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 Integrating Regional Development Planning and Policies: a special reference to Indonesian case

Chapter I
Problem Statement


Why Study Indonesia’s Regional Development? : Justification on the Importance of the Research’s Topic.

"Countries," nations, nation-states, and international economies are in fact collections of spaces (regions), each with its own society and its own economic, social, political and power structure. The degree to which these spaces are integrated into a unified national economic, social, political and administrative system varies a great deal from country to country, and these variations go a long way on explaining differences in performance from country to country. (Higgins and Savoie, 1995, p.3) The above quotation is meant to answer the question of how important, at least for me, to further understand about the way in which regional development planning in Indonesia is implemented. Why study Indonesian regional planning? First, and foremost, they are the essential indicators of development. As Hill (1997) puts it, just as trends in interpersonal equity are regarded as major development outcome, so too are trends in inter-regional equity. Especially, in country as diverse as Indonesia. This means, that the more developed regions such as Jakarta (the capital of Indonesia) might be regarded as more akin in its socio-economic structure to Bangkok, Thailand; whereas a very poor province such as East Nusa Tenggara (NTT) might be viewed as a ‘Bangladesh’. The challenges these very different regions are about as different as those are in these countries. Therefore, Indonesia surely presents as a good laboratory for those who want to obtain better understanding in regional development planning practices and policies especially in developing country.

Second, examining the existing planning practices and policies comprehensively will give a challenge to identify what the real problems are facing by regional development in Indonesia, especially in accelerating the development in less developed region by implementing such development policies and strategies.

A country trajectory is generally not regarded as sustainable if inter-personal inequality (of income, expenditure, wealth, or a range of social indicators) exhibits a secular-increasing trend. Similarly, if inter-regional inequalities display a persistent increase over a decade or more, then national economics and political integrity may be threatened. Accelerating the development in less developed region will be one of the solutions to reduce these inequality issues.

Regional development strategy in Indonesia has recognized several action plans. Some of them that has been implemented recently are:

  1. Integrated Area Development Program (IADP);
  2. Sub-regional Economic Cooperation (SREC) or Growth Triangles (GT);
  3. Integrated Economic Area Development (known as KAPET—Kawasan Pengembangan Ekonomi Terpadu).
However, their achievements in accelerating the economic growth of less developed areas were still questioned. In my opinion, those regional development strategies is the example of an overlapping in policy choice that can cause non-optimal and undesired as well as profligate budget allocation. Therefore, it will examine such phenomena and hopefully can come up with policy recommendation.

Chapter II
An Overview of the Regional Development Planning Practice in Indonesia

Constructing an Integrated Regional Development Planning Practices and Policies in Indonesia

A set of combination of polices and strategies of regional development has been engraved in Indonesia and a great deal of amount of efforts and funds being poured to develop regions, particularly those the backwards eastern parts of Indonesia. The results, however, is mixed and varied from one region to another but the most obvious is the disparity between the relatively richer western parts of Indonesia (Sumatra, Java, Bali) as compared to its eastern counterparts. The reduction of such disparity, as well as poverty alleviation program, is one of the most important focuses of national development agenda. Regional development is an integral part of the national development, as explicitly stated in the National State Guidelines (GBHN). Therefore, a responsive and comprehensive regional planning will serve as framework for achieving the stated objectives.

A responsive planning practices is underscored, as the prevailing traditional planning system appears to lack the essential elements to cope with the fast changing environment of local development planning. For instance, among other events, the adoption and gradual implementation of the government program on regional autonomy has created a strong pressure against the limited capacities of local planning institution and its apparatus. Moreover, a piece-meal, ad-hoc and stand-alone strategies often dominate the style in which regional development planning is implemented.

It usually appeared in the forms of uncoordinated policies and strategies, of which, at the one hand, have a substantial wasteful of budget and overlapping of program, while on the other hand, causing difficulty in evaluation, monitoring and coordination of the program.

An integrated regional planning which moves towards integrating policies, priorities and needs coming from national and provincial levels, and the needs and aspirations of people from the grassroots level. In addition, at the same time, forging an appropriate policy and planning-mix of the economic, social, and physical factors in the integration process.

In the case of sectoral planning, the process has to flow from a single-sector focused towards a holistic and integrated multi--sectoral planning. Sectoral plans and spatial plans are anticipated to merge at every administrative level to generate desired synergistic effects and efficiency in achieving the project objectives. This study is an effort in that direction using three important features of the national strategy to secure smooth implementation of the regional development.

This study will examine the policies and strategies that are currently implemented by the government (both at central and/or provincial level) to seek and measure the possibility of integrating the current policies and strategies into a one comprehensive model of explanation. This study will focus only on three main policies and/or strategies currently being implemented by the government with a special reference to the Eastern Part of Indonesia in accordance with what stipulated in the State National Development Guide lines. I would rather call it: an integrated regional planning, in which to be read and understood in the context of the current development priority to develop eastern Indonesia. However, the focus of attention of this study is rather parochial.

