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Informal businesses play important role in city life: Study
Rooming houses and street vendors are important businesses for people in need of affordable lodgings and meals
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span>Rooming houses and street vendors are important businesses for people in need of affordable lodgings and meals. While they are often neglected in city planning, a recent study has shown the important functions they serve, even in upscale areas.
The study was conducted by Rame Rame Jakarta (Hustle and Bustle Jakarta), a local group that shares the interests of Jakarta’s informal entrepreneurs. Divided into three parts, the study released this month found that informal businesses in Karet, South Jakarta, near the Sudirman Central Business District (SCBD), thrive because of the patronage of white and blue collar workers alike.
The first section of the report focuses on how informal sector food and beverage sellers provide workers with affordable meals, while the second part of the report explores rent and mobility. The third part of the report mainly details how the chain between producer and supplier works and is expanded.
Rooming houses, known locally as kos-kosan, offer cheaper rent than apartments or houses, which helps employees with mid-tier incomes save money.
This was particularly important for those who arrived from outside Jakarta or had only recently begun their careers, according to the study.
It also helps companies recruit the best candidates from all over the country, who might struggle to move to Jakarta if no such services were available.
“These businesses are directed toward earning a sustainable income rather than profit optimization. Informal landlords can accept shorter rental periods, delayed payments and other irregularities that are typically unacceptable for property developers,” Andesha Hermintomo, cofounder of the group, said on Thursday.
The study also found that rooming houses help improve mobility amid Jakarta’s worsening traffic congestion. Many construction workers rent accommodation in Karet, often arranged by their employer in partnership with locals.
The flexible rooming house business model allows them to reach construction projects faster, circumventing the need to transport thousands of workers from distant locations or to set up temporary worker villages in already crowded urban spaces.
Street coffee vendors who sell various beverages and snacks from bicycles or carts, known locally as starling — a moniker derived from Starbucks keliling (around) — are often sought out by office workers, app-based ojek (motorcycle taxi) drivers, construction workers and security guards alike who need a cheap injection of caffeine.
However, despite their relevance, such informal sector businesses were not taken into account in the city’s spatial and development planning, particularly in upscale areas, Andesha said.
“Apart from the affordable prices and delicious taste, informal vendors share many unique characteristics, such as their interaction and the relationships they build with their customers,” he said.
Authorities often clamp down on street vendors for illegally occupying sidewalks and blocking pedestrians, while the food and beverages they sell are also often accused of being unhygienic.
“Even if this is so, it doesn’t mean they have to be eradicated,” Andesha said. “The city has to at least acknowledge them as real variable data when designing the city.”
Moreover, the study also found that not only are informal sector businesses important to the lives of their customers, they also allow people to improve their welfare.
Rumini, for example, who has sold home-cooked meals from her cart since 1992, she had been able to earn a living, as many of her customers were office workers in the SCBD area.
“Most of my customers are business people, they have money but still come to eat from a cart because the price is much cheaper. Even the food in the office canteen is more expensive,” she said, adding that she only operated in the morning and afternoon, when workers arrived at and left work.
Similarly, Nurjanah, a masseuse, has also benefited from the informal business ecosystem. She rents a home with her family for Rp 1.2 million (US$84) per month.
“[My customers] mostly live around Karet. I ride a bicycle or sometimes travel by ojek (motorcycle taxi) when I have to rush. If they are outside Karet, I usually ask if they can cover my transportation costs,” she said.
