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close this bookIn Place of the Forest: Environmental and Socio-economic Transformation in Borneo and the Eastern Malay Peninsula (UNU, 1990, 310 pages)
close this folderPart 2 : Issues of endangerment and criticality
close this folderUrban development and social welfare
View the document(introductory text...)
View the documentLevels of urbanization
View the documentThe major urban centres of Borneo
View the documentPoverty and social welfare
View the documentConclusion

(introductory text...)

Levels of urbanization
The major urban centres of Borneo
Poverty and social welfare

Following the brief introduction to this topic in chapter 3, here we will deal more specifically with the nature of the urban places that have developed in the region, with urban-rural relationships, and with the question of poverty, both urban and rural.

Levels of urbanization

Before it is possible to discuss trends in the proportion of the population residing in urban areas of Borneo and Peninsular Malaysia, it is necessary to examine the definitions of "urban" as employed by the two countries. Malaysia uses a population of 10,000 within a gazetted administrative area, whereas Indonesia adopts a more complex set of criteria, including a population density of over 5,000 per km2, less than 25 per cent of the population engaged in agriculture, and possession of a number of "urban" facilities. The fact that definitions differ between the two countries, and that both were adopted only at the 1980 censuses, replacing earlier criteria, means that accurate comparisons in time and space are difficult. Both are considered to understate actual levels of urbanization or city-like living conditions (Ko, 1991; Hugo, 1993).

The boundaries that have been used to demarcate cities, or city cores, or "townland" have also varied over time. Although this is a common problem for urban studies, it would appear that many of the Malaysian cities are "underbounded," which greatly understates their current size, whereas the Indonesian authorities have been more liberal in providing their cities with wider boundaries within which to grow, including some rural lands (Wood, 1985; Mohd Yaakub Hj. Johari and Baiyah Ag. Mahmon, 1989; Samad Hadi, 1990; Ko, 1991). The Indonesian situation presents less of a problem for the major cities, because "rural" components are separated. There is a difficulty, however, in identifying the precise size of smaller towns because they are included in the urban population of larger regencies (kecamatan).

Bearing the above caveats in mind, some generalizations can none the less be made. First, levels of urbanization, although increasing in all of the territories under study, are in most cases below the average for both Malaysia and Indonesia, the core areas of which are more urbanized than are the frontiers. Kalimantan had 27.5 per cent of its population in urban areas in 1990, compared with 35.6 per cent for Java and 30.1 per cent for Indonesia as a whole. The overall Kalimantan rate disguised marked contrasts, however, from a low 17.6 per cent in Central Kalimantan to 48.9 per cent in East Kalimantan. The latter has the highest urbanization rate for any Indonesian province outside of Jakarta (Sensus Penduduk Indonesia, 1990). Figures for Malaysia, using the 10,000 population cut-off rate with restricted boundaries, give a rate of urbanization of 24.4 per cent for Sarawak and 23.4 per cent for Sabah (including Labuan). This is recognized as being far too low. Not only does it seriously understate the size of major towns, it may lead to the odd situation of apparently declining rates of urban growth, as urban cores remain static and populations burgeon in the surrounding suburbs, which are still classified as "rural." It would seem particularly inappropriate for Sabah, where large numbers of foreign immigrants are housed in squatter settlements on the edges of all east coast towns and the capital, Kota Kinabalu. Inclusion of all places over 1,000 (which are defined as "urban small" or "bazaar" and possess some urban characteristics) raises these figures to 28.4 and 27.0 per cent, respectively, which appear more comparable to their Indonesian counterparts, but still understated. Under the latter definition, the overall rate for Malaysia becomes 38.9 per cent, which is still below an "official" rate for 1990 of 43 per cent (World Bank, 1992).

City size

Table 10.1 represents an attempt to derive some reasonably realistic city sizes for the Borneo territories and the eastern littoral of Peninsular Malaysia. In addition to the census figures for the bounded

Table 10.1 Populations of the cities sad towns of Borneo and the eastern Pen insula, 1990/91 (60,000 and above)

City/town Population
Banjarmasin (S. Kalimantan) 444,000
Pontianak (W. Kalimantan) 387,000
Samarinda (E. Kalimantan) 335,000
Balikpapan (E. Kalimantan) 309,000
Kuching (Sarawak)a 267,000
Kota Kinabalu (Sabah)b 250,000
Kuala Terengganu (Peninsula) 229,000
Kota Bharu (Peninsula) 220,000
Sandakan (Sabah)c 175,000
Sibu (Sarawak)d 148,000
Tawau (Sabah)e 116,000
Palangkaraya (C. Kalimantan) 100,000
Kuantan (Peninsula) 93,000
Miri (Sarawak) 87,000
Banjarbaru/Martapura (S. Kalimantan) 85,000
Singkawang (W. Kalimantan) 85,000
Tarakan (E. Kalimantan) 81,000
Kemaman (Peninsula) 72,000
Bandar Seri Bagawan (Brunei) 70,000
Bontang (E. Kalimantan) 67,000
Lahad Datu (Sabah)e 60,000

Sources: Sensus Penduduk Indonesia 1990; Jabatan Perangkaan Malaysia, 1992a, 1992b.

a. Kuching was estimated by Lockard to have 250,000 to 300,000 in the mid-1980s; others have suggested 400,000 (Lockard, 1987; Yusoff bin Hj. Hanifah, 1991). In this table, small settlements and half of the remaining population in the administrative district were added to the "townland" population. This might still be too low.

b. Kota Kinabalu has been described as a "conurbation"; it was suggested that a better idea of the size of the city would be gained if the adjacent area of Penampang was included. The whole administrative area listed under "Kota Kinabalu" plus half of Penampang have been added. Ho Ting Seng suggested a likely population for Kota Kinabalu of 240,000 in 1990 (Ho Ting Seng, 1989; Mohd Yaskub Hj. Johari and Baldev Sidhu, 1989; Samad Hadi, 1990).

c. Sandakan was also described as a conurbation with a dense surrounding population. Many of these people are in squatter settlements of recent migrants. Half of the remaining administrative district population has been added to the total (Teen, 1991).

d. Sibu's population was given by Sutlive (1985/86) as "almost 140,000" in 1984. Here, half of the remaining population of the administrative area has been added to the "townland" numbers; it might be too low.

e. Both Tawau and Lahad Datu have large immigrant populations living in squatter settlements (Tawau 29,000 and Lahad Datu 21,000 in 1988). An allowance has been made for these, plus a small increase (Teen, 1991). urban areas, estimates in the Malaysian literature concerning the "actual" size of the major cities have been taken into account. All "rural" components have been removed from the Indonesian cities.

