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Prosperity in Indonesian border cities: Challenges and policy recommendations

Updated: Oct 29, 2019


Shifting from security to prosperity

When we talk about border cities, what is on your mind? Are you referring to land borders? In Indonesia, we have plenty of border cities; those adjacent to Malaysia, Papua New Guinea, and Timor Leste. We also have border islands which have different problems as land borders where people can walk across. Crossing from one island to another requires more effort, and it may be a bit harder to obtain information on conditions on other islands.


Seven national border posts (we call them “pos lintas batas negara” or simply abbreviated as “PLBN”) have been built during 2015 until 2017 by President Joko Widodo’s administration. The posts are also equipped with customs, immigration, quarantine, and security (CIQS) facilities. As the completion of PLBN, the border cities are now open for massive infrastructure projects. Roads that enable mobility to the posts have been improved, traditional markets are provided to increase local trade, as well as water supply, sanitation, and health facilities. These projects have really changed the face of Indonesian border cities.


There’s been a changing development paradigm; previously the development policy was focusing more on security, now the President wants border cities to be the new centres for generating (local and regional) economic growth. The development of border areas has been one of President Joko Widodo’s nine priorities, the so-called “Nawa Cita”. The third of the priorities highlights the importance of developing Indonesia from the periphery to fortify these areas.

What are the challenges?

The next tasks will not be easy. The fundamental point to create growth may follow sharp lines, but the social, economic, and political contexts may not. Families seeking better lives will very often move based on economics, without regard for formal borders. Taking an example at PLBN Entikong in West Kalimantan, we will see women (often called “pengaleng”) buy[1] groceries (eggs, rice, etc.) from Tebedu Malaysia. They used to carry bags (sometimes they take their sons or daughters to help them) and sell the goods to local suppliers afterwards with a very small amount of benefit.

Several researchers (Ormond & Sulianti 2012, Klijs 2016, Phua 2016) have also revealed another phenomenon called “medical travel[2]” at the Indonesia – Malaysia border; the currently built road networks should also contribute to the increased number of cross-border patients’ mobility.

A different phenomenon is visible in PLBN Mota’ain, East Nusa Tenggara (NTT). NTT is the most southerly province of Indonesia. The province has suffered from underdeveloped infrastructure for a long time. Roads were poor, especially in rural areas. Access to water is also a major problem. The province is dry for much time of the year and in rural areas many of the villages rely on untreated local springs, rainwater harvestings, and other sources for water supplies.

Local champions and cross border festivals: innovations for prosperity

Nevertheless, as the Ministry of Public Works is developing PLBN Mota’ain, government spending has also been allocated for numerous infrastructure projects throughout the area. Several local farmers have felt the different ambience as they used to experience before. Although they still need more efforts to gain attention from local officials, the presence of “local champions” (I call them this way) have shaped this underdeveloped area to be more prosperous as they involve local community in organic farming practices. I had a chance to meet Ms. Ivon, owner of Fresh Farm, an Atambua local farm company. Located in Fatubaa village, East Tasifeto district, Ivon and 15 local workers have been cropping rice, corn, watermelon, edamame (soybean), tomato, eggplant, etc. to fulfil the demand of 325 customers in the city which earn them around IDR 20 million (USD 1,500) per month.



Figure 1. Local communities are involved to crop plants (left – middle). Harvested plants (right) (Source: Ms. Ivon’s photo collection)

Having PLBN as the new icon, cross border festivals have also been organised by the Ministry of Tourism in collaboration with local governments to attract tourists both foreign and domestic. These events are also intended to introduce local culture which would obviously generate income for local governments and people.


Figure 1. Fulan Fehan, cross border festival in NTT (left). Cross border festival in Entikong, West Kalimantan (right) (Source: www.travel.kompas.com)


Lessons learned and recommendations

Having done research at the border cities, I should raise a hat to President Joko Widodo for giving development priority to these areas.


