Income inequality creates both spatial and social divides and shows itself within cities in many ways. Gated communities in Indonesia have become a glaring example. However, legislation and urban planning can help bridge these divides and reduce inequality.
“Inclusionary planning instruments” are designed to do just that. But to be effective they need to be strongly enforced.
In Indonesia, there are two instruments that have the potential to create more inclusive societies. But power differences between rich developers and the urban poor, lack of expertise in how to implement inclusionary planning, and even insufficient awareness of relevant instruments, have hindered enforcement.
Rising inequality globally
A rise in inequality globally has been pointed out over the last five years by several organisations. Oxfam International has just published a report on inequality that highlights a significant difference in wages.
Between 1980 and 2016, the top 1% of the world population captured 27% of the total world income growth. The bottom 50% received only 12% of the income growth, according to the World Inequality Report 2018.
Indonesia is not immune to these global trends; both income and wealth inequality are rising in the country. The Gini index for Indonesia (a coefficient between 0-1 used to measure income inequality – the closer to 1, the more unequal) increased from 0.31 in 1990 (UNDP, 1990) to 0.41 in 2015.
What’s more, according to Oxfam, wealth inequality has increased to a level where the four richest men in the country have more wealth than the poorest 100 million people.
Inequality is one of our main concerns if we want to have harmonious and just societies. The mainstream international development agenda recognises this and the 2015 Sustainable Development Goals include a goal (SDG10) to “reduce inequality within and among countries”.
Inequality in cities
Income inequality manifests itself in cities. We can see clear differences between different social groups in terms of access to housing and basic services.
Houses for upper-middle-class families in Indonesia are spacious, built with good-quality materials and located in neighbourhoods with good services and infrastructure. In the case of gated communities, there are also security devices in place.
Conversely, poor housing lacks appropriate structural conditions. There is overcrowding, often with one family living in a single room. And there is no sanitation and access to basic services.
Gated communities are, especially in the Global South, the main housing option for upper-income groups. The rich justify living in gated communities to reduce insecurity and fear of crime. However, belonging and exclusion of the “unwanted” people are strong reasons behind living in closed enclaves.
Even when poor and rich groups might co-exist in the same territory they do not interact with each other, except for some formal work exchange between employer and employee, where there are strong power relations at play.
Residents’ access to services and infrastructure is also divided along lines of wealth. This creates patterns of “splintering urbanism”, reflecting the unequal distribution of services and infrastructure in the territory.
Indonesia’s planning instruments
Inclusionary planning regulations can serve to reduce the gap between rich and poor, including disparities in the services and infrastructure available to them. These instruments require private developers to incorporate social housing or/and services and infrastructure for less advantaged groups when building housing for upper-income groups.
Indonesia has two potentially inclusionary planning instruments for new private residential developments. The first is the “1.2.3 Ratio” scheme and is included in national regulation. It says that for each house built for high-income residents, private developers should also build two houses for middle-income families and three for low-income families.
The second instrument is called “socialisation”, included as a stage of the Environmental Impact Assessment. The assessment is required when seeking planning permission for a new housing project. The “socialisation stage” requires developers that plan to build a project in an already urbanised area to obtain permission from existing residents for the project to go ahead.
Both instruments represent attempts by the government to reduce inequalities in the cities and to enforce some sort of “planning gain”. These could be seen as a positive step towards redistribution, with incredible potential to create positive change in Indonesian cities.
However, our research data from Jakarta and Yogyakarta show that “Ratio 1.2.3” is hardly being enforced. Land is scarce in many Indonesian cities and it is not profitable for the private sector to build houses for middle- and lower-income families. Additionally, many government officers responsible for the “Ratio 1.2.3” application are unclear on the enforcement mechanism.
In the case of “socialisation”, it has become a very limited process. It has turned into economic negotiations between powerful private developers and less powerful local residents who live close to the proposed project. The latter are usually represented by the neighbourhood association leaders.
In the best situations, the local communities manage to obtain a few new sources of employment, as security guards, cleaners, gardeners or builders.
They may also receive some funding for annual community events, such as the Independence Day celebration. The local roads and mosque might get spruced up.
But these benefits are not enough to reduce the gap between the two groups, nor will they encourage any sort of social interactions between new and old residents.
The lack of enforcement of “Ratio 1.2.3” and the limited scope of the “socialisation” process are missed opportunities for Indonesian cities. These instruments have the potential to decrease urban income inequality by “forcing” those who have more money to contribute to the public good for the benefit of poorer families.
How to get more out of inclusionary planning
To improve the benefits from these inclusionary planning instruments, the government should:
develop clearer and realistic guidelines and instruments that can be applied
establish clearer mechanisms for public officers to enforce these instruments
make society more aware of these instruments and, in particular, of the potential benefits of more harmonious and just cities.
Rising inequality globally
How to combat the inequality gap is often a heated topic for governments. International organisations say that while world leaders now acknowledge inequality, not enough is being done to efficiently reduce it.
Other measures to reduce inequality include more progressive tax systems, as suggested in the latest World Inequality Report. Under this system, people who earn more also contribute more towards public services and higher public. This covers spending to provide education, health care and social protection for all. Policies for equal salaries between female and male workers are also promoted as key to reducing inequality.
Considering the scale of inequality, and the urgency of the problem, inclusionary planning instruments are valuable mechanisms. These should be revisited to ensure the full benefits are realised.