Although there are still some uncertainties about the sizes of the Malaysian cities, it is believed that the relative order is about correct. It is clear that the four large centres in Kalimantan stand out. East Kalimantan, with its highly urbanized, "enclave" economy, supports two "big" cities in Borneo terms; South and West Kalimantan have one each. Central Kalimantan, with continuing low levels of urbanization, is well down the list. Sarawak and Sabah also support one large centre each; these cities have far less of an industrial orientation than their Indonesian counterparts but play a more prominent role in administration, given the greater relative level of autonomy of the East Malaysian states than of any Indonesian province. Remarkably, only four cities in the Peninsula appear in this table. The two largest, the old state capitals of Kuala Terengganu and Kota Bharu, are both major regional centres. The more southerly places are newer, with growth related to the oil and timber industries. They have not developed a full range of services and occupations, being in the shadow of the large cities of the western Peninsula from which they are accessible in only a few hours by road. The old capital of Pahang state, Pekan, near the mouth of the largest river in the Peninsula, is completely bypassed by the modern transport network and does not appear in the table at all. Thus, of a total population of almost 3.7 million in these 21 towns and cities, 83 per cent is in Borneo, reflecting both the rapid urban growth that has taken place there in recent years and also the dominance of the west coast cities in the modern urban pattern of the more populous Peninsula. Yet the urban system of Borneo, as it now stands, is mainly a product of the present century, whereas both the eastern Peninsular state capitals included in Table 10.1 were important regional capitals in the eighteenth century or earlier, and both had populations between 10,000 and 20,000 before the end of the nineteenth century (Lim Heng Kow, 1978).

The major urban centres of Borneo


There have also been "towns" in Borneo for centuries, at trading points on the mouths of the principal rivers, together with the ancient commercial city of Brunei. Several of these towns, although small in population, had considerable importance in regional trade in the nineteenth century and earlier. Many of them were built largely over the water, or on moored rafts, the most notable example being Kampung Air in what has since become Bandar Seri Begawan (Brunei), the history of which extends back over several centuries. Banjarmasin also certainly existed in medieval times, and around 1900 was probably already the largest town on the island of Borneo. Reid's map (1988) of political centres in South-East Asia around 1600 also shows Kutai (East Kalimantan) and Sukadana (West Kalimantan), but these were of lesser importance. Banjarmasin is the largest, most wateroriented, and most crowded of Borneo's urban places. It is built on swampy ground, on islands, and along a number of canals linking the Martapura and Barito rivers, together with the banks of those streams. Population densities per square kilometre reach over 50,000 in the district known as "Kelayan"; the average for the city is just over 6,000, but that also includes some agricultural land (Penduduk Kotamadya Banjarmasin, 1988). This may be compared with an average density of 3,700 for Pontianak, another longestablished centre.

Banjarmasin grew slowly during Dutch times - a reflection of the more rural orientation of the period. In 1930 it had 66,000 people, but this still made it the largest city in Borneo and the fourth largest in the Outer Islands of the Netherlands Indies (Volkstelling, 1930). The disturbances in the countryside during the 1950s, low rubber prices at the end of the 1960s, and periodic droughts that devastated crops led to post-independence episodes of cityward migration, largely of Banjarese from the main agricultural area of the Hulu Sungai. In more recent times the establishment of woodworking plants, especially for plywood, sawmilling, and furniture, has led to the increased attraction of the city as a place for employment. Javanese and Madurese have added to the existing minority of Chinese, with some Dayaks, Bugis, and Arabs, but the city remains predominantly Banjarese, and Banjarese merchants control much of its trade. Attempts to reduce the power of Banjarmasin by depriving it of part of its hinterland through the creation of the separate state of Central Kalimantan have not, in fact, been successful. The city is still the leading processor of raw materials from the Barito basin, much of which lies in Central Kalimantan.

Although the strictly "urban" area has experienced steady growth rates over the past 20 years (slightly higher between 1971 and 1980), there has not been the spectacular expansion experienced by cities such as Samarinda or Balikpapan. Despite an occasional "palace" of a wealthy merchant and a conscious attempt to upgrade the business district, with recent construction of new hotels and even shopping malls, Banjarmasin remains a lower-middle-class city - not much obvious poverty, but not much wealth either. The damp and swampy conditions and the continuing problem of securing drinking water in the dry season (with related outbreaks of cholera) have led many of the middle-class and wealthier citizens to move to Banjarbaru/ Martapura, where the general environment is more pleasant. This centre (two towns that have coalesced) has important educational, religious, and administrative functions, plus a diamond-cutting industry. An urban corridor has developed along the 40 km stretch of road between the two nodes, with some decentralization of factories, especially those making rattan carpets.

A survey undertaken by Potter in 1991 of 278 migrant households to Banjarmasin from the Hulu Sungai found one major concentration of employment in small-scale sawmilling and furniture works, with some families also living in "barracks" and working as day labourers in bigger sawmills. Woodworking industries, including large plywood mills, are found mainly clustered along the Barito River, whence timber supplies are floated down from Central Kalimantan. South Kalimantan has 16 plywood factories, most of them close to Banjarmasin, but only 6 within the actual city limits. Their predominantly female labour force is drawn partly from Java, but does include some locals. With almost 1,000 labourers each, they provide an important focus. Crumb rubber, chemicals, and cold storage are other major employers (Kotamadya Banjarmasin Dalam Angka, 1991). About 10 per cent of the migrants sampled worked in large factories and were more recent arrivals.

Migrants of longer standing tend to be self-employed, either as merchants or as workers in artisanal or handicraft occupations, usually from their homes. In the more crowded parts of the city, such as the Kelayan area, there are many families of tailors and seamstresses drawn mainly from the northern Hulu Sungai, which has a long tradition of sending its people to urban destinations (Rambe, 1977). A final group, living in recognized higher-status neighbourhoods, are civil servants of Hulu Sungai origin. They have markedly better education levels than most rural migrants, as do the majority of those with above-average incomes, although the reverse is not necessarily true. Some civil servants are poorly paid and live in very small houses, despite their education level.

