Luqman Hakim Department of Public Administration, Faculty of Administrative Science, Brawijaya University [email protected]

Luqman Hakim Department of Public Administration, Faculty of Administrative Science, Brawijaya University Elhakim@Brawijaya.Ac.Id

JKAP (Jurnal Kebijakan dan Administrasi Publik) Vol.23 (2), November 2019, 124-84 ISSN 0852-9213 (Print), ISSN 2477-4693 (Online) Available Online at https://journal.ugm.ac.id/jkap

Build Operate Transfer (BOT): Does it Apply Universally? The Case of Dinoyo Malang City Mall, Indonesia

Luqman Hakim Department of Public Administration, Faculty of Administrative Science, Brawijaya University [email protected]

Abstract Politics change, so does public administration. The aim of this research is to evaluate the Build Operate Transfer (BOT) – based policy in the modernization of Dinoyo Traditional Mar- ket Malang city, East Java province, Indonesia. The research was conducted during 2017- 2018. The research was based on a qualitative research design, and used in-depth interview, observation and documentation to collect data. Research results showed that the change in In- donesian political landscape that begin with the step down of President Soeharto from office in May 1998, also served as a milestone of radical change in public administration. The change in politics from authoritarianism towards democracy, also affected the way government is organized and the delivery of public services are delivered from an over centralized to a de- centralized approach. The BOT scheme in the public service delivery, is a public private partnership arrangement, which is a new alternative available to deliver public services. The Di- noyo Traditional Market, which was developed by the central government in 1980s, has since been redeveloped to become a modern market that is today known as Malang City Mall. Under the BOT scheme, a group of private Indonesian Chinese investors financed the reconstruction of the market, and have the opportunity to operate the mall for a certain period, after which ownership will revert to the city government. Some of the adverse effects of BOT arrangement include decline in income of small traditional traders due to the loss of space to carry out their activities, marginalization of traditional tenants as their products are replaced by domestically manufactured and imported goods, caused disputes due to the feeling of unfairness.

Keywords: built operate transfer (BOT), conflicts, good governance, modernization, political economy of development, traditional market

