Green Cities: a Sustainable Urban Future in Indonesia (Financed by the Government of Australia) (Part 1 of 2)

Technical Assistance Consultant’s Report

Project Number: 46380-005 October 2016

Indonesia: Green Cities: A Sustainable Urban Future in Indonesia (Financed by the Government of Australia) (Part 1 of 2)

Prepared by Robert van der Hoff, John Sutton, and Niels van Dijk Urban Solutions BV in association with PT Ciriajasa Rancangbangun Mandiri (CRM) Indonesia)

Indonesia

For Asian Development Bank

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

CURRENCY EQUIVALENTS (as of 20 October 2016)

Currency Unit – Indonesian rupiah (IDR) IDR1.00 = $ 0.0000766 $1.00 = IDR13050

ABBREVIATIONS

ADB – Asian Development Bank AfD – Agence Française de Développement AFM – Alternative Financing Mechanisms APBD – Anggaran Pendapatan dan Belanja Daerah (regional/municipal budget) APBN – Anggaran Pendapatan dan Belanja Nasional (national budget) APEKSI – Asosiasi Pemerintah Kota Seluruh Indonesia (association of Indonesian municipalities) ASEAN – Association of South East Asian Nations AusAID – Australian Government Overseas Aid Program BAPPENAS – Badan Perencanaan Pembangunan Nasional (national development planning BDA – Batam Development Authority BIFZA – Batam Indonesia Free Zone Authority BLU – Badan Layanan Umum (public service agency) BLUD – Badan Layanan Umum Daerah (regional public service agency) BOT – Build Operate Transfer BRT – Bus Rapid Transit BUMN – Badan Usaha Milik Negara (state owned enterprise – SOE) CAPEX – Capital Expenditure CBO – Community Based Organization CDIA – Cities Development Initiative for Asia CDTA – Capacity Development Technical Assistance CIIPP – City Infrastructure Investment Programming and Prioritization CPS – Country Partnership Strategy CSR – Corporate Social Responsibility DAK – Dana Alokasi Khusus (special allocation fund) DAU – Dana Alokasi Umum (general allocation fund) DBH – Dana Bagi Hasil (revenue sharing fund) DED – Detailed Engineering Design DGHS – Directorate General of Human Settlements, Ministry of Public Works DMF – Development Monitoring Framework DKP – Dinas Kebersihan dan Pertanaman (city sanitation and landscaping agency) DPR – Dewan Pewakilan Rakyat (national parliament) DPRD – Dewan Perwakilan Rakyat Daerah (regional parliament) DSCR – Debt Service Coverage Ratio 3E – Environmental, Economic, Equitable EA – Executing Agency ESCO – Energy Savings/Service Company FAR – Financial Analysis Report FS – Feasibility Study GCAP – Green City Action Plan (see also RAKH) GCP – Green Cities Program (also: Green City Profile) GIS – Geographic Information System GOI – Government of the Republic of Indonesia GT – Green Team IA – Implementing Agency IIF – Indonesia Infrastructure Fund IIGF – Indonesia Infrastructure Guarantee Fund IMT-GT – Indonesia Malaysia Thailand Growth Triangle IndII – Indonesia Infrastructure Initiative IPAL – Instalasi Pengolaan Air Limbah (see also WWTP) IPP – Independent Power Producer IUWASH – Indonesia Urban Water, Sanitation, and Hygiene JICA – Japan International Cooperation Agency KfW – Kreditanstalt für Wiederaufbau (German Development Bank) FGD – Focus Group Discussion KSPPN – Kebijakan dan Strategi Pembangunan Perkotaan Nasional (National Urban LCF – Livable City Framework LGE – Local Government Enterprise LGOE – Local Government Owned Enterprise MDG – Millennium Development Goals SPV – Special Purpose Vehicle SWM – Solid Waste Management TA – Technical Assistance TOR – Terms of Reference UNDP – United Nations Development Programme WSS – Water Supply and Sanitation WTE – Waste to Energy

NOTE

In this report, "$" refers to US dollars. TA-8518 INO: Green Cities:

A Sustainable Urban Future in Indonesia

FINAL REPORT

TA-8518 INO: Green Cities A Sustainable Urban Future in Indonesia 2 - Capacity Development

DOCUMENT SIGN OFF

Report Title: Final Report

Client Name: Asian Development Bank (ADB)

Project Name: TA-8518 INO: Green Cities: A Sustainable Urban Future in Indonesia

Document Number: US2016/INO8518/FR

Client Contract Number: 112365-S52413

This Consultant’s report has been prepared by Urban Solutions BV in association with PT Ciriajasa Rancangbangun Mandiri (CRM) Indonesia. The report does not necessarily reflect the views of ADB, Australian Aid, or the Government concerned, and ADB, Australian Aid, and the Government cannot be held liable for its contents.

File No: US2016/INO8518/FR

Issue No: A Date: 20/10/16

Sign Off Originator Checker Approver Client Approval (if required)

Print Name: Robert van der Hoff John Sutton Niels van Dijk

Signature:

Date:

Contents

Executive Summary ...... 10 1 Introduction ...... 14 1.1 Background to the CDTA ...... 14 1.2 Structure of the Report ...... 15 2 Preliminary Work to Define the Approach to Green City Action Planning ...... 16 2.1 Regulatory Framework for Action Planning ...... 16 2.2 City Readiness and Capacity Assessment ...... 17 2.3 A Need for Result-Oriented Action Planning ...... 18 2.4 Literature Review ...... 18 2.5 Summary: What is a GCAP? ...... 19 2.5.1 Core Principles of Green City Action Plans ...... 19 3 Approach and Methodology ...... 20 3.1 GCAP facilitation ...... 20 3.2 Finance Methodology ...... 29 3.2.1 Financial Assessment Report (FAR) ...... 29 3.2.2 Alternative Financing Mechanisms (AFM) ...... 31 4 Process and issues faced in capacity development ...... 34 4.1 Methodology Development and application ...... 34 4.1.1 Purpose ...... 34 4.1.2 Development ...... 34 4.1.3 Practice ...... 34 4.1.4 Summary of Methodology Development and Application ...... 35 4.2 Facilitation of the TA ...... 36 4.2.1 Language ...... 36 4.2.2 Schedule ...... 36 4.2.3 Management of the TA ...... 37 4.3 Capacity Development ...... 37 4.3.1 Institutional Capacity Development, Urban Management Partnerships ...... 38 4.3.2 Issues faced ...... 40 4.3.3 Planning Capacity Development ...... 41 4.4 Brief Summary of the process and issues by City ...... 42 4.4.1 Batam ...... 42 4.4.2 Kendari ...... 43 4.4.3 Malang ...... 43 4.4.4 Medan ...... 43

4.5 Developing financing capacity ...... 43 5 Outputs ...... 46 5.1 Intermediate outputs ...... 46 5.2 The Green City Action Plans (GCAP) ...... 48 5.2.1 Action Plans ...... 50 5.2.2 Generic actions ...... 53 5.2.3 GCAP implementation ...... 54 5.2.4 Financing options & mechanisms ...... 55 5.3 Public Finance Outputs per City ...... 57 5.3.1 Issues and outputs ...... 57 5.3.2 Malang ...... 59 5.3.3 Medan ...... 60 5.3.4 Batam ...... 61 5.3.5 Kendari ...... 61 6 Current Status of TA ...... 63 6.1 Evaluation of the TA in the National Green Cities Roundtable in Surabaya ...... 63 6.1.1 Malang ...... 64 6.1.2 Batam ...... 64 6.1.3 Medan ...... 64 6.1.4 Kendari ...... 64 7 Lessons Learnt and Recommendations ...... 66 7.1 Policy & Practice ...... 66 7.2 Planning ...... 66 7.3 Finance ...... 66 7.4 The fate of the GCAPs ...... 68 8 Conclusions and Next steps ...... 69 8.1 National Policies on Urban Infrastructure Development ...... 69 8.2 GCAP Methodology Development ...... 69 8.3 Future TA Delivery ...... 72 8.4 Next Steps ...... 72

Figures Figure 2.1: Cyclical Process of the GCAP ...... 17 Figure 3.1: 10 Step Methodology for GCAP Development ...... 21 Figure 3.2: Toolbox for Green City Action Planning ...... 22 Figure 3.3: Project Finance/Funding Flowchart ...... 33 Figure 4.1: Organization Chart of Green Team ...... 39 Figure 5.1: Overall Implementation ...... 54

Tables Table 3.1: Contents of the Green City Profile...... 24 Table 3.2: Checklist for Assessing ‘Ease of Implementation’ of Proposed Green Programs . 26 Table 4.1: Capacity Development ...... 38 Table 5.1: Overview of Intermediate Outputs and Prioritized Programs ...... 47 Table 5.2: Status of GCAPs by end of TA ...... 48 Table 5.3: The GCAP in Brief ...... 49 Table 5.4: GCAP Responsibilities ...... 55 Table 5.5: MEDAN: Funding & Financing Options, Implementing Mechanisms for Sanitation Program ...... 55 Table 5.6: Options for Alternative Modes of Financing ...... 56 Table 5.7: Financial/Budget Ratios ...... 58 Table 5.8: Potential Borrowing Capacity ...... 59 Table 5.9: Investment in Green Attributes ...... 59 Table 8.1: Initial Suggestions for Consolidating the GCAP Methodology ...... 70 Table 8.2: Outstanding Issues ...... 73

Appendices (on CD-ROM)

A.1 Green City Action Plan Medan A.2 Green City Action Plan Batam A.3 Green City Action Plan Kendari A.4 Green City Action Plan Malang B.1 Financial Assessment Report Medan B.2 Financial Assessment Report Batam B.3 Financial Assessment Report Kendari B.4 Financial Assessment Report Malang C Methodology on Alternative Financing Mechanisms D International Green Cities Literature Review E Livable Cities Framework (LCF)

Glossary of Acronyms and Abbreviations

ADB Asian Development Bank AfD Agence Française de Développement AFM Alternative Financing Mechanisms APBD Anggaran Pendapatan dan Belanja Daerah (regional/municipal budget) APBN Anggaran Pendapatan dan Belanja Nasional (national budget) APEKSI Asosiasi Pemerintah Kota Seluruh Indonesia (association of Indonesian municipalities) ASEAN Association of South East Asian Nations AusAID Australian Government Overseas Aid Program BAPPENAS Badan Perencanaan Pembangunan Nasional (national development planning agency) Bappeda Badan Perencanaan Pembangunan Daerah (regional development planning agency) BDA Batam Development Authority BIFZA Batam Indonesia Free Zone Authority BLU Badan Layanan Umum (public service agency) BLUD Badan Layanan Umum Daerah (regional public service agency) BOT Build Operate Transfer BRT Bus Rapid Transit BUMD Badan Usaha Milik Daerah (regional government enterprise - RGE) BUMN Badan Usaha Milik Negara (state owned enterprise – SOE) CAPEX Capital Expenditure CBO Community Based Organization CDIA Cities Development Initiative for Asia CDTA Capacity Development Technical Assistance CIIPP City Infrastructure Investment Programming and Prioritization CPS Country Partnership Strategy CSR Corporate Social Responsibility DAK Dana Alokasi Khusus (special allocation fund) DAU Dana Alokasi Umum (general allocation fund) DBH Dana Bagi Hasil (revenue sharing fund) DED Detailed Engineering Design DGHS Directorate General of Human Settlements, Ministry of Public Works DMF Development Monitoring Framework DKP Dinas Kebersihan dan Pertanaman (city sanitation and landscaping agency) DPR Dewan Pewakilan Rakyat (national parliament) DPRD Dewan Perwakilan Rakyat Daerah (regional parliament) DSCR Debt Service Coverage Ratio 3E Environmental, Economic, Equitable EA Executing Agency ESCO Energy Savings/Service Company FAR Financial Analysis Report FS Feasibility Study GCAP Green City Action Plan (see also RAKH) GCP Green Cities Program (also: Green City Profile) GIS Geographic Information System GOI Government of the Republic of Indonesia

GT Green Team IA Implementing Agency IIF Indonesia Infrastructure Fund IIGF Indonesia Infrastructure Guarantee Fund IMT-GT Indonesia Malaysia Thailand Growth Triangle IndII Indonesia Infrastructure Initiative IPAL Instalasi Pengolaan Air Limbah (see also WWTP) IPP Independent Power Producer IRM ADB Indonesia Resident Mission IUWASH Indonesia Urban Water, Sanitation, and Hygiene JICA Japan International Cooperation Agency KfW Kreditanstalt für Wiederaufbau (German Development Bank) FGD Focus Group Discussion FS Feasibility Study KSPPN Kebijakan dan Strategi Pembangunan Perkotaan Nasional (National Urban Development Policy and Strategy – NUDPS) LCF Livable City Framework LG Local Government LGE Local Government Enterprise LGOE Local Government Owned Enterprise LLTT Layanan Lumpur Tinja Terjadwal (scheduled human waste desludging service) LPPI Lembaga Pendanaan Pembangunan Infrastruktur (infrastructure development finance institute) LGR Local Government Regulation or Bylaw (see Perda) MCA Multi Criteria Analysis MDB Multilateral Development Bank MDF Municipal Development Fund MDG Millennium Development Goals M&E Monitoring and Evaluation MOE Ministry of Environment MOF Ministry of Finance MOH Ministry of Housing MOHA Ministry of Home Affairs MOU Memorandum of Understanding MPWH Ministry of Public Works and Housing MSS Minimum Service Standard (SPM – Standar Pelayanan Minimum) NLDTP Long Term National Development Plan NMT Non-motorized transportation NUDP National Urban Development Program (see P3N) NUPS National Urban Policy and Strategy NUDPS National Urban Development Policy and Strategy OBA Output Based Aid OBC Outline Business Case ODA Official Development Assistance O&M Operation & Maintenance OPEX Operational Expenditure OSS On/Off Site Sanitation PAD Pendapatan Asli Daerah (regional own revenue) PAKLIM Policy Advice for Environment and Climate Change

PDAM Perusahaan Daerah Air Minum (regional/municipal water enterprise) PEFINDO PT Pemeringkat Efek Indonesia (Indonesian credit rating agency) Perda Peraturan Dearah (regional/municipal government regulation) PFS Pre Feasibility Study PIP Project Implementation Plan PIP Pusat Investasi Pemerintah (Indonesia Investment Agency – IIA) P2KH Program Pengembangan Kota Hijau (see also GCP) P3N Program Pembangunan Perkotaan Nasional (national urban development program) PLN Perusahaan Listrik Negara (national electric company) PMU Project Management Unit PPP Public-Private Partnership PSP Private Sector Participation PT SMI PT Sarana Multi-Infrastruktur (Persero) 3R Reduce, Reuse, Recycle RAKH Rencana Aksi Kota Hijau (see also GCAP) RIAP Revenue Improvement Action Plan RIDF Regional Infrastructure Development Fund RPIJM Rencana Program Investasi Jangka Menengah (plan for medium term investment program) RPJMD Rencana Pembangunan Jangka Menengah Daerah (regional medium term development plan) RPJMN Rencana Pembangunan Jangka Menengah Nasional (national medium term development plan) RTRW Rencana Tata Ruang Wilayah (regional spatial development plan) RTRWN Rencana Tata Ruang Wilayah Nasional (national spatial development plan) SC Steering Committee SDG Sustainable Development Goals SKW Surat Keputusan Walikota (Mayoral Decision) SMART Specific, Measurable, Achievable, Realistic, Timebound SOAR Strengths, Opportunities, Aspirations, Results SOE State Owned Enterprise (see BUMN) SOP Standing Operating Procedure(s) SOW Scope of Work SPAM Sistem Penyediaan Air Minum (water supply system) SPM Standar Pelayanan Minimum (see MSS) SPPIP Strategi Pembangunan Permukiman dan Infrastruktur Perkotaan (urban infrastructure andsettlement development strategy) SPV Special Purpose Vehicle SWM Solid Waste Management TA Technical Assistance TKPPN Tim Koordinasi Pembangunan Perkotaan Nasional (national urban development coordination team) TOR Terms of Reference UMKM Usaha Mikro, Kecil, dan Menengah (MSME) UMP Urban Management Partnership UNDP United Nations Development Programme UNESCO-IHE Institute for Water Education UOP ADB Urban Operational Plan 2012-2020 UPP Urban Poverty Program UU Undang-Undang (law of the government of Indonesia)

WB The World Bank WB Waste bank WS Water supply WSS Water Supply and Sanitation WTE Waste To Energy WWTP Waste Water Treatment Plant (see also IPAL)

EXECUTIVE SUMMARY

Introduction

The green cities concept is an emerging approach and rapidly developing both internationally and nationally. This CDTA was meant to apply the concept to selected cities in Indonesia. Considering the novelty of the concept in Indonesia, capacity development was a key component, and it was designed to be flexible and receptive to lessons learnt throughout the duration of the Services. The green cities concept was adapted to suit the local context and, importantly, local capacity for management and governance. Information on existing green cities development policies in the context of urban development in Indonesia, as well as stakeholder mapping and institutional analysis, can be found in the Consultant’s Interim Report.

Background to the CDTA

The Government of the Republic of Indonesia (GOI), through its National Development Planning Agency (Bappenas) has started implementing a National Urban Development Policy and Strategy 2015-2025 that aims at having urban areas meet national service standards by 2025, achieve smart, green and livable cities by 2035, and attaining sustainable urban development by 2045. The Government supports green cities initiatives that gradually will become a part of urban development policy and practice. One of these is the Green Cities Program (GCP)1 implemented by the Directorate General of Human Settlements2 in the Ministry of Public Works (MPW), now renamed the Ministry of Public Works and Housing (MPWH). The ADB‘s Strategy 2020 emphasizes the need for an integrated approach when planning to provide environmental infrastructure, services, and other public goods. The Urban Operational Plan 2012–2020 provides direction and is the ADB’s response to addressing the urban challenge. The plan presents an integrated approach that is green, competitive, and inclusive in order to achieve sustainable and livable cities that balance the environment, economy and equity. This capacity development technical assistance (CDTA) is putting the ADB Urban Operational Plan into action by (i) bridging the gap between urban planning and environmental management in developing investments plans; (ii) reviewing innovative financing mechanism, and (iii) establishing close coordination among multiple sectors involved in urban development planning. The CDTA is embedded into ADB’s Green Cities Initiative focusing on developing green cities in all of Southeast Asia. The Green Cities Initiative was initiated through the regional capacity development technical assistance for green cities. The outcome of the CDTA will be enhanced city management’s capacity in integrated planning and management of urban infrastructure in the cities that participate in the CDTA.

1 Program Pengembangan Kota Hijau (P2KH) 2 Previously the GCP was implemented by the now defunct Directorate General of Spatial Planning (DGSP)

Structure of the Report

The report is structured around the following parts: First, the preliminary work undertaken by the Consultant to establish the approach to green cities action planning, including an assessment of city readiness to undertake the work and the resulting need for an innovative approach; second, development of an appropriate and replicable methodology for preparing a Green City Action Plan (GCAP); third, facilitation of the cities’ planning process to create local capacity and ownership for green action planning; fourth, creation of a project pipeline, and investigation of alternative modes of financing; fifth, process and issues in capacity development; sixth, outputs per city; seventh, achievements by the end of the TA; eighth; lessons learnt and recommendations; and finally, suggested next steps for future green city action planning in other cities in Indonesia.

Technical Assistance for Capacity Development (CDTA)

The ADB supported GoI’s Green Development policy by helping it select four cities with different characteristics: Batam, Kendari, Malang and Medan. After Bappenas and the ADB introduced the initiative to the cities to garner support, the CDTA was launched in August 2014. The CDTA was to develop GCAPs in each of the participating cities, including an investment program outlining short-, medium- and long-term investments for green infrastructure for climate change adaptation. The CDTA would be the basis for developing an investment pipeline in the urban sector that supports the ADB's strategic approach to provide governments with ‘Finance ++’ building on knowledge and leveraging co-financing. The CDTA was to pilot test innovative approaches for urban management for green cities.

The GCAP

The Consultant has defined the GCAP as a prioritized, time scaled (mainly short to medium) green development and investment plan, combined with an urban management and implementation plan, a financing plan, and performance monitoring indicators. This integrated action plan is prepared by and for the city to realize its green vision (guided by the ADB’s evolving green city concept using as its motto “The Green City is the City of the Future”).

Process

Once the cities of Batam, Kendari, Malang and Medan had established a municipal multi- year, multi-stakeholder “Green Team”3 by Mayoral Decision as a counterpart working group, the Consultant was able to deliver the TA to the four cities over a period of two years on an intermittent basis. This started with visioning a green urban future, and concluded with the formulation of an action plan based on agreed priorities. The Consultant developed a methodology for action planning while the TA was in progress. As each city had different characteristics, as well as a different starting date and work schedule that the Consultant had to accommodate, by the end of the CDTA the four cities had drafted their first GCAP, with the

3 The term ‘Green Team’ was coined by the Consultant for ease of use; the GCP in the MPWH calls it the Green City Communication Forum (Forum Komunikasi Kota Hijau), UNESCO-IHE/MARE used the term City Level Working Group (CLWG) developed through a Learning and Action Alliance (LAA), the cities may refer to them as Green City Working Groups (Pokja Kota Hijau), or in the case of Malang, Green City Board (Dewan Kota Hijau). In essence they all refer to roughly the same group of people tasked with or contributing to preparing a Green City Action Plan.

understanding that it is a rolling plan that should be updated each year. By the end of the TA in mid-2016, the Green Teams had not equally progressed in capacity development, but the Consultant accepted this as a consequence of the process of achieving local ‘buy-in’. The Green Team is meant to be a sustained entity that is the core for developing specific urban management partnerships for project implementation, and a replicable action planning methodology.

Main Outputs

The main outputs produced by the CDTA are four Green City Action Plans (GCAP) based on the action planning methodology developed by the Consultant. A GCAP comprises a method for improving integrated urban planning through profiling, baselining, and performance indexing, a project pipeline, an assessment of the city’s fiscal capacity, consideration of alternative modes of financing for the proposed project pipeline, and a plan for implementing the project pipeline.

