EPIGRAPHS

INTRODUCTION: “LIKE BLACK AND WHITE PARTS OF THE EYE”

In April 2008, and only six years following the legal formation and secession of Indonesia's Riau Islands Province (Provinsi Kepulauan Riau, or Kepri) from adjacent Riau Province, then Governor of Riau H.M. Rusli Zainal (2003–13) attended a meeting of the South Sulawesi Family Association (Kerukunan Keluarga Sulawesi Selatan, or KKSS) in Riau's provincial capital of Pekanbaru. The South Sulawesi Family Association is one of Indonesia's largest and most active ethno-regional associations, with members hailing from or tracing their roots to South Sulawesi, an east Indonesian province widely known as the ancestral homeland of Indonesia's Bugis people. Outnumbering that province's indigenous Makassarese, Mandar and Torajan peoples, South Sulawesi's Bugis people are historically renowned as much for their seafaring prowess as they are for the wanderlust that fuels their travels throughout Indonesia, Malaysia, and beyond in “search of good fortune” (Bugis: massappa’ dallé).

The Riau Governor, a “Malay of Bugis ancestry” (Malay: Melayu keturunan Bugis), had been previously honoured by the ethno-regional association with the honorary “title” (gelar) of Daeng Magguna. Roughly translatable to “he who is useful”, the title bestowed upon the Riau Governor by the association featured the Bugis-Makassar honorific “Daeng”, commonly given to Bugis-Makassar people of noble birth. Daengis also a title whose meaning reverberates in the historical imaginary of Riau and Riau Islands Provinces, two places whose contemporary borders closely align with those of the once-sprawling Malay Sultanate that stretched from what we today call Indonesia, through Singapore, to Malaysia. .

The maps presented in this book are based on site-specific field studies, official datasets and online resources compiled by Karoline Kostka and Hans Hortig between July 2019 and April 2020. They are uniquely produced for this publication.

The authors gathered additional insights into the Singapore-Johor-Riau region during their work at the Chair of Architecture of Territory at the Singapore ETH-Centre, Future Cities Laboratory (FCL), from 2013 to 2015. Further discussions and feedback from the editors Francis Hutchinson and Siwage Dharma Negara helped to shape the final version of the map sections.

The most significant sources for creating a base map in all sections are:

• • Open Street Map (OSM), Open source geo-referenced information, data retrieved in the period of July 2019 to April 2020.

• • Natural Earth, free vector and raster map data, https://www.naturalearthdata. com/downloads/ (accessed December 2019).

• • Badan Informasi Geospasial (BIG), Indonesia Geospasial Portal, http:// portal.ina-sdi.or.id (accessed between July 2019 and February 2020).

Additional information for the specific map sections are derived from the following sources:

Introduction

Indonesia and Riau Islands Province

Global Administrative Areas. “GADM dataset of Global Administrative Areas”. https:// gadm.org/index.html (accessed November 2019).

BIG. 2017. “Peta Negara Kesatuan Republik Indonesia (NKRI)”. https://www.big.go.id/ artikel/show/peta-negara-kesatuan-republik-indonesia (accessed October 2019).

Section 1: Economics

Mobility and Transport

Rusdi, S. 2019. “Shipping and Logistics Challenges in Kepulauan Riau”. Workshop on Economic Update for the Riau Islands, ISEAS – Yusof Ishak Institute, November 2019.

PELNI. 2006. “Pelayaran Nasional Indonesia”. https://www.wikiwand.com/id/ Pelayaran_Nasional_Indonesia (accessed December 2019).

BIG. “Sistem Informasi Batimetri Nasional”. http://portal.ina-sdi.or.id/batimetri/ (accessed October 2019).

Kostka, K., and H. Hortig. 2019. Mapping via Google Maps, Wikimapia, Bing Maps, October 2019.

