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Indonesia Rural Areas Infrastructure Development Project (3) External Evaluator：Masami Sugimoto (SHINKO Overseas Management Consulting, Inc.) Field Survey：Sep

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Indonesia Rural Areas Infrastructure Development Project (3) External Evaluator：Masami Sugimoto (SHINKO Overseas Management Consulting, Inc.) Field Survey：Sep Indonesia Rural Areas Infrastructure Development Project (3) External Evaluator：Masami Sugimoto (SHINKO Overseas Management Consulting, Inc.) Field Survey：Sep. 2007 - Mar. 2008 1．Project Profile and Japanese ODA Loan Indonesia Indonesia Jakarta Project Site Map of Project Area Bridge Constructed by Local Community Group (West Nusa Tenggara Province) 1.1 Background As the World Bank admired their performance as “The East Asian Miracle” in its research report in 1993, East Asian countries achieved rapid economic growth during the period from 1965 until the beginning of 1990s. Indonesia also successfully recorded a high rate of average annual economic growth of 7% within 20 years from 1976 to 1996. Being supported by such favorable economic circumstances, the number of population living in poverty in Indonesia reduced from the 50 million to 20 million levels and its poverty headcount ratio drastically dropped from 40% to 11%. However, the Asian Financial Crisis that widely at- tacked East Asian countries just after that prosperous period seriously damaged the Indonesian economy and depressed its Gross Domestic Product (GDP) in 1998 down to -13.7% against the previous year. Concurrent hyper-inflation and upsurge of unemployment rate swelled population in poverty up to the 50 million level and pulled the poverty ratio in the countryside back to 26%, which is almost equivalent to the level in the 1980s. These circumstances urged Indonesia to take emergency measures to tackle poverty as one of the most prioritized objectives in the country’s development policy. 1 1.2 Objective To promote sustainable economic development and enhancement of self-reliant capacity of the regions involved by developing basic rural infrastructures; such as access infrastructure, water supply, sanitation and small-scale irrigation facilities, in 14 provinces (Nanggroe Aceh Derussalam <NAD>, North Sumatra, West Sumatra, Riau, Jambi, South Sumatra, Bengkulu, Lampung, West Kalimantan, Central Kalimantan, South Kalimantan, East Kalimantan, South Sulawesi and West Nusa Tenggara <NTB>), and thereby contributing to the poverty alleviation in Indonesia. 1.3Borrower/Executing Agency：Government of Indonesia／(Coordinating Agencies) Deputy for Regional Development and Local Autonomy, National Development Planning Agency (BAPPENAS), Ministry of Finance, (Executing Agencies) Directorate General (D.G.) of Human Settlement, Ministry of Public Works, D.G. of Regional Development, D.G. of Community Empowerment, Ministry of Home Affairs 1.4 Outline of Loan Agreement Loan Amount/Disbursed Amount 20,039 million yen/19,906 million yen Exchange of Notes/Loan Agreement March 2001 / July 2001 Terms and Conditions - Interest Rate 1.8％（ Consulting Service 0.75%）, - Repayment Period 30 years（Consulting Service 40 years） - Grace Period 10 years - Procurement General Untied （Consulting Service Bilateral Tied） Final Disbursement Date October 2005 Main Contractors N/A (over 1 billion yen) Consulting Services Pacific Consultants International (over 100 million yen) (Japan), PT. Mitrapacific Consulindo International (Indonesia) 2 Feasibility Study(F/S), etc. N/A 2．Evaluation Result (Rating: A) 2.1 Relevance (Rating: a) 2.1.1 Relevance at the Time of Appraisal The Indonesian Government has focused its development efforts on dual goals to attain “economic growth” and “equal distribution of national wealth” since the Third Five Year National Development Plan (REPELITA III, 1979~1983), however, the rapid economic growth until the mid-1990s brought increasing income differentials among people as well as regional economic disparity. To cope with this serious issue, the government put stronger emphasis on redressing the gaps and poverty reduction since the 5th Five Year National Development Plan (REPELITA V, 1989~1993), and launched the Integrated Area Development Program and other related programs which directly target the low-income group living in poverty. Aiming at the quantified targets to reduce the number of population in absolute poverty from 25.9 million (13.7% of the total population) in 1993 to 12 million (6%) by 1999, the government accelerated its steps for poverty alleviation in succeeding REPELITA VI, 1994~1999. The government started programs to implement the policy specifically targeting villages officially identified as a “backward village (desa tertinggal)1” by the Central Bureau of Statistics (BPS: Badan Pusat Statistik). They were inherited by the new national development plan, PROPENAS (2000~2004), which replaced REPELITA under the Wahid regime emerged after the withdrawal of