Planning Strategies and Design Concepts
Public-Private Partnership Concept in Utilizing Heritage Buildings in the Semarang Old City Regeneration, Indonesia
2025 年 13 巻 4 号 p. 46-62
詳細
2025 年 13 巻 4 号 p. 46-62
In recent years, the government has regenerated heritage areas of the city centre of Semarang where it has rebuilt the area’s damaged infrastructure. This activity is intended to save cultural heritage areas. The development has included some heritage building owners; there are still several heritage buildings owned by State Owned Enterprises that remain stalled. The article aims to examine the concept application of public-private partnership (PPP) in the regeneration of the old city of Semarang. Qualitative interviews were conducted with informants with experience handling heritage buildings, and secondary data analysis was conducted on the PPP concept. The research results show that investors who typically engage in this activity have a set of fairly consistent characteristics, and the interviews showed three primary findings. First, the investors tend to care more about historical buildings, not only financial gain, but also social impact and environmental sustainability. Second, Heritage buildings belonging SOEs haven’t yet collaborated with the private. Third, there is potential for structured PPP such as the feasibility of heritage buildings, and the heritage guarantee agency supervises government-owned cultural heritage buildings. This article suggests that involving sponsorship can enhance the effectiveness of the PPP concept for state-owned heritage buildings.
Recent studies related to urban heritage regeneration have attracted the attention of various parties. The historic area in the city centre serves as a bridge connecting the past to the future. Interested parties express a desire for the historic area to function well in urban life. For this reason, they are dedicated to revitalizing this heritage area (Armstrong, Soebarto et al., 2021; Khalil and Nasr, 2023). Governments in various countries are committed to the agenda to regenerate abandoned urban areas and settlements. Urban heritage regeneration improves the conditions of a declining an area. This process aims to rebuild the area and make it more liveable and prosperous (Alsalloum, 2011; Dogruyol, Aziz et al., 2018).
Governments have often taken steps to protect heritage cities if they can justify their actions in terms of local and national economic development. The regeneration of cultural heritage areas is always associated with efforts to improve the regional economy, for example by increasing the potential for tourism (Al-hagla, 2010; Zhang, C., Fyall et al., 2015). Historic areas can be attractive tourist destinations, as they allow a visitor to understand past conditions and the trajectory of a city’s development (Isaac, Bernstein et al., 2020; Neeharika, Charu et al., 2023).
Research results in the Old City show that the identity of a place has the potential to encourage the intention to preserve heritage areas (Dameria, Akbar et al., 2022). However, historic cities face various management challenges, especially when the ownership of these buildings varies. Individuals, private companies may own heritage buildings, while the government or state-owned enterprises also possess buildings with historical significance (Boniotti, 2023). Those building owners who have the financial capacity can renovate and utilize the building as per their purpose. Whereas government-owned buildings have limited resources and budgets to manage these heritage buildings (Zhang, Y., Kang et al., 2019).
These buildings demand exceptional management to ensure their optimal performance and longevity. It's essential to consider the regulatory issues related to heritage building conservation. This process requires complex resources and licensing. Risk management is also a significant challenge that needs to be addressed from a long-term technical and financial perspective. Regenerating heritage areas containing heritage buildings requires public and private cooperation, but it's a time-consuming process that can't be completed quickly. Long-term planning is crucial to ensure these buildings are used and maintained correctly. This condition has an impact on the complexity of the public-private partnership problem in areas that hold the status of cultural heritage areas (Adu-Ampong, 2017; Carbone, Oosterbeek et al., 2020) .
In the historic core city regeneration, the government is responsible for the area's infrastructure development. Unfortunately, there are historic buildings belonging to State-Owned Enterprises (SOE) that are also not managed properly. Most of the management of these buildings is still conventional in that the owners or those in charge have not made alternative management plans in collaboration with those who care about historic buildings (Calabrò and Della Spina, 2019).