Lessons Learnt and Recommendations

Towards completion of the CDTA, Bappenas hosted a “Green Cities Roundtable” evaluation workshop in Surabaya for the participating cities. The overarching lesson learnt by the participants was that in general, politicians lack incentives to pursue agendas for long-term green development, resilience and climate change mitigation that require high levels of planning and investment in the short and medium term while the potential concrete rewards will become visible only long after their tour of duty. The participants also concluded that current national policies on green and sustainable development to create livable cities need to be made more concrete, and need to sufficiently incentivize local decision makers. Hence, Green Teams will continue to face difficulties in persuading decision makers to adopt far-reaching strategies. The participating cities did, however, conclude that the TA had been successful in developing capacities and setting a green infrastructure development agenda, but they would welcome continued specialist inputs to strengthen their GCAPs in the future. The Consultant has learned that for TA to be effective, a differential approach has to be applied in which each city receives tailor-made (flexible, intermittent) support, including engagement of a legitimate local counterpart (the Green Team) and local champions in each city. In addition, the TA needs to be delivered by city facilitators who have been trained to use the methodology (now in Version 1.0). The Roundtable recommended the continuation of a Green Cities TA based on requests from cities, on condition that cities issue a Mayoral Decision to establish a Green Team as a prerequisite for eligibility for TA support, and receive prior training in applying the methodology. The Consultant believes that a consolidated and published methodology (Version 2.0) can enable a city to produce a viable GCAP within one budget year if facilitation is provided to the Green Teams. Bappenas agreed that the GCAP methodology can become a useful knowledge product to help guide Indonesian cities.

Next Steps

Following the Roundtable workshop in Surabaya, a final wrap-up meeting was held in Bappenas with the Consultants (see Appendix X for the presentation used by the Consultant for reporting to Bappenas). A number of next steps were discussed and in principle agreed upon:

1. As a first activity, Bappenas is willing to convene a meeting of the Mayors of Batam, Kendari, Malang and Medan in Jakarta to jointly sign their GCAPs once finalized. 2. As a second activity, Bappenas is willing to convene an inter-agency workshop to discuss and agree on the GCAP Methodology Version 2.0 before disseminating it as a knowledge product The approved and signed GCAPs can be used as examples for other cities. 3. As GoI is currently preparing a new framework for urban infrastructure development financing that is expected to start functioning in 2017, the GCAP can be used as a tool for mainstreaming the preparation and pipelining of bankable investment proposals based on integrated local development planning with increased focus on green and resilient development and climate change mitigation. As such, GoI has an interest in consolidating the GCAP as a knowledge product, print it as a guideline, and disseminate it. 4. Bappenas is willing to consider establishing a national inter-agency standing committee of selected experts (“Green Cities Forum”) that can screen applications and select interested cities based on pre-qualification, provide training on GCAP, periodically visit cities to assist them with green performance appraisal, and liaise with support facilities such as the CDIA; it can act as a clearinghouse for the production and exchange of knowledge products and information, as well as the processing of requests for support in preparing masterplans, feasibility studies, local regulations, or the creation of a task force to move priority project proposals forward. This will ensure that sustained political will and momentum will push the GCAP methodology to the forefront of green and resilient urban planning in Indonesia. 5. In the absence of guaranteed sources of infrastructure project financing, the proposed Green Cities Forum should monitor GCAP implementation in active cities, especially for actions that do not require external support, as that was one of the main purposes of the GCAPs. Several issues as shown in the table below were left further consideration.

Issues & Risks Proposed Solutions 1 During the CDTA, the 4 participating cities GoI needs to apply a differential approach for TA had different levels of readiness, and and training in which each city receives tailor-made therefore required tailor-made facilitation. (flexible, intermittent) support, including engagement of local champions in each city. 2 There is need for a paradigm shift that GoI needs to formulate incentives that can provides concrete incentives to city persuade city governments to voluntarily improve governments for turning action plans into urban management effectiveness, efficiency, and action, local knowledge into practice, and equity. It is therefore suggested that Bappenas local resources into investments. establish a National Green City Forum to address such issues and formulate appropriate incentives. 3 There is need for more hard evidence that GoI needs to provide more concrete evidence of the sustainable green city development benefits of sustainable green city development. A brings real benefits; at present, some National Green City Forum would be well placed to cities will still be reluctant although the undertake basic research to collect and disseminate MoU for the CDTA assumed that the such evidence based on reliable facts and figures. cities did not need to be convinced. 4 There is a risk that no suitable innovative In order to boost infrastructure investment, GoI financing mechanisms are available that needs to promote efficiency gains in city financial city governments are able to manage. management and public service delivery, while at the same time promoting alternative financing mechanisms. This is probably best achieved through regulatory framework development, followed by regular training programs combined with incentives.

1 Introduction

1.1 Background to the CDTA The green cities concept is an emerging approach and rapidly developing both internationally and nationally. This TA therefore was designed to be flexible and receptive to lessons learnt throughout the duration of the Services, and build capacity for ‘green’ planning in the recipient cities. The green cities concept has been adapted to suit the local context and, importantly, local capacity for management and governance. Additional information on existing green cities development policies in the context of urban development in Indonesia, as well as stakeholder mapping and institutional analysis, can be found in the Consultant’s Interim Report. The Government of the Republic of Indonesia (GOI) has started implementing a National Urban Development Policy and Strategy 2015-2025 that aims at having urban areas meet national service standards by 2025, and attaining sustainable urban development by 2045. The Government also supports green cities initiatives that gradually will become a part of urban development policy and practice. One of these is the Green Cities Program (GCP)4 implemented by the Directorate General of Human Settlements5 in the Ministry of Public Works (MPW), now renamed the Ministry of Public Works and Housing (MPWH). GoI, together with the ADB, selected the cities of Batam, Kendari, Malang and Medan that had already participated in the GCP managed by the MPWH since 2010. In the MPWH’s first appraisal in 20136, city performance was judged primarily on implementation of three ‘attributes’7 (Green Planning and Design, Green Open Space and Green Community) that fell under the purview of the now defunct DGSP.8, The MPWH’s appraisal underscored that with the new National Development Plan period starting in 2015, the participating cities should scale up their GCP by promoting the ‘heavier’ infrastructure attributes including Green Water, Green Waste, etc. Some attributes such as Green Transportation and Green Energy are outside the purview of the MPWH. Under this TA, the cities were under no obligation to apply all of the MPWH’s eight GCP attributes, but should at least help identify their top green investment priorities, particularly with respect to the heavier, infrastructure attributes. This will also help to align the outputs with ADB’s (and other donors) approach to Country support, in terms of planning/preparing infrastructure investments. The MPWH’s report explained the ideals of Zero Waste, Zero Run-off, Green Transportation, and the other ‘big attributes’. However, those principles were applied only as ‘supporting attributes’ within the three ‘starter kit’ attributes of Green Open Space, Green Planning & Design, and Green Community. This was pre-determined by the fact that the then Directorate General of Spatial Planning had no authority beyond its spatial planning mandate. In other words, cities built public parks and kampungs that incorporated bicycle

4 Program Pengembangan Kota Hijau (P2KH) 5 Previously the GCP was implemented by the now defunct Directorate General of Spatial Planning (DGSP) 6 The 2013 MPWH GCP performance appraisal report with the title “Buku Peningkatan Kinerja P2KH 2013” is based on batch appraisals (IA, IB, etc.) of groups of local governments 7 The 8 GCP-MPWH attributes are green planning and design, green open space, green community, green waste, green building, green energy, green water and green transportation. The term ‘attribute’ coined by the MPW GCP has been maintained by the Consultant, but further specified to avoid confusion (see Table 1). 8 In the appraisal of Batch 1A, Malang, Kendari, Batam and Medan came out 8th, 9th, 16th and 22nd respectively. Medan subsequently disengaged itself from the GCP, purportedly because it didn’t see sufficient return on investment.

paths and LED lighting and similar facilities as supporting attributes because it could still be considered spatial planning. Outside those areas there was nothing until the TA expanded the scope, helped by the fact that the DG of Spatial Planning ceased to exist in 2016, and the GCP moved to the DG of Human Settlements which has infrastructure development as its mandate. In the MPWH report, city performance was based on three criteria: City Response to P2KH (commitment), Technical Performance, and Administrative Performance. They only applied to the ‘starter kit’ attributes. The fourth criterion used by the MPWH was ‘perception value’, the evaluation team’s opinion about city performance. The evaluation team consisted of national and provincial government staff. Malang ranking 8th, Kendari 9th, Medan, Batam 16th, and Medan 22nd. The MPWH report also explained the ‘implementation profile’, but by that time Medan had already disengaged from the GCP, so there was no implementation profile for Medan. As the ‘big’ green attributes were meant only to support the creation and embellishment of public parks and green spaces within communities, no city-wide profiles were prepared. To further green city initiatives, this TA has facilitated the preparation of Green City Action Plans9 for the four selected cities. It should be noted that the TA was meant to promote an integrated ‘rolling plan’ process embedded in the local government statutory planning process, but ‘greened them up’ by making cross-sectorial linkages, introducing initiatives to make cities more resilient and able to counter climate change, and to measure their own performance. In addition, it was meant to explore alternative modes of finance for proposed projects, consider implementation mechanisms through ‘Urban Management Partnerships’. The GCAPs were expected to provide an important reference for drafting the cities’ next Medium-term Local Development Plans10, and provide a means for preparing and ‘selling’ projects, thus accessing finance – this is an important part of the capacity development process.

1.2 Structure of the Report The report is structured around the following parts: 1. Executive Summary 2. Introduction 3. Preliminary Work 4. Approach and Methodology 5. Process 6. Outputs 7. Status of TA 8. Lessons Learnt and Recommendations 9. Next Steps There is some repetition between methodology and process and outputs as they are intrinsically linked but the sections were necessary to enable discussion of the different aspects of the TA and the approach, which was developed as the project progresses.

9 Rencana Aksi Kota Hijau (RAKH) 10 Rencana Pembangunan Jangka Menengah Daerah (RPJMD)

2 Preliminary Work to Define the Approach to Green City Action Planning

2.1 Regulatory Framework for Action Planning From the outset of the TA it became clear that, in the absence of sufficiently strong GoI green urban development regulatory framework and practical policy implementation support mechanisms, existing municipal planning approaches and procedures in Indonesia did not favor green city planning. If green city action planning were to succeed, it needed to be owned and undertaken by the cities themselves, be simple and transparent, and based on existing data. Green city development is not enshrined in the current statutory municipal development planning system including the Medium-term Development Plan (RPJMD). A green city action plan could therefore only succeed if it was linked to, or embedded in, the local plans by adding green content through ‘green lensing’ , in other words, by ‘greening them up’. To generate ownership, the green city action planning process would require some form of legitimacy, hence the cities were encouraged to (and all did) issue a Mayoral Decision to create a multi-year, multi-stakeholder ‘Green Team’ that would receive an operational budget, be in charge of green city action planning, oversee implementation and monitoring – at least in coordinating any necessary partnerships where integrated projects require multi- stakeholder inputs – and report to the Mayor, to ensure local political support. As GoI provided no support, this initiative had to be undertaken by the Consultant at the outset of the TA. One of the ‘missing links’ in the municipal planning process it the bridge that leads to project proposals and sources of finance. Without establishing such a link, the Green Teams would not be able to formulate meaningful action plans. It was therefore important that specific actions relating to financing, including institutional set up of projects is included in the GCAPs. Also missing was a ‘rolling’ urban development process based on benchmarks and performance indicators that would show whether a city was making progress towards green development goals. The Consultant was not in the position to change the current regulatory framework for municipal development planning, but it could introduce new ways of planning that would be helpful without infringing on established standard operating procedures. Figure 2.1 shows the concept of a ‘rolling plan’ in which a baseline is prepared that measures and indexes current city green development performance, sets targets for the short-to- medium term in a GCAP, and indicates longer-term initiatives on the basis of a “Roadmap” that sets goals for green performance in the long term. Each year, performance is measured, plans are rolled over until the next year, and new initiatives can be introduced. It emphasizes the importance of specific short-term actionable actions. While medium and long-term plans are also covered, these should be taken as indicative and intend to show the general direction the city wants to take. As a result, the methodology should be seen as a cyclical process that results in a GCAP being reviewed or ‘rolled over’ periodically.

Figure 2.1: Cyclical Process of the GCAP

City readiness for untertaking green city action planning is low (see Section 3.2), so having an official Green Team as the locus for green development planning, combined with more performance-based planning tools, provided the fourfold benefit of having a single local entry point and working group for continuous learning, a sounding board for the introduction of new planning methods, an effective way of building capacity, and a locally endorsed action plan that could be signed by the Mayor, annually updated, and rolled over.

This more integrated approach to planning was expected to achieve better coordination, a way to more green and integrated urban planning, and locally supported action plans that could be updated periodically.

2.2 City Readiness and Capacity Assessment A needs and capacity assessment was undertaken during the last quarter of 2014. The capacity in all Cities was perceived as low, which reinforces the conclusion drawn from the international literature review in that a new approach is needed to facilitate local GCAPs in a low capacity environment.

Each city was given a readiness score between 1 and 5, one being the lowest, and five being the highest. The score being based on information gathered by the Consultants through meetings, workshops, and desk studies, it was somewhat subjective, and did not necessarily reflect the opinion of Bappenas, the ADB, the GCP in the MPWH, or that of the cities themselves.

The main readiness factors are a city’s willingness to accept the GCAP TA that is on offer, issue a Mayoral Decision, allocate a budget, establish a ‘Green Team’, and task it with preparing a Green City Action Plan before the end of 2016. In addition, it should be ready to engage a local champion, strive for more effective and efficient financial management, and prepare to prioritize investment proposals. The below table shows the overall scores attributed to the cities as part of the readiness assessment:

Table 2.1 - City Readiness for undertaking a GCAP

City Readiness Score (1-5) Medan 2.2 Malang 2.2 Kendari 3.2 Batam 2.2

2.3 A Need for Result-Oriented Action Planning Action planning has been around for some time. With a view to developing local initiative, local governments have often engaged in some form of action planning, mostly initiated by donor-driven technical assistance projects which were few and far between. Such one-off action plans are rarely acted upon because once completed, local governments fail to give them official status, put somebody in charge of their implementation, and mobilize the necessary resources (including qualified personnel and stakeholders) for implementation. Thus, a new design for action planning was called for.

Action plans need (where possible) to be developed locally, they need to be simple and clear, so that they can be implemented, and very much focused on ‘actions’ which are necessary for implementing projects. Actions should each be a specific step towards implementing a project, they should be feasible and time bound, they should always have a responsible agency/party. Actions are therefore not projects (action plans are often written as a list of projects). Actions are steps for implementing projects: they can be related to institutional set up, technical studies, obtaining finance, project preparation, coordination or communication, project management etc. This was a very important focus of the consultants during the TA.

2.4 Literature Review The Consultant undertook a literature review to identify green city action plans that had been developed and implemented successfully, few were found in developing countries – such as Indonesia. Many such plans in developing countries relied (understandably) on consultants or external experts to develop the plans, but the use of such experts inherently creates a process which is neither simple to repeat when the plan needs updating, nor simple to implement without further assistance.

There is no methodological guide for this TA to follow in terms of developing GCAPs, particularly as a focus of this TA is to facilitate the cities to develop their own plans which can be owned and implemented locally.

Furthermore, during this review, no practical and simple performance measurements we’re found which could be utilized directly by the Cities to measure their current (baseline) performance, based on existing data. The review did, however, allow creation of a tool for green planning that was termed a ‘green lensing framework’ which was subsequently applied as part of the GCAP methodology it developed.

Significantly, ADB supported GCAPs to date have been consultant driven and project focused. As described above, rather than listing projects, it is important that actions are developed which are realistic (and logical and sequential), specific, and focused on delivering projects or initiatives that bring about green results.

Furthermore, tools for profiling/baselining identified in the wider literature not applicable due to lack of capacity and resources (again, this process was to be undertaken by the cities). Monitoring, and planning should be based on available data. In the next iterations of GCAPs the complexity can be increased and there may be some appropriate tools for this including possibly the rapid assessment of city emissions and transport emissions evaluation models for project cities (Clean Air Initiative for Asian Cities).

2.5 Summary: What is a GCAP? Based on the above, the Consultant has defined a GCAP as a time-scaled green investment plan for a city. It includes specific actions for implementating prioritised investments (programs or projects) over the short to medium term, covering urban management, institutional aspects, and financing. Where possible and appropriate, performance indicators are provided to enable monitoring and updating. This integrated action plan complements a city’s statutory planning process (notably its Medium Term Development Plan – RPJMD), and has been prepared by, and for, the city to realize its green vision. The Consultant field-tested this GCAP model with the Green Teams, who concluded it was the only model considered supportive to the local planning system that currently has no formal mechanism for linking a development plan to project proposals and finance.

2.5.1 Core Principles of Green City Action Plans With Green Teams established, the Consultant was ready to introduce a new method for action planning based on principles that became the core of the GCAP:

 Links planning to project proposals, project development, financing, and implementation;  Provides a marketing document to sell project components to central gov, the private sector, and other donors;  Simple to prepare, roll out, and roll over for a Green Team based on local know-how;  Linked to the RPJMD by enhancing green components;  Focus on relatively short term actions within a longer term strategy; 11  Focus on 4-5 manageable green programs or initiatives, prioritised by the city, and formulated into project briefs, from which realistic actions can be developed;  Result-oriented; the actions are not projects, they are actions designed for preparation and implementation, related to technical studies, partnerships, financing, capacity development, social marketing, project risk mitigation etc.

11 There is not much point in defining actions past 5 years or the duration of the municipal medium-term development plan because when Mayors are replaced, his/her successor is legally required to prepare a new plan.

3 Approach and Methodology

As no suitable tools for City-led result-oriented technical assistance facilitated action planning were available, the Consultant had to develop an appropriate and replicable methodology over the course of this TA, and test it out in the field with the municipal Green Teams while they were preparing their GCAP.

There is therefore a significant element of trial and error involved in developing this methodology and aspects of the same approach weren’t consistently effective in each city.

The final approach has however now been fully road tested, has been well documented, and it is expected it could be developed into an ADB endorsed knowledge product (which could be applicable to other countries) with a number tools (a toolkit) for facilitation12.

The approach uses a series of intensive workshops and training sessions with ‘homework’ for the Green Teams (with some facilitation by national consultants) to complete (as best as possible) before moving on to the next phase. The results (if available) were then collated, and the methodology adjusted for the next City or next phase.

This approach required significant planning and flexibility in implementation from the consultant team.

The overriding aim of the TA was focused on developing GCAPs, and through this process actions related to capacity development, partnerships and project financing were developed (the methodology integrates all of these aspects). The approach is outlined below (section 4.1), and recommendations for further consolidating the GCAP methodology are presented in chapter 9. As the financing aspect of the TA was a crucial output and critical to successful implementation of the GCAPs this has been described in further detail in a separate section, 4.2.

3.1 GCAP facilitation The two figures below show the final methodology: the “10 Step Approach” (Figure 3.1) and the “Toolbox” (Figure 3.2) that enable Green Teams – assisted by their facilitators and local champions – to systematically prepare a GCAP. This section serves to briefly explain the steps and products that lead to GCAP formulation.

12 This will require further work beyond the scope of this TA

Figure 3.1: 10 Step Methodology for GCAP Development

Figure 3.2: Toolbox for Green City Action Planning

Step 1 - Issue a Mayoral Decision to set up a Green Team for GCAP.

The first (administrative) step is to establish a multi-stakeholer Green Team by Mayoral Decision. Although not included in the MoU and Technical Proposal, the Consultant considered a Mayoral Decision13 as a prerequisite for having a mandate and budget for operating the ‘Green Team’ as the local partner (and core of the future Urban Management Partnership – ‘UMP’ in the TA and ADB’s Green Cities literature), and to get ‘ buy-in’ from city government, to ultimately own the process and output. Therefore, the Consultant had to invest considerable time in facilitating the drafting and enactment of these documents. For that reason, the Decision together with the establishment of the Green Teams were included in the GCAP as Step 1, and also in the Toolbox as the first tool to be applied. Without the Mayoral Decision, there would be no constituency for the GCAP process. At the same time, the Consultant identified local ‘champions’ who were most likely to advocate and support the GCAP process to its constituency. The structure of the Green Team according to the Mayoral Decision is shown in Figure 5.1.

Step 2 – Use SOAR to analyse Strengths, Opportunities, Aspirations and Results

Once the Green Team is in place, it undertakes the ‘SOAR’ exercsie from the Toolbox to envision a green future as part of the GCAP process. The SOAR exercise is based on the older SWOT, but with the advantage that it is much more positive, forward-looking, and result-oriented. It functions as a ‘scene-setter’ for a broad group of local stakeholders, and

13 Surat Keputusan Walikota - SKW

allows them to align views. This is necessary to focus the discussion on green development so they stay on track during the rest of the process. The SOAR tool is publicly available on the internet in several versions.

Step 3 - Apply ‘green lens’ to formulate framework for liveable and sustainable city development

Once the result of the SOAR analysis has been agreed upon (the result of which can cover between 1 and 10 ‘green attributes’), the Green Team proceeds to ‘greening up’ the city’s existing Medium Term Development Plan (RPJMD) by applying a ‘green lens’ using the Livable Cities Framework (LCF) (Appendix E) developed by the Consultant. The Consultant also prepared a spreadsheet with a list of criteria to rate the items in the LCF using the Multi Criteria Analysis (MCA) method. As a first action, the Green Team has to agree on the criteria to be used. The second and third actions are described in Step 6. Note: The MCA spreadsheet is in theory vulnerable to manipulation if so desired by the green teams. This was controlled through the application of the MCA in collective mode (weights and scores were set and agreed by the Green Team), so that if any manipulation of weights and scores was done, it was "transparent" so that the Green Team was aware of what it was doing and could justify its reasons. Some Green Teams attempted to boost the ranking of some selected program but could not rationally change the weights and score enough to make it come out as priority. It makes it easy for the Green Team to test/simulate various combinations of weights and scores and review the resulting rankings through a “What if” iteration. This has the value of educating the team on the pros of cons of each proposal, specifically on the tradeoffs among the criteria being "weighed" as to their respective importance to the city and stakeholders. Strengths of the MCA include:  Learning process that stimulates discussion and facilitates a common understanding of the decision problem  Openness to divergent values and opinions  Capability to tackle qualitative and intangible factors  Accountability (systematic, transparent)  Capability to support conflict resolution and to help reaching a political compromise  Support a broad stakeholder participation  Preferences are revealed in a more explicit and more direct way

Step 4A – Prepare a Green City Environmental Profile (GCP) with thematic GIS maps

On a parallel track, the Green Team prepares a Green City Environmental Profile (GCEP) that will be appended to the GCAP, but in fact is meant to guide it when the planning process is already ‘rolling’. It was developed and tested by the Consultant to become a tool for more integrated planning. It contains basic planning data, a series of thematic maps on all infrastructure ‘attributes’ in GIS format combined with an environmental narrative, an inventory of current and green initiatives, resource use, and climate vulnerability, all compiled by the Green Teams. It also comprises a fiscal capacity analysis (to be found in Appendix B) and a ‘Roadmap’ spreadsheet developed by the Consultant (see below) that allows Green Teams to rate their city’s green performance based on indicators for all green ‘attributes’, both on governance indicators and technical indicators. The purpose of this exercise is to identify where existing and planned infrastructure developments fall short of achieving green objectives, and can be improved by adding initiatives that will increase their green development content (value). This process can be repeated to inform the next RPJMDs, and will hopefully sensitize decision makers to

gradually strengthen the green value or ‘greenness’ of development plans to match the Roadmap. Table 3.1 below shows the content of the GCP. Table 3.1: Contents of the Green City Profile

ITEM REMARKS 1 Introduction Explains purpose of the GCP Introduction with basic economic, 2 The City in Brief environ-mental and social development data The overlay maps show available Collection of GIS Green Development maps with networks and systems in A3 format; maps 3 narrative environmental profile can be added, updated, or replaced as required 3a City Administrative map 3b Geography and Land Use map 3c Green Open Space Map Shows areas and their use Green Transport and Urban Mobility map 3d Shows areas, networks and systems (both motorized and non-motorized) 3e Green Water 1: Water Supply map Shows areas, networks and systems 3f Green Water 2: Drainage and Flood Control map Shows areas, networks and systems 3g Green Waste 1: Sanitation map Shows areas, networks and systems 3h Green Waste 2:Solid Waste map Shows areas, networks and systems 3i Green Industry and Commerce map Shows areas, networks and systems Green Community map Shows communities at urban village level 3j (including health and education) that qualify/do not qualify as green Because green buildings are not being 3k Green Building map certified yet in Indonesian cities, none of the cities was able to prepare this map Because power supply is outside municipal authority, local green energy is 3l Green Energy map not yet a familiar concept, so cities limited themselves to a power distribution map Mostly based on the World Bank Group 3m Climate Vulnerability map Climate Wizard mapping facility Inventory of what the city is already doing 4 Current and planned green initiatives and planning to do 5 Priority green development programs The agreed program & project pipeline A spreadsheet that allows the Green Team to rate its green performance 6 Roadmap to green development in 2035 based on a 2015 baseline, and predict performance until the year 20135; it can be red, yellow or green. Result of Analysis of Strengths, Opportunities, 7 Aspirations and Results (SOAR) Result of Multi-Criteria Analysis (MCA) for selecting 8 long list of green programs and projects Result of city fiscal profile analysis and revenue 9 improvement options

In the future, if a City already has an approved GCAP that needs to be updated, it would be preferable to move Step 4 up to Step 2 in order to connect to the previous version of the GCAP.