Concentration will only be directed to three policies that actively being promoted and pursued by the Indonesian government in order to ensure its effort to strike a balance of development efforts aimed at reducing regional disparity. The priority policies which are considered to be a public policy priority at sub-national level, particularly in the eastern part of Indonesia during the last 10 years, that consists of:

    1. Integrated Area Development Program;
    2. Sub-regional economic cooperation (SREC) and growth triangle; and
    3. Integrated Economic Development Area (KAPET).
Let us now have a closer look at each of them as explained below.


BOX 1: A BRIEF EXPLANATION ABOUT INTEGRATED AREA DEVELOPMENT PROGRAM (IAD) IN INDONESIA Starting from 1994, Indonesia has been implementing the Sixth Five-Year Development Plan (REPELITA VI). Two of the main programs stated in REPELITA VI are in pursuing poverty eradication and reducing inequality and disparity under the logy of distribution of development. Indonesia deals with the lack of infrastructure and social economic condition in less developed areas -- which are located in isolated and very remote area and most of which are located in the eastern part of Indonesia.

In the developing the less developed areas such as provinces and districts in eastern part of Indonesia region, Indonesia has been implementing some related programs in developing the less developed areas with an integrated approach which is called an integrated area development program (IAD). The IAD programs have been implemented in promoting regional and local economic activities to overcome the problems faced by applying an integrated and multi-sectoral approaches, where are very much relied on the role of the local governments, particularly the second-level of local government at the districts and municipalities.

BOX 2: STRENGTHENING EAST INDONESIA POSITION FOR GLOBALIZATI-ON THROUGH SUB-REGIONAL ECONOMIC COOPERATION In order to implement the development policy for east Indonesia region, it needs to enhancing and strengthening its linkages with global and international economy, by developing regional growth centers in the region which has economic linkages to the international growth centers. The regional growth centers in east Indonesia have been established and identified in the national strategy for spatial planning, which classified into three level of centers such as nationally, inter-regionally, and regionally (locally). Related to the linkages to other international growth centers, there are national development centers that can be developed as follows: Regional development cooperatives involving provinces in East Indonesia need to be encouraged, such as: (i) between northern east Indonesia with southern Philippines and eastern Malaysia within the context of BIMP-EAGA; (ii) between the eastern east Indonesia with Papua Nugini and adjacent Pacific countries within the context of Arafura regional cooperative; (iii) between southern east Indonesia with northern Australia within Arafura cooperation; and (iv) among East Kalimantan, West Kalimantan, and North Sulawesi within the context of BIMP-EAGA economic cooperation.

In order to compete with the countries in each sub-regional economic cooperation, the east Indonesia region is strengthening its information system for regional development and integrated area development.

However, by considering that the regional cooperation may not only depend on the public investment, the role of private sectors has to be enhanced. This reason is very related to the principal mechanism for the sub-regional economic cooperation such as BIMP-EAGA, which has to be implemented by ‘private-led economic cooperation’. To support the implementation of the cooperation mechanism, the role of private sector investment in east Indonesia is still need to be encouraged, by providing incentives in fiscal and monetary fields parallel to the provision of sufficient basic infrastructures for regional development and basic infrastructure requirement for private investment in East Indonesia region.


BOX 3: A BRIEF EXPLANATION ABOUT THE INTEGRATED ECONOMIC DEVELOPMENT AREA (KAPET) In Indonesia's sixth-five year development plan (Repelita VI), the national strategy for spatial planning states the policy to set up priority areas which have strategic values in the national development. The development of those priority areas is implemented by regional approach, and focussing to attract private investment in the areas and its surrounding regions.

For the long-term development plan, the national strategy for spatial planning has established 111 priority areas to be developed, of which 55 areas are located in east Indonesia region. For each priority area, it has been identified the strategic potential sectors can be developed optimally, which consists of eight strategic sectors as follows: estate crops, food crops, fisheries, livestock, forestry, industry, tourism, and mining.


Accompanying those priority areas and their strategic sectors, there were production regions in east Indonesia such as for food crops in South Sulawesi, North Sumbawa, Kendari, and Gorontalo; estate crops in Kalimantan, Sulawesi, Maluku, and Irian Jaya; forest-related products in Kalimantan, Sulawesi and Irian Jaya; fisheries in Maluku; and livestock in Nusatenggara.

In line with the development policy for the priority integrated economic development areas, there is a policy for developing urbanized regions in east Indonesia which planned as the center for surrounding areas, such as national development centers in Ujung Pandang, Manado, Pontianak, Banjarmasin, Kupang, and Jayapura; interregional development centers in Balikpapan, Samarinda, Palangkaraya, Mataram, Dili, Ambon, Merauke, Sorong, Palu, and Kendari.

As various literatures suggested, the eastern part of Indonesia is relatively backward compared to its western counterparts, especially Java. This has been viewed by many as a 'bias' in development policies for the benefit of the western part of Indonesia. Basically, it is understandable that the concentrations of business activities tend to locate near centrality where almost all decision-making and granting a license are easier. In addition to that, infrastructure development also helped accelerate this propensity of disparity. The government efforts to address this problem has so far, in my opinion, been a piece-meal and far from being needed, that is: an integrated one.


