Land Value Capture (LVC) Implementation Challenge in the Transit Oriented Development (TOD) Project in Jakarta, Indonesia

Land Value Capture (LVC) is a financing method utilized by the government to reap the benefits of increased property value resulting from public infrastructure investments. This method is widely adopted for large infrastructure projects in both developed and developing countries. LVC requires a virtuous cycle condition in which the produced value can be reinvested for the same purposes. Transit Oriented Development is a concept of development where interaction between land use and mobility provides cyclical benefits. Investment in land use will generate more people to come to the TOD area using public transportation services, where the profit is used again to improve the area. TOD is an innovative development concept that is gaining popularity in metropolitan cities, including Jakarta, Indonesia. However, implementing LVC for TOD projects in Jakarta requires contextualization in terms of its management, especially because different organizations operate five different public transportation systems. This research aims to explain the effect of TOD management on using LVC from a virtuous value cycle perspective in Jakarta, Indonesia. This research uses a case study where different sub-part components are compared with a qualitative technique. It compares five organizations responsible for managing different public transportation systems. Further interviews were also conducted to get perspectives from regulators at provincial and national levels to broaden the discussion. The qualitative data for the interview were analyzed with coding analysis and supported with the use of ATLAS TI.23 to support its reliability. Other data sources from the desk research study were also gathered to identify the regulatory framework of the topics. The implementation of LVC for the TOD project in Jakarta is still not virtuously implemented because of different TOD management by each organization which are property based and whole area development approaches. Among different value capture instruments, only the joint development instrument is predominantly used by the organizations. Limitations in land availability and regulations clarity are the main reason for limitations in using different LVC instruments. This condition has led to unequal reinvestment benefits for the TOD project. Organizations with property based approaches benefit significantly from property sales revenue since they can develop it on top of their property. Meanwhile, organizations with whole area development approaches can only receive insignificant gains from public infrastructure investments.