Kasiba Driyorejo, a Solution to Urban
Development

Large Scale Land Management of Urban Areas in
Eastern Java

by Bob Eko Kurniawan

Introduction

Land is the necessities for human life and it is also one of the economic factors for
production. Indonesia is a liberal country specifically in economic area, although the
Indonesian government constitutional law no. 33 year 1945 said that “The land, air
and all the natural resources are under the government authority for the sake
of public interests”1 but in practice, for economic development reasons the land
became one of the free market objects as a consequences for this matter it attracted
many investor both from overseas and domestic. The disadvantage of this situation
is sometimes attracts speculators in this case, the land speculators. This situation in
the future could cause the low -income people to not having the opportunity to buy
In the beginning of the 1990s the idea of developing land banking management
start to emerge. To solve this problem, the government of Indonesia in this case the
Ministry of Infrastructure and Settlement came up with the “Kasiba” idea or in
English “Pre Developed Areas”. This solution has been constitutionally declared
with the government act No. 80 year 1998. The acts intend to manage the land better
and to prevent it from speculators interference.
The Kasiba project is located in Surabaya city. The project called Driyorejo
Kasiba Project. Surabaya as the second largest cities beside Jakarta is the main gate
of central distribution for eastern Indonesia, which is developing into central trade,
economic area, information, production and distribution. Surabaya is also has a large
the land as a based to construct a better house.

Seaport which handles the trade goods from all over the world. As the consequences,
support of infrastructure, facilities, and public utilities are in need. The recent
implementation of the new authority decentralization policy for every province in
Indonesia means the bigger Region/county authority, causing the need for new
regulation of lands law, facilities and infrastructure so the optimum regional
development could be achieved. The government as the regulator and facilitator for the main course and strategies, should oriented to people welfare. Perum Perumnas or National Urban Development
Corporation as a state owned company along with the other state owned counterpart,
from the beginning had covered the above issues by developing the New Area
Policy the “Driyorejo New Town” in east java province. The main objects of this
consortium are to help the region authority to provide lands. The management
considering the land development policy which is constructed with holistic pattern
and. The Kasiba project is a large -scale project it has minimum requirements for the
dwellings only to 3.000 units. This project also intended to develop a new town with
central business district (CBD) with good infrastruct ure facility.

Problem Definition

Most of the people in Indonesia have the mentality to prefer living in the land based
house or horizontal type house it is part of the cultural heritage. This tradition is
based on paternalism culture that indicates the man, as head of the family must
obtain a land as his family pride. From that context one can also made a conclusion
that land is a necessities in Indonesian people that is why it has attracted the
speculators to invested money in land to speculation motive. T his situation had been
going from the beginning of Indonesian history until present.
With the recent urbanization phenomena the land speculator became more
accumulated in amount especially in big cities in Indonesia like Jakarta and
Surabaya. Many of the land speculators act as a real estate company, the problems
that can occur from this situation began from incompetence to acquire the land with
proper legal matter, incompetence to construct the house with proper technical
standard, did not provide the people with adequate land for environmental purposes
that could led to flooding and any other catastrophe. All of those matters caused the
location of the houses spreading in further area in order to achieve cheap price for
the land. This means the agricultural area for farming are becoming less than
expected, the increase of the government investment in infrastructure and the fact
that low income people had to moved out far from their works place. These
problems are common to be found in under developed and developing countries.
The main focus of this project is how to manage the land in order to provide the
low-income people with adequate land and infrastructure as the main target of the
government for urban development. The idea of this paper is to overcome the
shortcomings that occurred in the project and hoping with this course I can have
some useful feedback to make the project successful.

As an archipelago country, which divided into eight big regions as the central of
activities, most of the Indonesian people are living in rural areas. Although the
country is developed into industrial country but most of the people are working as
farmers in rural areas. Housing condition for people in rural areas does not need
special attention because they already had their land and a house. The only thing the
government concern in this matter is to distribute economic equality, because the
main centre of economic growth is in Java and Bali islands. The type of house in
rural area is typically clay roofed and bamboo walled house. This type of house is
self help type with the owner as the builder and usually he got help from neighbours
in “gotong-royong” spirit (gotong-royong is the traditional way of Indonesian people
to help each other in building a community). The material for this kind of house is
very cheap because it came from native resources.
Figure 4: Common house in rural area of Indonesia with clay roof and bamboo wall.
The problem that usually occurs with people who living in urban area, because
the condition of their houses usually in bad shape this means a bad sanitary, poor
building materials, lack of infrastructure. Some of them are squatters with neither
legal land nor house certificates. The government had came up with solution to
overcome that problem by helping them in housing and relocated them into another
place/land provided with infrastructure and starting capital money all of this work,
which were done by the Agency of Transmigration and National Land Institution.
Big city also had problem, there are many slum areas in big city like Jakarta and
Surabaya caused by the dense populated area crowded by peoples.
Government Policy and Programme.