Indonesia has many historic cities undergoing regeneration of their old cities, including the old town of Jakarta and Semarang. Jakarta was the first city to regenerate its old city, followed by Semarang. The old city of Semarang is undergoing improvements in its physical infrastructure, economic, and environmental development. This area is home to 116 buildings that the local government has recognized as cultural heritage. Many building owners have already renovated and revitalized their properties for different purposes.
However, several buildings belonging to the central government or State-Owned Enterprises (SOEs), specifically many prominent buildings, have not received serious attention to find new uses for these buildings. Many thoughts and hopes for public-private partnerships in managing infrastructure and public buildings. However, partnerships for historic buildings are still rare due to the strict requirements entailed in revitalizing the buildings. Therefore, the study aims to obtain the concept of applying public-private partnerships (PPPs) to support the management of historic buildings in the old city of Semarang.
This research uses a qualitative approach through purposive interviews, secondary data collection, and observation. To achieve the research objectives, the researchers focused on the initial conceptual level, namely the application of PPP to utilize state-owned cultural heritage buildings. Therefore, they sought informants who had prior understanding of this issue, even though they were in other heritage cities, apart from experts who have businesses in the old city of Semarang.
Therefore, researchers interviewed the director of Jakarta Old Town Revitalization Corporation (JOTRC), who has been able to initiate public-private partnerships in managing heritage buildings (INF-1). Then, the private sector, which had business in the old city of Semarang (INF-2), the relevant Semarang government, which understood investment in the old city (INF-3), and the old city management agency of Semarang (INF-4), which has data and understands the condition of the old city of Semarang. Apart from that, researchers also sought information from various parties to confirm existing data. Researchers conducted interviews to gather information from informants and verify data related to previous observations. The study's framework in Figure 1 below.
The approach employed involves utilizing a case study, specifically delving into a 'limited system' or case gradually over time by gathering data from diverse information sources that are abundant in context. The theory is used as additional knowledge or comparison to see the symptoms being observed more fully. Therefore, qualitative research aims to understand symptoms or problems not in the context of looking for the cause or effect of a problem through existing variables but to understand the symptoms comprehensively, so various information regarding the problem being studied must be obtained. The information referred to includes the results of previous research on issues that have similarities (Yin, 2009).
The questions pertain to how the government and private sector collaborate to manage heritage buildings. There are numerous regulations governing the preservation of these buildings, including restrictions on activities that can or cannot be performed, requirements for investment activities, and support for preserving cultural heritage sites. The data analysis involved examining literary dialogue, which served as the foundation for research problems. In addition, literature dialogue related to the findings was also carried out to enrich the analysis. Interviews with government staff who handle Old City, management institutions, the private sector, and the community became the reference and process for triangulating the data obtained. The description is obtained from observation, document review, and related literature (Cresswell, 2013). Analysis of the results of this interview is important to support the concept of cooperation with the characteristics of the research area.
Currently, international organizations have defined and legitimized the heritage in various places. The heritage policy must focus on defining the elements included in a specific heritage. For instance, cultural heritage, which includes handicraft traditions, recipes, and languages, plays a significant role in the modern economy and the quality of social life. The government is aiming to achieve World Heritage Status, but it's a challenging process due to the strict requirements evaluated by experts (UNESCO, 2019). If an area receives this status, its reputation as a cultural tourism destination will become more widely known, leading to a rise in the number of visitors (Caratelli, Misuri et al., 2019).
Therefore, city governments often decide to undertake development initiatives to improve their images because this process will typically encourage increased private investment in an area or city and result in more economic activity and a greater tax base. The regeneration of urban areas requires careful strategic urban planning. This can include the planning of a cultural quarter that transforms an area that has little to no economic activity into a vibrant area that is rich in cultural and economic activity. Several things that must be considered in developing such a cultural area include supporting factors, for example the presence of areas that require regeneration, especially historic buildings that have not been managed well (Alseragy, Elnokaly et al., 2018).
