Conditions in Aceh…………………………………………………

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Brief for the Consultative Group on Indonesia

Public Disclosure Authorized ACEH UPDATE

Public Disclosure Authorized Public Disclosure Authorized

Promoting Peaceful Development in Aceh Public Disclosure Authorized

January 2003 Introduction

The signing of the cease fire agreement on This brief is composed of two parts. Part December 9, 2002, provides a unique One is a summary of the findings and opportunity for improving life for the recommendations of the multi-donor people of Aceh. The peace process now missions and a high-level delegation of the needs to be complemented by a phased Tokyo conference co-chairs that have development strategy that will allow Aceh visited Aceh since the signing of the peace to recover from its decades of conflict and agreement. The objective of the missions to provide its people with broad-based was to identify high-priority activities and benefits from its many resources. This brief opportunities for the international has been prepared for the January 2003 community to assist in five broad areas: meeting of the Consultative Group on § support for the peace process, Indonesia, to serve as the basis for continuation of the discussion over Aceh’s § humanitarian assistance, development that began at the Preparatory § community development, Conference on Peace and Reconstruction in Aceh, held in Tokyo on December 3, 2002. § governance and public planning, § restoration of infrastructure. The international community can play a helpful role in peaceful development in The volume of donor financing is le ss Aceh. Support for the peace monitoring important than its quality, since. mechanism, the most immediate priority, government finances are not the main has been established for the present. Next problems in Aceh. The inability to deliver in importance are short-term targeted government services, especially in remote humanitarian measures , quick-impact areas, and the absence of a favorable development programs that show tangible environment for private sector development results of peace to the people of Aceh, and are. monitoring systems to track economic and social development. Part Two contains provides an update on the current situation in Aceh: socio- Donors can also help by providing support economic conditions, the business climate, to the design of a comprehensive public resources and spending, governance, development strategy that has broad and infrastructure. support from all major stakeholders. A credible commitment to such a plan should A Donor Coordination Matrix is included form the basis of long term donor as an appendix. assistance to Aceh. Donor coordination can then be folded back into the established mechanisms of the CGI.

Table of Contents

Introduction …………………………………………………………………… i

Part One: Opportunities for International Support ………………………… 1

1.1 Support to the Peace Process ……………………………………. 1 1.2 Short-term Humanitarian Assistance …………………………… 3 1.3 Community Reconstruction………………………………………. 4 1.4 Governance and Public Planning………………………………… 5 1.5 Improving the Business Climate …………………………………. 7 1.6 Investing in Physical and Social Infrastructure…………………. 7

Part Two: Conditions in Aceh………………………………………………….. 9

2.1 Poverty, Health and Education Profile……………………………. 9 2.2 The Climate for Business ………………………………………….. 13 2.3 Public Resources, Spending and Planning ……………………….. 16 2.4 Governance Issues ………………………………………………… 21 2.5 Infrastructure Issues………………………………………………. 23

References and Data Sources ……………………………………. ……………. 26

Annex 1: Fiscal Flows to Aceh’s Regional Governments, 2002-3 …………… 28

Annex 2: Monitoring of the Reconstruction and Development Activities in Aceh …………………………………………………… 29

Annex 3: Identification of Activities to Expand the Community Recovery Programme………………………………………………. 31

Annex 4: Description of the Kecamatan Development Project……………… 33

Annex 5: Outline Terms of Reference for Aceh Governance and Public Sector/Regional Public Expenditure Review……………… 34

Annex 6: Donor Coordination Matrix ………………………………………… 37

Part One: Opportunities for International Support

The Cessation of Hostilities Framework Agreement Between Government of the Republic of Indonesia Four multi-donor teams and a delegation and the Free Acheh Movement (CoHA) was signed representing the four Tokyo conference co-chairs on December 9, 2002. at the Henry Dunant Centre for (Japan, United States, European Union and World Humanitarian Dialogue in Geneva, Switzerland. At a Bank) visited Aceh between December 16, 2002 and press conference after the signing, the Coordinating January 15, 2003. Their effort was focused on the Minister for Political Affairs and Security articulated priorities agreed in Tokyo: five elements of the agenda for peace-keeping and § Support to the peace process, peace-building: § short-term humanitarian assistance, § maintain and strengthen peace; § provide humanitarian assistance and social § community reconstruction, rehabilitation; § governance and public planning, and § implement a democratic political process; § economic reconstruction; and § restoration of social and physical § reconciliation and society-building. infrastructure.

In anticipation of the CoHA signing, the Part One of this report presents the findings of these international community met at the Preparatory teams. Details of specific recommendations are Conference on Peace and Reconstruction in Aceh, in available from the teams themselves. Each team has Tokyo on December 3, 2002. The donors recommended follow-up missions participating in the conference agreed that development assistance could and should support and deepen the Aceh peace process and that a 1.1 Support to the Peace Process coordinated approach by the donors would make for more effective use of the aid they could provide. The teams were comprised of representatives from USAID, UNICEF, WHO, OCHA, UNDP, WFP, and The recovery and development process can be IOM. The mission began with two premises: that the divided into three main stages. In the short term, CoHA is not a comprehensive political settlement development assistance should complement the but only a first step toward a permanent solution to humanitarian program with activities that provide the Aceh conflict through peaceful dialogue, and that visible returns on peace. Medium term projects with any long-term effort to reconstruct Aceh physically longer planning horizons should be based on an and socially will not be possible without an end to the examination of the quality of service delivery in Aceh violence. Therefore, it is important that donors seek as a whole, not just in the conflict areas. Restoring ways to strengthen and support the process. Aceh’s formerly vibrant private sector will be a key element of the medium term strategy. For the longer One important way to provide that support is through term, the critical question is how to place Aceh’s direct technical assistance to the "All-Inclusive public financing onto a sustainable basis. Current Dialogue" that is specifically provided for in the projections are that Aceh’s main natural resources – CoHA. The goal of the Dialogue is an election in oil, gas, and forest products – will be seriously 2004 and the establishment of a democratically depleted within a decade. Consideration should be elected government responsive to the aspirations of given to options for investing part of the current the Acehnese people. Facilitation of that process natural resource windfall so that the province can would be a vital contribution to a final political enjoy a long-term benefit stream. settlement and crucial to keeping implementation of the CoHA agreement on track.

Recommended Guidelines for Donors§ andAssuming Government stable fromsecurity conditions prevail, assist with preparations for the direct Elements of an ImmediateThe Preparatory Response Conference1 on Peace and Reconstruction in Aceh Tokyo, December 3, 2002elections (called for in the Special Autonomy § Continued support for the Centre for law), to choose provincial and district 1. SupportHumanitarian humanitarian Dialogue and development programs, givinggovernment quick demonstrated heads. returns to peace. To the extent possible, humanitarian aid should build in bridges to the development strategy by promoting § publicSupport transparency for civil and society invo organizationslvement, by careful that targeting, and by building in clear exit strategies or transfersare making to longer a contribution term, sustainable to the programs. process of Humanitarian 2. Short programs-Term also need Humanitarian to be screened for their developmentAll-Inclusive impacts; Dialogue, improperly reconciliation, targeted food aid, for example, can adversely affect on local farmers. human rights promotion, conflict Assistance 2. Unblock existing projects. A number of donor-funded projects – especially in rural areas – are currently prevention, and recovery stalled or disbursing only slowly. Such investments inThe health, teams education, were consisted roads, irrigation, of representatives etc, offer from § perhapsFunding the bestfor opmassportunity media to getcampaigns tangible benefitsand onUNICEF, the ground WHO, quickly. OCHA, Unblocking UNDP, should WFP, be IOM an and immediateradio talkpriority. shows to promote public USAID. awareness and support for the cease-fire 3. Use delivery mechanisms which have proven to be successful in reaching the poor. For the peace and peace process Initially, donors should emphasize districts outside of process to succeed, it is important that the populationBanda living inAceh, those particularlyareas that were those mostly hardest affected hit by thethe § conflictFunding see antangible experienced benefits advisorof the new to assist situation in soon.conflict Getting (e.g. resources Pidie, onEast, the groundNorth quicklyand South is Aceh), thereforethe preparation, an appropriate planning goal. However and format the evidence of fromwhich, many due postto security conflict concerns, situations wereis that also hastily the areas designedthe Alldelivery-Inclusive mechanisms Dialogue often haveincluding disappointing, least and accessible sometimes to aidnegative and development outcomes. Fortunately efforts prior therereaching are a number those ofvoices proven marginalized mechanisms by in theoperation to inthe Aceh CoHA. to channel resources to communities. violence, such as those of women and young 4. Support the establishment of independent monitoring of social-economic indicators. In parallel with people. One characteristic of the conflict in Aceh has been the monitoring of the peace agreement, this can play a very valuable role. Credible information on the success of policies and programs will help set developmentburning targets, of schools. design Even the appropriate though in manyinterventions cases only § Work with the HDC/JSC process to and evaluate success. Civil society monitoring will alsosome contribute of the classrooms, to independent not theinformation entire schools, on were identify what role donors can play, if any, performance. burned, the threat against schools led to an exodus of in the re -integration of ex-combatants into teachers and widespread student drop-outs. 5. Usesociety available, emphasizing resources moreemployment effectively. creation Nominal resource allocations to Aceh from the national budgetand andaddressing the subnational psycho autonomy-social program and are theThe fourth conflict highest has in created Indonesia, two yet distinctive individual patterns sectors of suchreconciliation as education, needs. health, and others appear to lack adequatedisplacement. resources. Local Losses people come have from been many temporarily sources, e.g., late release of funds, non-competitive procurementdisplaced practices, within weak Aceh agency when absorptive their villages capaci wereties. under A credible program to achieve effective use of existing development resources should be an essential Support in the Medium Term 2 threat. JSC is actively working to return the complement to an assistance package. relatively small number still displaced to their 6. § IncreaseProvide public additional transparency technica andl accountability.and legal communities.Increasing the accountabilityA larger number of public of persons expenditures (about andassistance aligning themto facilitate better with implementation the needs of the ofpeople 100,000,will improve primarily the quality transmigrants and effectiveness of Javanese of publicorigin), investment.Aceh’s BudgetsSpecial shouldAutonomy be published law, andwith accessible left atthe all levelsprovince of government. and arrived Participatory as IDPs in North planning,emphasis implementation on drafting andthe monitoring many required mechanisms Sumatra. in gove rnmentThey wish programming to return to can Aceh increase but dothe not yet ownershipimplementing and effectiveness regulations of governmentin consultation sponsored believe programs that andthe situationcan play ais vitalsufficiently role in buildingsecure. trust. with all stakeholders; 7. Assess the investment climate, and improve it. A strong,The large efficient number private of killings sector willof civilians be essential has tocaused § Support efforts to improve community peaceful development. At present, costs of doing businessparticular in Aceh hardship are very for high. the Conflictvictims’ has families. resulted inThe rentparticipation extraction on in a locallarge govescale.rnment Implementing decision existing- laws and beginning to demonstrate that the legal making and help reduce citizen distrust; normal community coping mechanisms for assistance system can work in a professional, unbiased manner areto widowsimperative. have An not assessment been functioning; of the investment the victims § climateProvide could capacity begin right building away, andassistance should involveand a couldcareful be listening seen as tosympathizers the concerns of of one local sort or another, entrepreneurstraining to aslocal well civil as large society businesses. organizations and looking after their families could imply sympathy 8. Saveto resourceshelp build for sustainable later. Aceh operational province will and retain itsfor highone orrevenue the other inflows side fromin the natural conflict. gas, oil, and forestfinancial products management; for less than a decade. Consideration should be given to placing excess government resources into a trust fund. The advantages are twofold. On the one handImmediate it will make Response the resources available in the future years when oil and gas revenues will not be available; it will also shift spending 1 § Continued support for the Centre for Contacttowards USAID a periodfor details. when the absorption capacity is likely to have increased. 2 Humanitarian Dialogue (USAID) Contact UNDP or USAID for details.

Elements of an Immediate Response1 § Assuming stable security conditions prevail, assist with preparations for the direct § Continued Support for the Centre for elections (called for in the Special Autonomy Humanitarian Dialogue. law), to choose provincial and district § Support for civil society organizations that government heads. are making a contribution to the process of the All-Inclusive Dialogue, reconciliation, human rights promotion, conflict 1.2 Short-Term Humanitarian prevention, and recovery. Assistance § Funding for mass media campaigns and The teams consisted of representatives from radio talk shows to promote public UNICEF, WHO, OCHA, UNDP, WFP, IOM and awareness and support for the cease-fire USAID. and peace process. § Funding an experienced advisor to assist in Initially, donors should emphasize districts outside of the preparation, planning and format of Banda Aceh, particularly those hardest hit by the the All-Inclusive Dialogue inclu ding conflict (e.g. Pidie and East, North and South Aceh) reaching those voices marginalized by the that were also the areas least accessible to aid and violence, such as those of women and young development efforts because of security concerns people. prior to the CoHA.