It was clear from this survey and from general observation in the city that, despite the presence of large establishments, the bulk of employment continues to be found in small-scale, "informal-sector" occupations, including services such as cheap transportation and food vending. However, wood-related industries predominate, with many of the smaller plants being directly dependent on offcuts from the larger sawmills for their raw materials. There is discussion in the recent literature about a downturn in plywood manufacturing in Kalimantan due to shortages of raw materials (Hill, 1992; Indonesian Commercial Newsletter, No. 92, 27 January 1992). This did occur in Banjarmasin during the 1991 drought, because low water levels disrupted supplies from up-river, and log production figures for Central Kalimantan indicate totals still somewhat below average in 19911992 (Kalimantan Tengah Dalam Angka, 1991). However, there does not yet appear to be a serious supply problem. Although South Kalimantan no longer has many forests, Banjarmasin remains well placed to process timber from parts of Central Kalimantan.


Pontianak makes much of the fact that it is one of only a small number of cities in the world located directly on the equator and has attempted, in a limited way, to turn this into a tourist attraction. Although there is much swamp forest close to the city, most of the urban area stands on slightly higher ground, so the population does not have the same direct contact with rivers and canals as in Banjarmasin. Pontianak is a very Chinese city, with nearly one-third of its population of Chinese descent. Other important groups are Melayu (26 per cent), Bugis (13 per cent), and Javanese (12 per cent). Despite the predominantly Dayak population in the interior of West Kalimantan, only 3 per cent of Pontianak's population is Dayak (Kota Pontianak Selayang Pandang, 1989).

In contrast to Banjarmasin, Chinese are very visible in retail trade. According to Kota Pontianak Selayang Pandang, trade (24 per cent), administration (18 per cent), and transport (15 per cent) provided the major sources of income, followed by industry, both large and small, at 12 per cent. In terms of numbers employed, trade was even more prominent, occupying 36 per cent of the population, while administration employed 17 per cent and industry 11 per cent. With the exception of a very poor area across the river from the main city, Pontianak is somewhat more middle class in appearance than Ban jarmasin, though parts of the older market areas around the central core are decidedly run down. Housing tends to be less crowded without the restrictions of Banjarmasin's location, but problems of available water supply are also felt in the dry season.

West Kalimantan has 14 plywood mills, many concentrated at Sungai Raya just outside the city limits, with some moving also into blackboard and particle board; there are more than 50 sawmills (Dep. Perindustrian, pers. comm.; and Potter, fieldwork, August 1993). Most timber supplies are floated down through the Kapuas River delta channels to the city, although there is one plywood factory up-river at Sanggau, and another in the south at Ketapang. The need to bring in additional wood supplies from Sarawak to keep all the factories functioning was noted some years ago (Dines Kehutanan, Kalbar, 1990), and anecdotal evidence suggests that the problem is continuing.' There appear to be far fewer furniture factories and other small-scale woodworking establishments in and around Pontianak than in Banjarmasin. Small handoperated sawmills, so common in Banjarmasin, are not permitted. Rubber processing is, however, prominent, with eight plants in operation (Kotamadya Pontianak Dalam Angka, 1991).

The orange trade is another important activity. West Kalimantan is Indonesia's leading producer of Siam oranges, most of which are exported to Jakarta via Pontianak in refrigerated ships. Recently the industry has been in a state of crisis, because pressure from large cartels and trader-collectors has reduced returns to growers below production costs. Attempts by the Governor of West Kalimantan to secure better conditions for the farmers led to the insistence that all belong to cooperatives. An Orange Trade Co-ordinating Board was set up, under the control of a Jakarta-based private company, which was to maintain price stability. Unfortunately, this has not happened and the quality of the product has declined. Consumers are turning to imported oranges, which are now allowed to enter Indonesia free of control. As stated in a recent survey: "If this situation is allowed to continue, the collapse of orange cultivation ... in West Kalimantan, is just a matter of time" (Indonesian Commercial Newsletter, 10 May 1993).2

Balikpapan and Samarinda

The two "boom" cities of East Kalimantan, with their respective dependence on oil and timber, have experienced rates of growth that have been among the highest in Indonesia (Hugo et al., 1987). Balikpapan was created as the port for the oil fields around the mouth of the Mahakam to the north, early in the twentieth century, whereas Samarinda was the capital of the Kutai sultanate and, although small, was already a place of importance during the nineteenth century.3 Major growth, however, is modern. Starting from a low post-war base - in 1961 Balikpapan had 92,000 inhabitants and Samarinda 70,000 - their populations have increased dramatically in the past 30 years, largely as a result of spontaneous interregional migration. Samarinda has now outstripped Balikpapan and is growing almost twice as fast as Pontianak, which it might well overtake in the next decade. The two cities were studied by Wood (1985) as examples of settlements on the "resource frontier," and by Magenda (1991) in a broader analysis of regional politics focusing on ethnic interrelationships.

Magenda contrasted the relative roles of the Kutai aristocracy and immigrant groups of Bugis (from South Sulawesi), Banjarese (from South Kalimantan), and Javanese in the historical development of the two towns. In the timber and oil boom period of the early 1970s, he noted that a great influx of Javanese migrants considerably changed the ethnic composition of East Kalimantan, undermining the previous dominance of Banjarese in Balikpapan and Samarinda. Bugis also arrived in considerable numbers, augmenting a smaller, long-standing Bugis population, and there were minorities from North and Central Sulawesi. Though there is a lack of detailed census data by ethnic origin, Magenda estimated that Balikpapan in 1991 contained a majority of Javanese (35-40 per cent), 25-30 per cent Bugis, and 20 per cent Banjarese, with declining numbers of Chinese.

Samarinda, on the other hand, is still a predominantly Banjarese city, where they make up 40 per cent of the population, followed by Javanese with 30 per cent; 10 per cent are Bugis and 10 per cent are Chinese and various Dayak groups (Magenda, 1991). The "polyglot" nature of the immigrant population may be appreciated when one examines the ethnic origin of those working for the Kaltim Prima coal mine at Sangatta, north along the Kutai coast. Apart from foreigners, 25 different Indonesian origins were represented among the 2,099 employees, from all regions of the archipelago. The most prominent were Javanese, Bugis, Kutai Malay, and Batak (North Sumatra), with (apart from one Dayak) only the Kutai qualifying for the designation "local" (Klingner, 1994)!