Luqman Hakim— Build Operate Transfer (BOT): Does it Apply Universally…... INTRODUCTION that are produced in rural areas to urban residents, serve as space for transactions and There is a symbiosis between rural exchange between rural and urban dwellers, and urban areas. Rural areas supply basic hence are essential for the survival and sus- needs such as rice, vegetables and fruits, tainability of residents in rural and urban which urban dwellers buy to meet their areas. The New Order Regime, under Presi- basic needs while generating income for the dent Suharto issued a presidential instruction former (Hlaing, Kamiyama, & Saito, 2017). that provided the legal foundation for the Meanwhile, urban dwellers provide services, establishment of thousands of traditional including education, medical services and markets during the 1980s in many urban are- manufactured products, which rural dwellers as in Indonesia. For that reason, traditional buy (Satterthwaite, McGranahan, & Tacoli, markets are also referred to as Inpres or 2010).Thus, relations between urban and presidential instruction Number 7 of 1982 rural areas are mutual in nature, hence inter- about Market Development and CrreditsAs- dependent. One manifestation of interde- sistance. Physically, traditional markets have pendence between rural and urban areas is simple structures that are characterized by the existence of traditional markets (Castle, open spaces traditional sellers display their Wu, & Weber, 2011). Usually located in produce and merchandize that are easily ac- strategic parts of the city, traditional markets cessible to buyers (Sasanto & Yusuf, 2010). gave served various roles for society, includ- However, in general, traditional markets oc- ing meeting places, buying and selling mer- cupy strategic locations on state owned land. chandise, and sharing and exchange between In relation to the management, most, if not urban and rural cultures. Nonetheless, tradi- all, of traditional markets have been put un- tional markets despite offering a variety of der the control of local governments merchandise from rural areas to urban residents at affordable prices face an existential Another important characteristic of threat posed by modern markets who are traditional markets is the priority they ac- better organized, managed, have better facil- cord to small tenants, who are usually resi- ities, good sanitation, safety and security. It dents of the surrounding areas. Thus, traders is in order to redress this problem that the with a lot of capital are not allowed to oper- Indonesian government since 1980s imple- ate stalls in traditional markets. A thorough mented traditional market revitalization poli- observation on the regular market activities cy, that continues to this day (Gunawan, have shown that based on the above man- 2018). Dinoyo traditional market is one of agement and ownership of stalls model, tra- thousands traditional markets were affected ditional markets have been successful in by the revitalization program (Alamsyah, serving as a meeting place for traditional 2017). sellers and the lower income urban buyers (Aulawi, 2015) . Nonetheless, the management of the revitalization process right from bidding to Traditional markets serve broadly execution, has come in for criticism, from two sets of customers. Some customers are some stakeholders who dissatisfied with the attracted by cheap prices offered in tradi- mechanisms used in the process. The objec- tional markets for basic necessities while tive of this research is to assess the impact another set of customers comprises those of using BOT mechanism in revitalizing Di- who buy products at cheap prices in tradi- noyo traditional market on relations among tional markets for reselling to high end cus- the three key stakeholders in the project, in- tomers near their residences and in modern ter alia, traditional market tenants, private shops (Sumintarsih, 2011). However, the investors, and Malang city government. performance of traditional markets has been bedeviled by poor management, disor- Traditional markets, sell products 145 Copyright © 2019, JKAP, ISSN 0852-9213 (Print), ISSN 2477-4693 (Online) JKAP (Jurnal Kebijakan dan Administrasi Publik) Vol.23 (2), November 2019 ---- https://journal.ugm.ac.id/jkap ganized display of products in stalls, low Traditional Market, which is based on the hygiene, danger to the personal and property Build Operate and Transfer (BOT) public safety (pickpockets being a common prob- and private sector arrangement. The project lem) and product price fluctuations, and gen- was entrusted to private investors. In other erally marginal incomes for tenants due to words, the redevelopment of Dinoyo tradi- small margins. Thus, unlike modern markets tional market, was not tailored toward em- such as Indomart, Alfamart, Giant and Hy- powering traditional tenants rather driven by permart, sellers and buyers of products in investment cost and return considerations for traditional markets face uncertainty of both investors who bankrolled the modernization product price and quality. Consequently, of the project. while some traditional tenants continued to Consequently, modernization of Di- sell their produce at increasingly low profit noyo traditional market has fundamentally margins, the number of customers visiting changed the function and relations among traditional markets declined over time large- various stakeholders. The involvement of ly due to personal safety and health concerns private sectors, especially Indonesian Chi- (Rahayuningrum & Tjahya, n.d.). nese, in the modernization process, has sig- To address the problem of decreasing nificantly shifted the role and function of the public interest in traditional markets, succes- traditional market. While traditional markets sive reformative era governments embarked historically, have been reserved as locations on measures to modernize them to make where low income residents sell and buy them more welcoming and attractive to cus- basic necessities, the development of Di- tomers. Based on Minister of Trade regula- noyo traditional market to become Dinoyo tion No. 37/M-DAG/PER/5/2017, thousands Mall, has led to the marginalization of tradi- of traditional markets are set for moderniza- tional tenants. The implication is the current tion. Indeed, the process of modernizing government has abandoned the purpose of traditional markets has been underway even empowering traditional tenants which was before the ministry of trade regulation to that conceived and implemented by the previous effect was issued. The number of traditional government. markets which have been claimed to be Poor implementation of good gov- modernized between 2015 to 2018 is 4.211 ernance principles in the management of dispersed throughout 34 provinces. Accord- traditional markets is another factor that ingly, there still 1.037 markets to be finished caused disputes among the traditional mar- in 2019 or are set for modernization in the ket tenants, the local government and mod- future (Kominfo,2019.) Based on the Minis- ern sector practitioners. In the Dinoyo City ter of trade regulation, Malang municipality Mall case, the dispute pitted between the has initiated plans to modernize traditional Association of Traditional Traders, which markets in the City, one of which is the represents Dinoyo traditional market tenants Pasar Inpres Dinoyo. To support the mod- on one hand, and Citra Gading Asritama Ltd ernization process, the municipal govern- and the local government (representing Di- ment issued local regulation No. 12/ 2004 as noyo redevelopment investors and the City the legal framework. Mayor, respectively). It is thus apparent that Dinoyo City Mall is an epitome of a the current city government, unlike its pre- modernized traditional market. In line with decessors, tends to lend support the stance changes in national and local politics and taken by large private investors as opposed public administration, which have led to the to that taken by traditional market tenants. increasing involvement of the private sector, The modernization and management civil society, and the public in the delivery of traditional markets is based on Presiden- of services, the modernization of Dinoyo tial regulation No. 112 / 2007 on the man-