§ Work with the HDC/JSC process to One characteristic of the conflict in Aceh has been identify what role donors can play, if any, the burning of schools. Even though in many cases in the re -integration of ex-combatants into only some of the classrooms, not the entire schools, society, emphasizing employment creation were burned, the threat against schools led to an and addressing psycho-social and exodus of teachers and widespread student drop-outs. reconciliation needs. The conflict has created two distinctive patterns of displacement. Local people have been temporarily Support in the Medium Term 2 displaced within Aceh when their villages were under threat. JSC is actively working to return the relatively small number still displaced to their § Provide additional technical and legal communities. A larger number of persons (about assistance to facilitate implementation of 100,000, primarily transmigrants of Javanese origin), Aceh’s Special Autonomy law, with left the province and arrived as IDPs in North emphasis on drafting the many required Sumatra. They wish to return to Aceh but do not yet implementing regulations in consultation believe that the situation is sufficiently secure. with all stakeholders (UNDP, USAID). The large number of killings of civilians has caused § Support efforts to improve community particular hardship for the victims’ families. The participation in local government decision- normal community coping mechanisms for assistance making and help reduce citizen distrust. to widows have not been functioning. The victims § Provide capacity building assistance and could be seen as sympathizers of one sort or another, training to local civil society organizations and looking after their families could imply sympathy to help them build sustainable operational for one or the other side in the conflict. and financial management. A serious impact of the conflict has been the degradation of what used to be very lucrative agricultural production. Irrigation systems have

1 deteriorated, fields have been left unattended, tools For additional information, contact USAID. have been destroyed and livestock killed. This 2 For additional information, contact UNDP or USAID.

degradation is one of the main causes for the pockets expand emergency assistance for the of poverty that now exist in Aceh. health sector (UNICEF).

§ Conduct a detailed assessment of the need The Government has made a formal request for food for donor-funded food aid (WFP). aid to supplement national efforts directed at the most vulnerable, particularly returnees, widows and others § Revise the text and project proposals affected by the conflict. GOI’s preliminary estimates related to Aceh in the “Consolidated are that some 250,000-300,000 people would need Appeal for Indonesia 2003”, published in humanitarian food assistance for a period of three to November, 2002. The original appeal six months. The cost of such an effort would be included projects totaling USD 3.1 million. approximately US$ 5 million. If a donor-funded UN humanitarian agencies, NGOs, the program is determined to be appropriate, it must be Government and other donors have begun the designed to minimize any negative effect on the local revision, which will be published in early food market and food production. February 2003 (OCHA). Urgent assistance can be provided almost immediately within existing funding, mostly by Support in the Medium Term expanding programs already in hand. WHO and WFP would need additional funding for expanded § Support the revival of the Posyandu programs. At the same time, planning should be mechanism (community-based maternal- initiated for longer-term assistance, requiring the child health service) (WHO). development of new programs and new funding. § Support strengthening of human resources and district level management in the Elements of an Immediate Response3 health sector, as well as drug supplies and pharmaceuticals management (WHO). § Assist the provincial Department of Health § Initiate data collection on children in the implementation of a Minimum involved as participants in the conflict, Essential Package of Health Services potentially leading to design of special (WHO). programs to address their issues (UNICEF). § Expand the ongoing peace education project in Acehnese high schools and conduct participatory child rights 1.3 Community Reconstruction workshops, provide psycho -social support The mission team included representatives of the for conflict-affected children (UNICEF). Japanese Government, UNDP, and the World Bank. § Increase ongoing emergency education assistance , including through the provision Aceh’s villagers have been the group most hit by the of school-in-a-box kits, textbooks, supplies, conflict, with many leaving for the cities or to other teacher training, and psychosocial support for provinces. In many areas, divisiveness and fear conflict-affected children (UNICEF). paralyzed community organization and stifled growth. Physical infrastructure has been destroyed by § The Emergency Response Fund can fund the conflict, but an even bigger problem than actual programs by NGOs in Aceh aimed destruction has been the abandonment or neglect of specifically at the treatment and schools, clinics, irrigation systems, water supplies and prevention of scabies (OCHA) the like because the professional staff have left and § Work with education authorities on villagers are not able to replace them. improving water-and-sanitation facilities and hygiene promotion at schools and will Village level responses to the cessation of hostilities are very positive. Many villagers who had left for the cities or IDP camps are returning (although the non- 3 The agency to contact for details is shown in Acehnese refugees are not) and taking up productive parentheses.

work. The planting season is underway, and local Project assisted by the World Bank, which level trade is picking up quickly. Support for the currently covers more than 2,000 villages, ceasefire is high everywhere the mission visited. and the UNDP-assisted Community Recovery Program, which provides support Government follow-up to the ceasefire agreement has to NGOs. Both can be scaled up significantly also been positive. In one kabupaten visited, and will produce rapid results in the field. government field teams have made village-by-village Costs and other details are provided in needs assessments. School building repairs in 30 Annexes 3 and 4. percent of the damaged schools in Kabupaten Pidie, one site the team visited, are already underway, § Third, there is also a need to support although there is a severe shortage of teachers and programs designed for specific vulnerable teaching materials. Government efforts to clear away groups in Aceh. The government and NGOs illegal checkpoints and levies from major roads were both give priority to support for widows, applauded by the farmers the team interviewed. handicapped people, and highly vulnerable landless and fishing communities. Donor- The team identified three main areas where targeted supported programs for female -headed donor assistance for community development is households could be scaled up at modest cost. urgently needed. All three can be initiated These programs must be designed to meet the immediately through programs already in operation specific needs of groups marginalized from but will require additional planning and funding for normal development programs. Programs to expansion in the medium term. support unemployed youth even above and beyond the community quick-impact civil § First, overall monitoring is very weak and works projects are a special priority. support is needed to improve both government and civil society capacities to make sure that funds are well-targeted and 1.4 Governance and Public that they reach their intended Planning beneficiaries. Lack of information about development programming is already a problem for both district government and The team was made up of representatives from the civil society organizations. The team World Bank, Japan, and UNDP and received inputs therefore recommends that the donor from European Union program staff in the field. It community agree on a “code of practice” for focused on two major themes: organizations working in Aceh that includes § the need to ensure broad-based access to the active provision of core project public services, while promoting more programming information to the NGO forum effective and responsive delivery under the and to local governments. More details are circumstances of post-conflict and special given in Annex 3. autonomy, and.

§ Second, a broad-based program of quick § improvement in the business climate in key impact projects that reach the village in sectors such as agriculture and trade by highly transparent ways is a priority. The reducing transaction costs and enhancing the need for quick impacts argues for scaling up rule of law. existing programs rather than creating new The team also took the opportunity to address a ones, which will take too much time. Quick number of infrastructure issues in advance of more impact projects should also support specialized missions planned shortly after CGI. ADB community-level decision-making and joined in the compilation and analysis of transparent local governance. The mission infrastructure information. The mission benefited reviewed two existing programs that meet from close collaboration with the Provincial Planning these objectives and also have broad Agency (BAPPEDA NAD) and with the University coverage: the Kecamatan Development

of Syiah Kuala (Unsyiah) in Banda Aceh. Summary operation of timber-consuming industries. Until findings follow. sustained peace will change that situation as mills reopen and demand for timber expands. Until that To increase the chances for sustained peace, the time, Aceh has a “window of opportunity” to achieve international community should assist Aceh in sustainable management of this resource which, promoting successful governance and institutional unlike oil and gas, will yield its benefits in perpetuity reforms. The implementation of the Special if properly cared for. Autonomy Law 18/2001 presents significant opportunities but also significant risks. The Provincial Parliament (DPRD) has a major task before it – enactment of the many local regulations Elements of a Short-term Response (Qanun in Aceh, equivalent to the PerDa in other § Completion of a Regional Public provinces) required to implement Law 18/2001 – and Expenditure Review. It is vital that it has barely begun. resources be allocated in a way that builds trust. This requires that funds be seen to be For peace to succeed, donors should assist regional used in an efficient and fair manner. A government and civil society in promoting public provincial public expenditure review could accountability, transparency, and democratic help greatly in this process. The RPER participation. These will be critical to effective would be designed to enhance regional planning, resource allocation, and implementation of government planning capacity under the public services in Aceh. The challenge for the peace and provide inputs to civil society government, civil society and the international discussions. The review would be conducted community will be to secure accountable and with an identified team from University effective service delivery while meeting the urgency Syiah Kuala, in close coordination with the to bring about tangible benefit. Accountability, BAPPEDA and with the support of the World transparency and participation will also contribute to Bank. More details on the RPER are given in rebuilding trust and a sense of inclusion across civil Annex 5. society and in society’s relationships with government. It is therefore of paramount importance § Placement of an international liaison that financial support be administered in such a way position in Banda Aceh, initially to assist in that it promotes the conditions for sustainable the RPER but also for donor coordination prosperity and public service delivery. and on-going dialogues with the provincial and local governments . The position would Issues that need to be addressed by the Acehnese also be able to facilitate arrangements to meet themselves include accountability mechanisms technical assistance needs that may emerge (including the issue of direct elections), law and during peace negotiations. order, relations between province and local § Establish an integrated team in the governments under special autonomy, and capacity provincial government to control illegal for planning how Aceh’s resources can best be logging and forest clearing and burning, deployed over the next decade. The international including Forestry Department, community can help by promoting best practices from Environmental Management Agency Indonesia and from post-conflict regions (BAPEDALDA), Police, and Prosecutor’s internationally. Office

Forest management in Aceh deserves special attention. Deforestation has occurred more slowly in Aceh than in any other province except West Papua, with the result that more than 60 percent of the province is still forest-covered (Holmes, 2002). Part of the reason is the protracted conflict, which has curtailed both legal and illegal logging and the

Support in the MediumTerm4 Elements of a Short Term Response § Technical assistance to the Provincial § Sustained monitoring of the investment Planning Agency (BAPPEDA) to develop climate, and wider reporting of persistent provincial level information systems, or rebounding levels of illegal levies. The enhance bottom up planning (initially with possibility of on-going polls of business and pilot projects in the same kabupatens transport enterprises, in collaboration with where the RPER will take place) and HDC/JSC’s monitoring and public enhance capacities on prioritization and information campaigns of instances of co-ordination (UNDP). extortion, should be explored (World Bank). § Define a process to arrive at a governance § Establishment of an Aceh Business Forum, reform strategy which responds to the providing an opportunity for genuine challenges of post-conflict/special autonomy dialogue between the business sectors and Aceh (UNDP). the government (World Bank). § Prepare a provincial policy and action plan for sustainable forest management, in Support for the Medium Term consultation with all stakeholders , and in collaboration with the Ministry of Forestry, § When conditions pe rmit, review the which still retains considerable authority over suspended study project for Sabang forested lands (World Bank) Integrated Regional Development § Provide capacity building and training including study scope and possible target assistance to provincial and regency area refocusing (JICA). government organizations to enhance legislative, administrative and planning capacity for accountable, effective and 1.6 Investment in Physical and participatory management (JICA, UNDP). Social Infrastructure § Further identify specific areas in political institutional building, legal, and police The damage to physical infrastructure is not as great reform for donor support . as that suffered in many other post-conflict situations. Well-targeted programs can quickly and effectively bring about a revitalization of key pieces of 5 infrastructure including utilities, schools (4,648 1.5 Improving the Business classrooms damaged out of 30,642), clinics, irrigation Climate systems, and other public facilities. Communities themselves can play an important part in this process, assisted as needed by the projects described under Since the cessation of hostilities, the roadblocks and Community Reconstruction above. checkpoints that have impeded commerce have markedly decreased in number. However, illegal Electric power shortage in Aceh was an issue cited as levies and outright extortion still remain a constraint an acute problem by the provincial government, PLN, to increased prosperity in the province. Continued businesses and many other stakeholders. The present uncertainly still hampers investments, especially by power shortage in Aceh has to be addressed through domestic firms and households. Improvements in operational measures by PLN, as implementation of security and governance will do much to alleviate any new power generation capacity will require at their concerns. The team therefore recommended least two to four years, and probably longer. The specific steps to address business concerns. JBIC-ADB hydroelectric project at Peusangan can be examined for restarting when security conditions

4 permit but will not in any case be ready to generate Agencies to contact for details shown in parentheses. power for at least five years. The short-term 5 Agencies to contact for details are shown in parentheses.

possibility that appears most promising is for PLN § Examine measures for urgently required to buy surplus power from captive power plants urban drainage improvement to alleviate owned by large industrial consumers (fertilizer and damages suffering from frequent flooding petrochemical plants) in Aceh. Their combined (JICA). installed generation capacity is reportedly 485 § Review and update highway megawatts (MW), out of which 47 MW is already transportation plan for Aceh in interconnected to the PLN grid. consultation with local governments and

other stakeholders. Technical assistance for As shown in Annex 6, ADB, JBIC and World Bank this purpose is already available in an have projects under implementation that can directly existing project supported by World Bank. address needs in irrigation, agricultural extension, roads, urban infrastructure, schools and decentralized § Assist in road rehabilitation through health services. Many of them have been slowed or Second Road Rehabilitation Project now suspended as a result of the conflict. These offer under preparation by ADB, substantial resources that can be put to use in Aceh, implementation period 2004-2006. either as presently designed or when adjusted to Notional allocation to Aceh US $18 million address pressing needs in the post-conflict situation. (ADB). However, to ensure the most efficient use of these § Examine the feasibility of re -tendering for resources, the donors and executing agencies must the Hydroelectric Power Plant Project at coordinate carefully. Peusangan in Takengon District (ADB/JIBC). Elements of Short Term Response

§ A follow-up mission on health, education, and infrastructure issues, ideally in early February 2003. The mission is currently being planned by the World Bank, in collaboration with ADB, JBIC and other partners. § Restore/restart existing projects in health, education, irrigation, agricultural extension, urban infrastructure, water supply, and road sectors (ADB, JBIC, World Bank).

Support in the Medium Term § Assist PLN and provincial government in exploring and, if feasible, negotiating arrangements for purchase of surplus electric power from self-supplied private industry (ADB).

