T

he theme of this year’s World Habitat Day, which fell on Oct. 2, was “Affordable Homes.” But Indonesia is suffering from a backlog of 11.4 million houses, and the country’s urban poor are not getting the homes that they need.

Blame it on institutional silo mentality and knowledge disconnects among policymakers. Policies are drafted by those who work only within their institutional mandates and think within their own academic paradigms. Such compartmentalization in acting and thinking does not work to solve multi-faceted issues.

There are three institutional and knowledge “silos” that contribute to Indonesia’s failure to house the urban poor: The disconnects between housing types and job types, between housing development and economic development and between urban development and regional development.

The first is more a micro issue, looking at housing types and job types within a city. The second is a mezzo-level issue, linking housing with local economic development. The third is more macro, highlighting the need for more balanced urban development across the country.

The first disconnect is looking at housing separately from employment. This results in a mismatch between the types of urban housing available and residents’ nature of work. Policymakers are middle-class people with regular 9-to-5 jobs who spend most of their days outside the home. To them, housing is mainly for resting, and they believe that low-income families would be happy to get quality apartments, as would they.

Indeed, in Jakarta’s case, many middle-class people are envious of the Jatinegara Barat apartments built for low-income families.

In reality, the majority of the urban low-income population does not hold regular or formal jobs. They spend many hours at home because it is also a place for economic productivity and social interaction. And due to the nature of the products that they make and sell, they rely on foot traffic that incidentally passes by their homes.

For them, living in vertical housing or places far from the city center means loss of income and social ties. That’s why many low-income families that were moved to vertical apartment buildings had problems paying rent and utility bills, even at subsidized rates.

By connecting housing and jobs, policymakers would see that low-income workers require a different type of housing. Eventually, a developed city will have more formal employees and apartments would become the norm. But this requires a concerted effort to expand the formal economy. Until low-income workers find regular jobs, different housing types are needed to cater for those in the informal sector.

The second disconnect is treating housing development independently of economic development. This results in a spatial mismatch between residential and industrial areas, as well as a reluctance to allocate public subsidies for urban housing.

In many developed countries, urbanization and housing developments occurred hand-in-hand with industrialization.

During the industrial revolution in England, many people left rural areas and moved to the cities to work in manufacturing jobs. Their presence helped boost national productivity and after being neglected, they were eventually accommodated through public housing.

Indonesia is urbanizing fast, but the country’s “economic returns to urbanization” is low.

According to a World Bank report, a 1 percent increase in Indonesia’s urbanization level leads to a 2 percent increase in its gross domestic product (GDP). But in other Asian countries, such returns range between 6 and 10 percent! The reason for Indonesia’s low returns to urbanization is the lagging growth of labor-intensive industries. Consequently, public subsidies for urban low-income housing are limited, as it contributes little to national productivity.

Housing provision for workers should be part of the national economic development strategy, under which public housing subsidies are in line with overall strategies to boost the economic productivity of a city or the country.

The third disconnect separates development in major cities from development in secondary and tertiary cities.

Urban development is highly uneven, with close to 60 percent of the country’s GDP and population residing on the relatively small island of Java. Greater Jakarta as the largest urban agglomeration and accommodates close to 30 million people, while secondary and tertiary cities have much lower populations and offer fewer opportunities.

People will always move in search of opportunities, and these are what cities offer. Given Indonesia’s relatively low urbanization level at 58 percent, more people are still moving to the cities. Thus, no matter how cities solve their low-income housing problem, there will always be new low-income residents to provide for.

To prevent the concentrated pressure of urbanization in a few of Indonesia’s largest cities, there must be a conscious effort to develop more economic opportunities elsewhere. This does not mean developing new areas from scratch, but in strengthening the country’s secondary economic hubs like Surabaya, Medan and Makassar. This includes providing housing and social amenities so these secondary cities could become viable alternatives for people to move to.

President Joko “Jokowi” Widodo, with his extensive experience as mayor and governor, understands well those issues that are preventing Indonesia from achieving proper urban and regional development. He has seen firsthand that diminishing opportunities in rural areas are not matched with better working and living opportunities in cities.

However, the president is not doing enough on this front. Top-level intervention is required to solve Indonesia’s severe inter-sectoral coordination problems, and so far, he has done very little to resolve the silo mentality in the urban low-income housing sector. The country’s housing policy community should sit together with its economic and regional development decision-makers and commit to solving these problems together.

President Jokowi should lead the effort, as he is the only person with the authority to break down institutional silos. The opportunity to create change is clear. After all, Indonesia may not get a former mayor and governor as president every five years.
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The writer is a research fellow at the National University of Singapore, focusing on economic development in Indonesia’s subnational regions.