Luqman Hakim— Build Operate Transfer (BOT): Does it Apply Universally…... agement and development of traditional chandize once modernization was done); markets, shopping centers, and modern local government, lacking sufficient re- stores and trade, and Minister of Trade regu- sources to implement central government lation No. 70/M-DAG/PER/12/2013 that policy on modernization of traditional mar- stipulates the Guidelines for Planning and kets, opted to use BOT mechanism with the Development of Traditional Markets, Shop- consequence that the redevelopment and ping Centers, and Modern Stores. subsequent management of the traditional There are 7 large traditional mar- market had to be relinquished to private in- kets in Malang, which have been earmarked vestors who financed the project; private investors, financed the development of the for modernization, inter alia, Dinoyo market, Blimbing market, Gadang market, Oro market, hence had vested interest in ensuring that tenants in the modernized market would -Oro Dowo market, Klojen market, and the Central Market (locates in Malang city cen- be charged such rent that would enable them to recoup their investment cost . ter). Specifically, Dinoyo market, which is the focus of this research, is located in It is not therefore surprising that the Lowokwaru sub district, Malang city, East dispute ended up pitting traditional market Java province. Modernization of traditional tenants on one hand, and private investors markets in Malang city is underpinned by and local government on the other. Conse- the Malang City Mayor Regulation No. quently, efforts by traditional market tenants 188.45/16/35.73.112/2010, which stipulates to stage demonstrations against the local the use of Build Operate Transfer as the fi- government demanding more stalls in the nancing and management mechanism for the modern market were futile. Based on BOT construction and subsequent management of arrangement, Malang city government no the market. longer has the authority to influence tenants In 2010, the city government sociali- in the modern market, because it is vested in zation the project. Based on project plan, private investors (CGA Ltd) Thus, upon completion of the redevelopment exercise of Dinoyo traditional market tenants were sup- posed to be temporarily resettled to a new Dinoyo traditional market, many traditional tenants have been unable to return to their location in Merjosari village administration during the construction phase, and would former stalls, let alone allocated new ones, which has adversely affected incomes and return to the modernized market. However, wellbeing of their households and families. considering that private investors were re- sponsible for redeveloping the traditional market rather than the local government, traditional tenants initially refused the request Literature Review Dual Economy and its to temporarily relocate because of the fear Ramifications that they would find it difficult to return to Indonesia like many other emerging their stalls once the completion of the mod- countries has characteristics of dual econo- ernization exercise was done. my. There is a traditional, rural and urban To that end, from the outset, modern- sector, which is fraught with economic ac- ization of Dinoyo traditional market based tivities which are informal, small scale, low on BOT model, was characterized by vested technology adoption, managed by the use of interests that varied by key stakeholders traditional practices, lack access to modern (Prastanta, 2004). Traditional market ten- financial system and potentially suffer from ants, who were not involved in paying the low productivity (Bebbington, Dharmawan, cost of traditional market redevelopment Fahmi, & Guggenheim, 2006). Conditions in perceived modernization as a threat to their the modern sector are the converse of those livelihoods (losing space to trade their mer- in the traditional sector and are characterized