Future urban heritage regeneration explores interdisciplinary characteristics, sustainable regeneration, branding, interactive processes, specialists, stakeholders, influencer agents, and creative groups. The strategy employed to accomplish and advance the concept varies from location to location. In this innovative approach to regenerating the Heritage core, the focus is not only on the physical and tangible aspects but also on the intangible dimensions of the place (Chahardowli, Sajadzadeh et al., 2020; Gao, Zhang et al., 2017). There is a progressive process of sustainable regeneration for the core area of the Heritage City. It begins with the initial phase of sustainable regeneration, followed by the intermediate phase of sustainable regeneration, and finally, the future phase of sustainable regeneration.
The heritage area comprises a diverse array of heritage buildings and socio-cultural elements designed to facilitate activities within its bounds. The utilization of these buildings is contingent upon the owner; while some are currently operational, many remain untapped, due to various problems, especially high costs. An area of current management focus involves fostering partnership with external entities, particularly state-owned enterprises as a public with the private sector (Abdou, 2021).
Public-Private Partnership in heritage buildingsPublic-private partnerships (PPPs) involve a long-term collaboration in which private parties manage government-owned areas or buildings due to their expertise in that field. These partnerships are commonly used in infrastructure development, particularly in cases involving direct payments or regular income from users (Burke and Demirag, 2017).
Public-private partnerships are becoming more popular and are being used in various sectors, making them attractive for conservation-related areas. In numerous regions across the globe, public-private partnerships (PPPs) have been utilized for the preservation and administration of cultural heritage sites, such as archaeological sites, structures, scenery, urban areas, collections, and natural areas of significant heritage value. Authorities and non-profit organizations involved in cultural heritage preservation are also exploring PPPs as a means of generating financial resources for cultural heritage (Claudia and Luigi, 2016). Meanwhile, heritage areas and building usage have not been widely implemented due to the complexity of issues in public-private partnerships within heritage areas (Abdou, 2021).
These complexities include a lack of financial resources, while heritage buildings often require expensive maintenance and restoration. The public sector often has limited budgets to manage these buildings. Restoration of heritage buildings involves significant risks, both from a technical and financial perspective. Meanwhile, in the end, the use of heritage buildings must be carried out carefully and by conservation principles. Climate change is also one of the causes of damage to historic buildings that must be taken into account (Gutierrez-Carrillo, Delgado et al., 2021).
Utilizing heritage buildings through conservation is not a task that can be completed in a short time. Long-term planning is needed to ensure the continued preservation and maintenance of these buildings. Moreover, heritage buildings often have important symbolic and historical value for society. The process of preserving and restoring heritage buildings involves complex, regulatory and licensing requirements. A clear and efficient legal framework to support PPPs in the preservation of heritage buildings is important (Burke and Demirag, 2017; Calabrò and Della Spina, 2019).
To provide resources for those who wish to advance this cultural heritage area. The existing literature review provides little guidance on the use of PPPs. The main emphasis is on the utilization of PPPs for historical structures and urban areas. The role of Public-Private Partnerships and three sectors in the preservation of heritage buildings, sites, and historic urban areas is particularly highlighted. Ultimately, the government is willing to collaborate with the private sector if this legal aspect becomes part of the agreed-upon regulations (Macdonald and Cheong, 2014).
Based on their awareness, individuals and organizations can play a role in conserving and using their historical buildings or collections. The government or other authorized bodies can oversee the management of these assets for the greater good of society. The entrepreneur's behavior is not solely seeking profit but is committed to preserving the building and utilizing it. Similar behavior occurs in entrepreneurs who use historic buildings as places for artistic and cultural activities (Absalyamov, 2015; Rahdriawan, Yuliastuti et al., 2022).
