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Balikpapan - Borneo
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.

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