1. Integrated economic areas

Since the government is planning to develop another PLBNs, for further improvement, it is worth to notice that developing an economic cluster for our own population alone will probably not be successful if border crossing is physically possible. I think far better is to have an “integrated” economic area available to everyone who can realistically travel throughout the area. That would also allow some specialization of opportunities or services on whichever side of the border. Let people cross either direction, but CIQS policies should definitely be in place since we experienced 7 (seven) cases of drug smugglers from Malaysia to Indonesia in 2016.


2. Facilities

Border areas should be well-equipped by proper water supply, sanitation, energy, and telecommunication facilities. Thus, people coming to the areas for amenities and enjoying festivals can spend more money to stay at homestays or local hotels, as well as immediately keeping in-touch with their colleagues at their home-countries via social media. To generate more income to local people, the PLBNs can also be utilised as “showcase” for selling local souvenirs and handicrafts.


3. Pricing Policies

Looking at the “pengaleng” phenomenon, it is obvious that price difference exists, and pricing policies might be used to discourage it. But that would distort prices within our own country. Free market pricing should lead to production of goods and services where they are most cheaply produced. In short, any policy that tries to prevent families or single workers from migrating for safety or economic advantage will have costs, and these costs will reduce the value of the aforementioned economic cluster. If we look at the political relations between Indonesia and its neighbours, I would think that any policies that produce good relations and free movement of people will reduce cross-border tensions.


4. "Temporary-worker" - programme

A "temporary worker" program might be useful. Having lessons from the U.S., President Trump’s administration has largely stopped this program. Under their old guest worker program, an individual could come into the U.S. (usually for seasonal agricultural work) and then go home again until the next year. When President Trump stopped this program, it became too risky for Mexican citizens to travel back and forth, so the worker brought his whole family to the U.S. illegally and they have tried to stay--often having children here who would be born as U.S, citizens, which creates another complication. I think people usually want to stay in their own countries--for family, neighbour and cultural reasons--and will emigrate (legally or otherwise) only if opportunities at home are not as good as those across the border. Trade agreements between countries would help reduce tensions and illegal crossings, and a temporary worker program is one kind of agreement that may be easier to implement than complicated trade agreements with balance of payment issues. Ideally, a guest worker program would allow worker movement both directions. An Indonesian citizen might be a good fit for a job in Papua New Guinea, and could work there without either sneaking across the border or bringing his family along.


5. Local Champions

Local governments should acknowledge and endorse more local champions. Why? Because they empower local people, and could strive in border areas by multiplying innovations and perseverance. I personally hope there will be another Ms. Ivon to give more prosperity for people in border cities.


6. Cooperation

Lastly, for whatever programs the Indonesian government is thinking about in creating economic clusters at the borders, I suggest to think about the incentives that we might inadvertently create for others wanting to come in--and the costs of keeping them out. Or, what economic value might be lost if the Indonesian workers could not cross the border for a job, or to sell something. Expand the pie, preferably in cooperation with other countries, rather than creating a smaller pie and trying to keep it for ourselves.



About the Author:

Adji Krisbandono (UMD-6) graduated in 2010 at IHS with a specialisation on 'Urban Land Governance for Sustainable Development'. He works as supervisor on policy studies at the Institute of Policy Studies, the Ministry of Public Works and Housing of Indonesia. He is now preparing several policy recommendations related to public private partnership in infrastructure development and management, accelerating economic growth in border cities, supply chain analysis of earthquake resistant housing program, and technology disruptions in infrastructure development.

[1] The Indonesia-Malaysia Border Trade Agreement regulates the goods from Indonesia that are allowed to be sold to Malaysia and the goods that are allowed to be bought from Malaysia by Indonesia citizens along the border area. It also regulates the value of goods that are allowed to be bought from Malaysia and the goods that are allowed to be sold to Malaysia. Those who own the Cross Border Identity Card (Kartu Identitas Lintas Batas, KILB) will not imposed a custom duty as they conducted cross border trade activity, but the value of goods is limited to RM 600 (Krisostomos & Mugasejati, 2011).


[2] Cross-border medical tourism has been seen as a way to enhance economic growth. In 2007, nine Malaysian states were visited by 341,288 foreign patients, who generated MYR1,313.4 m ($372.3 m) output, MYR468.6 m ($132.8 m) in value added, and over 19,000 jobs (Klijs et.al 2016).

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