Step 4B– As part of the GCP, prepare a Roadmap with baseline performance indicators

A basic requirement was that green performance indexing would be relatively simple so that Green Teams themselves would be able to appraise their city’s performance. The approach was to design a dual set of indicators to show governance performance (planning, institutional, and financial), as well as technical performance in all of the technical green attributes. Through conditional formatting, the spreadsheet is able to automatically show poor, medium or high performance, indicated by the colors red, yellow and green respectively. When scored, the Excel spreadsheet will instantly show the corresponding performance color. The cross-sectorial nature of the Profile connects a number of issues, and is expected to contribute to greener and more integrated planning and performance appraisal that can be updated annually. The year 2015 was selected as the baseline year for this TA, and data and maps have as far as possible been updated to 2015. The GCP would normally provide the baseline for measuring the city’s green ‘status’, and for updating and rolling over an existing GCAP, but during this TA there was no such sequence yet because all tools were developed for the first time. The roadmap also serves to provide a longer term view for the City (which can be updated) beyond the realistic actions developed for priority programs and projects.

Step 5 – Prepare Long List of Program Proposals (existing, planned, and new)

Based on Step 3 and 4, the Green Team discusses and assembles a long list of Programs and/or Projects that will contribute to the City achieving its vision for green development. Facilitated by the TA team, the Green Team prepares a brief description of preferred Programs.

Step 6 – Using MCA, prioritize Programs and Prepare Program Briefs

The second action of the MCA covers the discussion and consensus/agreement on the weights and scores to be applied to the provisional long list of Programs and/or Projects from the Step 5. As a third action, the Green Teams refines the scores and ranking of the MCA to adjust the results to the context of the city, such as unavoidable adjustments to accommodate the mayor's preferences, emerging opportunities, and other considerations. It should be noted that the process has to be iterative in order to be completed, but that the Consultant has to agree with the Green Team on a cutoff point beyond which the choice has to be fixed for the GCAP. As a last action in the prioritization process, the Green Team does a first assessment of the selected Programs’ relative ease of implementation based on a checklist provided by the TA Team (see table 3.2). This Step can already be combined with a fiscal capacity analysis and the scoping of options for alternative modes of financing, and will result in a list of priority Programs with summary descriptions.

Table 3.2: Checklist for Assessing ‘Ease of Implementation’ of Proposed Green Programs

ITEM ASSESSMENT EXPLANATION 1 KNOWLEDGE / CAPACITY 1.a Experience of city with (1= poor ; 5 = excellent) Explain the answer including implementing comparable mention of specific relevant programs (sector, scope, experience technologies, size) 1.b Performance of (1= very unsuccessful ; Explain the answer including previous comparable programs 5 = very successful) mention why something is (sector, scope (technologies), considered successful or size) unsuccessful 1.c Current knowledge and (1= poor ; 5 = excellent) Explain the answer including experience within the city mention specific sources of administration with comparable knowledge (persons/ institutes) programs (sector, scope (technologies), size) 2 BUDGETS & FINANCE 2.a Likeliness that public budget will (1= very unlikely ; 5 = Explain the answer including be made available for this kind very likely) why this is very unlikely or of program? (here, Green likely Teams can already use lessons learned from Fiscal Capacity Analysis) 2.b Experience of city with attracting (1= poor ; 5 = excellent) Explain the answer including alternative sources of finance mention of specific relevant (CSR, private investors, user experience charges, NGOs) for this kind of program 2.c Performance of this experience (1= very unsuccessful ; Explain the answer including 5 = very successful) mention why something is considered successful or unsuccessful 2.d Likeliness of attracting (1= very unlikely ; 5 = Explain the answer including alternative sources of finance for very likely) shy this is very unlikely or this program likely

2.e Likeliness that funding or (1= very unlikely ; 5 = Explain the answer including finance will be available for this very likely) why this is very unlikely or program, either from public likely budgets, other sources or a combination. Answer should be based on the previous questions 3 LEGAL & REGULATIONS 3.a Will the program be easy or (1 = very difficult; 5 = Explain the answer including difficult to implement given very easy) why this is very difficult or easy current legal and regulatory framework 4 POLITICAL/ SUPPORT 4.a Will there be sufficient support (1 = no support; 5 = full Explain the answer from relevant stakeholders to support) implement the program It should be noted that often there is no clear distinction between Programs and Projects, and no agreement on official nomenclature. A Program is normally seen as a declaration of intent, whereas a Project normally specifies a product, location, duration, and budget. Quite often, however, a Program is called a Project and contains Sub-Projects. To circumvent this problem, the Consultant decided to use the term Program Brief , and to formulate Actions as

requirements for implementing Projects and Sub-Projects as part of the Program. The Consultants used the following definitions to create a clear understanding in the Green Teams when drafting a GCAP: Program An initiative for promoting green development having stated goals that match the city’s vision and mission. A program normally comprises a number of projects and sub-projects that have clear interfaces, and is formulated in a Program Brief. Project An investment in a physical infrastructure project, or the creation of a new organization, or a policy revision, or a local regulation, as part of a Program Brief. If the Project (such as establishing a new body or policy) is subsidiary to another Project, it is understood to be a Sub-project or action. Action Actions comprise one or more activities required to meet the conditions for (sub)project implementation, such as setting up a Project Management Unit (PMU), preparing a project implementation plan (PIP), preparing Terms of Reference (ToR) for a study, identifying sources of financing, acquiring land, undertaking a technical study etc. The TA team developed a Program brief template, which went through a number of iterations but includes (where possible):  Program title  (Sub)project names  Summary  Legal and policy context  Current conditions  Indicators and targets  Project owner/implementer  Partnerships and stakeholders  Beneficiaries  SMART objectives  Capex / Opex and financial model  Estimated revenues  (Sub)project duration  Ease of implementation  Potential risks

Step 7 – Based on the Program Briefs (including Projects and Sub-Projects), prepare Financing Options

The Green Team prepares a Program Brief describing the policy and regulatory framework, as well as the technical, institutional, and financial aspects of a proposed Program (Project). The Briefs are critical to the overall methodology, and significant time was spent with the cities developing them. This is a new template for Indonesia and can now be applied in other cities as well. As part of Step 7 also, Green Teams have to assess options (both traditional and alternative) for financing their programs and projects. Here the financial assessment report (FAR, result of fiscal capacity analysis, step 3) is useful to estimate if and how much public funding is available and if additional sources can become available. This methodology and the

methodology to identify possible alternative mechanisms and sources of funding/ finance are further explained in Section 5.5. This exercise turned out to be quite a challenge for the Green Teams, and had to be intensively facilitated. This is discussed further in Section 4.2.

Step 8 – Prioritize Programs (Projects) based on moderated Focus Group Discussions using MCA criteria

The Green Team holds a Focus Group Discussion (FGD) with a selected and representative group of stakeholders to achieve consensus on planning decisions. This will result in the reduction of the long list to a shortlist that will normally not contain more than five Programs so that the action plan remains focused and achievable. Note: As by the completion of the TA none of the cities had yet applied for technical assistance by the CDIA for preparing a PFS, its CIIPP methodology for prioritizing projects was not used during the TA. Instead, the Green Teams undertook a FGD as part of their regular on-the-job workshops. Also, at that stage of GCAP preparation, the CIIPP was not required anymore because the Green Teams and Steering Committees considered all selected Programs as priority Programs, and in some cases the data requirements for CIIPP were not met. At this stage, prioritized program briefs were worked up in greater detail to enable an action plan to be developed.

Step 9 – Prepare the GCAP based on the Shortlist

Once Program Briefs (including one or more Projects) are clearly formulated and agreed upon by the Green Teams, it can derive the necessary Actions from them fairly easily and directly, such as implementation mechanisms, risk mitigation measures, financing options, partnerships feasibility assessments etc. These Actions become the core of the GCAP, whereas the Program Briefs are appended to it. The format for the GCAP, including a summary GCEP, was developed by the Consultant. The four GCAPs prepared under this TA can be found in Appendix A.

Step 10 – Apply the SMART Logframe method to evaluate results

The SMART Logframe tool, also know as the Development Monitoring Framework (DMF), is an established method for appraising projects, and will not be further discussed here. This step was not done during the TA because the GCAPs were new, and there was nothing to evaluate, review or update yet. It is expected that after the first year, the Green Teams will update their GCAP using this method. The actions have been developed in a SMART way, they are:  Specific  Measurable (where possible)  Achievable  Realistic, and  Time-bound. It should be noted that the methodology is not rigid. Green Teams or consultants can agree to do it differently, for example in a slightly different order, or skip steps deemed unnecessary, especially when similar work has already been done.

3.2 Finance Methodology The Consultant developed two capacity development processes to help the Green Teams analyze how to improve a city’s financial situation as part of the Green City Profile (GCP), and consider different ways to finance selected priority projects. The Consultant facilitated the Green Teams in using them: 1) Financial Assessment Report (FAR) to improve municipal financial management 2) Alternative Financing Mechanisms (AFM) for prospective project proposals The financial aspects of the Methodology are mostly linked to step 7 of the GCAP. It allows Green Teams to determine how sufficient funds can be mobilized for prioritized programs, particularly with respect to attracting finance alternate to ‘normal’ public budgets. Also, Green Teams were encouraged to formulate actions which could improve or increase city budgets (public finance). Below is a summary of both tools, and the full description can be found in Appendix B.

3.2.1 Financial Assessment Report (FAR) The FAR focuses on analyzing cities’ expenditures and budgets as laid down in the RPJMD (5-year plan), APBD (municipal annual budget) and Renstra (sector budgets), and focuses on 3 key questions: 1) Can cities increase their budgets available for capital expenditures (CAPEX) by being more efficient and/or implementing new (green) taxes? 2) Can cities borrow money to increase future budgets available for capital expenditures in green sectors? 3) Can cities allocate more available budgets to different sectors to fund prioritized green programs? To consider opportunities related to question 1, actual revenues and expenditures of the cities in past years were analyzed using a number of ratios. The ratios provide insight in the way the cities gathered revenues over the past years, how these revenues were used and how much is available for capital investments to improve the city’s (green) infrastructure. These numbers provided a good starting point to discuss how future budgets can be increased and how more budgets can be allocated for capital expenditures, especially in green sectors.

Ratios Malang Medan Batam Kendari Average of actual numbers realized for years data is available Independency

Local income / Transfer Fiscal decentralization

Local income / Total revenues Effectiveness for Infra Assets (lifetime > 12 months) Capital Expenditures / Total Expenditures Effectiveness for Goods & Services (lifetime <

12 months)

Ratios Malang Medan Batam Kendari Average of actual numbers realized for years data is available Non personnel expenses / Total Expenditures Own Revenue vs Personnel Ratio

Own revenue/ Personnel Expenditures Personnel Expenses Ratio

Personnel Expenditures / Total Expenditures Operating Expenses Ratio

Operating Expenditures / Total Expenditures

Question 2 (borrowing capacity) considers the income available for debt repayment and uses a formula (based on Indonesian regulations14) to calculate the potential borrowing capacity in the coming 5 years. This analysis can serve as a starting point for cities, to further explore with lending agencies if they are eligible for lending and what procedures they should follow to get loans from institutes as LPPI (Lembaga Pendanaan Pembangunan Infrastruktur / Infrastructure Development Funding Institution) or the Ministry of Finance. Question 3 can be answered once cities have an overview of what they are spending on Green Attributes. The table below shows the information that Green Teams should gather to be able to have this discussion. Variations on these figures are possible such as green expenditures as % of CAPEX expenditures. On top of this, it would help to have benchmarks on what successful green Indonesian and foreign cities have spent to realize and expand green infrastructure and perform well on various green attributes. An attempt has been made to collect such figures from existing research but regrettably numbers are not available. Also, while it is useful for cities to have insight in the way they spend their budgets, it would help to have a well-defined framework of when expenses qualify as a green attribute. For example, is BRT only green when it uses mainly green buses (gas or electric driven)? In its current form, the below overview is useful to see if cities’ expenditures match their green ambitions. For example, if green open space is a priority, but only a small part of budgets is used for this, this is something for the Green Team to look into and discuss with decision makers.

Ratios Malang Medan Batam Kendari

% of total expenditures (actual numbers realized in years data is available)

Green Community

Green Planning and Design

Green Open Space

Green Waste

Green Transportation & Urban Mobility

Green Water

14 Government Regulation no. 30/2011

Ratios Malang Medan Batam Kendari

% of total expenditures (actual numbers realized in years data is available)

Green Energy

Green Industry

Green Building

Total

3.2.2 Alternative Financing Mechanisms (AFM) Programs that fail to receive funding from central government are often shelved by local governments. Therefore, in accordance with the TOR, the Consultant sought to push the cities to consider alternative implementing mechanisms for selected projects. Alternative mechanisms in many cases have the ability to attract alternative financing from the private sector. The AFM tool allows cities and Green Teams to consider the possibility of applying alternative mechanisms already in the green action planning stage. This will allow cities to consider including further research into this options in the next stages of developing the projects, such as in the pre-feasibility stage. The goal of the methodology is: 1. To identify options to apply alternative implementing mechanisms to realize projects (project briefs are a starting point of this analysis) 2. To identify possible sources of finance and funding that match the mechanisms and projects 3. To determine next steps towards implementation Implementing mechanisms reflect the way stakeholders co-operate to implement a project and the way risks and responsibilities are allocated. Alternative implementing mechanisms are for example BOT, joint ventures and cooperatives (of communities, of service providers such as bus operators). Different sources of finance and funding are available, depending on the applicable implementing mechanism such as financing from commercial banks, development banks (such as ADB, KfW, IFC but also Indonesian Institutes like IIF and the newly formed LPPI (Infrastructure Development Funding Institution)), community cooperatives and funding from NGOs and private sector CSR programs. The methodology developed is simple because for most city planners this is a new concept they had to be familiarized with. As part of these outputs, a flowchart (see Figure 4.2) was created highlighting different ways for the Green Teams to consider alternative implementing mechanisms. While the flowchart is simple in nature and it can be argued that it oversimplifies financial project evaluations, this is done deliberately to encourage the Green Teams to think about the various options available to them. It should be taken as a guide and in no way should be thought of as exhaustive. The flowchart also shows the importance of taking into account the capacity of cities to apply possible implementing mechanisms. The main purpose of the flowchart (figure 3.3) is to provide guidance in determining whether financing mechanisms or funding mechanisms apply. Funding and financing are different concepts.

 Funding: a project is paid for without the expectations of financial returns (grants or Corporate Social Responsibility (CSR)).  Financing: a project is paid for with the expectation of financial returns. This means the project needs to generate revenues for the investor.

Figure 3.3: Project Finance/Funding Flowchart

4 Process and issues faced in capacity development

This section provides some descriptions of key parts of the capacity development process and outlines issues faced by the consultant team.

4.1 Methodology Development and application

4.1.1 Purpose The intention of developing a methodology for green development action planning was to provide a consistent approach for all cities, so that by the end of the TA the GCAPs could be compared in terms of quality, and provide a comparable set of project proposals for evaluation by financing agencies. The Consultant also hoped that the GoI would eventually endorse the methodology for replication in other cities. The methodology was developed throughout the capacity development TA process, and many issues were encountered during this process.

4.1.2 Development Action planning already existed in various forms, but generally was not part of the municipal statutory planning process, and didn’t measure performance, with the result that local action plans were rarely budgeted and implemented as intended. In addition, green development required planning to be cross-sectorial and inclusive. The Consultant tried to overcome these obstacles by embedding action planning in municipal medium-term development plans (RPJMD) to ‘green up’ existing plans by adding a pipeline of green project proposals to implement them. Ideally this should be done around the time city governments had to draft a new RPJMD, but this didn’t match the timeframe of the TA.

4.1.3 Practice The methodology had a number of components that were developed more or less separately and field-tested at different stages in the course of the TA with Green Teams of different calibre, so by the end of the TA the Consultant could only reasonably establish that the methodology was in principle practical, applicable, and robust, but lacked the time to shape it into a mature knowledge product ready for dissemination. The Consultant’s product is still (in some respects) a work in progress, but it is hoped that future technical assistance for green cities development will enable it to further evolve and become institutionalized. In this regard, two components of the methodology deserve special mention: The Green City Profile (GCP) The Consultant introduced the Green City Profile (see Methodology) as an innovative planning tool, in the expectation that it would enable the Green Teams to practice a more integrated and result-oriented green infrastructure development planning process. At the completion of the TA however, the GCP was still a work in progress for the following reasons:  It consisted of separately developed, mutually related tools (SOAR, MCA, Roadmap, GIS maps, Fiscal Profile etc.) that were deemed innovative but not yet fully integrated, so their potential as an integrated planning tool could not yet be demonstrated;  The Consultant introduced the GCP as a planning during implementation of the TA, and the Green Teams prepared it as well as they were able to do so at that stage, based on data available to them, but had not been able to apply it yet as an

integrated planning tool, it will not be fully utilized until it is fully adopted into a ‘rolling’ planning process;  The Green Teams were under no obligation to apply the GCP because it was not part of the statutory planning process;  It turned out to be difficult to obtain recent and reliable baseline municipal planning data, maps, etc.; and  No vetting or guidance was provided by the GoI Executing Agency and Implementing Agency which both were in the throes of reorganization, with the result that its entire Green Cities Program escaped attention.

The GCP would have been better able to prove its worth if prepared as the first step in the GCAP preparation process, prior to doing a SOAR analysis (see methodology) when preparing or updating a GCAP as part of the RPJMD. This is discussed further in the Recommendations section of this report. The Green City Profile was developed in Bahasa, the working language of the Green Teams, and useful and relevant information was summarized into the GCAP to provide a basis, and a form of baseline, for implementing the action plans. The Roadmap The ‘Roadmap’ embedded in the GCP (see Methodology) was jointly developed by the TA Team before being field-tested with the Green Teams. The main difficulty in designing the Roadmap was to agree on criteria and their scores in a progression of green development with reasonable cutoff scores between red, yellow, and green over a period of 30 years. Another difficulty was to explain it to the Green Teams, and ask them to try it out as a model for measuring green performance. Maybe not surprisingly, most cities viewed themselves as green already, and were disappointed when their baseline score for 2015 turned out to be in the red zone. By completion of the TA, the usefulness of the Roadmap was still unproven for the following reasons:  As was the case with the GCP, Green Teams had prepared the Roadmap once the Consultant had developed the tool, but were under no obligation to make it part of the statutory development planning process;  It turned out to be difficult to set a baseline and map out future green development based on reasonable assumptions; and  No vetting or guidance was provided by the GoI Executing Agency and Implementing Agency which both were in the throes of reorganization, with the result that its entire Green Cities Program escaped attention. The ‘Roadmap’ turned out to be a challenge mainly because Green Teams were not in the habit of rating current performance and projecting future performance. They completed the exercise with the help of the city facilitators, but the Consultant was not convinced the Green Teams would continue to use the tool by annually reviewing performance and updating their Roadmap once the TA was completed. The paragraph below concludes this sub-section, while the section on Next Steps recommends the way forward.

4.1.4 Summary of Methodology Development and Application The Consultant is of the opinion that to produce a finalised and integrated Green City Profile (GCP), it would have been necessary to undertake this methodological development and facilitation, fully tried and tested, as a first output in the sequence leading to a GCAP - considering the initial absence of an official counterpart planning team in the Cities, and limited national support, this was not possible, and it would have difficult to determine when

the time was ripe to proceed with GCAP preparation. Furthermore developing a new profiling tool for green cities in Indonesia (that can be produced by the cities, based on existing data) could have been a full TA in itself. The time and resources available meant, that at a certain point, the team had to move on to project development, prioritisation, and action planning. It can be concluded that Version 1.0 of the methodology (especially the GCP and the Roadmap) was not conclusively finished because of its unconventional approach (City led results orientated integrated action planning in Indonesia), and when applied, it will take considerable time to become internalized. It did, however, make some significant contributions: first, it forced Green Teams to get used to the notion of measuring performance, something they had previously been quite unaware of and/or reluctant to do; secondly, it brought to the fore that data, information and knowledge management in municipal government is still weak and uncoordinated, which adversely affects the quality of the planning process. The Consultant, however, did not have the resources to significantly improve integrated knowledge management as part of the planning process. As a result, the Consultant decided to include only a summarized data set from the GCP in the GCAP, and to append the GCP (the working document), in Bahasa, as a reference for the Cities15. This is considered sufficient, as green development planning tools will continue to develop to inform future versions of the GCAP. The profile still provides a useful data set to inform planning, but it should be simplified to ensure its success. As future technical assistance will be based on Version 1.1 of the methodology, the expectation is that it can be delivered in the proper sequence with tools that are ready for use.