Part Two: Conditions in Aceh

Part Two is intended to provide an update on Aceh that will helpful to CGI members as they seek ways all topics this is still a preliminary analysis. There are to support peaceful development in the province. It several cases where “next steps” include field consists of five sections. missions or targeted analytical work before details of potential donor support can be defined. Section 1 provides an initial assessment of the socio- economic situation in the province of Nanggroe Aceh Darussalam, with particular attention to poverty and 2.1 Poverty, Health, and health indicators and education. It compiles survey Education Profile data from the national bureau of statistics (BPS); administrative data collected and socio-economic According to the 1999 Susenas data,6 and using an surveys undertaken in the past year in Aceh with aggregated, consumption-based definition of poverty, World Bank, WHO, and Asian Development Bank Aceh is not a poor province. 15 percent of the rural assistance; the conclusions of a World Bank mission population was categorized as poor, while this was that visited Banda Aceh in November 2002; and the case for 5 percent of the urban population. Aceh is additional information obtained during the multi- ranked as Indonesia’s fourth or fifth richest province, donor missions to Aceh in December 2002 and depending on whether one focuses on rural or urban January 2003. poverty.

Section 2 reviews the business climate in Aceh, with Current wage data for unskilled labor indicate that a discussion of some actions in addition to wages are not below the national average. According improvements in governance (discussed later) that to data collected by the bureau of statistics, could help restore investment. agricultural wages in Aceh increased since 1996, while they fell nationally. The KDP survey asked for Section 3 addresses public resources and spending. It daily wages of ojek (motorcycle taxi) drivers and is provided to assist in evaluating urgent needs for found that they earn on average 27,000 Rupiah per additional assistance and to be a starting point for the day in Aceh compared to a national average of 20,000 governance work included as a priority in the Rupiah. Provincial Government’s program for reconstruction of NAD – e.g., to increase transparency and However, poverty comprises many other aspects than accountability, improve public finance management, just consumption, and it is in these areas where Aceh and promote public consultation. The information on faces the greatest challenges. Table 1 provides budgeting and planning in the report presented at the descriptive statistics for the poor, middle and rich Tokyo on December 3, 2002 has been updated with households. Education strongly correlates with details on planning processes obtained during the poverty. The poor in the Susenas and Poverty survey field visits in January 2003. Areas where have similar housing conditions. About half have strengthening is needed and donor support would earth or wooden floors, access to safe drinking water potentially be useful are also discussed in more detail. and access to electricity. Access to safe drinking water and electricity compare unfavorably with the Section 4 covers other aspects of governance rest of the Indonesian poor.7 (including law enforcement), and Section 5 describes the current situation with regard to critical elements of infrastructure. It is important to underscore that for 6 This was the last year that Susenas was carried out in Aceh. 7 The housing conditions of the middle and rich in the Poverty Survey are substantially better than in the Susenas which probably more reflects the sampling methodology than any changes in the housing conditions.

Table 1: Key poverty indicators

Poor Middle Rich Indonesia Aceh Indonesia Aceh Indonesia Aceh Poverty Poverty Poverty Susenas Susenas survey Susenas Susenas survey Susenas Susenas survey 1999 1999 2002 1999 1999 2002 1999 1999 2002 years of education [aged 18-65 in 1999, 68-2002 in 2002] 5.1 6.2 7.2 6.6 7.2 9.4 9.9 9.9 10.3 fraction of female headed households (%) 8.3 12.3 12 8.2 9.5 1 11.0 11.7 3 house has earth, wood or bamboo floor (%) 54 52 56 34 35 3 14 22 3 Has access to safe (pipe, pump, bottled, covered well) drinking water 65 50 52 76 66 84 90 79 92 Has electricity (%) 69 53 50 84 70 86 96 88 94

Aggregate poverty figures can conceal high poverty The Poverty Survey shows that 41 percent of the incidence both in relatively small geographical areas Puskesmas (public health centers) have sufficient and in particular socio-cultural groups. Female staff to provide service, and 44 percent indicate that headed households are significantly poorer than male they have sufficient medicines. The figures drop headed households. Of the 75 female headed sharply for auxiliary health centers to 17 percent. households included in the Poverty Survey, 64 were Stocks of essential medicines are usually sufficient categorized as poor. The incidence of poverty among for about 12 days. Around 25 percent of the female -headed households is much higher in Aceh Puskesmas indicate that their infrastructure is than in Indonesia as a whole. Internally displaced damaged, and 34 percent of the auxiliary health people (IDPs) are another vulnerable group that do centers indicate that they operate from a damaged not show up in large aggregates. Their poverty status building. The KDP survey found low budgets for the is well documented in three studies.8 IDPs often lack Puskesmas compared to the rest of the country. The basic services in health and education. average budget, including financing from Dinas, JPS- BK and patient fees, equaled 35 million for the 15 Health Puskesmas which provided complete data. The national average was 76 million. The Posyandu The main problem in the delivery of health services (maternal and child health service) program has been comes from the inability to serve remote areas. Aceh disrupted by the conflict and needs to be rejuvenated. has no lack of health personnel, but health personnel often refuse to work in rural areas. At the same time, Morbidity and utilization urban areas have an excess of health personnel that are poorly utilized and that strain the city budget. The Contrary to the rest of the country, the poor in Aceh government works with incentive mechanisms, such report being sick more frequently than do the rich as high salary offers from the districts, and the policy (see Table 2 below). It is a common finding that self- that specialists who agree to work in NAD will only reported illness increases as one gets richer. (The have to do half of the required service time for newly poor often cannot afford treatment or time off work, graduated specialists. This has not been enough to and thus tend not to report). The fact that in Aceh the attract staff to serve in high-risk rural areas. pattern is reversed indicates that the poor may experience significantly worse health.

8 World Food Programme: “Report on Livelihood of IDPs The utilization rates in the poverty survey are higher in Indonesia”. Drafts for Aceh Utara, Aceh Tengah, and for all groups, indicating that utilization increased Aceh Barat.

since 1999, as it did elsewhere in Indonesia. Both malaria, diarrhea, and dengue. Disease control surveys show that the poor in Aceh more often rely programs are reportedly not running smoothly.

Table 2: Utilization of basic health services

Poor Middle Rich Indonesia Aceh Indonesia Aceh Indonesia Aceh Poverty Poverty Poverty Susenas Susenas survey Susenas Susenas survey Susenas Susenas survey 1999 1999 2002 1999 1999 2002 1999 1999 2002 Percent ill in past month 21.5 22.4 29.2 23.5 21.2 19.9 25.0 19.3 19.2 Percent ill and sought care in past month 8.4 7.2 16.7 10.4 11.2 16.1 12.3 10.9 16.7 Percent ill and that used modern care 8.5 7.6 15.5 10.6 11.4 15.5 12.6 11.0 16.5 Percent ill and that used traditional care 0.4 0.6 1.2 0.4 0.3 0.6 0.4 0.2 0.2 Percent ill and that self- treated 12.8 14.0 5.1 14.5 12.1 1.1 15.3 9.9 0.4 on self-treatment than do the rich. The costs of Health promotion work is very limited: only Rp. 200 treatment are a major obstacle for the poor. When million is available to support this program in 2002. asked why they did not seek modern treatment, the The main health information system, SP2TP, no most common (34 percent) response was that it was too expensive. Table 3: Coverage of selected health services Maternal health/early childhood development in 2001 in Aceh

Village midwives play an important role in providing Selected Health Services Coverage maternal care. However, the village midwife program Vaccinations is at risk; many will complete their final national Difteri,Pertusis,Tetanus 1 84.2% contracts in January, and the local government has Polio 4 68.9% Measles 71.2% not made the resources available to continue this Hepatitis B 1 66.1% program. The Poverty Survey indicates 51 percent of Difteri tetanus 1 (school children) 36.3% births are attended by a village midwife. Vaccination Tetanus toxoid 2 (school children) 37.1% 1st ante natal care visit 86.8% (see above) rates are low in Aceh compared to the national th figures. According to the Poverty Survey, 72 percent 4 ante natal care visit 74.2% Tetanus Toxoid 2 (pregnant women) 61.3% of the children under 5 received vaccinations in Aceh Other in 1999, compared to 83 percent nationally. But the Iron tablet distribution 3.1% (very low) last PIN (National Immunization Day) was Birth delivery assisted by health 65.5% (see above considered successful. Coverage was reported to be personnel text)

102%, owing mostly to a major socialization effort to Source: Provincial health ministry Aceh. support PIN, including approaching the GAM. longer functions, but individual programs still submit Administrative data collected by provincial staff their reports to the province. show a similar picture. Table 3 shows program coverage for year 2001, based on district reports. Birth delivery assisted by health personnel for Education example was only 55%. Severe malnutrition among Enrollment rates in Aceh are not very different from children is 4%, which is higher than average. the rest of Indonesia (see Table 4). In 1999, the Prevalent communicable diseases are tuberculosis, pattern was virtually identical for primary education,

Table 4: Enrollment in Basic Education

Poor Middle Rich Indonesia Aceh Indonesia Aceh Indonesia Aceh Poverty Poverty Poverty Susenas Susenas survey Susenas Susenas survey Susenas Susenas survey 1999 1999 2002 1999 1999 2002 1999 1999 2002 Boys net primary 90 91 87 94 96 79 94 97 67 Gross primary 105 106 110 110 113 92 109 111 79 Net junior secondary 40 46 56 62 62 74 77 82 67 Gross junior secondary 54 59 87 80 74 104 98 94 131 Girls net primary 90 94 87 94 93 86 93 97 73 Gross primary 106 105 109 109 111 93 108 108 89 Net junior secondary 42 46 65 63 56 72 76 84 63 Gross junior 54 56 97 80 77 114 97 91 83 and for junior secondary Aceh scores even higher in the time of the interview, compared to a national terms of net enrollment rates. None of the surveys average of 89 percent. shows sex biases in education enrollment. The Poverty Survey shows lower enrollment rates for The Poverty Survey found that 46 percent of the primary, and higher for junior secondary. Junior primary schools are damaged, but still functioning. secondary enrollment increases with wealth according Fifty-one percent reported no damages. 64 percent of to both surveys. schools report damaged desks and chairs. On the other hand, all schools reported having a blackboard School attendance is a problem in Aceh. The KDP and 78 percent reported sufficient light in the survey covered 13 primary schools in Aceh and found classroom for reading. that 73 percent of the boys and 71 percent of the girls registered were actually attending class. The national Reports from Dinas Pendidikan (Department of averages in the school facilities survey were 86 Education, NAD) confirm this picture. Damages to percent for both sexes. The Poverty Survey recorded public schools are evident in the main conflict ridden an attendance rate of 85 percent at the primary level, areas, although levels of destruction vary by region. 86 percent at the junior secondary level and 82 For example, Central Aceh Kabupaten reported about percent at the senior secondary level. This is well 15 percent (43 of about 300) of its schools as having below the national average; the 2002 natio nal been destroyed. Three of these had previously household survey shows an attendance rate of 95 to already been rebuilt. Aceh Utara informed the 96 percent at all levels.9 The multi-donor mission was mission team that 14 SD (primary), 11 SMP (junior informed that the government is providing high school) and 4 SMA (high school) were burned scholarship assistance to make school attendance (of just under 500 schools in all) at an estimated possible for poor families but can meet only 35 replacement cost of Rp. 9 billion (US$ 1 million percent of demand. Teacher attendance is also lower est.). Overall, 4,648 out of 30,642 classrooms were than the national average. The KDP survey found 78 shown as damaged in 2001. Existing schools also percent of the permanent teachers present at school at need additional furniture and teachers in the short term. Ongoing projects may therefore be better utilized if adjusted to allow financing of 9 rehabilitation activities rather than being limited to Household surveys tend to report higher school attendance rates than facility based surveys. building new schools.

Government programs to address the school problems worrisome trend toward “recentralization” by the are encouraging. The multi-donor mission found that province. The province appears intent on allocating repairs are underway at 30 percent of the schools that most resources to doubling teachers wage remain damaged in Kabupaten Pidie. A total of 69 supplements in the next year. schools were damaged at one time or another during the past three years of conflict, and all but 14 had At the school level, both the Poverty Survey as well been repaired (but some redamaged). World Bank as the KDP survey were unable to obtain reliable experience throughout Indonesia indicates that budget information. School administrators were community involvement in the prioritization and highly reluctant to provide financial information. This rebuilding of schools is important and effective, often is consistent with the reality that in conflict situations, more effective than carrying out the work through financial information can be politically sensitive and contractors. thus is difficult to collect. It is also generally reflective of the low level of transparency in the Many persons interviewed during the multi-donor province. The KDP survey was able to collect budget mission stated that high levels of trauma among information only from 21 out of 49 schools, the teachers and students in areas touched by conflict Poverty Survey only from 75 out of 260 schools. were perhaps an even more significant problem than physical damage to facilities. There were 45,737 More specific needs assessments will have to be reported public and private teachers in Aceh in 2001, made in terms of physical and non-physical needs in of which 27,434 were at SD, 10,735 at SMP and education, and how these are presently being 7,568 at SMA (including madrasahs, ibtidaiyah and managed. The fielding of SUSENAS 2003 in Aliah). As is, there is a need for additional teachers, January/February will improve our knowledge of especially at the secondary level and for certain welfare in the province at the local government level, subjects (i.e. math, chemistry, physics). An but other initiatives like a full KDP survey later in the insufficient fraction of the teachers that are present year or a more concerted schools and schools meet the basic requirements for teacher training: financing survey can help. 33.56 percent for SD, 49.22 percent for SMP and 62.68 percent for SMA. Additional incentives are By way of summary, the main conclusions of this needed to attract teachers to conflict-prone areas. poverty overview are that:

