Indonesia’s underrated economic lynchpin

How many people could name the closest large metropolis to Australia? Singapore, Wellington, perhaps even Port Moresby might come to mind.

But the answer is Surabaya, a place which was once the largest city in what was known as the Dutch East Indies and a much more important commercial centre than Batavia, as Jakarta was then known.

" Surabaya is undergoing a revival which deserves attention."
Greg Earl, Ex-foreign correspondent & Asia editor

While the city on the eastern tip of the island of Java lost the battle for size to Jakarta decades ago, it still overshadows any urban area in Australia with a population as high as nine million depending on how surrounding urban areas are counted.

Yet Surabaya could yet be a lynchpin in the expansion of Indonesia’s role in the regional economy.

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PHOTO: Jerome Robbins Dance Division, The New York Public Library. (1860 - 1969).East Java - Architecture. Djembatan [Jembatan] Merah, Surabaia [Surabaya].


For most Australians, contemplating travelling in Indonesia beyond Bali is a situation which probably hasn’t changed much since 1903, when a Dutch colonial travel guide famously advised travellers to “stay no longer at Soerabaja than necessary, the more so as a single day is amply sufficient to reach several attractive spots in the highlands.”

The economic historian Howard Dick observed similarly in his history City of Work almost 20 years ago: “for those who just pass through, the city seldom gives rise to fond memories”.

Western Australia voted with its feet around the same time when it shifted its Indonesian office to Jakarta despite having a long-running sister state relationship with the East Java province based in Surabaya.

In a reflection of how Australia faces new challenges adjusting to Indonesia’s decade-old radical devolution of political and economic power away from the old ruling elite in Jakarta, Surabaya is undergoing a revival which deserves attention.


The city’s mayor Tri Rismaharini is now seen as the country’s most respected regional leader, assuming the role once held by the current president Joko Widodo when he made his name as a practical, corruption-free local government chief in the central Java city of Solo.

“I am quite happy to describe Surabaya as now probably the best run city in Indonesia,” Bernardus Djonoputro, an infrastructure expert who also heads the country’s town planners lobby group says.

“If you try to cross the street at a zebra crossing here there is more chance the traffic will stop than just about anywhere else in the country.”

This writer put this curious claim to the test during the first return visit to the city in almost 20 years recently and managed to survive the challenge.


Seeing the former city employee turned Surabaya’s first elected mayor - who is universally known as Ibu Risma - up close underlined how regional democracy is transforming Indonesia.

She has transformed the once lumbering city government by embracing digital technology which extends from a network of CCTV cameras to an online system for issuing local government licences.

“In three hours they can print out any requested licence,” she said in the keynote speech to an Australia-Indonesia Centre (AIC) conference on research cooperation.

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As if in reply to the dismal descriptions in the old tour guides, Rismaharini says: “We are struggling very hard to make Surabaya a healthy liveable city, so more people can call Surabaya home.”

The mayor has acquired a reputation for having city employees up early and finishing late pursuing new digital approaches to education and health services, which she says have made the city budget stretch much further.

Under the massive devolution of power from the central government to Indonesia’s provinces and cities which followed the end of the long serving authoritarian president Soeharto in 1998, local leaders have become more important players in national life.

Widodo, the current president, rose to power from Solo mayor to Jakarta governor captivating modern voters with an understanding of the new issues that concern ordinary people like transport and education.

This was a contrast to the military and bureaucratic figures from the Jakarta elite who have traditionally ruled the country. It is alsopart of an apparent trend away from traditional dynastic rule which can also be seen in countries such as India and the Philippines where the current leaders Narendra Modi and Rodrigo Duterte have emerged from successful stints in local government.


Surabaya’s mayor is now seen as the only viable challenger to the man who took over from Widodo in Jakarta, his former deputy governor Basuki Tjahaja Purnama (known by his nickname Ahok). Purnama, himself, is another unusual product of regional autonomy in that he is ethnic Chinese, which is unusual for politicians in Indonesia, and also came from a successful local government start in Jokowi’s home town.