Following the construction of the bridge across the Mahakam River and the upgrading of the road along the river between Samarinda and the former seat of the Kutai sultanate at Tenggarong, the lower part of this 50 km stretch has become one of the most heavily travelled in Borneo. What may be the largest concentration of plywood factories and sawmills in the world is located along the Mahakam within the Samarinda city limits (Schindele and Thoma, 1989). Samarinda produces 72 per cent of East Kalimantan's plywood and 74 per cent of its sawn timber (Kalimantan Timur Dalam Angka, 1991).

Wood studied the city before the bridge was built, at a time when the timber industries were still assessing the impact of the 1982/83 drought and fire. Logs were being brought in from northern parts of the province and from as far away as Sabah, and the future of the plywood industry in Samarinda appeared not at all secure (Wood, 1985: 84). In 1990 there were again complaints of a shortage of logs. Logging sites were located further and further inland, remote from log ponds and rivers, and the timber was becoming too costly to extract. One plywood factory near Samarinda was assisted by the government to import logs from Sarawak, but the economics of this appear doubtful, especially as a recent survey has suggested that the plywood industry in Indonesia is close to reaching its "culmination point," with static production levels.

The imposition of a high export tax on sawn timber, designed to encourage local processing, has led to a 35 per cent decline in output from East Kalimantan. Although there has been some shift into other types of wood processing such as veneer, blackboard, and moulding, these have gone only part of the way to make up for the drop (Kalimantan Timur Dalam Angka, 1991). Although some industrial timber estates (HTI) exist in the area, pulp and paper development is apparently zoned by the provincial government for the northern part of the province, from example, Tanjung Redeb, rather than the Samarinda area (Government of East Kalimantan, 1990a). A 1992 announcement, however, of five new investment projects for pulp and paper in East Kalimantan (no locations specified) raises the question as to whether this prohibition is still active. It would appear unusual if none of them was set up in the Samarinda-Kutai region (Indonesian Commercial Newsletter, 28 September 1992).

A relative decline in plywood and other wood-based industries might see a shift to a wider administrative and service role for Samarinda. Already its image has been improved with the redevelopment of the Mahakam riverfront into a residential and shopping complex, and rehousing the main market. The riverfront from the bridge to the central harbour is being turned into public parkland and its residents rehoused. Squatter settlements noted by Wood have disappeared and the "raw" frontier town atmosphere has gone. Samarinda is well placed as the capital of East Kalimantan to service the rapidly developing area of coastal Kutai.

This region, which includes Sangatta (Kaltim Prima coal), Bontang (LNG), and Muara Badok (fertilizer plant), has the potential for further resource-based industrial growth. Petrochemical development is seen as a major future direction (Government of East Kalimantan, 1990a, 1990b). It is undeniably an enclave development, geared toward meeting national or export, rather than local, needs. Nevertheless, it is this region, and that of Balikpapan, with the greatest concentration of large-scale industry in Borneo, that provides the base for the generation of the highest per capita domestic product in Indonesia. One must ask how much of this wealth becomes available to the ordinary people of the province, and we shall explore this below. A further question is to what extent this resource-based development is sustainable in the longer term. This is a question of direct relevance to Balikpapan.


Balikpapan is basically two cities: that occupied by oil industry executives, both Indonesian and foreign, and the city of the Indonesian workforce, most of them in the petroleum industry. The standard of housing and other amenities for the section on the hill owned by Pertamina, with its tree-lined streets and views across Balikpapan Bay, contrasts strongly with that in the rest of the city where there is much that is poor and run down. This is despite the transformation of the foreshore, which has taken place at the expense of the former squatter housing. Wood (1985) describes the boom in "luxury" housing that accompanied the influx of foreign oil executives who could not all be accommodated in the Pertamina area. It was a shortlived boom because oil exploration decreased, and with it the number of foreign oil contractors operating out of Balikpapan.

With a gradual decline in reserves and current low levels of exploration, changes are likely in the economy of Balikpapan. Although some drilling of exploratory and development wells was carried out in 1992 in East Kalimantan, mainly by foreign firms under contract, it is not known how many of those were in the Balikpapan area. Oil exploration in the immediate future is expected to move towards eastern Indonesia, where deposits have not yet been tapped, or into formations such as the pre-Tertiary, which are increasingly expensive to work. Balikpapan's period of growth might well be over, unless it can diversify into activities other than oil extraction and refining. The share of oil and LNG in the national GDP is expected to decline to 11 per cent by 2000, with much of the contribution coming from LNG (Indonesian Commercial Newsletter, 13 July 1992).

The areas of greatest potential in the near future appear to have moved away from Balikpapan towards the central Kutai coast. Tarakan, in the far north of the province, is like a mini-Balikpapan in its layout, also having a social cleavage between housing on the hill top (some of which is owned by the timber concessionaire, Inhutani) and the rest. Tarakan is known to lie on a rather small oil field, but it provides accommodation for workers on offshore rigs and has some strategic significance because of its location near the border with Sabah.

Kuching, Sibu, and other towns of Sarawak

The somewhat squalid housing conditions of a town like Tarakan are a far cry from the well-organized layout and open spaces of modern Kuching, capital of Sarawak since the founding of the Brooke sultanate. Unlike Kota Kinabalu, the Sabahan capital, and the East Kalimantan cities, Kuching was wholly undamaged in World War II. It retains a crowded, but no longer poor, Chinese-dominated central area and has some pleasant old buildings, notably those that house the excellent Sarawak Museum. To this are added some significant modern buildings and, between 1992 and 1994, the whole riverfront downstream of the market was cleared of "unsightly" small structures and laid out as an attractive promenade.

Kuching is, however, a city without an industrial base, in which a proportion of the wealth derived from logging and oil and gas elsewhere in the state has been devoted to urban "modernization" and large-scale construction. At the end of the 1970s, Leigh (1979: 343) viewed the expenditure on upgrading Kuching's facilities as resulting in "a grossly disproportionate growth of population," with the bureaucracy as the prime beneficiary. There is no doubt that Kuching has been growing quickly over the past 20 years. Lockard (1987) writes of new suburban neighbourhoods and housing projects that have displaced former rubber estates and mangrove swamps on the outskirts of the city, of traffic jams, and of burgeoning suburban shopping centres.

