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May 2020

Structural fire: The forgotten risk of Jakarta

Source: Asia Insurance Review | Apr 2015

Fire risk is increasing in Jakarta. Mr Avianto Amri, Ms Deanne Bird and Ms Katharine Haynes from Risk Frontiers, Natural Hazards Research Centre, Macquarie University, highlight the escalating danger as urbanisation grows in the capital, along with low awareness of fire safety and emergency management provisions. They urged insurers to play a critical role in reducing such impacts of disasters. 

There are three major problems that most people think about in relation to Jakarta: traffic congestion, air pollution, and floods. 
The government is currently investing considerable revenue (approximately US$5 billion) in new toll roads and subway systems to ease congestion and reduce air pollution. Although flooding still possess major risks, the government is also making efforts to reduce these through the rehabilitation of flood-ways and canals, the planned development of a new dam and emergency management reform, including disaster preparedness education in schools. 
Vulnerability to fire is escalating
These are very important issues. However, not many people are aware that Jakarta is also prone to structural fires. 
 Vulnerability to fire is rapidly escalating within increasingly congested settlements where there is a low awareness of fire safety and emergency management provisions. Without losing sight of the three most prominent issues, the government needs to commit more attention to fire preparedness and mitigation in Jakarta as it is potentially growing into a significant risk. 
A fast growing city in the midst of ASEAN free trade area
As the capital, Jakarta is the centre of Indonesia’s economy, political and cultural dimensions. The city has enjoyed stable economic growth in the last few years with more than 6% per year in the last five years (Statistics Indonesia (BPS), 2015), making it attractive for people to come to the capital to seek employment. Currently, the greater Jakarta area has a total population of more than 30.5 million people, making it the second largest urban area in the world after Tokyo (Demographia, 2015).
With the establishment of a border-free ASEAN Economic Community starting this year, it is expected that ASEAN countries will target Indonesia, a nation with 230 million people, as a market base for ASEAN goods and trades. 
As a result, more ASEAN nationals will seek employment in Jakarta thus pushing middle-income families to suburbs with dense populations and poor or inexistent infrastructure, building standards and government regulations, where they will be more vulnerable to flood and fire. 
Economic growth in Jakarta will also mean more new settlements and there will be more people living in overcrowded areas. Currently, Jakarta’s suburbs are already densely populated with the city having a population density of almost 14,400 people per square km. As a comparison, Bangkok and Kuala Lumpur have population densities of 5,300 and 6,891 people per square km, respectively. On the extreme side, one sub-district in Jakarta, Tambora, has a population density of 48,850 people per square km.
The impacts of floods and fires
From 2009 to 2013, fire incidences in Jakarta have led to 141 deaths, more than three times those caused by floods in the same period, which total 43. 
In terms of economic loss, floods still cause the biggest impact. For example, the flood in 2014 alone caused economic losses of around IDR5 trillion (US$388 million). Nevertheless, over the past five years, fires have caused significant losses estimated at IDR1.2 trillion rupiah (or close to US$100 million)(Statistics Indonesia (BPS), 2015).
Although the economic losses from fire incidences are still relatively low compared to floods, the number of incidences is rising. In 2004, there were 805 fire incidences in Jakarta. A decade later, this has increased 24% to 997 fire incidences. If this risk is not addressed, fire will likely become a much more significant threat to the society. 
Within Jakarta, fires are considered to be far more dangerous than floods as the flooding that occurs is generally slow-onset, allowing people time to prepare and save property. With a combination of congested settlements, dry and hot weather and low awareness of fire safety, a fire can spread quickly, endangering lives, and destroying properties. 
In particular, fire risk is greatest within the informal “squatter” settlements, where approximately 20% of Jakarta’s population live (Silver, 2007). Here housing is often constructed of extremely flammable materials and electrical wiring is commonly faulty. 
As a result, 75% of fire incidences in Jakarta occur due to preventable causes, such as faults relating to the electricity supply and within household electrical appliances (Statistics Indonesia (BPS), 2015), highlighting the need to enhance fire awareness and preparedness.
Learning from floods