Topalovic, M., H. Hortig, and K. Kostka. 2016. “Sources for the SIJORI Maps”. In The SIJORI Cross-Border Region: Transnational Politics, Economics, and Culture, edited by F. Hutchinson and T. Chong, pp. 465–70. Singapore: ISEAS – Yusof Ishak Institute.

GINI Ratio, 2017; Human Development Index, 2018; Population Growth Rate, 2017–18; Unemployment, 2018

Badan Pusat Statistik (BPS). 2019. “Indikator Utama Provinsi Kepulauan Riau”, Semester I 2019. https://kepri.bps.go.id/publication/download.html (accessed January 2020).

The Manufacturing Sector in Batam, Bintan and Karimun

Topalovic, M., H. Hortig, and K. Kostka. 2016

INTRODUCTION

The Province of the Riau Islands (PRI) is one of the provinces in Indonesia created by Law No. 25 of 2002, and which entered into effect in 2004 (BPS Kepulauan Riau 2006). The new province was carved out of the larger Riau Province, following the decentralization reforms of 1999 that intended to bring the government closer to the people through empowering local and provincial governments (Firman 2009). The creation of PRI was one of eight such reform processes that occurred in Indonesia since the onset of Reformasi in 1998.

The separation of the Riau Islands from Riau Province was led by local elites and was motivated by a number of factors, including: long-standing identity tensions in the region; the island dwellers’ feeling of being neglected by the mainland provincial government in Pekanbaru; and the opportunity to garner greater revenues from gas fields in the Natuna Islands (Hutchinson and Chong 2016; Fitriani, Hofman and Kaiser 2005).

In the extant literature on the region's development, Riau (Islands) is known as a site of cross-border development initiated by Singapore government in the 1980s with the creation of the Indonesia-Malaysia-Singapore Growth Triangle (IMS-GT), which includes Singapore, Johor in Malaysia, and Riau (abbreviated as SIJORI). The Singapore government's vision was to manage the “hinterlandization” of its economy by providing capital to its neighbours, while Johor and Riau provided land and labour (Bunnell et al. 2012).

This vision dovetailed with that of the Indonesian government, which began to develop Batam Island from the 1970s. The intention was to build Batam as a site of industrial activity to capture spill-over from Singapore. By 1991, the largest foreign direct investor in the island was Singapore—its main industries of interest being real estate, tourism, metal processing, drilling equipment and electronic component assembly (Toh and Low 1993). With a very high population growth rate from 1990 to 2000 resulting from a large influx of migrant workers from other regions in Indonesia, especially Java (Firman 2004), Batam became the Riau Islands main urban centre.

Batam is not the only site of development in the province .

INTRODUCTION

The formation of Riau Islands as Indonesia's thirty-second province in 2004 can be seen as part of a broader trend that saw the creation of new subnational government entities—seven provinces and 112 districts in total—throughout the country after the end of the New Order era (Tirtosudarmo 2008; Kimura 2013). This can be considered as a rational response from the peripheries against decades of centralization of wealth and power in Jakarta that culminated in the late 1990s (Emmerson 2000; Mietzner 2014; Malley 1999).

At the same time, the desire to form a separate Province of the Riau Islands (henceforth PRI) can also be understood through local cultural and historical circumstances that are unique to the region. These include a shared history of being torchbearers of the great Malay civilization and maritime empires that dominated the local seas before the arrival of European explorers and colonizers (Trocki 2007; Killingray, Lincoln and Rigby 2004; Long 2013).

This combination of both rational interests and cultural sentiments was argued to have motivated numerous subnational separatist movements in South Asia, such as in Assam, Kashmir, and Punjab (Mitra 1995). In Indonesia, some subnational movements were indeed separatist in nature, as in the cases of Aceh, Papua, (mainland) Riau, and East Timor.2 In contrast to these, however, the goal of subnationalism in the Riau Islands was not separatism, but broad autonomy in the context of decentralization. Still, in line with Mitra's (1995) thesis, this chapter argues that both rational interests and cultural sentiments were the main motivations for establishing PRI in 2002 and are still relevant for understanding much of the political dynamics taking place in the province in 2019.