Figures on the distribution of the main ethnic groups in Sarawak as a whole reveal roughly equal numbers of Iban and Chinese (at 29.5 and 28.9 per cent respectively), and 20.8 per cent Malay, 8.4 per cent Bidayuh, and smaller numbers of other indigenous people (Siaran Perangkaun Tahunan, 1990). However, the situation in Kuching is quite different. Although figures are available for only the "urban core," they show that in 1988 the city contained a large majority of Chinese (50.8 per cent) and a high proportion of Malay (37.1 per cent). The Iban population constituted 5.4 per cent and the Bidayuh 3.8 per cent (Yusoff bin Hj. Hanifah, 1991). There is no breakdown by occupation. The 14,000 Iban and Bidayuh in the urban core may be a small proportion of the members of local indigenous groups who are living in the Kuching metropolitan area.

Jomo Sundaram (1992), in his discussion of child welfare in Sarawak, noted the sociocultural upheavals taking place among the "Dayak" communities, leading them to favour an urban lifestyle and reject rural and traditional values. He stated that "The gradual undermining of the rural economy and the displacement of the population do not mean that urban Sarawak is absorbing them satisfactorily." In fact, the contrary is true: "Illprepared for urban life, they can find no other role than as squatters on the fringes of the cities" (Jomo Sundaram, 1992: 249).

Although we lack detailed information for Kuching, Sutlive's (1985/86) research in the second-largest city, Sibu, may provide some guidelines. Sibu is a major river port built where higher ground first touches the Rejang at the head of its delta, and a principal centre of the timber industry, with a crowded and fast-developing commercial centre dominated by new office buildings and hotels. It is no longer a seaport, since logs are rafted or barged past Sibu for loading onto ships at deeper-water anchorages closer to the mouth of the river and below the numerous sawmills that lie between Sibu and these anchorages. Sibu is dominated by Chinese, and is the headquarters of many ChineseMalaysian companies operating in the timber industry, both in Sarawak and further afield.4 However, Sutlive (1985/86) estimated that there were between 10,000 and 15,000 Iban in Sibu in 1984, with occupations ranging from highlevel administrators and professionals to construction workers, prostitutes, and domestics. This is as many as the whole population of Sarawak's one Ibandominated town, Kapit on the middle Rejang River. However, because most possessed little formal education and few marketable skills they tended to receive low wages from both government and private firms. Many were indeed living as squatters. Ko (1991) challenged the idea that squatting was a serious problem in Sarawak's cities, largely because of the state government's policy of demolishing such settlements and resettling the inhabitants. Nevertheless, he supplied a figure of 1,500 squatter dwellings on the urban fringe of Kuching and 500 in Sibu, plus a total of 1,000 dwellings in the core areas of Sarawak's four large cities. In fact it seems that much of Kuching's population is still relatively poor despite the traffic jams and the new five-star hotels.

Yusoff bin Hj. Hanifah (1991), discussing the "informal sector," denies that most of those who work as hawkers or produce foodstuffs and other cheap commodities in cottages or backyard factories are actually the poorest people. The poorest are those who work as labourers or "employees." Although the informal sector is constantly being augmented by newcomers to the city, its success derives largely from the low purchasing power of most of the other inhabitants. He notes that some of Kuching's newer, "modern" facilities have in fact not been utilized, necessitating the conversion of one shopping complex into a hawkers' food centre and another into a night market (Yusoff bin Hj. Hanifah, 1991: 281-282). The picture thus emerges of a city conscious of its image as the state capital, attempting to attract tourists by appearing "Westernized," yet not developing in a manner appropriate to the needs of much of its population.

Sarawak's boom town is in fact Bintulu, a growing industrial complex based on extensive gas supplies, with LNG, fertilizer, and chemical plants, and a wide range of associated activities scheduled, including timber and palm-oil processing and estates for light industry. The natural-gas liquefaction plant is the biggest commercial undertaking in Malaysia, the deepwater port has the second-highest tonnage in the country, and the fertilizer plant is designed to serve not just Malaysia but the whole of the Association of South-East Asian Nations (Jitab and Ritchie, 1991). The complex resembles that at Bontang, East Kalimantan, and the town's growth has been as rapid, with 43,000 people measured as "urban" in 1988. Ko (1991) notes that the new urban area of Bintulu should be 430 km2, not 2 km2, as it is currently defined.

Much older is Miri, the first oil town in Sarawak, with a charac teristic Malaysian core of Chinese shop-houses. Among these a few modern buildings have arisen since offshore oil and gas have led to recovery, following years of depression as land-based oil production declined. New suburbs and schools lie inland of Miri also, but the "boom-town" aspect of central Sibu and Bintulu is lacking.

Urban centres in Sabah: Kota Kinabalu, Sandakan, and Tawau

The towns of Sabah have grown even more rapidly than those of western Sarawak, and squatting on the urban fringes is a more visible phenomenon. Kota Kinabalu itself is almost entirely a modern town, the pre-war colonial settlement having been destroyed in 1945. Even more than Kuching, its modern appearance reflects lavish spending on new construction in consequence of the timber boom of the period since the 1960s. Hotels are prominent, as in Kuching, but the most striking element in this construction is the shining glass tower of the Sabah Foundation (Yayasan Sabah), which dominates the coastal area north of the city.s Between this tower and the core of Kota Kinabalu, however, lies one of the most extensive squatter settlements in northern Borneo.

A conference on urban development policy, held in Sabah in August 1989, identified a number of key issues that the participants believed needed to be addressed as the state moved into the 1990s. Although some of these issues apply also to Sarawak and, to an extent, to the Kalimantan provinces as well, others are more specific to Sabah.

It was concluded that Sabah had a poorly developed and "topheavy" urban system in which the major cities dominated their particular districts at the expense of small towns, with an inadequate spread of basic urban services. There had been little or no coordination between rural, regional, and urban development, with particular projects being implemented without reference to any overall plan. The cities themselves had poor labour absorptive capacities so that, although rural-urban migration was expected to continue, rising unemployment was anticipated. A particular problem in the case of Sabah has been the large number of foreign immigrants - Filipinos as well as Indonesians living in squatter settlements on the edges of the towns. Strains on existing services and environmental and health hazards followed, adding to already existing problems of pollution, poor drainage, and inadequate urban planning (Mohd Yaakub Hj. Johari and Baldev Sidhu, 1989).