The rise of local government leaders in Indonesia with power over business regulation has made the country more tricky for foreign business but also opened up new opportunities for business prepared to look outside Jakarta for go-ahead leaders like Rismaharini.

Surabaya’s economic growth last year was more than 7 per cent, which was well above the national average of just under 5 per cent.


Australian government officials have been encouraging Australian investors to look more at opportunities outside Jakarta pointing at higher growth in some cases and less competition from other foreign investors.

Western Australia’s Indonesia resident director Chris Barnes told the Surabaya conference: “Business people need to get out of Jakarta and go to the regions.”

He says Widodo’s personal focus on developing Indonesia’s maritime economy encompassing better sea transport and fisheries protection offers important new opportunities from teaching maritime English to port development.

Surabaya’s earlier dominant status as Indonesia’s commercial capital was built on its port but Australian ambassador Paul Grigson says a massive new port at neighbouring Gresik will restore Surabaya as a major Asian maritime centre with important implications for Australians wanting to trade with the rest of Indonesia.

“It’s so big you can’t see the end of it.” he says of the construction, “It’s certainly going to be the Osaka of Indonesia,” he adds in reference to Japan’s second city but industrial heartland.


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The revival of the regions under independent leaders potentially opens up new opportunities for Australia urban planners to play a role in Indonesia given the familiarity Indonesians have with Australia as a result of education and tourism.

Indeed, Rismaharini revealed at the conference she had been partly inspired to take on the job of reviving Surabaya by a visit to Melbourne where she had discovered what “a city is really like.”

major new public opinion research project on cross-border perceptions in Australia and Indonesia has hinted at somewhat greater affinity with Australia in the eastern part of Indonesia.

For example, the research showed in the city of Makassar on Sulawesi island where Australia has just opened a new consulate 100 per cent of people interviewed had a favourable impression of Australia.

Surabaya was only just behind with 96 per cent of people having a favourable impression. By contrast on Batam Island near Singapore where Indonesia has a free trade area and industrial park, only 75 per cent of people looked at Australia favourably.

The overall survey revealed some stark contrasts in perceptions with Indonesians more positive about the future and more positive about Australia than vice versa.

This underlines quite a void in Australian knowledge of the country’s closest Asian neighbour at a time when Indonesia is growing much faster and modernising and its citizens appear to be more open to business, education and tourism contact with Australia.

Eighty seven per cent of Indonesians have a favourable view of Australia but only 43 per cent of Australians view Indonesia favourably, outnumbered by the 47 per cent who view it unfavourably.

Eighty-two per cent of Indonesians think their economic prosperity will improve over the next ten years compared with only 34 per cent of Australians.


And at a time when both governments are trying to boost trade relations and rebuild ties after diplomatic rows over Australian spying on Indonesia and the executions of drug traffickers, Indonesian are much keener on a better relationship.

Sixty-five per cent of them think Australia is an important trading partner but only 51 per cent of Australians think the same of Indonesia. Seventy-seven per cent of Indonesians want their government to improve relations but only 51 per cent of Australians.

Nevertheless, the survey by EY Sweeney finds a strong thirst for knowledge about the other country in both places. The words Indonesians most frequently use to describe Australia are progressive (89 per cent), beautiful (86 per cent) and educated (85 per cent).

On the other hand, Australians most commonly describe Indonesia as religious (75 per cent), beautiful (51 per cent) and friendly (40 per cent).

The overwhelming takeaway from this research is Indonesians are much more familiar with Australia than vice versa.

But this is happening at a time when Australia is trying to build new business and security links in Asia to balance China and when Indonesia is undergoing its own political and economic transformation no better epitomised than by the dynamic mayor of Surabaya.

Greg Earl was a foreign correspondent in Indonesia in 1994-99, is a member of the Australian National University’s Indonesia Project advisory board and a participant in a recent Australia Indonesia Dialogue.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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