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The Jabotabek region's national and international linkages

Jakarta, as the capital of Indonesia, has played a significant role in the Pacific Asia region, particularly during the past 20 years. As one of the centres in this economically developing region, together with Singapore, Bangkok, Taipei, Hong Kong, and Seoul, Jakarta has been recognized as a trading partner for many cities all over the world. As the nation's capital, Jakarta is also a centre of distribution for almost all parts of the country, and at the same time it collects most of the trading commodities originating from other regions to be exported to the world market. To support this role, Jakarta has been equipped with a number of internationally standardized facilities and infrastructures. In addition to government offices, Jakarta accommodates head offices for almost all national companies, and branch offices of a number of multinational companies, including business services and banks. As an international city, Jakarta provides national and international transportation services. With regard to education and cultural activities, Jakarta possesses the largest concentration of educational and cultural facilities in Indonesia.

The main attractions of Jakarta and its region are not unlike those of other developing countries' large urban areas. For example:

• industrial activities are often an expansion of trade activities, which are concentrated in large cities;

• economic strength is concentrated in Jakarta because business services are mostly available in Jakarta, the communication facilities required by modern larger-scale industries are better in Jakarta than in any other parts of the country, and the concentration of skilled manpower is more obvious in Jakarta and its surroundings;

• large differentials in wage rates or operating costs that would drive modern industry out of Jakarta and its region are not yet present; and

• the influx of international businesses has favoured locations with good business services as well as a large and diversified labour force, in which Jakarta performs better than other regions.

Compared with other urban areas in Indonesia, the growth of the Jabotabek region has increased rapidly since the adoption of the policy to stimulate manufacturing and industrial sectors in the mid-1980s. The result is, among other things, the accelerating increase of population in the Jabotabek region, as has been described earlier. This is in line with the increasing role of Jabotabek in the national economy. The above discussion has indicated the role of Jabotabek in the national economy. It also has shown its role, as the economic core of the country, in the international economy and the Asia-Pacific region.

However, the region's growth, more specifically DKI Jakarta's growth, is affected by the growth and development of other cities or urban areas that, together with DKI Jakarta, form an urban system national as well as international. Hence, this section will look at the national and international linkages of Jabotabek/DKI Jakarta.

Many indicators should or could be used to identify these linkages, such as foreign investment trends, international flights, population movements, trade and information flows, monetary flows and transfers, telecommunications, newspaper distribution. However, since there is lack of data, only the first two indicators will be explored here, i.e. foreign investment and international flight connections.

As was described in the second section, the Indonesian economy's integration with the rest of the world has become significant since 1967, and more apparent since the industrial and trade policy reform packages launched by the government in 1986. A major part in the international relationship is played by Jakarta and its surrounding area, the Jabotabek region.

Looking at foreign investment in the Jakarta region alone during the period 1967-1990 reveals impressive growth, despite ups and downs following international situations. During the period 19741978 foreign investment reached US$338.1 million with 37 projects, whereas during the period 1979-1983 it reached US$963.3 million with 38 projects. In just the two years 1989-1990, foreign investment in Jakarta reached US$1,381.5 million with 181 projects.

Most of the foreign investment originated from the surrounding Asian countries, especially Japan and Hong Kong. In the period 1967-1990, the share of Japanese investment in Jakarta alone was 39.8 per cent, while for Hong Kong it was 12.8 per cent. The rest of foreign investment originated from Europe (20 per cent), American countries (8.5 per cent), Australia and New Zealand (2.4 per cent), Africa (0.6 per cent), and others (5.9 per cent) (see table 11.2 above).

This development proves that Jakarta plays a significant role in the Pacific Rim and in particular is influenced by Japan and the Four Little Dragons (Korea, Hong Kong, Taiwan, and Singapore). It also increasingly attracts more attention from international investors. Indonesia has in fact during the past two decades been viewed as among the most favoured nations for investment purposes besides Malaysia and Singapore. One of the important comparative advantages of Indonesia is its relatively cheap labour.

International flights, both passenger and cargo, by origin and destination show an upward trend. Tables 11.14 and 11.15 show increasing numbers of international flights, passengers, and cargo at Soekarno-Hatta Airport, the airport of Jakarta, during the years 1989-1991. Flights increased by 4.1 per cent (arrivals) and 3.7 per cent (departures).

Table 11.14 Soekarno-Hatta Airport (Jakarta): international flight movements by origin/destination, 1989 - 1991

Source: Perum Angkasa Pura II, Air Traffic and Air Transportation Statistics, Annual Report, various series.

Abbreviations: ARR-arrivals; DEP-departures.

In 1991, the most frequent flights were to Singapore, followed by Kuala Lumpur, Hong Kong, Bangkok, and Tokyo. However, the highest rate of growth of flights during 1989-1991 focused on flights to/from Seoul in Korea followed by to/from Hanoi in Viet Nam, and to/from Taipei in Taiwan.

With regard to the total number of passengers (see table 11.15), Singapore is the most dominant (about 812,000 arriving and 779,000 departing passengers), followed by Tokyo and Hong Kong. Kuala Lumpur, Taipei, and Bangkok form a second group (ranging between 50,000 and 67,000 arriving passengers and between 53,000 and 65,000 departing passengers). Cargo flights are also dominated by Singapore, followed by Hong Kong, Bangkok, and Tokyo for arriving cargo, while, for outgoing cargo, Singapore is followed by Tokyo, Hong Kong, and Taipei.

Table 11.15 Soekarno-Hatta Airport (Jakarta): international passenger flights by origin/destination, 1989-1991

Source: Perurn Angkasa Pura II, Air Traffic and Air Transportation Statistics, Annual Report, various series. Abbreviations: ARR-arrivals; DEP-departures.

Table 11.16 Domestic passenger flights from/to Jakarta to/from major cities, 1989

Source: Perum Angkasa Pura II, Air Traffic and Air Transportation Statistics, various issues.

These figures can give only an approximation of the international linkages of the Jabotabek/Jakarta region. However, the tables on air linkages support the assumption that internationalization or globalization of the Indonesian economy is taking place and has been increasing since 1989.

With regard to national linkages, at this point only data on air passenger movement are available (see table 11.16). Therefore only the broadest conclusion can be made, namely that the greatest linkage is with Denpasar and Surabaya, followed by Medan, Semarang,

Palembang, Yogyakarta, Ujung Pandang, and Balikpapan. All except Balikpapan are provincial capitals. A more accurate identification of national urban systems would include land and sea transport, as well as other means of communication (telecommunications and print media).

Jakarta has been growing rapidly since 1970 and Jabotabek has emerged as an extended metropolitan region (see also chap. 12). It dominates the political and economic arena of Indonesia and has actively participated in Indonesia's development.

Jakarta's urbanization hinges on its role as part of the Pacific Asia urban system and is thus closely linked with the globalization process in the region. International links between Jabotabek and other Asian cities, in terms of flights and passenger and cargo movements, are increasing. Jakarta is also the hub of foreign direct investment and the nexus of international trade flowing into Indonesia.

However, increasing urbanization has imposed stresses on the urban infrastructure and induced pollution. The government's efforts to alleviate the problems associated with urbanization have been hindered by inefficient administration. A proper institution that can direct the development of Jabotabek's infrastructure, transportation, and land management is much needed.

Note

1. A project sponsored by the World Bank as part of the nationally implemented integrated urban infrastructure development programme (Jabotabek Urban Development Programme I, II and III).

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