World Bank Document

Document of FLE The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No. P-3485-IND

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE Public Disclosure Authorized INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN AN AMOUNT EQUIVALENT TO US$30.0 MILLION

TO THE Public Disclosure Authorized REPUBLIC OF INDONESIA

FOR A

PUBLIC WORKS MANPOWER DEVELOPMENT PROJECT

March 11, 1983 Public Disclosure Authorized

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

Currency unit = Indonesian Rupiah (Rp) US$1 = Rp 700 RplOO = US$0.143 Rp 1,000 = US$1.43 Rp 1 million = US$1,428.57

GOVERNMENT OF INDONESIA FISCAL YEAR

April 1 - March 31

ABBREVIATIONS AND ACRONYMS

BAPPENAS - National Development Planning Board BIDANG DIKLATS - Training Units within the Training Department of the Ministry of Public Works, which serve the Directorates General BINA MARGA - Directorate General for Highways, Bridges and Land Clearing in the Ministry of Public Works BSP - Bureau for Construction Industry Development in the Ministry of Public Works CIPTA KARYA - Directorate General for Urban and Regional Planning, Housing and Water Supply in the Ministry of Public Works CMDU - Curricula and Materials Development Unit to be established in the Training Department of the Ministry of Public Works DPUP - Provincial Department of the Ministry of Public Works GAPENSI - Professional Association for Small and Medium-sized Contractors GOI - Government of Indonesia LAN - Civil Service Training Institute Mandor - Labor subcontractor who directly hires and supervises construction labor MPW - Ministry of Public Works PENGAIRAN - Directorate General for Water Resource Development in the MPW PERBINIKON - Project unit in the Bureau for Construction Industry Development of the MPW PRD - Professional Resources Development Program PUSDATIK - Center for Data Processing and Statistics in the MPW PUSDIKLAT - Training Department in the MPW4 REPELITA - National Five-Year Development Plan (Repelita I, 1969-74, Repelita II, 1974-79, Repelita III, 1979-84) RTC - Regional Training Center of the Training Department of the MPW FOR OFFICIAL USE ONLY

INDONESIA

PUBLIC WORKSMANPOWER DEVELOPMENT PROJECT

Loan and Project Summary

Borrower: Republic of Indonesia

Amount: $30.0 million equivalent (including capitalized front-end fee)

Terms: Repayable in 20 years, including 5 years of grace at the standard variable rate

Project Description: The main objective of the project is to improve the effectiveness of Ministry of Public Works (MPW) construction activities through manpower training. The project aims to: (a) strengthen the management of MPW staff training and related planning activities; (b) establish a Curricula and Materials Development Unit in the MPW; (c) expand and upgrade the MPWNs training facilities and staff training program; and (d) provide experimental training for small and medium-sized contractors and mandors (labor subcontractors who directly hire and supervise construction labor). A second objective is to strengthen Government planning and management capabilities through provision of fellowships for key staff of economic and policy-making agencies.

The principal benefits of the project would be improvements in the execution of MPW projects through increased skill levels of staff. A related benefit would be enhanced effectiveness in use of training resources. The contractor and mandor training would improve the skills of those trained. Results would be used to develop and provide larger training programs. The fellowship training would contribute to improvements in the management of Indonesian development programs.

The project faces a risk that adequate commitment, required by the several MPW units involved with staff training, could not be achieved. To reduce this risk, management improvements for staff training and improved courses would be developed jointly; and existing responsibilities for training management would be retained and enhanced. A related risk is that the central training authorities would be unable to implement the project

effectively while simultaneouislystrengthening the management and content of training. This risk would be minimiied through provision of an experienced Project Director for MPW components and additional staff and consultant services for facilities' planning, procurement and financial management. A risk also exists that the contractor and mandor training would be ineffective. To reduce this risk, the industry would participate actively in planning the training.

Estimated Costs /1 /2:

Local Foreign Total ------$ million ------

Management of MPW Training 1.38 5.69 7.06 Activities Curricula and Materials 3.44 4.33 7.76 Development Regional Training Centers 8.54 5.69 14.22 Contractor and Mandor Training 3.33 1.44 4.76 Professional Resources Development 0.06 3.15 3.21 Fellowship Program

Base Cost 16.73 20.29 37.02

Physical contingencies 1.49 1.44 2.93 Price contingencies 4.19 3.49 7.68

Total Project Cost 22.41 25.22 47.63

Front-end fee on Bank Loan - 0.22 0.22

Total Financing Required 22.41 25.44 47.85

/1 Imported equipment and materials would be exempt from duties. Taxes and duties on other items are estimated at $1.9 million (4% of project costs).

/2 Totals are rounded. - iii -

Financing Plan: Local Foreign Total ------$ million ------

IBRD 4.56 25.44 30.00 Government 17.85 - 17.85

22.41 25.44 47.85

Estimated Disbursements:

Bank FY 1984 1985 1986 1987 1988 …------$ million ------

Annual 1.3 2.6 3.6 9.0 13.5 Cumulative 1.3 3.9 7.5 16.5 30.0

Rate of Return: Not applicable

Staff Appraisal Report: No. 4173-IND dated March 4, 1983.

REPORT AND RECOMMENDATIONOF THIE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF INDONESIA FOR A PUBLIC WORKSMANPOWER DEVELOPMENT PROJECT

1. I submit the following report and recommendation on a proposed loan to the Republic of Indonesia for the equivalent of $30.0 million (including the capitalized front-end fee) to help finance a Public Works Manpower Development Project. The loan would have a term of 20 years, including five years of grace, at the standard variable interest rate.

PART I - THE ECONOMY /1

2. A basic economic report, "Indonesia: Growth Patterns, Social Progress and Development Prospects" (No. 2093-IND dated February 20, 1979), was distributed to the Executive Directors on February 26, 1979, and a country economic memorandum has been prepared in each subsequent year. The latest of these, titled "Indonesia: Financial Resources and Human Development in the Eighties" (No. 3795-IND dated May 3, 1982) was distributed to the Executive Directors on May 6, 1982. Annex I gives selected social and economic indicators for the country.

Background

3. The Republic of Indonesia is a highly diverse country spread across an archipelago of more than 13,000 islands with a land area of about two million sq km. It now has a population of over 150 million, growing at about 2.3% p.a., and is the world's fifth most populous nation. The country has a highly diversified resource base, with plentiful primary energy resources, significant mineral deposits, large timber potential and a developed systeim of agricultural commodity production and export. A high proportion of these primary resources are located on the sparsely populated islands of Sumatra and Kalimantan, while two-thirds of the population live on Java which has areas with some of the highest rural population densities in the world. About 20% of the population live in urban areas in both Java and the Outer Islands, and the current rate of urban population growth is over 4% p.a. The 1981 estimate of GNP per capita is $520, which places Indonesia for the first time amongst middle income countries./2

/1 Substantially unchanged from the President's Report on the Provincial Health Project (No. P-3402-IND), circulated under cover of R83-13, dated January 20, 1983, and approved by the Executive Directors on February 8, 1983.

/2 On the basis of the World Bank's system of country classification and Atlas methodology for calculation of GNP. Macroeconomic Developments and Resource Mlanagement

4. Until 1981, the economy had been growing at almost 8% p.a. for over a decade. This was associated with rapid increases in public expenditures, total investment and savings. The initial impetus for this occurred in the period of recovery from the turbulence of the mid-60s. The Government took effective action to restore macroeconomic stability, liberalize the economy, rehabilitate infrastructure, and provide incentives for domestic and foreign private investment. Hiowever for the last decade the dominant external influence has been the huge expansion, and significant variability, in foreign exchange earnings from oil. Net exports from the oil and gas sector rose from $0.6 billion in 1973/74 to $10.8 billion in 1980/81, when the current account enjoyed a surplus of $2.5 billion. Oil receipts also provide about 70%, of Central Government receipts and have helped finance the sustained increase in demand via the budget. The pattern of expeniditures has also helped foster diversified growth: of particular note has been the support for agriculture, through investment in infrastructure, support services and effective use of subsidies to maintain producer incentives. This bore fruit in two successive record rice harvests in 1980 and 1981. During 1971 to 1980 manufacturing has also enjoyed a high growth rate (of about 14% p.a.) from a very low base, but here sectoral growth has been in spite of a more restrictive policy environment and distorted incentives.

5. In 1981-82 the macroeconomic resource position changed dra- matically. Depressed international markets and a weak oil price have led to a turnaround in the current account of about $9 billion in two years, with a deficit of the order of $7 billion likely for 1982/83. Owing to historically prudent debt and reserve management, Indonesia does not face problems of the magnitude of other oil exporters. IHowever, barring a major recovery in oil prices, there will be a need for adjustment in the economy. The burden of adjustment will have to fall on import-intensive public expenditures, leading to some rephasing of existing expenditure plans. This will lead to some reduction in the growth rate in the short and medium run. Increased domestic resource mobilization will also be necessary - the significant reduction in the oil subsidy in January 1983 was an important step in this direction. At a more fundamental level the change in external prospects have emphasized the need for substantial structural change in the eighties. The development of a strong and diversified nonoil production and export base is essential to realize sustained high growth.

Incomes, Employment and duman Development

6. Despite the high concentration of the resource windfalls, the available evidence, from household expenditures surveys, indicates a fairly wide distribution of the benefits of growth and a reduction in poverty incidence over the past ten years. This is also borne out in the basic health indicators, with a 25% reduction in the infant mortality rate and an increase in life expectancy from 47 to 53./I These improvements should not, however, mask the continued existence of widespread poverty. Almost 50% of the population are estimated to have been in this condition in 1978. The core of the poverty problem continues to be in rural Java, where landless laborers form a large, and possibly rising, fraction of the population, and where, for most of the 1970s, there is little evidence of any rise in real agricultural wages. However, in the last two years of good rice harvests it is likely that significant improvements occurred on Java, while agricultural incomes on parts of the Other Islands dependent on export crops have declined in the face of the international recession.

7. In the future the availability of productive employment will be a key determinant of the distribution of income. The labor force will grow at about 3% p.a., equivalent to around 2 million people p.a., in the next decade. In 1980 agriculture still accounted for 55% of employment, and industry only 13%; the growth of services employment, from 24% of the total in 1971 to 32% in 1980, was the main mechanism for providing incremental employment in the 1970s. The growth in service incomes was partly sustained by rising oil incomes in the 1970s; if services are to continue to be a major source of labor income there is again a strong case for diversifying the pattern of productive growth. The key issue is one of widespread underemployment in the traditional sectors. To tackle this a sustained rise in labor demand is crucial - through the maintenance of overall growth and the encouragement of labor-intensive processes in both the traditional and the industrial sectors.

8. In the 1970s there was substantial progress in extending the provision of social services throughout the population. Universal enrollment in primary education has been virtually achieved and the enrollment rate in junior secondary schools is now 35%. However, the weak educational base of the population continues to be a major obstacle to rapid economic development and a substantial further expansion of secondary and tertiary education will be necessary as well as a major effort to raise the quality of the whole system. The situation is similar in the health sector. There has been a large expansion in facilities, notably at the sub-district level, but continued expansion and an improvement in quality will be necessary to increase effectiveness. This will have to be complemented by a major expansion in water supply and sanitation if the improvement in indices of mortality and morbidity in the 1970s is to be maintained. Currently only 18% of the rural and 40% of the urban population have access to safe water /2 compared with Government targets of 60% and 75%, respectively, for 1990.

Policy for Structural Change

9. Indonesia's past growth performance has been good, but the country is now faced with the need both to put the nonoil economy on to a viable

/1 On the basis of the 1971 and 1980 population censuses.

/2 Government estimuates for 1981. - 4-

long-run growth path and to effectively improve the basic needs situation of the poor. The re-emergence of a significant foreign exchange constraint has reduced the capacity of the economy to carry a high level of investment. Policies that promote appropriate investment choices in the public and private sector will be critical if the structural adjustment process is to be sustained.

10. In industry, the Government of Indonesia (GOI) is planning a program of large-scale natural resource-based investments, in refineries, LNG, petrochemicals, fertilizer, cement, pulp and paper, basic metals and mining. This will broaden the industrial base, but will have very limited employment implications and is very foreign-exchange intensive in the construction phase. Of greater importance for both employment and exports is the encouragement of agriculture and the small- and medium-scale private manufacturing through an improvement in the economic environment. Over the last year the GOI has allowed the rupiah to depreciate about 10% against the US dollar, thereby increasing incentives for the production of traded goods. Furthermore, the GOI has initiated a general review of the trade regime, with a view to removing the distortions caused by the wide variations in rates of effective protection. It has also embarked on a program designed to promote the expansion of nonoil exports, including export financing arrangements, export insurance, improved ports procedures, export processing zones and a system of export certificates (duty rebates). However, the private sector suffers from significant domestic constraints to its expansion, including a heavy regulatory burden, especially in the area of investment licensing, and a distorted and poorly developed financial system. Further policy reforms to alleviate these constraints are needed to create an environment conducive to private investment.

11. The energy sector is at the core of the structural adjustment problem. Oil and gas now account for 98% of domestic consumption of commercial energy and demand has been growing rapidly. If Indonesia is to avoid a serious reduction in foreign exchange earnings from the oil sector in the 1990s, it is essential to diversify energy usage and improve the efficiency of energy consumption. This will require both price and investment measures. In January 1983 domestic oil prices were increased by about 60%, and this followed a similar increase in January 1982. This was a decisive step that substantially reduced the differential between domestic prices and the average opportunity cost; however, price relativities between products diverge widely from those prevailing on the international market. In addition a major program of investment is planned, with public and private participation, in coal exploration and development, exploitation of hydro and geothermal resources, and a sixfold increase in electric power generation in the coming decade.

12. Agriculture will continue to be of great importance for export revenue (accounting for almost 75% of 1980 nonoil exports), food production and employment. Rice production has been steadily rising to an estimated total in 1982 of 23.2 million tons, compared with 13 million a decade earlier. This achievement is largely a result of the provision of new, and - 5 -

the rehabilitation of existing, irrigation systems, and the dissemination of new agricultural technology particularly with respect to the timely delivery of seeds and fertilizers. Future investment in physical infrastructure, especially in irrigation and rural roads, combined with a favorable market environment and good support services will be the main determinants of further expansion in food production. In the past tree crops have suffered from relative neglect, and the age structure of the trees is now very old, but GOI has a highly ambitious program of rehabilitation and replanting, necessitating substantial investment in manpower and improved organization of distribution and marketing. Transmigration renmains a high priority program for promoting development in underpopulated regions, providing opportunities for landless families on Java, Bali, and Lombok, and relieving economic and environmental pressures on those densely populated islands.

Financing Development - Domestic Resources and External Capital Flows

13. With a relative decline in oil incomes, alternative sources of domestic finance for investment will have to be found. This will require a major increase in resource mobilization through the public sector, through a combination of reduced subsidies on petroleum products and increased nonoil taxes. In 1980 it is estimated that taxes on the domestic economy were only 6% of GDP, if the domestic oil subsidy is netted out, compared with well over 10% for comparable countries. The 1982/83 budget represented a significant effort to improve the situation, with a halving in the annual level of the oil subsidy and a 15% budgeted increase in nonoil taxes, but this will have to be sustained in following years. In addition to public resource mobilization it is becoming increasingly important to encourage the growth and improve the efficiency of distribution of financialized savings, through an improved financial regime and the development of a domestic capital market.

14. Even with effective measures to mobilize domestic resources there will be a substantial need for foreign savings in the 1980s, especially in the short-run adjustment to loss in oil income. The most important component of this will be in the form of medium- and long-term debt flows. Total disbursed and outstanding external public debt was almost $16 billion at the end of 1981 and undisbursed debt amounted to an additional $11 billion. The Inter- Governmental Group on Indonesia remains a principal source of external capital, including Official Development Assistance, to the country. During the 1970s, however, Indonesia experienced an unusually rapid transformation in its public debt structure from a situation of heavy reliance on official concessional loans to increasing use of private, nonconcessional and variable interest loans in the second half of the decade. In 1981 private source debt accounted for 52% of new commitments of public debt. The fact that Indonesia remains highly creditworthy at the beginning of the 1980s, and the efficiency with which GOI has managed debt, are clear indicators of how far the country has progressed. Hlowever, the debt servicing capacity depends on commodity production rather than a broad industrial base, and this makes Indonesia somewhat more vulnerable to developments in international markets. The implication is that debt utilization should - 6 -

remain very prudent, and that there will be a continued justification for official debt of long maturities in the 1980s. Present projections indicate that Indonesia-s financing requirements can be met with the debt service ratio remaining close to 20% throughout the decade.

PART II - BANK GROUP OPERATIONS IN INDONESIA /1

15. As of September 30, 1982, Indonesia had received 48 IDA credits totalling $931.8 million, and 75 Bank loans amounting to $4,938.6 million. IFC investments totalled $136.8 million. The share of the Bank Group in Indonesia's total (disbursed) external debt outstanding at the end of 1980 was about 10.7%, and the share of debt service about 7.1%. By the end of 1981, these ratios increased to around 11.2% and 7.4%, respectively. Annex II contains a summary of IDA credits, Bank loans and IFC investments as of September 30, 1982, as well as notes on the execution of ongoing projects. Given the critical importance of agriculture (including transmigration) for employment, food security and exports, over one-third of Bank Group supported projects have been in this sector. In addition, loans and credits have been extended to virtually all other sectors of the economy, including transportation, education, urban development, water supply, rural development, nutrition, industrial development financing (including small-scale industry), power, telecommunications, population and technical assistance.

16. During Repelitas I and II, and in line with the objectives of these first two Five-Year Plans, a high proportion of Bank Group lending was directed initially toward the rehabilitation and then the expansion of infrastructure and production facilities. Special attention was also given to meet the shortage of skilled manpower and technical assistance needed for preinvestment studies and project execution. Repelita III, published in early 1979, stressed the need for continued high growth and stability, but departed from previous plans by placing special emphasis on more equitable income distribution and poverty alleviation. This focus, which was fully in line with the conclusions of the basic economic report, required greater attention to employment generation (particularly in the industrial sector) and to improvements in basic public services. While Bank lending was already consistent with these objectives, increased emphasis has been given to these priorities.