4.2 Facilitation of the TA

4.2.1 Language Even though the TA was an international consultancy, the ADB granted permission to facilitate workshops and on-the-job training entirely in Indonesian language (Bahasa Indonesia). As a consequence, the outputs of the Green Team during the 10-Step processs were also produced in Indonesian language. This was crucial because it increased local understanding, and greatly enhanced buy-in. The Green City Action Plans would be translated into English for international consumption, particularly as some projects and actions could be picked up by development partners, including ADB.

4.2.2 Schedule The original plan for the TA was to undertake an inception mission to agree on the TA schedule, followed by a national visioning workshop for all cities together, then two major workshops for each city separated by three-month working periods, to be concluded by a final ‘Roundtable’ evaluation workshop that would bring the cities together again to present their GCAPs and evaluate the TA. Initially, total time allocated was 18 months. This had to be extended to 24 months in order to accommodate a schedule of more but shorter facilitation sessions (see next item). During the initial stages of the TA, it turned out that the Green Teams could not be left to their own devices for long periods of time to do their ‘homework’, and needed regular on-the-job facilitation to prevent them from losing momentum. The Consultant adjusted its TA delivery schedule accordingly by scrapping the two originally planned large intermediate workshops and replacing them with a series of shorter facilitation periods. This was more difficult to organize. The Consultant had to persuade its city facilitators and specialists to adjust their

15 It is assumed that GCAP appendices can be attached in a CD wallet rather than printed to keep the GCAP concise.

planning accordingly while running the risk of losing specialists as a result of conflicting assignments. Because of the intermittent and somewhat unpredictable nature of their assignments, some of the national consultants experienced scheduling conflicts, leading to the termination of their contracts. This is not uncommon in Indonesia, and to the extent possible was anticipated by the Consultant. To minimize dependence on national consultants, the Consultant underscored local initiative, with the national consultants acting as facilitators rather than driving forces. This concept aligns with the idea of local ownership. In establishing TA schedules, the Consultant was at the mercy of city governments because the Green Teams could only be summoned with an official letter by the Mayor or the head of Bappeda, and this was too cumbersome to be practical. The more informal approach practiced by the Consultant resulted in regular re-scheduling of TA activities, as the City’s routine activities took priority, but the Consultant applied the utmost flexibility. This is the drawback of putting a local team in the driving seat, but it was the only way to make the approach work, and deliver an action plan which has a better chance of future implementation. The approach resulted in significant delays to the TA, however, it is the first step towards creating a paradigm shift in urban planning in Indonesia.

4.2.3 Management of the TA The way the TA was organized, the Team Leader was responsible for developing the methodology with contributions from the various specialists, chairing management meetings, as well as scheduling periodical city workshops to complete intermediate outputs. The city facilitators were responsible for on-the-job training by introducing each of the 10 Steps and facilitating their completion, given Green Team and data availability. With periodic intervals, the entire TA team would conduct city workshops to help the Green Teams complete intermediate outputs. The TA Team (or parts of the Team) also held periodical management workshops in Jakarta to agree on methodology, operational issues, and to report progress to the ADB and Bappenas.

4.3 Capacity Development The 10-step methodology required a sequence of capacity development activities starting with the creation of a municipal green planning team, and ending with approval of the GCAP document by the Mayor as shown in Table 4.1 below.

Table 4.1: Capacity Development

Capacity How it works Remarks Development - City Mayor issues a Decision (SKW) establishing the ‘Green Team’ (GT or basic - SKW is prerequisite for UMP) with a mandate to prepare and update a establishing legitimacy of the GT GCAP and the GCAP process (not - SKW and GT are multi-year, multi-stakeholder included in the MoU/ToR) - SKW allocates annual operational budget - Difficult to find champions, or to - GT is chaired by Bappeda and has a keep them because TA provided no Secretariat incentives for this purpose - GT consists of LG staff in charge of the - Quality of TA city facilitators A. Institutional attributes selected for the GCAP contributes to quality of GT and Capacity - GT can invite members from outside GCAP Development government as needed - In the absence of a ready - GT has one or more ‘green champions’ and methodology, facilitators had no ‘finance champions’ prior know-how on the GCAP TA Team facilitates GT with periodical on-the- approach job training workshops and remote inputs - In the absence of a ready through email and Whatsapp City Groups methodology, the Mayor has no - GT periodically reports on GCAP progress to advance knowledge of the product Steering Committee chaired by Mayor he/she is going to approve - Mayor approves the GCAP - GT and ‘finance champion’ are not forthcoming in analyzing fiscal - GT has working session(s) to assess the city’s capacity and identifying ways to ‘green’ fiscal profile in support of GCAP use the local budget more B. Financial preparation effectively and efficiently, in part Capacity - GT analyses current development plan due to lack of expertise Development (RPJMD) to assess current and planned levels - Ideally, a GCAP is drafted or of green investments updated around the time the next medium term development plan (RPJMD) is drafted in order to inform it - Quality of TA city facilitators - GT selects attributes to be included in the first contributes to quality of GT and GCAP based on SOAR analysis, Green GCAP Lensing with Green Framework, and applying an - In the absence of a ready agreed MCA methodology, facilitators had no - GT rates its current baseline performance C. Planning prior know-how on the GCAP based on a “Road Map” for green development Capacity approach for the short, medium and long term Development - The generic Road Map provided - GT drafts a Green City Profile with GIS maps by the TA allows the GT to see - GT drafts briefs for selected priority programs where it is and where it has to go in and projects terms of greening the city - GT drafts action plan for implementing Note: Results are recorded in the proposed priority programs and projects GCAP appended to the DFR

Financial capacity development is discussed further in a separate section, 5.5.

4.3.1 Institutional Capacity Development, Urban Management Partnerships From ADB’s definition, a UMP is essentially a broad group of actors or “committee” dedicated to achieving a citywide green development outcome, and in the process will share knowledge with one another. While this provides flexibility, it also provides insufficient focus and specificity.

The Consultant undertook a study on UMPs that was turned into a knowledge product and submitted to ADB headquarters for publication as part of a report on Green Cities16. The conclusion of the study was that UMPs are useful and that there was certainly a need to bring different stakeholders together to be part of the decision making process. However, any partnership between different government agencies should be created in order to resolve a specific issue over a defined period of time and be led by a ‘core group’ of stakeholders who will contribute to implementation of a project. In other words, partnerships are made at the project level, a City wide Urban Management partnership in Indonesia will be too cumbersome, and partnerships should be designed to bring the appropriate skills, knowledge, political drive, and regulatory authority together to facilitate implementation of a project to solve a specific problem. Thus, the Consultant resolved to create a Green City Team as an embryonic UMP in each of the four cities, bringing together different government agencies who have a direct stake in city planning and would act as the core group of stakeholders on agreed program and project proposals. The Green Teams were created by Mayoral Decision, and led by a Steering Committee chaired by the Mayor who had the final say in approving the Green City Action Plan. Figure 4.1 below shows the typical organizational structure of the Green Team as applied in each city. Figure 4.1: Organization Chart of Green Team

16 GREEN Solutions For Livable Cities, 2016, ADB, P121-138.

After considerable delays, all cities issued a Mayoral Decisions during the first quarter of 2015, articulating the composition (membership) of the Green Team and Steering Committee, operating procedures, and budget allocations for 2015, with optional extension for the following years. In most cases, civil servants from relevant local government agencies were appointed by position, while members outside government were to be selected and invited as needed depending on the green attributes to be dealt with. The Green Team, chaired by the Head of the city’s development planning agency (Bappeda) with its secretariat in the Bappeda office, was the port of entry for the TA consultants. The consultants planned the schedule for workshops and on-the-job training sessions in consultation with the Green Team’s daily manager, usually the Head of Physical Infrastructure Development in Bappeda. The daily manager was in charge of deciding who should attend the working sessions depending on the proposed agenda. The Green Team reported to the Steering Committee each time a milestone in the GCAP process had been reached, first of all to explain and justify the selection of the long list of programs and projects, and then to explain and justify the agreed short list (pipeline) of programs and projects, and the draft action plan. The Green Teams who prepared the pipeline also identified the partners (UMPs) that would be responsible for preparing and implementing the projects and action plans. Often these resulted in specific actions. The final milestone was to present the draft GCAP and submit it to the Mayor for approval. Based on the recommendations of the GCAP, the Mayor and his/her Steering Committee (the actual decision-makers) are to determine what actions are going to be implemented, which partners are to be engaged for each action, and under what conditions. The Chapter on Outputs will clarify how UMPs were included in this TA and the GCAPs.

4.3.2 Issues faced As the ADB MoU and ToR for the TA made no mention of the need for a Mayoral Decision or Green Team, and the GoI offered no support, the Consultant had to request the Mayors to do it. This resulted in a delay of several months during which the Consultant had no official counterpart. Having said that, the Consultant already held informal discussions during inception missions with ‘prospective’ counterparts to introduce the TA. However, if the Consultant had attempted to implement the TA without the Mayoral Decision and a Green Team, in the end there would have been no allocation from the local budget, and nobody would have taken responsibility for the results. The ToR promoted the concept of ‘green champions’, but it turned out to be difficult to find and keep one or more ‘champions’ for the Green Team. In theory the Mayor and Head of Bappeda should act as the primary ‘champions’, but in reality most of them were not very pro-active. One main reason for this is that no incentives could be provided to shoulder this responsibility and rally everybody around the cause. As the four cities assumed that the GCAPs would be completed before the end of 2015, and had not understood that the process didn’t stop there, the Heads of Bappeda did not request extension of the Mayoral Decisions for 2016 with a corresponding budget allocation. To correct the situation they did, however, request a mid-year budget revision for 2016. The Green Teams were of the opinion that the interest shown by the Mayor and Steering Committee in GCAP progress was not always sufficient to move the process forward expediently. In the same vein, they felt that the National Executing Agency and Implementing Agency were not demonstrating much concrete support for their efforts.

As all four cities have created a viable pipeline of programs and projects, the Green Team has demonstrated its credibility and usefulness, and is expected to continue to function in its capacity of integrated planning coordination team. It remains to be seen, however, to what extent the Green Teams will be able to make their mark in creating and sustaining partnerships for GCAP implementation, as this takes place at the level of the Steering Committee which is composed of the decision makers. UMPs under each project will develop if the Mayors actively promote green city development, continue to endorse the Green Teams, extend the Mayoral Decision each year to promote partnerships in accordance with the projects that have been prioritized for action, and allocate annual operational budgets to implement the actions.

4.3.3 Planning Capacity Development This section relates to the ability of the Green Teams to prepare an actionable and integrated GCAP supported by a project pipeline. The GCAP approach was not easily understood or accepted, and several cities expressed the opinion that they didn’t need capacity development and action planning – again – because they had done it before without tangible results. All they needed was feasibility studies for getting bankable projects into the project pipeline of the Ministry of Finance. Because of the current restrictive regulatory framework, however, local governments often do not have the means to tender feasibility studies by themselves. Some local government officials challenge the view that action planning has to be funded from the local budget because there is no guaranteed downstream result in terms of bankable project proposals, so there appears to be no rationale for applying local funds to invest in uncertain outcomes. Such perceptions can in part be attributed to the still prevailing passive mind-set from the pre-decentralization era when infrastructure projects were supplied by central government, whereas now autonomous cities are expected to mobilize local resources to the extent possible to manage their own affairs. There are no quick fixes for such obstacles to green development, but the work undertaken throughout this TA has sought to create and facilitate a paradigm shift in integrated urban infrastructure planning that aims to mobilize local resources to a larger extent than has been the case so far. This concept has gained momentum throughout the TA and the benefits of the GCAP are generally understood. When it was time for the Green Teams to prepare project proposals, the Consultant found that they were not accustomed to that task. The Consultant tried to find existing templates for preparing Project Briefs as well as an agreed nomenclature that could be used, but found nothing practical and suitable. Hence, the Consultant had to design a template that would enable the Green Teams to work out proposals that outline the type of information necessary for an initial funding proposal. Introduction of this new tool (the Project Brief) required significant preparation time and intensive facilitation by the Consultant. After developing a template, the Consultant assisted the Green Teams in preparing a pipeline of proposals based on their agreed priorities. As mentioned before, facilitation of this process was intensive as the Green Teams were not familiar with preparing project proposals (even 15 years after the nation was decentralized by law). On average, it took Green Teams a full day to put one proposal together, or an entire week for a city project pipeline. This was done in the last series of integrated “Roadshow” workshops. A second round of workshops was needed to follow up with FAR and and AFM for financing potential projects in the pipeline, to ensure their feasibility. One serious drawback of the current green cities development concept is that some green issues such as forest protection, bulk water supply, river pollution, and power supply fall

outside a city’s administrative boundaries and jurisdiction, limiting the Green Teams to plan for local green development only. This will continue to be a setback for the Green City concept unless cities, provinces, national agencies, and private corporations seriously cooperate in developing green cities across boundaries and jurisdictions. This can only be achieved by a strong national regulatory framework that is enforced with effective incentives and disincentives, while an attempt was made to broaden the green teams (for example to include provincial water supply companies), this framework was not fully available during this TA. The TA was able to get ‘everybody’ at city level around the table for planning purposes occasionally albeit not always simultaneously, but little attempt was made to invite provincial authorities and national policy makers to discuss coordination and cooperation on action plans. The regulatory framework for coordinating development planning is too rigid for that purpose. Bappenas occasionally paid a visit to one or other workshop, mainly to explain Bappenas policies on sustainable urban development. During this TA, no GCAP was conclusively finished by the Green Teams, the main reasons being that they were not held accountable for the result: The Mayoral Decision imposed no deadlines or deliverables, and provided no clear incentives for good performance. Having said that, the GCAP is not supposed to be a finished product: it has to evolve and improve continuously, and be updated periodically. The consultant team therefore has assisted in taking drafted action plans and assisting the Cities to finalize their GCAPs.

4.4 Brief Summary of the process and issues by City

4.4.1 Batam The Green Cities TA in Batam has been problematic from the beginning. The institutional challenges that limit capacity for green city planning in Batam are mainly related to weaknesses in coordinating sector plans and institutions, notably among the national Batam Development Authority (BDA or BP Batam)17, the city government, and the Ministry of Forestry, particularly on the issue of land allocation. As the TA aimed to develop capacities at municipal level rather than the entire Batam industrial development zone that was originally created as a greenfield development in a practically uninhabited group of little islands, the Mayoral Decision on establishing a Green Team for GCAP development only included membership at municipal level, as in the other three cities participating in the TA. The BDA was invited to GCAP sessions only as a token representative, and usually it was a different person each time. With the consent of the ADB, the Consultants met with the BDA several times in an effort to develop modes of cooperation and create synergies. However, despite obvious common interests in greening Batam, the respective authorities appeared not inclined to pursue a more integrated approach. As the Consultants were not in a position to overcome this obstacle, it had the effect of stunting the Green Team and GCAP development. Towards the end of the TA, however, Batam changed its stance, and during the final “Green Cities Roundtable” evaluation workshop in Surabaya, Batam specifically requested Bappenas to help end this dichotomy so that Batam could work with whatever authority was in charge on green development in a more integrated manner.

17 Also known as the Batam Indonesia Free Zone Authority (BIFZA)

Interestingly, the President of the Republic of Indonesia recently indicated his intent to abolish the BDA citing as reason that its dualistic management role had been overtaken by recent developments. According to an article in the Jakarta Post dated 30 December 2015 titled, ‘Govt to disband Batam Free Trade Authority’, stated, ‘Home Minister Tjahjo Kumolo has said the government will close down the Batam Free Trade Zone Management Agency (BPK FTZ) next year in an effort to eliminate the overlapping of authority in Batam.’18

4.4.2 Kendari At the outset of the TA, Kendari was the apparent frontrunner, not only because the Mayor had already embraced the Green City concept, but also because there was a strong Green City Champion (who subsequently left to study overseas) and it was being assisted by the UNESCO-IHE/MARE project aiming at improving water resource management. Kendari was the first city to issue a Mayoral Decision on the Green Team, and the first to complete Steps 1-6 of the GCAP process and report to the Steering Committee chaired by the Mayor. After that, however, momentum started to wane, maybe because the Green Team had insufficient incentives to want to stay ahead, but more likely because this small city lacked the human resources – especially a strong champion - to push important policy and technical decisions. The city struggled to put together a pipeline of project briefs. As a result, contrary to the guiding principles of the process, the Consultant had to take a more leading role in Kendari than in the other TA cities.

4.4.3 Malang Despite its commitment, the city of Malang during 2015 has experienced several setbacks as the result of a reshuffle of positions in the key agencies involved in green development, and preoccupation with the hosting of the annual national convention of the National Association of Mayors (APEKSI). In addition, the City Facilitator appointed by the Consultant had to be replaced twice for various reasons. The most recent facilitator, with full support from the ADB and the Consultants, decided to reboot the GCAP process. The Green Team was able to catch up with the other cities by the end of 2015 thanks to its continued commitment.

4.4.4 Medan Medan had initially disconnected itself from the GCP as implemented by the MPWH in 2013 citing dissatisfaction with the results, and was therefore not interested in joining the TA. After Medan participated in the National Visioning Workshop in Jakarta in November 2014 however, it agreed to join, subsequently to be disqualified by the Coordinating Minister for Economic Affairs from participation in the ASEAN Regional Cooperation on the Indonesia- Malaysia-Thailand Growth Triangle (IMT-GT), and implicitly the GCP. This decision was eventually overturned so that by April 2015 Medan was ready to start the TA, and had a Mayoral Decision in hand to prove its commitment. The Green Team, with the help of the CDTA City Facilitator who could be appointed once the Mayoral Decision was issued, managed to catch up with the other cities by the first quarter of 2016.

4.5 Developing financing capacity Initially, the Consultant conducted a number of interviews with relevant stakeholders to explore possible alternative mechanisms in urban projects, possible financing sources and best practices.

18 http://www.thejakartapost.com/news/2015/12/30/govt-disband-batam-free-trade-zone-authority.html

Interviews were conducted with public financial institutions, bi- and multilateral development banks (MDBs) and Indonesian banks: Pusat Investasi Pemerintah (Indonesian Investment Agency), PT SMI (Sarana Multi Infrastruktur (Persero)), Indonesian Infrastructure Fund (IIF), Indonesian Infrastructure Guarantee Fund (IIGF), PEFINDO – credit rating agency, Asian Development Bank, KfW, Agence Française de Développement (AfD), Dutch Development Bank (FMO), Mandiri Sekuritas. Interviews were also conducted with private companies: Synergy Efficiency Solutions (energy savings), Harsari (street lighting) and WMD (water). The interviews and additional desk research were used to further develop the methodology (Appendix F) for green teams to explore alternative mechanisms. The Consultant developed a model for municipal fiscal capacity analysis (FAR) as part of the Green City Profile (GCP) as well as a guide to alternative modes of financing (AMF) as part of the Green City Action Plan (GCAP). Their intent was to help the Green Teams make municipal financial management for green infrastructure development more effective and efficient, and also assist them in considering options for alternative modes of finance for selected programs and projects. This succeeded to some extent, but the tool was introduced to the Green Teams at a time when the local budget (APBD) for 2015 had already been fixed, and the input was concluded too late to influence the 2016 budget. The TA attempted to make Indonesian municipalities more capable and responsive to independent urban planning after decentralization in the year 2000. A large part of that effort, falls into enabling the cities to address their finance needs – not just from a project perspective, but also more generally as part of their city budgets. With the goal of addressing the importance of considering finance in the GCAP process, cities have appointed a Green Finance Champion acting as the key person in the Green Team to deal with the financial aspects of the GCAP and coordinate with other Green Team members to consider financing of projects related to different Green Attributes. Facilitation covered two major areas: one, an assessment of the city’s fiscal profile and capacity to allocate budgets for green infrastructure more effectively and efficiently (Fiscal Assessment Report or FAR); and two, an assessment of a city’s options for exploring and applying modes of financing other than public funding (Alternative Modes of Financing or AFM). While the FAR was mostly used as part of the Green City Profile (GCP) to ‘green up’ a city’s medium- term development plan (RPJMD), the AFM was introduced once a pipeline of priority programs and project was developed, to help develop project specific actions. Several missions were undertaken to all cities over the course of 2014, 2015 and 2016. The aim of these missions was:  To familiarize Green Teams with the financial part of this TA, both the FAR (Fiscal Capacity Analysis) and the Alternative Financing Mechanisms (AFM).  To explain the methodology for the FAR and the AFM, and to make clear what information Green Teams needed to gather and analyze to carry out the analysis.  To assist the Green Team in carrying out the analysis. For the Fiscal Capacity Analysis, this was done by discussing the draft Financial Assessment Reports (FAR), prepared by the Consultant based on the input received from the city. For the Alternative Modes of Financing this was done by applying the methodology developed to project briefs, thus consider appropriate implementing and financing mechanisms (and develop them into actions). To overcome limited know-how in financial management in the Green Teams, the Consultant decided to simplify the methodology, mainly by focusing on analyzing the actual revenues

and expenditures of cities in the past years - and not so much the budgeting as laid down in the local budget (APBD) and sectorial agency plans (Renstra). The Consultant faced difficulties to engage with all cities on the topic of their budgeting and the way they gather and spend available budgets. Cities were reluctant to share information and to openly discuss their budgets and possible opportunities to improve it. In addition, implementation of the local medium-term development plan (RPJMD) was on-going in all cities, so that there was limited opportunity to financially update green infrastructure investment along the way. Issues faced

Several missions have been devoted to activating the green teams in undertaking financial analyses, using different approaches. Early in the project the international financing expert requested a green finance champ to be appointed in each green team. The idea was that a clear counterpart would make it easier to gather information and to create an active attitude towards the financing topics of the TA. While the green financing champ was appointed by all cities, his/her participation was in all cases passive. Cities’ GCAP champions also did not seem to want to actively engage the finance champions. The FAR and AMF were useful tools in principle for analysing infrastructure investments and municipal financial performance, but results were mixed because the competence and know- how of the ‘finance champions’ in the Green Teams to view them as innovative approaches for dealing with project financing was not mature. Therefore, the product offered by the Consultant was not yet sufficiently appreciated and applied by the Green Teams. The Consultant also came to the conclusion that it had tried to push for innovative projects and unconventional modes of financing while it was still difficult to wean Green Teams away from their established practices ie not making much effort to mobilize more local resources in the spirit of decentralization, and primarily asking provincial and central government to provide grants for infrastructure projects, as this is the status quo. In late 2015, the Consultant already concluded that reluctance would remain, the most important reason being that analysis and discussions of cities’ budgets is very political in nature and should be held on a higher level than the Green Team, i.e the Steering Committee. The conclusion is that potentially useful financial tools have remained under- utilized. As their effectiveness cannot yet be ascertained, they remain a work in progress, to be further pursued in the hope that local mindsets will change.

