979) until today, but the policy has never been wholeheartedly implemented.

As long as economic activity is overconcentrated in Jakarta, it will be very difficult to reduce congestion and urban migration to Greater Jakarta.

Relocation of the capital from Jakarta to another city or region in Indonesia might not contribute significantly to solve this problem.

However, relocation can be implemented if there is a national interest. There are several implications — most notably financial consequences — but it will not necessarily solve the problem of congestion in Jakarta. Those are two completely different issues.

Strong political will is needed to deal with the problem of the overconcentration of socio-economic activities in Jakarta by planning and implementing a strategy to distribute economic activity from the city to other cities and regions in the country.

The writer is a professor at the Bandung Institute of Technology.