17. Because the country has moved from a position of resource surplus to deficit, as discussed in Part I, the development momentum will in all likelihood decelerate in the short run. To minimize this adverse impact will require effective policy reform to improve the environment for private

investment and to mobilize additional domestic resources so that investments in industry, infrastructure, tree crop development and human resources development can continue. The Bank-s program of lending and economic work is being geared to support the required measures. The primary emphasis of Bank involvement will be on policy and institutional development and technical assistance in the key sectors. This will involve a close integration between sector work and lending and the gradual broadening of lending to the subsector and sector level in order to assist with policy issues at this level. The only significant shift in the composition of lending involves a rapid expansion planned in the education sector, a direct response to the severe shortage of skilled manpower. In the industrial sector, in-depth sector work is focused on a policy to promote industrialization which will build on Indonesia-s comparative advantage in labor and resource intensive industries. This analysis could lead to those industrial projects which would facilitate reform in specific subsectors. In energy, sector work and continued lending is concentrating on policies to diversify Indonesia's energy base, rationalize pricing and improve sectoral planning. Irrigation and tree crops will continue to absorb a substantial portion of lending in view of the importance of these sectors, and continued support for transport is anticipated. Continued lending in the areas of provision of social services, in population, health and nutrition, urban development and water supply will increasingly emphasize institutional support and the development of innovative low-cost solutions.

18. The last two years have seen major improvements in the disbursement ratio /1 from a low of 13% in FY80, compared to a Bank-wide average of 21.31% in Thailand of 21.2% and in Nigeria of 17.31% in that year, to 18% in FY82. The poor FY80 ratio was in large part a result of the rapid increase in commitments during the FY77-79 period when total Bank/IDA commitments to Indonesia increased by 122% compared to a Bank wide increase of 83%. However, it also reflected implementation difficulties arising out of GOI's budgetary, procurement and payment procedures, including issuance of tender documents and opening of letters of credit. The severe shortage of managerial and technical manpower of course compounds the problem. A number of steps have been taken by GOI and the Bank to address these issues. Several special Bank missions have visited Indonesia to analyze the problems and make recommendations for simplifying budgetary and financial procedures. The GOI and the Bank have also instituted formal and regular joint review procedures to identify general and project specific problems and work out corrective measures. In addition, procurement seminars were held in Jakarta in September 1979 and November 1981. As a consequence of these joint initiatives, GOI has taken measures to streamline some of the complex budgetary and financial procedures affecting project implementation. The Bank is also helping the GOI in a special effort to identify problems in the construction industry with a view to developing

/1 The ratio of actual disbursements during the fiscal year to the cumulative undisbursed amount at the beginning of the fiscal year. - 8 -

appropriate remedial actions and policies. Weaknesses in the domestic contracting industry have been identified as one of the major causes of implementation problems in Indonesia. Finally, to reduce initial project implementation difficulties, many operations are now being presented for Board consideration at a later stage in the project cycle. As a result of these efforts, improvements are taking place. This was reflected in an increase in disbursements from $204.0 million in FY79 to $501.3 million in FY82, and $301.2 million for the first six months of FY83. It is nevertheless important that the Bank and GOI maintain their efforts.

19. From 1968 until 1974, all lending to Indonesia was made through IDA.' Due to the country-s improved creditworthiness following the commodity and oil price boom in 1973/74, the bulk of the Bank Group's subsequent lending has been through IBRD loans, with a modest amount of IDA lending being justified primarily on poverty grounds, as the per capita GNP was well below the IDA cutoff of $625. Given Indonesia's much improved creditworthiness, IDA lending was discontinued in FY80.

20. The proposed project constitutes the seventh lending operation presented to the Executive Directors this fiscal year. Projects under advanced stage of preparation and appraisal include the Third Agricultural Training, the Second Nonformal Education, the Second Polytechnics, the East Java Water Supply projects, and a fifth DFC operation.

PART III. MANPOWERDEVELOPMENT AND THE CONSTRUCTION SECTOR

Introduction

21. A shortage of qualified technical and managerial manpower is a major constraint to economic development in Indonesia. While the GOI gives priority to development of the formal education and training system, enrollment ratios at the secondary level and above are still the second lowest in the region. In these circumstances, staff upgrading through inservice training is needed to compensate for inadequate qualifications and experience.

22. Indonesia's development strategy for the 1980s stresses the need to maintain high levels of development expenditure and to generate new opportunities for employment through investment in infrastructure and services. This strategy implies a need for expansion of construction activities and a central role for the domestic construction industry. However, growth in demand for construction experienced during the 1970s has already strained the domestic industry. Problems are reflected in low efficiency owing to the shortage of qualified manpower and in cumbersome contracting procedures. The GOI plans to revise contract and other administrative practices for construction (para. 18) and to strengthen manpower. As part of this process emphasis is being given to upgrading manpower employed by the Ministry of Public Works (MPW), which generates about half of the value of public sector construction, or 35% of total construction activities. - 9-

Public Works Activities and Manpower

23. The three groups centrally involved in the public works sector are the Ministry of Public Works (MPW), and the consultants and contractors it employs. The MPW has three Directorates-General as follows: BINA MARGA, for roads, bridges and land clearing for transmigration; PENGAIRAN, for water resource development; and CIPTA KARYA, for urban and regional planning, housing and water supply. In 1981, these Directorates-General and their counterpart agencies in the Provincial Departments of Public Works (DPUPs) managed development projects valued at about $0.75 billion and $0.95 billion equivalent, respectively. To manage these projects, the MNW employed about 110,800 staff as well as a substantial number of engineering and design consultants. Nearly all MPW projects are executed under contract by construction firms. Over 80% of contracts are undertaken by small- and medium- sized domestic firms, numbering about 23,000. Remaining contracts are undertaken by 80 large domestic or foreign contractors. The majority of manpower employed by contractors is supplied by labor subcontractors who directly hire and supervise construction labor, called mandors, some 40,000 of whom operate at present. In recent years, the MPW has tried to replace consultants with staff and to shift increasing responsibilities from the Directorates-General to the DPUPs. However, the shortage of qualified manpower in the MPW has limited progress. Major skill deficiencies exist in program planning and project design, construction supervision, and, at the provincial level, operations and maintenance. Skill deficiencies are most pronounced among provincial staff of the MPW (accounting for over 60% of total staff). The key role of MPW staff in planning and managing the public works program make them a prime target for upgrading. In the construction industry, the greatest manpower problems emerge in small- and medium-sized contractors and mandors in enterprise management, and construction methods and management. Training for these contractors and mandors, though much needed, is still in an experimental stage (para. 24).

MPW Manpower Training

24. In an effort to reduce manpower constraints, the MPW began to provide in-service training for staff during the mid-1970s. More recently, the MPW has also supported training for the industry. In 1981, the MPW budget for staff training amounted about $7.4 million (exclusive of administrative overheads); 11% of staff participated in short courses (10,400 staff) or longer training programs, mainly degree and diploma (1,700 staff). About 50% of short courses are delivered in five Regional Training Centers (RTCs) owned or rented by the central Training Department in MPW, PUSDIKLAT, and located in Bandung, Surabaya, Yogyakarta, Medan and Ujung Pandang; and the remaining share is provided in several training facilities owned or rented by the Directorates-General. Long-term training for MPW staff is carried out in local universities and overseas. Some 15% of staff of large domestic construction firms participated in training managed by the MPW or the firms in 1981. However, experience with training programs for - 10 -

smaller contractors and for mandors has been limited. A project unit within the MPW-s Bureau for Construction Industry Development (BSP), arranged pilot courses for 400 trainees in 1981, in collaboration with GAPENSI (the Association for Small and Medium-sized Contractors). Costs for contractor training were shared equally by the MPW and GAPENSI. To date, experience with this training has been insufficient to guide development of expanded programs and a gradual transfer of responsibility to the private sector.

25. Despite the importance placed on manpower upgrading by the MPW, the effectiveness of staff training is limited by weaknesses in management. The PUSDIKLAT is responsible for coordinating training and providing short courses in cross-sectoral subjects. Three sectoral training units within the PUSDIKLAT, BIDANG DIKLATS, corresponding to the three Directorates-General, provide training in the relevant subsectors. The functions and staffing patterns within the Training Department are inappropriate for effective coordination, planning, monitoring and evaluation of training activities. Coordination with recently appointed training liaison officers in the DPUPs is also generally weak. Shortcomings in MPW staff and program planning further detract from training effectiveness. Technical support for staff training is also inadequate. The Training Department lacks a capacity for the regular development of curricula and materials; the RTCs lack full-time instructors; an insufficient number of short, job-related courses are provided; and quality is generally poor. Moreover, available training facilities are inadequate to support the volume of training provided; and the share of provincial staff receiving training is low compared to the need.

Bank Lending to the Sector

26. The Bank supports the GOI strategy to complement pre-service training with expanded and improved in-service programs in technical and managerial fields. Although the Bank has not supported a discrete training project for the construction industry to date, industrial skills development has been the focus of four education and training projects, for which Bank Group assistance has amounted to $135.6 million. These projects (Credit 219-IND, Loan 1237-IND, Credit 869-IND and Loan 1904-IND) have been designed to strengthen and expand technical secondary education, vocational training programs (pre-service), training for engineering technicians and higher level technical education. To date, a Project Performance Audit Report has been prepared for the first of these projects (Credit 219-IND). This audit (No. 2998, dated June 2, 1980, SecM80-440) stresses the importance of including fellowships for development of teachers and school administrators, and appointing key staff for project implementation in a timely manner. These lessons are reflected in the design of the proposed project.

27. Project-related training components have also been included in nine MPW projects supported by the Bank since 1978. Project financing for these components amounts to about $10 million. A recent Bank report ("Review of Training in Bank-Financed Projects", Report No. 3834 of March 1, 1982) concluded, however, that a more systematic and coordinated approach to - 11 -

training is generally needed. In line with recommendations of this report, the proposed project would support development of a comprehensive system to identify and meet staff training needs in the MPW on a regular basis.

PART IV - THE PROJECT

Background

28. The proposed project was prepared by the MPW with the assistance of consultants. Tt was appraised in Mlarch-April 1982 and post-appraised in October 1982. Negotiations were held in Washington from February 22 to 25, 1983. The Indonesian delegation was led by Mr. Suyono Sosrodarsono, Secretary General, MPW. The Staff Appraisal Report (No. 4173-IND) is being circulated separately. Supplementary project data are provided in Annex III.

Objectives and Scope

29. The main objective of the proposed project is to facilitate execution of the MPW-s construction program by upgrading manpower. This would be achieved by: (a) strengthening the management of MPW staff training and related planning activities; (b) establishing a Curricula and Materials Development Unit in the Training Department; (c) expanding and rehabilitating the RTCs and providing an expanded program of short courses for staff; and (d) providing experimental training for small- and medium- sized contractors and mandors. A second objective is to strengthen general management capabilities of manpower in key planning and economic posts in the GOI through provision of fellowships for staff involved with development planning, financing and related in-service training.

Management of MPW Staff Training Activities

30. The project would assist the Training Department and the Bureau of Personnel to introduce improved systems for training management and staff planning (para. 25). This would be accomplished by provision of office equipment and materials, several new staff positions, and technical assistance./l The PUSDIKLAT has been reorganized to facilitiate systematic coordination and planning of training,including the development of courses, materials, instructors and facilities. The PUSDIKLAT would also coordinate regular monitoring and evaluation of MPW training activities; systematic budgeting and cost-accounting; and related procurement. Staff of the Sectoral Training Units have been reorganized to facilitate coordination

/1 Technical assistance for this and other project components includes both foreign and local consultant services. It is expected that the provisions for local consultants, working with foreign consultants, would strengthen the skills of domestic firms in manpower planning and training design and managment, for which considerable demand exists in Indonesia. - 12 -

within the PUSDIKLAT for the planning and delivery of sector-specific training. The Bureau of Personnel would introduce improved procedures for staff planning and identification of training needs. To support more general improvements in the management of the MPW work program and training activities, the project would finance a study to review, consolidate and improve MPW programming procedures and management information systems. The project also includes consultant services for studies related to the preparation of future training projects. At negotiations, it was agreed that staff for new positions in the PUSDIKLAT, BIDANG DIKLATS, and for staff planning (in the Bureau of Personnel and in the Personnel and Organization Divisions of the Directorates General) would be appointed in accordance with a schedule agreed with the Bank (an understanding was reached that these staff would be formally appointed by December 31, 1983) (Section 3.02 of the draft Loan Agreement).

Curricula and Materials Development Unit (CMDU)

31. To improve the quality and relevance of short courses for MPW staff, the project would include the construction, equipping, furnishing and staffing of a CMDU in the PUSDIKLAT; the development and revision of course materials; and related technical assistance. The job-related materials would include case studies and field exercises for cross-sectoral and sector-specific subjects. They would be prepared mainly by sector specialists, in consultation with MPW technical and managerial staff. Course duration would average 3-4 weeks. Improved courses would be designed to redress the main skill deficiencies of MPW staff (para. 23). Emphasis would be given to cross-sectoral and sector-specific courses in program and project planning and design; surveying and measurement; construction methods, supervision and quality control; and equipment and plant operations and maintenance. Refinements in the course development program would be made on the basis of improved staff planning and monitoring information (para. 30). In addition, the PUSDIKLAT would evaluate the effectiveness of short courses in comparison with the longer training programs provided. The GOI has issued a ministerial decree creating the CMDU and has designated staff for key positions in the CMDU. At negotiations, it was agreed that (i) CMDU staff would be appointed in accordance with a schedule agreed with the Bank (an understanding was reached that CMDU staff would be formally appointed by December 31, 1983); (ii) the GOI would design and undertake a comparative evaluation of MPW training programs in accordance with terms of reference and a schedule satisfactory to the Bank; and (iii) the GOI would submit for review by the Bank, at least two months prior to the beginning of each fiscal year, an annual plan for the development of curricula and materials for short courses for MPW staff (a schedule for 1983/84 has been prepared and reviewed by the Bank) (Sections 3.02, 3.03, and 3.04 (a) of the draft Loan Agreement). - 13 -

The Regional Training Centers (RTCs)

32. To implement an improved and expanded program of short courses for MPW staff, the five existing RTCs would be expanded and upgraded under the project (para. 25). In addition, a new RTC in Jakarta would be constructed, furnished, equipped and staffed; and two to three full-time instructional staff would be appointed at each RTC. The project would provide training, through the CMDU (para. 31), for these instructional staff, who would further train 800 part-time trainers required to deliver short courses during the project period. Each RTC would have 270 trainee places, with boarding for 210, and include classrooms, staff houses, a workshop, a laboratory and related equipment. With use of the expanded facilities, about 80% of the short courses would be conducted in the RTCs and the number oF staff participating would nearly double, from about 10,400 in 1981/82 to 20,500 in 1986/87. By 1986/87, about 14% of MWRstaff would participate In this training each year. The proportion of provincial staff receiving training would increase from 7% in 1981/82 to 14% by 1986/37. The GOI has prepared a plan and budget for the MPW program of short courses for 1983/84 and designated staff for key positions in the Jakarta RTC. D)uring negotiations, it was agreed that all staff for the Jakarta RTC and full-time instructional staff for the existing RTCs would be appointed in accordance with a schedule agreed with the Bank (an understanding was reached that these staff would be formally appointed by December 31, 1983); and that the GOI would submit for review by the Bank, at least two months prior to the start of each fiscal year, the annual plan and budget for short courses and an overall annual program for all MPW staff training (Sections 3.02 and 3.04 (b) of the draft Loan Agreement).

Contractor and Mandor Training

33. The project would provide an experimental training program for small- and medium-sized contractors and mandors to provide a basis for the development and financing of regular upgrading programs by the private sector (paras. 23 and 24). The MPW-s BSP would coordinate the training and evaluate outcomes. The provincial offices of GAPENSI and mandors cooperatives would prepare annual training plans, select trainees and cooperate in the selection or revision of training materials to reflect local needs. The courses would be developed and delivered under contracts placed by the BSP withl local training entities, and would incorporate experiments with in-plant training in large firms and on-site advisory services for trainees. The project would include these contracts, instructional equipment, training for instructors for mandors courses and related technical assistance. It is expected that the GAPENSI would continue to contribute about 50% of the financing for contractor training. About 2,800 contractor staff and 4,550 mandors from all provinces would participate in the training. Contractors' courses would cover financial and contract management, tendering, site supervision and construction techno- logies; mandors training would focus on construction methods, measuirement and site management. Courses would combine classroom and practical experience. During negotiations, an understanding was reached that as of September 1984 an interim review of the cost-sharing arrangements for contractor training would be undertaken. It was also agreed that the GOI would undertake an evaluation - 14 -

of the training program for contractors and mandors in accordance with terms of reference and a schedule satisfactory to the Bank (Section 3.03 of the draft Loan Agreement).

Professional Resources Development (PRD) Program

34. To improve the effectiveness of manpower in key planning and economic posts in the GOI, the project would also include a program of overseas fellowship training for staff of the National Development Planning Board (BAPPENAS), the Ministry of Finance, the Ministry of State for Administrative Reform, the Civil Service Training Institute (LAN4)and related agencies. Financing for consultant services to assist with program management would also be provided. The fellowships would be provided in the fields of planning and management, public administration, economics and finance. About 113 officials would participate in doctoral, master's or short-term training programs. The existing Professional Resources Development (PRD) Program Steering Committee, established under an ongoing phase of the program (assisted by USAID), would select fellowship candidates (para. 36). Criteria established for the selection of fellows and fields of study have been reviewed by the Bank and are satisfactory.

