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| Ridwan Kamil explores solutions on how to finance infrastructure projects for Bandung, Indonesia. Supplied |
What are the challenges of being mayor of Indonesia’s third largest city?
Bandung is a vibrant city of 2.5 million inhabitants and 1 million day trippers who come from the surrounding areas to the city every day to work and study. With 30 universities within our territory, it’s also a very young city.
Economically, Bandung is doing well. In 2015, we had 6 million tourists and our economy grew by 8%. Sixty percent of our economy is made up of small and medium-sized enterprises. However, like many cities around Asia and the Pacific, we are struggling to finance large infrastructure projects that are badly needed to cope with growing urbanization.
What specific problems do you face?
Our most urgent problem is transport. In the 2 years I have been in office, we launched the so-called Bandung Urban Mobility Project, which includes plans to develop infrastructure like light railway train lines, a bus rapid transit system, a cable car, as well as initiatives aimed at changing the ways people commute, like introducing free school buses and promoting a bike-sharing scheme.
We have been successful in changing attitudes toward transport. For example, the youth have responded positively to our bike-to-school initiative. However, problems remain in how to fund future large-scale infrastructure developments.
Our second problem is housing, which is affected by the same issues. Bandung municipality has land to build new homes, but we do not have the capital to fund the construction of affordable housing for medium- and low-income families.
The level of investments needed to support projects in transportation and housing cannot be supported by public finance alone. Other forms of financing, such as those involving the private sector, are the only way forward.
What are the solutions that you have been considering?
“In Bandung, we hope that by successfully managing PPPs at the local government level, we could set an example for the rest of Indonesia. This could be a new development paradigm for the country and the rest of Asia and the Pacific.”
Ridwan Kamil, Mayor of Indonesia’s Bandung
We found the discussions we had with ADB experts extremely useful at pointing out possible solutions to our problems, especially in the area of public private partnerships (PPP). For example, we heard about the importance of setting up a PPP center, a single port of call for all that has to do with PPPs, like what the Philippines did.
PPPs are an extremely powerful tool for supporting big infrastructure at the national level, where the sums involved are large. This is appealing for private equity funds. But the need for financing at a local level is also huge. In Indonesia alone, this amounts to trillions of dollars. In this sense, the problems we face in Bandung are typical of many cities from across Indonesia and Asia and the Pacific.
In Bandung, we hope that by successfully managing PPPs at the local government level, we could set an example for the rest of Indonesia. This could be a new development paradigm for the country and the rest of Asia and the Pacific.
Is governance also an area you are looking at?
Over the last 2 years, we reformed governance in Bandung by adopting information technology solutions. Through our e-governance initiative, SMARTCITY, we introduced 300 software programs that address every aspect of how the city is run, from education to traffic control. Mobile phones are ubiquitous in Indonesia, and we realize that digital bureaucracy is extremely efficient. Bandung is now ranked first in terms of city governance efficiency in the whole of Indonesia.
We have also introduced measures to reduce red tape. For example, businesses under $50,000 do not need permits in Bandung. This led to 30,000 new businesses being formed in 5 months.
We also launched a microcredit initiative in the city. To date, more than 10,000 beneficiaries have received up to $3,000 each without the need to have equity as collateral, and we are happy to report that there are no non-performing loans in this scheme. These are people who in the past would be preyed on by loan sharks.
Bandung is growing and we have been extremely successful with many initiatives. But for our next step, we need private capital to come to the city and invest in our infrastructure.
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