The current regeneration of the old city of Semarang's site is inseparable from the awareness of preserving heritage cities in Indonesia. Initially, the government and cultural heritage experts realized the importance of preserving nature, old areas, and Indonesian culture. In 2003, the year of Indonesian Heritage, the Indonesian Heritage Conservation Network and the Indonesian International Council on Monuments and Sites (ICOMOS), supported by the Indonesian Ministry of Culture and Tourism, issued the Indonesian Heritage Conservation Charter. Indonesian heritage consists of natural heritage, cultural heritage, and saujana heritage. Natural heritage refers to unique natural formations. Cultural heritage encompasses the creative works, tastes, initiatives, and special contributions of over 500 ethnic groups in Indonesia. Additionally, it includes the influences and interactions with other cultures throughout history. Saujana heritage represents the fusion of natural and cultural heritage, existing within a unified framework of time and space (Indonesian-Heritage-Conservation-Agency, 2003).
Sixteen years after the birth of the Indonesian Heritage Preservation Charter in 2003, followed by the birth of the Indonesian Heritage City Preservation Charter in 2013, the preservation movement in Indonesia is increasingly dynamic. Awareness of heritage preservation is increasingly widespread, not only in objects, buildings, structures, and sites but also in areas and cities. There are still many Saujana heritage assets that are neglected and in a threatened condition. So it is deemed necessary to draw up a charter as a guide for various parties to carry out the preservation of the fauna heritage in Indonesia by referring to the different conservation charters adopted by UNESCO, ICOMOS, and other world heritage preservation organizations (Indonesian-Heritage-Conservation-Agency, 2019). This chart can be seen in Figure 2. Chart of Indonesian Heritage.
The figure shows heritage cities, where Indonesia has many urban heritage areas. A heritage city is one with a cultural heritage and significant cultural heritage buildings. Implementing heritage planning and preservation policies is a primary development strategy. The government's dedication to enforcing the laws that are the basis for heritage conservation is demonstrated through the Heritage City Arrangement and Preservation Program (HCAPP). In 2012, HCAPP was launched in collaboration with the Indonesian Heritage Conservation Agency (IHCA).
There are 52 heritage cities throughout Indonesia, of which sixteen are heritage cities in Central Java Province. In this province, a primary heritage city is the old city of Semarang. The history of the old city of Semarang is intertwined with the arrival of the Dutch in Indonesia. In 1596, Captain Pieter Keyzer and Cornelis de Houtman led four ships to the port of Banten, marking the Dutch's first arrival in Indonesia. The north coast of Java was then controlled by local rulers representing the Mataram kingdom, until the Vereenigde Oostindische Compagnie (VOC) controlled it in 1678. This region experienced rapid development due to the spice trade traffic through its ports (Nagtegaal and Jackson, 1996; Rukayah, Susilo et al., 2018).
The VOC built trading facilities, including a port and a pentagonal fort, to secure trade and military defence in the region. Since 1708, Semarang has served as the VOC's administrative centre on the north coast of Java. Officially, the Dutch occupation of Semarang lasted until Indonesian independence (Nagtegaal and Jackson, 1996). So, there are many historical buildings from the architectural style of the past that are still interesting today.
Based on the Regional Regulation on Building and Environmental Planning (RTBL) No. 2 of 2020, the area of the old city site is set at ± 72.358 hectares. It consists of a core zone and a buffer zone. Currently, the number of buildings on the old city site is 364 buildings, with details of 116 buildings designated as cultural heritage buildings, and 248 ordinary buildings. Most of the cultural heritage buildings are in the core zone, while the other buildings are in the buffer zone. The boundaries of the old city of Semarang are shown in Figure 3.
Source: RTBL No. 2 of 2020
For an extended period, this region has faced a decline, but it has since been revitalized through the regeneration of the area. In the past few years, there has been a notable transformation and renewal of this urban area. The local government began to seriously address this derelict area in 2003, issuing regional regulation no. 8 of 2003 concerning Building and Environmental Planning. Then in 2012, the government submitted a Heritage Cities Action Plan, in preparation for submission to the World Heritage Committee in 2016. Furthermore, from 2017 until now, the government has been regenerating the old city site in stages. As seen in Figure 4 below, namely:
Source: Semarang Board of Planning, 2022
At present, the primary activities in this area involve trade and services, catering to both large and small-scale economies. The majority of economic activities are focused on meeting the needs of the local community, particularly tourists visiting from both within and outside the city. Additionally, old buildings have been repurposed for trade and service purposes. Based on interviews and field observations, there are state-owned enterprises (SOEs) buildings that are not being utilised to their full potential. Some of these buildings are as follows Figure 5 below.