Certainly there has been some manufacturing development, although attempts to establish light industrial estates around the main urban centres have not been very successful. There are large numbers of sawmills near the timber-producing areas and plywood manufacturing on a limited scale at Sandakan, Lahad Datu, and Tawau. However, anticipated shortages of sawlogs, despite the recent ban on exports, will limit further development of wood industries until plantation timber becomes available. An integrated pulp and paper mill on the west coast at Sipingan is the first of its kind in Malaysia and in Borneo. It was started using residual timber from the nearby forest but will soon switch to its extensive plantations, in addition to using contracted wood supplies grown by small farmers (Sabah Forestry Department, 1990). Processing of the main agricultural products of palm oil and cocoa is also limited, with large amounts exported in their raw state to the Peninsula. The industrial sector is considered still weak; the proportion of the population employed in manufacturing is below that of Sarawak and also below that of South and East Kalimantan.

The huge illegal population of Filipino and Indonesian migrants is prominent in every sector of the economy, but most particularly in agriculture and forestry, as noted in chapter 5. However, it also features in manufacturing, construction, and retailing, activities typically located in cities. Pang (1990) estimates that the growth rate of the illegal population was 10 per cent between 1980 and 1987, compared with 2 per cent for the local population; by the year 2008 illegals will outnumber locals (Pang, 1990). Tsen (1991) calculated the illegal population squatting on the outskirts of urban areas, mostly on the east coast plus Kota Kinabalu, to be around 140,000 in 1988. A similar number were estimated to be resident on estates (Kler, 1992), with many others in timber camps or on construction sites.

Some of the most interesting studies of urban areas in Sabah concern the ecological and planning impact of this transient squatter population. Ho Tin Seng (1989: 236-237) quotes the following examples:

In Sandakan, a whole stretch of swamp land and river banks just a few miles from the town centre has been "swallowed" up by squatter settlements causing pollution and other problems to the nearby housing estates . . .

One of the more notorious transient settlements in Tawau is known as Kampung Titingan or Icebox, and sits on about five acres of coastal land which could be developed into fishponds, or a deep sea port. This settlement, occupied by nearly 10,000 transients, has spilled over to the nearby river which is being polluted ... Serious fires have at times swept through this settlement, razing large numbers of the houses and causing loss of life.

In Kota Kinabalu, pollution from the nearby settlements in Pulau Gaya not only disturb the delicate ecological balance but contribute to the slow growth of the tourism industry.

Tsen (1991) goes further and acknowledges that a proportion of the squatter settlements in Sabah are home to local rural-urban migrants. Despite government regulations banning further construction of squatter housing, and some demolitions, the settlements have grown rather than diminished. Although the federal government is responsible for policy on illegal workers (and it is acknowledged that the estate sector could not operate without them), it is considered that the two groups of squatters represent different problems. Tsen (1991) suggests that plans for improvement of the settlements must be incorporated within urban budgets, while at the same time more attention should be given to provision of employment in the rural areas to reduce ruralurban flows. The proliferation of squatter settlements in Sabah is obviously a symptom of high levels of poverty, of both immigrants and ethnic Sabahans, to which topic we now turn.

Poverty and social welfare

As with "urbanization," "poverty" is defined differently by Indonesia and Malaysia.6 Using the relatively simpler Malaysian approach, absolute poverty is measured on the basis of poverty line income (PLI), defined as "the minimum requirements for food, clothing and shelter and other regular expenditures that are necessary to maintain a household in decent standards of living" (terms are not defined). The PLI is adjusted for differential living costs between the regions of Malaysia, so that it is higher for Sabah and Sarawak than for the Peninsula. For 1990 it was set at M$544/month for a household size of 5.4 in Sabah and M$452 for a household size of 5.2 in Sarawak. Rural mean income was estimated to be 60 per cent and 54 per cent, respectively, of urban income in the two states (Government of Malaysia, 1991b: 100).

In Indonesia a number of different poverty measures have been proposed, beginning with the well-known estimates of Sayogyo (1975), in which income was measured in terms of rice-purchasing power. The poverty line ("poor" households) was set at 320 kg of milled rice equivalent (mre) per household per year in rural areas, and 480 kg in urban areas. Households receiving an income below 240 kg mre in rural areas and 320 kg mre in the cities were described as "very poor." Such a measure might have been suitable in rural Java perhaps up to 1970, but it has been argued that, especially in urban areas, people today have a very different perception of "needs." Although satisfaction of basic food requirements remains important (and the actual mix of foods may be more varied), other essential expenditures will also be made, even by the poorest. It is claimed that Sayogyo's 50 per cent differential in living costs between urban and rural areas is too high, while differences in prices between different regions of the country must also be taken into account.

Booth (1993) and Bidani and Ravallion (1993) have discussed a number of other indices put forward, including those of the World Bank (1990) and the most recent BPS (Central Bureau of Statistics) estimates. In 1992, for the first time, BPS made figures available by province for the proportion of the population in poverty. The basis of the BPS poverty line is the cost of purchasing 2,100 calories of essential foods, to which are added a number of other items such as rent, fuel, clothing, transport, and schooling, again kept to lowest levels.

Bidani and Ravallion (1993) have followed the BPS in choosing a "reference food bundle" of items commonly consumed by the poor that would yield 2,100 calories. A person is deemed "poor" if unable to purchase such a bundle, which is valued at local prices in each region. They then sought the typical value of non-food spending by a household just capable of reaching the 2,100 calorie limit. This was again locally priced and added to produce a composite poverty line more accurate in regional terms. It was discovered that urban prices were only 12 per cent above rural and that six regions had higher food prices than Jakarta, including most of Kalimantan. This measure will be used in this chapter, as it is more sensitive to regional differences in the incidence of poverty in Indonesia. The overall monthly per capita poverty line income (urban + rural) varied from Rp20,010 in West Kalimantan to Rp16,343 in South Kalimantan, or Rp100,051 and Rp70,275, respectively, on a household basis (Bidani and Ravallion, 1993).

