What's Fueling Jakarta's Anger

Inequality, overpopulation, and filth threaten its stability

The Tiffany and Cartier jewelry stores opened just this year at the marble-floored shopping mall in the heart of Jakarta. By day, well-heeled shoppers arrive in Mercedes-Benzes. But behind the building, squatters sleep next to an open sewer that empties into the Ciliwung River, brown with human waste and heavy-metal pollutants. Every year, hundreds of thousands of squatters come looking for work in the capital of Indonesia, only to wind up in shanty towns--as swank boutiques, luxury housing, and five-star hotels eat up available land.

The widening gap between rich and poor is a threat to social stability and is blamed in part for the riots that left parts of Jakarta charred and two people dead in late July. The problem is made worse by the political uncertainty surrounding President Suharto's tenure.

Jakarta's per capita income is three times the Indonesian average of $1,000. But although the living standards of most people have increased--thanks to national economic growth of 8% a year--the rich are getting richer faster than ever. Instead of celebrating their own progress, the working class who can now afford a 20 cents bus ride grind their teeth with resentment when a BMW roars past. "The magnitude of social jealousy is amazing," says Laksamana Sukardi, an opposition party former official. "The potential is very explosive."

Even more explosive is the population pressure. Shortages of land, infrastructure, and clean water keep living standards barely tolerable for all but the wealthiest, says Fritz H. Loebus, deputy head of the U.N. Development Program. With its 17 million people expected to reach more than 20 million by the turn of the century, Jakarta and its suburbs are the third-most-polluted urban area in the world. Only Bangkok and Mexico City are worse. High-rise construction has driven land prices to $5,000 a square meter in the business district, compared with 50 cents a square meter in the hinterlands, according to property consultants Jones Lang Wootton. Loebus says the city will run out of water suitable even for bathing within 10 years.

Domestic politics keep any concerted search for a solution to Jakarta's problems on hold. Major decisions are usually left to Suharto, but the 75-year-old President is busy allaying concerns over his health and cracking down on opposition politicians whom he blames for the riots. And reforms have always been hampered by an awesome bureaucracy: a city governor, a provincial governor, nine mayors, several district administrations, and "coordinating committees" that administer the Jakarta metropolitan area under the Home Affairs Ministry.

New infrastructure is being built at a breakneck pace but cannot keep up with growth. In Jakarta, only one house in five has a telephone, and many lines barely work, despite a drive by the state utility Telekomunikasi Indonesia, or Telkom, to install 2 million new lines nationwide. Although the government has built a network of new toll roads, they turn into parking lots at rush hour. Plans for a subway system remain in the early stages. Faulty electric lines keep new power plants from supplying enough electricity. In many houses, there is too little juice to run two air conditioners and a hair dryer at once. There are no sewage plants, and building them is a low priority.

The government has set a few solutions into creaky motion. One is relocating thousands of would-be migrants to outlying islands every year. Another is to encourage the construction of safe, clean housing in the suburbs, hoping that migrants will seek jobs there and settle nearby. "We want the population movement from rural areas to stop at Jakarta's suburbs," says Mulyadi Widodo of the Home Affairs Ministry.

NEPOTISM. The private sector also is seeking to make a business opportunity out of Jakarta's mess. Lippo Land Development is building two self-contained "satellite cities" near the Jakarta suburbs of Bekasi and Tangarang, with their own roads, power supply, and wastewater plants. Commercial tenants, including a J.C. Penney store, a McDonald's, and assembly plants for Sanyo, NEC, and Matsushita products, have already moved in. Low-income housing is slowly being built around them. "We hope we will not only stop urbanization from the outside but also bring people out of Jakarta," says Herman Latief, president-director of Lippo Cikarang, one of the two projects that cover a total of 7,000 hectares.

But many plans go awry because of the corruption and nepotism inherent in doing business in Indonesia. Latief says his company has paid the government $1.8 million to build low-income housing in accordance with regulations, but he's not sure whether the money is being used as intended. Another developer, who asks not to be named, says bribes paid to government officials to get construction permits accounted for 10% of first-year operating costs.

It's in this gray area of opportunity that the grown children of Suharto are profiting. His daughter, Siti Hardiyanti Rukmana ("Tutut"), who inherited the status of First Lady after the death of her mother in April, has acquired a 124-hectare plot of land in central Jakarta to build a $285 million mass-transit terminal--without bidding for the project. Next, she plans to build a subway system with her brother Bambang Trihatmodjo. Diplomats say these investments will be protected by their brother-in-law, Prabowo Subiyanto Soemitro, who was recently promoted to major general in the Indonesian army.

SQUALID SPRAWL. But without a change in the way it is managed, Jakarta risks degenerating even further into an environmental disaster area. Some experts predict an apocalyptic picture by 2015 of 35 million people afflicted with bronchi-al ailments and other epidemics in a squalid sprawl inadequately controlled by poorly trained officials. Even now in Jakarta Bay, fish breed in a lethal cocktail of chromium, nickel, lead, mercury, textile dyes, and other factory effluent, says Dan Millison, a U.S. consultant to Indonesia's Environmental Impact Management Agency.

To stave off a crisis, experts say Suharto must urgently begin reducing the concentration of government offices, military bases, and finance and manufacturing industries in Jakarta. That would help the government divert more population toward other parts of Indonesia. "If Indonesia makes a sequence of good choices over the next 10 years, [it could become] one of the great metropolises of the world--of reasonable size and with a good quality of life," says J. Vernon Henderson, professor of economics and urban studies at Brown University. The longer the problems fester, however, the higher the risk of upheaval in a post-Suharto era.