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Collapsed Buildings & Lost Lives in Palu: The Tragic Cost of the World Bank’s #DoingBusiness Rankings

October 2, 2018
By: Elizabeth Fraser

Last Friday, devastation ripped through Palu, Indonesia as both a massive 7.5 magnitude earthquake and subsequent tsunami struck the coastal city. The damage caused by these twin disasters – including the deaths of more than 800 – is horrifying.

Construction in Pekanbaru, capital of Riau province in Sumatra, Indonesia. Photo: Flore de Preneuf / World Bank (CC BY-NC-ND 2.0)
Construction in Pekanbaru, capital of Riau province in Sumatra, Indonesia. Photo: Flore de Preneuf / World Bank (CC BY-NC-ND 2.0)

In reading about the tragedy, one detail in particular has haunted me: reports of thousands of buildings – including hotels, shopping malls, and housing estates – collapsing and trapping those inside. This hard fact has stayed with me not just because the thought of being trapped in a collapsed building is absolutely terrifying, but because it unveils the dire impact of the World Bank’s pro-business agenda.

For years, the Bank has pushed Indonesia to improve its standing in the Bank’s annual Doing Business reports, which rank countries on their “ease of doing business” and reward governments for enacting pro-corporate policy changes. Over the past decade, Indonesia has succumbed to this pressure, passing many such policy reforms to leap-frog ahead substantially in the rankings.

Several of the reforms adopted by the Indonesian government under the World Bank's guidance have to do with the “ease” of obtaining building and construction permits. In 2008, the World Bank praised Indonesia for introducing a “simplified process” that allowed temporary building permits to be issued, making it possible for construction to begin before full permits were approved, and reducing the time required to get a permit from 49 days to just 21. In 2016, the government further “simplified” the building permit process so that approvals in certain parts of the country could be obtained in just two days. Then, this past summer, yet another reform was enacted with the introduction of an “Online Single Submission” licensing system, which makes it possible to obtain location, environmental, and building permits just one hour after submitting the required documentation online. As a result of these and other pro-business reforms, Indonesia’s rank climbed 51 spots between 2008 and 2018, including a 34 rank leap between 2016 and 2018 alone.

April 16, 2016 - WASHINGTON DC., 2016 World Bank / IMF Spring Meetings. Development Committee. United Nations Secretary-General Ban Ki-moon; World Bank Vice President and Corporate Secretary Yvonne Tsikata; Minster of Finance of Indonesia and Chairman of the Development Committee Bambang Brodjonegoro; World Bank Group President Jim Yong Kim; Managing Director of the International Monetary Fund Christine Lagarde. Photo: Grant Ellis / Word Bank (CC BY-NC-ND 2.0)
Bambang Brodjonegoro, Jim Yong Kim and Christine Lagarde Photo: Grant Ellis / Word Bank (CC BY-NC-ND 2.0)

There is little doubt that these reforms make it easier to start and operate a business in Indonesia. But this week’s disaster begs the question: at what cost?

What, and who, do we sacrifice when we put corporations first? When we speed up processes to attract private investors? When we cut corners to align under pressure from the World Bank?

For years, the global Our Land Our Business campaign has exposed the devastating impacts of the rush by developing countries to deregulate to please the Bank. As part of this campaign, a new report – released this week – details the specific and harrowing impacts of World Bank-backed reforms in Indonesia. We didn’t intend to release this report in the aftermath of a disaster – in actuality, we planned the release to coincide with the Bank’s annual meetings, which take place later this month in, yes, Indonesia. But this sobering backdrop brings a new kind of relevance to the report and its findings.

For years, the Bank has happily wielded its influence and power to push its pro-corporate agenda on governments around the world, willfully ignoring the waves of destruction it has created. This year – with the destruction of innocent lives in Palu as a backdrop to its meetings – the Bank and its officials must wake up to the devastation they have unleashed. They must be held accountable for the massive cost – in lives, livelihoods, the environment, and more – of their neoliberal agenda. And they must end the Doing Business rankings once and for all.

The world needs development policies that serve people, not policies that blindly focus on economic growth at all costs.