During a mass mortgage signing ceremony for the Housing Financing Liquidity Facility (FLPP) subsidized housing program in late December 2025, President Prabowo Subianto spontaneously put forward an important idea: the need for a master plan for cities across Indonesia.
According to the President, the presence of such a master plan is expected to transform the appearance of cities, making them more attractive and appealing to tourists.
This statement was quite surprising. Not only because it was delivered during an FLPP mortgage event, which has traditionally focused on subsidized housing development in regencies and suburban areas, but also because it marked the first time President Prabowo explicitly expressed concern for the urban development agenda. Over the past year, government policy has largely focused on human capital development through the Free Nutritious Meals Program and People’s Schools, as well as strengthening the rural economy through food self-sufficiency initiatives and the Merah Putih Cooperative program.
The emphasis on human resource development and rural areas is certainly not misguided. In fact, several indicators have begun to show positive results. In rural sectors, for example, farmers’ welfare has improved, as reflected in a stronger Farmers’ Terms of Trade (NTP), increased food production, and remarkable growth in the agricultural sector over the past year.
Urban Transformation and the Need for an Urban Development Law in Indonesia
However, when the government is targeting economic growth of up to 8 percent, placing too much emphasis on rural development could create a paradox. Experiences from around the world over many decades show that accelerated economic growth is almost always driven by the strengthening of urban areas. In contrast, rural development is generally positioned as a strategy for equitable development rather than the primary engine of growth.
The challenge is that Indonesia has not yet reached a stage of fully mature and balanced economic development. Economic growth still needs to be accelerated, while regional disparities remain unresolved. In this context, a growth strategy based on equity cannot rely solely on rural development. Strengthening cities, as centers of economic activity, industry, services, and innovation, is an essential prerequisite.
For this reason, the President’s invitation to bring together governors, mayors, and academics to discuss the future direction of urban development should be welcomed with optimism. This momentum should be used to formulate how Indonesia’s limited national resources, whether fiscal resources, policy instruments, or human talent, can be strategically directed toward urban development.
Indonesia’s cities possess enormous potential. However, that potential cannot be fully realized through the efforts of municipal governments alone. Fiscal constraints, limited authority, and fragmented cross-sector policies make it difficult for many cities to undergo significant transformation. Without a strong national framework, cities will continue to develop independently, resulting in uneven outcomes.
Furthermore, Indonesia still does not have a dedicated law governing urban development. This is noteworthy given that cities serve as the primary engines of national economic growth. Therefore, the concept of a city master plan should become an entry point for initiating an Urban Development Law capable of clarifying the distribution of authority, strengthening urban financing mechanisms, and promoting policy integration across sectors and levels of government.
Ultimately, urban development should not be limited to beautifying city landscapes or simply attracting tourists. Indonesian cities must be developed in ways that create meaningful impact by increasing productivity, expanding employment opportunities, strengthening national competitiveness, and serving as drivers of inclusive and sustainable economic growth.
This opportunity should not be missed. If managed with the right vision, strengthening Indonesia’s cities could become a crucial foundation for the country to move toward a higher phase of economic growth.
Hopefully.
Sources: Kompas.id – Penguatan Kota-Kota di Indonesia