The main idea of the policy is house are people rights and responsibility, the
government only play the role as facilitator and enabler stimulates the active role of
the people and the private sector.

The Strategy of Housing in Indonesia

The first government action in urban housing was in July 18th, 1974 with the
government act no. 29. This act formed the National House and Urban Development
Corporation (later become the National Urban Development Corporation) as the
only government owned corporation, which take responsibility in building houses,
and provides adequate settlements for low-income people in urban areas throughout
the 26 provinces in Indonesia. The idea of this act is to provide the low-income
people in urban areas with adequate and affordable houses.
This company began the urban developing in urban areas around Jakarta city and
made some improvement in housing condition for low-income people. The
government appointed the National Saving Bank as the national mortgage institution
by the Ministry of Finance act no. 49 year 1974. The National Saving Bank
institution provides low interest loans up to 90% (with very small amount of
interest) from total price of the house and the low -income people must pay the rest
10% within 1 year. These low-income peoples must be selected with certain criteria
before they can receive the loans. The National Saving Bank is not the only
institution that provides the loans for housing, there are several private banks, which
can provide it, but they not intended to help the low-income sector.
The government stops the grant for building the houses of low income people at
beginning of 1980’s and start from there the National Urban Development
Corporation had to provide the work capital of their own but still got the assistance
in priority and policy from the central government. This situation had led the
company to another policy in order to gain the construction money. The strategy is
to develop a cross-subsidy plan which is to provide the capital by constructing
luxury houses for the high income people this strategy however, is backed up with
the government policy of 1:3:6 pattern which means that if the company wants to
build 1 luxury house it must build 3 simple house (for middle income) and 6 very
simple house (for low income).
Simple Houses/Very Simple Houses (RS/RSS) at a ratio of 1:3:6, are prepared
with housing credit facilities or in Indonesian language, we called it Kredit
Pemilikan Rumah (KPR) at subsidized interests for house size of 21m 2 and 36 m2.
The interest rate for RSS is 8.5%; RS type 21 is 11% and 36 RSS type is 14% all of
this interest is below the market rate (year 2001).
The Government is giving priority to the infrastructure of Simple Houses/Very
Simple Houses (RS/RSS) built by the National Housing Development Corporation
(Perum Perumnas) and Cooperatives; and the housing regulation (Home Affairs
Instruction No. 12 of 1996) on low-cost Building License (IMB) and other cost of
RS/RSS. Law No. 4 of 1996 on the right of construction business and the housing
sector in Indonesia to replace mortgages and credits, as a legal guarantee for the
developer, bank and building owner, either as property freehold owner, land lease
rights, building leasehold rights and leasehold rights on state land are tended to drew
more interest in the housing development.
The leasehold rights of the house and land valid only for twenty years but this
only applies the middle and high income house owner who have house / land over
200m2. Low-income people with land below 200m2 have the right of the land
permanently without the obligation to extend the lease.

The Facts about Surabaya City

Surabaya as the second largest cities beside Jakarta with total area of 47.921 km 2 is
the main gate of central distribution for eastern Indonesia, which developing into
central trade, economic area, information, production and distribution. Total
population of Surabaya according to 1997 national statistic figures is 34, 6 million
people with population density per square kilometer of 720. Gross domestic product
per year is about USD 8.024. The city also has many manufacturing industry that
grew up all over the city. These industries along with its growth had taken so much
land space that initially setup for people settlement.
As a precaution, the support of infrastructure, facilities, and public utilities are in
need. The implementation of decentralization, authority and the bigger
Region/county authority, causes the need for new regulation of lands law, facilities
and infrastructure so the optimum development could be achieved.
The government as the regulator and facilitator for the main course and strategies,
should oriented to people welfare, specially the low-income people.
Perum Perumnas (National Urban Development Corporation) along with the state
owned counterpart, from the beginning had covered the above issues by developing
the New Area Policy the “Driyorejo New Town” in East Java province. The main
objects of this consortium are to help the region authority to provide lands. The
management is constructed with holistic pattern and considering the land
development policy.