147 Copyright © 2019, JKAP, ISSN 0852-9213 (Print), ISSN 2477-4693 (Online) JKAP (Jurnal Kebijakan dan Administrasi Publik) Vol.23 (2), November 2019 ---- https://journal.ugm.ac.id/jkap by formal, medium and large enterprises, tle reason to believe they can survive the high and quick adoption of technology in competition in the long run. Consequent- operations and management, use modern ly, the demise of traditional markets, if it management practices such as book keeping, have easy access to financial system materializes, will not only marginalize (Cowan, 1954). There is however, little rela- small traditional market tenants whose tions between the traditional and modern income comes solely from selling mer- sectors of the economy, which undermines chandise in the market, but will also have productivity and progress of the economy as adverse effects on rural areas and popula- a whole. In other words, since both the traditional and modern sectors are an integral but tion who supply produce as well as low separate components of the economy, reduc- income brackets in urban areas who rely ing stark differences in social, economic, of such places to buy food, clothing and managerial, financial, and technological other items at cheap prices. In other conditions, should be advantageous to both words, the decline of the importance of and the local and national economy at large (Susanto & Prihatminingtyas, 2016). This traditional markets in the economy of ur- underlines the rationale for the government ban areas, has the potential to have debili- policy on revitalizing traditional markets. tating effects on incomes of low income The policy of President Law Number 112 earners in both rural and urban areas, year 2007 among other goals, aimed to em- and by extension, urban and rural econo- power traditional market tenants by improving the quality of infrastructure of the mar- my (Bebbington et al., 2006) kets where they undertake their activities, Revitalization of traditional mar- overhaul organization of stalls to instill or- ket can be defined as the act of synergizing der, improve public facilities including sani- the potential of traditional market by im- tation and health, parking space, safety and proving competitiveness through redressing security. various obstacles that undermine operations, management, and performance in a compre- Traditional Market Revitalization hensive, integrated, and holistic manner One of the most formidable challenges (Daryanto, 2009). Revitalizing traditional traditional markets face is strong competi- markets is necessary for a number of rea- tion from modern markets (Minten & sons. Traditional markets are not competi- Reardon, 2008). Modern markets create an tive as they strategic location would suggest, ambience that provides shoppers memorable because of poor management, disorganiza- tion, poor sanitation, insufficient public fa- experience that is punctuated by a lot of fun, cilities such as parking area, hallways, and good sanitation and incredible hospitality, hardy any fun to entertain (Arianty, 2018). have a one-stop shopping strategy that al- Consequently, despite cheap prices of prod- lows an individual to not only do shopping ucts and commodities and strategic locations but have lunch or dinner, whilst enjoying in urban areas, traditional markets continue entertainment (Ibid). to be no areas for most but a few urban residents. Besides, modern markets are well Principles of Good Governance organized, offer attractive discounts, The concept of good governance owes trade-in opportunities, afford customer its origin and popularization to the United personal safety and price certainty Nation Development Program (UNDP). (Arianty, 2018). To that end, unless tradi- Since its introduction, many local and national markets are revitalized, there is lit- tional government have emphasized the im- Copyright © 2019, JKAP, ISSN 0852-9213 (Print), ISSN 2477-4693 (Online) 148

Luqman Hakim— Build Operate Transfer (BOT): Does it Apply Universally…... portance of adopting good governance prin- (economic and labor dynamics); the impact ciples as an integral component of people of the market revitalization on distribution centric delivery of public goods and services of production and resources that are the (Rhodes, 1996) (UNDP, 2011). Moreover, market and its environment generate, who good governance emphasizes good manage- loses and who gains, and the effect that ment of public assets, which is predicated on such outcomes have on relations between the involvement of key stakeholders, inter various stakeholders who have vested inter- alia, the state, that provides a conducive po- est in market dynamics (political economy); litical and legal environment; ii) The private and the level and consumer surplus revital- sector, which is involved in various fields ized market generates and how such surplus and informal sectors in the market; and iii) is distributed among stakeholders Society, which is engaged through the par- (traditional market tenants, investors of the ticipation of non state actors in general and revitalization process, and the city govern- civil society (non-governmental organiza- ment) (impact of market revitalization on tions and professional organizations) in par- development). ticular in economic social, and political ac- Closer observation of the contents tivities (Indradi, 2005). of the regulation, especially its provisions on the mode of financing and management of Dinoyo market revitalization, underscores RESULT AND DISCUSSION the departure of the policy direction which The Political Economy of Dinoyo Tradi- the current city government has taken from that pursued by the former government, tional Market Revitalization which was in line with the spirit that under- Malang city mayor regulation No. pins the goal of the central government in 188.45/16/35.73.112/2010 provided the le- revitalizing traditional market-enhancing gal framework for the modernization of Di- competitiveness of traditional market ten- noyo traditional market. The regulation stip- ants vis-a-vis traders and operators of mod- ulates that the Build Operate Transfer ern markets. The main focus of Dinoyo mar- scheme was the mechanism used in imple- ket revitalization is to increase revenues for menting and subsequently managing the the city government, which is possible project for the pre-determined period until it through relinquishing the task of financing was to be transferred back to the Malang project construction to private investors, in city government. Indonesian Chinese entre- compensation for which, future management preneurs provided the funding for the con- of the modernized market was vested with struction of the project, which also implied investors. It is efficient taking precedence that they had the rights over the manage- over empowerment of traditional market ment of Dinoyo market revitalization after tenants, which makes disputes between tra- its completion. To that end, by its nature, the ditional market tenants and other members BOT mechanism of revitalizing Dinoyo tra- of society who derived benefits from the ditional market had the potential for disputes existence of the traditional market one hand, between former traditional market tenants and beneficiaries of the revitalized market on one hand, and Indonesian Chinese and that include private investors and Malang the city government, on the other. To identi- city government. fy sources of disputes, several questions can serve as pointers, which include, the kind of Social and Economic Conditions products that a modern market can sell, cus- There is stark contrast in economic, tomers that have the purchasing power to management and technological conditions buy such products, the cost of the revitalized that characterized the economic activities market and who bears the cost of the project that served a means of livelihood for the ma-

