Indonesia's Urban Development

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  • IndonesiasUrbanDevelopmentTowardsInclusiveandSustainableEconomicGrowth

    1Peter D. EllisSenior Economist

  • Robust Economic GrowthRobustEconomicGrowth

    Recentpatternsofeconomicgrowthareexpectedtocontinueece t patte s o eco o c g o t a e e pected to co t ue

    RealGDPgrowth6.0%for2010 Drivenbystrongdomesticconsumptionandinvestment

    P dil d li i Povertyratesaresteadilydeclining Increasedlocalgovernmentauthority

    2009 2010 2011Gross domestic product (Annual per cent change) 4.5 6.0 6.2Consumer price index (Annual per cent change) 4.8 5.1 6.4Budget balance* (Per cent of GDP) -1.6 -1.5 -1.7Major trading partner growth (Annual per cent change) 0 8 6 5 4 3Major trading partner growth (Annual per cent change) -0.8 6.5 4.3

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  • Urbanization Growth RatesUrbanizationGrowthRatesCompoundAnnualGrowthRatesofUrbanPopulation,

    19702010

    4.5% 3.8% 4.2%

    3.0%

    3.5%

    4.0%

    3.1%3.4%

    2.8% 3.1%

    1 0%

    1.5%

    2.0%

    2.5%

    0.0%

    0.5%

    1.0%

    China India Indonesia Philippines Thailand Vietnam

    Source:UnitedNationsWorldUrbanizationProspects,2009

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  • Indonesia is Rapidly UrbanizingIndonesiaisRapidlyUrbanizing

    4

    Source: Indonesia Statistical Bureau (BPS) Proyeksi Penduduk, 2005

  • HighEconomicDensityinJava Economicactivityand

    populationareconcentrated in majorconcentratedinmajorurbanareasandinnonoilProvinces.

    Major metropolitanMajormetropolitanareas,suchasJakartaandSurabaya, experienceeconomicgrowthof6%p.a.

    UrbanpopulationinWestJava(includingJakarta)isexpectedtoincreasefromcurrently 60% to 80% bycurrently60% to80%by2025.

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  • JavaBaliJava Bali

    6

  • SulawesiSulawesi

    7

  • GeographicalDistancebetweenMajorCitiesin Indonesia and SingaporeinIndonesiaandSingapore

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  • EconomicDistancewithinIndonesiaB d t t tBasedonseatransportcosts

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  • Urban Population is DeConcentratingUrbanPopulationisDe Concentrating

    City 1990 1995 2000 2005 2010

    Jakarta 15.1% 12.2% 9.7% 9.3% 8.9%

    Surabaya 4.5% 3.7% 3.0% 2.8% 2.4%

    B d 3 8% 3 1% 2 5% 2 4% 2 3%Bandung 3.8% 3.1% 2.5% 2.4% 2.3%

    Medan 3.2% 2.7% 2.2% 2.1% 2.0%

    Semarang 2.3% 2.0% 1.7% 1.4% 1.3%

    Makassar 1.5% 1.3% 1.2% 1.2% 1.2%

    Palembang 2.1% 1.9% 1.7% 1.4% 1.2%

    Other Urban 67.6% 73.1% 78.0% 79.3% 80.6%OtherUrban 67.6% 73.1% 78.0% 79.3% 80.6%

    TotalUrban 100.0% 100.0% 100.0% 100.0% 100.0%

    Source:WorldUrbanizationProspects:The2009Revision.

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  • EconomicDevelopmentisExpandinginll bSmallerUrbanAreas

    M dGRDP nonoil&gas(2008)

    Medan3%

    Jakarta28%RuralRural43%

    Bandung2%

    Semarang2%

    Surabaya7%

    Makassar1%Oth bOtherurban

    14%

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  • CompoundAnnualGrowthRateofpopulationf diff i i 1996 2007fordifferentcitysizes1996 2007

    14.00%

    11.61%

    10.00%

    12.00%

    6.96%

    4.65%

    6.00%

    8.00%

    3.00%3.40%

    2.00%

    4.00%

    2 93%

    2.00%

    0.00%

    >10million 5 10million 15million 0.5 1million

  • Indonesias Largest Metropolitan AreasIndonesia sLargestMetropolitanAreas

    Jakarta Metropolitan Area (Jabotabek) Surabaya Metropolitan Area (Gerbangkertosusila)

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    JakartaMetropolitanArea(Jabotabek) SurabayaMetropolitanArea(Gerbangkertosusila)

  • Population of 8 Metro AreasPopulationof8MetroAreasMetroname

    2005 CAGR1995 2005

    Core Periphery Metro Core Periphery Metrop y p y

    Jakarta 8,820,603 12,799,559 21,620,162 0.44% 2.47% 1.56%

    Surabaya 2,611,506 5,974,090 8,585,596 0.33% 1.46% 1.10%y , , , , , ,

    Bandung 2,270,969 5,079,430 7,350,399 0.66% 3.13% 2.26%

    Semarang 1,446,533 4,335,017 5,781,550 0.97% 1.15% 1.10%

    Medan 2,029,797 1,812,196 3,841,993 1.07% 0.10% 0.59%

    Palembang 1,369,239 1,122,731 2,491,970 1.20% 2.67% 0.85%

    Makassar 1,194,583 1,106,362 2,300,945 1.58% 1.58% 1.58%

    Denpasar 574,610 1,208,004 1,782,614 3.97% 1.07% 1.87%

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    Source:IndonesiaBureauofStatistics(BPS)

  • OpportunitiesandChallenges

    CitiesaccommodatehalfofIndonesiaspopulationandareresponsibleforamajorshareofnationalGDP

    Urbanizationratetosupporteconomicgrowth

    Risingmiddleclassanddemand

    Rapidmotorization

    Substantialpublicinvestmentisrequiredtoaddressinfrastructuredemand

    Increasing investment needs Infrastructure Spending as a share of GDP Increasinginvestmentneeds Greaterdemandforbasicservices Localgovernmentcoordination

    Mass transit 67

    8Private

    SOE

    Sub-national government

    PercentofGDP

    InfrastructureSpendingasashareofGDP

    Masstransit

    Floodandotherdisastercontrol

    2

    3

    4

    5

    6 Sub-national government

    Central government

    150

    1

    2

    1994-1997 1998-2000 2001-2008

  • Thank YouThankYou

    16