The Kasiba Project

1. Kasiba Driyorejo located about 15 km near western Surabaya. The reason
for choosing location this far from the main city is because in order to
provide affordable settlement to the low -income people, the cheaper land
price at the closest place is in Driyorejo.
2. Kasiba Driyorejo is the beginning of implementation of Bill / UU No.4 year
1992 about housing & settlements.
3. Kasiba’s main organization is formed on December 20th, 1994. Formed by:
Perum Perumnas (National Urban Development Corporation) and
Consortium of 5 state owned corporation under the Ministry of Settlements
and Infrastructure.
4. The whole area of Kasiba Driyorejo is 1.200 ha
5. Lands owned by Perum Perumnas = 203 ha
6. Area of freed native occupants land = 655 ha
7. Areas around Kasiba = 142 ha
8. Areas that influenced by kasiba = 200 ha
9. Kasiba Driyorejo stands from:
v 9 Lisiba (pre-developed environment) @ 30 – 150 ha
v 67 Sub Lisiba(sub pre-developed environment) @ 1 – 90 ha
10. The main target of this project is low -income people to be specific, the
factory workers who work around Surabaya city. The type of houses that
planned to be build are horizontal land-based houses and vertical house.
The vertical house can be raised up to maximum five storey building.
Regarding the present law the vertical house type can be obtain by rent
system or buy with same scheme with the horizontal houses.

Strategies

The government in this case the Ministry of Infrastructure and Settlements along
with the common representative made constitutional law concerning the Kasiba’s
plan. The legitimating of the Kasiba’s plan is indicated in Government Law no. 80
in the year 1998, it stated that large -scale land management are the only solution to
overcome the rapid urban development and for that matter there should be an
institution to build as the protector and enabling power for the land management.
Current Strategy
To manage such large project the strategies that had been done are:
1 Determined which actors should play in this project:
v Central government as the legal protector, facilitator and stimulator
v Local government as the authority and supervisory institution
v The private sector as the construction and developing partner
v The Government Savings Bank as the funding facility for the people
2 The central government appointed the qualified institution as the central
command in charge. This institution should be an institution with qualified man
power, experienced in managing large projects, appropriate tools and good
connection with related developing partners. For the Driyorejo Project the
government had chosen the National Urban Development Corporation as the
leader and made consortium with five other state owned company. All of them
are operating in construction and housing.
3 Made site selection to select the location of the project. Because of the new
government policy of decentralization, the central government has no more
powers to control the local governments. All of the 26 provinces now have their
own control of its municipalities. The site is to be appointed by the local
government but the appointed institution should prepare the planning and project
proposal.
4 The lands will be acquired from the previous landowner by giving them
understanding of the importance of the project and in return the consortium will
give adequate compensation in some amount of money. Note that nobody will be
forced to evacuate.
5 The construction programme is to be made in partners with several qualified
private company. The type of the houses planned to be constructed are vertical
type or medium multi storey buildings and horizontal buildings or land based
houses. The multi storey buildings are intended to the low-income factory
workers whom the workplace is near the city centre. These five storey building
are rent type. The horizontal house type aimed to low income, middle income and
the high income with the 1:3:6 patterns. The plan is to build 10 multi-storey
buildings with 1.200 units of dwellings along with 3.000 lands based houses.
Beside the full-built house, the project also included the equipped land (the ready
to use plot, complete with infrastructure) to the middle and high-income market
share.
6 Made an appropriate funding system for such large scale project, which are came
from the central government through several state owned corporation and the
local government. The main idea was to make a consortium based funding system
for the Driyorejo Kasiba project. This consortium is supported by five state
owned corporation, all of them provided capital funding and technical assistance
for the project.
7 This project is aimed to cover the low income people in this case, most of them
are the factory workers around Surabaya area and because of that the government
had to provide appropriate funding system which is came in form of 5 to 20 year
credit payment for a owned based house or apartment. In this credit system the
government cover about 90% of the price, the other 10% should be paid in 1-year
instalments.

Proposed Strategy

There are several things that can be done regarding this matters. The appropriate
marketing plan is an essential in this project in order to gain more money for capital
turnover. In human resources there is some way that can be done. Based on current
Indonesian economic situation, the corporation as government property cannot
afford to hired new qualified employees for efficiency reason. The most feasible
way is to set up some continuous training in marketing programme, so the
employees can obtain the practical knowledge in marketing. By doing so the
marketing strategy of the project must also be adjusted. After that the management
should make an applicable marketing strategy. The proposed marketing strategies
are:
1 First to learn the characteristic of the local people, this is important to formulating
the right marketing package that suits the needs of the target market.
2 People had tendencies to prefer the land-based house, so the consortium should
prioritised to build the land based type houses. These houses shall be provided for
the high income, middle income and low -income people with 1:3:6 patterns.
3 For the factory workers who have the work location in the city, more multi storey
buildings shall be built and according to the government law these types of
buildings are rental type. The limitation of the storey is maximum five storeys.
The reason is because this building has no elevator for cost saving matter.
4 The information about this project and what it is intended to should be transparent
to the people. The plan is to set up a Marketing Information Centre (MIC) in each
people’s activity centre such as post office, shopping malls and other activity
centre. This marketing information centre should play the role as project public
relations. The MIC must be prepared w ith adequate marketing equipment such as
leaflets, market/models, pictures, etc.
5 More information board and ballyhoos at the appropriate sizes (in marketing
terms) must be place in public places.
6 More efforts on psychological approach to the people’s land-based mentality
transferred to multi-storey buildings tenants.