Project Management and Implementation

35. The project would be managed by existing units in the MPW and by the PRD Program Steering Committee. The executive authority for management of the MPW components would be the MPW Secretary General. The Director of PUSDIKLAT would be supported by a Project Manager and PUSDIKLAT staff to supervise the planning and implementation of MPW components; design and manage a progress monitoring system for those components; prepare related project budgets and maintain project accounts and audits; and procure project goods and services. A Project Manager, with appropriate qualifications and experience, has been appointed (Section 3.01 (b) of the draft Loan Agreement). With the addition of the Project Manager and new staff under the project (para. 30), the PUSDIKLAT will be fully able to carry out these responsibilities.

36. The PRD Program Steering Committee would be responsible for implementing the fellowship program for government managers. This Steering Committee comprises senior officials of participating agencies. It is chaired by the Deputy Chairman for Administration in BAPPENAS and reports to the Minister of State for Administrative Reform. The Steering Committee has a technical secretariat which is appropriately staffed to manage the proposed program.

37. The project, which would be implemented during mid-1983 to mid-1987, is in an advanced stage of preparation. The MPW owns the site selected for the CMDU and new RTC in Jakarta and has completed formalities for its proposed use. Bid documents for a first phase of construction (including the CMDU and RTC Jakarta) have been completed to allow construction to begin in October 1983. The MPW has also prepared master lists for equipment and - 15 - furniture and bid documents for a first phase of equipment procurement, to begin in November 1983. Further, terms of reference, contracts and invitations to submit proposals for the provision of technical assistance for all MPW components have been prepared, and are under preparation for the PRD component, to allow for awards by November 1983.

Costs

38. The total cost of the project is estimated at $47.85 million, equivalent. Equipment and materials imported under the project would be exempt from duties and taxes. Customs duties and taxes on other items are estimated at about 4% of total costs. Base costs refer to December 1982 prices. Construction costs have been calculated on the basis of recent tenders for similar facilities in Indonesia. The cost of furniture is estimated at 10% of construction costs. Equipment costs have been estimated on the basis of equipment lists prepared by the MPW and reviewed by the Bank. Technical assistance includes 1,245 man-months of consultant services (about 732 man-months foreign and 513 man-months local) and 1,598 man-months of foreign fellowships. Unit costs for technical assistance were estimated as follows: $12,000 per man-month for foreign consultants (inclusive of salaries, allowances, and international airfare); $2,140 per man-month for local consultants and $1,800 per man-month for overseas fellowships. A physical contingency ($2.9 million), comprising 5% for technical assistance and 10% for other items, was added to project costs. The price contingency allowance ($7.7 million) amounts to about 19% of the base cost plus physical contingencies and was based on the following escalation rates: local-13% in 1983, 10% for 1984 and 7% for 1985-88; foreign-8% in 1983, 7.5% in 1984, 7.0% in 1985 and 6.0% for 1986-88. The proposed Bank loan of $30.0 million would finance 65% of project costs (net of taxes) including the capitalized front-end fee of $0.22 million. The GOI, with contributions from GAPENSI (para. 33) would provide the remaining share of $17.85 million.

39. The operating costs of the expanded program of short courses for MPW staff would rise from an estimated $5.0 million in 1982/83 (including administrative overheads) to about $8.5 million by 1986/87. While expenditures on training materials would more than double, expenditures for outside boarding and subsistence would be reduced as a result of the provision of expanded training and boarding facilities under the project. Consequently, the average unit cost for training (based on direct training costs) would remain constant, at about $300 per trainee month.

Procurement

40. The CMDU and the new RTC in Jakarta would be constructed on the same site and tendered as a single package with a value of about $2.8 million. The value of renovation and expansion for the five existing RTCs would be about $1.0 million per contract. Based on past experience in Indonesia, these relatively small and geographically scattered contracts would not attract international bidders. The six contracts (estimated total value $7.8 million, including contingencies) would be thus awarded on the basis of local competitive bidding procedures. Contracts for equipment - 16 -

and materials would be grouped to the extent practicable to form attractive bid packages. Those costing $150,000 equivalent or more (estimated total value $3.0 million), would be awarded on the basis of international competitive bidding, in accordance with Bank Group Guidelines. In bid comparison, local manufacturers would be given a preferential margin of 15% or the customs duty, whichever is lower, over the c.i.f. cost of competing imports. Materials and equipment which cannot be grouped to form packages of $150,000 equivalent or more, (estimated total value $1.5 million), would be awarded on the basis of local competitive bidding procedures. Miscellaneous items, in packages not exceeding $25,000 equivalent, and subject to an aggregate limit of $0.5 million, would be purchased on the basis of at least three price quotations. Books and other printed materials would be procured through direct purchase after negotiations for discounts. Furniture contracts (estimated total value $0.7 million) would be awarded on the basis of local competitive bidding procedures. Prior Bank review would be required on awards of $150,000 equivalent or more for equipment and materials contracts (expected to account for about 60% of value). Technical assistance, including consultant services and services for arranging overseas fellowships, would be obtained from consulting organizations. Employment of consultants would be carried out in accordance with Bank Group Guidelines on the use of consultants.

Disbursements

41. Loan disbursements would be made on the basis of: (a) 55% of the costs of civil works; (b) 100% of the c.i.f. costs of imported equipment, materials and furniture; 100% of the ex-factory costs of locally manufactured equipment, materials and furniture; and 65% of imported equipment, materials and furniture procured locally; (c) 100% of the costs of consultant services, fellowships and MPW staff travel costs (incremental) for short courses; and (d) 50% of the costs of materials development and production for the program of short courses for MPW staff and for the preparation and delivery of contractor and mandor training. The disbursements schedule is based on disbursement experience with other education and training projects in the region. It shows an above-average disbursement rate owing to a shorter implementation period and the advanced state of preparation. Disbursements are expected to be completed by mid-1988.

42. For disbursements for travel and materials development and production for MPW staff training, and for contractor and mandor training, submission of the numerous contracts, invoices and receipts required for these relatively small items (amounting to about 15% of the loan amount) would be unduly costly for the GOI and the Bank. Disbursements for these items would therefore be made on the basis of statements of expenditure (SOEs), consolidated on a quarterly basis. Disbursements against other small local expenditures for equipment and materials, each less than $1,000, would also be made against SOEs. Supporting documents would be retained by the PUSDIKLAT at Jakarta and made available for review, as requested, by visiting Bank missions. Disbursements against remaining project expenditures would be made against full documentation. - 17 -

Accounts and Auditing

43. The Training Department and the PRD Steering Committee would establish and maintain separate, project-related accounts. Assurances were obtained at negotiations that project accounts would be maintained in accordance with sound and generally recognized accounting principles and practices satisfactory to the Bank; that the accounts would be audited annually in accordance with procedures satisfactory to the Bank, including a separate audit of accounts related to disbursement against SOEs; and that the audited accounts would be sent to the Bank not later than six months after the end of each fiscal year (Section 4.02 of the draft Loan Agreement).

Benefits and Risks

44. The proposed project comprises an important part of the GOITs strategy for manpower development for construction. The principal benefit of the proposed MPW staff training components would be improvements in execution of MPW projects through increased skill levels of staff. Related benefits would include enhanced efficiency in the identification of training requirements and use of training resources. The main benefits of the experimental contractor and mandor training would be improved skills of those trained and experience gained in the planning and delivery of such training. Results would be used to develop larger, cost-effective training programs with a gradual shift of responsibility to the private sector. The PRD Program is expected to improve the effectiveness of management in key planning and economic agencies.

45. Under the project, the number of MPW trainees in short courses would nearly double and the share of training provided for provincial staff would increase (para. 32). Increased expenditures for the expanded program of short-term training would be offset by improvements in efficiency and quality. The experiment with contractor and mandor training would increase the number of trainees from about 400 in 1981/82 to about 1,700 in 1986/87; about 113 officials from core government agencies would participate in the PRD Program.

46. The development of an improved management system for job-related training for MPW staff would require strong central support and commitment from the three Directorates-General and the DPUPs. A risk exists that commitment would be inadequate. To reduce this risk, the improved management system has been designed to encourage coordination: training needs would be identified within the operating units, practicing engineers and managers would be fully involved in course design and in training; and the existing training activities of the Directorates-General and provincial liaison officers would be continued and enhanced through the joint development of better standards, methods and training courses. The strengthening of evaluation and monitoring arrangements would be an integral part of these improvements. A related risk is that the PUSDIKLAT and the RTCs would be unable to manage project implementation effectively while simultaneously developing and introducing improved management practices and courses. This - 18 -

risk would be minimized by the provision of an experienced Project Manager, new staff to be appointed to PUSDIKLAT (including staff for facilities planning, procurement and financial management), and related consultant services.

47. In the case of contractor and mandor training, a risk exists that the planned courses would be ineffective. To reduce this risk, the main responsibility for identification of training needs, trainees, and necessary course revisions would be placed on contractors and mandors through the professional associations.

DART V - LEGAL INSTRUMENTS AND AUTHORITY

48. The draft Loan Agreement between the Republic of Indonesia and the Bank and the report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately. Special conditions of the project are listed in Section III of Annex III.

49. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank.

PART VI - RECOMMENDATION

50. I recommend that the Executive Directors approve the proposed loan.

A. W. Clausen President

Attachments March 11, 1983 Washington, D.C. ANNEX I - 19 - Page I of 5 pages

INDONESIA - SOCIAL INDICATORS DATA SHEET

INDONESIA REFERENCE GROUPS (WEIGHTED AV7RAGES AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE) a TOTAL 1919.3 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 316.5 1960 lb 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC

GNP PER CAPITA (US$) 80.0 140.0 430.0 261.4 890.1

ENERGY CONSUMPTIONPER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 124.7 121.9 225.4 448.7 701.7

POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 94680.0 116143.0 146557.0 URBAN POPULATION (PERCENT OF TOTAL) 14.6 17.1 20.2 17.3 32.4

POPULATION PROJECTIONS POPULArION IN YEAR 2000 (MILLIONS) 216.0 STATIONARY POPULATION (MILLIONS) 376.3 YEAR STATIONARY POPULATION IS REACHED 2110

POPULATION DENSITY PER SQ. KM. 49.3 60.5 74.6 158.1 255.9 PER SQ. KM. AGRICULTURAL LAND 355.9 378.8 452.4 355.9 1748.0

POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 40.7 44.0 40.1 36.8 39.9 15-64 YRS. 56.2 53.4 56.9 59.7 56.8 65 YRS. AND ABOVE 3.1 2.5 3.1 3.5 3.3

POPULATION GROWTHRATE (PERCENT) TOTAL 2.1 2.0 2.3 2.0 2.3 URBAN 3.7 3.6 4.0 3.3 3.9

CRUDE BIRTH RATE (PER THOUSAND) 46.8 40.7 35.3 29.3 31.8 CRUDE DEATH RATE (PER THOUSAND) 24.5 17.2 13.3 11.0 9.8 GROSS REPRODUCTIONRATE 2.8 2.7 2.2 2.0 2.0 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 181.1 2216.0 USERS (PERCENT OF MARRIED WOMEN) .. 0.2 27.1 19.3 36.3

FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71=100) 93.0 102.0 113.0 108.1 115.6

PER CAPITA SUPPLY OP CALORIES (PERCENT OF REQUIREMENTS) 86.3 93.9 101.7/c 97.3 106.4 PROTEINS (GRAMS PER DAY) 38.2 42.4 44.8/c 56.9 54.4 OF WHICH ANIMAL AND PULSE 5.6 6.2 6.67E 20.0 13.9

CHILD (AGES 1-4) MORTALITY RATE 22.9 16.8 11.3 10.9 6.7

HEALTH LIFE EXPECTANCYAT BIRTH (YEARS) 41.2 47.3 53.1 57.8 59.8 INFANT MORTALITY RATE (PER THOUSAND) 149.9 120.9 92.7 89.1 63.7

ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 3.0 12.0/d 32.9 32.0 URBAN .. 10.0 35.07- 70.7 51.9 RURAL .. 1.0 6.07d 22.2 20.5

ACCESS TO EXCEETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 12.0 15.0/e 18.1 37.7 URBAN .. 50.0 60.0CT 72.7 65.7 RURAL .. 4.0 5.O7e 4.7 24.0

POPULATION PER PHYSICIAN 46778.7 26498.5 13674.6 3297.8 8540.4 POPULATION PER NURSING PERSON 4517.0 7672.8 8871.6 4929.3 4829.4 POPULATION PER HOSPITAL BED TOTAL 1360.3 1644.6 1609.9/d 1100.4 1047.5 URBAN 251.8 .. 699.0/d 301.3 651.6 RURAL .. .. 3166.8/d 5815.7 2597.6

ADMISSIONS PER HOSPITAL BED .. .. 22.4/e .. 27.0

HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 4.4 4.8 URBAN 4.9 5.3 RURAL 4.3 4.7

AVERAGE NUMfBEROF PERSONS PER ROOM TOTAL .. 1.5 URBAN .. 1.6 .. RURAL .. 1.5 ..

ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL ...... URBAN ...... RURAL ...... ANNEX I - 20- Page 2 of 5 pages

INDONESIA - SOCIAL INDICATORS DATA SHEET

INDONESIA REFERENCE GROUPS (WEIGHTED AVERAGES - MOST RECENT ESTIMATE)- MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC

EDUCATION ADJUSTED ENROLLMENTRATIOS PRIMARY: TOTAL 71.0 78.0 94.0 97.4 96.2 MALE 86.0 83.0 100.0 101.0 99.8 FEMALE 58.0 73.0 89.0 87.8 92.1

SECONDARY: TOTAL 6.0 16.0 22.0 53.0 37.6 MALE 10.0 21.0 27.0 63.8 41.1 FEMALE 3.0 11.0 18.0 41.3 34.1

VOCATIONALENROL. (2 OF SECONDARY) 20.4 22.1 19.8 1.7 20.8

PUPIL-TEACHER RATIO PRIMARY 38.8 28.9 37.2 37.7 35.5 SECONDARY 14.0 13.1 17.0 20.2 25.0

ADULT LITERACY RATE (PERCENT) 39.0 56.6 62.0 52.1 73.1

CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 1.1 2.1 3.5/c 1.5 9.8 RADIO RECEIVERS PER THOUSAND POPULATION 7.2 22.0 41.9 35.4 116.5 TV RECEIVERS PER THOUSAND POPULATION 0.1 0.8 8.6 3.2 37.6 NEWSPAPER (-DAILY GENERAL INTEREST") CIRCULATION PER THOUSANDPOPULATION 11.0 .. 17.7/d 16.4 53.7 CINEMA ANNUALATTENDANCE PER CAPITA 2.8 o0.87W 3.6 2.8

LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 34791.4 41069.9 52582.0 FEMALE (PERCENT) 27.8 30.9 29.3 29.5 33.6 AGRICULTURE (PERCENT) 75.0 66.0 58.0 70.0 52.2 INDUSTRY (PERCENT) 8.0 10.0 12.0 15.0 17.9

PARTICIPATION RATE (PERCENT) TOTAL 36.7 35.4 35.9 40.0 38.5 MALE 54.2 49.5 51.0 51.8 50.5 FEMALE 20.0 21.6 20.9 23.8 26.6

ECONOMIC DEPENDENCYRATIO 1.2 1.3 1.2 1.0 1.1

INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. 23.5/d HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. 49.47. LOWEST20 PERCENT OF HOUSEHOLDS .. .. 6.6/d LOWEST40 PERCENT OF HOUSEHOLDS .. .. 14.4Td

POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 136.0 133.8 194.7 RURAL .. .. 112.0 111.5 155.1

ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 119.0 .. 178.2 RURAL .. .. 98.0 .. 164.9

ESTIMATED POPULATION BELOWABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 28.0 43.8 24.4 RURAL .. .. 51.0 51.7 41.1

Not available Not applicable. NOTES

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform.

/aa China included in total only.

/b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1978 and 1980.