149 Copyright © 2019, JKAP, ISSN 0852-9213 (Print), ISSN 2477-4693 (Online) JKAP (Jurnal Kebijakan dan Administrasi Publik) Vol.23 (2), November 2019 ---- https://journal.ugm.ac.id/jkap jority of local indigenous population tradi- Assessing the adoption of Good Govern- tional market for example and that those ance Principles in the Revitalization of where the majority of Indonesian Chinese Dinoyo Traditional population earned a living. It has been common knowledge that economic activities that Market. involved Indigenous people were small in With respect to the adoption of good scale, managed by owner operator using tra- governance during the revitalization of Di- ditional management skills, used rudimental noyo Traditional Market, several indicators technology, if at all, financed by funds col- point to absence of the same. One good indi- lected from friends and close kin, and had cator of absence of good governance in the very few limited connections and relations revitalization of Dinoyo traditional was the with other businesses and government (Dan noninvolvement of traditional tenants in et al., n.d.). On the contrary, agents involved project planning and reconstruction. Consid- in the modern economy, where most Indo- ering the fact that the project was financed nesian Chinese earn a living and own and through BOT mechanism, the main players operate businesses, are capitally intensive, were limited to Malang city government as characterized by separation between owner- the regulating authority and private inves- ship and management, adopt high technol- tors, through CGA Ltd as the project im- ogy in operations, have easy access to the plementation entity that The redevelopment banking system, their connections with other plan, based on CGA Ltd plan which was businesses and government. In an attempt to approved under the BOT arrangement , con- reduce the stark differences in operating, fers upon private investors the right to man- management, financing, and technological age the revitalized market for 30 years after conditions between traditional and modern which it will revert to Malang city govern- markets, the Indonesian government implement. There are indications, which howev- mented the policy on revitalizing traditional er, have not been proved without reasonable markets in the 1980s which was famously doubt, that project bidding process was called Pasar Inpres or Presidential Instructed plagued by collusion between rogue Malang Market. The thrust of the policy lies in its city officials and CGA Ltd. This is reflected efforts to enhance the ability of traditional in the fact that during the bidding process, markets to serve as bridgehead between ru- CGA Ltd bid had 10 percent points ad- ral production centers and urban customers vantage compared with other bidders. It is not therefor surprising that CGA was de- Improving operating and management clared winner of the Dinoyo reconstruction conditions in Dinoyo traditional market for bid. instance, was expected to smoothen and strengthen the flow of agricultural commod- It should, however, be noted that ities such as rice fruits, vegetables as well as winning the bid did not automatically guar- nonagricultural products produced in rural antee CGA Ltd as the company to recon- areas from rural areas to customers in urban struct the Dinoyo traditional market. This is areas. Besides, improvement in organization because upon winning the bidding process, of stalls in the market, safety and security, it had to be submitted to the city legislature availability of parking for visitors, and sani- for ratification. Traditional market tenants tation and health, were expected to increase used that opportunity to stage demonstra- the attractiveness of Dinoyo market for ur- tions expressed their objection to the bid- ban customers, which by implication would ding process and the outcome. Nonetheless, increase demand and supply of goods from such opposition proved irrelevant as the city rural areas. legislature also ratified the results of the bidding process. It is not, therefore, surprising that some members of society allege collu-