Funding for education is assured through the Special · On average poverty rates in Aceh are below Autonomy Law that states that 30 percent of funds the national average; must be allocated to education. The most significant challenges appear to be in implementation. The use of · For the groups most directly affected by the these funds in 2002 and 2003 still needs to be conflict, however, poverty rates can be high; clarified. Allocations are going to the Dinas Pendidikan, but the 30 percent is being defined to · The quality and coverage of public services include allocations for higher education, culture, sport in Aceh have been disrupted by the conflict and youth programs. The provincial education and will require corrective actions to restore agency received 20 percent of the allocation while 25 them.. percent of the budget went to local government in 2002. 2.2 The Climate for Business The provincial government transferred 90 percent of the local government share through specific In the long run, private sector growth will be the allocation and the rest as block grants mechanism. foundation for Aceh’s development and success in During the multi-donor mission, local governments meaningful poverty reduction. Oil and gas sector, complained about this level of earmarking, and said which are accounted to the mining and manufacturing that it detracted from their priority activities. These sector, accounted for 48 percent of Aceh’s regional disputes show the disparate views on responsibilities income in 2000. However, this sector is largely of an and authority of local governments and suggest a enclave type and impacts the economy primarily

through channels such as fiscal revenues (see next can’t work their fields or plantations and can’t get section). their produce to market. Poor security on the main highways has meant that goods traveling between Table 5, which compares growth in non-oil and gas Medan and Aceh arrived irregularly and at higher GDP in Aceh with growth in national GDP shows a cost. When the transportation system can’t operate, pre-crisis economy in Aceh more robust than for the neither people nor goods can move efficiently, nation as a whole. Moreover, the reduction in markets don’t work, and the economy is paralyzed. provincial GDP that occurred in 1998 and 1999 was Thus the agreement between GAM and the smaller than that experienced nationwide, and though Government must come with improved security in all Aceh’s return to positive growth has lagged, areas, from the most remote village to the main estimates for 2002 suggest it has nearly caught up. highways, if the economy is to restart and people are to rebuild their livelihoods. Most Acehnese continue to depend on the agricultural sector, especially the poor (see Table 6). The sector includes plantation crops, estate crops, and forestry, Transport Costs many of which are traded beyond the provincial boundaries. Box 1 presents one view of the pre-CoHA situation. The multi-donor mission corroborated it, with variations. For instance, by one account, GAM was Insecurity is Costly for Business previously asking Rp.5 million for each truck as an annual tax. Before the CoHA there were more than Businessmen, bankers, and government officials are 100 checkpoints on the Trans-Sumatran Highway

Table 5: Comparison of Economic Growth in Nanggroe Aceh Darussalam and Indonesia Growth in GDP (%) 1996 1997 1998 1999 2000 2001 2002 Aceh 7.69 5.28 -5.78 -1.33 0.47 1.58 3.01 (est) Indonesia 7.64 4.70 -13.13 0.79 4.90 3.32 3.50(est) Source: BAPPEDA NAD, 2002. unanimous in their opinion that the number one between Aceh and Medan. At each checkpoint, a requirement for restoring growth in the private sector trucker had to pay between Rp.30,000 and Rp.50,000. is peace and security. Without security in the rural In addition there were “wild” checkpoints, and they areas, farmers in this largely agricultural province cost at least Rp. 200,000 each, with the risk that the cargo would be damaged or the drivers physically abused. To "protect" truckers, the military and Table 6: Aceh’s Economic Structure BRIMOB sometimes organized escorted convoys. Sector Non Poor Aceh RGDP Depending on the value of the cargo, participation in poor 2000* the convoy would cost between Rp.300,000 and Rp. Agriculture 60.28 75.59 57.1 700,000 from Banda Aceh to the border with North Mining 0.12 0.25 1.1 Industry 5.08 5.92 10.9 Sumatra. Even when part of a convoy, truckers Electricity 0.09 0.09 0.3 deemed it wise to throw out small incentives at each Building 2.89 2.00 4.3 checkpoint (Rp.2000 to 5000). The new Police Chief Trade 15.20 8.12 11.1 for Aceh has stated that he will take strict action Transportation 2.99 2.52 8.8 against any of his men that still collect illegal levies. Finance and Other 0.35 0.13 1.2 Services However, many observers note the difficulty for Community Service 12.99 5.38 5.1 security forces to curtail lucrative money-making Total 100.00 100.00 100.0 opportunities. Source: SUSENAS 1999, BPS *non-oil and gas Since the CoHA, the situation has improved. The number of checkpoints has gone down sharply, and

they are charging much less. The only area were the for very low investment rates. Small businessmen situation appears not to have changed is Aceh Timur. who have been burned out can’t pay outstanding Each Banda Aceh - Medan trip now costs about credit and can’t borrow to rebuild. New or revolving Rp.400,000, according to local officials in Pidie. credit lines are reportedly impossible to obtain except for the very best, most secure businesses. As a result, There is still widespread evidence of other forms of many of the borrowers that can pay are not repaying direct extortion to enterprises. For example, a shrimp on existing loans, preferring to preserve working farmer with a turnover of Rp. 60 billion and 400 capital when there is no assurance of another loan if families as permanent staff closed his business capital is needed later. because it became too risky to operate. There was constant extortion. Infrastructure was not safe, Traders who continue to operate in the rural areas are employees were not safe, equipment and produce almost always self-financed. Businessmen complain were stolen, there were clashes preventing the that loans are available mainly to civil servants and farmers from collecting their shrimp, and there were are used primarily for consumption. This picture is too many roadblocks. generally confirmed by banks in the province. One public bank with the largest rural coverage reports 21 Security is also a problem for commerce at sea. The percent growth in credit this year (to date), but the Jakarta Post of January 13, 2003 reports complaints number of borrowers has declined by 2 percent. An from fisherfolk in North Sumatra that they are important commercial bank in the province stated that

Box 1: The Impact of Conflict on Transportation in Aceh

Medan is the central point for trade in Aceh, as consumer goods are distributed from there, most commodities are processed there, and all exports transit through Belawan port. Transportation is thus key to all aspects of consumption and production in Aceh. It was greatly affected by the general conflict and state of insecurity. · Trucking firms were spending an average of 60% of total cargo revenues at formal and informal check points. · From Aceh to Medan (608 km), there were 60 official check posts along the East Coast road, and 87 check posts along the West Coast road. · Passage through each check post involved payments ranging from Rp 50,000 to Rp 2 million, depending on the value of the cargo. Failure to pre-negotiate these amounts meant higher fees and added time to negotiate at each check post. Buses and bemos also had to pay at the check points, but a lower amount. · Average cargo transport costs for the Aceh-Medan trip were Rp 250/kg, reportedly the highest land transport costs in Indonesia. · NAD has a public rolling stock estimated at roughly 70,000 vehicles (including trucks, buses, bemos, etc.) although only an estimated 15% of those vehicles were on the road prior to CoHA. Many have been burned, but a large number were being warehoused both in Aceh province and in North Sumatra, waiting for safer times. · Many interior areas suffering more persistent conflict may not have had any public transportation service available. Sources: Organda and private sector interviews, February and November, 2002 subjected to extortion and piracy in Acehnese waters, they are very selective in their lending and tend to typically costing up to Rp. 5 million per day. focus on recruiting the best of existing businesses.

Credit is Limited Restricted Access to Markets

Provincial and kabupaten Chambers of Commerce in Products like coffee are grown by smallholders in Aceh identify the absence of credit as a major reason Aceh. They sell to roving middlemen. The farmers do

not manage to make a decent profit because they lack § De-politicize aid, and deliver it directly to the access to markets, and the middlemen are able to people. control the prices. Moreover, the cost of § Focus on technical assistance. transportation weighs heavily on the farmers’ profits.

Bulky goods are of course more sensitive to the cost It will be important to monitor “transaction costs of of transportation. Oil palm fruits are a good example: doing business” over the next few months. While according to local businessmen, the price of a recent observations suggest that the situation has kilogram of fruit is Rp. 200 west of Lhokseumawe dramatically improved as described above, the JSC but goes up in price to Rp. 680 close to the border has been receiving increasing numbers of reports of with North Sumatra. illegal levies. The reports may reflect greater willingness to report incidents since CoHA, rather The Private Sector’s Post-conflict Priorities than a higher incidence of extortion. When representatives of the private sector were asked during recent interviews what kind of assistance 2.3 Public Resources, Spending would be most effective for Aceh, they were remarkably thoughtful and generally consistent in and Planning their answers: To better appreciate current public spending patterns § Provide infrastructure and security so the and possible resource needs in Aceh, one needs to private sector can operate efficiently. focus on the central government, the provincial § Re-establish a functioning legal system. government, and the province’s now 20 local governments – kabupaten and kotamadya – jointly, § Monitor illegal rent-extractions that may not including resources provided by donors/multilaterals. immediate disappear with the ceasefire. Such a consolidated picture incorporates three major

Figure 1: Principal Fiscal Flows in Aceh (Center, Provinces, and Local Governments)

Central DAU/Shared Revenues (Pusat) DAK+Other Own Revenues Own Revenues

Provincial Government Local Governments (20)

Central Spending Provincial Spending Kabupaten/Kota Spending APBN APBD ABPDs

Legend: General Flows: Block Grant (DAU), Shared Revenues (SDA/STX) Earmarked Flows: Special Grant (DAK), Other (e.g., 2003 Wage Supplements)

public spending flows to Aceh: (a) expenditures by reforestation, infrastructure, education and health the provincial and local governments through the remain small. Own revenues (PAD), for example regional budgets (the APBDs); (b) expenditures by taxes of restaurants and hotels, tend to be quite the national government (the APBN, and its routine limited. “DIKs” and development “DIPs”, donor projects often playing an important part in the latter); and (c) Figure 2 adds up these various revenue components donor/multilateral funding that does not flow through for Aceh, and compares that sum to Indonesia’s 29 or enter into the government budget. Figure 1 other provinces. In 2001, at least Rp. 4.4 trillion illustrates the major revenue flows and ultimate (USD 490 million), or Rp. 1.1 million per capita spending by center and regional governments. (USD 123), appears to have been available in Aceh Regional governments in Indonesia rely primarily on for the provision of public services and investments central transfers (World Bank 2002a,b). These through regional budgets and the part of the central include the general block grant (DAU), shared taxes development budget that we can attribute directly to (STX), and natural resource revenues (SDA). Other the province.10 transfers such as the earmarked grants (DAK) for

Figure 2: Consolidated Public Resources at Provincial Level (Province, LG, Central Development)

3,500,000

3,000,000 Central Govt Development expend. Local Govt Central grant 2,500,000 Local govt tax share Local Govt Natural Revenue Share Local government own Revenue 2,000,000 Provincial govt Central Grant Provincial govt Tax Share 1,500,000 Provincial govt National Revenue Share Provincial government own Revenues Per Capita Rps (2001) 1,000,000

500,000

Province

10 These estimates do not reflect any possible withholding.

According to this consolidated picture, Aceh trailed The finalized 2003 central allocation figures suggest only East Kalimantan, Papua, and Riau, three other that Aceh will receive Rp 2.3 trillion (est. USD 260.3 natural-resource-rich provinces, in terms of available million) in block grants transfers (DAU) in 2003, plus funding per capita. This would suggest that public USD 33 million in other transfers. 12 With 7 percent spending was already 2-3 times higher on a per capita of the national allocation of Rp 2.269 trillion, Aceh basis than in many other provinces, although this has already received relatively generous DAK higher figure clearly does not say much about the allocations from the national government’s budget actual spending needs or efficiency. Special autonomy approved in 2001 has brought Aceh additional resources, especially at the provincial Table 7: Provincial (APBD) Budgets for FY level.11 2002

Regional Budgets (APBD) (Rupiah, and percent where indicated) Per Share Share Aceh is a strong beneficiary of natural resource Capita Own SDA Revenue Revs % revenue sharing (SDA), which accounted for 81 % percent of its revenues. This means that on a per Nanggroe 716,651 4.4 81 capita level, Aceh could and did plan to spend far Aceh more than most other provinces in Indonesia in 2002 Darussalam (see Table 7). Province National 189,122 28.8 10.3 Average The local (district) governments on average spent per at capita levels that were more comparable to those of local governments in the rest of Indonesia, and combined spent about as much as the province (see Table 8: Local Government (APBD) Budgets for Table 8). However, the data suggests big differences FY 2002 across the 15 local governments already in existence in 2002. While many greatly exceeded the national Per Capita Share Share per capita average, others were quite close to it. Revenue PAD SDA % % Kab. Aceh Barat 638,997 1.74 22.41 The province, moreover, enjoys more discretion in its Kab. Aceh Besar 777,360 1.78 19.89 budgets due to a lower share of wages to total Kab. Aceh Selatan 792,648 1.73 27.79 revenues (38 versus 72 percent for the average local Kab. Aceh Singkil - - - government). The province allocated its extra Kab. Aceh Tengah 820,891 2.33 11.38 resources across local government jurisdictions Kab. Aceh Tenggara - - - according to the implementation regulation (Qanun Kab. Aceh Timur - - - Kab. Aceh Utara 1,292,791 0.71 33.23 4) passed by the Aceh DPRD in 2000. Kab. Bireuen - - - Kab. Pidie 628,663 1.25 16.57 Comprehensive central, provincial, and local Kab. Simeuleu - - - government budgets for 2003 are not yet available. Kota Banda Aceh 884,974 2.87 18.78 Kota Sabang (2001 data) 4,876,106 1.34 22.85

11 Kota Langsa 609,855 2.32 13.10 Starting in 2002, Law 18/2001 (9th August) provides for Kota Loksumawe - - - Aceh’s Special Autonomy and higher revenue sharing. Aceh’s Special Autonomy Law gives it 55% of petroleum National LG Average 657,285 5.98 5.07 and 40% gas natural-resource taxes (rather than the standard Government Regulation 104/2000 (Article 12) of 15 % petroleum and 30% of gas). Law 18/2001 (Article program. The additional funds mandated in the 30 4.5) states that that this arrangement will be re -evaluated after eight years, i.e., in 2009. In addition, the Special Autonomy law stipulates that 30% of the transfers from the 12 These include USD 18 million in the newly introduced central government must be set aside for development DAK for infrastructure, health, and education, largely for expenditures in education. facilities rehabilitation.

percent education set-aside under Special Autonomy revenue sharing – and local governments together in means that ample funds should be available to Aceh, about one third of overall revenues were rehabilitate schools damaged through conflict or derived from natural resource transfers (SDA) in general depreciation. 13 2001. Aceh’s natural resource sharing revenues are anticipated to decline markedly in five years as oil Actual data for the natural resource transfers for 2003 and gas production declines. Although SDA revenue are not yet available, but revenue transfers – mostly streams are anticipated to decline, these will not from gas – amounted to an estimated 2.2 trillion completely disappear in the next ten years. By (USD 241 million) in 2002. Assuming that natural volume, production levels may drop by more than resource revenues will stay at least the same next half in the next decade (Mann, Arthur J. 2001b).14 year, this suggest that at least 535.5 million USD This would impact primarily the province. Assuming (about 133 USD per capita will be available through that Aceh did loose this one third of the regional budgets in Aceh next year, not including decentralization/special autonomy SDA revenues, this other own source revenues (see Table 9). would at present still place Aceh’s overall per capita provincial resource availability in 12th place New to 2003 is also the creation of five new local nationally (see Figure 2). governments, increasing the number from 15 to 20 (see Annex 2: nationally the total number of local governments went from 348 to 370). This expansion Central Expenditures (APBN) will also require resources to establish the new local Nationally, the central government continues to spend governments that have been split from existing units. Further work will also be needed to determine more than the regions for development, even in such the capacity and operating cost of this increased areas as education, health, and infrastructure. The number of local governments. 2002 development budget projected spending 53.3 trillion on development across the whole country. The central government’s development budget distinguishes between own source (rupiah murni) and Table 9: Projected Regional Government donor funded expenditures. Just under half has Revenues historically been donor funded.

