Please note - this is a temporary window. id21 is joining forces with Eldis and therefore the id21 website has been suspended. Soon all id21 content will be available on the Eldis website.

Tackling corruption to improve housing services in Indonesia

Corruption is widespread in Indonesia. In the capital Jakarta, corruption in the delivery of housing services is particularly damaging to poor people. What can be done to combat corruption? What lessons can be learnt from the anti-corruption initiatives in the Solok District of West Sumatra Province?

A report from Loughborough University in the UK provides a case study of corruption in the housing sector in Indonesia. Examining the experiences of Jakarta and Solok District, the report shows how improving governance to reduce corruption can improve service delivery.

Jakarta has a population of 8.3 million and its greater metropolitan area (Jabotabek) is home to around 23 million people. The population has grown faster than the local government’s capacity to provide housing and other services for residents. Land prices in Jakarta have risen and housing has become unaffordable for the majority of people who work in the capital. The city’s transport system has also come under increasing pressure.

A number of government policies have been introduced to improve housing provision for poor people. A state-owned property development company – Perum Perumnas – is responsible for providing affordable housing for low income groups. There are also regulations to ensure that every new property development includes some low cost homes. However, deeply rooted corruption in Jakarta has undermined these initiatives.

Key findings of the research include:

Corruption at Perum Perumnas has resulted in financial losses and a lack of strategic focus on housing for low income groups.
There is bribery and corruption related to granting business licences. This discourages private sector participation in providing affordable housing.
Corruption has led to the over-development of luxury homes and a lack of affordable housing in Jakarta. One consequence of this is environmental damage and increased flooding risk

Reducing corruption and simplifying bureaucratic processes in the housing sector would greatly increase poor people’s access to housing in Indonesia. The Governor of the Solok District of West Sumatra Province has been working to reduce corruption since 1997. The District has introduced a range of successful anti-corruption initiatives which have improved service delivery. Among the policies introduced are the ‘one door’ scheme, which simplifies the business licence application process and enhances freedom of information.

The author concludes that:

Eliminating corruption and cutting bureaucratic procedures would encourage the private sector to build affordable homes.
The ‘one door’ scheme in Solok District could be replicated in Jakarta.
The government in Jakarta needs to reassess its budget priorities and shift the emphasis from law enforcement to housing provision.
Perum Perumnas needs to be reformed to rid the company of corrupt practices.
A finance facility could be set up to provide housing finance for people excluded from commercial financial services.
In the longer term, the Indonesian government should explore policies to encourage new economic centres outside Jakarta.

Source(s):
‘Good Governance and Provision of Affordable Housing in DKI Jakarta, Indonesia: A case study’, Water, Engineering and Development Centre (WEDC) Loughborough University, by Danang Widoyoko, Series Editor: M. Sohail, 2007 Full document.
Further details about this research project ‘Accountability arrangements to combat corruption’ can be found on the DFID Research for Development website Full document.

Funded by: UK Department for International Development (C-64)

id21 Research Highlight: 8 June 2007

Further Information:
M. Sohail
Water, Engineering and Development Centre (WEDC)
Loughborough University
Leicestershire, LE11 3TU
UK

Tel: + 44 (0) 1509 222885
Fax: +44 (0) 1509 211079
Contact the contributor: WEDC@lboro.ac.uk

Water, Engineering and Development Centre, Loughborough University, UK

Views expressed on these pages are not necessarily those of DfID, IDS, id21 or other contributing institutions. Articles featured on the id21 site may be copied or quoted without restriction provided id21 and originating author(s) and institution(s) are acknowledged. Copyright © 2009 IDS. All rights reserved.

id21 is funded by the UK Department for International Development. id21 is one of a family of knowledge services at the Institute of Development Studies at the University of Sussex. id21 is a www.oneworld.net partner and an affiliate of www.mediachannel.org. IDS is a charitable company, No. 877338.