7 The six states owned corporations should make a joint operation with the private
sectors in setting up the business centre and by doing that the other target market
can be achieved.

Actors

In order to develop this pilot project of large-scale land management, there are many
actors involved in their particular manners. Each of them must work together in
cooperative way because the success of this project is depending from that. The
actors are:

Central Government’s Role

The central government acts as the main facilitator and enabler stimulates the active
role of the people and the private sector. This means that the government do not
responsible to construct all of the houses for the people by themselves but with the
help from private sectors. The fact that low cost housing does not interest the private
sector because of its low profitable business, forced the government to made special
policy in low cost housing. In the case of providing the house for low income people
the central government had to subsidies the construction cost of the house. The
allocated budget for this sector is about 10% from the total annual national budget.
With the new government law about the decentralization, the central government
has no longer power to control the local government. Now the central government
only acts as a policy maker and the main facilitator, this means all of the
infrastructure (water supply, electricity, road access, etc.) except the house
construction are provided by the central government.

Local Government’s Role

The local government plays the role as administrator of the region development and
must follow the central government housing policy in general means. The local
government must also implicate the infrastructure application in the region. They
also act as controller because every local government had its interior city planning
that must be follow by each private sectors in housing business. In general the
regional authority duties are:
§ Manage the usefulness of the region/town space:
a. Develop the human settlements, trade places, industry areas, tourism, farm
lands and other possible areas (land-use planning/zoning)
b. Transportation infrastructure system, telecommunication, energy and
environment management
c. Centre of human settlements system (structure plan)
§ Manage the preservation areas and subcultures areas:
a. Management of the human settlements (through Kasiba, Site & Services,
village improvement, renewal)
b. Land consolidation, land readjustment, water supply and other natural
resources
c. Developing activity system and developing priority
§ To improve the manual of controlling the space of the region
With the new policy of authority decentralization, the local government now had
freedom to develop it own region in most suitable approach way.

Private Sector’s Role

As the policy of the central government and inadequate resource the project also
involving the private sector as counterpart or business partner that supposed to build
the infrastructure in business, such as central business district (CBD), funds
provider, etc.

Shortcomings and Analysis of the Actors

There are problems with acquiring the land; this situation caused the site plan to
have some holes in it. These holes are represented the land that cannot be acquired
because the compensation had not reach the perfect agreement with the previous
owner. There is also lack of cooperation between the actors that could cause these
matters to occur.
This situation is getting worse because of the economic and political situation that
happened in Indonesia from 1998 until present. The US dollars becoming high in
rates and that caused the price of imported house material increased. This affected
the private sectors, because many of them are operated with international loans and
up until now the 6.000 private companies reduced to about 500 companies. The
bankruptcy of the private companies means that the housing supply for the people is
minimized. This also means that the task of providing houses for low-income people
is all on the shoulder of NUDC.

Design Principles

Climate Behaviour

Indonesia is a tropical country with two kinds of seasons throughout the year. The
first season is the wet season that starts usually starts from September to March and
the Dry season from June to August. The climate about 22 to 35 degrees in the wet
and dry season. Wet season sometimes can be a disaster if the rate of the rain is too
high, there’s flooding everywhere even the rural areas not to mention the metropolitan
cities where the density of the blocks are so high and the drainage systems are
disturbed with uncontrolled garbage.
Surabaya is located in the eastern part of the java island; this location is notorious
with the very hot climate in Indonesia. The temperature in this region is extremely
hot with the temperatures varied between 30 to 37 Celsius degrees. The main city is
located near the harbour, so the temperature is hotter in the metropolitan areas.

