Asia
3:29 pm
Wed January 4, 2012

Indonesian Economy Booms, Its Infrastructure Groans

Originally published on Wed January 4, 2012 10:40 pm

Indonesia has one of the world's fastest growing economies, and it's already the largest in Southeast Asia. This growth and stability recently earned it a major credit upgrade at a time when Western countries are fearful of downgrades.

Yet this vibrant economy has an Achilles' heel: its crumbling, overwhelmed infrastructure.

The problem becomes painfully apparent this time every year, when the rainy season fills commuters with dread in the capital, Jakarta, and many other cities.

Tropical downpours make Jakarta's notorious gridlock even more hellish. Gaggles of motorcyclists in ponchos struggle through flooded streets, weaving among the cars and trucks.

Commuters on Indonesia's overcrowded railways are only slightly better off. At one railway station, a woman named Mina balances a large bundle of fruit on her head as she waits for her train. This merchant, who uses just one name, looks aged far beyond her 37 years.

Each day, she spends anywhere from an hour-and-a-half to three hours getting from home to the market. Getting to and from work can cost up to a fifth of her monthly income, and she says it's depressing.

"I am very sad when it rains. I have to travel far to sell my fruit," Mina says with a subdued, resigned tone. "When it rains, I get soaked getting on and off the train. It's scary and tiring. The rain only makes my load heavier."

As Mina is talking, a security guard tries to pry loose a knot of passengers who got stuck in the doorway after trying to all squeeze in at once. Nimble young men in flip-flops scramble up the train's side and sit on the roof. The train pulls away, leaving Mina on the platform to wait for another train.

Elly Sinaga, who is in charge of urban transport systems at the Ministry of Transportation, says bottlenecks are simply costing citizens too much.

"According to our survey, the transportation costs here in Jakarta and the surroundings are almost 30 to 40 percent of income," Sinaga says. "Also, our costs for the freight transport [are] very high."

Swallowed By Traffic

On Dec. 15, the Fitch ratings agency raised Indonesia's credit rating to investment grade. The agency praised Indonesia's political stability, low public debt and strong consumer demand from a burgeoning middle class, but Fitch warned of inadequate infrastructure.

Indonesia's economy is growing at about 6.5 percent a year, and the country spends about 3 percent of its GDP on infrastructure. If it were to increase that amount, its growth might compare more favorably to that of China, whose economy grows at 8 percent, with infrastructure spending of 9 percent.

Hans Ulrich Furke is an urban planner from Germany who advises the Indonesian government. He says that traffic has swallowed up almost all of the city's open spaces, leaving residents nowhere to congregate but in shopping malls.

"Public space is just totally occupied by the rich, who have cars and motorbikes," Furke says. "So we don't have the chance to interact in a city, which I would define as healthy, where we meet in open space, in public space."

Furke also blames the mess on Indonesia's energy policies.

Fuel is subsidized, and that makes driving private vehicles so cheap that they compete with public transport," he says. "Riding a motorbike in Jakarta is cheaper than public transport."

Vice Minister of Transportation Bambang Susantono says Jakarta is serious about improving the quality of its life and becoming a more livable city. He says pilot projects to clear the downtown area of traffic will be expanded.

"I think we will start not for the whole city center, but some part of the city center," Susantono says, "so that people can think that this is really the way for the future — the way we have the car-free day, for example. Now it's getting more and more popular."

Right now, Sunday mornings in central Jakarta are one of the few times it is blissfully free of cars. The fumes dissipate. The decibel level drops. It's the sound of what could be: Public buses trundle along. Families bicycle together, children rollerblade, and a curbside barista sells cups of instant coffee from his bicycle.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

Indonesia is Southeast Asia's largest economy, and in recent years, it's become one of the world's best-performing economies. In this era of downgrades, Indonesia's performance and stability recently earned it a major credit upgrade. But even this vibrant economy has vulnerabilities. NPR's Anthony Kuhn reports from Jakarta that Indonesia's crumbling infrastructure is holding it back.

(SOUNDBITE OF RAIN AND LIGHTNING)

ANTHONY KUHN, BYLINE: This is the time of year Jakarta's commuters dread: the rainy season. Tropical downpours make the city's notorious gridlock even more hellish. Gaggles of motorcyclists in ponchos struggle through flooded streets, weaving among the cars and trucks. Commuters on Indonesia's overcrowded railways are only slightly better off.

At one train station, Mina balances a large bundle of fruit on her head as she waits for her train. This merchant who uses just one name looks aged far beyond her 37 years. Each day, she spends between an hour and a half to three hours getting from home to market. Getting to and from work can cost up to a fifth of her monthly income and, she says, it's depressing.

MINA: (Through Translator) I am very sad when it rains. I have to travel far to sell my fruit. When it rains, I get soaked getting on and off the train. It's scary and tiring. The rain only makes my load heavier.

KUHN: A security guard tries to pry loose a knot of passengers who get stuck in the doorway after trying to all squeeze in at once. Nimble young men in flip-flops scramble up the train's side and sit on the roof. The train pulls away, leaving Mina on the platform to wait for another one.

On December 15th, the Fitch rating service raised Indonesia's credit rating to investment grade. It praised Indonesia's political stability, low public debt and strong consumer demand from a burgeoning middle class. But Fitch warned of inadequate infrastructure.

Elly Sinaga, who is in charge of urban transport systems at the Ministry of Transportation, says transport bottlenecks are simply costing citizens too much.

ELLY SINAGA MINISTRY OF TRANSPORTATION, INDONESIA: According to our survey, the transportation costs here in Jakarta and the surroundings, it is almost 30 to 40 percent of their income. Also, for our freight transport, cost for the freight transport also still very high.

KUHN: Indonesia's economy is growing at about 6.5 percent a year. It spends about three percent of its GDP on infrastructure. If it were to increase that amount, its growth might compare more favorably to that of China, whose economy grows at eight percent with infrastructure spending of nine percent.

Hans Ulrich Furke is an urban planner from Germany who advises the Indonesian government. He says that traffic has swallowed up almost all of the city's open spaces, leaving residents nowhere to congregate but in shopping malls.

HANS ULRICH FURKE: Public space is just totally occupied by the rich, who have cars and motorbikes, so they don't have the chance to interact in public space.

KUHN: Furke also blames the mess on Indonesia's energy policies.

FURKE: Fuel is subsidized and that makes driving private vehicles so cheap that they compete with public transport. Riding a motorbike in Jakarta is cheaper than going by public transport.

KUHN: Vice Minister of Transportation Bambang Susantono says Jakarta is serious about improving the quality of life. He says pilot projects to clear the downtown area of traffic will be expanded.

BAMBANG SUSANTONO: I think we will start, not for the whole city center, but some part of city center so the people can, for example, think that this is really the way for the future. Yeah. The way we have the car-free day, for example, now, it's getting more and more popular.

KUHN: Sunday mornings in central Jakarta are blissfully car-free. The fumes dissipate. The decibel level drops. It's the sound of what could be. Public buses trundle along. Kids rollerblade and a curbside barista pedals past, selling cups of instant coffee from his bicycle.

Anthony Kuhn, NPR News, Jakarta. Transcript provided by NPR, Copyright NPR.