Jakarta’s Widodo Tested as Floods Show Infrastructure Gap
Stock Chart for Astra Otoparts Tbk PT (AUTO)
Jakarta Governor Joko Widodo is confronting the first major test since his election in September as floods that have claimed at least 20 lives highlight infrastructure gaps in Indonesia’s largest city.
Residents in North Jakarta are still stranded while more than 18,000 have been evacuated from their homes, as floods that started Jan. 15 submerge areas of the city. The death toll has climbed to 20, according to the Jakarta health office, and the inundation has disrupted businesses and swamped the offices of President Susilo Bambang Yudhoyono.
The inundation brings to the fore infrastructure failings in Southeast Asia’s biggest economy as the government struggles to meet spending targets for projects and reduce bottlenecks restraining growth. The lessons of inadequate protection against natural disasters were seen with Thai floods in 2011 that disrupted transportation and shut factories, hurting industrial output and putting pressure on prices.
“Jakarta accounts for a huge part of Indonesia’s gross domestic product,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. “Certainly how Jakarta functions as a city cannot be understated in terms of how investors view Indonesia. From that point of view, it does speak of infrastructure strains and capacity trying to keep up with the evolution of the economy.”
The capital contributed about 16 percent of Indonesia’s economic output in the third quarter last year, according to figures on the website of the National Bureau of Statistics.
PT Astra International (ASII), Indonesia’s biggest car and motorcycle distributor, said its flood-affected plants in the Sunter area of North Jakarta returned to normal Jan. 18, after the company shut them the previous day.
The plants in Sunter produce about 340,000 Toyota Motor Corp. (7203) and Daihatsu Motor Co. cars, as well as about 1 million motorcycles annually, Yulian Warman, a spokesman at Astra, said in a phone interview today, adding that the production shortfall can be covered within days by overtime.
Astra International shares fell 0.7 percent to 7,700 rupiah as of 2:52 p.m. in Jakarta trading. PT Astra Otoparts (AUTO), a car parts distributor of Astra International, rose 6.2% to 3,850 rupiah Jan. 18. The stock was unchanged as of 2:41 p.m. today in Jakarta.
A shopping center in North Jakarta run by PT Lippo Karawaci (LPKR), Indonesia’s second-biggest developer by market value, was closed Jan. 18 after 19 water pumps couldn’t cope with the surge of water inflow, Viva News reported on its website. Danang Kemayan Jati, a spokesman at Lippo Karawaci, couldn’t immediately comment when called on his mobile phone today, saying he was attending a meeting with Widodo.
Retailers in Jakarta lost 460 billion rupiah ($47 million) due to the floods, Bisnis Indonesia reported Jan. 17, citing Satria Hamid Ahmadi, secretary general at the nation’s association of retail businesses. Flooding in other areas across the country brought retailers’ total loss to about 1.2 trillion rupiah, the report said.
The rupiah declined 0.6 percent to 9,690 per dollar as of 1:47 p.m. in Jakarta, the biggest drop since Dec. 17, prices from local banks compiled by Bloomberg show. A daily fixing used to settle the derivative contracts was set at 9,823 today by the Association of Banks in Singapore. The Jakarta Composite index was down 0.6 percent at 2:44 p.m.
Widodo beat former Governor Fauzi Bowo, who was seeking a second term, with 53.8 percent of the vote last year. Widodo, former mayor of Solo in Central Java, received backing from opposition parties led by former President Megawati Sukarnoputri and former vice-presidential candidate Prabowo Subianto.
Widodo and Bowo both pledged to improve the mass transit system, which has been delayed since studies were first conducted in the 1980s. Traffic gets so bad that motorists pay bystanders to join them in car-pool lanes during rush hour.
“The population was hoping that magic happens” when Widodo took office last year, Iwan Gunawan, senior disaster risk management specialist at the World Bank, said in a phone interview from Jakarta Jan. 18. Improving the transport of goods to and from the port, “saving people’s lives and ensuring that some of the working population are better protected, with his popularity that will be high on his” agenda, he said.
Jakarta ranked 181 out of 221 cities for personal safety in a survey conducted in 2011 by advisory company Mercer that ranked internal stability, crime levels and law enforcement effectiveness. The city ranked 140 in overall quality of life, below Singapore, Kuala Lumpur, Bangkok and Manila.
“He has only now taken office and this is his first big challenge since taking office,” said Sunny Susanto, 27, whose family lost one of their cars in the floods. “I don’t expect he will be able to organize and fix all the mistakes the previous governments have made but if the same thing happens again next year with the same silly excuses then I will reconsider if I would vote for him again.”
The floods affected 41 square kilometers (16 square miles) of Jakarta, representing about six percent of the city’s land area, Sutopo Purwo Nugroho, a spokesman at the National Agency for Disaster Management, said Jan. 18.
More than 18,000 people in the city of 9.6 million were evacuated from their homes, Nugroho said. In 2007, floods submerged 232 square kilometers and forced the evacuation of 320,000 people, according to Nugroho.
Jakarta sits in a low-lying area with 13 rivers and more than 1,400 kilometers (870 miles) of man-made waterways, making it prone to flooding, according to the World Bank. About 40 percent of Jakarta’s land area is below sea level.
Last week’s rainfall from the neighboring city of Bogor, which is located about 190 meters to 330 meters above sea level, caused rivers in Jakarta to overflow their banks, Waskito Pandu, a spokesman at the Ministry of Public Works, said Jan. 18.
Short-term measures to reduce the risk of flooding include widening the banks of Jakarta’s four biggest rivers, Waskito said. The width of Ciliwung, the largest river, should be increased to 60 meters from currently 25 meters, he said.
“I just stayed home and made no money for two days,” said Muhamad Sugeng, a 53-year-old taxi driver who said he was trapped in North Jakarta for about six hours last week after dropping off a passenger. “There are so many problems in Jakarta, such as traffic jams, floods and public transportation. Jokowi needs to focus on floods as this problem can hurt people like me, affecting our ability to earn money to buy food,” he said, referring to Widodo by his nickname.
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