This chapter describes state formation and capacity in the Riau Islands Province. We acknowledge the definition of the state as adopted by Ruggie (1993), namely an institution with legitimacy to exercise power over territorial space. But in this case, we also refer to the state as an autonomous government entity that may not be necessarily independent, such as a state in a federal country, or a province in decentralized Indonesia.

INTRODUCTION

This paper investigates political parties in Indonesia's Kepulauan Riau (Kepri) Province, as a case of local politics occurring in the country's periphery. As one of Indonesia's outermost provinces, Kepri's political dynamics are a significant indicator of how parties are faring in regions with typically limited infrastructure and little attention from central party offices.

Although case studies of local politics and elections in Indonesia have proliferated since the commencement of decentralization (e.g., Erb and Sulistiyanto 2009), the investigation of parties in this particular region has so far been limited mainly to Choi Nankyung's work (2007, 2009). In her study on the Batam municipal elections, she pointed to the weaknesses of the parties, particularly regarding recruitment and election management. This chapter examines the parties’ overall organization at the provincial level, with particular attention being paid to how their activities are managed, and uses the 2015 gubernatorial election as a case study.

This chapter argues that the political and economic gaps between the provincial capital of Tanjungpinang and the commercial centre of Batam have created problems in organizational capacity for political parties in the province. While branches in Tanjungpinang coordinate the overall organization in Kepri, there is a strong need for the parties to focus their attention on the more populated and vibrant Batam. The provincial branches have consequently become largely inactive and undermanaged, and their activities infrequent and erratic. Local politics have thus come to be dominated by local figures who—although having party affiliations—gain popularity and public standing, first and foremost as individuals.

KEPRI PROVINCE: SMALL YET STRATEGIC

Kepri Province was established in 2004 as Indonesia's thirty-second province (under Law No. 25, 2002), following increasing demands for secession from Riau Province. The idea had strong opposition from the provincial government in Riau, which feared the loss of revenue from manufacturing, tourism, and natural resources (Amri 2016). Indeed, it was the combination of resentment caused by the inadequate size of revenues from local resources that were redistributed back to the region, dissatisfaction with the Riau provincial government in general, along with Malay cultural subnationalism, which inspired the idea to form a new province (Kimura 2010, p. 437).

INTRODUCTION

Beyond well-known areas such as Batamindo Industrial Park, Kabil Port and the shipyards around Batu Ampar, investors have a new destination in Batam. It is Nongsa Digital Park, located on the island's northeast corner; and now receiving firm-owners, managers and talent scouts from Singapore.

Inaugurated in March 2018, the park contains several smallish buildings grouped around a lake where about 300 people work for some 50 firms. These IT professionals are engaged in tasks such as coding, application development, data analytics as well as web design for Singapore-based firms in various sectors including logistics, education, travel, fintech, and insurance.

Rather than using separate offices, these people gather in large shared spaces consisting of long tables with individual work stations. When necessary, they use separate rooms for in-depth discussions and, in other cases, teams working on specific projects occupy purpose-built and fitted rooms. The atmosphere is young and dynamic, with stencilled patterns on the walls, table football in the corner, and most people dressed in black.

Despite the informal vibe, these programmers and web designers work intently and are closely integrated into projects being done in their respective client firms in Singapore. Beyond being wired into headquarters, these professionals often travel to the city-state for training and, in other cases, supervisors come to Batam to induct or supervise new hires. Output, motivation and career development are monitored closely on-site.

Despite its small base, the number of firms and workers in the park have increased steadily since its launch. The first three office blocks are full and three new buildings have been completed. There are plans for a much larger development, with leisure facilities and residential areas nearby. There are also promising investments in the pipeline by other investors, including a large Indonesian conglomerate as well as an industry major.