/c 1977; /d 1976; /e 1975.

may, 1982 ANNEX I -21 - Page 3 of 5 pages

DPtONiTCCSoOF SOCtL, iINDICATOe that they may non he intr-- the mastouhoritettee ed reliable, it should ito he note lotte: k.lthousit the do . drot- fro sorc .gatreily judged the dote. The date ste.ne definitiono end o .oncptSnod by different c--tine Ln colleting nationally cne crbli hecane of the ioni of etodardi.ed 5 trend.. end che-cteisa cetain m-J.r difftere-e betner co-trie. theirs.. nf o1 to de..cribe order. of tg ..ituidicate with nhthigh..r o-gs income that the ecootr poop cootry group of the euhiret country end (2) a coutry groep The refen-r group or ii() the tou I-m -tom Africa end Middle Lent Ia chose htcomt of tne..g-r (_nept to- "High Incm oil Enpornar" grop ther "Niddle of the tje7tn ceotry erinh-ic atone for each iodiceto end ehe cly the It thel rinto- group dat oh vcae r ppuletion meightnd of doto eoco-oloeiefiorte) of couuccie uncu theintetr depode onbth eviluhility ctnic in arcp bee date foc that idtcatr. nc-. the c-nores incooo the valu of maoIty othe ...... ofraecin indicutor noanthr The.en -eces are only onofol and Le not -uif oe coIo Lnt toe nouritd int..rietsn oe tndi-ennc eta ti-n ng the ountry ond refernc... ,.n tt Populution pen tieine ted - total. unhet. end tnl-Ppltc eq.ke.) ehe of boepito1 had. AeRA Ithoeond 1979 date. urban, and roro1l dvided by themi eepctia - To1 -f-eroc ae 1oceglndtne cud inland cetera; and epciolined hoepite1 andne Tona or Pe.n--nty evetlabin in Pablic Antd Pniv-tr genra Asri-ol-1e - fatiatte of ugri-ulun1 -n otnd truPorarily cener .ioPittnl ac netbiliebhence prnmaennl tnetf kitchen gerdno or to lie fallen; 1979 deta. hobilcenion-- to for cr-P., paatnree. -mna end by et ee..t one PbYatoi-c te-bliebm-nt pronidiog crincipelipcy hnalth dialcr ur onioldd nrl opiot heoe.inld CAPITA(US$) - it?Pe ca.pita t...a .....curren mrot pctna,- munsnt _pntrtly *tfttd b hy.cict (hut by GNP?PEU ne W-rId tnOtle (197840 hesie); 19I0. and mele nn1ettd icy -ea co-eric method essat oe.sd n etc.) tthinc oftf n-aietaco nd Ical no- s 1970. cud 1980 dAta. detion ed prnotdn a liniced rnrof mdicu1 tentlitire. fo inclde taOe pri_ctpel/gsoure1 hoepitola. -cugy (cool lit-e poryonee -rh- hoepitale end metnity tINUf COSUMPlnTIONPMk InpIT, - A-nalcnemtinof -onta. end roro1 h.sttuls. loclor1 rore1 hoep ita1 oud medical pstn-le.fnaturel gas end hydr-. nucea andl geohouele- end l1ignt., . SP:nleliend h-oPitttla ar ulu1drd oly uder-oal psr rapine; 190.17. ndi19 cst otordeche-gne tnictty) In kilogra cicol eqoi-eIrt Admineicte car Ptoeita ted - Oct1 -ntorfc eduiesiono data. trthniaedinided by tin nctrr ci bed.. Att VITAL STATISTICS POPULATIONI 1980 HOUttnc ToaMooaio id-TY- (tic-nde) - ofc July 1; 1960. 1970. and gOP of ioiiulno hant lacing qo-tree of orhen no total populanict; A hO..!,dcotat,f included ic UrbanPouacc (cren oa)-Rtic and their auo Inolt. A bs-dnr or lodgc may or nonot hr uchnuu- ey offIrct ow ... bility of dune dii tersondnfiniclcnof the ho...ehold forsatsiclporp..n.. aeng ontrite;1960. 1970. urd 1980 dote.

ity ete.tdetne npcity ,nlneonuocrroettunran tonat npuenonby ege od sen end their -tnolity and fnctil cat. oupi of thnro 1-lronlaeo_ -. onn pled ports. P-ojr-nio par-tntrr for -atlioy Acc.a. to Z-ectic ity tycocni c doLlIon - .tte, -rta..adrua. en hitrth i-crnating Ith .... r'arycopino Income ire life e-p--tn niectictty In lInIng quaters a p--rne 70.5 yrnnc. ~~Theer- Cocoent toaldeIL'nI.. nich level,lifrrnpncnnncyncnhiiiringes and team inofton -b hor,.. nd cure d-rtligein-pe-fney mannaton feriiy aeuloho trrloetnoigd-c1in on occ- It=o ned poet tautly -I'n..o yng tnane fn-tiltcya-c-dttg of -ernaity tOIICATIOT techfcootny is hb: see igod on: c tIme nineccknetn Oc-11-o cotton Adjouced ttl a-Ir and fre1l - Crone total,melt en fale nd tetilicytrnd -rprletlnpopoe. ctron Is cc gr-nh et Plan coo Stt..tunosypnoloo-n tnntiotey poplacion 5 1-vr as percocntgr of crepetine o- noclatc l gs. at the pnti-y need h-il the hitch nts. it eqoal to the deat rota. ond eno the e, 'nICt"" Pnln ecool-ege popolu-lone; nor-aly i-oloden ohjl d-n Thin In achieved only otter fenlicY tarts dn.ltn no for eut- oetocetn . yernho odjoetd ton dIff-rnn lengths of Prinny ndcontin; Lnonl of uni net reproduction tte, hhemo de-e-ti-t education enrolmen ny eceed 100 percent the roplcemeIt popolantorue u roire olh i_eoa ofneplcee ennn toeif roctly.The tutinne eh-r hr ottico1 echool tgr. iatcof the population sInc ou otl.r brine or natatdnciehut of the Projected char... cotol,1-in end freuIt - Cutpttd Pt abone; necodacy ni dnclicc of fortilinyrte to replac-icoaysho- intb Year 20009.ad the ntst ndcotiin reuie on bust four ye-r of epprved piory insrution; _acc tene. ,r-dagueo,ontonli. icton oe n ppl population rteher:: fnoa- Yest utotionr is--nhdLonano - Thityea h- etaticury .ochd.oualYof 12 cc 17 5mc ogf cnneodrne - nner tire vil he -ocldrd. Population tnal,y Inoiolerllet(nonf ucondan,y) oainlisiuin per ..oat~ kilneet- (Ill heotert.. of Pen so. ke. - id-y-a pnpol-oionP 1ndaprd- iocldr h.iticl od-ttn,ioL, or othe pRga notch opertet Octeame; 19c. 170 and1979 dene. -ntynn0 dryotcnott of nacodary iocnuo~ioti_ - CosPutnd en cho- for agri-lt-rl laud to Pm eq. in. ognicuore len~d et.ti - ptnooy. sod tconder_-Totnl -tdnnttrnI'lled only;960, 170 and1979 deco. ~Ppil-teaher ot.d n-ocdey leo1i diolded icy o-tc- ofceachere in the - Child-n (0-li yearn). e-kitog-gon (12- Prier Poynloionhr Otnocurn(penneI) coornPondioctnes pr-r nod oe)s conor fnid-peen p.p.- hi Yearn ), ed retired065 (croce-t) - Lit--onrdolts tahlr no tend and ccitt) ruruliaoioa td 15 .n... .ndout laIIo; 1960. 1970,t and 190desAduit.lit--en-t. totai rid- ofpceccecct-t adult 0 PorulotiocIr-ni mt.n toencent -- 1ne- uncool g-nh -sn- of and 1970-60. prnpouaiou 1950-60,19h0-70, f -bhan poyc- CONS2ITION Poruloin. month _o_ctrncnn -uranO _ .oa gronh ren ie Pitienta oe(e choco,nodrpuni)-Pornecnecpis 19500, 1960-70.and 1970.80. tu~doahlacthersan leioeto of tid-y-O cr erotcg enacha rihh.ioa o crodrninthtsr(rthoad Annol lion hittthnper thou...nd ailntoryo-hol-i radio population;1960, 1970, end 1980 data. tncclcnr (p-rnhn...a.dArrinio llpiyyt of r-j-dernfcc Mont dsotha par cth...aod of rnd-y-a naic Crude lanih tune (P.,rthuo.e.d.. to Beoonnal pet cho.udofpoplation; e...oeso- bnoodcos.ts ~puh~ito of .edi. popolet1on;, 1i9.60,' 1900, and 1980 date. Ii .c..ard rece-toesin tncieu nod Icpsosin ryg-erani tenr-ico-rgr number of d-ushtrrsonaoill haur in to rIntect; daaton f- nocyn-r ny con bheco-.brnhirenct osRprducio If ch,speIII'es prelel Ige-eproif fr- "rnno her, --oa prI d-onorpet- lcoi in 11960. 19702..ud 1980. en oonirst bholishnd cyrce;unIn... flo-Year sotaeeding lr ituan 2Otnnor 0nlnc)-TO enursinbro-dnat to An-ie (thcua..ndnl- ona bo-ieof occoptons ericere PFailyPlnn1iog A-icc -por. go-rceliptIc p-r thouan popolaton toI oe nio-nd TV cder copie of taloni fesilypienniug profru- nffsot. of hirb-coonoldoitn in outresod in ernY-nh.n roit iof TV09 nts ne in Pselly lenninaUnrrrlercenoIf tarriedjen) - Pencrcege,of tarriedt nnaerCruaio(e chSoudprtain ho.tnheuoeregeoir- ene f chil-hrnritgtg (15_44byan a n trth-cItr delet -ulot.locof "doil ge,%neraitrrs repr,deficed as pridinol age soop. Jac. edee alt taried coe to s-e publi-titondrooted poitatly to -rodiufgseto noa.I tc be 'dotty' if in IP..e to l_ne fou niLi ove POODANst NOTtITION p-c Oru - Bt..ed on nh, ouero ancpc'uco Cionee hencl itnendac-r Prc Inpil in_-in cieu_n Indet o.f Pood Prdoic1 per-dCeit (199-7 1.17) oIdeno" fend ond clnircke -cd during thn y-ar, lntlditgoditslocno.'.d productiondopfal food ooanitoa. Prcducnoonruclodeefnsed'end prisry goods(e.g.. euga..oo. nod abilt units. in ot caledar yea hbia. Cofdini-sc--e and itoutnd of iarehich ore ndiblr and ..n.. octiit(e.g otfes. FOtCf nludcd Ageaepnootion of eth coctry in hond..dLABOR toudio t:ireae Loho Ports (th ..... ndu) - Eco.ono-co1yocttce -rrone pri~ticenighte;19614),19170. nod 1980 data. Toto1 otinlerarpnodncsr en-d -cterlyedho1 ot171b onotes ooeno ec, carnote) - CO' td.rn.refrr r Per o.pino -upIl of c tiorie (perenc oni Rpopltioofci g. iticoca c curiou o-oncies q.utal-t of er food acoptliou-oofiehi In conr-e`p~ npt 1960. 1970 cod i980 d-n.. 1 --rgy oore doe-to prodoctic."leportn lean cct -p-blah; -oae(eno)-ftlpncr-cgn ci noon lborfoce Pot day. innilaiirbrl in teed, aerda, eo ooa nnycrnt.adntne Itsok.tn ppllne enludn anion hu1ntinond Aotclcr (eonn - laho fore tofario,foir 11, oeeng nd lonersIn dntinunib-n. Requit- of otoIL lahor to=; 1960, 170 cod 1980 den.. quntte cud in fodII cord fo or-o ucti- fittingaa -prtnirf -rntrrenttrdby F0O hosed on phyiloogcc -Osictico tnftuing age lodu cacc)-Labor forceit ninJog. andLheath cnidering anvinntcnt treeor,hd~y eniht. of nott laortoe cit~y -rrcenf -coero aud niactricity,ea te nod gnonptr-etagr cod Se dintributinoof pcoolnri-n and a11ning tc1 1960. 1970 and 1980 dens 1970 acd 19727dote. hooneholdle-t; 1961465. tale, cod foam - Pnntciipationo of pan c-pIn Ponc~fiPtyni-coon tpnc)-1nn, PnrcupEitc .0pml of p-connaos per-;dey) - Pnunrinoo--nc to toto1, note, and fanlo labc tore-u -a.oylPe f fodIReiado hc.I- scivityra...tenercsp.ted nnoply tfo pr .innatepopotailo of all age -encti_rly; "ni"un y-cntugca of noo. nat nod qorttfor nit c---ti-racooite . ty OO provideton 90 90 nd18 aa irnunhtd cn 71.0'ip-arbip.ticcuIrt- r- of total protin -m dey nod 20 gran ofb_a 0 and long time nro uloeoeci 60 0 lcic nn-o unun ftrpopoluioc. poirn connin.n hath 10 ge- sbol.d hr anita rti.Thasod 8 0 fr-n c-nint-i fron canin..nu.. -cnn.. Insta'cllc ch.-osecf7 grae of col yroccio und 03 o oi - cutio of popolonion ocd- 15 and it5 nod o iha -ncid, p.c...rd by Pun 'i.nzch Tir tocaotoolocdo nniaa protnn on -c __ccg for to cha total labcr to...cr. Wnrld Pood Iccocy;1961-65. 1970 and 1977 dta, noadco rl-Protoin sopply of food da- Prcanito protil enply frt0 1970 o.d 1977 dota. 19C009 DIStTRIiUTION ricedfros -niel sod poetin g=uepen doy;191-65, baocaccin och ucd hind) - eotod by ctctre hea deathopot tho...codic rnc noe(oth Child (aur 1-4) teoh tan (pr chunod A- 5 yen-tonirittat~IO22 pcoc, po--tu 20 yrc-- ..ud yc-t- 40 p-cent Ohio ag-S np, tot mai droctoy lg -0cc- ' agr grop1-year.t hldcoin of ht...aboldo. oteti dece dented fo Ife 1960;i, 1970 ond 19cc dons.

rcoc%yyonItIecatn f pcocci p1mtto A-Aoeccgeouharof y--r of liftretininThtlotog hato nu L.ifetoEtPtacy an Birnh (yeoar( nd th-uld ha i--or-nnod 4h cidablcito entbirth; 1960. 1970 and 1960 dc. Poory ct loca (U91yent clout.- crbc ond rual-1 -ouo deothe of itfennuun.d-one yar nucitaca~dAtaloont tc tia Intent Ihur-litto coon (c- tho..n.d) - Oholo t ocn conio)iina cotitltao tbtho; 1060, 0970 and 1000 dota c Aof ge per thi.....d 10cc con-iccollyaduoodaplsnccalo-fdrnlcncoi of popooto -tnl uban, I,dc..uI - Ot- re.. togem~ WennrIcoc-- uffordohr. bar of prople nnl ua-nc,an ) oichnronc .h...oteacoefe p ccner t n-third of e...ugn yen tapi,, b-orhulno.., 'nprigtad soloyolt e cRcin-aic1ur n--e .u.h thnOo tloc prcnccd icce hfi counicy 00bcc modonI atudfr_ nt ct p__-tur t - hi eaeoic e-.icnnb-nrapclcPerecolpI'lll odjannoct f-un g~'ec -lonc lining in -rbocuca or --udys t-totadi.cut mae thot11 mcaenfaho rtohrlailtit 0 L.-t (Py-oca -b t -ontl -tonior1 Ettlion-d Pnlto no iocrPccyIon cooaidrrndlsob hem ithin ecos, it oocre_ of chat h..u..e. and cora) ot cc'h. tn 0 nhc o-rahold acdr-t-1 P--ac of pPopleti-c tc-b- crasooctlnacent ocoOd io ty cbco the-tceItao. nbr of fanchlng ttchco do coo I'vl no ,,Id adiuynoyorioon- ypc of thc doy to

--- et di.poIulon1 Nui I..cpt (ot l,obo.- nod curd or-od by locudc o_....f ttorrnyetlnn_ icyoluc toot-n fcc diepo-l auy noth or ocoao.of h-t.cror-t the oletlo ad dispceel, ~init- iuin- no .sc-su-by c-n-b-rn tyo-es or nt~ -n cf pin pcioiouod botie1 Dc liciolio htynn- Ococi ccd PhXnloli- - Poputottocdlnodod by nonb- ot -tclioic 0 t1cci ,cuyico yr)cnno eorat_ Popcluticocon lend otunt q-liftad f-n I acdicalschool rni...... 1982 P-cuoo Pcy-ui- Onddby cunbntof yroci.itcoi P 1oulac fon N...Ocring nad no_ienndtcalcgrudto Ioottoaeo-in-onItco.ycn-lca-Irn - 22 - ANNEX I Page 4 of 5 pages

Population 147.4 million (mid-1980) GNP per Capita: US$520 (1981 estimate)

INDONESIA - ECONOMIC INDICATORS

Annual growth rate (2) Amount (at constant 1973 prices) (million US$ at current prices) Actual Estimate Projected Indicator 1980 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

NATIONAL ACCOUNTS Gross domestic product /a 70,024 5.0 6.9 8.8 6.9 5.3 9.7 7.5 2.1 4.8 5.0 5.0 Agriculture 18,003 0.0 4.7 1.3 5.2 4.0 5.5 3.5 3.1 1.7 1.6 2.2 Industry 29,227 5.6 11.1 14.2 5.9 5.5 9.0 8.7 -5.5 7.0 10.0 6.0 Services 22,794 10.1 5.9 12.0 8.9 6.9 8.5 9.0 7.0 5.0 5.0 5.0

Consumption 48,976 6.9 6.4 7.9 8.5 9.9 11.6 6.6 10.3 2.3 2.4 3.6 Gross investment 15,176 14.6 6.0 16.0 15.0 4.4 17.8 23.0 6.3 1.0 -1.0 4.3 Exports of GNFS 21,365 -9.7 12.5 22.4 1.9 -1.0 -4.2 -10.5 -11.5 1.9 15.0 6.7 Imports of GNFS 15,494 7.9 8.1 22.2 15.6 13.9 13.6 6.0 8.0 -2.0 2.0 2.0

Gross national savings 17,576 -19.7 12.0 33.3 -2.1 37.1 -2.1 8.0 3.0 2.0 4.0 5.0

PRICES GDP deflator (1973 = 100) 166 190 214 237 311 400 440 493 542 591 638 Exchange rate 415 415 415 442 623 625 625 625 625 625 625

Share of GDP at market prices (x) Average annual increase (%) (at current prices) (at constant 1973 prices) 1960 1970 1975 1980 1985 1990 1960-70 1970-75 1975-80 1980-85 1985-90

Gross domestic product 100 100 100 100 100 100 3.9 8.4 7.5 5.0 5.0 Agriculture 54 47 32 26 22 17 2.7 4.1 4.1 2.5 3.5 Industry 14 18 34 42 44 46 5.2 12.0 9.7 5.5 6.5 Services 32 35 35 33 36 36 4.8 9.7 9.0 6.5 5.0

Consumption 91 89 79 70 74 74 4.1 8.4 8.9 5.0 5.0 Gross investment 8 14 20 22 26 27 4.8 18.3 11.7 6.0 4.5 Exports of GNFS 13 13 23 31 23 18 3.6 9.2 8.7 -2.4 1.8 Imports of GNFS -13 -16 -22 -22 -23 -19 3.2 22.1 14.0 2.5 3.5

Gross national savings 8 9 17 25 25 22 6.1 23.1 14.4 4.8 5.3

As % of GDP 1960 1970 1975 1980

PUBLIC FINANCE /b Current revenues 11.7 10.1 10.5 23.4 Current expenditures 14.0 8.4 9.3 13 3 Surplus (+) or deficit (-) -2.3 +1.6 +7.1 i10.1 Capital expenditure n.a. 5.0 10.7 13.5 Foreign financing 0.2 3.5 3.7 3.4

1960-70 1970-75 1975-80 1980-85 1985-90

OTHER INDICATORS Annual GNP growth rate (x) 4.5 7.6 6.9 4.9 4.8 Annual GNP per capita growth rate (%) 2.4 5.1 4.5 2.5 2.4 Annual energy consumption growth rate (2) 2.9 16.0 15.0 7.0 6.0

ICOR 2.2 2.2 3.1 4.5 4.3 Marginal savings rate 0.30 0.48 0.30 0.2 0.3 Import elasticity 1.2 2.8 1.9 1.2 0.7

/a At market prices.

