Interview: Ridwan Kamil, Tri Rismaharini
Which areas present the greatest opportunities for investment in 2016/17?
RIDWAN KAMIL: We are now focusing on a new way of developing our cities’ economic growth. We recognise its weaknesses, and thus we are reorganising the way we finance infrastructure development. Bandung is working with the Asian Development Bank to push the public-private partnerships (PPP) agenda; without PPPs, our city’s economy would be slower than what we have now.
As you know, the government budget, which finances almost 100% of all infrastructure projects in Indonesia, is very limited for the cities on the archipelago. For example, I spent five years of my term as mayor with a budget of $1.5bn to allocate to $6bn worth of infrastructure developments in Bandung alone, which leaves a substantial shortfall of $4.5bn. If we used conventional thinking, Bandung would need three more mayors to finish the job. Alternatively, I can meet this cost by inviting the private sector to the table, which is a common procedure in developed societies.
With the help of the National Public Procurement Agency, a government body that oversees the tendering process, Bandung started to pilot a PPP project for hospitals and green technology for street lighting. If Bandung alone requires $6bn, Indonesia needs the equivalent of $2-3trn for the development of its 500 cities, which are commonly overlooked by investors, as most investment goes to federal projects rather than our cities because they are considered too small.
Today is the right time for new investments in the infrastructure development of our cities. We hope the world will see Indonesia as a new giant because we have a 50m-strong consumer class. If we can keep GDP growth at 5%, we should be the second-largest economy by 2030. Investors should use Bandung as the gateway to Indonesia and ASEAN. This city is the connection to the rest of Indonesia and the closest metropolis to Jakarta.
TRI RISMAHARINI: Given the increase in consumption in the region, Indonesia will play a major part in the regional trade of goods and commodities. Surabaya will not be left behind, as we aim to become a leading port in ASEAN. As you know, we recently opened a new port in Tanjung Perak, which today has the largest capacity in Indonesia; it can handle 15,000 twenty-foot equivalent units and seventh-generation ships, bigger than Tanjung Priok in Jakarta. We also started to build new roads to support the traffic going to and from the new port. We tried to better position the port, enabling it to connect to other islands in the archipelago, especially the eastern parts of Indonesia.
Currently our ports are busier than Jakarta’s, especially in serving international routes. Foreign investors can see better infrastructure enhancement in the city compared to a few years ago, as well as a better service environment. When investing in our transport and logistics business, we try to streamline coordination between the local government, the operator – Pelindo III – and Customs to make services straightforward and efficient.
Furthermore, we have invested heavily in the city’s tourism infrastructure, especially local attractions and leisure areas around the river banks, such as water parks and art parks, to promote tourism. Given the Ministry of Tourism’s 2020 goal, physical changes to Surabaya’s infrastructure are not sufficient.
Of equal importance is the need for our city to showcase our society’s multicultural character. We are organising many events with neighbouring islands, such as Bali and Lombok, to increase tourism through a display of cultural and religious tolerance. By pushing multicultural programmes and tourist attractions, we are sure to benefit surrounding administrations through an increase of local and international tourists.
Given the importance of small and medium-sized enterprises (SMEs), how have registration processes been streamlined?
RISMAHARINI: We have heavily emphasised IT as a way to enhance the city’s administration by limiting paperwork. After introducing IT, doing business in Surabaya has become faster and more transparent. We have also created mobile apps for requesting business permits. This facilitates the process of obtaining certificates and reduces the amount of paperwork required.
In addition, we have developed a transparent and faster permit process with our Surabaya Single Window system. Now the investor does not need any paperwork, and we provide a clear timeframe, which allows the investor to control the entire process. Through these reforms we have seen a jump in business registrations from SMEs and on the side of large enterprises.
KAMIL: In January 2016 Indonesia reformed its economy by removing permit processes for SMEs. For a business under $50,000, a permit is no longer required; instead a report may be submitted on a smartphone. After releasing the non-permit policies, we’ve seen an increase of 30,000 new businesses in the first six months of 2016.
For medium-sized and large businesses, we have made a big push for online management of the whole process from registration to payment. Through no longer having any face-to-face interaction, we aim to reduce corruption and incentivise business processes. We also pushed the micro-banking scheme, which provides up to 30,000 credits of $3000 each, without mortgages and equities. This advancement in credit has effectively freed an estimated 30,000 citizens of Bandung from loan sharks and has ensured a non-performing loan ratio of zero.
In what ways can the digital and ICT industries further support the overall development of Badung and Surabaya?
KAMIL: Currently, Bandung is one of the more progressive cities in Indonesia, employing over 500 types of software, which caters to city management. My current mission is to ask the federal mayors and regions to join the movement of “smart cities” to save money and create a transparent and open government by relying on technology. This will shape Indonesia’s governance in the next 10 years. Given our strength and the enterprises currently operating in the city, we have also invited high-tech and ICT companies to invest in Bandung. We are pushing a creative economy, with a focus on city tourism coupled with a very progressive SME development plan, given the 60% market share of SMEs in Bandung.
RISMAHARINI: Our area is half the size of Jakarta, and our population is a quarter of the capital’s. There are over 50 digital enterprises operating in the city and its surroundings. We are aiming to expand the smart city idea in Indonesia. We have been successful in integrating digital services to enhance the logistics and infrastructure aspect of the city’s management. We provide incentives to push Surabaya to become an IT and digital hub in Indonesia. For citizens, basic certificates such as birth and death certificates will eventually be obtained through mobile apps. The aim is to reduce administrative work undertaken at the city hall and to enable citizens and public servants to allocate their time better. If a citizen wants to assist in maintaining street lights or roads they can use apps to report issues to the local government and give feedback on any required maintenance.
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