The Economic Value of Urban Heritage Conservation for Indonesia

A discussion on the importance and economic benefits of conserving heritage sites in Indonesia’s cities

Freddy Fashridjal
8 min readMar 7, 2021

In the beginning of the 20th century, the Dutch colonial government was alarmed by the Spanish Flu Pandemic that threatened livelihood in Batavia, which is now called Jakarta. Anticipating the need for extreme measures, authorities sought to move the capital further south in a mountainous area known for its tea plantations. Collaborating with the land owners, space was made available for new government buildings, educational institutions and shopping districts. This development also marked the introduction of art deco architecture, a combination of modern styles with fine craftsmanship and rich materials, taking some of the city’s iconic hotels and conference halls as examples. Some years later, in this same city, a civil engineering graduate of the local university named Soekarno started an architecture firm with his friend and designed many private houses before deciding to go into politics and fight for Indonesia’s independence. This city is called Bandung, West Java, and the buildings mentioned are now known as Gedung Sate (the governor’s office), Bandung Institute of Technology, Braga Street, the Savoy Homann Hotel, and Gedung Merdeka (venue of the Asia-Africa Conference in 1955).

Savoy Homann Hotel, Bandung (Source:

Moving to another part of Indonesia, there is a city that was founded by travelers from the region’s highlands. In the 14th century, its port served the spice trade and rose to fame in 1511 after the Portuguese empire blocked routes to Malacca. The neighborhoods around the port gained international influence from Chinese and India merchants, reflected from the nearby markets and housing complex. The city then became part of the Aceh Islamic Kingdom and development followed its local architecture. During colonial rule, the Dutch government began to develop buildings along the docklands that served as trade and commercial offices. This includes the third De Javansche bank branch, after Jakarta and Surabaya, as the colonial government saw the city’s economic significance. Decades after independence, the provincial and central government built a bridge that connected the docklands with the hillside of the city known for its setting in the classic literature work Siti Nurbaya from the acclaimed local writer Marah Roesli. This city is known as Padang, West Sumatra, and today the port serves as a gateway to islands like Mentawai, the an internationally renown surfing destination.

Kota Tua Muaro, Padang (Source: Republika)

These are just two of countless stories that show the strong value of urban heritage. Having spent most of my life in Bandung and roots in Padang, I came to learn about these historic facts just recently. When I was a schoolboy walking down Braga Street, all I saw were just old Dutch buildings since urban history was never really mentioned in class. After exploring Indonesia during my time working for a building materials company, I noticed that every major city, particularly in Java and Sumatra, has a colonial town in the urban center. As much as we despise colonial rule, this shows how the Dutch built the economy: they were able to identify the strategic locations, build the proper infrastructure and design the buildings to be suitable for the tropical climate (before air conditioning was invented). If you think about it, Jakarta’s Kota Tua is quite similar to Amsterdam’s Dam Square. As the Republic of Indonesia has taken over the economy since 1945, many of the colonial buildings resume to fulfill their purpose, including my high school and middle school building. This brings perspective that such buildings are not merely remnants of colonization but a symbol of Indonesia’s freedom: evidence of what the Dutch initially built for themselves has been taken over by our own people to benefit the local population. Besides colonial architecture, we can also find traces of Chinese and sometimes Indian influence from visiting merchants who also enriched our cuisine and spread their religious beliefs. These buildings are mostly temples and markets which today still actively welcome worshipers and customers. This shows the diversity that has existed throughout Indonesia’s history.

However, among the preserved heritage buildings, many are vacant, rundown and/or used productively. Even more saddening, some have been completely demolished for new development. From research and expert discussions, I see there are 5 main factors. First, most conservation efforts are focused on an individual building rather than an entire neighborhood. As some iconic sites have successfully been preserved, there are many singular sites on the same street that are left unkempt. This leads to the second factor: property ownership. The derivation of property law from the Dutch colonial government has consequently resulted in ambiguity of ownership. With the lack of proper archives, multiple people could claim ownership for a site. Such complications in development rights continue to stall the conservation of heritage sites. Besides documentation on ownership, there is lack of information on the cultural value which is the third factor. Most local governments do not have much data to validate historic significance of a heritage site. This lack of information results in the fourth factor, heritage site owners are unaware of the functional value of their property hence there is no incentive for further development. Finally, the failure to capture the economic value and formulate strong regulations weakens the case for developers to conserve the heritage site. With the lack of comprehensive valuation for heritage sites, the cost of conservation would exceed the perceived economic returns compared to replacing it with new development.