Chapter III
Research Objectives and Anticipated Results

Major research objective is to formulating an integrated approach for regional development planning in Indonesia.

The research will focus to three different programs and approaches are being implemented in Indonesia for regional development practice and strategies, particularly for local government that needs such different policies and strategies to be integrated.

The research will explore and examine each of the program and endeavor to understand on how to combine, synchronize, and integrate the programs to be such an integrated regional development approach and policy.


The objectives of the research are:

  1. To observe issues and problems in implementing the regional development policies and strategies in Indonesia, with special reference in the eastern part of Indonesia.
  2. To explore strength and weakness of each policy and strategy of regional development in Indonesia, with special focus in the eastern part of Indonesia.
  3. To exercise challenge and opportunity in applying such integrated regional development approach in Indonesia, particularly for local entities in the eastern part of Indonesia.
  4. To formulate an integrated investment planning and programming for local and regional development in Indonesia, especially with focus on the partnership between government and private sector.
  5. To formulate an integrated development planning process and mechanism for local and regional level of development, with special focus for an improved annual and medium-term development planning process in Indonesia.

The main expected result of the research is recommendations for an improved-integrated regional development policy and approach in Indonesia, with a special reference to the eastern part of Indonesia.

The research is expected to produce policy recommendations for:

  1. Refined and improved regional development program approach, which is formulated by combining, synchronizing, and integrating the existing programs such as growth triangles, integrated economic development areas, and integrated area development programs.
  2. More efficient and effective planning and programming for the development investment in the eastern part of Indonesia, not only for public investment but for private investment as well.
  3. More significant role of government agencies in national, provincial and local level in managing and implementing the regional development planning and policies in Indonesia, and its partnership with private sectors in central and local level.
  4. Improved coordination system and mechanism of regional development planning and policies among government agencies at central and local level.
  5. More appropriate and suitable scheme of decentralizing power and authority from central to local level in managing and implementing the policies and programs of regional development in Indonesia.

 Chapter IV
  Sample and Local Setting

The population of interest in this research is all regional development programs which support the development of growth center areas in less developed provinces. The less developed provinces here include 13 provinces in eastern part of Indonesia.

Based on the implemented regional development programs such as GTs, KAPETs, and IADPs, three provinces in eastern part of Indonesia which have relatively complete experiences for applying such programs, i.e. East Kalimantan, Irian Jaya, and West Nusa Tenggara, will be chosen as the research samples. Moreover, due to the geographic condition of eastern part of Indonesia, it is important to examine which model and approach should be developed in order to develop many less-developed areas.

By taking three provinces of east Indonesia region as samples of this research, it is hoped that the research in other less-developed areas can be done efficiently. Furthermore, reasons to take such sample provinces are because of their experiences in dealing with the identified-programs such as GTs, KAPETs, and IADPs for the last ten years, and their position which are located in the national border area.



To measure the population sample in this research, the instruments that will be used are a survey methodology and spatial data which will based on central dan provincial basis. The instrument of the spatial data will use data from the central bureau of statistics other offices on the district basis.

The published regulation and policies from various related agencies in national and provincial level will be examined and observed their consistency and inter-linkages each other. Such instruments are merely important to understand and identify the implementation performance of the regional development policies and programs.


Data Collection and Analysis

The steps in this research project are described as follows:

  1. Collecting and compiling the data and information available from secondary resources such as from central and provincial level, such as Central Bureau of Statistics, Ministry of Home Affairs, National Development Planning Agency, Coordinating Minsitry for Production and Distribution, three designated-provincial governments, an other related agencies from government and private sector. Data and information from donor agencies such as the World Bank, ADB, USAID, JICA, OECF, and AusAID will be explored and examined as well.
  2. Primary survey by interviewing various resource-persons from related agencies in central and provincial level, both from government and private sector, to have an objective perception and argument for the integration of regional development planning and policies. A set of questionaire will be prepared to be facilitated interview for the primary surveys.
  3. Analysing data and information which will be examined qualitatively and quantitatively, by employing appropriate models and approaches. Computer-aided models for non-parametric statistical analysis will be employed for data analysis.

Implications and Applications of the Research Implications

The research will exercise and examine variables of those could influence the policy-making process, formulate and select priority of planning concepts, and make possibilities of the implementation.

Various issues of decentralization of power and responsibility from the central to the provincial and local governments in promoting integrated regional and area development is also to be elaborated furthermore.

The research will also seek the possibility of partnership between government and private investments on their implementation, and evaluate the process and impact on the regional development.

In summary, implication of the research is to have a better formula and more appropriate strategic scheme in developing the less developed areas together with the development of the economic potential areas, especially in eastern part of Indonesia region. In shorter way, it is the need to interface the economic and social development purposes in such an integrated development approach.



The research will challenges researchers to contribute ideas, concepts of development, and thoughts in such a more efficient management and analysis of the regional development process and mechanism in Indonesia, especially in the eastern part of Indonesia.


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