Patterns of rural and urban poverty in East Malaysia

In 1990 the incidence of poverty in Sabah was given as 34 per cent, with rural levels reaching 39 per cent and urban 15 per cent. Figures for Sarawak were a much more moderate 21 per cent overall, with rural poverty 25 per cent and urban 5 per cent. When examined by ethnic group (or at least Bumiputera7 against Chinese), Bumiputera were seen to be still experiencing the higher levels of poverty - 41 per cent in Sabah and 29 per cent in Sarawak. In contrast, only 4 per cent of Chinese fell below the poverty line in each state.

Although the rural poverty figures are far above urban levels, it is worth remembering that the "underbounded" nature of the cities means that people living in urban fringe areas, many of whom are housed in squatter settlements, are automatically classed as rural. Hence it is very likely that urban poverty is considerably higher, and rural poverty somewhat lower, than the figures indicate. The Bintulu study mentioned by Ko (1991) found that most of the poor were located outside the Bintulu Townland but within the "real" urban area, and had a poverty incidence of 21 per cent, which was much higher than official levels.

Whereas both rural and urban poverty have steadily declined in Sarawak since 1976, and this trend is expected to continue, in both numbers of poor households and percentage of the population included, in Sabah the situation is different. Both the percentage of those in poverty and the numbers of poor households actually rose between 1984 and 1987. By 1990 the percentages had marginally improved but numbers of poor households continued to grow (Government of Malaysia, 1989, 1991b). While the Mid-term Review of the Fifth Malaysia Plan (Government of Malaysia, 1989) identified padi farmers, rubber and coconut smallholders, fishermen, and estate workers as groups prone to poverty, a local study in Sabah added shifting cultivators and general agricultural workers to the list (Mohd Yaakub Hj. Johari, 1991). Given that the poverty line is based on money income, and that returns from small-scale agriculture and fishing in particular are notoriously low, these concentrations are not surprising. However, one might query the appropriateness of such income measures with groups such as shifting cultivators and padi farmers, who may not "feel" as poor as their income might indicate if they are able to secure their own subsistence.

It is notable that estate workers appeared more prominently in the poverty figures for Sabah than for Sarawak. This highlights the difference between the two states in their use of foreign labour, with 90 per cent of Sabah's estate workers being Indonesian or Filipino (Kler, 1992). As Kow (1992) has noted, wage levels in the Sabah estate sector are low, which is one of the reasons local farmers are not interested in employment there. A survey carried out in 1988 indicated that 86 per cent of the 49,000 workers on 280 agricultural estates earned between M$101 and M$300 per month. Although these wages might appear reasonable to Indonesian or Filipino workers when compared with their rates back home, they automatically put the immigrants below the poverty line in Sabah, which has a much higher cost of living (Kong, 1992). In the urban areas of Sabah, Zulkifly Hj. Mustapha (1989: 268) found a proliferation of informal-sector activities, which he ascribed to "an employment crisis due to the slow speed of labour absorption and low rate of growth in modern urban economic activities, particularly in relation to industrialization, and the high rate of immigration (illegal migrants) and internal population mobility (ruralurban migration). " Although he noted that most illegals moved into informalsector occupations, all ethnic groups have apparently been involved. However, there is no doubt that the inflow of large numbers of poor and largely unskilled migrants from Sabah's neighbours has placed enormous stress on urban facilities and helped to maintain the persistently high levels of poverty, both urban and rural.

Patterns of rural and urban poverty in Kalimantan

The proportions of the population of Kalimantan that fell below the poverty line in 1990 are shown in Table 10.2, based on Bidani and Ravallion (1993). Although these figures are not strictly comparable with those from the Malaysian territories, they are at least based on a similar set of basic expenditures (according to the norms prevailing in each society) and adjusted for regional living costs. Whereas, in general, Indonesian poverty levels have been falling over time (using Sayogyo's measurements for example), no temporal sequence is possible with these figures. They do, however, give credence to the belief expressed by Booth (1992a, 1993) that the highest poverty incidence is no longer to be found in Java, but is found in parts of the Outer Islands. The rates for West Kalimantan are second only to East Nusa Tenggara (Irian Jaya and East Timor being omitted), with Maluku and south-east Sulawesi not far behind. These other provinces are in eastern Indonesia, which has had high poverty levels for some time.

Table 10.2 Proportions of the population below the poverty line, Kalimantan provinces (1990)

Province Urban + rural Urban Rural
W. Kalimantan 33.8 14.7 38.7
C. Kalimantan 18.7 12.3 19.9
S. Kalimantan 8.7 0.9 11.5
E. Kalimantan 14.0 4.9 22.5

Source: Bidani and Ravallion (1993).

Table 10.3 Indices of poverty at the food poverty line,alimantan (1990), adjusted for cost diferentials

Province Urban + rural Urban Rural
W. Kalimantan 21.1 6.2 24.9
C. Kalimantan 9.9 4.1 11.1
S. Kalimantan 3.1 0.1 4.2
E. Kalimantan 4.7 0.4 8.7

Source: Bidani and Ravallion (1993).

The levels in rural West Kalimantan are surprising, but reflect the local high food prices. On the food poverty measure alone, without the addition of other costs, 24.9 per cent of the population of rural West Kalimantan and 11.1 per cent in Central Kalimantan are unable to afford the minimum level of 2,100 calories (Table 10.3). At the other extreme, the people of urban areas in South and East Kalimantan have few problems in meeting calorie requirements.

Given that 75 per cent of West Kalimantan's population is still engaged in agriculture, forestry, or fishing, and 71 per cent of that in Central Kalimantan (Statistik Indonesia 1992), it is not surprising that incomes are low. The decline in rural poverty in Java has largely come about because of the increased availability of non-agricultural wage employment. Booth (1993: 80) comments that in the Outer Islands "much of the income accrues from particular sectors whose linkages with the rest of the regional economy are quite limited." Thus developments such as mining provide few employment opportunities for local people, and the profits are often drained away from the province. Such statements are certainly true of Kalimantan, especially East Kalimantan, where so much of the development has been of an enclave nature. Those who have benefited have been mainly immigrants, the majority of them urban. The interior Dayak population has shared little in this bonanza, hence rural poverty levels in that province have also remained rather high.

