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Economic Growth, Development Planning and Policy Alternatives in Medan, Indonesia

Published online by Cambridge University Press:  24 August 2009

Thomas R. Leinbach
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Extract

Rapid urban growth, in spite of some limited success in controlling population expansion, will likely continue over the next two decades in much of the developing world. Growing evidence suggests that this surge of urbanization poses significant problems for urban development and management as well as for national economic progress in general. Despite relatively strong economies and development programmes this trend is quite conspicuous in Southeast Asia where policy concerns about resource allocation, informal sector development, fiscal capacity and urban services delivery have emerged.

Type
Articles
Information
Journal of Southeast Asian Studies , Volume 18 , Issue 1 , March 1987 , pp. 118 - 140
Copyright
Copyright © The National University of Singapore 1987

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References

The research reported here is derived from a larger project on migration, urbanization and employment in North Sumatra which was supported by the National Science Foundation (INT-8203890-A) and the National Geographic Society. These sources are gratefully acknowledged, as is the University of Kentucky Research Foundation. Parts of the investigation and the writing were completed during a Fulbright-Hays Southeast Asian Research Fellowship period while the author was based at the Centre for Advanced Studies/Department of Geography, National University of Singapore in 1985–86. Typing assistance by the Centre for Advanced Studies is gratefully acknowledged.

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20 Roepstorff, op. cit., p. 54.

21 Before the 1974–75 Industrial Census large and medium size firms could employ as few as 50 and 5 people respectively in order to qualify for these size classes. After this date large firms were defined with employment of 100 or more; medium firms, 20 to 99; small firms, 5 to 19 and cottage firms fewer than 5 people (including those with no paid workers). See McCawley, op. cit., p. 97.

22 Milone, op. cit., p. 66.

23 A qualifying comment must be inserted here. The reader will recall that in 1970 Medan comprised 4 kecamatan, while by 1980 this had expanded to 11. Thus it is reasonable to assume that some industries located in Deli Serdang kabupaten at the time of annexation is now found within the Medan Kotamadya boundary. Given the absence of detailed data it is difficult to precisely assess the number of industries and employment thus affected, but any such small distortion will not invalidate the basic comparison discussed here.

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25 McCawley, op. cit., pp. 85–86.

26 Data from various sources differ considerably with respect to 1980 large and medium industry employment in textile, weaving and related industries (ISIC 32) in Medan. The total employment in North Sumatra province in this sector in 1980 was 2,355 and thus the figure of 1,037 for Medan seems reasonable, although it could be lower. See also Ginting and Daroesman, op. cit., p. 68.

27 McCawley, op. cit., p. 162.

28 Dick, Howard, “Survey of Recent Developments”, Bulletin of Indonesian Economic Studies 21, No. 3 (12, 1985): 19–22CrossRefGoogle Scholar.

29 McCawley, op. cit., p. 161.

30 The labour force in Indonesia is now defined as the population aged 10 and over, after deducting students, mothers, and retired and other unemployable persons.

31 Medan Long Range Urban Development Plan, Vol. III (Medan: Sinotech Engineering Consultants, 10 1980), pp. 2–6Google Scholar.

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33 Medan Long Range Urban Development Plan, op. cit., p. 5.

34 Estimating unemployment is extremely difficult in Indonesia as elsewhere in the developing world. In many ways underemployment is a much more appropriate concept. See United Nations, Migration Urbanization and Development in Indonesia (ESCAP: Bangkok, 1981), pp. 24–26Google Scholar.

35 Government of Indonesia, National Urban Development Strategy Draft Final Report, T2.3/3 (Jakarta: Directorate of City and Regional Planning, 09 1985), p. 13Google Scholar.

36 Ibid., p. 5.

37 Ibid., p. 125.

38 Ibid., p. 127.

39 In 1977 the conversion was US$1 equals Rp 415. The data was derived from Penelitian Pola Penggunaan Pendapatan Rumah Tangga di Kotamadya Medan, 1977. Updated figures for 1980 show the median annual income to be Rp 692,000 or US$1,025 (US$1 = Rp 675). See Medan Long Range Urban Development Plan, op. cit., pp. 3–18.

40 Medan Long Range Urban Development Plan, op. cit., p. 8.

41 A measure of the impact of these deficiencies is provided by recent Japanese investment intentions. Japan's investment in Indonesia has declined over the past 3 years, and is expected to decrease further in the years ahead. From 1982 to 1985 the investment dropped from US$634 million to US$99 million. The major reason supplied to account for this decline is the frequent changes in Indonesia's economic and business policies which make it difficult for Japanese investors to make long term business plans. Straits Times, 18 March 1986, p. 11.

42 The recommendation and basic planning for an industrial estate for Medan was made over a decade ago. The estate is to be at Mabar (see Figure 2), and over the term of 10 years was forecasted to attract nearly 100 establishments. Metal products and processing (ideal candidates for feeder industries) and rubber, plastics and chemical products firms were to be the most likely prospects for location in the estate. Essentially the plan has not yet been realized. For background see Beca, , Carter, , Hollings, , and Ferner Ltd., Medan Industrial Estate Study: Summary, 08 1975Google Scholar.

43 McGee, op. cit., p. 137.

44 United Nations Industrial Development Organization. Mechanism for Small-Scale Industry Development: Ancillarization — Development of Feeder Industries (Vienna: Division for Industrial Studies, UNIDO/IS. 551, 9 08 1985), pp. 6–7Google Scholar.

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50 A recent INPRES (Instruksi Presiden) document specifically calls attention to the need for an improved operating environment for informal sector activities.

51 Medan Long Range Urban Development Plan, op. cit., pp. 3–20.