Some of the heritage buildings belonging to SOE as in Figure 5 are first, the building belonging to the Indonesian Shipping Limited Company (Pelni Ltd), a two-story building on a land area of ±1550 m2. Second, the buildings belong to Jiwasraya Insurance Limited Company (Jiwasraya Ltd), a four-story building on a land area of ±1000 m2. Third, the former Army supplies building (Kodam Supplies), the building is on land ± 2590 m2. Fourth, the Djakarta Lyod Limited Company building is a two-story building on a land area of ±825 m2. Fifth, the Indonesian Trade Building, is a one-story building on a land area of ±620 m2. Sixth, the building belonging to Rajawali Nusantara Indonesia Limited Company (RNI Ltd) is a two-story building on land measuring ±2780 m2. Seventh, the building belonging to Perkebunan Nusantara XV Limited Company (PTP Nusantara) is a two-storey building on land measuring ±570 m2.
SOE assets in the form of cultural heritage buildings often present a dilemma, namely, expensive maintenance and less-than-optimal function of the building. The provisions for leasing assets are contained in Law Number 19 of 2003 concerning SOE. This business entity has its capital provided by the state, either in its entirety or only a part of it. Of course, there is direct participation as one of the state's assets. These assets belong to the state, so when a private party is interested in using the building for its purposes, it must obtain approval from the state. One way to make this happen is through government and private cooperation. The government still owns the building. However, the private sector is responsible for its management.
The government role in supporting the private sector in heritage citiesGovernment has a crucial role in the initial phase of urban regeneration, but as time progresses, the private sector gradually assumes responsibility for the conservation zone. The basic principles of urban regeneration indicate that enhancing the physical surroundings can significantly aid in the successful rejuvenation of an area. The urban regeneration definition is "a strategy of altering the constructed environment to foster economic growth." Various other regeneration policies are also linked to this definition, from social policy and community cohesion to environmental renewal. Tallon (2013) contributes additional information to the understanding of urban regeneration, emphasizing that it pertains specifically to initiatives within urban areas and excludes non-urban and rural regions (Yates, Evans et al., 2016).
During this period, the types of policies in the stakeholder sector and the economic focus have changed and the private sector has become increasingly dominant. At first, the public sector plays a central role. Thereafter a balance is struck between public and private, and finally the private sector dominates, with public funds becoming more selectively available. Although urban planning was traditionally the responsibility of public authorities, funding for heritage investment projects now often comes from both private and public sources. This funding may be distributed among various levels of government administration. While the significance of heritage restoration in heritage cities is growing, investment in heritage rehabilitation is not solely the responsibility of the public sector. The public sector is primarily involved in funding public infrastructure and does not have jurisdiction over privately owned heritage buildings (Throsby, 2016).
Expenditure for the preservation and utilization of cultural heritage can be viewed as a form of investment. The effects of this investment can be evaluated using commonly employed investment assessment methods in both public and private decision-making processes. These expenses are recognized as investment initiatives to preserve or renovate valuable assets. Capital expenditures are undertaken to generate a stream of future benefits, the present value of which, when discounted, is expected to justify the initial expenditure (Alvanchi, Jafari et al., 2021; Alves, Azevedo et al., 2023). Due to the unique characteristics of the heritage area regeneration, the private sector has challenges to face in deciding to invest in this area.
The idea of public-private partnership is a strategy to succeed in inter-city competition during this era of globalization. This collaboration provides the necessary funding for investments, which have thus far been lacking. The private sector brings forth innovations, not only for their business operations, but also for technological advancements in building preservation. This partnership ensures income generation, sustained maintenance, empowerment of the local community, and most importantly, risk sharing between the government and private entities (Darcy and Wearing, 2009; Farhat, 2018).