While still small in size, the Digital Economy (DE) sector has many structural similarities with the export-for-manufacture model that underpinned Batam's rapid economic development in the 1990s and early 2000s. However, rather than leveraging Indonesia's abundant ranks of lower-cost unskilled labour, this new sector is entirely premised on utilizing skilled workers.

INTRODUCTION

Existing research on Batam-Singapore relations has focused more on economic and trade ties as opposed to social issues. The ties between the two cities, which are 20 kilometres apart, are always discussed within the framework of SIJORI, a joint development and business venture between Singapore, Malaysia, and Indonesia. To be sure, links between the three states transcend economic, trade and security matters to also include religion and cultural exchanges. It only takes a 45-minute ferry ride from Singapore to Batam and the number of Singaporeans crossing over to Indonesia via Batam is high—comparable to the number that travels to Jakarta.

Batam is a highly industrialized city, attracting immigration from other parts of Indonesia, especially Java. According to the 2010 census, Batam has a population of 1.2 million people. 77 per cent of them are Muslims, 17 per cent Christians, and 6 per cent Buddhists (Effendy 2014, p. 149). In terms of ethnicity, 27 per cent are Javanese, and the other major ethnic communities include: Malays (17.6 per cent); Bataks (15.0 per cent); Minangkabau (14.9 per cent); and Chinese (6.3 per cent) (Effendy 2014, p. 150). Even though the proportion of Malays is smaller than the Javanese, yet as part of the Riau Islands, Batam strongly upholds its Malay character. It also has a sizeable minority Bugis community, which has strong trade networks (Firdaus 2016). Historically, Riau was part of the Johor-Riau Kingdom, and the name Riau appeared at least three times in seventeenth- and eighteenth-century sources (Wee 2016, p. 243).

Lately, there have been security concerns between the two cities. In August 2016, Batam authorities foiled a plot by a terrorist group called Cell Gonggong Rebus (GR) which planned to launch a rocket from the island towards Marina Bay in Singapore. The police arrested five Indonesians for the failed attempt. The militants were believed to have links with ISIS (Islamic State in Iraq and Syria), and separatist groups in Xinjiang, China (Wahyudi 2017). The leader of GR, Gigih Rahmat Dewa, travelled to Singapore several times before he was detained. He was married to a Batam resident and has a house in the city.

INTRODUCTION

To Singapore's immediate south, the Province of the Riau Islands has a population of 2.2 million, and a land area of 8,200 square kilometres scattered across some 2,000 islands in 240,000 square kilometres of water. The better-known island groups include: Batam, the province's economic motor; Bintan, its cultural heartland and the site of the provincial capital, Tanjungpinang; and Karimun, a fishing and shipping hub near the Straits of Malacca. These island groups are more outwardly oriented and multiethnic, but the province also includes another three other island groups, namely Natuna, Anambas and Lingga, which are more isolated, rural, and homogeneous.

Within Indonesia, the Province of the Riau Islands (PRI) is relatively small in demographic terms, and very remote from the centre of power. Logistics connections between PRI and major population centres in Java and Sumatra are underdeveloped and overpriced, effectively barring significant commercial and cultural exchange between the “centre” of the country and this far-off province. For much of the recent past, government services and communication were routed through Pekanbaru, the provincial capital of Riau Province, to which the Riau Islands used to belong.

Yet, the province is strategically located next to major shipping lanes and telecommunications infrastructure, making it one of the most connected areas in Indonesia. Furthermore, it is close to Singapore and, through the city-state, able to access global capital and expertise. The Riau Islands has also long sought to capture spillover from Singapore, with policymakers looking north to identify trends and commercial opportunities. Thus, the province is simultaneously affected by its marginality and centrality.

Despite its small size, the Riau Islands is an important site for manufacturing in Indonesia. In late 1989, spurred by considerable flows of foreign direct investment into Singapore and Johor, the Indonesian government liberalized the investment regulations for Batam, allowed more private sector participation, invested more resources in physical infrastructure and began to work with Singapore to develop its human resource base and market the island.

