Interview: Sri Sultan Hamengku Buwono X

How does the government of Yogyakarta manage investment developments?

SRI SULTAN HAMENGKU BUWONO X: Yogyakarta has experienced quite a lot of investment recently. We try to strategically limit and direct these investments in ways that take into consideration our region’s key characteristics. First, the government of Yogyakarta is relatively small. Second, we do not have a large supply of natural resources or a sea connection, so we must be strategic with what we do have. This means, for example, that focusing on manufacturing and industry would result in high operating costs. Third, Yogyakarta has a relatively large educated population. With 300,000 students divided among 117 institutions of higher education, we are the education sector of Indonesia. Because of these factors, we direct investment to sectors suited to our region, such as the creative industry, which requires little property, triggers innovation and does not create pollution.

We also direct investment to projects that positively affect the whole region – we see a lot of potential for small and medium-sized enterprises to benefit our large student population, as well as Yogyakarta as a whole.

For example, Yogyakarta used to be a region based on agriculture. In the mid-1900s we convinced farmers to become suppliers to industry, in order to benefit from economic growth in the region. Nowadays, we try to help not only farmers, but rather whole communities. We try to persuade these communities, together with the supplying farmers, to develop specific industries. We call these structures independent villages. Other villages have more potential for tourism, so we assist them to become more tourist-friendly.

What is the government doing to boost growth?

HAMENGKU BUWONO X: We are currently building a new international airport to improve Yogyakarta’s global connections. The current airport is running significantly over capacity, and the new airport will facilitate further development of Yogyakarta as a region. We hope that this new airport can not only increase tourism, but also ease transportation of imports and exports.

We are also looking into ways to make investment easier. To that end, we are currently working on land clearance. In other regions, you need a permit from the central government to get land. In the Special Region of Yogyakarta, the local government makes such decisions. This makes it less bureaucratic.

In the case of the new international airport, for instance, we managed to clear more than 600 ha of land in less than 2.5 years without political turmoil. Normally, it is inspected by the national, rather than regional, government. However, in Yogyakarta the regional government has this responsibility. This relates not only to land clearance, but also to the speed of licensing. Because of its status as a special region, Yogyakarta has more authority in terms of licensing, so we experience fewer obstacles than other regions do with this issue. This leads to faster processing, because you don’t have to go through the national government.

To what extent do various regions cooperate in order to aid growth and investment?

HAMENGKU BUWONO X: Indonesian governors often cooperate together in different associations, which are conducted both nationally and regionally. It is helpful to learn from other regions’ experiences, but it is also important to cooperate on specific projects.

The regional cooperation platforms generally have no problems and are quite intensive. The national ones, however, face a number of challenges. Cooperating with regions far away is not easy, because distance creates logistic issues – it can be very expensive and inefficient to work on a project together. The current Indonesian government is trying to combat these challenges by boosting infrastructure development throughout the country. This requires regions to cooperate and coordinate in a more extensive way, which is likely to make these geographic limitations easier to overcome.