- 15/08/2024
- Category: Commentaries
Author: Hana Aulia
Editor: Hafiz Noer
The New Indonesian Capital City Nusantara (Ibu Kota Nusantara/IKN) will be built with the concept of smart city (Otorita IKN, 2023). The development of a smart city in IKN aims to create an innovative, sustainable and technology-based city. This city is also present to provide smart ways to overcome urban problems that accommodate liveable and sustainable aspects. Yovanof & Hazapis (in Lee et al., 2013) revealed that smart cities must be interconnected and flexible between infrastructure and city residents who are oriented towards open access to the use of public infrastructure mediated by technology.
The Role of the Private Sector in IKN’s Smart City Development
To encourage the smart city concept in IKN, the Indonesian government adopts the use of technology as the main foundation in the development of IKN. The Indonesian government also collaborates with the private sector in realizing this smart city concept. Reporting from the website ikn.go.id (2023), the Nusantara Capital Authority is exploring collaboration with GRAB for the utilization of data analytics in planning the development of sustainable smart city infrastructure and oriented towards the convenience of residents. In addition, IKN is also collaborates with an electric vehicle battery company, PT Ningbo Contemporary Brunp Lygend Co Ltd (CBL) to create public transportation that supports zero net carbon (Tempo.co, 2024). The collaboration promoted by the Nusantara Capital Authority with various private sectors is included in the concept of public-private partnership (PPP) or government cooperation with business entities. Koppenjan (2005) defines PPP as a form of structured cooperation between the government and the private sector in the planning and/or provision of facilities or infrastructure, where both can share or reallocate risks, costs, benefits, resources and responsibilities. Grimsey and Lewis (2007) also added that PPP is a collaboration in building infrastructure based on public ownership.
According to Brinkerhoff (2011), the PPP agenda in managing public infrastructure development is carried out in several ways. First, taking a jointly determined development goal. Second, decision-making through collaborative and consensus-based schemes. Third, the organizational structure is egalitarian. Fourth, the collaboration relationship is based on trust between the two parties, both informal/formal. Fifth, synergistic relationships between partners. Sixth, prioritizing accountability for the outcome of development projects.
By looking at the series of PPP agendas and development time targets, the realization of IKN’s smart city certainly requires ‘collaboration’ works with the private sector. This is because the development of IKN’s smart city requires a lot of resources such as financing, natural resources, human resources, and the most urgent is the procurement of information technology. Meanwhile, according to Voorwinden (2021), the argument that is always built by PPP is that the private sector is able to offer more efficient managerial and problem-solving capabilities, especially in the procurement of technological products for smart cities. In addition, the private sector also offers innovative solutions by considering various problems in smart city development. With the PPP mechanism, smart city development will also be more open to public suggestions because it involves non-government actors.
Private Privatization in Smart City Development
However, with all the good sides of PPP practices, the involvement of the private sector in the development of IKN’s smart city also risks the privatization of planning (Shatkin, 2007). This is defined as the transfer of responsibility and power over urban development governance planning from the government/public sector to the private sector. Voorwinden (2021) mentions that this risk can occur because the private sector not only acts as a ‘vendor’ of smart city development, but they are involved in policy formulation through the data and innovation models produced. Meanwhile, when working on a development project, the private sector also has full access to identify public needs that they can utilize for commercial interests and ignore the interests of creating inclusive public spaces. Of course, this can lead to misalignment and a shift in values or public logic to market logic. The private sector, which tends to serve commercial interests, will focus more on short-term results, prioritizing profits and asset management that tends to be profit-based (Sandulli et al, 2017). Furthermore, the private sector can control access and information about development products. Thus, the government will also find it difficult to monitor the performance of these products.
The risk of shifting public logic to the market logic will also have an impact on the inequality of urban development. Short-term profit orientation creates economic development such as the growth of business activities—the development of companies/factories that can spark an increase in labor, and an increase in tourism that can invite domestic/foreign tourists. Therefore, a new spatial decentralization of elite consumers emerged that required basic needs such as housing, offices, and other industries that were more efficient and oriented towards urban elite consumers (Bello, 2004). A spatial design that only accommodates the needs of upper-class consumers with minimal provision of public-inclusive facilities will lead to social polarization. This means that the gap between the lives of the upper and lower classes is increasingly visible (Moulaert, 2001).
The Impact of PPPs in Creating Urban Development Inequalities
Indonesia has several cities developed by the private sector. One of them is BSD city in South Tangerang. The city was built by PT Sinar Mas Land. This city also has a smart city concept equipped with housing facilities, apartments, hotels, schools, hospitals, and even golf courses. Of course, these facilities are priced at high prices and only target the upper middle class. In contrast to other public infrastructure in South Tangerang city, such as roads that are still damaged at several points. The poor quality of roads has led to the lack of integration of development between areas, such as housing drainage and roads. This can trigger flooding and congestion (Kompas, 2020). This phenomenon illustrates that development controlled by the private sector does have better quality. However, its utilization is far from inclusiveness for all groups.
Meanwhile, IKN-private sector cooperation, for example with a Chinese company, PT Ningbo Contemporary Brunp Lygend Co Ltd (CBL) and a South Korean company, LG Energy Solution to produce electric vehicle batteries at IKN, also has the potential to cause inequality. In accordance with Wijaya & Sinclair (2024), the cooperation has led to inequality in national development. The forms of inequality include economic and environmental inequality felt by the communities around IKN, especially Morowali Regency. This is due to the area is a supplier of the main raw material for battery production, namely nickel. These mining activities have an impact on environmental damage in Morowali (Syarifuddin, 2022). In addition, the Morowali community also does not feel the existence of electric vehicle facilities because these facilities only exist in IKN. The various collaborations between the Nusantara Capital Authority and the private sector raise concerns about the imbalance of IKN’s smart city development if it is taken over by the private sector completely without any control from the government.
Who’s IKN for?
Reflecting on several case studies described above, PPP activities in IKN’s smart city development have the potential to create inequality. In fact, if we look back at the basic principle of IKN development, it is equitable development (Buku Saku Pemindahan Ibu Kota Negara, 2021). This is based on the reality that 59% of GDP sources in Indonesia are located in Java Island, whose area is only 7% of all Indonesia (Kompas, 2023). The urgency should be a reminder that the relocation of the National Capital is due to the lack of development and increasingly complicated urban problems in Java. The big idea of IKN’s smart city as an agenda for equalizing urban development at this point is again questioned considering the success and implementation of projects that seem to lack an agenda of creating space for the public. The big name “smart city” is ultimately prone to fall into mere branding and recognition instead of being created for the benefit of the public.
Therefore, the Indonesian government needs to ensure that the PPP scheme implemented in the development of the IKN’s smart city continues to be oriented towards inclusiveness and the creation of public spaces. Such as the PPP practices carried out by Hong Kong. Referring to Cheung et al. (2009) Hong Kong has implemented best practices of PPP by creating a framework that integrates local (Hong Kong) and international insights and experiences. This can be realized by collecting local aspirations and needs in the IKN’s smart city development process. Of course, this process can create public infrastructure that is inclusive and maximally beneficial to the community. In other words, PPP practices can have a good impact if the development still considers the inclusive public interest.
References
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Bello, W., De Guzman, M., Malig, M.L. and Docena, H., 2005. The anti-development state: The political economy of permanent crisis in the Philippines. Zed Books.
Brinkerhoff, D.W. and Brinkerhoff, J.M., 2011. Public–private partnerships: Perspectives on purposes, publicness, and good governance. Public administration and development, 31(1), pp.2-14.
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