Local Provincial Governments Government Total In 2001, we could attribute about Rp 0.97 trillion (millions (millions (millions (est. USD 107 million) of direct central government USD) USD) USD) expenditure realization to Aceh (WBOJ 2002). If we DAU 2003 241.1 19.2 260.3 assume that the center spent its development DAK/Other expenditures in proportion to population (i.e., for Special Aceh’s 4 million relative to the national population), Transfers 2003 32.6 1.4 33.9 Revenue we would expect Aceh to have received 1.03 trillion Sharing in 2002. Given the priority that is often given to (SDA/STX Aceh in government documents, we would have 2002) 134.8 106.3 241.1 expected the proportional allocations to be higher TOTAL TRANSFERS 408.5 126.8 535.3 (Government of Indonesia 2002) rather than lower. Source: Ministry of Finance, see also Annex 2 Further work will be needed to highlight the actual level of resources the center is allocating to Aceh.

Natural resource transfers (SDA) are potentially a While allocations for Aceh may be high, realized much needed boon for Aceh’s development expenditures have typically lagged behind planned prospects. But these flows will likely not last forever. allocations in past years and tend to be highly Taking the province – which draws heavily on natural

14 Until April 2000, six LNG trains operated in Aceh. 13 Much of Aceh’s basic school infrastructure was built in From the four remaining trains, two are anticipated to close the 1970s under the Inpres, has reached the end of its between 2005-2007, with only one train remaining in lifespan and needs to be replaced. operation from 2008-2014.

compressed in the la tter part of the year -- even in the present 20. This not only presents fixed costs in comparison with other areas of the country. By terms of replicating local bureaucracies, but also October 15, 2002, only 46 percent of overall national concerns about a further fragmenting of local central development allocations had been realized. capacities for implementation. Absorption capacity The government was still projecting realizing Rp. in various sectors could present serious problems for 47.5 trillion (90.1 percent). Local government implementation, and some regions such as Aceh expenditures have been even more problematic, with Tenggara were reported to be especially weak. reportedly less than 30 percent of the APBD having Although the province could act to backstop smaller been disbursed by the fourth week of November or weaker local governments under Special 2002. Anecdotal evidence suggests that the problem Autonomy, there were some indications that the gulf of realized expenditures may be especially chronic in between provincial and local governments in Aceh Aceh, particularly for donor funded activities (Mann, was widening rather than closing. Measures for Arthur J. 2001a). Whereas this is an overall problem better planning, coordination and responsibility for development spending in Aceh, in the current assignments will therefore be critical elements to the circumstance it may also be an opportunity. The effective spending of fiscal resources. emphasis in 2003 – where initial budget plans are for Rp 54.5 trillion -- may therefore not have to be in Also, the regional governments will have to be increasing budgetary allocations for Aceh, but careful to engage in effective medium-term civil ensuring that those allocations are actually service management. Recent fiscal windfalls in implemented effectively. education will apparently be used to supplement for example teachers salaries for 2003. Further work will Underspending can be partly explained by the unclear have to be done to evaluate the effectiveness and rules regarding budget allocations to local fiscal sustainability of such measures. Efforts by the governments. Law 18/2001 on Special Autonomy not Bappeda and the University of Syiah to engage in a only granted Aceh significant additional levels of broader process of Aceh 2020 (“V isi Aceh 2020”) revenue sharing, but significantly enhanced the role with broader parts of civil society are to be of the province and the governor in Aceh. This encouraged. contrasts with decentralization Law 22/1999, which places primary resources and authority in the hands of Many of the institutional features, and weaknesses, of local governments. Much ambiguity remains, and planning and budgeting in the rest of Indonesia are understandably many local governments in Aceh lean also evident in Aceh. Uncertainties surrounding towards the interpretation of Law 22 more favorable Special Autonomy potentially introduce additional to them. This lack of clarity, along with lack of challenges in the province. The province’s intention implementing provincial regulations, could to implement Islamic law may pose still other undermine the effective use of resources. At the challenges. same time, more clarity needs to be established as to the level of central government (ABPN) resources Since the province and local governments rely that are implemented in the province. heavily on natural resource transfers, delays in setting these allocations have delayed budget implementation The distribution of revenues across Aceh’s local for 2003. Combined efforts will have to be made to governments is regulated by Qanun 4 of February anticipate allocations earlier and allow for more 2002. The Qanun states that 40 percent goes to the flexible implementation, especially to yield fast and province, 25 percent goes to the producing district, effective results from available budgets in Aceh in the and the remaining 35 percent is distributed to the upcoming year. The Governor has established a “Tim other districts based a formula involving population Migas” to liaise with the center on the timing and and land area. Further analysis will need to calculation of transfer. determine the degree to which this promotes fiscal equalization across local governments in Aceh. Provincial planning priorities are set out in provincial Qanuns (i.e., local regulations/Perdas elsewhere) 1-3, The number of local governments in Aceh has 2002 (i.e., the Propeda, Renstra, Repetadas). The doubled during the few years, increasing from 10 to regional development program (Program

Pembangunan Daerah (Propeda)) is a broad statement other supervision agencies (BPK and BPKP) and to of provincial government objective and includes a improve capacity in Bawasda. statement of vision and mission. Rencana Strategis (Renstra), a strategic plan with a three-year time Lack of transparency and consultation at this stage horizon, is aimed at establishing accountability for are unfortunate, because they are among the main the heads of the region and the heads of dinas/badan. avenues through which government can win back the Based on Renstra, Rencana Pembangunan Tahunan trust of civil society. One “quick-fix” approach Daerah (Repetada), an annual plan, is developed. The would be for the government to ask third parties such Repetada is the only planning document that connects as NGOs, the new media, the university, to with the local budget (APBD). participate in supervision and monitoring of on-going program to ensure effective implementation. A review of these instruments suggests that they do not have clear linkages at the provincial level, and that linkages are even weaker with the corresponding 2.4 Governance Issues instruments at the local level. Moreover, the lack of clear performance indicators makes it difficult for Aceh faces many of the same characteristics and stakeholders to measure government’s performance challenges of regional government and development on providing public services. NGOs expressed the evident across Indonesia after decentralization. view to the multi-donor mission that there was no Responsibilities over resources and service delivery transparency and involvement of the civil society and increased signif icantly for provincial and local that it was even difficult to get access to the governments (World Bank, 2002). While documents decentralization offers the opportunity for more responsive government, this can by no means be The current Rakorbang (regional development taken for granted. Lack of capacity and limited planning and consultation) did not appear to accountability on the part of regional governments adequately respond to the demands from the can undermine the prospects of enhanced public community and other stakeholders. Local services to communities and of a return of investment governments complained that they were not for broad-based growth. sufficiently involved in planning and implementation processes by the provincial level, e.g., in discussions The post-conflict and special autonomy situation surrounding national roads. For example, some local gives additional, unique dimensions to restoring officials were concerned that province appeared public services and productive investment in Aceh. focused on large, prestigious new projects rather than To be sure, although the conflict has touched all of on rebuilding and rehabilitating the facilities that have Aceh, there are considerable differences across the 15 been damaged or destroyed by the conflict. province. However, the legacies of conflict, exclusion and marginalization weigh on many parts Most of the tender processes do not appear to follow of society. First, the need to rebuild trust is great: transparent procedures. Information on public works trust between the government forces and GAM, projects was not routinely being disclosed to the between the public and government in general, and public, for example on signboards at project sites. between levels of government. Distrust is a barrier to There is a general perception that management of the democratic participation. sectors remains closed, and that projects are controlled by vested interests (e.g., Pemda and Second, there is an increasing pressure on the contractors). provincial government to act quickly to meet the public’s overwhelming expectation of fast and The local government internal auditor (Bawasda) is concrete economic development. responsible for controlling local government expenditures. However, limited audit scope, limited staff capacity, and restrictions on field visits because 15 of the conflict have constrained its performance. The conflict was initially most pronounced in the There is a need to integrate the control function with eastern regions of Pidie, Biruen, North Aceh, and Eastern Aceh.

In the post conflict context in Aceh, good governance (b) uncertainty regarding the respective roles of the and security are widely seen by all consulted governor and regents/mayors, and (c) no clarity on stakeholders16 as critical preconditions for long-term accommodating political aspirations, including those development, economic recovery and reconciliation. of GAM, into the formal and peaceful political Insecurity caused by, for example, increased process. criminality or illegal taxation is indicated as a key factor limiting the successful restart of economic The first obstacle to Special Autonomy is a lack of activities and undermining the credibility of the provincial regulations to implement the law. UU institutions responsible for delivering services, NAD NO. 18/2001 can only begin to have its full administering justice and protecting the population. effect after enactment of a multiplicity of provincial Furthermore, it is perceived as weakening trust, regulations (called Qanuns in Aceh, Perdas in the rest confidence building and reconciliation efforts. of Indonesia). The law mandates direct popular elections of the Governor, Vice-Governor , regents Discussions during the multi-donor mission, and mayors and vice-regents and mayors, to establish particularly with civil society organizations, a democratic government in Aceh, with legitimate highlighted the importance of increased participation authorities at both provincial and local government and consultation in Aceh’s reconstruction and the levels. About half of Aceh’s regional heads are up building of democratic processes in the province. A for election in the next year, and there has been much number of key priorities were put forward: political pressure for the implementation of direct elections (“pilsung” or pilihan langsung). However, § ensuring broad participation of civil society the Qanun to define details of the direct election has actors in the All Inclusive Dialogue and not yet been passed by the provincial parliament ensuring the dialogue covers all aspects of (DPRD). Law 18; § improving consultation of communities in The Quanun has been drafted, by 33 members of the service delivery and program design; DPRD, with assistance from a Jakarta-based NGO, § ensuring that women’s contribution as peace Center for Electoral Reform (CETRO), and the U.S. - builders and peace-makers are effectively based International Republican Institute (IRI). built upon and their perspectives sought; DPRD NAD has just accepted the draft for § supporting local capacities for promoting discussions, which could be finished in March 2003. peace and reconciliation and for finding It is not clear whether the draft has been subjected to innovative solutions. adequate public consultation. Elections could § Improving transparency and accountability potentially begin in 2003, but careful planning of the regarding the allocation of development election process will be critical for its success. resources The second obstacle regarding the special autonomy package is the uncertainty over the roles of the Special Autonomy and Governance governor and the regents. The existing autonomy law (UU No. 22/1999) gives principal authority to regents The Special Autonomy Law of Nanggroe Aceh and mayors in managing financial and administrative Darussalam province (UU NAD No.18/2001) was affairs, whereas the UU NAD No. 18/2001 gives enacted in August 2001 by the national parliament some of this power to the governor. The dual (DPR). While this law gives enormous opportunities authority created by the two laws is creating for the future development of Aceh, there are three confusion among local and provincial authorities as to critical challenges that must be overcome to achieve which law should be respected. One example is a full implementation of the law: (a) lack of complaint from a Bupati that the provinc ial implementing regulations (e.g., for direct elections), government intervened to deny a planned purchase of school buses for his regency. His opinion was that 16 This issue was raised as a priority by almost all the purchase of the school buses is the right of regent interviewees including: governance officials, members of based on the provisions of the UU No. 22/1999. This law enforcement agencies, international and national NGOs alike, and field members of the JSC.

uncertainty needs to be resolved through consultation judicial system. In addition, jurisprudence and leading to enactment of appropriate qanuns. judicial procedures are underdeveloped, the safety of judges, staff, witnesses, evidence and suspects is The third challenge is to find ways to accommodate continuously at risk (judges and administrative staff regional aspirations such as those of GAM in the are being threatened and are afraid to continue their formal political system. The law on political party duties). Capacity is very uneven throughout the amended by the DPR in December 2002 does not province. recognize a regional party as a contestant in the 2004 general election. Thus, the fact that GAM’s support While Law 18 stipulates the creation of a Syariat base is in Aceh limits its opportunity to form a Court System, the provincial regulations are still to be political party and contest an election. It is difficult developed and approved. to imagine that GAM would join existing national parties. UU NAD No.18/2001 does not address this Adat courts are the most accessible mechanism for issue either. ordinary people. In Aceh 90 percent of the disputes are handled through Adat courts. In the current post The first obstacle can be resolved at the provincial conflict environment, adat law could also be a level, while resolving the other two needs action by powerful tool for reconciliation and conflict the central government. Provincial leaders in both the resolution. Regrettably, adat judges (village leaders) executive and legislative branches must therefore are no longer elected, are seen as vulnerable to abuse work closely with the central government and the by the parties to the conflict and, as lacking neutrality national parliament. Transparency is essential to and sufficient knowledge. avoid both the reality and the appearance of closed decision-making by political elites. Law Enforcement Judicial Reform With respect to the police, civil oversight by the provincial governor as stipulated in Law 18 will have The Special Autonomy Law and the CoHA give the to be further defined in a provincial police law. The province special authority and responsibilities in Qanun has been drafted but still needs to be disclosed justice and law enforcement. The province thus needs to the public, discussed and approved including a to take the lead in reforming and strengthening the time-table for implementation. A key challenge is to judicial system and the police. Both institutions counter the existing lack of trust, perceived lack of present particula r challenges, and as police and accountability and abuse of power by law judicial reform have proven difficult at the national enforcement institutions and mechanisms. Success in level, the risks and opportunities provided by the this would engender the respect for the law that is special situation in Aceh need to be better assessed. currently weak in many parts of Indonesia.