/b Central Government only, on an April-to-March fiscal year basis.

East Asia and Pacific Programs January 3, 1983 - 23 - Population : 147.4 million (mid-1980) ANNEX I GNP per Capita: US$520 (1981 estimate) Page 5 of 5 pages

INDONESIA - BALANCE OF PAYMENTS, EXTERNAL CAPITAL AND DEBT (Millions US$ at current prtces)

Actual Estimate Projected Indicator 1977 1978 1979 1980 1981 1982 1983 1984 1985 1990

BALANCE OF PAYMENTS /a 1. Exports 10,861 11,353 17,494 22,245 20,295 20,698 24,125 27,829 42,761 50,179 (a) Oil & LNG (gross) 7,354 7,374 11,323 16,661 16,541 16,550 19,033 21,772 32,824 38,308 (b) Nonoil 3,507 3,979 6,171 5,584 3,754 4,148 5,092 6,057 9,937 11,871 2. Imports (including net NFS) -10,686 -11,493 -14,035 -18,649 -23,541 -22,683 -23,507 -25,358 -34,514 -41,856 (a) Oil sector -2,909 -3,364 -4,348 -5,884 -5,572 -5,053 -4,682 -4,706 -6,591 -7,164 (b) Nonoil imports -7,241 -7,543 -9.028 -11,790 -15,340 -15,340 -16,466 -18,561 -25,521 -32,022 (c) NFS (net) -536 -586 -659 -975 -2,629 -2,290 -2,359 -2,091 -2,402 -2,670 3. Resource balance 175 -140 3,459 3,596 -3,246 -1,985 618 2,470 8,248 7,816 4. Factor services -865 -1,015 -1,261 -1,205 -3,852 -4,482 -5,210 -6,267 -9,141 -10,719 (a) Interest public debt -441 -514 -772 -819 -1,118 -1,319 -1,617 -1,953 -2,605 -2,836 (b) Other (net) -424 -501 -489 -386 -2,734 -3,163 -3,593 -4,314 -6,536 -7,883 5. Capital grants 66 46 52 76 100 100 100 100 100 100 6. Balance on current account -624 -1,109 2,250 2,467 -7,000 -6,357 -4,491 -3,698 -794 -2,804 7. Direct foreign investment 285 271 217 140 276 350 450 600 800 1,000 8. Public M & LT loans (a) Disbursement 1,956 2,205 1,865 2,536 5,180 5,922 6,384 6,473 6,234 7,091 (b) Amortization -825 -1,548 -1,329 -953 -1,376 -1,720 -2,042 -2,440 -4,052 -5,120 (c) Net disbursements 1,131 657 536 1,583 3,803 4,202 4,342 4,033 2,182 1,971 9. Other capital (net) -140 891 -1,261 -1,454 1,274 1,897 456 -202 -210 -22 10. Change in reserves (- increase) -651 -708 -1,690 -2,736 1,645 -82 -757 -733 1,977 -45 11. Net official reserves 2,208 2,916 4,606 7,342 4,709 4,791 5,548 6,282 11,180 12,148

Reserves in months of nonoil imports + NFS 3.4 4.3 5.6 6.9 3.7 3.8 4.0 4.1 5.3 4.6

Memorandum Item Net foreign assets of the banking system /d - - 6,906 10,787 8,509 7,091 7,348 8,082 12,980 13,948 Total reserves in months of nonoil imports + NFS 3.4 4.3 8.6 10.1 6.7 5.6 5.3 5.3 6.2 5.3

EXTERNAL CAPITAL AND DEBT /b Gross Disbursements 1,956 2,205 1,865 2,536 2,356 Concessional Loans 442 484 433 679 802 Bilateral 381 448 399 631 729 IDA 49 29 30 42 68 Other 12 6 5 6 5

Nonconcessional Loans 1,514 1,721 1,432 1,858 1,552 Official export credits 218 271 61 25 154 I8RD 191 168 199 331 106 Other multilateral 16 12 46 52 86 Private - source 1,089 1,270 1,126 1,450 1,206

External Debt (fixed-term) Debt outstanding & disbursed /d 11,658 13,107 13,233 14,882 15,529 Official - source 7,077 8,390 8,434 9,400 9,746 Private - source 4,583 4,717 4,799 5,482 5,783 Undisbursed debt 4,475 5,839 7,932 9,454 11,288

Debt Service Total service payments 1,262 2,062 2,101 1,772 1,974 Interest 441 514 771 819 973 Payments as % exports /e 11.6 18.2 12.0 8.0 9.0

Average Interest Rate on New Loans (%) 6.3 7.6 6.6 8.4 9.1 Official - source 5.4 4.6 5.0 5.0 7.8 Private - source 8.6 10.2 8.6 12.8 10.4

Average Maturity of New Loans (Years) 20.5 18.7 19.1 19.0 15.6 Official - source 23.9 30.1 25.8 24.8 20.8 Private - source 10.4 8.6 11.1 10.0 10.7

As % of debt outstanding at end of 1981 Maturity structure of debt outstanding Maturities due within 5 years 30.9 Maturities due within 10 years 60.2 Interest structure of debt outstanding Interest due within first year 4.1

/a On an April-to-March fiscal year basis. 7b Excludes private nonguaranteed loans. Ic Includes foreign assets of deposit money banks in addition to official reserves. Jd At end of period. East Asia and Pacific Programs Ie Oil exports treated on gross basis. February 3, 1983 ANNEX II - 24 - Page 1 of 29 pages

THE STATUS OF BANK GROUP OPERATIONS IN INDONESIA

A. STATEMENTOF BANK LOANS AND IDA CREDITS (as of September 30, 1982)

US$ million Loan/ Amount Credit Fiscal (less cancellations) Number Year Purpose Bank IDA Undisbursed

Twelve Loans and thirty-four Credits fully disbursed 559.3 491.5

400 1973 Smallholder and Private Estate Tea - 7.8 1.4 428 1974 Pulo Gadung Industrial Estate - 16.5 7.5 479 1974 Bali Tourism - 16.0 1.9 514 1975 Jatiluhur Irrigation Extension - 30.0 1.6 1100 1975 Sixth Irrigation 65.0 - 7.6 1179 1976 Agricultural Research & Extension 21.5 - 1.3 1197 1976 National Resource Survey & Mapping 13.0 - 4.0 1236 1976 Fourth Highway 130.0 - 19.8 1237 1976 Fourth Education 37.0 - 6.2 1250 1976 Second Shipping 54.0 - 4.7 1267 1976 National Food Crops Extension 22.0 - 2.2 1268 1976 Seventh Irrigation 33.0 - 8.0 1318 1977 Transmigration and Rural Development 30.0 - 3.5 1336 1977 Second Urban Development 52.5 - 7.0 1337 1977 Tanjung Priok Port 32.0 - 9.3 1365 1977 Sixth Power 116.0 - 31.5 1373 1977 Nutrition Development 13.0 - 4.5 1433 1977 Teacher Training-Fifth Education. 19.0 - 7.7 1434 1977 Eighth Irrigation 63.0 - 36.3 1435 1977 Ninth Irrigation 35.0 - 6.7 1472 1977 Second Population 24.5 - 12.8 1486 1978 Non-Formal Education 15.0 - 4.9 1499 1978 Nucleus Estates and Smallholders I 65.0 - 25.4 1513 1978 Seventh Power 94.0 - 33.9 785 1978 Small Enterprise Development - 40.0 9.2 1578 1978 Tenth Irrigation 140.0 - 115.2 1579 1978 Eleventh Irrigation 31.0 - 17.5 827 1978 Rural Credit - 30.0 3.7 1604 1978 Nucleus Estates & Smallholders II 65.0 - 51.8 869 1979 Polytechnic - 49.0 36.9 ANNEX II - 25 - Page 2 of 29 pages

US$ million Loan/ Amount Credit Fiscal (less cancellations) Number Year Purpose Bank IDA Undisbursed

1645 1979 Twelfth Irrigation 77.0 - 52.0 1653 1979 Third Urban Development 54.0 - 28.5 898 1979 Fifth Technical Assistance - 10.0 9.2 1691 1979 Lower Cimanuk Basin Flood Control 50.0 - 35.8 1692 1979 Second Agricultural Training 42.0 - 22.7 1696 1979 Fifth Highway 123.2 - 83.5 1703 1979 Fourth BAPINDO 50.0 - 10.9 919 1979 Transmigration II - 67.0 30.0 1707 1979 Transmigration II 90.0 - 89.5 1708 1979 Eighth Power 175.0 - 104.1 1709 1979 Second Water Supply 36.0 - 28.9 946 1980 Yogyakarta Rural Development - 12.0 10.3 1751 1980 Nucleus Estates & Smallholders III 99.0 - 69.9 984 1980 Smallholder Rubber Development - 45.0 36.3 995 1980 Fifteenth Irrigation - 45.0 33.2 996 1980 National Agriculture Extension II - 42.0 40.9 1811 1980 Fourteenth Irrigation 116.0 - 95.0 1835 1980 Nucleus Estates & Smallholders IV 42.0 - 35.8 1840 1980 National Agricultural Research 35.0 - 35.0 1014 1980 National Agricultural Research - 30.0 28.1 1869 1980 Third Population 35.0 - 34.5 1872 1980 Ninth Power 253.0 - 224.9 1898 1981 Smallholder Coconut Development 46.0 - 43.9 1904 1981 University Development 45.0 - 44.1 1950 1981 Tenth Power 250.0 - 205.5 1958 1981 Swamp Reclamation 22.0 - 19.6 1972 1981 Fourth Urban Development 43.0 - 41.3 2007 1981 Nucleus Estate and Smallholder V 161.0 - 155.7 2011 1981 Second Small Enterprise Development 106.0 - 53.3 2049 1982 Jakarta-Cikampek Highway 85.0 - 85.0 2056 1982 Eleventh Power 170.0 - 170.0 2066 1982 Second Seeds 15.0 - 15.0 2079 1982 Bukit Asam Coal Mining Development & Transport 185.0 - 167.7 2083 1982 Rural Roads Development 100.0 - 100.0 2101 1982 Second Teacher Training 80.0 - 80.0 2102 1982 Second Textbook 25.0 - 25.0 2118 1982 Sixteenth Irrigation 37.0 - 37.0 2119 1982 Seventeenth Irrigation 70.0 - 70.0 2120 1982 National Fertilizer Distribution /1 66.0 - 66.0 2126 1982 Nucleus Est. & Smallholders VI 68.1 - 67.1 2153 1982 Coal Exploration Engineering /1 25.0 - 25.0 2199 1982 Central Java Paper and Pul. /1 5.5 - 5.5

/1 Not yet effective. - 26 - ANNEX II Page 3 of 29 pages

US$ million Loan/ Amount Credit Fiscal (less cancellations) Number Year Purpose Bank IDA Undisbursed

Total Bank loans and IDA credits 4,611.60 931.80

Of which has been repaid -162.60 -5.93

Total now outstanding 4,449.00 925.87

Amount sold to third party 28.24 Amount repaid by third party -27.21 -1.03

Total now held by Bank and IDA /a 4,447.97 925.87

Total undisbursed 2,813.9 250.20 3,064.10

/a Prior to exchange adjustment. - 27 - ANNEX II Page 4 of 29 pages

B. STATEMENT OF IFC INVESTMENTS (as of September 30, 1982)

Fiscal Type of Loan Equity Total year Obligor business ---- (US$ million) ----

1971 P.T. Semen Cibinong Cement 10.6 2.5 13.1 1971 P.T. Unitex Textiles 2.5 0.8 3.3 1971 P.T. Primatexco Indonesia Textiles 2.0 0.5 2.5 1971 P.T. Kabel Indonesia Cable 2.8 0.4 3.2 1972 P.T. Daralon Textile Manuf. Corp. Textiles 4.5 1.5 6.0 1973 P.T. Jakarta Int. Hotel Tourism 11.0 - 11.0 1973 P.T. Semen Cibinong Cement 5.4 0.7 6.1 1974 P.T. Primatexco Indonesia Textiles 2.0 0.3 2.3 1974 P.T. Monsanto Pan Electronics 0.9 - 0.9 1974 P.T. PDFCI Devel. Fin. Co. - 0.5 0.5 1974 P.T. Kamaltex Textiles 2.4 0.6 3.0 1976 P.T. Semen Cibinong Cement 5.0 1.5 6.5 1976 P.T. Semen Cibinong Cement - 1.1 1.1 1977 P.T. Daralon Textile Manuf. Corp. Textiles 0.4 - 0.4 1977 P.T. Kamaltex Textiles 1.3 0.2 1.5 1979 P.T. Daralon Textiles 0.9 - 0.9 1980 P.T. Papan Sejahtera Capital Market 4.0 1.2 5.2 1980 P.T. Indo American Industries Glass Dinnerware 11.1 0.9 12.0 1980 P.T. Semen Andalas Cement and Indonesia Construction Material 48.0 5.0 53.0 1982 P.T. Saseka Gelora Leasing Capital Market 4.0 0.3 4.3

Total gross commitments 118.8 18.0 136.8

Less: sold or repaid and cancelled 78.6 5.7 84.3

Total held by IFC 40.2 12.3 52.5

Undisbursed (including participant's portion) 30.82 0.3 31.12 - 28 - PageANNEX 5 IIof 29 pages

C. STATUS OF PROJECTS IN EXECUTION /1 As of September 30, 1982

These notes are arranged by sectors in the following order:

Page No. Agriculture Irrigation (514, 1100, 1268, 1434, 1435, 1578, 6-10 1579, 1645, 1691, 1811, 995, 1958, 2118 and 2119) Other Agricultural Projects (400, 1318, 1707/919, 1499, 10-14 1604, 1751, 1835, 984, 1898 and 2007, 2126) Agriculture Support Services (1179, 1267, 996, 1840/1014 and 2066) 14-16 Rural Development (946) 16

Agro-Business and Credit (785, 827 and 2011) 16-17

Education (869, 1237, 1433, 1486, 1692, 1904, 2101 and 2102) 17-20

Energy (1365, 1513, 1708, 1872, 1950, 2056, 2079 and 2153) 20-22

Industrial Development and Finance Industrial Estates (428) 22 Development Finance Companies (1703) 22-23

Population and Nutrition Population (1472 and 1869) 23-24 Nutrition (1373) 24

Technical Assistance (898 and 1197) 24-25

Transportation Fertilizer Distribution (2120) 25 Highways (1236, 1696, 2049 and 2083) 25-26 Marine Transport (1250) 26-27 Ports (1337) 27

Tourism (479) 27

Urban Development (1336, 1653 and 1972) 28-29

Water Supply (1709) 29

/1 These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. - 29 - ANNEX II Page 6 of 29 pages

C. PROJECTS IN EXECUTION

AGRICULTURE

Irrigation

Credit No. 514 Jatiluhur Irrigation Extension: $30 Million Credit of October 3, 1974; Effective Date: January 10, 1975; Closing Date: December 31, 1982

Initial organizational difficulties, extensive changes in the design of project works and delays in awarding civil works contracts are expected to substantially delay project completion by four years. All major contracts for civil works have been awarded, and the last of these is expected to be completed by mid-1984. The total project cost is currently estimated to be about 90% over the appraisal estimate, mostly because of delays. Dis- bursements at the end of June 1982 were about 94% of appraisal estimate.

Loan No. 1100 Sixth Irrigation: $65 Million Loan of April 10, 1975; Effective Date: June 20, 1975; Closing Date: June 30, 1984

The project is currently expected to be completed by March 1985, about four years behind the original completion date. This is mainly due to a delay of more than one year in the completion of bidding documents, followed by a delay of about two years due to delayed land acquisition, delayed payments to contractors and the effects of the 1978 Rupiah devaluation. Another year's delay has been added lately by the postponement of drainage works in both Rentang and Cirebon subprojects due to budget constraints. Disbursements at the end of June 1982 were about 88% of the appraisal estimate. Because of the continuing delays the Closing Date has been postponed by two years.

Loan No. 1268 Seventh Irrigation: $33 Million Loan of June 4, 1976; Effective Date: September 21, 1976; Closing Date: December 31, 1983

The main components of the project are tertiary development on an area of 100,000 ha served by irrigation systems rehabilitated under previous projects and the construction of 6,000 ha of a new irrigation system in the Sadang area of South Sulawesi. The construction of tertiaries has progressed well and gained such a momentum that the scope of work was increased to 115,000 ha. About 111,000 ha have been completed and the balance was expected to be completed by March 1982. The construction of North Sadang has suffered a delay of about four years due to design revisions and late award of contracts. Completion of the project is expected by March 1984. Disbursements at the end of June 1982 were about 75% of appraisal estimate. - 30- ANNEX II Page 7 of 29 pages

Loan No. 1434 Eiglhth Irrigation: $63 Million Loan of June 6, 1977; Effective Date: July 7, 1977; Closing Date: March 31, 1983

The main components of the project are rehabilitation of the Madiun Irrigation System (Stage I) serving an area of about 75,000 ha, including 30,000 ha of tertiary development, a pilot ground water scheme for 2,800 ha in the Madiun-Solo area and the improvement of flood control, drainage and road networks on 5,700 ha of coastal land in Ciujung. Only the drainage works and road improvement in both the Ciujung and Madiun subprojects are expected to be delayed due to budget constraints and lack of experienced staffing. GOI has mobilized additional engineers and foreign consultants for construction supervision at Ciujung and has tapped additional sources of funds to keep the Madiun works on schedule. Disbursements at the end of June 1982 were 40. of the appraisal estimate.

Loan No. 1435 Ninth Irrigation: $35 Million Loan of June 6, 1977; Effective Date: July 7, 1977; Closing Date: December 31, 1984.