So what are the economic values of preserving Indonesia’s urban heritage? According to the World Bank (2012) in its book on the Economics of Uniqueness, heritage can be seen as a cultural asset that reflects community values. It gives the signature characteristics that make a city attractive for visiting and living. These heritage sites are strategically located in central parts of the city and built with an economic function to facilitate trade and commerce while providing jobs and other wealth opportunities for the people. The unique aesthetics of these buildings can attract talent from the creative class, who has preference for interesting workspaces (considering it all comes down to a single factor, would you rather work at an office in a historic landmark or a generic shophouse/ruko?). The economic use of these sites can change along with the structural development. A good example can be seen in Dublin, which successfully generated investment from technology giants like Google, Facebook and Amazon to invest in the conservation project of the Dublin Docklands to be used as a Digital Hub attracts talent from the sector and supports promising tech startups.

Dublin Docklands (Source:

Having new job opportunities leads to new business opportunities, such as increased demand for restaurants, cafes, entertainment and other leisure amenities. Urban regeneration through heritage conservation could also uplift the value of brownfield land in the area, by attracting new development that complements the city’s uniqueness and reduces the need for widening urban sprawl. The regeneration of these heritage sites would increase the level of tourism keen to explore and enjoy the historic and cultural values. To think about it, most of the tourist sightseeing destinations in Europe are merely well-preserved constructions that simply function as a place for public and/or private sector employment. A mix-used function can be applied by using additional floor space to serve as rental accommodation for these tourists.

So now let’s imagine what fully conserved heritage sites could like in Indonesian cities. There will be no sketchy rundown vacant buildings, all will be put to optimum usage. Streets are decorated with shops and sidewalk cafes with rental spaces for offices or residential flats on the second floor. As the pandemic has shown the effectiveness of remote work, people can now choose to work in an open-air historic building. There will be more business opportunities in the historic centers that generate positive spillovers for the surrounding areas. And once the pandemic ends, more international tourists would come to these cities after knowing Indonesia has more to explore besides its nature and Bali.

The key to achieve this strong institutions accountable for heritage conservation. Dublin’s success started from effort from Ireland’s Industrial Development Agency and the Custom House Docks Development Authority in formulating the city’s competitive strategy and making the sites available for redevelopment. These institutions would then successfully generate private investment to finance this project. This is the second key element: effective collaboration between the public and private sector. Heritage conservation sites can be categorized as tourism infrastructure according to the 2020 Ministry of Development Planning Act no.2 on public-private partnerships. Various schemes can be explored like rehabilitate-operate-transfer (ROT) or rehabilitate-lease-transfer (RLT) where the private sector can conserve the project to operate or lease to gain economic returns before transferring to the government. Another scheme is Land Value Financing (LVF) which captures the value uplifts from property within proximity of the regenerated historic sites. Property owners can be incentivized to increase economic activity in their building or sell it for development.

Besides institutional development and project financing schemes, an important element of success relies on us: the knowledge and awareness of the citizens. As I mentioned earlier, there are many historic facts behind everyday neighborhoods that I just learned recently. There are so many more stories and cultural values to learn from our city. As we are in the digital era, we can start by simply opening Google, Wikipedia, TripAdvisor or other apps whenever we pass a historic/cultural heritage site.

From my observation (pre-pandemic), many Indonesian cities are improving in terms of heritage conservation. Being a focus area for the government’s tourism strategy, Jakarta’s Kota Tua has much more economic activity compared to 5 years ago as many colonial buildings now function as cafes and art centers. Braga Street has gained significant improvement since Ridwan Kamil’s administration, from being known for dodgy activities to becoming a lively, pedestrian-friendly shopping street. Yogyakarta’s Malioboro Street continues to develop with more addition of businesses and even international brands in the shophouses. I also learned that Semarang’s Old Town now has a privately-owned bistro with an elegant home studio on the upper floor called Spiegel Home Studio that the owner conserved from a colonial-period shop with the same name. This shows that heritage conservation can really be done by anyone with a strong will and motivation.

Spiegel Home Studio, Semarang (Source:

Although still several buildings that can be conserved and regenerated in these cities and current efforts have shown hope to continuously develop. There are also some cities with strong heritage but rather overlooked, like Bengkulu with its British colonial buildings and old traditional neighborhoods, that can follow the footsteps of the progressing cities. So let’s learn more about the heritage sites in our cities, share information with others, and contribute to conservation for a unique and sustainably developed economy!

Building in Bengkulu’s Old Town (Source: Antara)



Freddy Fashridjal

Analytics Professional based in Stockholm. MSc Urban Economic Development from the Bartlett, UCL. Global citizen and culture enthusiast.