After 26 years of protracted war, the formal judicial The rapid integration of about 4,000 BRIMOB into system has collapsed. Eighteen permanent courts the Uniformed Police and the gradual recruitment of used to operate in Aceh, but now they operate from Acehnese into the forces (possibly including former only six locations, exacerbating the burden on those GAM combatants) put pressure on the system to six and reducing access to the system for the majority enhance and extend capacity (including training), to of people. Access to courts is already an issue in ensure that officers have the ability to undertake their Indonesia, and the current physical distances are duties professionally. making the formal justice system even less accessible.

As the conflict has broken down trust within society 2.5 Infrastructure Issues in general, suspicion about court decisions and Rehabilitation and reconstruction of infrastructure perceptions of widespread corruption have further that was damaged or that deteriorated though lack of decreased the credibility and effectiveness of the maintenance as a result of the conflict is important,

especially in the short run. But Aceh’s infrastructure The project financing was included in the ADB- has not been excessively ravaged by the conflict. supported Power Development and Energy Enhancement Project approved in October 1995, and JBIC Loan IP-441 signed in December 1995. The Electric Power consulting services for supervising project implementation ($21 million) and civil works ($68 Power shortages were considered to be acute million) will be funded under the JBIC loan, and problems by many stakeholders contacted during the metal works ($13 million), electrical works ($40 multi-donor mission. Electric services in Aceh were million), and transmission line for power evacuation poor even prior to the conflict, with insufficient ($9 million) will be funded under the ADB loan. transmission and power generation in place. Supply is often intermittent across Aceh, a condition that creates disruptions in many sectors, including in The tendering process for the civil works had to be suspended when prospective contractors withdrew education, small and medium industries, and because of security concerns. A joint JBIC-ADB staff government offices. One response for those who can field mission is tentatively planned in the second afford it has been to buy small generators, but this is quarter of 2003 to evaluate the possibility of neither efficient, environmentally desirable, nor restarting the project. The project cannot alleviate the practical for lower-income families. present power shortage problem in Aceh as its The maintenance of PLN’s equipment contributes to benefits will be available only after 5-6 years. the problem; it is substandard in part due to constrained budgets. The tariff for electricity in Aceh There are three proposals for privately-owned power is only Rp. 350/Kwh, while the break-even point is plants in North Sumatra, namely Asahan I Rp 700/Kwh at the moment. The tariff levels have not hydropower plant (180 MW), Suralla geothermal been changed for years. power plant (330 MW), and Sibayak coal fired power plant (120 MW). The power purchase agreements for Short-term actions to ameliorate the present power the three projects were signed prior to the 1997 crisis shortage have to involve operational measures by but project implementation was initially postponed in PLN, as implementation of any new power generation by Presidential Decree 39 of September 1997, and capacity will require at least 2-4 years. Although later approved to continue by Presidential Decree 15 Aceh is interconnected to the North Sumatra grid, in March 2002. Renegotiations have been held during spare capacity is not available in PLN-owned power the past 2 years with the project developers to restart plants there. One promising possibility is for PLN to the project implementation under revised terms. A buy surplus power from captive power plants owned suitable framework could be developed to expedite by large industrial consumers (fertilizer and the renegotiations and project implementation with petrochemical plants). The installed power generation specific allocation of power for Aceh and the capacity of such plants in Aceh is 485 megawatts responsibility of power purchase being shared (MW), out of which 47 MW is already connected to between PLN and the Aceh provincial government. the PLN grid. If the government finds this approach Developing this type of a new approach will require suitable, commercial terms will need to be negotiated time and resources, and its benefits will be available by PLN with the owners to make surplus power for another 3 to 5 years. An ADB-funded TA is available when the PLN supply is insufficient. presently under implementation to develop a new framework for private sector participation in power The Peusangan hydropower project is an integral part generation projects outside Java-Bali, and its of the least-cost development plan to meet the power recommendations will be useful for finalizing this demand in Aceh and North Sumatra. It utilizes the approach (recommendations expected by mid-2003). existing lake and regulating reservoir, which obviates the need for major civil works and hence the environmental and social impacts are minimal. The Another possibility is for PLN to procure diesel design and detailed engineering of the project were generators or open-cycle turbines that can be installed prepared under an ADB loan approved in July 1991. in Aceh's major load centers in a relatively shorter period of 1-2 years. However, such power generation

will have to be based on fossil fuel so will have adverse environmental impacts, and the cost of power will be higher. That approach would require Aceh to substantially increase the electricity tariff in the province, which will only be possible once the government regulations following the new Electricity Law 20 of September 2002 are issued (expected by end 2003). PLN will also require assistance in capital investment as the average national tariff is presently insufficient to provide additional resources (the tariff level will be adequate 2005 onwards).

Housing

Aceh faces the challenge of rehabilitating approximately 13,501 houses estimated to have been destroyed in the conflict, according to the provincial Department of Social Welfare. The provincial Department of Urban Affairs and Settlements has an immediate plan to rebuild and rehabilitate the houses that have been destroyed by the conflict throughout the province. The Department allocated resources and started implementing rehabilitation for 3,135 houses. However, these is some debate about how the entire task can best be financed and carried out. As is the case with schools, the communities themselves should be looked on as excellent sources of labor and ingenuity in this effort.

References and Data Sources

References Badan Pusat Statistik and Badan Perencanaan Pembangunan Daerau NAD, 2002. Aceh Dalam Angka (Aceh in Figures). Jakarta.. BapPeda NAD, 2002, Economic Reconstruction and Reconciliation and Society Building Province of Nanggrow Aceh Darussalam, Dinas Perkotaan dan Permukiman, 2002, Usulan Program:Dinas Perkotaan dan Permukiman Propinsi NAD dalm Pertemuan Dengan Negara Donor di TokyoIchsan, Chairul, Islahuddin, Abd.

EN.REFLIST

Data sources area is, the categorization of households in poor, The most recent of the Susenas household survey was middle and rich it is based on an indicator based on conducted in 1999 by the bureau of statistics (BPS). household assets and consumption. The sampling For more recent data we rely on a poverty survey however, remains non-random. If we compare conducted by the University of Syiah Kuala17 characteristics of time-invariant variables across the (Poverty Survey) and a facility survey conducted by three groups we find that the poor generally have KDP facilitators (KDP survey). rather similar characteristics. The housing characteristics indicate that the rich in the Poverty The 1999 Susenas provides statistically sound Survey represent a higher income bracket than the estimates of poverty, and other social welfare rich in the Susenas household survey. indicators. The data also allow for a comparison between Aceh and the rest of the country. BPS ceased The KDP survey was fielded in September 2002 and the household survey after 1999 because of safety collected information on prices, wages, and health concerns. When presenting tabulations by welfare and education service delivery from 900 kecamatans status we distinguish between poor, middle, and rich in which KDP was operating throughout the country. households. For the analysis based on the Susenas The choice of the village where the facilitator 1999 this classification is based on the per capita collected the data was not specified. The purpose of household consumption of the household. The first the survey was to establish a mechanism that could quintile is categorized as poor, the third as middle and deliver up to date information on the situation in the the fifth as rich. social sectors by using existing project reporting mechanisms. The Poverty Survey was conducted by students of the university during their summer break in August 2002. Basic socio-economic information was collected from households, health and education facilities and a community questionnaire for 2 villages in almost all kecamatans in Aceh. Students were asked to collect information from 2 poor households, 1 middle, and 1 rich households. Because the classification is subjective, and probably depends on how wealthy the

17 Financial assistance was provided by the Office of Transition Initiatives and technical assistance by the World Bank.

Annex 1. Fiscal Flows to Aceh’s Regional Governments, 2002-2003 Central Transfers Other Allocations FY 2002 Revenue Sharing DAU DAU Wage Hike Teacher 2002 DAU TA DAU 2003 2003 Compensation Top Up SDA SDA Final 2003 AdjustmentFinal DAK 2003 2003 2003 STX SDA (Oil) (Gas) (Other) (billions Rp) (billions Rp) (billions Rp) (billions Rp) (billions Rp) (billions Rp) (billions Rp) (billions Rp) (billions Rp) (billions Rp) (billions Rp) 1Kab. Aceh Barat 174.8 76.3 0.0 76.3 9.2 4.7 2.1 6.6 7.7 1.2 0.2 2Kab. Aceh Besar 167.0 192.2 0.0 192.2 7.0 12.7 3.3 5.0 7.7 1.2 0.2 3Kab. Aceh Selatan 137.5 114.3 0.0 114.3 10.9 6.7 1.5 4.2 7.7 1.2 0.2 4Kab. Aceh Singkil 101.5 93.3 8.3 101.5 3.6 1.6 0.6 4.8 7.7 1.2 0.2 5Kab. Aceh Tengah 146.1 149.7 0.0 149.7 12.5 7.4 2.5 4.9 7.7 1.2 0.2 6Kab. Aceh Tenggara 130.6 89.1 0.0 89.1 10.2 4.0 1.2 5.4 7.7 1.2 0.2 7Kab. Aceh Timur 180.1 139.0 0.0 139.0 8.4 8.2 2.5 15.0 21.2 1.6 0.2 8Kab. Aceh Utara 199.9 149.1 50.8 199.9 4.4 9.4 2.9 24.4 94.8 15.7 0.2 9Kab. Bireuen 138.9 154.0 0.0 154.0 4.8 8.5 3.2 7.7 7.7 1.2 0.2 10 Kab. Pidie 233.0 221.8 11.2 233.0 8.7 12.4 3.9 5.5 7.7 1.2 0.2 11 Kab. Simeuleu 87.3 79.7 7.6 87.3 10.2 1.4 0.6 4.7 7.7 1.2 0.2 12 Kota Banda Aceh 138.0 134.5 3.5 138.0 8.4 7.8 2.7 7.7 7.7 1.2 0.2 13 Kota Sabang 79.9 77.8 2.1 79.9 9.6 1.8 0.3 4.6 7.7 1.2 0.2 14 Kota Langsa 57.5 62.6 0.0 62.6 3.4 1.0 0.4 0.0 7.7 1.2 0.2 15 Kota Loksumawe 62.7 87.3 0.0 87.3 3.7 2.8 1.0 0.0 7.7 1.2 0.2 16 Kab. Aceh Jaya 0.0 41.9 0.0 41.9 8.6 2.8 0.8 0.0 631.4 228.8 1.2 17 Kab. Nagan Raya 0.0 64.9 0.0 64.9 8.8 1.5 0.4 - - - - 18 Kab. Aceh Barat Daya 0.0 47.6 0.0 47.6 8.7 2.3 0.5 - - - - 19 Kab. Gayo Lues 0.0 58.9 0.0 58.9 8.2 1.9 0.6 - - - - 20 Kab. Aceh Tamiang 0.0 52.5 0.0 52.5 9.1 2.9 0.9 - - - -

Local Governments (Total) 2,034.7 2,086.3 83.5 2,169.8 158.5 101.9 32.1 100.3 847.9 261.1 4.0 Province Aceh 172.4 76.1 96.3 172.4 2.5 9.7 0.0 32.0 54.1 8.1 1.2 Province Aceh (Special SDA) 0.0 631.4 228.8 1.2 Total (Province + LGs) 2,207.1 2,162.5 179.8 2,342.3 161.0 111.6 32.1 132.3 1,533.4 497.9 6.4

Local Governments (est. million USD) 226.1 231.8 9.3 241.1 17.7 11.3 3.6 11.1 94.2 29.0 0.4 Province (est. million USD) 19.2 8.5 10.7 19.2 0.3 1.1 0.0 3.6 76.2 26.3 0.3 Total Aceh (Province + LGs, est. million USD) 245.2 240.3 20.0 260.3 18.0 12.4 3.6 14.7 170.4 55.3 0.7 Source: Ministry of Finance. Rate used is Rps 9,000/USD

ANNEX 2

Monitoring of the Reconstruction and Development Activities in Aceh

Introduction and Objectives

A monitoring system of reconstruction activities and development programs in Aceh is be key to ensure that timely support is provided to the Acehnese population to reestablish a normal livelihood. The monitoring system is intended as a mechanism to oversee the implementation of activities and outcomes of development programs (governmental and donors programs alike) with the following specific objectives:

1. To gather data on governmental plans and other actors (bilateral and multilateral donors, NGOs, etc.) and disseminate it so as to keep the Acehnese population informed of existing and planned initiatives 2. To document progress in the implementation of reconstruction and development activities and detect delays or irregularities in the implementation process 3. To disseminate information on the overall progress of implementation of development program so as the Acehnese population is informed of on-going activities 4. To provide feedback to government and donors on progress in implementation of development program, gaps, delays so as the necessary corrective measures are taken by the concerned institutions 5. To direct any special concerns and indications of irregularities to the appropriate government institutions

The monitoring of reconstruction activities and development programs in Aceh will be an on-going process that would tentatively last for a initial period of eighteen months.

