Building Indonesia's Future Through Smarter Cities


MARCH 25, 2015

It is 6 p.m. in Jakarta and commuters are heading home. The streets are gridlocked with cars, buses, trucks and motorbikes creeping along at an average speed of 12 kilometers per hour — slightly faster than the speed of a person jogging. The number of vehicles in Jakarta has grown at almost 11 percent annually, while the road network has expanded by less than 4 percent annually. The city's transportation infrastructure struggles to cope with the sheer volume of vehicles, resulting in a negative impact on productivity, economic growth, the environment and the quality of life of the millions of commuters stuck for hours in traffic every day.

In 2008, the United Nations observed that more than 50 percent of the global population lives in towns and cities — a milestone in human history. By 2050, it is estimated that 75 percent will live in urban areas.

The pace of urbanization is accelerating around the world. Indonesia's cities are already the economic engines of the nation and will be more so in future. These economic engines attract people from all over the country and even from abroad, who come to seek employment and business opportunities. Yet urbanization brings specific challenges along with the benefits.

Firstly, larger pools of unemployed people in cities contribute to higher crime rates. Jakarta ranks below Mumbai and Ho Chi Minh City in terms of safety and security on the Economist Safe Cities Index 2015. As the capital city of a G-20 nation, Jakarta must take on the challenge of improving the safety and security of its citizens and visitors.

Another challenge brought about by the accelerating pace of urbanization is the issue of waste management. As centers of population growth, consumption and resource usage, cities generate a tremendous amount of waste. The residents of the Greater Jakarta metropolitan area, also known as Jabotabek, generate over 35,000 cubic meters of garbage daily, enough to cover a football field to a depth of over five meters. Where waste is not collected regularly and treated properly, it could lead to serious public health and environmental issues.

Thirdly, cities must develop and attract the talent that drives economic innovation and business growth, in order to create employment, education and housing opportunities for citizens.

Leading cities such as New York, London and Singapore have already undertaken economic development studies and competitiveness benchmarking, and created strategies for attracting businesses and talent from around the world in order to maintain their competitive position regionally and internationally.

Lastly, with the steady influx of people moving to Indonesia's cities, city managers face growing pressure to deliver basic public services to their citizens. This challenge is made starker considering the current ratio of public servants to citizens in Indonesia is 1.9 to 100, compared to 8.4 to 100 in developed countries.

Cities occupy 0.5 percent of the world's land surface, yet consume 75 percent of its natural resources. City leaders are now presented with difficult choices if growing cities are to remain livable. As mentioned by PricewaterhouseCoopers advisor Malcolm Foo, "City leaders must develop smarter plans for managing their cities — they must develop smarter solutions to keep pace with the scale and acceleration of today's urban challenges."

Characteristics of a smart city

The smart city concept is gaining currency among city leaders worldwide to address the challenges of rapid urbanization. While several definitions of the term exist, they generally refer to cities that harness technology and engage citizens to enhance livability and improve the citizen experience. Enabled by a highly functioning, integrated information and communications technology platform, a smart city:

  • Maintains an integrated transportation infrastructure that serves everyone — the elderly on foot, children on bicycles, people commuting by public transit and private vehicles to work.
  • Works towards improvements in safety and security in a manner that corresponds to advancements in technology.
  • Manages its environment effectively, such as dealing with waste and waste water, reducing its carbon footprint, and managing energy consumption.
  • Implements education and innovation hubs to facilitate collaboration between business, academia, talent and government, as part of a robust economic development plan.
  • Provides e-government services to its citizens and businesses, such as online license and permit application.
Examples and benefits of a smart city

One example of how a smart city tackles traffic congestion is found in Sydney. Road and traffic sensors around the city send data to a traffic control center, which then coordinates traffic lights to facilitate a smoother flow of traffic. This system allows motorists to spend less time waiting for traffic lights to turn green during peak hours and helps emergency vehicles to respond more quickly during emergencies.

To address safety and security, audio and video sensors now exist in many cities around the world to detect suspicious activity, triggering signals for law enforcement to respond. Through a program called Operation Virtual Shield established by Chicago's former mayor, Richard Daley, the city has effectively used public surveillance cameras to reduce its crime rate. Two months after cameras were installed in Humboldt Park, the crime rate dropped 20 percent.

