ABSTRACT

Prior to the economic problems, Indonesia had experienced rapid economic growth and changing economic structure during the last two decades. Per capita income had increased from US 50 dollars in 1967 to US 650 dollars at 1994. The economic growth which was initially driven by import-substitution and oil-based industries had been increasingly promoted by export-oriented manufacturing industry. Indonesia has been undergoing a major demographic and economic transformation. The average urban population growth rate was 5.5 percent during the last decade which is higher than the average of national population growth of 1.9 percent and rural population growth of 0.8 percent during the same period. Because of the interdependence of urban and rural development, the rapid transitions from rural to urban that are taking place, and the increasing importance of integrated 'agro-urban' development, the strategy for urban development is being conceived and implemented in Indonesia in the context of the regional development strategy.