Stakeholders Consultations

The mission held discussions with local populations in the rural areas, visited sites where destruction was inflicted by the conflict, met with government officials in Kabupaten Pidie and in Banda Aceh. In addition, the mission met twice with the Forum Aceh LSM to discuss the main characteristics of a monitoring system for reconstruction activities and development programs, as described in the next section. The Forum Aceh LSM is composed of 104 local NGOs working in different themes such as economic and social projects, legal rights, women’s activities and many others. The mission also met with the Henri Dunant Center (HDC), third party mediator in the peace process.

Monitoring System

The monitoring of reconstruction and development activities is expected to rely on local NGOs capacity to follow up on government’s and donors’ development activities in Aceh. NGOs involved in the monitoring process would create a network or secretariat that would compile and consolidate the results of monitoring process in selected priority sectors (health, education, economic activities, vulnerable groups, etc.).

Local NGOs involved in the monitoring process would rely on their links to local community groups to access information and would regularly visit sites of reconstruction and development projects to inform their evaluation. Close collaboration with community groups and field presence are key elements for a successful

monitoring system. In the interest of having a stronger monitoring process, close collaboration between the NGOs monitoring network (or secretariat) and governmental institutions and donors would also be pursued.

The NGOs monitoring network (or secretariat) is expected to create mechanisms for dissemination of their reports and overall information in Aceh and in the national scene. Effective ways of disseminating information will be used including those reaching local communities, the Acehnese population in the urban areas, and the overall Indonesian population. Coalitions with national NGOs and national media would provide the venue for disseminating the results of monitoring. Close collaboration with governmental institutions and donors would also support the solution of potential irregularities in the different programs.

Additional Remarks

The creation of a monitoring network is a new initiative in Aceh and, therefore, local NGOs will need support to strengthen their capacity to successfully undertake the task. National NGOs and other national institutions would be a potential tool to provide training and technical support to the Acehnese NGOs involved in the monitoring system. Methodologies for community monitoring, communication and advocacy skills and interests based negotiation are potential areas of capacity building needs for the local NGOs. The estimated cost to get the monitoring network into operation and sustain it for 18 months would be approximately US $ 600,000.

ANNEX 3

Identification of Activities to Expand the Community Recovery Programme in Nanggroe Aceh Darussalam

CRP currently maintains a regional office in Banda Aceh to coordinate program activities at the provincial and district levels. The provincial office supports liaison offices in four districts (Aceh Tenggara, Aceh Barat, Aceh Timur and Aceh Utara). Through this mechanism, CRP manages grant activities in cooperation with local civil society organizations (such as Aceh NGO Forum, WALHI, NGO forums for Gender Issues and Human Rights).

CRP has supported a total of 63 grants to civil society organizations in Aceh since it launched operations there in 1999. A total of 35 of these grants have been to local NGOs and 28 have been direct to community-based organizations. The grantees are located in all districts of the province. The total funding committed to these grants is USD 622,000, of which USD 521,898 has been disbursed. The current programme has reached an estimated 10,000 poor households.

Future CRP Activities in Nanggroe Aceh Darussalam: CRP plans to expand its programme by focusing on two inter-linked initiatives to address the special needs of the poor in the province:

Grants to Local NGOs/CBOs to Reduce the Incidence of Poverty.

CRP proposes to expand the existing programme of small grants (average size proposed to be Rp. 200,000,000) to local NGOs and community-based organizations (CBOs).. It is planned that a programme of 260 small grants will be phased over a three year period (60 grants will be implemented during 2003 and 100/year during 2004 and 2005). Priority will be given to scaling up of existing projects and to development of new projects in the peace zones to be established under the Cessation of Hostilities Agreement. Special attention would be given to those rural areas which have been the center of conflict in the past. All grants would be implemented so as to provide support for activities which: · Empower the poor and their communities to further help themselves; · Improve the access of the poor to formal credit and other resources to further improve their levels of income and welfare; · Compliment and do not replicate other initiatives; · Provide equal opportunities for assistance irrespective of race, religion, gender or political party; and

· Are cost-effective and likely to yield sustainable benefits.

Funding Requirements/Mechanisms: As detailed in the attached Table 1, it is estimated that a total of USD 4,345,000 will be required to support this programme during 2003 to 2005. A total of USD 1,473,000. will be required to support implementation of the programme during 2003; USD 1,377,000 in 2004; and USD 1,494,000. in 2005.

All funding would be channeled through the CRP Trust Fund and administered by the UNDP. Grant funds to local NGOs and CBOs would be transferred directly by UNDP to beneficiary groups based on administrative procedures established in agreements between CRP and UNDP. Technical assistance to support programme implementation would be provided by UNDP in cooperation with CRP.

Table 1. Preliminary Estimated Cost to Support CRP Activities in Aceh during 2003 to 2005

US Dollars/Year % of Total No. Unit Cost (Rp.) Total (USD) 2003 2004 2005 Costs 1. Grants to Local NGOs/CBOs 8.600 Area Based Grants Aceh Besar 2.300.000.000 267.442 267.442 Aceh Barat 4.000.000.000 465.116 465.116 Aceh Tenggara 1.400.000.000 162.791 162.791 5 additional Districts to be determined 2.000.000.000/district 581.395 581.395 1.162.791

Small Grants ‘Regular’ Program 25 grants 100.000.000/grant 290.698 290.698 45 grants 100.000.000/grant 523.256 523.256 55 grants 100.000.000/grant 639.535 639.535 Sub-Total Grants 1.186.047 1.104.651 1.220.930 3.511.628 80,8%

2. Strengthening Capacity of Local Society Organizations - Workshops Provinces 2 x year 75.000.000/workshop 17.442 17.442 17.442 52.326 Districts 9 x 2 x year 25.000.000/workshop 52.326 52.326 52.326 156.977 - Training 430.000.000/year 50.000 50.000 50.000 150.000 Sub-Total Grants 119.767 119.767 119.767 359.302 8,3%

3. Support for Programme - CRP Staff Costs 10 individuals 40.000.000/staff/year 46.512 46.512 46.512 139.535 - Office Operation Costs 250.000.000/year 29.070 29.070 29.070 87.209 - Central Office Support 250.000.000/year 29.070 29.070 29.070 87.209 - Transportation Costs 200.000.000/year 23.256 23.256 23.256 69.767 - Vehicles (Motorcycles) 8 Units 15.000.000/unit 13.953 13.953 Sub-Total Support for Programme 141.860 127.907 127.907 397.674 9,2%

4. Technical Assistance Short Term National (UNDP) 15 months USD 1,500 /month 7.500 7.500 7.500 22.500 Short Term International (UNDP) 6 months USD 9,000 /month 18.000 18.000 18.000 54.000 Sub-Total Technical Assistance 25.500 25.500 25.500 76.500 1,8%

Total 1.473.174 1.377.826 1.494.105 4.345.105 100,0%

ANNEX 4

Description of the Kecamatan Development Project

Overview and current status -- The Kecamatan Development Program (KDP) is a government of Indonesia effort to alleviate poverty in rural areas and to improve local governance. KDP provides block grants of Rp. 500 million to 1,000 million (approx. US$55,000-110,000) per year to the poorest subdistricts and villages in Indonesia for small-scale, low technology infrastructure, social, and economic activities. Approximately 65%- 70% of KDP block grants get spent on village labor, with the remainder going to basic materials such as cement, pipe, etc.

KDP emphasizes core principles of community participation in all stages of design and management, transparency, competition for funds, open menus, and sustainability. All KDP activities aim to allow villagers to make their own choices about the kind of projects that they need and want. Facilitated by social and technical specialists who live in the project districts and villages, KDP also provides a non-violent forum to mediate different interests and reach a broad consensus on community priorities. All KDP documents are public, and the project is monitored by independent NGOs and journalists who publish their reports with no prior review.

In Aceh, KDP has functioned in without any long interruptions since it began in 1999. In 2002 the project operated in 7 districts, 63 subdistricts and some 1,234 villages.. However, conflict did affect the project’s operation in a number of ways: security concerns meant that meetings are usually held in the day rather than at night, after work, as in most other areas; villagers did not opt for economic loans because of fear to leave cash n any public place and because conditions did not ensure a stable enough environment to ensure a reasonable chance of success, and so on.

For 2003, the project will expand to 8 districts and it will cover 2,000 villages. In addition, all eight districts are adding funds of their own, sufficient to cover 700 additional villages. Three hundred facilitators (300) have been trained and are currently being deployed across Aceh.

Expansion proposal – KDP can be readily scaled up to cover the 13 main districts. This would require adding 61 kecamatans, which would include an additional 1,477 villages and a population of an additional 1.0 million villagers. Total costs of the additional amount would be approximately $16.5 million. Eighty-five percent of this amount would go to the village block grants, while the remaining 15% covers the cost of extra engineers and facilitators, independent monitoring, and fast-track training.

A proposed timetable would deploy the first wave of 300 subdistrict facilitators to the villages by mid-February. A second round to cover the expanded area could be recruited and deployed two months after that. The entire province would thus be covered by the program by the end of May, 2003. The only two major project specific risks facing the expansion would be whether GOI can expedite revision of the budget documents, and how quickly additional consultants can be recruited and changed. An informed assessment is that both constraints can be overcome.

ANNEX 5

Outline Terms of Reference for Aceh Governance and Public Sector/Regional Public Expenditure Review 2003 The Aceh RPER will be conducted by {8} faculty members (economists, lawyers, political scientists), but will draw on broader dialogues with government and civil society. The team will closely coordinate with the Provincial Bappeda and its head Pak Chairul Ichsan and a team of civil society. The report would be completed by April 2002, and be disseminated in both English and Indonesian. The group will choose three case study focus kabupatens/kotamadya (e.g., Aceh Utara/Lhokhsumawe, Pidie, Aceh Tengah, Aceh Barat (including focusing on the recent splits to Aceh Barat Daya and Naga Naraya), and possibly Sabang. The Syiah Kuala team will adapt instruments/methodology drawn from other regions in Indonesia.

Workstream Theme Local Main Civil Society Pre-CGI Outputs Possible Post-CGI Action Counterpart Government Respondents Points (including timing and Counterparts resource needs estimates) Regional Public Centered on Islahudin Bapenas Budget · Review of revenue sharing and · RPER (April 2003) Expenditure the theme of Faisal SEKDA/Kepala Transparency management under special autonomy · Public Expenditure Review broad-based, Jeliteng Biro Keuangan Groups between province and local governments Tracking Study responsive Pribadi Kepala (Sama/Somasa) · Predicted Revenue Flows in Medium (PETS) for Health and and effective Dinas Term (i.e., gas/oil) Education (tbc) service Pendapatan · Relationships between province and LGs · Medium Term delivery and Daerah (Law 22/1999 versus Law 18/ 2000) Expenditure public Komisi · Review of current planning instruments Framework Dialogue investments Anggaran and processes, and how these link to · Prospects for Trust for DPRD consultation/implementation/execution Fund Mechanisms to development Kepala processes smooth expenditure Dinas · Central Government Resources, absorption/revenue Pertambangan Responsibilities, and Coordination with management dan Energi Aceh government · Technical Assistance Tim · Evaluation of expenditures and service for Expenditure Advokasi delivery, especially in education Evaluation Migas Aceh (including special autonomy allocation of Bawasda 30%) and health Dinas · Extent of blocked donor projects and Pendidikan possible impact on fiscal Dinas disbursements/service delivery Kesehatan · Civil service review (size, capacity, incentives, etc.) · Relationship between executive,

legislative, and civil society in planning, budgeting, and service provision · Accountability mechanisms (e.g., financial management, audit mechanisms, administrative recourse) · Judicial services and accountabilities (especially as related to Law 18/2001, and complementary systems).

Poverty & Revitalizing Masbar BPS PTAs · Understand the degree to which PEMDA · Post-CGI mission on Social Information Nasmundin Dinas has sufficient information for policy health and education Monitoring for on Service Pendidikan making & planning core services (early Effective Delivery, Dinas · Review quality of comprehensive Feb) Planning and especially in Kesehatan information on facilities, services, · KDP Faclitator Village Policy Health and financing and welfare at the Survey on Core Education kecamatan/village level Service · Recommend that standard BPS instruments like National Household Surveys (SUSENAS) be restarted Investment Mawardi BKPMD Businesses, · Case Studies (e.g., coffee) of key sectors · Propose system for Climate (Lawyer), Business to see what barriers & constraints to sustained monitoring Appraisal Sofyan Associations, business are of barriers to trade and Syahnur Transport · Interviews with transportation companies illegal taxes and levies (Economist), Companies · Dispute resolution mechanisms (adat and · Complementary formal mechanisms) initiatives to reduce · Security for guarantees for business & barriers (e.g., training, traders/human security skills, and management) · Methodology for Kabupaten Level Rapid Investment Climate Appraisals (June 2003) · Monitor for example bus ticket prices/price gradients · Options for strengthening dispute resolution

The Aceh work will build on the Regional Public Expenditure Reviews (RPER) completed by the World Bank (including cases on North Sumatra, West Java, and NBT), JICA (East Kalimantan and South Sumatra), and ADB. The standard diagnostic tools will be amended to address the respective issues of post-conflict/special autonomy. The team could the use WBs West Java and Lombok Timur case studies as examples. Under the rubric of information systems for planning and policy making, we will also examine next steps for attaining a more comprehensive picture of public services and facilities, especially in health and education. The work will build on an previous collaboration of the World Bank with the Faculty of Economics at UNSYIAH to complete a Poverty Survey in September 2002. The work will examine the degree to which the local government has requisite information for effective planning, policy making, and implementation regarding the provision of basic services throughout Aceh. The work would also draw on the Governance and Decentralization Survey (GDS 2002) instruments, the KDP Health and Education Service Facility Surveys, and the Regional Rapid Business Appraisal structured questionnaires. Special attention will be paid to poverty and vulnerability assessments in a post-conflict context. The investment climate work will identify the main economic sectors in Aceh, and develop a series of rapid/appraisals to identify scope for improving the business climate and monitoring its development. The work will build on previous experience of regional monitoring of taxes and regulations in 1999/2000 by SMERU under an ASEM project.