5 Outputs

The first TA output was the methodology for drafting Green City Action Plans (GCAP) discussed in the previous Sections. The Green Teams applied each of the 10 Steps of the methodology (with intermittent assistance by the TA city facilitators) to produce a series of intermediate outputs, usually a document to be used as the basis for completing one or more next Steps, including green visions, GCPs, project pipelines & project briefs, and financial reports. The second TA output was the completion of four GCAPs which summarise the intermediate outputs and include actions to implement the prioritised programs. The actions relate to project preparation, institutional set up, technical studies, procurement, financing options & mechanisms, partnerships, and capacity development measures required to implement the projects within the prioritised programs. The results of the TA will eventually be measured in terms of actionable programs and projects, and outcomes will be measured in terms of sustained activities of the Green Teams in pursuit of green development.

5.1 Intermediate outputs The intermediate outputs are summarized in the GCAPs and it is intended that they are appended in full to the four GCAPs in soft copy on CD inside the GCAPs to keep the GCAPs concise but to make the outputs available to the Cities for reference. An overview of the intermediate outputs is provided in table 5.1 below.

Table 5.1: Overview of Intermediate Outputs and Prioritized Programs

BATAM KENDARI MALANG MEDAN Remarks Intermediate Outputs Analysis of Strengths, Desired green development Desired green development Desired green development Desired green development Useful visioning tool, but quality of Opportunities, Aspirations & results identified results identified results identified results identified output is facilitation-sensitive Results (SOAR) 2015 Green City Useful integrated planning tool, but Environmental Profile with Environmental Profile with Environmental Profile with Environmental Profile with Environmental Profile & quality of output is facilitation- maps produced maps produced maps produced maps produced thematic GIS maps sensitive “Roadmap” for Green Useful performance appraisal tool, Green performance score Green performance score low Green performance score low Green performance score low Development performance but quality of output is facilitation- low (‘red’) for baseline 2015 (‘red’) for baseline 2015 (‘red’) for baseline 2015 (‘red’) for baseline 2015 to 2045 sensitive Fiscal capacity score Fiscal capacity score not Fiscal capacity score Fiscal capacity score Useful fiscal analysis tool, but quality Financial Analysis Report sufficient for green sufficient for green investment sufficient for green investment sufficient for green investment of output is leadership-sensitive (FAR) investment in base year in base year 2015 in base year 2015 in base year 2015 (“finance champion”) 2015 Useful program & project formulation City has formulated 7 City has formulated 5 City has formulated 5 City has formulated 4 Program & Project Digest tool, but quality of output is programs based on format programs based on format programs based on format programs based on format facilitation-sensitive Useful financial management tool, Alternative Financing Scoped for selected pipeline Scoped for selected pipeline Scoped for selected pipeline Scoped for selected pipeline but quality of output is leadership- Mechanisms (AFM) projects projects projects projects sensitive (“finance champion”) Prioritized Programs “Green Water” project : Improving water supply and Improving water supply and Improving water supply and Ready for submission to financing - water supply service network service network service network agencies for further processing “Green Water” project : Improving urban drainage Improving urban drainage and Improving urban drainage and Ready for submission to financing - drainage & flood control and flood control network flood control network flood control network agencies for further processing “Green Waste” project : solid Ready for submission to financing Waste-to-Energy plant - Waste-to-Energy plant Waste-to-Energy plant waste management agencies for further processing “Green Waste” project: - On-site sanitation - On-site sanitation - On-site sanitation - On-site sanitation Ready for submission to financing waste water management - Off-site sanitation - Off-site sanitation - Off-site sanitation - Off-site sanitation agencies for further processing “Green Transportation” BRT system development BRT system development (or BRT system development (or Ready for submission to financing - project : BRT (or suitable alternative) suitable alternative) suitable alternative) agencies for further processing “Green Transportation” Non-motorized transport Non-motorized transport Ready for submission to financing - project: NMT network network agencies for further processing “Green Industry & Industrial waste Ready for submission to financing - Commerce” project: management agencies for further processing Community-based city-wide Ready for submission to financing “Green Community” project: - - - Waste Bank system agencies for further processing Tidal energy production in Ready for submission to financing “Green Energy” project: - - - Kendari Bay Area agencies for further processing Essential integrated team, but Urban Management Sustained “Green Team” Sustained “Green Team” Sustained “Green Team” Sustained “Green Team” quality is leadership-sensitive Partnership (UMP) based on Mayoral Decision based on Mayoral Decision based on Mayoral Decision based on Mayoral Decision (“green champion”)

5.2 The Green City Action Plans (GCAP) Cities often chose to focus on solid waste management, water supply, sanitation, and transport as their priorities. This is not surprising, as they are the key environmental challenges facing fast-growing cities, and they are in line with government policies to, among others, provide 100% sanitation and zero slums by 2020. Improvements in those areas will improve health, economic development, and the environment, and have a positive impact on livability. As discussed previously in this report, actions are to be developed to enable the cities to implement projects to deliver a number of priority programs that contribute to sustainable urban development. For each project budgets and implementing mechanisms are defined. And the actions, developed to implement the projects are to be realistic and specific with designated responsibilities. Therefore they have to be achievable within relatively short timeframes of no more than around 5 years, otherwise responsibilities and objectives may become unclear too far into the future. The program pipeline covers the longer term green development objectives of the City, and the rolling action planning process should be used to develop actions for the next priority programs. Again, as described before, actions are to include project preparation, institutional set up, technical studies/aspects, regulatory enablers, financing, and capacity development to enable implementation of projects. They also include the mobilization of additional resources (expertise, finance etc) as will be explained in this section. All four cities have finished 9 out of 10 steps in the “10-Steps to GCAP” process, whereas step 10 comprises the review, updating and ‘rolling over’ of the GCAP. One should keep in mind that the GCAP is a ‘living’ document and will continue to undergo review by the cities. Table 5.2: Status of GCAPs by end of TA

GCAP approved & Draft GCAP City Step signed by Remarks prepared Mayor, budgets allocated GCAP to be translated into Bahasa Batam 9 Yes Pending Indonesia by ADB, BAPPENAS, or participating cities GCAP to be translated into Bahasa Kendari 9 Yes Pending Indonesia by ADB, BAPPENAS, or participating cities GCAP to be translated into Bahasa Malang 9 Yes Pending Indonesia by ADB, BAPPENAS, or participating cities GCAP to be translated into Bahasa Medan 9 Yes Pending Indonesia by ADB, BAPPENAS, or participating cities

The completed 10-step methodology resulted in a rolling action plan that can be used by a municipal team for integrated green development planning and be periodically updated. Table 5.3 below shows the generic format of the GCAP in brief.

Table 5.3: The GCAP in Brief

Contents Description Remarks Explains background and purpose of the GCAP, as well as a summary of the GCAP Includes foreword by the Mayor Introduction preparation process and the vision for the approving the GCAP City. This section of the GCAP contains a summarized version of the city’s Green City The full GCP (as far as environmental profile as a ‘scene setter’ for Profile available) is appended to the green development issues. Key baseline data Summary GCAP in Bahasa Indonesia is included where available. Output: Full GCP appended to the GCAP Based on agreed long list and short list, this section provides an overview of selected At present it cannot be priority programs and projects until the year Green ascertained yet that the GCAP 2035 as a reference for implementation and Development will be periodically updated, or periodical updating of the GCAP Strategy 2035 that the list of priority programs Output: Table of priority programs and and projects will be adhered to projects for implementing in short (action plan) and long term The final long list of programs to implement Program briefs of all prioritized the Green Vision (in the longer term) is Program long programs are appended for provided, as well as the subsequent short list list and reference. Briefs are described of prioritized programs for which actions are shortlist in technical, financial, regulatory, developed. institutional, and risk terms Output: program pipeline Some generic guidance is provided in terms This section could be removed Enabling of implementing and enabling actions to as it may be self-explanatory for actions avoid repetition within the ‘action’ plans. the cities. Because of the relatively informal status of the GT in the LG hierarchy, at present it cannot be ascertained that the Action Plans will be followed up This section provides a list of actions properly; much depends on the required to bring each program and project to influence that Bappeda can Action Plans the preparation and implementation stage. To wield be described in further detail below.

Output: Action Plans It has been argued that a Local Regulation would be required to achieve the required momentum and legal basis for budgeting and implementation Whilst budgets and finance sources are specified in the action plan, this section Alternative summarizes the options for alternative modes Modes of of financing for programs and projects in the (same as above) Financing pipeline (AMF) Output: Options for AMF incorporated in selected Action Plans GCAP Appendices

This section applies the SOAR approach together with the City’s Vision & Mission The quality of outputs depends statement to agree on green development on the qualifications of the Visioning outcomes for the medium to long term members of the GT, which Output: Table of agreed Strengths, varies considerably between Opportunities, Aspirations, and Results cities. covering all green attributes This section applies ‘Green Lensing’ to the The Green Framework is a agreed SOAR to create a wish list of reference table for Green Green Lensing programs and projects Lensing provided by the TA Output: Long list of desired programs & consultants, but the GT can projects modify it if deemed necessary This section applies a MCA to weigh and The MCA is a method provided rank long list and produce a short list of Multi-Criteria by the TA consultants to rank a priority programs and projects Analysis (MCA) long list, but the weighting is Output: Ranked long list with selected short decided by the GT list The GCP provides a tool for integrated green development planning with a baseline and Not all cities have a complete performance indicators. This section is and qualified data set in their appended to the GCAP GCP yet, and at present it Output: GCP document comprising: cannot be ascertained that GCP - Compilation of city baseline data for 2015 data will be completed, updated, on economic growth, environmental and used effectively as an inter- management, and social development Green City disciplinary and integrated - Thematic GIS overlay maps for all green Profile (GCP) planning tool attributes

- Overview of existing and planned green Ideally, the GT should prepare a initiatives GCP before preparing a GCAP, - Fiscal profile with Financial Assessment but in the absence of a ready Report (FAR) GCP format the process was in - Roadmap with generic performance parallel (iterative) indicators for green development in the short, medium and long term Program briefs of all prioritized programs are appended for reference. Briefs are described The Brief template was in technical, financial, regulatory, institutional, developed by the consultant in Program Briefs and risk terms. They were developed to help the absence of any existing prioritize programs, but also as a basis for useful template in Indonesian discussing financing mechanisms and planning process. developing realistic actions for the GCAP Only one city developed public finance management actions as Financial assessment reports are appended a result of this process due to a to provide guidance to the cities in improving Financial reluctance to embrace local budgets for green development. These were Assessment budget improvements. It was a developed by the Consultant with varying Report useful capacity development levels of assistance from Green Team process to provide City’s with financial champions. options to improve financial management.

5.2.1 Action Plans The key Output from the GCAPs is the actions themselves, developed to facilitate implementation of every project within each prioritised Green City program. Actions are developed under all the projects which make up the prioritised programs. Under each program some information is summarised up front, including:

 Why?  Current status  Goal  Results  Benefits  Indicators  Risks & mitigation The projects are then summarised. The responsible agency for each project is included, as well as the estimated budget, the implementing mechanism (including financing and funding), and other partners. Actions are developed under this framework. Where relevant, actions specify the responsible agency and a timeframe for completion. Actions were developed by the City in Bahasa in a spreadsheet format and converted (with some amendments/improvements) by the consultant team into English, for international consumption. To provide an example of this, the actions for Project 3 of Medan’s Sanitation Program (Improvement of on-site sanitation system) are presented below. SAN 3: Establish regular septage pumping (desludging) and management system

The provision of regular septage desludging management services is one of the development challenges for the achievement of the 2017 SDG (Sustainable Development Goals) and the 2020 Indonesia’s national flagship 100%:0%:100%. In the short term, septic tanks will remain the principal form of urban sanitation in Medan as the sewer network is not extensive. Septic tanks require regular removal of septage. Without coordinated septage management, Project 2 (provision of improved tanks), will not result in improved sanitation, health, and environmental protection – as monitored under project 1 (prepare a sanitation baseline). It is important that these services are implemented in a coordinated and holistic way including institutional and cost recovery aspects to provide a sustainable service to the residents of Medan. It is planned to transfer the responsibility for collection and disposal of waste to PDAM, as they are best placed to manage such operational activities from a technical perspective. Action Description and responsibilities Timeframe SAN3.1 To promote sustained operation and enable this off site sanitation 2016 program, Medan city government will draft and adopt, through its legislative body (DPRD), a local regulation (Perda) detailing Medan city’s Septage Management System. The regulation will state the rationale, user fees, operation, management (roles and responsibilities), and penalties. Unless otherwise repealed or amended, the septage management ordinance remains valid, thereby ensuring sustained operation. SAN3.2 Establish a Memorandum of Agreement between the City and PDAM 2016 that future septage pumping (collection) and management will be undertaken by PDAM Tirtanadi. SAN3.3 In 2016, the City Cleaning and Landscaping Agency (DKP) will 2016 transfer responsibilities for the management of domestic septage waste to PDAM Tirtanadi, which currently manages off-site sanitation (centralized sewage). This includes the transfer of their existing septage pumping trucks to PDAM. SAN3.4 The City government will acquire additional septage pumping trucks 2017 (2 per year) from The Ministry of Public Works under a grant to the (annual) City who will then hand them over to PDAM Tirtanadi. SAN3.5 PDAM Tirtanadi will establish an internal operation unit to manage 2017 and conduct septage collection (every 2 years) and disposal.

SAN3.6 PDAM will prepare and approve standard operational procedures 2017 (SOP) in PDAM for septage management. SAN3.7 PDAM will train staff in latest septage management and disposal 2017 options, including developing managerial capacity particularly with respect to asset management, cost recovery, and efficient service delivery - according to performance targets and in responding to customer concerns. Technical training will also need to be delivered to the operation unit in the physical operation of the truck and ancillary equipment (valves, pumps etc). SAN3.8 The Sanitation Working Group, established under project 1, will 2017 coordinate a social marketing and public awareness campaign with PDAM to raise awareness of the benefits of improved sanitation, ensure public acceptability of regulations and tariffs, and ease project implementation. SAN3.9 PDAM will coordinate with the City government to review and set 2017 tariffs (including for adjoining municipalities) and establish a system to recover operational costs from user fees (septage pumping). SAN3.10 Explore the opportunity to establish household sanitation revolving 2017 funds for low costs septic tank and construction and public toilets. SAN3.11 Consider utilising private sector companies to provide efficient 2018 septage collection and transport services. SAN3.12 PDAM Tirtanadi will establish wastewater and septage quality testing 2018 facilities and trained staff at PDAM Tirtanadi. SAN3.13 It is planned that the Province of North Sumatra will develop a new 2017 independent septage treatment facility (Project 4) at the Cemara area. In the interim PDAM will utilize Cemara WWTP for septage disposal, which has been using only ±30 % of its design capacity of 60,000 cubic metres per day. Responsible PDAM Tirtanadi agency

Estimated Preparation (design): Rp 1.65 billion costs Realization (construction): Rp 6 billion Implementin OBA (Government Grant) for equipment g Improved cost recovery for financing operational improvements mechanism, funding & International Technical Assistance for Capacity Development and Training. financing Private sector contractors to provide efficient septage pumping and transport services. Other Medan: Sanitation Working Group, Bappeda, DKP (transfer of vehicles and partners responsibilities), Environment Agency (regarding advocacy) Regional: Other municipalities (regarding tariff setting) Social/ communities: Green Communities, social groups such as the Lions Club and AKKOPSI, users, poor households. Private sector: for septage collection and transport.. International: Technical assistance for capacity development and training.

As can be seen from the above, urban management partnerships have been proposed and developed at the project and action level. This includes listing the project owner and key stakeholders and, for example, establishing a City Sanitation Working Group (an action in

itself under project 1 of Medan’s sanitation program) which will include PDAM Tirtinadi (an agency beyond the municipality itself). Other institutional actions are proposed, including a memorandum of agreement (Action SAN3.2), transfer of some responsibilities (Action SAN3.3), and establishing an operation unit (Action SAN3.5) for septage collection and disposal. Regulatory and operational actions are proposed, including drafting a local regulation (Action SAN3.1), developing standard operating procedures (Action SAN3.6), and setting tariffs (Action SAN3.9). Capacity development actions are proposed, including training in septage management (Action SAN3.7), and septage quality testing (Action SAN3.12). Social marketing actions are proposed, including raising the awareness of improved sanitation (Action SAN3.8). Finance actions are proposed, including exploring the opportunity for a revolving fund for septic tank construction (Action SAN3.9), also options for private sector involvement in desludging are to be considered (Action SAN3.11). In other projects, particularly when related to infrastructure planning and construction, more common procurement of technical feasibility studies, goods, services and construction (including approvals and construction permits) are included. The action plans also include some specific project preparation and implementation activities, but to avoid repetitiveness, as some actions will be required for all projects, generic (project implementing) actions have also been provided in each GCAP, as described in the section below. Whilst developing action plans in such an integrated manner has required significant effort from the Consultant (as opposed to developing separate capacity development and urban management partnerships plans), the output really is an integrated action plan rather than a list of ‘projects’ as previous ADB GCAPs have been. The actions are specific activities required to enable and implement projects which will contribute to Green Cities development. The plans also serve to separate specific tasks where international partners can support or provide assistance (particularly when related to infrastructure, which is not the case in the above example). By completion of the TA, each city had drafted a first version of its action plan, but it was too early to determine what kind of implementation issues would occur as the GCAPs had only reached the approval stage, and implementation budgets had not yet been allocated. For more details, see the respective GCAPs.

5.2.2 Generic actions As described above, some generic project implementing guidance/activities are described in each GCAP to remind cities of best practice approaches to project implementation. These are provided before the projects and specific actions are listed. Project Management Unit (PMU) A temporary organizational unit created for the purpose of preparing a project implement plan (see below), and managing the project on a day to day basis. A PMU (or committee or taskforce) is headed by the agency responsible for the project. An operational budget for the PMU needs to be allocated. Representatives of relevant local government agencies, other agencies and possibly representatives of the community can also be members of the PMU.

The PMU will consider whether or not alternative implementing mechanisms (BOT, Joint venture, CSR, etc.) will be considered in the feasibility study, but also the actions related to changing or implementing regulations, issuing permits, etc. Project Implementation Plan (PIP) A document that describes in detail the actions needed for implementing the project, including preparatory activities. The PMU should be in charge of preparing and managing it. It covers the project cycle -a sequence of events and activities usually starting with a feasibility study, project design, financing, land acquisition, tendering, procurement, construction supervision, monitoring and evaluation, as well as operation and maintenance. It clearly describes the division of responsibilities, timeline and budgets needed. It specifies what decisions are needed, when, and by whom. A project is normally undertaken by a contractor, government department, a combination of public and private actors, a consortium, etc. Different actors can be responsible for different parts of the project cycle.

5.2.3 GCAP implementation Some guidance is also provided in each GCAP to guide its overall implementation, this is summarised in figure 5.1 below.

Figure 5.1: Overall Implementation

Informs / key Steering Mayor Committee decisions

Monitoring Progress/ / guidance reporting “Green Team” Monitoring/ guidance Progress/ reporting

Taskforce / PMU Taskforce / PMU Taskforce / PMU Taskforce GCAP – Waste – Water – Green taxes

A Steering Committee (SC) will monitor and guide the progress on GCAP and actions on a quarterly basis. The Mayor will chair the SC that further consists of heads of SKPDs in the field of green attributes, and other stakeholders. As chair of the “Green Team”, the head of Bappeda will keep the Mayor informed about the progress to enable the Mayor to make decisions when needed. The “Green Team” will coordinate programs and projects and the interfaces between programs and projects. They will also update the GCAP every 2 years. The “Green Team”will meet bi-weekly to monitor progress on specific projects and actions. Those in charge of specific programs and projects will inform the “Green Team” about their progress and specific issues, decisions or guidance they need. The “Green Team” will determine the agenda for meetings with the SC and prepare these meetings. Specific taskforces (PMU) will be set-up to drive the implementation of programs and projects on a day to day basis. The taskforces will be made up of representatives of relevant SKPDs and other agencies and led by the agency/ body responsible for the sector.

Table 5.4 below summarizes responsibilities in implementing the GCAP as a whole.

Table 5.4: GCAP Responsibilities

What? Who? When? Mayoral Decree on set-up and installation of SC and Mayor Update in 2106 “Green Team” incl. description of roles, SOP, membership and budgets Continuation of Mayor’s decree including budget Head of Bappeda annually allocation Work-plan “Green Team” including initiating the set-up of “Green Team” as and when specific taskforces/ PMUs for agreed projects required Evaluation of performance of “Green Team” Steering Committee bi-yearly

5.2.4 Financing options & mechanisms As with the approach and process sections of this report, a separate section is provided in this report to discuss the outputs of the financing aspects of the TA. Table 5.5 below shows, as an example, the financing options and mechanisms developed as part of the City of Medan’s Sanitation Program. These will keep their status of ‘options’ as the Program has not yet been approved, and prepared (including tangible funding and financing sources/mechanisms). As can be seen, the Program has limited scope for alternative modes of financing, but the City of Medan hopes that the introduction of effective operating mechanisms will attract private operators to manage sanitation services against a fee to be charged to customers, even though the latter are mostly urban residents classified as poor. This illustrates the fact that good institutional and regulatory preparation is necessary to implement alternative modes of finance, and thus justifies the detail in the ‘action plans’. Table 5.5: MEDAN: Funding & Financing Options, Implementing Mechanisms for Sanitation Program

Title of Program & Projects Financing Options & Implementing Mechanisms 2B Green Waste (Waste Water): Program: On-site sanitation & Off-site sanitation Project 1:  Public funding from Medan (municipal) and provincial government Prepare a Sanitation Baseline, Monitoring Plan, and establish  Improved revenue resulting from Revenue Improvement

a Sanitation Working Group to Action Plan (RIAP) coordinate monitoring and related projects

Project 2:  The City of Medan to pay for impermeable septic tanks Production and installation of  PDAM Tirtanadi to pay for desludging trucks at the rate 100,000 impermeable septic of 2 units per year tanks over a five-year period  Subsidy scheme by Ministry of Public Works & Housing, and Ministry of Health  OBA central government funding for the project (i.e. sources from APBN and DFAT [Indii-Ausaid]) Project 3:  PPP: PDAM Tirtanadi with private companies to operate desludging. Establish regular septage

pumping (desludging) and  Direct service payment by customers management system

Project 4:  Public funding: PDAM Tirtanadi Build and operate a new  Subsidy scheme by Ministry of Public Works & Housing, Septage Treatment Facility and Ministry of Health and Disposal  OBA central government funding for the project (i.e. sources from APBN and DFAT [Indii-Ausaid])

Other programs, such as water supply, and transport, lend themselves to private sector involvement. This is established within the GCAPs, but for continuity, the Sanitation Program is used as an example to illustrate how financing and funding of projects has been addressed within the GCAPs.