Legal framework of cooperation for SOE assetsGovernment regulations regarding cooperation in this matter are contained in SOE Ministerial Regulation Number PER-03/MBU/08/2017. This includes work guidelines that each party must implement related to the goals of development. Investments related to the collaboration will also be made. SOE Building Properties can remain competitive and productive. A primary issue is the length of the collaboration. The SOE typically prefers a short time of less than five years. However, the private sector typically wants a longer period of more than twenty years.
The legal regulations for leasing SOE assets cover the necessary operational standards. These are typically procedures, such as the mechanisms for selecting partners for the collaboration. Apart from this, there is also an assessment regarding what documents are required. This includes plans and risk studies. Forms of risk mitigation assessment are also carried to attempt to ensure smooth operations.
Apart from operational standards, there are also several prohibitions. These were created to prevent harm the country. For example, there is a prohibition on the transfer of rental assets. Another prohibition includes provisions preventing the use of leased SOE assets as collateral (for example, registering a letter or certificate to obtain money from another party). Another important prohibition states that collateral cannot be tied up after the contract period ends (Kim, Kim et al., 2023).
Therefore, it takes a minimum of twenty years for the government to collaborate with the private sector to preserve and utilize heritage buildings. The Old Town of Jakarta has served as precedent for this partnership agreement. Pursuing economic activities within the confines of historic buildings often requires a considerable duration to fully realise the intended goals of sustainability. The process of adapting these structures for modern economic use, while simultaneously preserving their historical integrity and achieving environmental sustainability, can be a lengthy and complex undertaking.
Findings on the principle of partnership in the utilization of heritage buildingsAs evidenced by qualitative interviews, researchers obtained a variety of information regarding government-private partnerships for heritage buildings. However, not all of these are covered in this paper; we selected key areas to determine the best collaboration and excellent public-private partnership concept for utilizing heritage buildings.
Investors remain somewhat interested in doing business in heritage buildings, despite these partnerships having significant limitations, primarily the conditions of the buildings (which continue to deteriorate). The management of heritage buildings is also a major concern for prospective investors. Among willing investors is a desire to manage old buildings, not just for profit, but to build a legacy for the next generation, as shared by the first interview subject.
"...businessmen, when they build apartments and malls, it's just a normal story for their children and grandchildren. But if you all told me about tidying up old buildings such as Rotterdam Lyoid, repairing heritage buildings, namely Fan Beauty and Clock, and repairing the Kerta Niaga building, it would be a different story. There is another legacy. Make them interested and give the money here...” (INF-1)
In this case, the private sector has a clear motive for renovating and maintaining historic buildings beyond making a profit. They are not solely looking for profit but are committed to preserving old buildings. Business implemented using heritage buildings require attention to the preservation and authenticity of the building's form. This task is quite challenging, as preserving historical buildings necessitates careful consideration of how the building will be utilized while also taking into account its original physical attribute. As stated by one of the informants in the following manner.
“…reusing heritage buildings that have been conserved for business activities is also not easy, the choice of business activity must adapt to the heritage building. What business is appropriate to the building capacity? If the size of the building is considerable, it could potentially serve as a hotel; however, if it is on the smaller side, it may not align with your preferences, necessitating a willingness to make concessions. …” (INF-2)
There are also instances of non-conventional financing from private investment. In 2015, the Minister of SOE issued a letter of approval for the Building Lease Agreement for a fairly long period of 20 years while maintaining ownership rights in Indonesian Trading Company Ltd. This collaboration is considered a public-private partnership scheme because the building owner is a SOE. Unlike other PPPs, for Jakarta Old Town Revitalization Corpotation (JOTRC) the renovation of these ancient buildings was essential. As for use, the investors sought to obtain sufficient income to maintain the building at a significant cost.