the former president Suharto in 2000.Along a series of the policy measures above, the government started the programs of “INPRES Desa Tertinggal: Presidential Instruction for Backward Villages” and basic infrastructure development of backward villages in 1994. The preceding “Rural Infrastructure Development Projects Phase 1 and 2” were to implement the latter scheme focusing on potential villages by developing access infrastructures (road, jetty, etc.), simple water supply and sanitary facilities. Covering approximately 11,000 villages which account for 17% of the total villages of Indonesia and 40% of the total backward villages, the projects contributed toward the economic activation and income increase in the regions involved. This Project, its Third phase introduced small-scale irrigation facilities 1 There were 20,633 villages that were identified as “Desa Tertinggal,” which accounts for 31% of the total number of 65,554 villages throughout Indonesia in 1994. 3 as a new component and strengthened involvement of local people from the preparation stage. The Project was thus important from the viewpoint of promoting self-sustaining regional development through basic village infrastructure improvement with strengthened people’s participation. 2.1.2 Relevance at the Time of Ex-post Evaluation The “Medium-Term National Development Plan (Rencana Pembangunan Jangka Menengah Nasional : RPJM-N) <2004~2009>” specifies four objectives as follows for achieving the “Social Peace (Kesejahteraan Masyarakat)” of the Indonesian nation which is one of the prioritized agenda for national development during the plan period. (1) Reduction of poverty and unemployment (2) Alleviation of economic and social disparities among regions (3) Human resource development (4) Strengthening of infrastructural development support RPJM-N Chapter 16 on poverty reduction stresses the importance of development promotion by means of improving basic infrastructures including electricity, water-supply and access facilities (roads, etc.). The significance of rural infrastructure development is also emphasized in Chapter 13 (Decentralization and Regional Autonomy), Chapter 26 (Regional Development) and Chapter 33 (Infrastructure Development) from the respective standpoints. The government work plan (RKP: Rencana Kerja Pemerintah) of BAPPENAS in 2007 declares that the poverty reduction is one of the most prioritized development goals and promotes rural poor people’s access to food, education, and basic infrastructures such as water supply and sanitary facilities. The discussions with local people and governments in the field survey of the ex-post evaluation also indicate high need for infrastructure development and capacity strengthening for autonomous program implementation and operation through direct participation. Thus, the Project corresponds to the national and other relevant development plans of Indonesia both at the times of appraisal and ex-post evaluation, and remains to be highly relevant. 2.2 Efficiency (Rating: a) 2.2.1 Output The rural infrastructures developed under the Project are listed in the table 4 below. Rural villages involved amount to 8,060. Table 1：Infrastructures Developed by Type of Facility Actual Output Number of Output Planned Quantity Quantity Villages Involved 1. Access Infrastructure (1) Road 11,940m 11,934m 3,704 3,677bridges (2) Bridge 1,846 70,909m 70,850m (3) Jetty 472 units 471 units 244 2. Water Supply Facilities (1) Water Pipe 1,097km 1,097km 816 (2) Other Facilities 4,031units 4,064 units 3. Sanitary Facilities 1,970units 1,968 units 469 (MCK2) 4. Small-Scale Irrigation (1) Irrigation canals 1,423km 1,423km and drainage 23,625 23,625 981 (2) Other Irrigation 353 ha 349 ha Facilities units units This Project is financed under the scheme of Project Type Sector Loan (PTSL)3 in which small-sized works are taken as sub-projects in accordance with the local needs. The “Planned Quantity” in the Table 1 above was fixed during the selection of sub-projects in Project implementation. In addition to the physical components, the Project also provided training for capacity building of local communities and governments to enable them to plan, implement, operate and maintain the sub-projects by themselves. The construction works were executed by local contractors (KSO <Kerjasama Operasional> Method) or by local communities (OMS <Organisasi Masyarakat Setempat> Method), and the fact that OMS increased from 4,447 cases (at the time of Project commencement in 2001) to 2 Mandi, Cuci, Kakus: Indigenous Indonesian complex facilities comprising a set of “bath (mandi),” “washhouse (cuci)” and “toilet (kakus).” 3 A type of project loan which collectively finances multiple small-scale sub-projects in a specific sector, while the other ordinary loans fund a single larger-scale project. 5 7,486 cases (in 2003) indicates the effect of the capacity building above4. The number of man-month of consulting services was 2,136MM,
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