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The Republic of Indonesia Basic Study for Mid-Term Infrastructure Development FINAL REPORT

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The Republic of Indonesia Basic Study for Mid-Term Infrastructure Development FINAL REPORT No.No. Basic Study for Mid-Term Infrastructure Development The Republic of Indonesia The Republic of Indonesia National Development Planning Agency (BAPPENAS) The Republic of Indonesia Basic Study for Mid-Term Infrastructure Development FINAL REPORT FINAL REPORT March 2010 March 2010 JAPAN INTERNATIONAL COOPERATION AGENCY NIPPON KOEI CO., LTD. A1PA1P JRJR 10-01610-016 No. Basic Study for Mid-Term Infrastructure Development The Republic of Indonesia The Republic of Indonesia National Development Planning Agency (BAPPENAS) The Republic of Indonesia Basic Study for Mid-Term Infrastructure Development FINAL REPORT FINAL REPORT March 2010 March 2010 JAPAN INTERNATIONAL COOPERATION AGENCY NIPPON KOEI CO., LTD. A1P JR 10-016 The Republic of Indonesia Basic Study for Mid-Term Infrastructure Development Final Report Table of Contents Location Map Page Chapter 1 Introduction 1.1 Background and Basic Understandings of the Study ·············································· 1-1 1.2 Objectives of the Study························································································· 1-2 1.3 Work Schedule····································································································· 1-2 1.3.1 Work Plan and Bar Chart ······································································ 1-2 Chapter 2 Infrastructure Development Strategy for the Next Five Years 2.1 Economic Performance and Structure of Indonesia ················································ 2-1 2.1.1 Recent Economic Performance of Indonesia ··········································· 2-1 2.1.2 Economic Structure of Indonesia···························································· 2-5 2.2 Socio Economic Issues in Indonesia ······································································ 2-7 2.2.1 Review of Economic Performance under Current RPJM ························· 2-7 2.2.2 Socio Economic Conditions of Indonesia ················································ 2-10 2.2.3 Infrastructure and International Competitiveness of Indonesia················· 2-12 2.3 Infrastructure Provision to Sustain Strong and Equitable Economic Growth ·········· 2-15 2.3.1 Introduction··························································································· 2-15 2.3.2 Infrastructure provision to sustain strong economic growth····················· 2-16 2.3.3 Infrastructure provision for equitable growth·········································· 2-18 2.3.4 Poverty alleviation through basic infrastructure services························· 2-19 2.3.5 Infrastructure Strategy··········································································· 2-20 Chapter 3 Instructive Financing Strategy 3.1 Necessary Investment Amount ············································································ · 3-1 3.1.1 Investment Needs and Financial Gap······················································ 3-1 3.1.2 Necessary Investment Size to Achieve Target Growth ···························· 3-4 3.1.3 Empirical data and Comparison with Other Countries ···························· 3-5 3.1.4 Conclusion ···························································································· 3-9 3.2 Analysis on Government Budget Structure·························································· · 3-9 3.2.1 Infrastructure Investment Budget in Recent Years ·································· 3-9 3.2.2 Characteristics of GOI’s National Budget (APBN)································· 3-11 3.2.3 Basic Simulation of Government Infrastructure Investment Budget········· 3-13 - i - 3.2.4 Effects of Public Debt on Government Budget········································ 3-21 3.3 How to Increase Infrastructure Investment Fund·················································· · 3-24 3.3.1 Overall Strategy ···················································································· 3-24 3.3.2 Improving Fiscal Space through Decreasing Subsidies···························· 3-28 3.3.3 Promoting Infrastructure Investment by Sub-National Governments ······· 3-30 3.3.4 Promotion of PPP through System and Capacity Improvement ··············· 3-32 3.4 Strategy to Promote PPP in Indonesia ································································· · 3-33 3.4.1 GOI’s Approach to PPP········································································· 3-33 3.4.2 Progress of PPP projects in Indonesia····················································· 3-34 3.4.3 Experience of Foreign Countries and Benchmark for Indonesia··············· 3-36 3.4.4 Measure to Accelerate PPP···································································· 3-37 Chapter 4 Current Status, Issues and Development Programs for Major Sector of Infrastructure 4.1 Transportation Sector ························································································· · 4-1 4.1.1 General Information of Transportation Sector ········································ 4-1 4.1.2 Present Performance of Transportation Sector········································ 4-8 4.1.3 Regional Characteristics and Development Policy of Transportation Infrastructure························································································· 4-19 4.1.4 Development Framework for Transportation Infrastructure ···················· 4-29 4.1.5 Road Transportation·············································································· 4-31 4.1.6 Railway Transportation ········································································· 4-49 4.1.7 Air Transportation················································································· 4-65 4.1.8 Sea Transportation ················································································ 4-83 4.1.9 Evaluation of Candidate Projects in Transportation Sector······················ 4-103 4.2 Power Sector······································································································ · 4-128 4.2.1 Current Development Program······························································· 4-129 4.2.2 Progress of Development ······································································· 4-131 4.2.3 Remaining Issues··················································································· 4-140 4.2.4 Action Plan to Address the Issues··························································· 4-147 4.2.5 Priority projects for the next five years (2010-2014) ····························· 4-154 4.2.6 Candidate projects for Blue Book··························································· 4-162 4.3 Water Supply and Sewerage Sector····································································· · 4-169 4.3.1 Current Development Program······························································· 4-169 4.3.2 Progress of Development ······································································· 4-173 4.3.3 Issues to be followed up by the RPJMN 2010-2014································ 4-183 4.3.4 Action Plan to Address the Issues··························································· 4-185 - ii - 4.3.5 Candidate Projects for New Blue Book 2010-2014 and the Next Version of PPP Book ························································································ 4-192 4.4 Water Resources Sector······················································································ · 4-207 4.4.1 Current Development Program······························································· 4-207 4.4.2 Progress of Development ······································································· 4-209 4.4.3 Remaining Issues··················································································· 4-213 4.4.4 Action Plan to Address the Issues··························································· 4-227 4.4.5 Priority Focus Areas of Water Resources Infrastructure Development for Next RPJM 2010-2014 ···································································· 4-244 4.4.6 Recommendation of Projects to be listed in the Next Blue Book 2010- 2014······································································································ 4-250 Appendix-1 Procedures of Formulation of National Medium Term Development Plan (RPJM) 2010-2014 A1.1 Relevant Laws, Regulations, and Development Plans···································· A1-1 A1.1.1 Position of Medium-term Development Plan (RPJM) in the National Development Planning System ································································· A1-1 A1.1.2 How to Prepare Medium-term Development Plan (RPJM) ························ A1-1 A1.2 Relations of RPJM, Blue Book, and PPP Book etc. ······································ A1-2 A1.3 Procedures and Schedule for Formulation of RPJM 2010-14 ························ A1-3 Appendix-2 Appendix to Chapter 3 A2.1.1 Sources of Infrastructure Investment ···························································· A2-1 A2.1.2 Effective Use of ODA and PPP funds··························································· A2-5 - iii - List of Tables Page Table 2.1.1 Key Economic Indicators of Indonesia ................................................................. 2-2 Table 2.1.2 Impacts on Total Employment, 1985-2005........................................................... 2-3 Table 2.1.3 Impact on Domestic Employment by Region and Industry.................................... 2-3 Table 2.1.4 Comparison of Economic Performance with Other
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