The project includes (a) rehabilitation of 8,000 ha of irrigation system, drainage rehabilitation on 19,000 ha of the Sedeku area in Central Java; (b) new irrigation pumping system on 3,280 ha at Sungai Dareh-Sitiung (Stage I) in West Samatra for transmigrants; and (c) feasibility studies of ten small to medium irrigation projects and of the Sungai Dareh-Sitiung (Stage II), with detailed designs. Delay in completion of the Sedeku irrigation drainage rehabilitation by about three years continues, compared to appraisal estimate. The Sungai Dareh-Sitiung (Stage I) construction has progressed well, with pumps commissioned and trial runs made. The main and secondary canals are completed, the tertiary network is 80% completed, but land development is lagging. Feasibility studies of the ten small to medium irrigation systems have been completed. The Situing Stage II system studies and designs are completed, and construction was financed under Ln. 2118-IND (Irrigation XVI). Disbursements at the end of June 1982 were about 78% of appraisal estimate.

Loan No. 1578 Tenth Irrigation: $140 Million Loan of June 6, 1978; Effective Date: August 16, 1978; Closing Date: December 31, 1984.

The project includes: (a) rehabilitation and improvements of about 34,700 ha of Kali Progo irrigation system; (b) improvements of about 19,900 ha of Way Seputih; (c) improvements and expansion of about 63,100 ha of Way Sekampung irrigation projects; (d) studies and detailed designs of two dams associated with (b) and (c) above; (e) studies of Dumnogaand Gumbasa irrigation projects; and (f) consulting services for the above and also studies of two dams in the Kali Progo project area and extension of irrigation to Bekri, West Rumbia, Way Kandis and Way Ketibung in Lampung Province. Due to initial delays in survey and mapping of the irrigation service areas, delay in decid- ing canal capacities till completion of the dam studies and staff shortage during the years 1979 and 1980, the implem entation of Way Seputih and Way Sekampung components are behind schedule by abouIt two years. However, the field surveys and the dam studies have now been completed and the staffing situation has improved. The construction tempo and standard of construction in the Kali Progo area has also improved. The GOI has decided to delay - 31 - ANNEX II Page 8 of 29 pages construction of the Batutegi Dam to serve the Way Sekamping system since other dams on Java appear of higher priority. Downstream works will therefore be restricted until dam construction starts to ensure an adequate rate of return. The Dumoga irrigation project studies were completed and construction financed in Irrigation XV (Credit 995-IND). Dilsbursements at the end of June 1982 were 35% appraisal estimate.

Loan No. 1579 Eleventh Irrigation: $31 Million Loan of June 6, 1978; Effective Date: August 16, 1978; Closing Date: December 31, 1983.

The Cipamingkis irrigation subproject, to serve an area of about 7,600 ha is progressing well, the headworks with intake structure were completed by end 1981. The main and secondary canals to serve 3,820 ha are progressing on schedule, but there is a setback of nine months in the rest. A delay of 9-12 months is expected in assigning consultants for tertiary design, with a consequent delay in tertiary construction. The project is currently estimated to be completed by mid 1984, a delay of 18 months compared to appraisal estimate. The hydrological measurement program is expected to be completed by March 1984, with a delay of about 2 1/2 years. It is expected that there will be $4 million savings which will be used to finance the tertiaries for the Jatiluhur Irrigation Extension Project (Credit 514-IND) which did not cater for the higher intensity of canals now adopted in all systems. Disbursements at the end of June 1982 were about 53% of appraisal estimate.

Loan No. 1645 Twelfth Irrigation: $77 Million Loan of December 29, 1978. Effective Date: May 10, 1979; Closing Date: March 31, 1984.

The project includes: tertiary development on about 186,000 ha of the Jatiluhur Irrigation System, W. Java; drainage improvement in the Cisedane irrigation area including upgrading of roads in W. Java; and studies of drainage and flood control in Pemali-Comal and Sadang irrigation areas; tidal and swamp lands development for about 350,000 ha in the Lalang and Mesuji areas of S. Sumatra, and the Sebangau area in Kalimantan; and detailed designs for reclamation of about 110,000 ha of swamp land in Karang Agung of S. Sumatra. The area of tertiary development has been increased to 205,800 ha. All the civil works contracts of Cisedane drainage and roads improvement are awarded, currently estimated to be completed by March 1985; a delay of over two years over appraisal estimate. Studies are mostly completed; the remaining are expected to be finalized by 1982. Disbursements at the end of June 1982 were about 40% of the appraisal estimate.

Loan No. 1691 Lower Cimanuk Basin Flood Control: $50 Million Loan of May 7, 1979; Effective Date: October 16, 1979; Closing Date: March 31, 1984.

The main components of the project are flood protection levees, bank stabilization and river training works on the lower Cimanuk river, widening of the Rambatan Channel and construction of a hydraulic control - 32 - ANNEX II Page 9 of 29 pages

structure at Bangkir, the Cimanuk river estuary study and the flood control operating and flood forecasting study. Good progress has been made on the civil works and various studies. Civil works are expected to be completed by mid-1984. The latest supervision mission recommended that the implementing agency should consider using the savings for procurement of additional operation and maintenance equipment such as dredgers, dozers, draglines, dump trucks and loaders. The equipment will be useful for emergency repairs of other rivers such as Cisanggarung which causes damage during the wet season. The latest project cost estimates indicate that $6-8 million loan funds will remain unused by the completion of the project. The list of equipment to be procured using the savings under the Loan is being reviewed. Disbursements at the end of June 1982 were about 59% of appraisal estimate.

Loans No. 1811 Fourteenth Irrigation: $116 Million Loan of April 3, 1980; Effective Date: July 3, 1980; Closing Date: January 31, 1986

The main components of the project are construction and rehabilitation of drainage and flood protection works on the Serang River to reduce flooding of some 61,000 ha of farm land, rehabilitation of '-heMadiun Irrigation System (Stage II) serving about a 65,000 ha area and tertiary development serving a 120,000 ha area in the Pemali-Comal and Pekalen Sampean subprojects. The project contracts for flood mitigation works for the Serang River have been awarded after one year's delay. Works in the Madiun area and the tertiary development are progressing well ahead of schedule. Dis-- bursements at the end of June 1982 were about 72% of appraisal estimate.

Credit No. 995 Fifteenth Irrigation: $45 Million Credit of April 3, 1980 Effective Date: July 3, 1980; Closing Date: January 31, 1985

The project includes (a) completion of Kosinggolan Irrigation System on about 5,000 ha and construction of the new Toraut Irrigation system for 6,600 ha; catchment protection and nature reserve on an area of about 100,000 ha; institutional support through consultancy services and training; and studies and investigations of four irrigation systems. Construction of the Toraut headworks and the first 2 Km of the main canal which commenced in January 1981 were greatly delayed but the contractor has now agreed to work to a revised program to be completed by May/June 1983. Award of two ICB contracts is behind appraisal schedule by 15-18 months. This subproject is currently estimated to be completed by June '1985compared to March 1984 in the appraisal estimate. GOI has commenced implementing the "Dumoga-Bone National Park" master plan covering an area of about 270,000 ha. The Bank will review progress in late 1982 before finally agreeing with the GOI proposal to finance US$1.1 million from the credit for the expanded National Park as against US$0.7 million provided for the Nature Reserve. Four studies included in the project should be completed by early 1983, present progress is about 50%. Institutional support program willl continue up to June 1984. Disbursements at the end of June 1982 were about 60% of appraisal estimate. ANNEX II

- 33 - Page 10 of 29 pages

Loan No. 1958 Swamp Reclamation: $22 Million Loan of March 31, 1981; Effective Date: July 9, 1981; Closing Date: December 31, 1986

The project assists GOI's effort to reclaim and settle swamps by implementing a 9,000 ha swamp reclamation and settlement project at Karang Agung, South Sumatra. In addition to physical works, the project comprises the preparation of future swamp investments, an ecological impact study, an investigation of groundwater for drinking, and project monitoring. The major works contract for construction of canals was awarded end-1981 and consultants for construction supervision were assigned in March 1982. Consultants for studies are being recruited. The project completion is likely to be delayed due to the eight months' delay in the start of construction. Disbursements at the end of June 1982 were about 75% of appraisal estimate.

Loan No. 2118 Sixteenth Irrigation: $37 Million Loan of April 5, 1982; Effective Date: August 9, 1982; Closing Date: December 31, 1987.

The project will complete construction of the Sitiung Irrigation System (Stage II) in Sumatra to serve about 7,600 ha of transmigrant and local farmer lands; improvement of management systems of the Directorate General of Water Resources Development (DGWRD); training and support for water users and their associations; expansion of DGWRD's basic hydrological data network; and studies for development of the Cisanggarung River Basin and detailed design of the Jatigede Dam.

Loan No. 2119 Seventeenth Irrigation (East Java Province): $70 Million Loan of April 5, 1982; Effective Date: Not yet effective; Closing Date: December 31, 1988.

This is the first irrigation project to be concentrated in a single province and implemented through a provincial irrigation service. It will rehabilitate existing surface irrigation systems serving about 50,000 ha; develop groundwater irrigation systems to serve about 13,000 ha; upgrade operation and maintenance for about 140,000 ha of irrigation systems already rehabilitated; and strengthen the East Java Provincial Irrigation Service.

Other Agricultural Projects

Credit No. 400 Smallholder and Private Estate Tea: $7.8 Million Credit of June 22, 1973; Effective Date: November 30, 1973; Closing Date: December 31, 1982

The project provides for credit through Bank Rakyat Indonesia (BRI) to improve productivity on 10,000 ha smallholder tea and 3,200 ha private estates (PTPs) tea, rehabilitation of five private estate tea factories, construction of two new factories for smallholder leaf; training of extension staff and tea growers, studies for marketing, diversification and BRI - 34 - ANNEX II Page 11 of 29 pages

management. The project is making a substantial contribution to smallholder tea industry with 8,500 participants against the appraisal estimate of 7,000. Of the five private tea estates participating, two are excellent, two are fair and one is poor. Progress on construction of the PTP XII factory, to process smallholder and estate tea, is satisfactory. Extension and training has helped about 16,000 smallholders. The project still suffers from weak management, loan collection is deteriorating and many scattered borrowers make loan servicing difficult. Disbursement at the end of June 1982 were about 70% of appraisal estimate.

Loan No. 1318 Transmigration and Rural Development: $30 Million Loan of July 21, 1976; Effective Date: March 30, 1977; Closing Date: December 31, 1982

After a slow start which resulted in extension of the Closing Date to December 31, 1982, the project has shown continuous progress since mid-1980 and is expected to be completely disbursed by end-1982. In Baturaja, 4,400 families (98% of target) have been settled and 1,300 shal:Low wells (91% of revised target) have been established. The pasture develop-- ment program is well established in Baturaja and Way Abung and 8,800 cattle (93% of target) have been distributed in both sites. Rubber development is almost completed with only 400 ha (6% of target) to be planted in 1982. Disbursements at the end of June 1982 were about 88% of appraisal estimate.

Loan No. 1707 Transmigration II: $90 Million Loan and $67 Million Credit of (Cr. No. 919) June 1, 1979; Effective Date: October 4, 1979; Closing Date: December 31, 1985

About 800 families have been settled to date and an estimted 3,000 of the proposed 30,000 families will be settled by the end of the next fiscal year. Sufficient land has been mapped in Jambi province for 20,000 families but half of these sites have been excluded from the project because they lie in production forests. No other areas in Jambi province are likely to be suitable for large scale settlement and land has been identified in South Sumatra for 10,000 families. Because of the importance of land identification, about $50 million has been allocated from the Transmigration II project for site selection and evaluation for the GOI program. Delays in settlement and rehabilitation components have led to slow disbursement and cost overruns and much remains to be done to ensure sustainable food crop production. Disbursements at the end of June 1982 were about 1.7% of appraisal estimate. Agencies are better informed about the project than they were previously and are working conscientiously. To circumvent problems of land shortage and increasing implementation de'lays: (a) settlement targets should be reduced to 20,000 families, (b) about one-fourth of project funds should be allocated to mapping and consultancy services; and (c) current disbursement rates should be maintained. To speed implementation, the size of land clearing contracts should be reduced and contracts should be tendered for each site as it is prepared. Recommendations have also been made which 35 ANNEX II Page 12 of 29 pages

would permit action on Singkut rehabilitation and simplify procurement. To improve incomes, actions should be taken to reinforce agricultural services and introduce tree crops into existing and new communities. To accomplish these objectives changes in the loan documents would be necessary.

Loan No. 1499 Nucleus Estate and Smallholders I: $65 Million Loan of November 18, 1977; Effective Date: January 12, 1978; Closing Date: June 30, 1984

The nucleus estates have planted about 60% of the 11,500 ha of rubber to be established for smallholders and will complete about 72% by the end of the current planting season; have constructed about 3,400 settler houses and settled about 1,035 families. In their own estates, the nucleus estates have rehabilitated 18,400 ha of rubber, planted 7,200 ha of rubber, 3,700 ha of coconuts, and 5,600 ha of oil palm, exceeding project targets for rubber planting and rehabilitation. Three rubber factories and one palm oil mill have been constructed. However, as there were start-up delays in some smallholder planting, and some civil works construction will not be completed on schedule, the Closing Date has been extended to June 30, 1984. Disbursements at the end of June 1982 were about 58% of appraisal estimate.

Loan No. 1604 Nucleus Estate and Smallholders II: $65 Million Loan of July 12, 1978; Effective Date: September 13, 1978; Closing Date: December 31, 1983

Progress with rubber and infrastructure development has slowed but construction of settler houses, preparation of food crop areas and the enrollment of settlers are on target. Action has been taken to speed up the lagging operations and the project is expected to be mostly completed by June 1985, except for the rubber replanting component in Jambi Province where farmer response has been poor. Particular efforts are being made to encourage farmer participation but the 4,500 ha replanting target is unlikely to be achieved by that date. The project Closing Date will probably have to be extended to June 30, 1985. Disbursements at the end of June 1982 were about 30% of appraisal estimate.

Loan No. 1751 Nucleus Estate and Smallholders III: $99 Million Loan of August 13, 1979; Effective Date: November 12, 1979; Closing Date: December 31, 1986

All implementing agencies have made good progress. Although some components are slightly behind schedule, the overall project is on or slightly ahead of schedule. About 7,500 ha of rubber have been planted, half of which is for smallholders. About 420 settler houses are occupied and garden lots established. In 1982, one of the estates, PTP I, was upgraded to take over responsibility for completing the Alue Iemerah smallholder component under NES I (1499-IND). Disbursements at the end of June 1982 were about 55% of appraisal estimate. ANNEX II - 36 - Page 13 of 29 pages

Loan No. 1835 Nucleus Estate and Smallholders IV: $42 Million Loan of May 16, 1980: Effective Date: August 11, 1980; Closing Date: December 31, 1986

Smallholder oil palm planting is on schedule and of excellent quality. Village layout, settler house construction, and road development are a little behind schedule due to problems of land availability. However, these problems are being actively addressed by the implementing estate (PTP X) and the Project Coordinating Committee, and project completion is likely by target date. Disbursements at the end of June 1982 were about 66% of appraisal estimate.

Credit No. 984 Smallholder Rubber Development: $45 Million Credit of April 3, 1980; Effective Date: May 23, 1980; Closing Date: March 31, 1986

The project continues to progress satisfactorily, by early 1982 over 9,700 ha rubber or 85% of plan was planted. Delays in road construction are affecting project implementation and supervision, and measures to speed up progress are under review. Training of field staff and smallholders will be kept strictly practical; visual aids are being prepared. Creation of a trainer/coordinator position at provincial level but working at the Project Management Unit level is being considered. The creation of an internal audit unit and timely recruitment of staff to deal with financial matters is urgently required. Four studies, including a feasibility study, for an eventual second project are nearing completion and after review by GOI will be submitted to the Bank for review and comment. There are no major problems with this project, apart from the requirement to strengthen management and the seriously delayed procurement of vehicles. Disbursements at the end of June 1982 were about 101% of appraisal estimate.

Loan No. 1898 Smallholder Coconut Development: $46 Million Loan of Augast 25, 1980; Effective Date: November 25, 1980; Closing Date: June 30, 1986

Although the planting programs of tall and hybrid coconuts under the project seem reasonably on target, the results being achieved are generally not satisfactory. Problems relate to lack of control of project management in Head Office, Provincial Offices (PO) and Coconut Working Centers (CWC) regarding the selection of suitable planting areas and participating smallholders, technical control and supervision of planting and maintenance standards, timely supply of seednuts and of essential inputs, and slow release of project funds, and thus a slow rate of withdrawal application and disbursements. To improve control of field operations some restructur- ing of the project in its scope and management structure is needed, by reducing the project area and reorganizing the PO/CWC management system. GOI agrees in principle with this recommendation and proposes to take necessary action. Disbursements at the end of June 1982 were about 19% of appraisal estimate. - 37 - ANNEX II Page 14 of 29 pages

Loan No. 2007 Nucleus Estate and Smallholder V: $161 Million Loan of June 26, 1981; Effective Date: October 21, 1981; Closing date: June 30, 1988

The project would develop about 53,000 ha of tree crops (rubber, oil palm, coconuts), food crops and house gardens in West Java, West Kalimantan and Bengkulu provinces with public sector estates as implementing agents. The project has made a good start including the nurseries establishment, initial planting for the smallholders in West Java, construction of some roads, estates offices and smallholders' houses. Disbursements at the end of June 1982 were about 115% of appraisal estimate.

Loan No. 2126 Nucleus Estate and Smallholder VI: $68.1 Million Loan of April 23, 1982; Effective Date: July 23, 1982; Closing Date: June 30, 1988

This loan was declared effective on July 23, 1982. The project will assist the GOI's nucleus estates and smallholders development program by establishing 28,200 ha of tree crops (rubber and coconuts), food crops and house gardens in West Java, Bengkulu and Maluku provinces with public sector estates as implementing agents.