However, typically investors wish to gain profits through their involvement while providing benefits for the public by increasing tax revenue. Ideally, the increased tax base provides the resources necessary to sustain the heritage area. The concern of the private sector is accompanied by their confidence in doing business and getting added value from taxes, as explained by interview subject 3:
“…If the old buildings are not functional, the government or mayor can be indirectly sued for not maximizing the potential of local taxes generated from these buildings. The property tax cannot be increased because the building is not functional. Business taxes per square meter are lost to consumers. We need to support the private sector. What kind of model? How much feedback? The important thing is that the tax increases...” (INF-3)
From the standpoint of private, it is necessary to ensure the long-term viability of heritage sites by preserving and utilizing the existing historic buildings. They hope that activities using these buildings will be able to obtain financing (both tax and other) so that the old area and facilities may be maintained. However, the cooperation model remains a significant concern. The existence of this question indicates that the private sector still does not know how to utilize these empty heritage buildings, including the process, the cooperation model, and the governing regulations. There are few investors who know about the 20-year collaboration in the old city of Jakarta, although the precedent for this agreement may not necessarily be cited in the old city of Semarang. Until now, what is broadly felt is the difficulty in utilizing the old building.
These doubts are evident among the government and the old city management body of Semarang. It is not surprising that many SOE heritage buildings in this area have no economic activity. For example, in interview 4, a Semarang Old City Area Management Agency member worries that if the private sector is involved, they may ultimately not put the buildings to adequate use.
“… It is important to note that the lack of functionality is not limited to government or state-owned buildings. Numerous privately owned buildings are also inactive and require intervention. In the event of such occurrences, what steps should be taken to address this issue effectively?” (INF-4)
Members of the private sector realize that doing business in the old city area using old buildings is certainly not easy. The agreement stipulates that there must be stages of joint activities with the community, MSMEs, and other community creative groups in utilizing old buildings. This means that from private sector actors cannot operate unilaterally and must collaborate with various community groups and MSMEs, until economic activities run properly.
"... Now, the government's focus is on supporting the utilization of preserved historical buildings by allowing public investment. It would be wise to prioritize Micro, Small, and Medium Enterprises (MSMEs) as they are well-equipped to stimulate economic growth. The old city area provides ample opportunities for the creative economy. Ultimately, we aim to strike a balance between different economic activities, particularly as investors show increasing interest..." (INF-2)
The results of interviews with experienced investors show that the creativity of MSMEs is one of the pillars in the development of the old city area. Furthermore, creative communities and other informal sectors are often what keep these old areas attractive. Investors remain responsible for economic activities that can increase taxes and regional income. Based on these conditions, the time requirement for collaboration is long-term.
Based on the discussion above, important findings that must be considered in public-private partnerships are: 1) That there are entrepreneurs who care about the buildings and areas of the old city; 2) Many heritage buildings belonging to state-owned enterprises have not yet openly collaborated with the private sector; 3) Utilizing old buildings requires a long-term process, with stages from MSMEs economic actors and various other communities, while the government remain hesitant and this has not made it easy for the private sector to participate in managing these old buildings.
Public-private partnerships are one of the tools for executing tasks and guaranteeing long-term revitalization in the historic city district. One example of such partnerships is the utilization of government-owned heritage buildings. However, there are many challenges with this approach, as the utilization of historical buildings does not necessarily yield immediate financial returns. Therefore, at this juncture of PPPs, various buildings necessitate support from external entities. This support can manifest in the shape of sponsorship or corporate social responsibility. Subsequently, the private sector and creative communities engage in economic endeavors. Through a proper utilization, the aspiration of conserving cultural heritage structures can be realized.
Each building in the old city is in a different state of disrepair, and the form of government and private cooperation ought to be tailored to each building. The analysis also shows that the government understands the importance of public-private collaboration to obtain benefits for the old city area. There are several essential requirements which must be met in order for these collaborations, namely: 1) The government provides clear regulations regarding the use of heritage buildings; 2) There is support from the Ministry of SOEs and the Semarang City Government; 3) There is confidence in the revitalization of heritage buildings (explained in the preservation of each building and its environment); 4) There should be leasing, or long-term use of heritage buildings; 5) There should be SOE governance that fulfils all existing procedures; 6) Providing various avenues for supporting entrepreneurs, including financial sponsorship and corporate social responsibility (CSR) initiatives.