Floods in Jakarta have been a chronic problem since the Dutch built the city in the 16th century. The first record of a major flood dates back to 1621, almost four centuries ago. Nevertheless, city administrations continued to neglect flood risks and over time, the problem increased with the continued rapid growth in urbanisation. 
In the last few years, however, there has been a concerted effort to mitigate floods through the rehabilitation of water catchment areas, flood-ways and canals and significant community preparedness and emergency management planning. 
The Jakarta government has developed contingency plans with the 125 at-risk “Kelurahan” (or villages) and developed flood early warning systems that provide communities 5-6 hours lead time to prepare and evacuate before the flood strikes. 
Risk communication strategies have also improved across the city through the use of social media. Moreover, disaster risk reduction training for school teachers and principals has been undertaken to enhance flood awareness and preparedness in schools, communities, and among the wider public.
Getting children’s involvement in risk reduction programmes
While it is true that children are more vulnerable than other groups to a variety of disaster impacts, many authorities misperceive that children are passive victims with no role to play in disaster management in both developing and developed countries (National Commission on Children and Disasters, 2010). 
Research and practice in the developing world is beginning to challenge this assumption, where many child-focused organisations are implementing disaster risk reduction programmes, taking into consideration the specific needs of children by involving them in the process.
According to the latest progress report, the Government of Indonesia has made a substantial achievement in the integration of disaster risk reduction into the school curricula. However, there are still key issues affecting its success. Therefore, Risk Frontiers is undertaking research in Indonesia (and Australia) to investigate ways to address the barriers and challenges of implementing disaster risk reduction education in primary schools.
One of the issues is that school disaster risk reduction programmes in Jakarta often focus on the more prominent hazards such as floods and sanitation. However, our research has revealed that many teachers fear fire more than flood because they: 
feel they are prepared for floods due to the mitigating actions and early warning systems in place and, 
have learnt to adapt to flood risk but consider themselves very much at risk to fires. 
“If we see smoke from the window of our classroom, we start to worry and are very concerned because fire can easily spread in this community and we are not sure of the safety of our houses,” said a Jakarta primary school female teacher.
As with floods, fire risks in Jakarta need to be addressed early and not just with a piecemeal approach. 
Regulations need to be enforced and communities need to be aware of the risks. Various stakeholders, including children, non-government organisations, academics and the private sector can work together to effectively tackle this issue.
Opportunities ahead
The insurance industry should see this as an opportunity to promote fire insurance for homeowners as a way to mitigate risks. 
According to the Indonesian Financial Services Authority, only 12% of Indonesians (approximately 28 million people) have insurance products or services and market penetration is still very low. 
There are 134 million people classified as middle-income families in Indonesia (Asian Development Bank, 2010), with a large majority located in urban cities such as Jakarta. This number is expected to grow with the current administration’s ambition to achieve economic growth of up to 7%. Hence, there is untapped potential among these Jakarta residents that could benefit the insurance industry as well as the community. 
Bulk of wealth is in their houses
Middle-income families have relatively high purchasing power and are significant drivers of the economy. This group tends to put their investment into property, ie purchasing new homes. 
If a fire destroys properties of middle class homeowners, it will disrupt a significant portion of their wealth. Therefore, targeted campaigns to raise public awareness should be undertaken, with a focus on the importance of implementing fire prevention and preparedness strategies at home and within small to medium enterprises. This is pertinent, considering that most fire incidences are preventable. 
Insurance also plays a critical role in reducing the impacts of disasters. With the growth in the Indonesian economy, the insurance market has plenty of potential to expand, particularly in disaster-related insurance. This situation may also be the case for other developing urban cities in ASEAN such as Manila, Bangkok, Phnom Penh, and Ho Chi Minh.
Mr Avianto Amri, Ms Deanne Bird and Ms Katharine Haynes are from Risk Frontiers, Natural Hazards Research Centre, Macquarie University in Sydney, Australia. 
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