Trapped in the rubble, the Palu earthquake shows the cost of the World Bank’s pro-business agenda in Indonesia
October 17, 2018
The World Bank’s pro-business agenda has led to lax and risky construction rules in Indonesia, a fact brought into focus by the devastating earthquake and tsunami that hit Palu in September as Elizabeth Fraser, Senior Policy Analyst at the Oakland Institute, highlights.
On the 28th of September, devastation ripped through Palu on the island of Sulawesi in Indonesia as both a massive 7.5 magnitude earthquake and subsequent tsunami struck the coastal city. The damage caused by these twin disasters – which at the time of writing has heartbreakingly claimed more than 2,000 lives – is horrifying. In reading about the tragedy, one detail in particular stands out: reports of thousands of buildings including hotels, shopping malls, and housing estates collapsing and trapping those inside. The thought of being trapped in a collapsed building is absolutely terrifying, but this tragedy also unveils the dire impact of the World Bank’s pro-business agenda.
The World Bank in Indonesia
For years, the Bank has pushed Indonesia to improve its standing in the former’s annual Doing Business reports, which rank countries on their “ease of doing business” and reward governments for enacting pro-corporate policy changes. Over the past decade, Indonesia has succumbed to this pressure, passing many such policy reforms to leapfrog ahead substantially in the rankings.
Several of the reforms adopted by the Indonesian government under the World Bank’s guidance have to do with the “ease” of obtaining building and construction permits. In 2008, the World Bank praised Indonesia for introducing a “simplified process” that allowed temporary building permits to be issued, making it possible for construction to begin before full permits were approved, and reducing the time required to get a permit from 49 days to just 21.
In 2016, the government further simplified the building permit process so that approvals in certain parts of the country could be obtained in just two days. Then, this past summer, yet another reform was enacted with the introduction of an Online Single Submission licensing system, which makes it possible to obtain location, environmental and building permits just one hour after submitting the required documentation online. As a result of these and other pro-business reforms, Indonesia climbed 51 spots in the rankings between 2008 and 2018, including a 34-rank leap between 2016 and 2018 alone.