These key factors provide a reliable option for both government and private agreements in the process of renovating and revitalizing historical structures. By doing so, there will be a significant increase in funds available for the upkeep of these aged buildings. The focus for investors lies in their dedication and ability to effectively maintain these architectural treasures.
The main consideration for investors is their commitment and capacity to utilize heritage buildings owned by SOE so that they are well maintained. In the beginning, their business calculations were often less profitable, so sponsorship became the initial bridge to start this kind of collaboration. When it is still early, the expected benefits are the preservation of heritage buildings, together with the public sector, society, and communities that care about this heritage area.
In this study on heritage buildings, the interview results reveal that investors' emphasis on old buildings is crucial, including the utilization of CSR in dealing with these buildings. Additionally, due to the abundance of old buildings in this area requiring conservation, the existence of a cultural heritage team and the viability of building function are essential in the building utilization process. The functional attributes of the building must conform to the shape and space within the old building. Vendors and MSMEs can contribute to supporting the utilization of these heritage buildings.
Based on the interview results, it would be even more advantageous if investors were to form a consortium to oversee the management of historical landmarks in the old city. The local government itself also doesn't need to worry about the preservation and sustainability of the building. A team of cultural heritage experts and a team of building feasibility experts are involved in the process of utilizing this old building. The concept for government-private collaboration is shown in Figure 6.
To acquire a comprehensive understanding of the current business operations, encompassing social and economic circumstances as well as financial profit prospects, this partnership agreement has the option to employ a guaranteed agent. This neutral agent consists of experts who bridge the government and investors' problems with sponsors who wish to preserve heritage buildings. This concept strongly upholds the idea that when it comes to conserving heritage buildings, there is a notable effort from either individuals or organizations to step up as sponsors. Initially, the primary aim was not solely focused on financial benefits, but rather on ensuring the continued existence and functionality of these heritage structures (Absalyamov, 2015; Zhou, Huang et al., 2018).
The government of Semarang is making efforts to conserve heritage urban areas and structures while simultaneously enhancing the economy through space utilization strategies. The administration has successfully executed its duty of constructing public infrastructure through the urban heritage regeneration initiative. Although certain privately owned historic buildings are partially operational, numerous state-owned enterprise buildings are yet to reach their optimal functionality. Consequently, public-private partnerships are deemed essential to effectively manage the damaged and vacant government-owned buildings and to address this situation.
The concept behind the ideal public-private partnership model is to attract investors who have a genuine interest in preserving historical buildings. Subsequently, both the government and investors recognized that achieving profitable outcomes would be a lengthy and gradual process, necessitating extensive cooperation over an extended period. Financial, technical assessments, and preservation can be conducted in collaboration with the guarantee agency, ensuring optimal cooperation. The government should create more opportunities for investors to come together and work closely to discuss the government's heritage buildings. This activity will help stimulate development awareness in these old buildings.
Conceptualization, Rahdriawan, M., Yuliastuti, N., and Indrosaptono, D.; methodology, Rahdriawan, M., Yuliastuti, N., and Indrosaptono, D.; software, Rahdriawan, M.; investigation, Rahdriawan, M.; resources, Rahdriawan, M., Yuliastuti, N., and Indrosaptono, D; data curation, Rahdriawan, M.; writing—original draft preparation, Rahdriawan, M., writing—review and editing, Rahdriawan, M.; supervision, Yuliastuti, N., and Indrosaptono, D. All authors have read and agreed to the published version of the manuscript.
The authors declare that they have no conflicts of interest regarding the publication of the paper.
The authors would like to thank Diponegoro Univerity Scholarship, the Local Government and the Semarang Old City Area Management Agency. We also thank to Directur of Jakarta Old Town Revitalization Corporation. Special thanks to the participants of the Old City for the discussion about the old city of Semarang.