Design Types

Land Based House

The land based house are very popular in Indonesia and most of the Asian countries
because of the cultural heritage to have land as the most important things to achieve
in the family. With the rapid urban developing the land price is become higher and
higher, our projects to develop the horizontal houses are commonly located in suburban
areas. As for the design is not much to discuss much about because in this
project my corporation intention was to concern in the low -income people and in
this situation the low-income people, as the main target has no part in the design
process.
The design of the house basically is the implementation of the tropical design with
much ventilation above the doors and windows. The material that we’re currently
using is concrete hollow bricks (CHB) for the side panels, tempered clay as the tile
roof for middle-income house and asbestos roof for the low -income house. For the
flooring we used the concrete cement for the low-income house and ceramics tile for
the middle and high -income house.
The design of the house itself is basically a common row blocks type for the low
income, for the middle and high income we used the Mediterranean design type in
couple plotting system. Some of the design is adapted the exclusive native culture
house design. This is only can be done in specific area in Indonesia which has
special and exclusive culture, like Bali for instance. The basic lay out for the low-income house is commonly called the very simple
house; basically it is a core house with asbestos roof and CHB wall with separate
water closet out side of the house. The materials was chosen because of it is cheap
and can be found everywhere in Indonesia. The size of this house is about 21m2 in
building size and 72m2 in plot size The final price of the house is Rp. 6,9 million or
if converted to US Dollar with the latest currency rate (May 2001) is about USD 690
including the complete infrastructure.
Basic infrastructure included the 400w electricity, regional water supply piping
for each house and accessible roads for cars inside the complex. The municipal
provides public transportation for the area. The roads inside the very simple housing
area is about 1,5 m wide made from concrete slab (it is meant to be a path way),
there are parking areas for the vehicle and the main road inside the complex is 6 m
wide for public transportation purpose. For the middle and high-income house the
roads are wider because the plot was designed for car park for every house.

Multi Storey Building

In the urban areas where land is treated like a gold, it so expensive and so hard to
find there are no option than to build multi storey building for the low -income
people. These buildings have a maximum floor of five storeys and for cost reason it
has no elevator in it. Basically the plan for each dwelling is 21 to 54 m2.
In Driyorejo project the plan was to build 10 multi storey buildings. The type of
the buildings is simple blocks with the ground floor arranged to function as shops
and other social activities centre. The natural gas is used for cooking; the gas
arrangement was conducted through pipes inside the buildings.
The balcony is designed for gardening purpose, so each dweller can do their
green activity. Playfield for the children and other social facilities are included in
this project. Other successful multi storey building projects had been done in Jakarta
and West Java provinces. These buildings are going to be modelled for the Driyorejo
Kasiba Project.

Conclusion

With the rapid urbanization phenomena throughout Indonesia where lands around
the urban area became very rare and expensive, the low income people whose work
place is in the centre or around the metropolitan area has no option than to move far
away from the city. In some case the middle income prefer to rent houses. In general
the settlement for low-income people in the metropolitan areas is not in the adequate
condition. So what to do? The central government had not issued such a program to
do something about it, they concentrating more on the housing sector not in the land
management.
The idea of self –help housing is out of the question at least for now, because the
central government has not enough human resources to assists to such program.
People tend to be consumptive type they just want to receive a package of house and
use it. Self-help house can be another solution if we can introduce it right and use
the step-by-step approach.
The government act no. 80 year 1998 of Kasiba Plan is the right move to do
something about this. The land became manageable and easiest to control. It also can
act as a tool for controlling the land price. But on the other side the plan of Kasiba is
much too big in perspective and not close to the ground in the reality. The plan has
so many interference from the central government with political purpose; it makes
the project not professionally manage which could lead the project to no end.

Recommendations

I already put up my proposal for the possible strategies in the Strategy topic
above, but there are some thoughts that I want to share regarding this matter. The
land management idea is the best way to dealt with land in coordination but at the
same time the central government interfere makes the project moving nowhere. To
involve more the private sectors in the project could done the project a better
manageable institution. By encourage them to participate more in this project means
that investment in social and trade infrastructure are more easy to achieve, it can
fastened the economic growth in the area and surely can attract people to find their
works here. The central business district that was one of the things the project aims
is the key to make this project success.
Finally, the best way to deal with this situation is to make a ‘win-win’ solution to
every actor that involved in this project. Win-win solution is a management term for
a way to solve a deadlock in agreement by accommodate every person interest to
acceptable way with maximum tolerance to the main goal. With this solution one
could absorb and accommodates all of the individual interest of the actors better and
the central government should put their role in the appropriate way.

References
The Government of Indonesia
1945 Kitab Undang-Undang Dasar 1945, Constitutional Rights. Cabinet Secretariat
Publishing, Indonesia
Kottler, Phillip
1988 Marketing Management: Analysis, Planning, Implementation, and Control
Prentice Hall Business Publishing, USA.
Simanungkalit, Panangian
2000 Kasiba, The Implementation. Kastil Publishing, Indonesia.