The Policy Directions to Control Land Use Allocation for Residential Area Through Fiscal Instruments in Depok Municipality

Abstract

Over the last three decades, the population of Depok Municipality has experienced a significant increase. The residential area development has in particular become the prime sector in driving Depok’s rapid development, notably due to its strategic location as a satellite city of Jakarta. This phenomenon has led to the uncontrolled increase of house selling prices and land-use conversion from green open lands to built-up areas. Therefore, some efforts should be done to control the increase of house selling prices and the land-use conversion. One avenue of government interventions dealing with the negative externalities caused by rapid residential area development would be by using various fiscal instruments, such as infrastructure restriction and tax imposition. Against this background, the main objective of this study is to provide the policy directions to control land-use allocation for the residential area through fiscal instruments. To this end, three intermediate objectives are proposed, namely: (1) to identify the determining factors underlying the house selling price, (2) to analyze the correlation between the residential area and property tax (PBB-P2) revenue, and (3) to analyze the comparison of the spatial distribution patterns between the residential area and PBB-P2 revenue. In doing so, Ordinary Least Square (OLS) regression and Geographically Weighted Regression (GWR) were employed to identify the determining factors of the house selling price. Moreover, Pearson Correlation was used to analyze the correlation between the residential area and PBB-P2 revenue. Lastly, Global and Local Moran’s Index were applied to analyze the comparison of the spatial distribution patterns between the residential area and PBB-P2 revenue. The analysis of OLS regression reveals that the structural dimensions and locational attributes or infrastructure contribute significantly in determining the house selling price. The analysis of GWR shows that the locational attribute, especially distance to the Central Business District (CBD) of Jakarta, is considered as an effective instrument to control the house selling price in Depok. In addition, the results from Pearson Correlation and Local Moran’s Index indicate that PBB-P2 does not play an effective role as an instrument in steering residential areas in Depok. Based on the above analyses, the policy directions to control land-use allocation for the residential area in Depok were formulated, notably by imposing measures related to restriction of distance to the CBD of Jakarta and by improving the performance of PBB-P2 revenue. The policy directions can also be locally applied in the way that every village (kelurahan) in Depok has its specific priority. For examples, the policy directions for Jatijajar, Tapos, Leuwinanggung, Sukatani, Cilangkap, Ciampaeun, and Kukusan Villages focus more on improving the performance of PBB-P2 revenue. On the other hand, Mekarsari Village is directed to focus more on the restriction of the CBD of Jakarta.