URBAN DEVELOPMENT ISSUE AND DUALISTIC GOVERNANCE SYSTEM IN BATAM CITY OF INDONESIA

Batam is an island-city in Indonesia. Strategically located in the Malacca Straits and close to Singapore and Johor (Malaysia) cities, Batam gains its status as a Special Economic Zone (SEZ) which has made its growth rapid 
and was categorized as one of the fastest-growing cities in the world in term of population according to US-based consultancy Demographia (The Guardian, 2015). As result, carrying capacity and land shortage of Batam has become the main concern followed with the issues of clean water supply availability, high amount of domestic waste and land management including coastal reclamation activities. Moreover, the existence of two government agencies in managing the development of Batam has led to the dualism of planning governance and caused the conflict of authority. The underlying conflict pits Batam-Indonesia Free Zone Authority (locally known as BP Batam), which is a central government agency and the local government, Batam City Government (locally known as PEMKO Batam).

The dualistic governance system between BP and PEMKO in managing the city of Batam has a negative impact on the development process, and also makes it difficult to the investors who have to negotiate through countless permits and approvals, a lot of which is redundant. This happens so, even in spite of the creation by the Central Government of the one-stop shop for various government permit issuing systems. There exist a worrying frequency of policy conflict and disharmony of development programs between BP and PEMKO with both institutions having a strong legal standing in handling the development of Batam City.

In the 1980s, Batam was designated as a Bonded Zone by the Central Government of Indonesia to catch economic spillovers from Singapore. Its main focus was to be a manufacturing and logistics center. They established an authority body called Batam Industrial Development Authority/BIDA (currently transform become the BP Batam) as one stop service center for business licensing bureaucracy to serve investors as well as to prepare land acquisition and the development of Batam as an industrial city. BP was given full authority by the Central Government of Indonesia to control and manage all the land in Batam, which means that land allocation must get permission first from BP. However, the conflict arose when the Central Government enacted a Law of Regional Autonomy in 1999 and in 2000 Batam was declared a new autonomous city by establishing the Local Government of Batam City (PEMKO Batam). Dualistic governance system emerged as PEMKO’s administration, lead by the Mayor of Batam City, claimed part of the authorities formerly held by the Chief of BP Batam.

Unlike other city governments in Indonesia, Batam City Government (PEMKO Batam) is the only local government in Indonesia that has no authority to manage and control the land under its territorial jurisdiction. This means that the Mayor has difficulties to initiate planning for the physical development of Batam. However, the conflict is exacerbated by the fact that the mayoral position is elective while the chairmanship of BP Batam is appointive, lending the mayor more legitimacy with the citizens of Batam. The issue of decentralization in Indonesia still has some obstacles and lack of coordination is a consequence of that.

On September 2019, President Joko Widodo ended the dualism by signing the Government Regulation (PP) Number 62/2019 about the Second Amendment to Government Regulation Number 46/2007 about the Free Trade Zone and Batam Free Port. With this PP, the BP Batam will be led by the Mayor of Batam City (dual position as the Head of Local Government as well as the Chief of BP Batam).







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