Agriculture Support Services

Loan No. 1179 Agricultural Research and Extension I: $21.5 Million Loan of December 19, 1975; Effective Date: February 23, 1976; Closing Date: December 31, 1982

The project will close on December 31, 1982. Civil works in Sungai Putih and Sembawa (rubber) and Sukamandi (rice and palawija) were behind schedule and are now almost complete. Most of of the field and workshop equipment, furniture and vehicles have been received and contracts for laboratory equipment and chemicals for Margahayu (highland vegetables) and for Sungai Putih and Sembawa have been awarded. Ten agricultural information centers (AICs) under the Agency for Agricultural Education, Training and Extension have been constructed, furnished and equipped. Two additional centers at Aceh and Ambon are under construction and will have to be financed from another project after closing of this project. Extension materials are being produced and distributed from the completed AICs. Loan proceeds are expected to be almost fully disbursed at the closing of the project.

Loan No. 1267 National Food Crops Extension; $22 Million Loan of June 4, 1976; Effective Date: September 21, 1976; Closing Date: December 31, 1982

The targetted programs for construction, equipment procurement and training have been achieved. Some additional activities in these fields which are included in the follow-up project, the Second National Agricultural Extension Project (Cr. 996-IND) are currently being undertaken. These are expected to be completed within the revised closing date for the Loan of December 31, 1982. Overall the project continues to make satisfactory progress. - 38 ANNEX II Page 15 of 29 pages

Credit No. 996 Second National Agricultural Extension: S42 Million Credit of April 3, 1980; Effective Date: July 3, 1980; Closing Date: March 31, 1986

Substantial progess has been made with the construction and rehabilitation program for the Rural Extension Centers and the Training and Visits System is progressively gaining more strength. Contact farmers and their associated farmers groups are responding to the two-weekly meetings with the field extension workers. Staff shortages in the field extension workers and extension subject matter specialists cadres and shortages of motor cycles for field staff are continuing problems; also, the strengthening of training in extension packages in nonrice crops needs early actions. The project unit is aware of these deficiencies and steps are expected to be taken to address the problems; although the staff shortfall may continue into the next fiscal year. A unified extension system embracing other subsectors has not yet begun to function although keen interest in this approach is evident in some Provinces and could form the basis for developing a workable system. Overall, the project is making satisfactory progress.

Loan No. 1840 National Agricultural Research: $35 Million Loan and $30 (Cr. No. 1014) Million Credit of May 16, 1980; Effective Date: July 16, 1980; Closing Date: June 30, 1990

The project is the second phase in the strengthening of the overall institutional framework of the Agency for Agricultural Research and Develop- ment (AARD) for agricultural research in fruits, lowland vegetables, livestock, fisheries, forestry and estate crops other than rubber and industrial crops. Directors for the Central Research Institutes and for Research Institutes and Centers already approved by the Minister of Agriculture have been appointed. Civil works for the six locations planned for 1980/81 are going ahead and contracts for most of the civil works planned for 1981/82 have been awarded. More than fifty candidates for long-term local fellowships have been selected. A contract for consultancy services has been executed between AARD and the International Agricultural Development service.

Loan No. 2066 Second Seeds : $15 Million Loan of January 15, 1982; Effective Date: March 11, 1982; Closing Date: June 30, 1989

This project provides for: establishment of 18 medium Seed Processing Centers (SPCs) for the National Seed Corporation, P. T. Pertani and Cooperatives; six small SPCs for Cooperatives; additional equipment and facilities for five Food Crops Research Institutes (FCRIs), Provincial Seed Farms and Seed Control and Certification Services; establishment of a diploma course on seed technology at the Bogor Agricultural Institute; and in-service training, technical assistance and studies for strengthening the institutions operating in the seed subsector. Locations for the five medium SPCs to be constructed in the first year have been decided on and land ANNEX II - - Page 16 of 29 pages

acquisition is in progress. Tender documents for the SPCs are being finalized for issue of tender shortly. Long-term consultants are also expected to be appointed shortly. The first supervision mission has been recently fielded.

Rural Development

Credit No. 946 Yogyakarta Rural Development: $12 Million Credit of August 13, 1979; Effective Date: December 5, 1979; Closing Date: March 31, 1987

The improving trend in overall project performance discerned during the October 1981 supervision has continued. Activity targets are now being substantially met with the exception of the Small Scale Industries (SSI) and Village Health Components. Firm recommendations have been given to improve performance of these two components which should yield early, positive results. If, however, results are not forthcoming, firm steps should be taken either to terminate them or simplify their objectives and scope. Project performance rating has been upgraded to 2.2.

AGRO-BUSINESS AND CREDIT

Credit No. 785 Small Enterprise Development: $40 Million Credit of April 7, 1978; Effective Date: August 17, 1978; Closing Date: December 31, 1984

This project provides technical assistance to strengthen GOI's small credit programs, KIK/KMKP, and credit assistance to small-scale enterprises (SSEs) in West Sumatra and East and Central Java which account for about a third of countrywide KIK/KMKP loan approvals. Satisfactory experience with this first Bank-assisted pilot project has led to a nationwide SSE development project which is supported by the Second Small Enterprise Development Project (Loan 2011-IND). The credit component is fully disbursed.

Credit No. 827 Rural Credit: $30 Million Credit of June 23, 1978; Effective Date: November 3, 1978; Closing Date: March 31, 1985

This project provides long-term credit to about 40,000 smallholders, primarily for fisheries, perennial crops and livestock, and technical assistance to Bank Rakyat Indonesia for program development, training in term lending, credit procedures and accounting and management information systems. Due primarily to delays in obtaining consultancy services, the project is about nine months behind schedule. Following extension of the project to cover additional provinces and commodities, it is rapidly catching up. ANNEX II Page 17 of 29 pages

Loan No. 2011 Second Small Enterprise Development: $106 Million Loan of June 26, 1981; Effective Date: October 16, 1981; Closing Date: December 31,1984

From the three regions covered under SEDP I the project has expanded to cover all 27 regions in Indonesia where the Small Investment (KIK)/Small Permanent Working Capital Credit (KMKP) program is being implemented. Small credit lending financed under the project continues to expand rapidly. Annual loan approvals of over $1 billion in 1981 reached about 12-14% of known small-scale enterprises throughout the country. In addition to technical assistance designed to strengthen banks' small credit operations, the project also provides for industrial extension services under the Directorate General of Small-Scale Industries (Ministry of Industry). The loan became effective on October 16, 1981 and disbursements are on schedule.

EDUCATION

Credit No. 869 Polytechnic: $49 Million Credit of December 29, 1978; Effective Date: May 11, 1979; Closing Date: June 30, 1985

The project objectives are to establish a new system for training engineering technicians, improve the quality of accountancy training and practices, and assist in strengthening education planning and management. The project would establish a Technician Education Development Center (TEDC), six polytechnics and four accountancy development centers and include technical assistance and associated studies. The project is making good progress and implementation is on schedule without a cost overrun. The TEDC building has been completed and construction of the six polytechnics is near completion. Equipment contracts for the TEDC and the six polytechnics have been awarded. The first batch of students was enrolled in the six polytechnics in 1982. The expert services and fellowship program are progressing satisfactorily. The accountancy component after initial delays, is now making good progress. Three study contracts have been awarded and two are being awarded. Disbursements are on schedule.

Loan No. 1237 Fourth Education: $37 Million Loan of April 15, 1976; Effective Date: June 17, 1976; Closing Date: December 31, 1983

The loan is helping to finance physical facilities and related technical assistance for: (a) two faculties of technology at existing teacher training colleges and four new centralized workshops for technical training for the Ministry of Education and Culture (MEC); (b) 17 new vocational training centers, an existing instructor training center and 25 mobile training units for the Ministry of Manpower (MOM); and (c) new premises for the National Institute of Administration (LAN), the country's principal civil service training institution. The completed MEC subproject is problem-free and facilities are operating satisfactorily. The MOM subproject has made some progress but is about two and a half years behind ANNEX II - 41 - Page 18 of 29 pages

schedule with a 16% cost overrun. Problems faced include poor equipment procurement management, shortage of funds, low utilization of completed facilities, poor quality of training (less than 50% of trainees placed in employment), and partial compliance on covenants. The LAN component has made no progress for three years and is now about three and a half years behind schedule, mainly due to the default of the civil works contractor for price escalation disputes with GOI. After retendering, a new contract has been approved recently and construction of the remaining unfinished portion of the building is expected to be completed in late 1983. Furniture and equipment procurement has not commenced. It is unlikely that this component will be completed by the present Closing Date. The GOI has been informed of the overall status and urged to take remedial actions. A second extension of the Closing Date to December 31, 1983, has been approved. Disbursements at the end of June 1982 were about 81% of appraisal estimate.

Loan No. 1433 Teacher Training: $19 Million Loan of June 6, 1977; Effective Date: July 7, 1977; Closing Date: June 30, 1983

The project is now progressing satisfactorily. Approximately 88% of the civil works program has been completed. Phase I is complete and 90% of the construction in Phase II is finished. Overall, 50% of furniture and equipment has been procured and delivered. The first cycle of teacher training has been completed and the second cycle is in process with all training expected to be concluded by October 1982. Disbursements at the end of June 1982 were about 52% of appraisal estimate due principally to lags in disbursement for civil works and delays in procurement of books, equipment, and furniture. It is expected that disbursements will accelerate during the coming months. Despite delays and the current low disbursement level, it is expected that the project will be completed on time.

Loan No. 1486 Non-Formal Education: $15 Million Loan of September 14, 1977; Effective Date: November 4, 1977; Closing Date: June 30, 1983

The project aims at strengthening the Department of Education's nonformal education programs in seven provinces. Financing would cover: civil works to renovate two existing and establish four new provincial centers, instructional equipment and vehicles, in-service training, materials development, a basic learning fund, and related technical assistance. Construction of the six Balai PENMAS (directorates for out-of-school education) centers, has been completed. All furniture and equipment are already on site. About 90% of the staff training program is meeting appraisal targets and production and distribution of pretested learning materials is accelerating. The technical assistance program is on schedule; local staff have replaced foreign consultants. Disbursements at the end of June 1982 were about 57% of appraisal estimate and are expected to continue to accelerate in the next few months. -42- ANNEX II Page 19 of 29 pages

Loan No. 1692 Second Agricultural Training: $42 Million Loan of May 7, 1979; Effective Date: July 31, 1979; Closing Date: June 30, 1985

The project constitutes the second phase of GOI's long-term strategy to improve the quality and supply of middle level agricultural manpower. Good progress continues to be made. Disbursements at the end of June 1982 were 540% of the appraisal estimate. The FAO technical assistance team is now in place and fellowship utilization remains up to schedule. Implementation of a tracer study of agricultural secondary school graduates was planned to begin in June/July 1982.

Loan No. 1904 University Development: $45 Million Loan of November 13, 1980; Effective Date: January 22, 1981; Closing Date: December 31, 1986

The project is the first phase of a long-term university development program. Its main objectives are to increase the output of high level manpower and improve the quality of university education in the fields of engineering, science, agriculture, and economics (including business administration and accountancy), as well as strengthen the management of the overall university system. The additional land required for the University of Gadjah Mada and the new site for the University of Andalas have been acquired. The campus master plan for the University of Indonesia has been completed, and the Universities of Gadjah Mada and Andalas are expected to be completed by early 1983. The initiation of technical assistance provisions are about eighteen months behind schedule. A contract is being negotiated with an external agency to administer the program of fellowships and visiting professors. Two contracts were signed with the British Council for the training of university administrators and textbook editors. Work is in progress to establish a Management Information System and a Monitoring Evaluation System in the Directorate General of Higher Education and in each project university. There have been no indications to suggest that project costs will be other than estimated at appraisal. Disbursements at the end of June 1982 were about 27% of appraisal estimate.

Loan No. 2101 Second Teacher Training: $80 Million Loan of April 5, 1982; Effective Date: May 24, 1982; Closing Date: June 30, 1988

The project seeks to improve the skills, competence and effectiveness of the education staff involved in primary and secondary education and educational administration.

Loan No. 2102 Second Textbook: $25 Million Loan of April 5, 1982; Effective Date: June 14, 1982; Closing Date: June 30, 1987

The project will support the establishment of the Integrated Text- book Project, a permanent organization to plan and manage textbook development - 43- ANNEX II Page 20 of 29 pages

activities; a Center for Curriculum Development, which would develop improved curricula for primary and secondary schools, and an improved national distribution system for all textbooks for primary and secondary schools.

ENERGY

Loan No. 1365 Sixth Power: $116 Million Loan of February 4, 1977; Effective Date: June 6, 1977; Closing Date: June 30, 1983

Construction work on the project has reached its final stage. The 200 MW Unit No. 4 was synchronized on November 26, 1981 and has been in commercial operation since March 1982. Unit No. 5 went into commercial operation in August 1982. The associated studies have been completed.

Loan No. 1513 Seventh Power: $109 Million Loan of February 3, 1978 ($15 million cancelled November 30, 1980); Effective Date: June 30, 1978; Closing Date: December 31, 1983

All contracts were awarded at highly competitive costs with a substantial reduction in foreign costs and, therefore, $15 million of the original loan of $109 million has been cancelled. The Bank also agreed to the inclusion of the following additional studies in the scope of the project: (a) Sunda Strait submarine cable feasibility; (b) optimization of location of future thermal plants: (c) power sector management information system design. Construction work at the site has been delayed by about 21 months. Commercial operation of the 200 MW generating unit is expected early in 1984. Construc- tion of the associated transmission lines is progressing satisfactorily. The feasibility study of the East Java coal-fired thermal power station site has progressed to the point of selection of a suitable site. Contracts for the studies (a), (b) and (c) mentioned above have been signed, and work is progressing satisfactorily. Disbursements at the end of June, 1982 were about 60% of appraisal estimate.

Loan No. 1708 Eighth Power: $175 Million Loan of June 1, 1979; Effective Date: November 5, 1979; Closing Date: December 31, 1984

The project encountered a number of problems and slipped nearly eleven months behind schedule by September 1981. However, progress since then has improved and the estimated delay has not increased. The main causes of the delay of one year were: (a) late finalization of contracts, and (b) tardy performance of the local contractor for piling work. Most contract awards have now been made and the commissioning date for Unit No. 1 at Suralaya is expected to be October 1984. Disbursements, though much lower than the appraisal estimates, are in line with the revised projections prepared in July 1981. The project cost is expected to remain within the appraisal estimate. ANNEX II - 44 - Page 21 of 29 pages

Loan No. 1872 Ninth Power: $253 Million Loan of June 13, 1980; Effective Date: October 24, 1980; Closing Date: September 30, 1985

This project is experiencing delays. However, the commissioning date of the second unit of Suralaya is now expected to be June 1985, i.e. six months behind schedule. The EHV project is delayed by almost one year due to delay in finalizing contract awards. All major contracts are expected to be finalized. Progress of land acquisition for the substation and the transmission lines is satisfactory. Disbursement at the end of June were about 24% of appraisal estimates.

Loan No. 1950 Tenth Power: $250 Million Loan of March 6, 1981; Effective Date: April 23,- 1981; Closing Date: June 30, 1987

All major contracts for construction and installation of generating equipment required for the Saguling hydroelectric project have been placed with an estimated saving in total project costs of about $99 million. Con- struction work started at the main dam site in August 1981, and encountered problems in regard to timely completion of diversion tunnels. River diversion planned for end-May 1982 was not achieved. However, steps have been taken to divert the river in December 1982 and so modify the later construction program as to ensure that original dam construction targets are met. Other project subcomponents are progressing with 3-6 months delays, some of which are expected to be recovered. No cost overruns are expected. Disbursements at the end of June 1982 were about 42% of appraisal estimate.

Loan No. 2056 Eleventh Power: $170 Million Loan of November 16, 1981; Effective Date: April 15, 1982; Closing Date: June 30, 1986

Implementation of the project is proceeding on schedule. Contracts worth about $50 million have already been evaluated and approved by the Bank. Contracts valued at $100 million have been evaluated by PLN and are presently under review by GOI. PLN is planning to issue, in December 1982, another invitation to bid for the balance of the distribution equipment estimated at $20 million.

Loan No. 2079 Bukit Asam Coal Mining Development and Transportation: $185 Million Loan of January 22, 1982; Effective Date: May 25, 1982; Closing Date: September 30, 1987

Project implementation has commenced. Thus far no delays have occurred which would affect the project completion date. The consultants are now fully mobilized. Soil investigation and geological work is ongoing at the mine site. The bids for the main mining equipment have been received. The turnkey contract for the Tarahan terminal were signed and procurement of the ship is in progress. During the initial startup moderate problems have been noted in respect to project management and concerns have arisen with ANNEX II - 45 - Page 22 of 29 pages

respect to the procedure for procurement of packages not financed by the Bank. These matters received close attention from the first supervision mission and they will remain a focus of subsequent supervision missions.

Loan No. 2153 Coal Exploration Engineering: $25 Million Loan of June 14, 1982; Effective Date: Not Yet Effective; Closing Date: June 30, 1987

The project will evaluate coal reserves and assess the viability of specific coal deposits in South Sumatra and other promising areas in Indonesia. The project will be aimed at providing GOI and its agencies with a coal reserve inventory of its major coal-bearing areas and feasibility/ prefeasibility studies of attractive deposits, thus enabling it to establish investment priorities and define policies for its short, medium and long-term strategy for coal production and coal use.

INDUSTRIAL DEVELOPMENT AND FINANCE

Industrial Estates

Credit No. 428 Pulo Cadung Industrial Estate: $16.5 Million Credit of September 14, 1973; Effective Date: November 13, 1973; Closing Date: December 31, 1982

The Credit was for the development of an industrial estate at the eastern border of Jakarta. Land acquisition difficulties have persisted since project inception and have eventually resulted in a substantial project delay. Consequently, disbursement of the Credit has been slow, and the Closing Date of the Credit has been extended to December 31, 1982 to enable the remaining funds to be used for the development of an export processing zone and related studies. As of September 15, 1982, a total of $8.9 million has been disbursed. Full disbursement of the Credit is expected by the new closing date.