Enabled by these changes, and catalysed by a favourable international environment, manufacturing-related investment flowed into Batam, dramatically boosting incomes. Singapore and Singapore-based firms were important sources of investment, as well Japan, Hong Kong, Korea, and Taiwan.

INTRODUCTION

Batam has an unbeatable business proposition. Situated a mere 20 kilometres from Singapore, linked by logistics networks, and possessing vastly cheaper land and labour, the Indonesian island is ideally placed to absorb investment from its wealthier neighbour. In theory, it should be teeming with investors and populated by factories and workers.

Indeed, this is just what happened during the 1990s and early 2000s. The liberalization of investment regulations, coupled with Batam's well-developed infrastructure and proximity to Singapore, made the island an attractive site for manufacturing operations seeking to escape the city-state's rising costs. During the 1990s, Batam's industrial base grew in size and sophistication, rapidly becoming one of the country's centres of electrical and electronics production. In the mid-2000s, the shipbuilding industry also began to develop on the island. Coupled with the older, more established tourism sector, Batam became a crucial source of foreign exchange for Indonesia. Through these three “motors”, hundreds of thousands of formal sector jobs were created, and the island became one of the country's richest—with its economy often growing at more than 10 per cent per annum.

Over the last few years, the success of Batam's export-focused industrialization model has come under question. In 2017, the island's growth rate flatlined at 2 per cent per annum, very substantially below the national average. Indeed, exports have been decreasing since 2013, and unemployment has spiked over the last two years. The once-burgeoning ranks of semiconductor, hard-disk drive, and component manufacturers have atrophied since 2010, with few new arrivals and many more anchor firms closing their facilities. In 2013, the shipbuilding sector, once heralded as Batam's sunrise industry, also began to contract. At present, the majority of the island's shipyards sit idle, or have turned to lower-value repair jobs to cover costs. Unemployment is now above the national average.

This chapter attempts to understand the key trends within Batam's manufacturing sector, and whether the island's manufacturing for export model is still viable. To this end, the chapter is structured in the following fashion. First, it will provide background to the development of the manufacturing sector on the island.

INTRODUCTION

The winding path that led to the creation of Indonesia's modern province of Kepulauan Riau (Kepri) has deep historical roots, and the ramifications are still being played out. In 1997, more than twenty years ago, a collection of articles under the title of Riau in Transition was published in a special issue of the journal of the Royal Netherlands Institute of Southeast Asian and Caribbean Studies (Chou and Derks 1997). At that time Riau was the sixth largest of Indonesia's twenty-six provinces, extending from the foothills of Sumatra's Bukit Barisan to the Natuna islands in the South China Sea, with a land area covering 94,562 km2 and a larger sea surface of around 235,000 km2. It was further distinguished by its geographical separation. On the one hand was mainland Riau (Riau daratan) on the Sumatran side of the Melaka Straits, together with its offshore islands; on the other, insular Riau (Riau kepulauan), which included around 2,000 islands stretching from the Riau-Lingga archipelagos to the South China Sea. My contribution to this collection focused on the period from the sixteenth to the late twentieth century, giving particular attention to Riau-Johor, reconstituted after Melaka's conquest by the Portuguese in 1511, and its relationship with Malay areas along the east coast of Sumatra. Tracking the uneasiness that characterized the daratan-kepulauanassociation over nearly 500 years, I argued that despite the widespread perception of Riau as a Malay domain, the promotion of a sense of unity and commonality between mainland and island would be no easy task (Andaya 1997, p. 505). But when the final proofs went to press, there was no indication that the fall of the Soeharto regime and the subsequent demands for reformasi were around the corner. Nor could one then foresee the ripple effects of the regional autonomy law, which finally took effect in 2001, or that the rising tensions in the daratan-kepulauan marriage would reach such a point that divorce seemed the only solution. Under extreme pressure from island representatives, Jakarta eventually agreed to the creation of a new province of “island Riau”. In 2002, only five years after Riau in Transition appeared, President Megawati Sukarnoputri signed the document that formally separated kepulauan Riau from the daratan.