A recent BPS (1992) report on the characteristics of poor house holds notes that they were, in general, larger than average, with poor levels of education and primary sources of income from either agriculture or trade. A subsidiary report specific to West Kalimantan included the 27 variables used to classify villages as either "non-poor," "poor," or "very poor" by giving them a composite score. The variables covered such areas as village facilities and environment, level and ease of communications, and characteristics of the population such as birth and death rates and enrolments of school-age children. Using these scores, 52 per cent of West Kalimantan's 4,800 villages were classified as "poor," but only 27 were "very poor" (BPS, 1993). An atlas of poor villages published by the National Planning Development Agency, BAPPENAS (1993), using the same criteria, has placed large numbers of the interior villages in East Kalimantan and in the eastern part of Central Kalimantan in the "very poor" category.


The picture that emerges from these discussions of the nature of the urban places in Borneo, and of levels of poverty and relative deprivation, is a disturbing one. Despite the increased levels of industrial development, based largely on the exploitation of the island's resources of forests and minerals, the wealth generated has largely bypassed the indigenous populations of the interior, especially in Indonesian Kalimantan. Very few Dayaks live in the urban centres, except in Central Kalimantan, where industrial development is lowest. In Sabah and Sarawak the movement of indigenous people to the cities has been stronger, but most are still only marginally involved in the urban economy. In the East Malaysian states the capital cities are removed from the major industrial enclaves. In Sabah the competition from illegal immigrants for urban niches is strong and not slackening. Although rural-urban migration should not be essential for people's incomes to be raised above poverty levels, the existence of strong urban-rural differentials is a clear sign of stagnation and lack of opportunity in the rural areas. Although the logging industry has offered non-agricultural employment, in general wage levels available to locals have been low. A similar situation prevails in the newer plantation forests and, in Kalimantan, Javanese transmigrants are regularly brought in as a labour force to work these forests. Estates and land-settlement schemes in East Malaysia have likewise proved unattractive to indigenous people, although some in situ schemes for village improvement have shown possibilities. Even in better-off South Kalimantan, existing rural industries have been undermined by centralization and the all-embracing grasp of the large cartels on available resources.

A further disturbing feature is the indication of imminent decline in the sustainability of the industrial structure, based on actual shortages of raw materials. It has already become clear in Sabah that the forests will soon be unable to meet the demands of even the limited local market and the industries set up to serve it. Such indications have now also surfaced in both East and West Kalimantan, where log supplies are becoming more distant and more expensive to extract. So far, plantations are lagging and their timber, when it becomes available, will require different technologies leading to different outcomes. Sumatra, with some of its pulp and paper plants already in place and several more planned, is in a better situation than Kalimantan to face a future drop in the dominance of plywood. The oil industry too is feeling the impact of declines in exploration. Although natural gas and coal are still abundant, rapid rates of extraction will quickly lower their life expectancy.

Perhaps other activities such as eco-tourism offer better possibilities for the future and for the involvement of the indigenous people of the interior. Although Sarawak and Sabah are placing more emphasis in that direction than the Kalimantan provinces, in both Malaysia and Indonesia there has been a lack of sensitivity in the promotion and maintenance of minority cultural practices, which signals caution in proceeding too quickly.


1. Presumably this comes by sea. Neither Brookfield nor Potter has seen any evidence of timber transport on the road between Pontianak and Kuching.

2. The situation of the orange growers is a further example of the attempts to impose Jakartabased controls on particular industries, with serious effects on rural dwellers in Kalimantan. The insistence that all sawmills be attached to timber concessions led to numerous closures of small rural sawmills for lack of raw material, or their relocation in cities such as Banjarmasin where they at least had access to offcuts from the large plants. The banning of exports of rattan, while ostensibly to encourage local processing, resulted in a rapid decline in prices so that growers and collectors no longer harvested the product. This led to a shortage of raw materials for existing plants, which were themselves subject to severe controls on the quality of the processed item. Producers of rattan carpets in areas of the north Hulu Sungai, where the industry had been an important source of village income, suddenly found that export licences were available only to a few city factories. Although it was necessary to control overproduction for the main Japanese export market, the rural industry was almost wiped out as carpets became unsaleable except on local markets. It is worth noting that con siderable recent urbanization has occurred as a result of such dislocations of rural manufacturing.

3. However, Bock (1881: 23), who visited Samarinda in 1878, described it in his diary as "the most miserable place I have ever seen; the natives and their buildings correspond in squalor." There were houses on both land and water (on rafts), but all located close to or on the river. There were only two larger buildings, the Sultan's palace, a wooden, iron-roofed structure, run down because it was seldom occupied by the Sultan, who normally lived some kilometres away at Tenggarong, and the town governor's residence, which was the only substantial and well-furnished house in the town. "Everyone," Bock wrote, "is a trader," although presumably he excluded the poor from this statement.

4. All the log-exporting Chinese entrepreneurs operating on the coast of New Britain, Papua New Guinea, in 1991 came from Sibu (B. J. Allen, pers. comm.). Sibu entrepreneurs are also at work in the Solomon Islands. There are close family linkages among these small-scale timber-working companies, and they can accumulate the funds needed to reward Papua New Guinea political leaders for their granting of access to national resources.

5. There is something of a parallel here between urban investment in Malaysian Borneo during the modern timber boom and urban investment in Amazonian Brazil during the rubber boom from 1880 to 1912. Though less flamboyant, the Yayasan Sabah tower perhaps bears comparison with the famous opera house in Manaus.

6. Discussion is confined to Borneo. The situation in the eastern Peninsula is very different for the legal population, where only the Malay rice-and-rubber farming groups of the older agricultural regions still retain a high proportion below the official poverty line. However, the large population of illegal immigrants is in a different category, and there is no information whatever concerning them. The discussion regarding Sabah in this section may, however, well apply.

7. Literally "rulers (or sons) of the soil," this term applies to all members of ethnic groups supposedly indigenous to Malaysia. Chinese (and Indians) are excluded, including the "Straits Chinese" who have been present in the western Peninsula since the sixteenth century, much longer than some Malay groups such as the Minangkabau, most of whom have migrated to the Peninsula since the eighteenth century. The term also embraces the indigenous people of Malaysian Borneo. In terms of the New Economic Policy of 1970-1990, Bumiputera status conveyed significant advantages in terms of access to education, land, financial assistance in entrepreneurship, and government employment.