Development Finance Companies

Loan No. 1703 Fourth BAPINDO: $50 Million Loan of June 1, 1979; Effective Date: September 25, 1979; Closing Date: September 30, 1983

BAPINDO continues to make significant progress in both operations and institutional developments: its operations in terms of new loan and equity investment approvals more than doubled compared to 1979; its financial position and performance recorded a marked improvement; and the portfolio quality showed signs of reduced loan arrears in relation to the portfolio. Moreover, BAPINDO continued to make progress in implementing the agreed Action Program of 1977 and other programs for further strengthening its ANNEX II - 46 - Page 23 of 29 pages

organization and increasing its project promotion activities as agreed during the last loan negotiations in April 1979. BAPINDO put into effect on April 1, 1981 a General Improvement Program involving a number of organizational reforms and staff training and deployment. This was done in order to enable BAPINDO to play a larger role in promoting the country's industrial development as well as increasing its operational capabilities. Commitments and disbursements under the loan, which were slow at the beginning have accelerated during the past year and the loan may be disbursed on schedule.

POPULATION AND NUTRITION

Population

Loan No. 1472 Second Population: $24.5 Million Loan of July 6, 1977; Effective Date: August 4, 1977; Closing Date: April 30, 1983

All civil works are completed and the buildings are occupied and operational. The mobile service units provided under the project are making a significant contribution to the recruitment of contraceptive acceptors. Training and population education are scheduled to be completed by the end of 1982. The research components -- the contraceptive raw materials study and the community incentive scheme -- will not be completed before the loan closing date and an extension is likely to be requested by the Government. A loan saving of $7.0 million has been reallocated for the purchase of equipment in support of project activities and procurement is expected to be completed by December 1982. A further savings of $3.3 million is anticipated and the Government intends to request Bank approval for reallocation. Only about $11.2 million, or 48%, has been disbursed out of the loan. A sizeable proportion of the balance will be disbursed by the Closing Date, but not the full loan amount.

Loan No. 1869 Third Population: $35 Million Loan of June 13, 1980; Effective Date: September 10, 1980; Closing Date: March 31, 1985

Progress on the health components of this project, particularly training, has been very good. Training is ahead of the appraisal schedule and the construction of health center annexes is underway. Population components have, however, made less than satisfactory progress. While the procurement of vehicles and audio-visual equipment for mobile information units is in process, the implementation of civil works has been delayed considerably. As a result of recent GOIs efforts, this component is beginning to make some progress. A sizeable number of contracts are expected to be awarded by December 1982 and construction should start in early 1983. Population education has also been delayed pending decisions on the recommendations of an evaluation which was completed in July; a report on this was submitted to the Government in August. A detailed program for ANNEX II - 47 Page 24 of 29 pages

training teachers was also required before funds could be released. A recent Bank mission has reveiwed these issues with the concerned agencies and it is expected that implementation will start soon. Because of delays in physical implementation, disbursement is lagging behind appraisal estimates.

Nutrition

Loan No. 1373 Nutrition Development: $13 Million Loan of March 14, 1977; Effective Date: March 31, 1977; Closing Date: March 31, 1983

The pace of project implementation has increased considerably, with the construction of the laboratory at the Nutrition Academy now completed and the construction of the Nutrition Training Center currently underway and is expected to be completed by end of 1982. Contracts for unprocured equipment have been awarded and delivery is expected to be completed in early 1983. More than 80% of project fellowships and over 60% of consultancy months have either been utilized or committed. The project was evaluated by an independent team in July/August, the findings of which are quite positive. Bank staff have reviewed the findings with Government and made pertinent observations. Physical progress during the past twelve months has been faster than ever before. This rapid progress is reflected in a sharp increase in the level of cumulative disbursement from $4.3 million as of August 31, 1981 to $8.3 million by August 31, 1982. A further saving of $800,000 has been reallocated from the category vehicles and equipment to consultants services, fellowships and salaries of local experts for the staff of the Project Director. The project is expected to be completed by December 1982 and no further extension in closing date date will be required.

TECHNICAL ASSISTANCE

Credit No. 898 Fifth Technical Assistance: $10 Million Credit of May 7, 1979; Effective Date: September 5, 1979; Closing Date: March 31, 1984

Progress under this project is satisfactory.

Loan No. 1197 National Resource Survey and Mapping: $13 Million Loan of February 5, 1976; Effective Date: April 2, 1976; Closing Date: December 31, 1983

The National Coordinating Agency for Surveys and Mapping (BAKOSURTANAL) complex at Cibinong is completed, and most of the cartographic photographic processing, including color photo processing equipment and printing equipment required to produce maps, are installed. Computer equipment for resource analysis including a topographic data bank and flatbed ANNEX II - 48 - Page 25 of 29 pages

plotter has been installed. Various resource evaluation activities have been undertaken using these facilities. Recruitment and training of new staff, particularly at junior and middle level has recently been accelerated. The new photography operation financed under the parallel Canadian Project was delayed as a result of which the Bank agreed to extend the Closing Date until December 31, 1983. The photography operation started in July 1981 and is expected to be completed by the new Closing Date.

TRANSPORTATION

Fertilizer Distribution

Loan No. 2120 National Fertilizer Distribution: $66 Million Loan of April 5, 1982; Effective Date: September 27, 1982; Closing Date: June 30, 1986

This project will increase agricultural production in Indonesia by substantially expanding the capacity to distribute fertilizer to farmers. Funds are also provided for preparation of future maritime transport projects, including master plans and detailed engineering for several ports.

Highways

Loan No. 1236 Fourth Highway: $130 Million Loan of April 15, 1976; Effective Date: August 13, 1976; Closing Date: December 31, 1982

The project although now substantially completed has been under implementation for nearly six years. Because of slow execution, the Closing Date was postponed by two years to December 31, 1982. The only component still ongoing is the road betterment program and the related consultancies for works supervision. Other consultancies have been completed satisfactorily, sometimes with substantial delays. Four road sections have been transferred from the Fifth to the Fourth Highway Project. Bank participation in expenditures to be incurred in 1982 on these contracts would fully utilize the surplus.

Loan No. 1696 Fifth Highway: $130 Million Loan of June 1, 1979 ($6.8 Mil- lion cancelled June 30, 1981); Effective Date: August 28, 1979; Closing Date: December 31, 1984

Project implementation, which started nearly three years ago, is substantially behind schedule. The project is about 25% completed compared to 70% scheduled. The causes for delay are: (a) the ambitious project objectives, which translate into program-type components and numerous consultancies; (b) overcentralization of the Directorate General of Highways (DGH); (c) a shift of senior staff within DGH; and (d) new development guidelines of the GOI under Repelita III emphasizing the spread of investments 49 ANNEX II Page 26 of 29 pages

over a larger number of projects with reduced standards. However, work is now underway on nearly all project components, and there is still a reasonable chance of completing the project with a total delay of only one year. The Provincial Departments of Public Works programs of support works were just started in January 1982 with mobilization of consultants and after road maintenance equipment had been ordered. $6.8 million of the loan has been cancelled due to misprocurement of road maintenance equipment.

Loan No. 2049 Jakarta-Cikampek Highway: $85 million Loan of October 9, 1981; Effective Date: February 9, 1982; Closing Date: December 31, 1987

The project will increase road capacity between Jakarta and Cikampek (about 70 km to the east) by construction of a new toll road and by improvements to the existing highway. Consultants have been selected for construction supervision, and contract negotiations have been concluded. Bid opening for the four sections of road works took place in late May 1982, somewhat behind schedule. The bid evaluation report is being reviewed by the Government. Land acquisition has been completed up to and including negotiations with property owners, and payment of compensation is underway. Negotiations are about to begin with consultants to provide technical assistance to the Indonesia toll road corporation, P. T. Jasa Marga.

Loan No. 2083 Rural Roads Development: $100 Million Loan of January 22, 1982; Effective Date: August 11, 1982. Closing Date: December 31, 1986

The project will improve rural road infrastructure in selected provinces by strengthening the capacity of the district public works agencies and implementing an expanded program of rural roads works; and supporting a rural road development program for a three-year period in five Indonesian provinces. The project also contains components for training and technical assistance. Implementation of the various project components is still at an early stage. Bids were received in March 1982 for road construction and maintenance equipment and bid evaluation has been completed for about half of the items. Consultants are now being mobilized to provide technical assistance to the district public works agencies and to assist the Directorate General of Highways in preparing further rural roads programs.

Marine Transport

Loan No. 1250 Second Shipping: $54 Million Loan of May 20, 1976; Effective Date: October 8, 1976; Closing Date: December 31, 1982

The project is part of the first phase of the Government s Inter- Island Fleet Development Program and is designed to modernize, expand and improve the efficiency of the inter-island fleet. All funds for ship procurement ($48.0 million) have been disbursed and the balance of ANNEX II - 50 - Page 27 of 29 pages

funds for technical assistance ($6.0 million) have been disbursed or allocated. It is expected that all funds will be disbursed by loan closing date. All of the operations under the loan appear to have been carried out satisfactorily.

Ports

Loan No. 1337 Tanjung Priok Port: $32 Million Loan of November 4, 1976; Effective Date- March 3, 1977; Closing Date: June 30, 1983

The Government-financed works in Basin III, delayed due to the impact of the 1978 Rupiah devaluation, the Basin III civil works financed by the Bank loan, also delayed due to the devaluation, and civil works financed by the Bank loan in the Regional Harbor, are completed. Several Bank-financed studies which are proposed or have been completed, will enable the GOI to identify components of a further ports project suitable for Bank financing probably in FY84. Overall estimated project costs remain approximately at appraisal levels despite an increase in civil works costs.

TOURISM

Credit No. 479 Bali Tourism: $16 Million Credit of June 14, 1974; Effective Date: December 4, 1974; Closing Date: December 31, 1983

All works on the infrastructures and the amenity core at Nusa Dua were completed in June 1982. The access road to Nusa Dua from the airport and the Denpasar bypass road were completed and opened for traffic in December 1980. The hotel training school was completed in July 1979 and has been in operation since then. The preparation of possible participation by the Bali Tourism Development Corporation in hotel investment utilizing the uncommitted portion-of the credit is expected to be finalized by the end of September 1982. The market for tourism to Bali has been good and international standard hotels in Bali have been achieving high occupancies. The construction of a first hotel (450 rooms) by Garuda at Nusa Dua is progressing well for completion in March 1983. The construction of a second hotel (250 rooms) by Anchol Group at Nusa Dua has just started. Disbursements at the end of June 1982 were about 81% of appraisal estimate. ANNEX II - 51 - Page 28 of 29 pages

URBAN DEVELOPMENT

Loan No. 1336 Second Urban Development: $52.5 Million Loan of November 4, 1976; Effective Date: March 28, 1977; Closing Date: June 30, 1983

The project aims at providing basic infrastructural facilities including footpaths, drainage, water supply and human waste disposal to about 3,000 ha of densely populated slum areas (kampungs) in Jakarta and 374 ha in Surabaya. The physical program is now complete with a coverage of about 3,434 ha kampungs in Jakarta and 441 ha in Surabaya. Supplementary technical assistance studies related to future projects preparation and utilizing the accrued loan residual have been recently agreed upon. To facilitate the financing of these studies, the Bank, in December 1981, extended the loan Closing Date from December 31, 1981 to June 30, 1983. Disbursements at the end of June 1982 were about 85% of appraisal estimate.

Loan No. 1653. Third Urban Development: $54 Million loan of January 31, 1979; Effective Date: September 26, 1979; Closing Date: December 31, 1984

The project extends the slum (kampung) improvement programs (KIP) under the Second Urban Development Project (Loan 1336-IND) in the cities of Jakarta (750 ha) and Surabaya (580 ha), and also provides for similar basic infrastructural facilities in three additional cities -- Ujung Pandang (375 ha), Semarang (310 ha) and Surakarta (170 ha) -- with the KIP coverage in each city ranging between 15 to 37% of total kampung areas to be upgraded. Also included in the project is a comprehensive solid waste management program (SWIP) in Jakarta, and Surabaya and macro-drainage improvements in Surabaya. The KIP component is nearing completion in all cities with its actual coverage exceeding the target levels in Jakarta and Surabaya. SWIP implementation is progressing well in Surabaya but has just started in Jakarta due to earlier start-up delays in pilot testing. The Surabaya drainage component is in the construction stage which is somewhat beset with land acquisition problems (for canal dredging schemes) warranting local government-s more intensive participation and an increased allocation of funds for the program. The overall project is expected to be implemented within the appraisal projected dated of December 31, 1984. Disbursements at the end of June 1982 were about 59% of appraisal estimate.

Loan No. 1972 Fourth Urban Development: $43 Million Loan of May 8, 1981; Effective Date: September 9, 1981; Closing Date: September 30, 1986.

The project further expands Bank-s assistance to GOI-s slum improvement programs (KIP) under the earlier urban projects to six nationwide provincial capital cities with a total target KIP area of 2,000 ha and with a coverage in each city representing about 15 to 33% of total KIP area to be upgraded. Sites and sevices schemes, aimed at providing affordable core housing ANNEX II - 52 - Page 29 of 29 pages

units to the low-income population, will be developed for a total of about 11,000 plots in some six to seven cities. Sectoral programs comprising of solid waste improvement, and improved water supply are also included in one of the project cities. A national urban mapping program covering 125 cities will be undertaken providing base data for future city planning, land regis- tration and valuation programs. The developoment of the housing and mortgage financing institutions is a prominent feature of the project. Technical assistance for project management, training and feasibility studies to various urban authorities and agencies will be provided. The sites and services program is proceeding satifactorily. The start-up delays in the implementation of the KIP programs have been overcome and the progress of these programs should significantly improve with the consultants currently being appointed. The first phase of the urban mapping contracts covering some 45 cities will commence in October 1982. Technical assistance programs are proceeding satisfactorily. Disbursements at the end of June 1982 were about 35% of appraisal estimate.

WATER SUPPLY

Loan No. 1709 Second Water Supply: $36 Million Loan of June 1, 1979; Effective Date: February 29, 1980; Closing Date: December 31, 1984

The project expands and improves existing water supply and distribution systems in the cities of Tangerang and Surabaya (both in Java), Jember (Sumatra), Pare-Pare (Sulawesi) and Ambon (Moluku), and provides for the construction of new systems in Klaten and Purwakarta (both in Java). The total increase in raw water yield in the cities as a result of the project is projected at 1,770 lit/sec and the total installation of transmission and distribution mains will amount to about 375 kms with house connections targetted at a total of 40,000 in the project cities. The project is also aimed at establishing water enterprises (WEs) in the project cities and strengthening the skills of WE's staff, as well as the Cipta Karya (Housing and Urban Development) staff, in the areas of administration, financial and operational performance of the enterprises. After considerable delays (up to 18 months) the award of most of the International Competitive Bidding procurement contracts for the supply of pipes and materials is now complete and procurement is in progress. The construction of the civil works in the project cities is currently underway. The organizational and management training for the WEs has been underway since September 1981 and is proceeding satisfactorily. Disbursements at the end of June 1982 were about 28% of appraisal estimate. - 53 - ANNEX III

INDONESIA

PUBLIC WORKS MANPOWER DEVELOPMENT PROJECT

Supplementary Data Sheet

Section I: Timetable of Key Events

(a) Time taken to prepare the project: 1-1/2 years (b) Agency which prepared the project: MPW with consultant assistance (c) First presentation to the Bank: January 1981 (d) Main Bank identification/ preparation mission: September 1981 (e) Date of departure of appraisal mission: March 1982 (f) Date of departure of postappraisal mission: October 1982 (g) Date of completion of negotiations: February 1983 (h) Planned date of effectiveness: July 1983

Section II: Special Bank Implementation Actions

None.

Section III: Special Conditions

The GOI would:

(a) appoint, in accordance with a schedule agreed with the Bank, staff for new positions in the PUSDIKLAT, BIDANG DIKLATS, CMDU, RTCs, the Division for Manpower Planning and the Personnel and Organization Divisions of the Directorates General of MPW; and, a Project Manager with appropriate qualifications (paras. 30, 32 and 35);

(b) submit to the Bank for review and comment, no later than two months prior to the beginning of each of its fiscal years, an annual plan for development of curricula and materials for short courses for MPW staff, an annual plan and budget for short courses and an overall annual program for all MPW staff training (paras. 31 and 32); and

(c) undertake evaluations of MPW staff training activities and of contractor and mandor training in accordance with terms of reference and a schedule satisfactory to the Bank (paras. 31 and 33).

IBRD 16891 TNAST SE ---- \THAILAND~\(TO A- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~INDONESIA WORK PATIK CA,~~~~~~~~~oj ~~~~~s-'~~~~~ PHILIPPINES VPUBLIC --- 7 ~~~~~~~~MANPOWERDEVELOPMENT PROJECT MALAYSIA ~~~~~00 BRUNEI, (i:Ri

\ _____ CA~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~MAITT

CTE-DTE AD ERDEUT~RRU ]~~~ 2A(k~~~~~~IDXN/ ~~~~~~~MALAYSIA/ ) r

2 ~ ~1~ ~~UT1

A / C INGAPORE -r~~~~~~~~~~~~U 0

AUTAUEA~~ ~~~T 1ff 'UAWS 1 T7ST PROVINCES )l y

IACEH RI2 RA N JAYA H~ b,K-d- DD ~ N RATIAUTPA' 7 TAMEI N - BENG''U C,~ ~ ~ ~ ~ ~ ~~N. 9 SUECTALSMTFRTI A KAR/T/ 111,U I a- 7CENTALJAVA NTIDME' SA AMTET H' EATMUN-A/,C . -. lO5WE'ST TUSATUN GA

19NRTAIWD CENTRAL /SP~~~~~~~/TES~~9g~~jSWASSESI '------6-