Creating a self-driven local economy

17 MAY 2021

City	Surabaya
Type	Economic development
Period	2010-2015
Location	In many parts of the city, mostly in densely populated neighbourhoods
Sections	1 In brief 2 Key issues before project 3 Leadership/governance 4 Creativity/innovation 5 Impacts 6 Replicable ideas

To alleviate poverty and improve the economic status of lower income settlements as well as increase the competitiveness of small businesses, Surabaya developed several programmes to tap on existing resources within the kampungs (traditional neighbourhoods) to create a self-driven and sustainable local economy.
The Kampung Unggulan (Prominent Kampung) programme seeks to empower the kampungs to improve their economic condition by transforming their subsistence economy into a sustainable and profitable one.
With a ‘one village one product’ approach, the programme selected ten selected kampungs to develop ‘home-based enterprise’ and specialty in products such as embroidery, dress-making and traditional food items.
The Pahlawan Ekonomi (Economic Heroes) programme seeks to empower women and housewives to become entrepreneurs and set up their own small and medium-sized businesses (SMB), with a target of 5,400 SMBs.
The city encouraged the use of empty lands for urban farming for both self-consumption and sales of surpluses to complement home-based economic activities.

General nation-wide lack of employment opportunities and income, especially in urban areas.
Traditional methods of intervention, such as training for increased productivity, are conducted by bureaucrats and historically achieved little impacts.
Limited public funds and resources in the city.

Under then-Mayor Tri Rismaharini’s leadership, Surabaya believed in creating an inclusive and people-centric city and in developing the potential of the people by giving them opportunities.
Then-Mayor Rismaharini emphasises on integrity and heart, and on the interests of ordinary citizens. The city focuses on minimising corruption, and playing up on public participation and compassion for the people.
Despite limited public funds and a per capita development budget of USD $191.70, the city achieved much success and buy-in from the people by working closely with the community, and giving them platforms where they could display their ingenuity and hard work.
The city recognised the hurdles to personal development and took the first step of providing for the basic necessities of the people, such as free education through secondary level, free healthcare for all, and maternal care for the mother and child up to the age of six months.

In the Kampung Unggulan programme, the city first sought to understand and include as many as possible the existing home-made products, and then support these activities by providing professional training and low-interest government loans to the people.
The city also helped to enhance the uniqueness and quality of the products by making them more environmentally friendly and marketing them to more affluent consumers, as well as national and international buyers.
With many of the lower-income population already involved in agricultural activities, the city rolled out the urban farming programme to not only support local economy, but also form a key component of greening the city.
Vacant public lands, especially those at the fringes of kampungs are used for vegetable and fish farming, and are managed by the community. Private landowners who turn their lands for urban farming receive up to one-third of the harvest, with the rest sold for profits.

Surabaya has greatly improved its quality of life, especially for the lower-income groups, with an economic growth between 6-7 percent* that surpasses the East Java Province and national levels.
The Kampung Unggulan programme saw the increase in the number of people participating, and increase in income generated from IDR 24,414 million (approx. USD $1.6 million) in 2011 to IDR 91,118 million (approx. USD $6.2 million) in 2016.
The success of the programme saw the increase in household income, welfare, self-reliance, and an increased willingness in learning and sharing of experience.
The number and variety of home-made products have also increased.
The success of the Kampung Unggulan project has inspired many other Indonesian cities and towns to emulate it in their own areas.
The Pahlawan Ekonomi programme has successfully empowered some 5,000 housewives to build their own enterprises ranging from fashion to food and handicraft.

Rather than reinventing the wheel, cities could tap onto the existing capabilities of the people by giving them platforms to showcase their skills and products, thus creating a self-reliant and sustainable local economy.
Strategic interventions, such as the push for urban farming as part of the city greening programme, can help to achieve multiple effects of improving local economy as well as improve the urban environment. O

The information in this case study is correct as of 2018. The COVID-19 pandemic may have affected the current developments. ↩