A summary of alternative financing mechanisms is provided in table 5.6 below:

Table 5.6: Options for Alternative Modes of Financing

Project & owner (A) (B) (C) (D) (E) (rows)/ financing Financing Funding Implementing Financing Funding options (columns) mechanism sources sources (options) (options) Waste to Energy BOT (contract); (ii) Not yet explored Tipping fee: (Malang) BUMD/ BLUD Rupiah (own company); 100.000 – (iii) Joint Venture 150.000 per (company public & tonnes. private) Waste to Energy BOT (contract); (ii) Not yet explored Tipping fee: no (Medan) BU Joint Venture number (company public & mentioned private) Bus Rapid BUMD/ BLUD Private sector: National and Transit (Medan) (own company) buses and city budgets: possibly stations dedicated bus International lines National budgets: buses development institutes: business plan BUMD (GiZ), detailed design buslanes (ITDP) Human Waste Medan city: No Medan city:

Management – sceptic tanks sceptic tanks PLT2 (Medan) PDAM Tirtanadi: PDAM trucks Tirtanadi: trucks Green Water – PDAM Tirtanadi Significant PDAM

SPAM (Drinking availability Tirtanadi, Water Supply payments could making use of Distribution attract private city budgets Network sector expansion) investments. (Medan) Lessons learned from ABT (Batam)

Project & owner (A) (B) (C) (D) (E) (rows)/ financing Financing Funding Implementing Financing Funding options (columns) mechanism sources sources (options) (options) Waste to Energy BOT (ongoing) Procurement to Local (Batam) be re-started regulation (Perda) needed to determine maximum tipping fee Non-revenue BOT (Inter)national Not discussed water (Kendari) water companies

5.3 Public Finance Outputs per City Whilst actions related to establishing the mechanisms for financing projects have been included in the ‘actions’ of the GCAP, it was hoped the cities would develop further actions related to public finance improvement.

It was hoped that more generic actions related to improving local revenues, reducing budgetary ‘waste’, attracting investment, improving ‘creditworthiness’, and generating municipal loan/debt profiles would be established but this has not been the case. Issues faced have been discussed in the Process chapter above, and further summarized below. As such there are limited tangible outputs to discuss in this section but Financial assessment reports (FARs) have been conducted for each City and they are also summarized in this section.

5.3.1 Issues and outputs  Draft Financial Assessment Reports are included in Appendix B1-4.

 After 2 years, it is not clear to the Consultant whether or not the cities in this TA have a serious ambition to further improve their fiscal capacity.

 The FAR shows that cities, especially Batam, have improved their own local income (PAD) significantly over the past years. Also, especially the Green Teams of Batam, Malang and Medan, have all expressed ambitions to further increase PAD in the future.

 The table below summarizes the result of the analysis of cities’ budgets, revenues and expenditures.

 The ratios for independency and fiscal decentralize show that all cities are still highly dependent on high level government transfers of budgets. Medan and Batam do better than Malang and Kendari. All cities have a clear incentive to increases own local income (PAD) to become less dependent on central government. Ultimately, this would allow cities to use own local income for capital expenditures and plan such investments further ahead. Most cities identified potential actions to improve own local income.

 The ratios for effectiveness show that only around 20% of budgets are available for CAPEX in (green) infrastructure (Kendari is doing better, around 30%). A maximum of between 20 and 30% is available for good and services, the non-personnel component of OPEX (Kendari is doing worse with around 17%). All cities have a clear incentive to improve these ratios and be more efficient in expenditures. However, none of the cities

identified actions aimed at this, for example decreasing costs of operation and personnel. All cities expressed it was forbidden by law to “let go” government officials. They were reluctant to discuss lowering operating costs by phasing out personnel over time.

 Related to personnel expenses it is noteworthy that none of the cities can pay personnel expenses fully from own local income. Batam and Medan are doing much better than Malang and Kendari. Table 5.7 below summarizes the result of the analysis of cities’ budgets, revenues and expenditures.

Table 5.7: Financial/Budget Ratios

Ratios Malang Medan Batam Kendari (2011 - (2011 – (2010 – (2010 – Average of actual numbers realized for years data is 2015 2014) 2015) 2015) available Independency 26,3% 57,8% 49,6% 16,4% Local income / Transfer Fiscal decentralize 18,8% 36,4% 30,8% 11,7% Local income / Total revenues Effectiveness for Infra Assets (lifetime > 12 months) 19,5% 20,4% 20,6% 29,3% Capital Expenditures / Total Expenditures Effectiveness for Goods & Services (lifetime < 12 months) 25,4% 23,7% 31,9% 16,8%* Non personnel expenses / Total Expenditures Own Revenue vs Personnel Ratio 36,3% 65% 69,5% 23,1%* Own revenue/ Personnel Expenditures Personnel Expenses Ratio 55,0% 55,9% 47,2% 57,5%* Personnel Expenditures / Total Expenditures Operating Expenses Ratio 80,5% 79,6% 79,1% 70,7% Operating Expenditures / Total Expenditures

All cities can theoretically borrow in the next 5 years, based on their cashflows available for debt repayment. This is an opportunity to create significant budget increases available for capital investments in green infrastructure on the short term. However, despite of some specific potential actions identified during workshops, none of the cities included actions to improve their fiscal capacity in the draft GCAPs they produced. The potential borrowing capacity of each city is presented in table 5.8 below.

Table 5.8: Potential Borrowing Capacity

Rupiah billion First year 5 years

Malang (2016 – 2020) 1.445 3.532

Medan (2015 – 2019) 3.031 5.523

Batam (2016 – 2020) 1.452 3.509

Kendari (2016 – 2020) 813 1.591

Only Batam finished the analysis of what the city is spending on Green Attributes (see Table 5.9). The other Green Teams did not follow-up on this action, despite assistance offered by the city facilitators. This is a pity because these data are also useful to estimate if budgets are available for prioritized green programs and projects. Batam did not discuss the implications of the analysis amongst the green team.

Table 5.9: Investment in Green Attributes

Ratios Batam % of total expenditures (actual numbers realized in years data is available)

Green Community 0,55%

Green Planning and Design 0,12%

Green Open Space 0,28%

Green Waste 3,48%

Green Transportation & Urban Mobility 4,57%

Green Water 1,35%

Green Energy 0,00%

Green Industry 0,00%

Green Building 0,00%

Total 10,3%

5.3.2 Malang Malang’s Green Team sees opportunities to further increase own revenues (PAD), but also indicates that a number of actions are already ongoing to achieve this. Ongoing actions are:  Introduction of E-tax to increase collection rate  Set-up of 1-stop shop with easier procedures so that more people will apply for licenses  Introduction of new taxes (extensification) for example for advertising  Tariff adjustment (for example street parking, from 1k to 2k)

 Increase licenses provided by mobile desks (for example for small businesses)  Start public campaign to create awareness about tax obligations (sosialisasi)  Improve database building permit (IMB, currently 70%). This will also help to improve revenues from property taxes (PBB). Malang is not yet looking into the possibilities of implementing green tax incentives and levies. For example, tax deductions (PBB) for green buildings, and higher taxes for polluting buildings. But this is an option to be further explored as part of the yearly update of the GCAP. At this time, Malang will focus on implementing the ongoing actions successfully.

Malang also looked into ways to improve the way it spends available budgets. The city already has taken action to improve planning and procurement to reduce SILPA. The actions are bundled under the SAKIP programme. The technical capacity of public officials is already sufficient to plan and procure timely. It could be worthwhile to review the current decision making structures: can decision making about Green Team proposals be improved? (including budget allocation)

An initial analysis of the potential borrowing capacity showed that Malang could potentially borrow little under 1.500 billion Rupiah (~114 million USD) in 2016 and over 3.500 billion Rupiah (~267 million USD) between 2016 – 2020. The Green Team sees this as an interesting opportunity and will discuss this with relevant public officials in the city. An action plan for public borrowing can be developed together with decision makers. This should be combined with training and technical assistance in the field of public borrowing. This option can be further explored as part of the yearly update of the GCAP.

Actions and next steps:

 Review and improve decision making structure related to planning, budgeting, project preparation and procurement: can decision making about Green Team proposals be improved? (including budget allocation)  Prepare and carry out action plan for public borrowing

5.3.3 Medan The green team concluded that there are possibilities to further increase own local income (PAD). Possible specific actions to increase PAD that were brought up by the green team are:  Introduce electronic tax collection system. This will increase collection rates, for example for restaurant tax and entertainment tax  Improve database for IMB (building permits) and PBB (property tax)  The green team intends to develop a RIAP (revenues improvement action plan) to further explore these and other options and to formulate specific actions to achieve this.  To improve budgets available for capital expenditures, the green team sees opportunities to decrease yearly unused cash balances by improving procurement and planning. This could partly free up funds for capital projects. Possible specific actions identified are:  Advanced procurement: Medan can start procurement procedures before the local budget (APBD) is officially formalized. By this Medan can avoid delays.  Medan is already making use of E-procurement system (electronic).

An initial analysis of the potential borrowing capacity showed that Medan could potentially borrow over 3.000 billion Rupiah (~230 million USD) in 2016 and over 5.000 trillion Rupiah

(~424 million USD) between 2016 – 2020. The green team indicates that this looks promising. The green team will discuss with high level decision makers, the possibility of attracting loans for green actions and projects that do add value to Medan’s economy and livability but for which no budgets are currently available and actions to further explore this opportunity. The city will put special attention to its low classification (score 0,25) according to MoF Regulation no.33/PMK.07/2015 on Map of Local Government Fiscal Capacity. Actions and next steps:

 Prepare and implement a Revenue Improvement Action Plan (RIAP)  Discuss the possibility of attracting loans for green actions and projects that do add value to Medan’s economy and liveability but for which no budgets are available.

5.3.4 Batam Batam’s Green Team sees opportunities to further increase PAD. This will be necessary to achieve the current mayor’s goal to increase total revenues to Rupiah 4.000 billion (from around 2.000 now). A specific opportunity identified is implementing an electronic tax and levies system. This can significantly increase local income (PAD). Specifically, electronic systems could be applied for collection of parking levies, solid waste levies and restaurant taxes, and also waste levies. For example, for waste levies, the potential revenues are Rupiah 75 – 80 billion yearly of which currently only Rupiah 22 billion is collected. Batam is not yet looking into the possibilities of implementing green tax incentives and levies. For example, tax deductions (PBB) for green buildings, and higher taxes for polluting buildings. But this is an option to be further explored as part of the yearly update of the GCAP. An initial analysis of the potential borrowing capacity showed that Batam could potentially borrow over 1.500 billion Rupiah (~114 million USD) in 2016 and over 3.500 billion Rupiah (~267 million USD) between 2016 – 2020. The Green Team showed interest in the significant borrowing potential resulting from this initial assessment. However, the Green Team did not take a clear position on what to do with this knowledge. No actions were formulated so far. The city could consider to develop an action plan for public borrowing can be developed together with decision makers. This should be combined with training and technical assistance in the field of public borrowing. This option can be further explored as part of the yearly update of the GCAP While the analysis on Green Attribute expenditures has been prepared, no discussions have taken place about this in the Green Team. It can be seen that waste, transportation and water get most budgets. This is in line with the priorities laid down in the GCAP. No budgets are allocated for energy and industry because investments for this fall under the local privatized PLN (energy) and PB Batam (industry). It is noteworthy that no budgets are allocated to green buildings. Actions and next steps:  Increase PAD (Electronic tax and levies system, increase collection rate waste levies)  Discuss with key decision makers such as the Mayor the option to further explore Batam’s borrowing capacity.

5.3.5 Kendari Kendari’s Green Team sees opportunities to further increase own revenues (PAD). A Cadastre – improving data on land ownership and use - could help to increase the collection

rate of PBB (land and property tax). Also, Kendari is implementing automatic portal system and electronic parking. Kendari is not yet looking into the possibilities of implementing green tax incentives and levies. For example, tax deductions (PBB) for green buildings, and higher taxes for polluting buildings. But this is an option to be further explored as part of the yearly update of the GCAP. Kendari also looked into ways to improve the way it spends available budgets. Non- discretionary expenses are hard to decrease, especially the costs of personnel. Government employees have contracts for life. Based on the discussions held, Kendari intends to focus its efforts on increasing PAD. PAD measures are easier to implement and Kendari is already more efficient in spending the available budgets for CAPEX than the other cities participating in the Green Cities programme. An initial analysis of the potential borrowing capacity showed that Malang could potentially borrow little under 800 billion Rupiah (~61 million USD) in 2016 and over 1.500 billion Rupiah (~114 million USD) between 2016 – 2020. However, the Green Team indicated that Kendari does not have the human resources to prepare a loan agreement. There is a need for training and technical assistance in the field of public borrowing. Whit that, the borrowing option can be further explored as part of the yearly update of the GCAP. No actions have been formulated.

6 Current Status of TA

The Consultants’ initiative to require the cities to issue a Mayoral Decision to create a Green Team of local stakeholders that would be in charge of preparing the action plan was essential. Without that, the TA would have had no legitimate partner in the municipal government to prepare a GCAP, and have it endorsed by the Mayor. The actual signing of the GCAPs by the Mayor is still pending the presentation of the final version of the GCAPs. Participating in the MPWH’s Green Cities Program (P2KH) since 2011, the 4 cities had previously only worked on a ‘starter kit’ of 3 green attributes (green planning & design, green open space, and green community), The TA had challenged them to tackle some of the ‘heavier’ attributes such as green waste, green water, and green transport, and the 4 cities had responded by proposing GCAPs including a pipeline of infrastructure projects. The TA was experimental in nature because the methodology had to be developed during the TA. The Green Teams have by and large adopted the 10-step action planning methodology because it was pre-tested in the field and modified as necessary. Some local variations emerged based on Green Team preferences. Especially the Project Briefs proposed by the consultants were eagerly adopted as they served to create a pipeline of priority projects. All 4 cities had different characteristics that required a tailor-made approach. This was time- consuming, but with the operational framework now developed it can be safely predicted that the process should take only one year in the future as opposed to the two years allocated to the TA. The Consultant had resolved that the GCAP would not replace or conflict with statutory plans such as a city’s Medium Term Development Plan (RPJMD), but instead would serve to ‘green it up’ because each incoming Mayor has to produce a new RPJMD within 3 months of taking office. In 2016, the GCAPs for Medan and Batam were produced in time to ‘green up’ the RPJMDs for those cities. In Kendari and Malang, the ‘greening up’ will have to wait till 2017 when new Mayors are elected. By the time the Draft Final Report was submitted, it was not yet known to what extent the Medan and Batam GCAPs had been able to inform the new RPJMDs. The Green City Profile model, although deemed effective when applied consistently, could not yet be fully embedded in local practice during the CDTA period because it would require more training and coordination than was available. The Consultant, therefore, could not ascertain whether the Green City Profile will continue to be used as an active tool for integrated planning by the Green Teams. By the time the Draft Final Report was submitted, some project proposals in the pipeline had apparently been submitted to national government for consideration before the Mayor had signed off on the GCAP. The Medan Mebidang water supply project, for instance, was recently included in Presidential Decree No.3/2016, but the Consultant could not ascertain the contribution of the Medan GCAP in this respect.

6.1 Evaluation of the TA in the National Green Cities Roundtable in Surabaya Without having participated in the Green City Program, the city of Surabaya is considered the leader in Indonesia’s Green City Development because of the relative wealth of experience available. The ADB agreed to hold the final CDTA evaluation workshop in that city. The

Consultants endeavored to engage key decision makers in Surabaya and Jakarta, and scheduled the event for the end of May 2016 to coincide with the City’s 723rd Anniversary. The Roundtable was the final consultative forum of the 2-year TA for before the submission of the Draft Final Report and debriefing with ADB in Bappenas. Its main purpose was to get the 4 participating cities together with the ADB, Bappenas, MPWH, and the TA team to share experiences with Green City Action Planning and to be informed on national urban policy development including green city development. The Roundtable was used to evaluate the TA. This exercise was led by Bappenas, and implemented by two groups consisting of delegates from two cities each. All 4 cities rated the CDTA as successful, and raised special points of interest that applied to their city as described below.

6.1.1 Malang The city added ‘green education’ as an attribute to develop because of the importance attached to preparing youth for a more active role in green urban development and management. In the final action plan (GCAP), however, green education did not make it to the list of top priorities and was rescheduled for medium-term initiatives.

6.1.2 Batam The city added ‘green industry & commerce’ as an attribute because of the importance attached to environmental management of industry and commerce in the Batam special economic development zone. It had faced a special problem in that the Batam Development Authority as part of national government and the Municipality of Batam within the same geographic area had different jurisdictions and authorities, whereas green development cannot be limited to a single jurisdiction. In the end, the TA managed to bring the two parties together to agree to resolve such issues in the interest of green development goals. The potential value of the mediating role of the TA - the results of which will not be immediately visible- should not be underestimated.

6.1.3 Medan The city initially was not interested in participating in the TA, later changed its mind, was subsequently disqualified by Bappenas because of unrelated problems, finally to be admitted again, starting a year behind the other cities. However, it managed to catch up and finish at the same time as the other cities. The impact on the TA team was significant because inputs and timing had to be rescheduled several times, and the consultant had to submit a number of contract variations for approval by the ADB.

6.1.4 Kendari The city is relatively small with only 350,000 inhabitants surrounding a bay area with ample green open space, but experiences shortage in power supply and water supply that hamper economic development. It also has drainage, flood control, and sedimentation problems. In cooperation with the UNESCO-IHE MARE project (a partner in the TA also funded by the ADB), it was agreed to undertake an integrated bay area development project requiring support from provincial and national government because it requires water catchment area management across administrative boundaries. The grand scheme is to tackle all problems together by generating tidal energy to eliminate the shortfall in power supply, dredging the bay area to help resolve drainage & flood control problems, and use sediments to create a landfill from sediments to develop eco-tourism in mangrove areas, and finally improve water

supply. Scoping all this was beyond the expertise to be provided by this TA, but actions were formulated to work towards the realization of a large integrated scheme.

7 Lessons Learnt and Recommendations

7.1 Policy & Practice Participants to the Final Roundtable in Surabaya agreed that a lack of incentives for politicians to pursue agendas for long-term green development, resilience and climate change mitigation hampered green development because it requires high levels of planning and investment in the short and medium term while the potential concrete rewards will become visible only long after their tour of duty. Hence, Green Teams realize they will continue to face difficulties in persuading decision makers to adopt far-reaching strategies. As greening problems are rarely confined to a city’s administrative boundaries, the need for joint planning across administrative boundaries is a prerequisite for effective planning and investment. As executive power for urban investment is not with the local planning agency (Bappeda) but with the Mayor, and legislative power is with the Council, while at the same time meagre local resources are subject to political push-and-pull, there is no guarantee that even well- prepared green action plans will be implemented as intended. The Green Teams are expected to carry forward and safeguard the agreed Green City Action Plans. However, there is a risk that in the absence of concrete incentives and sufficient power, the Green Teams will not be fully pro-active and committed, that no local champion will come forward or that the Green Teams will not be able to safeguard implementation of the GCAP. Some stakeholders have observed that the GCAP, despite being embedded in the local development planning and budgeting process, is only as strong as the city’s commitment to the local plans and budgets that are made legally binding by LG Regulation. The Roundtable’s main recommendation, therefore, was for Bappenas to strengthen green development policies to make them more result-driven and incentive-driven. No concrete recommendations were formulated on how to do this.

7.2 Planning Related to this, integrated development planning often is considered an exercise that is only loosely connected to reality. The cities expressed the need for continued technical assistance to develop local capacity and functional partnerships to help cities implement and periodically roll over their action plans (GCAPs). The current Green Teams are convinced of the importance of their role, but feel they don’t have sufficient strategic planning and technical and financial capacities to be self-driven. They need to become stronger in order to be more credible, and become more able to influence decision-makers. The Green Teams recommended using more or less permanent facilitators (as opposed to the intermittent facilitators used in this TA) as well as expert advice on technically complicated project proposals.

7.3 Finance As this was not part of the agenda of the Roundtable, the Consultant undertook to formulate a number of recommendations related to finance:  High level decision makers “buy-in” crucial: the Fiscal Capacity Analysis (FAR) should have resulted in more actions and active discussions within the Green Teams. It is suggested that in possible next TA’s using the GCAP methodology, the Fiscal

Capacity Analysis is only started once the intrinsic will to critically review city budgets is expressed by key decision makers, most importantly the Mayor. Given the polical sensitivities of the Fiscal Capacity Analysis, it is crucial that high level decision makers appoint a Green Finance Champion with a clear mandate to come up with recommendations to increase revenues and spend available funds more efficient.  Focus on specific topics as soon as possible: even the simplified FAR looks into improving cities’ fiscal capacity from various angles such as: (1) improving own local income; (2) spending budgets more efficiently; (3) allocating sufficient budgets to achieve green ambitions and; (4) borrowing. While we believe the FAR is instrumental to discuss possible improvements, we suggest cities to focus on specific questions earlier in the process.In all cities, it was observed that Green Teams prefered to discuss and consider possible actions to increase own local income. If the fiscal capacity analysis is undertaken with clear political support, it should aim to select specific angles to further research. For example, a Revenue Improvement Action Plan (RIAP) could be prepared to come up with specific recommendations to increase cities’ own local income.  Stimulate actions for borrowing: an initial analysis showed that all cities can potentially borrow. We expect that this is also the case for many other comparable size Indonesian cities. We suggest the financial part of a GCAP process to look in more detail into borrowing capacity and formulate specific actions cities can take to borrow money.  Standardize approach, definitions and measurement methods: given the challenges resulting from the reluctance of Green Teams to carry out this analysis, cities and Green Teams are encouraged to intensify their efforts after completion of this TA. The central government could support this, as for the Green City profiles, with the aim of standardizing the approach in terms of ratios used, clear definitions of these ratios and methods to measure the ratios. For example, currently it is arguable what is the basis to label different budgets lines as “green”.  Incorporate Alternative Mechanisms in cities’ development policies: even for Medan and Batam and certainly for the other cities are relatively new and experience is little. Cities could use the knowledge gained during this TA, to discuss and decide how they want to structurally incorporate the application of Alternative Mechanisms in their development process. The materials produced during this TA, and meetings and presentations held with the Green Team provide a good starting point to do this.  Set-up dedicated units for Alternative Mechanisms: dedicated units can be set-up by cities that decide to structurally incorporate Alternative Mechanisms in their development policies. These units can inform, train and guide city departments to identify and prepare projects that can attract alternative sources of finance and funding.  Make use of international experience and experts: to succesfully apply Alternative Mechanisms, cities will have to go through a learning development curve. Cities are encouraged to make use of international experience and experts to guide them through this process. In this way, local expertise can be built. Involvement of international experts can be decreased over time once Indonesian experts have incorporated their knowledge and experience.  Apply for support instruments: the learning curve for applying Alternative Mechanisms comes at significant upfront costs. External experts need to be hired to prepare projects, in many cases international experts. Luckily various national and international agencies can be asked for assistance once cities have identified projects they want to prepare making use of Alternative Mechanisms, such as from National

Government, LPPI (previously PT SMI), CDIA and other international development organizations and banks. The ADB mission concluded the Roundtable with a presentation on ‘Lessons Learnt’, and expressed the hope that some of the priority project proposals would make it to the Blue Book and get to the next stage of feasibility studies during 2016 for possible implementation in 2017-2018. The conclusions and recommendations for future green city action planning in other cities using the methodology developed, possible improvements, and the roles of the various stakeholders, are described in the next section.