A new waste management system based on the optimum collection of waste is another smart city solution. A Finnish technology company has recently worked with New York City to implement sensors in garbage collection points. The sensors measure the amount of the garbage piled up at each collection point, transfer this data to the municipal waste management agency, where the system calculates the most effective collection route based on priorities.

A smart city develops innovation hubs to maintain its competitive edge. Biopolis and Fusionopolis in Singapore, two industrial parks for startups and technology firms, are located in close proximity to the National University of Singapore in order to facilitate collaboration between business and academia.

Other possible solutions by the smart city concept, which address the public services problems, is transparency, more self-service access to government services and a wider level of participation in the decision-making processes of local government. For example, the public may be able to review government procurement data and vote on their city budget priorities, as is the case in Cordoba, Spain.

Three steps to a smart city

Although some of these concepts seem futuristic, they are feasible and, in fact, already being implemented in leading cities around the world. There are three essential elements to begin the journey to becoming a smarter city.

Firstly, there must be strong leadership. As stated by Marina Tusin, people and change leader for PwC Consulting Indonesia, "A leader with a strong vision must be able to drive the people to put shared interests as the priority and keep their sights on the common goals."

City leaders who embark on the smart city path may be tempted by grandiose plans that involve iconic projects. Instead of being distracted by these showpieces, the leadership of the city must align behind a vision for the city that addresses its most pressing needs to improve the livelihood of its citizens. The needs may be social, environmental or economic in nature; they may involve improving the city's physical infrastructure for its roads, power grid, or technology, or they may involve developing more cultural and recreational amenities.

Whatever the priorities of the city, strong leadership is needed to bring together different agendas within the city bureaucracy and break down organizational silos that may hinder the development of the city's strategy and realization of its vision. In Indonesia, Ridwan Kamil, Tri Rismaharini, Basuki Tjahaja Purnama, and Illiza Sa'aduddin Djamal are city leaders who are changing the way their cities operate to effectively address their citizens' needs.

Secondly, planning and collaboration between city stakeholders is essential. Each agency in a city bureaucracy is traditionally set up to fulfil a specific mission. As such, many city governments lack a structured way for agencies to collaborate on city solutions that require an integrated approach across their jurisdictions. Yet complex projects require collaboration between government agencies and between government and city stakeholder constituencies including citizens, universities, and the private and not-for-profit sectors.

One example of successful collaboration in addressing the city's challenges is in Budapest, where research institutes manage the Innopolis program, an economic development initiative funded by the European Union that helps startups with the goal of boosting innovation and entrepreneurship.

In Antwerp, citizens successfully lobbied the government for an abandoned railway yard to be converted into a green space for the citizens to enjoy. And in Venice, Unesco proactively promotes discussion forums on sustainable tourism and cultural heritage in order to trigger public participation in protecting and maintaining the city. Similar approaches may be applied in cities in Indonesia.

Thirdly, communication is important to generate partnerships and engagement with stakeholders and to realize smart city projects. Communicating small successes consistently several times a year is necessary to keep citizens engaged, rather than keeping them waiting for a benefit to be realized in the distant future. Recognizing the importance of this, Jakarta has launched its own smart city website,, to optimize service for residents.

In Amsterdam, residents can easily access the Amsterdam smart city website, where the information on new smart city-related events and initiatives is updated on a daily basis. Effective communication raises smart city-related initiatives to an international level, bringing benefits to the city.

The Singapore International Water Week was initiated in 2008 to be the annual gathering of water-related practitioners, government officials, and industry leaders. The event generated S$13.6 billion ($9.9 billion) worth of new projects in 2012, establishing the city-state as a global center of excellence for water management.

Ready to implement?

Looking at the challenges faced by Jakarta and other Indonesian cities today, while also looking at the potential solutions to address the challenges, the smart city path offers a promising — and necessary — journey to the future of Indonesian cities. As PwC's smart city expert Foo notes, "Solutions for the cities of the future must be modular and built to keep pace with changes in citizen expectations and advancements in technology. Processes, technology and thinking that worked in the past may not support the uncharted future."

On the negative side, the rapid pace of urbanization in Indonesia, as well as in other parts of the world, is putting pressure on its cities to respond quickly. On the positive side, there are existing smart city solutions and concepts that can be adopted now to improve the lives of Indonesian citizens.

Malcolm Foo is a global adviser on smart cities, Andana Priantono is a consultant and Charles Vincent is president director, all from PwC Consulting Indonesia.