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks ADB David Green 6325511 Gedung BRI II, 7th floor [email protected] 0812-815-5048 · L 1383: Sumatra Urban Development · 54% · The economic crisis Jl. Jend Sudirman Kav 44-46 Sector Project hampered the release of P.O. Box 99 JKPSA Farzana Ahmed 6235511 Government Jakarta Pusat [email protected] Counterpart funds. The

Amanah Abdulkadir situation has been [email protected] rectified.

Anil Terway (632) 632-6412 (p) · L 1397: Power Development & · 45% · Major issues in procurement [email protected] (632) 636-2230 (f) · Suspended on 12 June Efficiency Enhancement Project process 2002.

· 54% Irregularities found in two · L 1519: Development of Madrasah · · Investigated Aliyahs Project provinces

· L 1527: Capacity Building of Water · Project will be

Supply Enterprises for Water Loss transferred to IRM

Reduction effective 31 January

2003.

· 5% · L 1579: Northern Sumatra Irrigated · In full implementation.

Agriculture Sector Project

2 fellows for master · 7% · · Loan 1792-INO: Technological and program in USA had

Professional Skills Development sector difficulties in getting visa Project from US Embassy

· The project demands · 12%; allocation for · Relatively weak local · L 1810: Decentralized Health Services intensive support and Aceh province; capacity of new loan US$9,073,839. team. monitoring.

Disbursement to date · ADB staff constrains · Aceh has a good record (Executing Agency – CPCU’s data): for project implementation. But new $1,142,308 local team, constraints in field visit by ADB staff

and central satff, and decentralization (DIP

allocation, funds flow) has created some implemantation delay.

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks · Procurement of good for contracts below $50,000 equivalent authorized by central project coordination unit (CPCU). ADB’s approval for procurement of medical equipment and vehicles on 9 January 2003 (estimated value of the contract: US$2,340,853). · Waiting for final bidding documents, under preparation with CPCU assistance. · Other support for income generating activities and basic education is being considered

DFID Yvan Biot 5720235 · Consolidating networks and building 38

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks British Embassy, Jalan MH [email protected] 0811848332 capacity between local indigenous Thamrin 75, Jakarta 10310, 3156264x4252 peoples organizations in natural Indonesia Jim Carpy resource management – Naggroe [email protected] 3156264x4293 Aceh Darussalam.

Komang Sumariyani [email protected]

EUROPEAN Juan Planas 5706076 (p) x333 Leuser Development Project, which is · Contributing a grant · Massive logging and other Commission [email protected] 5706075 (f) cover almost two million hectares area in of Euro 32.5 million. pressures are a constant u.int Wisama Dharmala Sakti, 16 th North Sumatra and Aceh provinces. The danger to the ecosystem. Floor, Jl. Jend. Sudirman 32. activities are: Jakarta 10220 · Stabilize wildlife areas and reduce conflict · Develop appropriate economic activities and infrastructure around the periphery, including eco-tourism · Carry out an applied research and monitoring program · Build up a programme of awareness and support with local partners

JAPAN Embassy Hiroshi Matsuura 324308 x705 Menara Thamrin Bldg 8F [email protected] Jl M.H. Thamrin Kav 3 Jakarta Pusat Takeshi Kohno 3983-9747 (dir) [email protected] 0818992489

Masaki Tani 39839744 (p) [email protected] 3152859 (f)

JICA Motoo Taki 3907533 · Agreement for the Study for Sabang · The study was · The objective of this Plaza BII, Tower II, Lt 27 [email protected] Integrated Regional Development in suspended in April 2001, Study are: Jl. M.H. Thamrin, No 51 the Republic of Indonesia due to security reasons. 1. to formulate Sabang Jakarta 10350 Tanaka Tsutomu · Due to change of the Integrated Economic [email protected] situation as well as the Development Zone (SIEDZ) regional development plan for regional development the DI Aceh since the signing master plan for 2020. of the Scope of Work, it is 2. to conduct pre-feasibilty study on prioritized projects necessary to make sure whether the contents of the identified under the master previous TOR which plan for 2020; and specializes in Sabang area is 3. to support for still fesible or not for the strengthening the planning 39

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks still fesible or not for the capacity of Indonesian commencement of this Study. counterpart personnel through the implementation of the study.

· The city of Banda Aceh had been frequently damaged both by flush flood from Kr. Aceh and inland storm water combined with high tide. For instance, the inundiation in July 1996 caused serials damaged especially in the sub- basin 3, where important structures are located. Thus, urban drainage improvement is urgently required in Banda Aceh area.

· Country Focused Training in Japan (Regional Development)

· In country training (Capacity Building for Local Government)

· Support for general Election 2004

· Support for Regional Health

JBIC Shigeo Nakagawa 5220693 · Syiah Kuala University Development · Date of loan signing: · The project has been · The project aims to Summitmas II, 7th Floor [email protected] Project (L/A No.: IP-418) November 4, 1993 continuously implemented improve higher Jl. Jend Sudirman Kav. · Loan Amount: JPY even under the difficult education in Aceh 61-62, Jakarta 12190 5,467 million security condition. through the building (equivalent to about construction of the US$ 46 million) faculty of Agriculture and Engineering and associated supply of

equipments and

fellowship program for the young lecturers. · In 2001, Japanese Government approved loan extension and the 40

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks loan extension and the project is expected to be completed in 2003. · The project will

contribute significantly to the human resource development on Aceh

· The project aims to The tender procedure has · Peusangan Hydroelectric Power Plan · meet the increasing been suspended due to Project (L/A No.: IP-441) · Date of loan signing: power demand in withdrawal of prospective December 1, 1995 Region I (Aceh) and contractors due to security · Loan Amount: JPY Region II (North 10,625 million reasons. Sumatra) through

(equivalent to about construction of the 86 US$ 89 million) MW hydropower station along Peusangan River. · The project is being co-financed by ADB. · JBIC finances civil works portion of the project.

· JBIC will be able to examine the possibility of the re-tender when the peace process is smoothly implemented and the security condition is enough to attract capable

international

contractors.

· Rural Areas Infrastructure · In Aceh, the project · The project is Development Project (III) (L/A. No.: IP- allocated about Rp 45 expected to further · Date of loan signing: 506) billion (equivalent to about contribute to the July 5, 2001 $ 5 million) for 3 regencies community development · Loan Amount: JPY (Kabupaten Aceh in Aceh until 2004. 20,039 million Tenggara, Aceh Tengah, (equivalent to about and Aceh Barat) in 2001 US$ 168 million) and 2002 for improvement of village infrastructures

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks such as roads, bridges, water supply, and sanitation and small scale irrigation.

OCHA Michael Elmquist 3141308 x172 · UN Resource Centre in Banda Aceh UN Building 5th Floor [email protected] (focal point for coordination of UN and Jl. MH Thramin 14 NGO humanitarian activities in Aceh) P.O. Box 2238, Jakarta

UNDP Eugenia Piza-Lopez 3141308 x202 · Conflict Prevention UN Building [email protected] · Governance Jl. MH Thamrin 14 · Community Recovery Program (CRP) P.O. Box 2338 Guy Janssen 3141308 x201 [email protected] 08129442576 Jakarta 10240

Alan Prouty [email protected]

Andre Klep [email protected]

Kristanto Sinandang 3141308 x136 Kristanto.sinandang@und p.org

UNICEF Konrad Huber 5711326 x 236 · Ongoing peace education project with Wisma Metropolitan II, 10th & [email protected] 0811194651 Nonviolence International 11th Floor · Ongoing emergency education support, Jl. Jend. Sudirman, Kav. 31, Siddarth Chatterjee 0811-142232 including teacher training, and plans for [email protected] Jakarta 12920 school wat-san and hygiene promotion P.O. Box 1202/JKT, Jkt 10012 Steve Aswin 0812-1034472 · Limited emergency health support, UN RESOURCE [email protected] including National Immunitation Week · Plans for psychosocial support, child CENTER Eirik Gronvold 0812-1034377 Representative Office in Banda participation, and data collection on [email protected] child combatants Aceh

US EMBASSY David DiGiovanna 34359071 · Political Issues [email protected] 0816935751

USAID John D. Lindborg · Economic development 42

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks [email protected]

Jim Hope [email protected] 34359381

Michael Stievater 34359347 [email protected] 08161908571

USAID/OCPR Laurie Pierce 0811311846 · Made some quick grants to secure the DAI-Program Support Initiatives [email protected] peace of Aceh for USAID’s Office of Conflict · A new grant to the HDC to expand the Prevention and Response efforts of the Public Information Unit Menara Duta, Lt 2, Wing B (PIU) Jl. Rasuna Said, Kav. B-9 Kuningan, 12910 Jakarta · A new grant for the economic recovery through traditional group through CARDI · Establishing economic self sufficiency for female heads of households through ICMC · Expanded support to IMC for work in water and sanitation, with IDPs displaced by the conflict. · Selected 21 local NGOs, and will develop grant with each in Jan. 03 for small scale development support (agriculture, health, education, enterprise development and human rights). World Bank Farida Zaituni 5299-3040 · KDP 2; has 2,000 project funded · No disbursements Jakarta Stock Exchange Bldg Scott Guggenheim villages and 700 local government expected until May or Tower 2, 12th floor sguggenheim@worldbank. funded ones (TA at 20%). The cycle so of 2003 (but Jl Jend Sudeirman Kav. 52053 org 5299-3052 begins in January 2003, with facilitator approx. $ 13M will be Jakarta 12190 Tom Walton 5299-3080 Kai Kaiser training. No activities delay in this cycle, disbursed in 2003). [email protected] although the overall project is behind schedule because of national level issues.

· KDP 1; 7 districts, 63 kecamatans, and · Infrastructure: 96% 1,234 villages (40% of the provincial (year I), 92% (year population) II), and 98% (year III). · Loans: 4% (year I), 8% (year II), and 0.6% (year III) 43

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks · Misc.: 0% (year I), 0% (year II), and 1.4% (year III).

· Education: Junior Secondary Education · Extended and will close (JSE), contract teachers and block grant for Junior Secondary Schools for in December 2003. quality improvement, and managed by school committee.

· Irrigation: IWIRIP (Indonesia Water · FY 2002: No project Resources and Irrigation Reform · FY 2003: Rp 140 activities in the field, · Institutional Implementation Program), institutional million (incl. 10% because could not visit the strengthening to support strengthening to support irrigation local government’s sites. Only training and irrigation reform and reform and very small civil works. contribution). These coordination in Jakarta. very small civil works. budget will be about · Extended and will close Rp 60 million for the in December 31, 2004. province and Rp 40 million each for Kabupaten Aceh Selatan and Pidie.

· Limited field activities due to · Agricultural: Decentralized Agricultural · Total: US$ 8.69 security situation. and Forestry Extension Project · Project activities are: (i) million. · The Bank can not conduct (DAFEP). enhancement of · 2 districts (Aceh field supervisions, and relies farmer’s capacity to on reports from district Barat and Pidie) participate in and lead project staff through extension activities, (ii) meeting in Medan or Jakarta strengthening the district

and central project staff extension system, and regularly visit the province. (iii) provision of central · Relatively low capacity of extension policy and the project staff compared project management to other districts. support. · Closing Date: March 31, · Because of security 2004.

reasons, field activities are

limited.

· Current project issue is the development of road in · Conservation of Elephant Landscapes · Closing Date: December in Aceh (CELA): (GEF – Medium Size Aceh called “Ladiagalaska”, · Total: US$ 627,000, 31, 2002 (original). Project). which may affect the forest disburse US$ · Extended: December as elephant corridors. 591,290. 31, 2003 44

ACEH DONOR COORDINATION MATRIX ANNEX 6 Updated January 15, 2003 Organization Contact Phone No. Projects Disbursement Problems Remarks 591,290. 31, 2003 · To conserve biologically rich forest ecosysytems in Northern Aceh,

focusing on the lowland

forests that are important wildlife corridors, especially for elephant. · To maintain biological corridors between the

well protected Gunung

Leuser ecosystem and the Nothern Aceh forests. · Implemented by Flora & · Major problem on Fauna International procurement side has been (NGO), with the field lack of control and offices in Medan and

understanding of Bank Banda Aceh.

procurement procedures at · Sumatra Regional Roads Project kabupaten level where most · Extending some (SRRP); Ln 4307 - IND of the project contracts from 3 months implementation has been to well over 12 months · Aceh component is occurring. about $ 16 million of for implementation and Additionally once contracts still not completed. which close to $ 14 have been awarded, access million has been has been difficult in many committed, bur less locations in Aceh and this has than $ 11 million delayed contract disbursed. implementation, extending.

WB51267 L:\Aceh\CGI Report \final report components\CGI Brief - Aceh.doc January 23, 2003 6:01 PM