INTRODUCTION

Batam's economic growth has been nothing short of spectacular. In the 1990s, it experienced an investment boom fuelled by investments from Singapore. This lasted for two decades and transformed the economy and landscape of what was an outpost into a place with a major industrial city of over 1 million inhabitants.

This impressive pace of development has often been accompanied by a marked degradation of the natural environment. Mangrove areas have rapidly disappeared, floods have occurred around the city because of erosion caused by land clearing; illegal squatter settlements have intruded into protected forests, and toxic substances from the offshore cleaning of ships have affected the quality of Batam's coastal waters.

But all is not lost. Economic and environmental imperatives can be reconciled if Batam's development trajectory takes into account the impact of economic growth on the environment. Sustainable development is not impossible (Hezri and Dovers 2012, p. 277).

Negative environmental impacts have to be controlled by regulations and by proper enforcement. The institutional framework (regulations and property rights) plays a central role to ensure that negative environmental impacts are accounted for and minimized. Problems generally arise from either an absence of regulations or property rights to regulate the environment or from the absence or lack of enforcement by the relevant authorities.

The Riau Islands Province (PRI) is made up of five rural regencies (kabupaten) and two cities or urban municipalities (kota). Batam and Tanjungpinang are the two cities within PRI, while Bintan, Karimun, Lingga, Anambas and Natuna form the five regencies (Amri 2016, p. 155). Batam Island's land area totals 415 km2 (41,500 hectares).

This chapter will examine the various manifestations and causes of environmental degradation against the backdrop of economic transformation, population growth and enforcement (or lack thereof). It also provides a comprehensive update where possible of the present state of environmental affairs in the municipality, and the challenges involved in maintaining the carrying capacity of the environment to cope with development.

Following a discussion of the methodology used in this study, the next section will examine the impact of government policies on economic transformation, and of migration on population growth.

INTRODUCTION

Batam's development process has been quite unique among medium-size cities in Indonesia, as it has developed virtually from scratch. In the late 1960s, there were 6,000 people on the island, essentially fishermen and their families. Since then, Batam's population has been growing by leaps and bounds, and the number reached approximately 1.37 million people by 2019 (BPS 2019).

Over the decades, due to its proximity to Singapore and, through it, international capital, Batam has always been accorded one or another form of special status with certain privileges. Beginning in 1971, the government promulgated a series of regulations that were pivotal to the subsequent development of Batam. Then, it was merely an outpost station of the national oil company, PN Pertamina, which provided logistics and operational support to its offshore exploration activities. In 1972, Nisho-Iwai, a Japanese consultancy firm and Bechtel Corporation of the United Sates prepared a master plan for the development of Batam (Pertamina, Nisho-Iwai, and Pacific Bechtel 1972).

In 1973, the central government passed the Presidential Decree No. 41 which declared all of Batam island as an industrial zone (BIDA 1980). One important provision of the decree was the establishment of Batam Industrial Development Authority (BIDA) as the sole entity responsible for the island's economic development. BIDA was endowed with an extensive range of responsibilities to, among other things: develop and manage Batam as an industrial area; handle transshipment activities; plan and manage the island's infrastructure development; and expedite business licensing processes. B.J. Habibie, the Minister for Research and Technology, became BIDA Chairman in 1978 and took a direct interest in the island. He saw it as a means of concentrating scarce resources in a given location and bypassing many of the infrastructural problems facing other parts of the country. This support also allowed BIDA to deal with the relevant local governments within Riau Province effectively and, hence, enabled it to roll out infrastructure and promote business development on the island (Hutchinson 2017).

In 1978, the government designated all of Batam island as a bonded warehouse zone. Often referred to simply as a bonded zone, this is an area where dutiable goods may be stored, processed, or manufactured without paying duty.