7.4 The fate of the GCAPs Commitment to the GCAP may wane before the end of 2016 if bankable project proposals are not yet in sight, resulting in a local disconnect from the process. This is understood by the ADB and the EA as an inherent risk associated with this type of TA. Despite the coaching provided by the TA Team to develop local capacities, there is no guarantee that Green Teams will commit sufficient resources in terms of time, competent staff, and money to produce a viable GCAP and commit to its implementation. The TA Team is ultimately responsible for the agreed outputs, even if in the end they will not be locally embedded products. The question remaining is: Will the GCAP stick as an action plan and get implemented and updated? In the opinion of the Consultant it can, as long as GoI makes a stance on green and sustainable urban development, supported by clear policies and appropriate incentives. If not, the TA will remain a pilot project. This will be further discussed in the section on Conclusions and Next Steps.

8 Conclusions and Next steps

8.1 National Policies on Urban Infrastructure Development The National Development Planning Agency Bappenas and the Ministry of Finance (MoF) have been preparing a new financial institution called the Infrastructure Development Finance Institute (IDFI or LPPI - Lembaga Pendanaan Pembangunan Infrastruktur) which basically would be the result of merging two parastatals, the Indonesia Infrastructure Guarantee Fund (IIGF) and the multi-Infrastructure financing facility PT. SMI (Sarana Multi Infrastruktur). In parallel to that, the World Bank is preparing the Regional Infrastructure Development Fund (RIDF) with a mandate (among others) to support the LPPI. These initiatives are soon to be included in the public infrastructure investment portfolio (aka Blue Book) that is managed by Bappenas and MoF. At the same time, the Directorate General of Human Settlements in the Ministry of Public Works and Housing (MPWH) that is in charge of the Green Cities Program is preparing a National Urban Development Program (NUDP) for which is the Implementing Agency and Bappenas the Executing Agency, also to be included in the Blue Book. Once that is done, Bappenas will request participation in the NUDP by the ADB and other Donor in the form of loans and grants. While the LPPI is being set up, PT. SMI has started working on its new mandate to provide support to the RIDF in helping local governments prepare bankable project proposals and assist them in managing the projects. Bappenas is proposing to link the GCAP process to the PT. SMI program once the 4 Green City Action Plans are ready in order to facilitate the process of developing bankable project proposals.

8.2 GCAP Methodology Development Development of the GCAP methodology has resulted in Version 1.0, but additional support is still required to bring it to Version 2.0. The Consultant believes that the methodology provides an important tool for the development of GCAPs throughout Indonesia as it has been designed specifically with the Indonesian institutional context in mind. While questions remain about the future of GCAP implementation, the process now been established, and has so far proved to be quite successful. The Consultant believes that once the methodology is finalized, a useful knowledge product can be put together to help guide Indonesian cities along the creation of their own GCAP. There is reason to believe that a finalized and streamlined methodology could easily be implemented by any city within one budget year. However, the methodology will still have to be consultant-led for now. This does not in any way detract from the city’s ‘ownership’ of the plans. Rather, the consultant acts as a moderator and facilitates discussion throughout the different steps. Eventually, the hope is that the methodology will become adopted and mainstreamed into the central government’s green city program for Indonesia (P2KH). This will ensure that sustained political will and momentum will push the GCAP methodology to the forefront of green urban planning in Indonesia. Initial suggestions for consolidating the GCAP Methodology are shown in Table 8.1 below.

Table 8.1: Initial Suggestions for Consolidating the GCAP Methodology

Version 1.0 Version 2.0 Startup sequence:19  GoI distributes GCAP Guide V.2.0 to Cities;  GoI socializes the CDTA to the four  GoI appraises commitment and readiness cities of interested City (local champions);  GoI approves and fields TA to help  Mayor issues Decision on Green Team prepare GCAP based on agreed format, and allocates Green development often concerns budget from APBD planning issues that are not confined  Green Team prepares Baseline Profile to municipal boundaries, so in some Step 0 based on agreed format; cases one or more adjacent districts,  GoI provides short preparatory assistance provincial government, or even to complete pre-qualification national government need to be  GoI signs SOP/MOU with Mayor involved. The MoU for the CDTA,  Goi approves and fields TA to help however, did not describe such inter- prepare GCAP20 government implementation The consolidated GCAP methodology arrangements. specifies arrangements for the coordination of GCAP preparation across jurisdictions and between levels of government. 21 Step 1 Issue Mayoral Decision establishing Move to startup sequence; GCAP Green Team (SKW Pokja Hijau) Mayor has to safeguard multi-stakeholder, multi-year budget character of SK Step 2 Visioning: Analyze Strengths, (no change) Opportunities, Aspirations, and Results Note: Set time for completion (<1 month) to (SOAR) avoid loss of momentum Step 3 Apply ‘Green Lens’ framework for Develop Roadmap for Green Development livable and sustainable city (previously under Step 4) development (social, environmental, Note: Set time for completion (<1 month) to economic) avoid loss of momentum Use Multi-Criteria Analysis (MCA) to agree on issues considered most important Step 4 Prepare Green City Profile (GCP) with Move to startup sequence; maps and baseline performance Set time for completion (<1 month) to avoid indicators (based on model) loss of momentum Profiling should be simple and focus on a few key performance indicators based on available or easy to collect data (to be agreed by GoI). If needed, more indicators can be developed to monitor program success at the action planning phase. Monitoring and performance measurement needs to be done at national level, firstly to highlight performance relative to other cities, and secondly to ensure a realistic SOAR. Technical assistance can be given in project/investment, action planning and project preparation. Remove fiscal capacity analysis from GCP. Step 5 Prepare long list of program proposals (No change) (existing, planned, new, short, Note: Green Team prepares Long lists,

19 The correct sequence is to be discussed by the team that will prepare Version 2.0 20 This assumes that GoI can provide qualified GCAP facilitators 21 Or between municipal government and a development authority as is the case in Batam

Version 1.0 Version 2.0 medium, long) Program Briefs & Project Briefs in roundtable discussions but only when all partners are around the table. This requires facilitation by strong (international standard) civil/environmental engineers and finance consultants. Step 6 Use Multi-Criteria Analysis (MCA) to (No change) prioritize Programs and prepare Note: Set time for completion (<1 month) to Program descriptions; assess ease of avoid loss of momentum implementation (checklist) Step 7 For prioritized Programs, prepare Note: Given the need for basic services to Program Briefs (or Project Briefs, meet minimum public service standards, it is depending on size); difficult to inspire a Green Team to think in Assess alternative financing terms of integrated green plans based on mechanisms and options results of the SOAR analysis. Sectoral plans are a simpler entry point than integrated plans, so the Green Team can start with sectoral projects to meet public service standards, and integrate them later instead of trying to define integrated programs from the start.

Change: As cities are still relatively unfamiliar with exploring alternative modes of financing, and are bound by current government regulations while new ones are still being prepared (such as availability payments), the finished CDTA could only serve as an exercise to sensitize Green Teams to the options that are currently available for priority programs/projects. Any TA to work out financing modalities would normally be provided as part of a feasibility study (FS) and require specialist inputs. If cities so require, a short TA can be planned to help mayors work out the AMFs for an already approved GCAP, or to grant a TA for FS preparation.

Note: Set time for completion (<2 months) to avoid loss of momentum Step 8 Through Focus Group Discussion (No change) (FGD), prioritize Programs (Projects) Note: Set time for completion (<1 month) to based on institutional and fiscal avoid loss of momentum capacity, risks, and impact criteria using Multi-Criteria Analysis (MCA) Step 9 Based on a set of agreed prioritized (No change) Programs (Projects), prepare a GCAP Note: Set time for completion (<2 months) to that explains how to achieve the avoid loss of momentum agreed results, mainly for the short term Step 10 Using Development Monitoring (No change) Framework (DMF), (SMART Note: performance measurement tools will Logframe) or similar method, verify be applied once GCAPs are implemented achievement of results; update City and reviewed Profile and GCAP annually.

8.3 Future TA Delivery In more or less the same way that the current CDTA was organized, TA delivery in the future can be undertaken through short intermittent facilitation combined with a couple of key workshops at city level:  Based on national baseline data, a SOAR can be done, and a Roadmap developed;  Workshop for Program/Project long list development and MCA;  Workshop to discuss prioritised Program/Project Briefs;  Workshop to discuss action development and financing. In the future, it cannot be expected that cities will have joint initial visioning workshops and final roundtable workshops because they will probably be on different timelines.

8.4 Next Steps Following the Roundtable workshop in Surabaya, a final wrap-up meeting was held in Bappenas with the Consultants (see Appendix X for the presentation used by the Consultant for reporting to Bappenas). A number of next steps were discussed and in principle agreed upon: 1. As a first activity, Bappenas is willing to convene a meeting of the Mayors of Batam, Kendari, Malang and Medan in Jakarta to jointly sign their GCAPs once finalized. 2. As a second activity, Bappenas is willing to convene an inter-agency workshop to discuss and agree on the GCAP Methodology Version 2.0 before disseminating it as a knowledge product. The approved and signed GCAPs can be used as examples for other cities. 3. As GoI is currently preparing a new framework for urban infrastructure development financing that is expected to start functioning in 2017, the GCAP can be used as a tool for mainstreaming the preparation and pipelining of bankable investment proposals based on integrated local development planning with increased focus on green and resilient development and climate change mitigation. As such, GoI has an interest in consolidating the GCAP as a knowledge product, print it as a guideline, and disseminate it. 4. Bappenas is willing to consider establishing a national inter-agency standing committee of selected experts (“Green Cities Forum”) that can screen applications and select interested cities based on pre-qualification, provide training on GCAP, periodically visit cities to assist them with green performance appraisal, and liaise with support facilities such as the CDIA; it can act as a clearinghouse for the production and exchange of knowledge products and information, as well as the processing of requests for support in preparing masterplans, feasibility studies, local regulations, or the creation of a task force to move priority project proposals forward. This will ensure that sustained political will and momentum will push the GCAP methodology to the forefront of green and resilient urban planning in Indonesia. 5. In the absence of guaranteed sources of infrastructure project financing, the proposed Green Cities Forum should monitor GCAP implementation in active cities, especially for actions that do not require external support, as that was one of the main purposes of the GCAPs. Several issues remained outstanding as shown in Table 8.2 below, and were left to further consideration.

Table 8.2: Outstanding Issues

Issues & Risks Proposed Solutions 1 During the CDTA, the 4 participating cities GoI needs to apply a differential approach for TA had different levels of readiness, and and training in which each city receives tailor- therefore required tailor-made facilitation. made (flexible, intermittent) support, including engagement of local champions in each city. 2 There is need for a paradigm shift that GoI needs to formulate incentives that can provides concrete incentives to city persuade city governments to voluntarily governments for turning action plans into improve urban management effectiveness, action, local knowledge into practice, and efficiency, and equity. It is therefore suggested local resources into investments. that Bappenas establish a National Green City Forum to address such issues and formulate appropriate incentives. 3 There is need for more hard evidence that GoI needs to provide more concrete evidence of sustainable green city development the benefits of sustainable green city brings real benefits; at present, some development. A National Green City Forum cities will still be reluctant although the would be well placed to undertake basic MoU for the CDTA assumed that the research to collect and disseminate such cities did not need to be convinced. evidence based on reliable facts and figures. 4 There is a risk that no suitable innovative In order to boost infrastructure investment, GoI financing mechanisms are available that needs to promote efficiency gains in city city governments are able to manage. financial management and public service delivery, while at the same time promoting alternative financing mechanisms. This is probably best achieved through regulatory framework development, followed by regular training programs combined with incentives.

City of Batam GREEN CITY ACTION PLAN 2035

Foreword by the Mayor

Assalamuallaikum, Wr. Wb.

The City of Batam’s Green City Action Plan (GCAP) is an initiative that serves as a “roadmap” towards improving the quality of life in the city by applying “green attributes” generally known as green planning and design, green open space, green building, green energy, green transportation, green waste, green water, and green industry & commerce, all significantly based on and supported by a green community.

The basic reason for the City of Batam to prepare a GCAP is to help achieve development that is sustainable, fair and profitable at the same time because we are convinced that green development can realize economic and social equity as it will be able to suppress and manage conflicts between economic interests on the one side and the need for environmental preservation on the other side.

The GCAP succinctly describes our priority programs as a reference for any citizens who want to understand our framework for aspiring to become a Green City, including external parties interested in participating in our Green City development.

The government of the City of Batam commits itself to continuing the process of capacity development for greening the city through a multi-year and multi-stakeholder rolling green action planning process led by the “Green Team” to strengthen the City’s Medium Term Development Plan (RPJMD). The Green City Action Planing process is supported by an appropriate resource allocation based on a Mayoral Decision.

Hopefully we will all be blessed with the help of the Almighty God in transforming the City of Batam into a Green City. Aamiin.

Wassalam,

Batam, August 2016

H. Muhamad Rudi SE.MM Hartanto Reksodipoetro Walikota Batam Kepala Badan Pembangunan Batam

Table of Contents

Foreword by the Mayor ...... 1 Table of Contents ...... 2 Introduction ...... 4 What is a GCAP? ...... 4 Summary of GCAP Preparation Process ...... 4 Green City Profile ...... 8 Green City Development Strategy to 2035 ...... 14 Batam Green Urban Development Strategy until 2035 ...... 15 From Long List to Short List ...... 16 Long List of 19 Ranked Green Programs ...... 17 Priority Green Programs ...... 18 Final Selection of Priority Programs ...... 18 The Next Five Years – Priority Programs, Projects & Actions ...... 19 Introduction ...... 20 Institutional Enabling Actions for “Green Team” and PMUs ...... 21 The Six Priority Programs – Action Plans ...... 22 Green Water – Action Plan Batam ...... 24 Program: Improving water quality in Duriangkang Reservoir ...... 24 Green Waste – Action Plan Batam ...... 30 Program: Improvement of on-site sanitation system in parallel with ongoing wastewater network and treatment project ...... 30 Batam Green Waste Action Plan ...... 37 Program: Environmentally Friendly SWM System including WTE plant in Telaga Punggur ...... 37 Green Transport – Action Plan ...... 46 Program: Development of the “Trans Batam” Bus Rapid Transit System (BRT) ...... 46 Green Transport – Action Plan ...... 52 Program: Development of Network of Bicycle Lanes and Footpaths in Batam City ...... 52 Green Water – Action Plan ...... 58 Program: Improvement of urban drainage and flood control system ...... 58 The Six Priority Programs – Finance Actions ...... 63

Introduction This GCAP supports the National Urban Development Policy and Strategy (NUDPS) for the period 2015-2045. The long-term vision is to realize sustainable and competitive cities for people’s prosperity based on physical characteristics, economic advantages, and local culture by 2045. This vision will be achieved in three phases: (i) creating a national urban system, (ii) having urban areas meet national service standards and creating sustainable cities that are green, livable, smart and competitive, and (iii) strengthen governance and government institutions. In addition, the GCAP is based on the “Green Vision” of the Mayor of Batam stated below: “ACTUALIZING BATAM CITY AS A MODERN CIVIL WORLD PORT AND BEING THE CENTRE OF NATIONAL ECONOMIC GROWTH” This vision is a broad statement, consistent with national urban development policies and strategies, and able to accommodate a number of green development goals. One of the pillars for implementing the NUDPS is the Green Cities Program (GCP)1 which is implemented with the National Development Planning Board (Bappenas) as the Executing Agency, and the Directorate General of Human Settlements in the Ministry of Public Works and Housing (MPWH) as the Implementing Agency. The City of Batam has been participating in the GCP since 2010. It focused primarily on implementation of three ‘attributes’ (Green Planning and Design, Green Open Space and Green Community). With the new National Development Plan period that started in 2015, the City of Batam endeavored to scale up its GCP by promoting some of the ‘heavier’ green attributes such as Green Water, Green Waste, etc. by preparing a Green City Action Plan (GCAP) with technical assistance by the ADB.2

What is a GCAP? A GCAP is a time scaled green investment plan for a city. It includes specific actions for preparing and implementing prioritised investments over short/medium term, which covers urban management and institutional aspects, capacity development, and financing. Where appropriate, performance indicators are provided to enable monitoring and updating. While ‘actions’ focus on the short to medium term, it also provides a strategy for achieving the City of Batam’s green vision over longer- term time scales. This integrated action plan complements the City of Batam’s statutory planning process, notably the Medium Term Development Plan (RPJMD). Successful implementation of the GCAP would allow the City of Batam to become a ‘champion’ for Green Cities in Indonesia. The GCAP uses the term ‘Green’ as a metaphor for cities that are clean, healthy, safe and energy- efficient so as to become liveable and sustainable. It also reflects efforts to balance the economy and the environment with social inclusiveness.

Summary of GCAP Preparation Process In 2015, the Mayor issued a Decision (SK 800/449.k/2015) to create an inter-disciplinary municipal ‘Green Team’ that would become responsible for preparing the GCAP and allocated a budget for its operations. The ‘Green Team’ was chaired by the Head of the Municipal Development Planning Agency (Bappeda) and intermittently facilitated by ADB consultants. To realize this Green City Action Plan, it was essential to start with a vision for green development to guide the development of priority programs, projects, and manageable actions. The GCAP is the

1 Program Pengembangan Kota Hijau (P2KH) 2 TA-8518 INO: Green Cities: A Sustainable Urban Future in Indonesia - 2 Capacity Development (46380-005) 4

result of a process of identifying city development aspirations through a “green lens” to formulate a framework for sustainable development, and subsequently narrowing it down through a process of further analysis and selection to result in the formulation of several priority programs, which were then developed into detailed program briefs. The Programs that will help the City achieve its vision for green development are shown in the “Green Development Strategy 2035” on page 16. Based on further considerations of implementability including current capacity limitations, the Green Team subsequently shortened the list drastically to focus on three priority Programs (a) Environmentally Friendly Solid Waste Management (SWM), (b) On-site Sanitation and regular septage desludging services and (c) Ecotech Garden to protect Duriangkang dam water quality as the main raw fresh water source of Batam city for the short term, and on three secondary priority Programs (d) Bus Rapid Transit (BRT), (e) Bicycle Paths & Pedestrian Walkways and (f) Urban Drainage and Flood Control System for the medium-to-long term. Because the GCAP is a rolling plan, programs, projects and actions may be added and modified periodically. The six Priority Programs were used to prepare a list of Actions in the form of a spreadsheet as shown in “The Next Five Years – Programs, Projects and Actions”. The City of Batam’s Green Team will prepare annual updates of the GCAPs as a rolling plan by adding new green project proposals in order to ‘green up’ the city’s future medium-term and annual development plans, starting with the new Medium Term Development Plan (RPJMD 2016-2020). To clarify the GCAP formulation process, the two tables below show the “10 step approach” and “toolbox” used by the Green Team to systematically prepare its GCAP. This section serves to explain the intermediate steps and products that led to GCAP formulation.

The first (administrative) step was to establish a multi-stakeholer “Green Team” by Mayoral Decision. The Green Team then started visioning a green future, and used the tools from the ‘Toolbox’ diagram shown above to proceed from vision to aspirations and expected results. Once the Green Team completed the SOAR (Step 2), it proceeded to ‘greening up’ the city’s existing Medium Term Development Plan (RPJMD) by applying a ‘green lens’ using the Livable Cities Framework and a Multi Criteria Analysis (MCA) to develop and prioritise programs (Step 3). The purpose of this exercise was to identify where existing and planned infrastructure developments fell short of achieving green objectives, and could be improved by adding components that would increase their green development content. This process will be repeated to inform the next RPJMDs to sensitize decision makers and gradually strengthen the green value or ‘greenness’ of development plans. Although the Green Team was free to introduce new ideas (for example MRT for Green Transportation, and LED street lighting for Green Energy), it opted not to do so because of other more pressing needs that needed to be addressed first. This was a deliberate strategy because existing plans already proposed in municipal plans should have priority. At the same time, the Green Team started working on a “Green City Profile” (Step 4) with the aim of developing a baseline for performance measurement. The Green City Profile includes the results of Step 2 and 3. It also includes a “Roadmap” spreadsheet for green development, an environmental profile with thematic GIS maps used for integrated ‘rolling’ plan development, as well as an inventory of current and planned green initiatives. The Green Team used the Roadmap to rate the city’s green performance and progress towards green development objectives as part of a rolling plan process. The Roadmap uses generic green performance indicators that the Green Team can use to formulate short (2015-2019), medium (2020-2034), and long-term (2035-2045) targets toward sustainable development. The Roadmap’s aggregate score for all indicators combined can be red, yellow, or green. By objectively rating the Roadmap using 2015 as the baseline, the Green Team concluded that Batam’s aggregate score was still in the “red” zone. The section below is a summary version of the City’s environmental profile taken from the Green City Profile including current and planned initiatives from the Green City Profile. The full Green City Profile is attached to the GCAP. In line with Step 5, 6, 7, the Green Team prepared a number of Project Briefs, undertook a fiscal capacity analysis for green infrastructure investment, and scoped options for alternative modes of financing. As all four Programs were adopted for action, there was no need anymore for prioritizing projects (Step 8). Step 9 has resulted in this GCAP, while Step 10 will be done to monitor performance when the next update of the GCAP is due.  The Fiscal Analysis can be found in Appendix A.  The Project Briefs can be found in Appendix B.  The Green City Profile can be found in Appendix C.

