The metropolitan area of Jabotabek, which surrounds Jakarta in Indonesia is experiencing rapid urbanization as a result of two parallel forces: centralization and decentralization. On the one hand, migrants are swarming into Jakarta (the central city of Jabotabek). On the other hand, residents in the central city are leaving for the suburbs (Botabek). This pattern of urbanization and urban development is happening in the context of weak state capacity and strong market power in the land development market. Continuous population growth and weak regulation cause continuous land subdivision. Land plots are increasingly becoming smaller, which makes land agglomeration for redevelopment an increasingly expensive process.

One consequence of this has been the growth of self-developed popular housing. The physical deterioration of the central city and lack of redevelopment opportunities in the central city has left developers with no option other than to venture into the suburbs where development land is available. One form of development which has proved particularly popular, particularly to middle-class housebuyers is the gated residential estate, which offers relatively self-contained communities with necessary services and amenities.

As a result, urban sprawl has emerged as market competition overwhelms planning coordination. This dual process of urbanization in Jabotabek reveals the consequences of the formation of land development markets without a regulatory state. The slums of urban kampungs that have developed as  a consequence of inward migration can be attributed to market failures, and the market failures are caused by the failure of the state in the first place. Gated functional suburban housing estates are the products of the market. However, the sprawl of private new towns that have been developed without regional planning coordination, and the resultant social segregation can also be also attributed to the failure of the state.