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Jakarta Recharged

Published: 29/10/2012 - Filed under: Home » Archive » 2012 » November 2012 » Destinations »

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The news is in: Indonesia is on the rebound. The country’s economy grew by 6.4 percent in quarter two of 2012, surpassing the first quarter’s 6.3 percent – and that’s despite the slowdown in exports, which dropped 5.8 per cent in May. This country of more than 242 million has remained economically robust, with a growing mining industry as well as strong domestic consumption.

One example is technology supplier Bosch: at its latest annual press conference in Indonesia, held in August, the company announced that in its 2011 business year it reported a 42 percent growth in revenue, totaling $93 million. It also revealed plans to open more offices in the archipelago.

At the end of last year, Fitch Ratings brought Indonesia back to investment grade after 14 years of junk ratings, and in January this year Moody’s Investors Service followed suit. Suddenly things are starting to look up – but it’s been a long road.

A New Dawn

After the 1997 financial crisis in Asia had wreaked havoc on the once-booming Indonesian economy, strong man Suharto was forced to step down as president, ending some three decades of authoritarian rule. In the wake of this upheaval, the country went through a difficult period of political reform, culminating in its first direct presidential election in 2004. Since then increased stability has propelled economic development, and in 2011 Indonesia ranked 16th in GDP according to the World Bank.

Although this ranking was still relatively low for a country with the world’s fourth largest population, the speed with which its economy is growing and the continuous turmoil in the Eurozone and elsewhere, Indonesia will almost certainly be a few notches higher in the next count. 

When I arrived at Jakarta Soekarno-Hatta Airport last April, I could immediately feel the buzz. The airport handled 51.5 million passengers last year, which makes it the 12th busiest airport in the world, surpassing Changi as number one in Southeast Asia. Unfortunately, the facility was built in 1985 for 22 million passengers a year, and there has been no major upgrade since. It shows: the facility felt dated, and at immigration, the queue was long and movement was slow.

However, there’s reason to hope things will get better soon. State airport operator Angkasa Pura II broke ground in August on a major expansion project for Soekarno-Hatta. The aim is to boost passenger capacity to 62 million people by 2014. But in a country where infrastructure projects have been plagued by long delays and even cancellations, one cannot afford to be overly optimistic.

Driving from the airport to my hotel, the newly opened Pullman Jakarta Central Park, also gave me first-hand experience of the city’s infamous traffic. Much of the time the car moved at a snail’s pace. But I was luckier than some, as my hotel’s location in West Jakarta was closer to the airport; my travel time was 45 minutes, but had I been staying downtown the journey would’ve been well over an hour.

The Pullman is located in a new 52-acre, mixed-use development called Podomoro City, which was created to get around the city’s traffic issues. “It’s like a city within a city,” says Veri Y Setiady, executive director of Agung Podomoro Land which developed the project. “We have the office building, we have the retail complex and there is a hotel, so it’s very convenient and people can stay in one area.” The project has 11 apartment towers surrounded by 10 acres of green space. 

Setiady adds that shopping centers have become a way of life in Jakarta, with people spending an average of five to six hours per visit. Other than Jakarta residents themselves, a large chunk of Podomoro City’s retail business comes from visitors from other cities in the country. “The middle-income sector is growing very, very fast, and they mostly go to Jakarta for shopping and spending the weekend with family,” Setiady says. “It’s good to have Pullman Jakarta Central Park, as on weekdays it’s mostly businessmen, and on weekends it’s mostly families.”

Problems to Solve

For those business folk who do have to venture into the center of town, dealing with chaos is part and parcel of each day. Even crossing the road can sometimes be impossible since in many areas there are no traffic lights. After a visit to the Fatahillah Square in Kota, the old town district, my group and I tried to cross Jalan Bank to get to the ATM, but it seemed like an age before we had a window of opportunity – and the nerve – to run to the other side. 

Even around the main traffic circle of Jalan Bundaran HI, in the beating heart of Central Jakarta, the roads are not well laid out. There are few crossing points, and pedestrian bridges look old and shoddy. You find yourself asking why, with the country becoming increasingly affluent, much-needed public works projects aren’t following at the same pace? The sad answer of course is corruption – a fact acknowledged even by the country’s president Susilo Bambang Yudhoyono when he spoke to parliament on August 16, ahead of Indonesia’s independence day.

Although the country’s top leader has spoken out, few believe that things will change much in the short term. For one, the culture of corruption is too entrenched in the national mindset. General manager of Pullman Jakarta Central Park, Fabrice Mini, who has lived in the country for 15 years and speaks Bahasa, says: “Indonesians are the most sincere people you could ever meet, but a few individuals can be funny when it comes to money. Those would have the tendency to want to take as much as possible, because of the idea of ensuring their own future.”

Perhaps the best example of the way the culture of corruption has hindered the development of Jakarta’s infrastructure is the ambitious 17-mile monorail project. It was halted in March 2008, leaving 150 columns standing in the streets. The project was scrapped due to legal and financial problems with the developer PT Jakarta Monorail.

While recent press reports have hinted at the return of the monorail, officials are already discussing plans to use the pylons for a less costly elevated bus rapid system (BRT) to complement Transjakarta, the existing ground level BRT. The head of the local branch of the Indonesian Transportation Society (MTI), Tri Tjahjono, was quoted in the press in August saying he supports making use of the columns for a new BRT system instead of reviving the monorail project, as it would cost less and require no new expertise in maintenance. But a final decision, if it ever materializes, might still take years.

Indonesia is without a doubt rich in potential, but if improvements to infrastructure and regulatory systems do not happen fast, things will reach the breaking point, and there’s a very real risk that development will slow to a crawl or stop altogether. “There are too many political issues here, so they are not focused,” says Setiady. “We need a very strong leader.”

By Reggie Ho


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