Store

Trapped in the rubble, the Palu earthquake shows the cost of the World Bank’s pro-business agenda in Indonesia

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.

indonesia world bank widodo Jim Yong Kim
Indonesia’s President Joko Widodo (left) shakes hands with World Bank President Jim Yong Kim (right). Indonesia will host the annual meeting of the World Bank and International Monetary Fund in Bali in October © Gagah Adhaputra/AFP

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.

construction world bank indonesia
Construction in Pekanbaru, the capital of Riau province in Sumatra, Indonesia © Flore de Preneuf/World Bank

The cost of putting corporate interests first

There’s little doubt that these reforms make it easier to start and operate a business in Indonesia. But this recent disaster begs the question, at what cost? What and who do we sacrifice when we put corporations first? When we speed up processes to attract private investors? When we cut corners to align under pressure from the World Bank?

palu earthquake tsunami sulawesi indonesia
People carrying their belongings through a damaged area following the earthquake and subsequent tsunami that hit Palu in Central Sulawesi, Indonesia. Over 2,000 people died, 80,000 have been displaced and more than 65,000 homes destroyed © Ulet Ifansasti/Getty Images

For years, the global Our Land Our Business campaign has exposed the devastating impacts of the rush by developing countries to deregulate to please the Bank. As part of this campaign, a new report, Indonesia: The World Bank’s Failed East Asian Miracle,  released on the 2nd of October by the Oakland Institute, details the specific and harrowing impacts of World Bank-backed reforms in Indonesia. Beyond the recent devastation in Palu, this includes the displacement and criminalisation of smallholder farmers and indigenous defenders to make way for mega-agricultural projects, as well as massive deforestation, widespread loss of indigenous land and rapidly increasing greenhouse gas emissions associated with the country’s expanding palm oil sector.

palu earthquake tsunami sulawesi indonesia
An aerial view of Balaroa village in Palu, devastated by the earthquake and tsunami. A new report – Indonesia: The World Bank’s Failed East Asian Miracle – released on the 2nd of October by the Oakland Institute details the negative impacts of World Bank-backed reforms in Indonesia © Ulet Ifansasti/Getty Images

Development for people

For far too long the Bank has wielded its influence and power to push its pro-corporate agenda on governments around the world, wilfully ignoring the waves of destruction it has created. The time for this to end is now. As it happens, just last week World Bank officials gathered in Indonesia for their annual meetings.

Against this horrific and sobering backdrop, the Bank and its officials must wake up to the devastation they’ve unleashed. They must be held accountable for the massive cost – in lives, livelihoods, the environment, and more – of their neoliberal agenda. And they must end the Doing Business rankings once and for all. The world needs development policies that serve people, not policies that blindly focus on economic growth at all costs.

Related articles