Luqman Hakim— Build Operate Transfer (BOT): Does it Apply Universally…... sion between the city government executive riod, they should ensure that stalls are occu- organ and legislature on one hand and CGA pied by individuals or groups of individuals Ltd which ensured that the reconstruction of who have the capacity to pay as much rent the traditional market and subsequent man- as possible. That implies that the kind of agement after completion, for 30 years. business and merchandise cannot be the selling of agricultural products and other nonagricultural products from rural areas. The Triangular Conflict in the Dinoyo Such a requirement, therefore eliminates tra- Market Revitalization Project ditional market tenants as viable tenants in Ideally, the implementation of Di- the reconstructed market. noyo traditional market revitalization pro- Thirdly, the traditional tenants who ject, based on BOT mechanism , should go have a traditional market traders’ union, as smoothly if all good governance principles front organization (P3DKM) to represent were complied with during project planning, and advocate for their rights and interests. bidding and implementation. The assump- Traditional market tenants would prefer a tion that using BOT in revitalizing Dinoyo policy that did not reconstruct the market, traditional market would make necessary but in case reconstruction was deemed im- compliance with good governance principles perative, then the implementation of the pro- with all driven by the overarching goal of ject should have been Malang city govern- achieving common interest, proved unfound- ment, and not private investors. Thus, tradi- ed and unrealistic. The three parties, inter tional market tenants though not opposed to alia, traditional market tenants, Malang city the idea, expressed strong objection to the government, and Indonesian Chinese inves- project plan and implementation scheme. tors, despite having different interests, were Thus, while local government and city expected to sidelines their group interests to mayor was eager to showcase the recon- support the common goal of improving col- struction of Dinoyo market cost effectively lective wellbeing through the reconstruction achieved as proof of the performance of the of Dinoyo traditional market. Facts on the government under his or her tenure, private ground pointed to divergence of interests investors focused on controlling the manage- among the three parties, as a source of irrec- ment of the reconstructed public asset to ex- oncilable differences that created fertile pedite return in investment made based on found for protracted conflicts. the approved business plan. The local government or Mayor is Meanwhile, tenants if given the op- one the key three stakeholders, vested with portunity, would have preferred to maintain authority to regulate ,administer the confer- their traditional small businesses in either ring of operating permits to operators of as- the traditional market or the reconstructed sets that belong to city government, collect market. To that end, using BOT as a form of revenue, and charged with the responsibility public private partnership to develop public of providing public services to the citizenry infrastructure while generates efficiency under their remit. Private investors, is the hence cost effective for the government, second party, which is represented CGA Ltd generates disadvantages for some of the lo- and Hyarta Danadipa Raya Ltd (HDR). Pri- cal population who lose their rights to earn a vate investors provide funds to finance the living by paying affordable rent to local gov- reconstruction of the market, and in compen- ernments. Consequently, BOT while in theo- sation, based on BOT terms, offered the ry can be used as a model in procuring pub- right to manage Dinoyo revitalized market lic services, in practice, it has the potential to for 30 years. To that end, private investors arouse public opposition against the local in an attempt to ensure their investment cost government and management under the co- will be repaid by the end of the 30 year pe- trol of the private investors. 151 Copyright © 2019, JKAP, ISSN 0852-9213 (Print), ISSN 2477-4693 (Online) JKAP (Jurnal Kebijakan dan Administrasi Publik) Vol.23 (2), November 2019 ---- https://journal.ugm.ac.id/jkap CONCLUSION cal infrastructure, creates fiscal space for The reconstruction of Dinoyo tra- financing other equally important public ditional market which was based on Minis- goods and services, and reduces the cost ter of Trade regulation No. No 37/M-DAG/ public sector should have to pay for civil PER/5/2017, and Minister of Trade regula- servants and administration units that pro- tion No. 70/M-DAG/PER/12/2013 on revi- duce and manage such services. talization of traditional markets and modern Nonetheless, the adoption of BOT, markets and Malang city Mayor Regulation like in the case of Dinoyo traditional mar- No. 188.45/16/35.73.112/2010 has generat- ket, has the potential to create disputes be- ed many benefits, which include among tween private investors who finance the re- others, improving quality of sanitation and construction and future management of the health, attractiveness of the market due to refurbished facilities and former tenants of better organization, availability space for public facilities because the latter more of- parking, improved security and safety for ten than not end up losing rights they had sellers and buyers. prior to coming into force of new arrange- Nonetheless, the project failed to ments. The case because the more compli- achieve the principal goal of the policy of cated if principles of good governance do revitalizing traditional markets in Indonesia not underpin project planning and imple- which was adopted since 1980s. The main mentation, making corruption, collusion objective is to enhance competitiveness of and nepotism possible. traditional market sellers with modern markets. Dinoyo revitalization, has led to loss of livelihood for many traditional market tenants because of the reluctance of management to allocate them stalls in the refurbished market, high rent paid for hiring stalls, leading to conflicts among the traditional market tenants, Malang city government and private investors who are charged with managing Dinoyo modern market for 30 years. The case of Dinoyo traditional market revitalization underscores a dilem- ma that policy makers often face. Due to financial constraints which is attributable to having many development priorities that need funding at the same time, local government have to choose public services which must be implemented directly by the various offices, and those that are delegated to the private sector through public private partnership arrangements. Using BOT as a mechanism to finance public infrastructure facilities has become increasingly common practice in the procurement of public goods especially those that require large investment cost. Some of the benefits include, the involvement of non-state actors in procurement, delivery and management of public physi- Copyright © 2019, JKAP, ISSN 0852-9213 (Print), ISSN 2477-4693 (Online) 152

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