Green City Profile The section below is a summary of the full Green Batam is the fastest-growing municipality in City Profile developed by the Green Team as Indonesia, with a population growth rate of 11% part of the action planning process, which is per year. appended to the GCAP. It is shortened here to Batam feels the impact of rapid urbanisation. provide a brief introduction. The City is becoming densely populated with Batam is a group of small islands with municipal newcomers and seasonal workers. This will status, with Batam City located on the cause a shortage of land to build on, and a northernmost island near Singapore across the corresponding rise in land prices, which in turn strait. Batam is the largest city in the Riau has had a negative effect on economic growth as Islands Province of Indonesia, the third-largest well as environmental preservation. city in Sumatra region after Batam and Urbanization and industrial growth also causes Palembang, and the eighth-largest city in environmental problems such as insufficient Indonesia after Jakarta Raya, Surabaya, housing, water supply, industrial, commercial Bandung, Batam, Semarang, Makassar, and and household waste management, traffic Palembang. congestion, and pollution of air and The Batam Free Trade Zone Authority (BIFZA) groundwater. also known as the Batam Development Even though the GCAP in principle only covers Authority (BDA) or Badan Pengusahaan Batam the municipality, in reality green development (BP Batam) is a national organization located in issues tresspass administrative boundaries, and Batam with a mandate to develop Batam into an this is an issue in the case of Batam. The BDA, international industrial hub based on the established in 2007, considers the whole of original Batam Industrial Zone created in 1970- Batam to be an industrial development zone, 1971. It now has 21 industrial parks with more whereas the municipality of Batam (which than 1,000 companies currently in residence. obtained its status in 1999, decades after the According to its mission,3 Batam is to become a original Batam Industrial Zone was created) leading economic region in Asia and the Pacific, wants to manage the City according to its and a major contributor to national economic ‘autonomous’ municipal status. Because of development. Batam also aims to become a hub differing views and overlapping authorities, it of export-oriented green industries, and a has been difficult to align development planning provider of nautical tourism, trade, and and environmental management within the international transshipment. municipality with the broader interests of the BDA, and recently there have been high-level Batam is an industrial boomtown, an emerging discussions about solving this problem by transport hub, and part of a free trade zone, the modifying the status of the BDA to share more Indonesia–Malaysia–Singapore Growth Triangle, authority with the municipality. located 20 km off Singapore's south coast. The 715 km2 main island is the core of the municipality of Batam, of which 450 km2 is Spatial Development classified as urban. Batam administratively The municipal Spatial Planning Department has covers a number of scattered islands and islets only partial control over land use based on the totaling 2,200 km2, with Galang and Rempang current City’s Spatial Planning 2004-2014 as islands to the immediate south connected to most allocation decisions are made by the BDA. Batam by short bridges, collectively called The renewal spatial planning is still under Barelang. These two islands maintain their rural development. The result is that the best sites character. Bulan Island is also rural. The are reserved for industrial purposes, whereas municipality has a population of 1,035,280 (May the municipality is left will commercially less 2015). According to the 2010 national Census, attractive and harder to develop hills and slopes. As spatial planning is often associated with public open spaces, this appears to make sense, 3 bpbatam.go.id but it also prevents spatial planning from 8

becoming inclusive and integrated by mixing Batam also has plans to upgrade the existing land use and providing green space near Green Open Space master plan from the housing, places of work and public facilities. municipal budget, for which the engineering design is currently taking place. According to One of the adverse effects of this is that new the P2KH report, several public areas have residents of Batam City encroach on land that is greening potential including green ways, public considered to be under BDA’s authority, for parks, and sport facilities covering a total of 196 example water catchment areas. ha. Potential private areas such as gardens and Because of its geography, Batam’s spatial golf courses can contribute a total of 3,838 ha. development is uneven. There is a development However, current greening plans and programs gap between the northern and southern parts are currently not yet integrated with cultural caused by the general lack of public services and heritage sites that fall under the Department of infrastructure in the southern part because the Tourism. north is closer to the city, and therefore more attractive to investors. In addition, CSR funds should be able to significantly contribute to developing and Green Open Space (RTH) safeguarding green public spaces, and be able to Population density is 470 people per km2 (May mobilize communities to campaign for more 2015) based on total administratively land area such facilities near their places of residence. 2 2 (2,200 km ), and 2,300 people per km (May The overall target of the Batam Green 2015) based on built-up urbanized Batam city Community is to achieve 30% green open space 2 area (450 km ). (20% public and 10% Private). Presently its According to Law No. 26 year 2007 on Spatial primary concern is to ensure that green open Planning, ideally open space in Batam shall be area is not further reduced. It advocates for 30% of the total area of 2,200 km2, or equal to making good use of the open space for a 7,333 ha consisting of 20% public open space number of social and small economic activities (4,888 ha) and 10% private open space (2,445 to reduce the chances for a possible change of ha). According to the Government’s 2013 Green function. Cities Program (P2KH) report, overall green open space stood at 5,667 ha, but is it not clear if this Green Energy low figure is based on the urbanized area on the Energy consumption (based on bill payments in main island only, because Batam as a whole is 2013) was 1,993 GWh per year. This is projected not densely populated and should be able to to increase to 4,248 GWh in the year 2020. This easily meet the standard. This shows that in the target will be difficult to meet, but so far, no case of Batam, a uniform national standard is renewable sources of energy are available. A difficult to apply. waste-to-energy plant that is currently being re- tendered (see Green Solid Waste converts to According to the Ministry of Public Works Energy below) is planned to supply 15 MW of Regulation No. 5/PRT/2008, the City shall 2 energy, and undersea cables are planned to provide an open space of 250m at neigh- 2 2 provide electricity to the small outlying islands. bourhood level (RT) (= 1 m /capita), 1,250 m at community level (RW) (= 0.5 m2/capita), 9,000 There is future potential for using natural gas as m2 at village level (Kelurahan) (= 0.3 m2/capita) a source of energy supplied from Sumatra main and 24,000 m2 at sub-district level (Kecamatan) island and Natuna island, but for the time being (= 0.2 m2/capita). In practice, however, it is it is still only for household use. difficult to apply this standard. As energy supply currently is beyond municipal There are plans to upgrade and increase public authority and its statutory development open space, mainly by developing a Batam planning process, this GCAP has not yet Botanical Garden (Kebun Raya Batam) with 86 attempted to specify actions to provide greener ha located at Sambau Village - Nongsa Sub- energy and reduce consumption. It is expected, district with Government funding.

howeer, to become a component of the next through kiosks to informal settlers who are not GCAP. eligible for a water connection. Non-revenue water (NRW) was 23% in 2014, and PT ATB has Baseline Installed Required Supply set a target to reduce this to 20% by 2020. Capacity (MW) Capacity Because of the limited size of the reservoirs, 2015 508,42MW 1.284,6 MW (73%) Batam will have to develop additional sources of Source: PLN Business Plan 2015-2024 water supply to keep up with increasing industrial, commercial and household demand. Green Industry In addition, the reservoirs and surrounding According to Bappeda, annual CO2 emissions catchment areas need increased surveillance to amount to 7,375 ton for transport, and 125,811 prevent encroachment, pollution, and rapid tons for industry. So far Batam has not yet shallowing. Also, it has proven difficult to stop been able to persuade local industries to reduce residents from creating fisheries in the emissions and apply energy saving measures reservoirs. such as LED lighting, efficient air conditioning, energy-efficient manufacturing, efficient water Green Water: Drainage & Flood and waste-water management, clean industrial Control solid waste management, efficient logistics, etc. At present, flooding is not yet a critical problem, Good practices elsewhere demonstrate that this even though after heavy rains some roads can is not only meant to improve the environment, be inundated for several hours. but also to ‘green up’ industries with a view to future competitiveness and sustainability. However, this will change in the future as a result of rapid urbanization and industrial Because of the volume and speed of its development, so now is the time to prepare an industrial operations, Batam is in need of special urban drainage and flood control Masterplan. measures to manage industrial development. This has not yet been included in this GCAP Even though regulations for industrial because preparatory consultations and data management exist, they are not always gathering are required between the BDA and consistently applied. So far, Batam has not yet the Batam municipality. It should, however, been able to fully inventorize, assess, and become part of the green development strategy enforce regulations on industrial management, until 2035 (see Climate Change below). and for that reason no actions have yet been proposed in this GCAP. It is expected that it will Green Solid Waste become an important action area in the next At the moment, the City Sanitation Department GCAP. collects 750 tons of household waste, 140 tons of non-toxic industrial waste, and 50 tons of Green Water: Drinking Water Supply yard and street waste. Batam has a relatively good water supply from 5 reservoirs covering 97% of the population on the All waste is disposed in a controlled landfill site main island at the rate of 3,500 litres/sec. On managed (40 ha) located at Telaga Punggur by the other islands, average service coverage is the City Sanitation Department. Industries have only 30%. The reservoirs are surrounded by to deposit their non-toxic waste in a special site fences to protect them from human (KABIL) owned by the BDA and managed by a encroachment. Because of its small size and salt private operator. Toxic industrial waste is water intrusion, Batam cannot use groundwater collected and managed by another entity (PT as a source of drinking water. The BDA has a Prasadha Pamunah Limbah Indonesia) and water supply contract with a private Indonesian transported to Cileungsi in the district of Bogor company PT Adhya Tirta Batam (ATB). The (West Java Province) for treatment. shareholders of ATB consists of PT Bangun Cipta There are 101 household-operated waste banks Kontraktor 50% and Sembcorp of Singapore in Batam, and 10 school-operated ones in which 50%. PT ATB has a program to supply water people can deposit and ‘save up’ waste for

money. Even though they collect about 30.5 expected to serve 11,000 household tonnes of waste per month, their combined connections or 16% of the population by the capacity so far is only 0.14% of total household year 2020. The Sanitation Masterplan has waste production. identified 5 sites for centralized household human waste processing. The pilot project Until now the City has not enacted a policy to located in Batam Centre area is financed force households to segregate their waste at through a loan from Korea managed by the home, which would greatly increase the Government. For this GCAP, a number of actions effectiveness of the waste banks. According the are proposed to support development of an the Ministry of Environment & Forestry, the integrated off-site sanitation system. Government of Indonesia aims to establish parent waste banks in Batam (and five other cities, i.e. Makassar, Jakarta, Surabaya, Green Buildings Semarang, Surakarta) to coordinate all other Green buildings have not yet become an subordinate banks and waste management important attribute for green development in services in 2016. Batam, but that is likely to change in the future because of its potentially significant contribution Anticipating future demand for waste disposal to saving energy (see section on Green Energy) and green energy, a Waste-to-Energy Plant is and other resources such as water, as well as planned with a capacity of 700 tons/day. It is improving environmental health, thus providing expected to generate 15 MW of power that will a safer, environmentally friendly, and more be sold to the National Electricity Company productive environment. Initially, public (PLN). The WTE plant is to be managed by a buildings can acquire green certification private operator under a PPP contract. provided by third parties to help make the Even though a winning bid is already available, concept familiar. Also, the Government can the project has been put on hold pending the provide incentives for construction or drafting and enactment of a Local Regulation on retrofitting buildings to meet energy efficiency the Tipping Fee, which is proposed as part of the criteria, especially in industrial areas. In the actions to be undertaken for SWM in this GCAP. future, certification should become a prerequisite for issuing building permits for any Green Human Waste type of construction. The province of DKI Jakarta Current human waste management capacity is has issued the Governor Regulation No. 38 Year 33 lps, and only connects 2.3% of the 2012 on The Green Buildings that can be used as population. an example for Batam City. So far, Batam City has no Green Building regulations. Industries are required by law to build their own human waste processing facilities, but so far Green Transportation controls are not stringently applied, and there is Traffic congestion has not yet acquired critical no mechanism to require ships passing through proportions in Batam, but needs to be the Batam port to manage ship-borne human anticipated as a result of rapid urbanization. waste that pollutes the coastal areas. The BDA has prepared a Transportation According to a study by EHRA (Environmental Masterplan. There are plans to build a monorail Health Risk Assessment) 75% of unconnected system starting 2017 with a length of 54 km. It households use private septic tanks. Based on a will cross Batam Center from east to west and current population of 1,030,528 and a water north to south. According to the director of consumption of 150 litres lpcd, and assuming infrastructure in the BDA, financing will be that 80% of water is converted into waste, daily 3 achieved through a PPP contract. Another human waste production is about 123,000 m . component of the Masterplan is a 20 km Total waste management capacity currently network of bicycle paths. stands at 14,720 m3 per day or 12% of required capacity. A new centralized system with a Because Batam’s built-up area is not very dense, capacity of 230 lps is being planned, and is it has good potential for non-motorized

transport (NMT). Shaded/canopied pedestrian modeled in more detail in order to plan for walkways and bicycle paths (essential in tropical appropriate mitigation measures. climates) can be segregated from automotive roads. It should be noted that the original 1970 design of Batam Center (by Bechtel and Nissho Iwai) was car-free. As a contribution to traffic management in the short term, an area traffic control system (ATCS) will synchronize the operation of traffic lights at major intersections to help reduce traffic jams. In addition, the GCAP strategy to 2035 anticipates the development of a BRT system.

Baseline Number of % Of Citizens Using Motorized Vehicles Public Transport 2015 5.531.777 3.0 Source: BPS Statistics 2015 Resources Green Community The City of Batam currently does not have all Batam has a program for engaging urban human, financial, institutional, regulatory, and residents in greening the City, among others by other resources needed to simultaneously planting trees in open spaces, mangrove address all of its green development problems, conservation, household waste segregation, and but hopes that this GCAP will adequately promoting the use of bicycles for going to work. address some of the urgent issues that hamper Private companies take part in this through their sustainable development. The main resource CSR initiatives. issues are summarized below.

Batam’s Green Community was established in FISCAL RESOURCES 2013 in line with the Government’s Green City Program (P2KH). Its Forum undertook a series of Batam is still highly dependent on high levels of promotional acclivities that were packaged government transfers to its municipal budget. under the theme of Green Festival. 63% of total budgets came from transfers between 2011 and 2014. Batam spends only Climate Change little over 20% of the budgets available for As outlined in Indonesia’s National Action Plan capital investments. for Climate Change Adaptation (RAN-API), the Currently Batam’s yearly budget is not enough projected rise in sea levels (SLR) has a strong to finance the preparation of green capital potential to become a serious threat because of projects such as a BRT, Waste to Energy and the country’s many maritime and coastal others. As part of this, GCAP Batam has looked activities. Around the year 2050, global into ways to improve this situation by: warming is expected to raise seawater levels to  Increasing own local revenue 35-40 cm above current levels.  Attracting loans (municipal lending)  Use available funds more efficient towards Based on that projection, the maximum SLR in green capital projects Indonesia could reach 175 cm by the year 2100  Attracting alternative sources of finance to (Bappenas, 2010b). projects, for example by setting-up Joint The map below (prepared by Maplecroft) with Ventures with the private sector, BOT the index below it shows that Batam falls in the contracts, involving communities through “extreme risk” zone that combines risks of rising cooperatives, etc. seawater levels, floodings from increased rainfall, etc. The effect on Batam needs to be

INSTITUTIONAL RESOURCES Related to attracting alternative sources of finance, most of Batam’s know-how is currently vested in the BDA, and it will take some time to develop it for the municipality. REGULATORY RESOURCES Batam still needs regulations that will allow it to effectively implement and enforce the environmental issues it wants to address, such as regulations on water management, transport management, and waste management. These will be part of the GCAP.

Conclusion Based on the City Profile, as well as agreed priorities based on the existing situation and capabilities, the City of Batam has defined actions related to prioritized programs and more generic actions focusing on the short term to make these programs and projects more achievable. In the GCAP, actions are formulated to help improve fiscal and institutional capacity, create more durable partnerships, strengthen the regulatory framework and ability to finance projects, and potentially increase impact of such projects. The Profile signals that sanitation and waste management are the key focus areas for the City at the moment, and justifies selection of these programs. In parallel, Batam should prioritize increasing the budgets they have available for green capital expenditures and improve their institutional capacity and ability (human resources) to prepare projects so that they can be offered to involve the private sector and others (such as national government programs and development banks) to finance. This will be further addressed in the next sections of this GCAP.

Green City Development Strategy to 2035

Batam Green Urban Development Strategy until 2035 After completing the SOAR, ‘green lensing’ process, selection of priority Programs going from a long list to a short list, the Matrix below summarizes our green urban development strategy until 2035, showing green attributes and the rough time frame for realizing them. This GCAP specifies green development actions for the current plan period until 2019, but will be expanded and rolled over to future plan periods. GREEN ATTRIBUTES 2015-2019 (this GCAP) 2020-2024 2025-2029 2030-2034 2035-2045 Green Planning, Finance, and 1 Continuous Implementation Management Green Open Space (RTH) To be designed in next Program for urban forest development including mangrove areas 2 (public parks, burial grounds, water phase of the CGAP Program for acquisition of green open space to meet legal requirements (RTH) retention areas, greenbelts,etc.) Green Community (Resilient 3 Community) Continuous (including Program for Green Schools (Sekolah Adiwiyata) and resilient kampungs (PROKLIM) (includes health care and education) Green Transport & Urban Mobility BRT system development, including bicycle paths 4 BRT system development (motorized & non-motorized) and pedestrian walkways On-site and Off-site Green Waste Program for acceleration of house connections to 5A Sanitation System (sanitation) central sewerage system development Green Waste 5B SWM system development Integrated SWM program including industrial areas (solid waste) Ecotech Garden to reduce pollutants entering Green Water Integrated water management program including 6A Duriangkang dam as the (water supply) industrial areas fresh raw water source for Batam City Program for normalization of streams and drains, enlargement of Green Water Urban Drainage and Flood 6b drainage network, construction of water reservoirs, retention areas, (urban drainage & flood control) Control for Batam City water absorption wells, etc. Green Building To be designed in next Program for green certification of buildings, including promotion of roof gardens, hanging 7 (energy efficiency, climate resilience) phase of the CGAP gardens Green Energy To be designed in next 8 (clean, efficient & renewable) phase of the CGAP Green Industry & Commerce To be designed in next 9 (sound environmental management) phase of the GCAP Green Air (Blue Sky) To be designed in next 10 (emission reduction & control) phase of the GCAP

From Long List to Short List A long list of proposed programs (Step 5) was given a code number and ranked with the help of a Multi-Criteria Analysis (MCA) (Step 6) based on criteria for liveability and sustainability developed by the Green Team. It subsequently attributed weights to the long list. The result of the weighted MCA scoring provides a ranked list of 19 Programs as shown on the following page. Listed programs that could not be accommodated in this version of the GCAP will be further specified and incorporated into future versions.

Long List of 19 Ranked Green Programs

Program Program Title MCA Ranking Code weight

9 Spatial Development Planning & Control 6,0680 1

14 Environmental Pollution & Degradation Control 5,9680 2 Provision of Facilities & Infrastructure for Environmental Protection 15 5,9300 3 & Management 10 Land Use Planning 5,7180 4

16 Environmental Planning and Natural Resources Conservation 5,7000 5 Development, Construction, and Maintenance of Housing & 12 5,6640 6 Environmental Infrastructure & Facilities 4 Improve quality & quantity of public green open spaces 5,2058 7 Develop synergy between water supply management and human 8 5,1776 8 waste management 13 Improve construction quality and oversight of buildings 5,3010 9 Human resources development and oversight in the field of mining, 11 5,0710 10 electricity supply, fossil fuels (BBM) and gas Development, improvement, maintenance and rehabilitation of public 18 5,1420 11 transport infrastructure and facilities 19 Improve public transport service delivery 5,1630 12

5 Protect water sources, reservoirs, and catchment areas 4,9116 13

1 Reduce domestic waste production 4,9016 14

7 Develop drainage & flood control network 4,8576 15 Build human waste treatment plant (IPAL) to reduce domestic human 6 4,7114 16 waste 2 Reduce industrial waste production 4,6664 17 Program to improve community safety and comfort and prevent 17 4,5360 18 natural disasters 3 Develop ROW and median of public roads as green open spaces (RTH) 4,4380 19

80% Percentage weight assigned to green city attributes/criteria 20% Percentage weight assigned to ease of implementation

Priority Green Programs From the above long list, the priority Programs ranked 2 and 3 were selected based on their strategic importance to green development (Step 6). Spatial Development Planning & Control, despite being ranked No.1, could not be converted into an action plan at short notice for inclusion in the GCAP. This one, as well as other priorities, will be considered in the next GGAP.

Ranking Program 2 Environmental Pollution & Degradation Control 3 Provision of Facilities & Infrastructure for Environmental Protection & Management

Final Selection of Priority Programs The Green Team reported the result to the GCAP Steering Committee including the Heads of all local government agencies (SKPD) involved (Kepala Bappeda, Dinas Kebersihan, Dinas Perumahan dan Permukiman, Dinas Pekerjaan Umum, Dinas Tata Ruang and Tata Bangunan, Badan Lingkungan Hidup, and PDAM), and finally had a consultation with the Regional Secretary (Sekretaris Daerah Kota Batam) as the representative of the (previous) Mayor. As the two proposed programs are similar in the interpretation of their purpose, the Green Team resolved to adopt both as a program guide, and to use three ongoing initiatives as a project guide for the short term.

Ranking Program Environmental Pollution & Degradation Control Construction of an on-and-off-site sanitation system including intermediate and final treatment 2 facilities Construction of an Ecotech Garden to protect Duriangkang dam water quality as the main raw fresh water source of Batam City

Provision of Facilities & Infrastructure for Environmental Protection & Management

3 Construction of an environmentally friendly solid waste management system including “Waste to Energy” technology

After final consideration of financial, regulatory and institutional risks for implementing each project and the interfaces and possible synergies between projects, it was concluded that the three Programs listed above were the most likely to be supported with clear and realistic actions, and therefore should constitute the GCAP. However, after the new Mayor was appointed, he provided guidance to the Green Team by attaching a higher priority to developing a BRT system and non-motorized transport (NMT) network, as well as an urban drainage & flood control system, with the result that these were subsequently included as priorities for the medium-to-long term.

The Next Five Years – Priority Programs, Projects & Actions

Introduction This section describes the prioritized programs, projects and actions we will undertake in the next five years. It also describes the institutional set-up we will implement to ensure informed and timely decision making and careful management of the interfaces between different projects. To avoid misunderstandings, we include a short list of definitions of key terms used in this section.

Program An initiative for promoting green development having stated goals that match the city’s vision and mission. A program normally comprises a number of projects that have clear interfaces, and is formulated in a Program Brief or Digest.

Project An investment in a physical infrastructure project, or the creation of a new organization, or a policy revision, or a local regulation, to be formulated in a Project Brief. If the project (such as establishing a new body or policy) is subsidiary to another project, it is understood to be a sub-project or action.

Action In the context of the GCAP, actions comprise one or more activities required to meet the conditions for project implementation, such as setting up a Project Management Unit (PMU), preparing a project implementation plan (PIP), preparing Terms of Reference, identifying sources of financing, acquiring land, etc.

Project Management Unit (PMU) A temporary organizational unit created for the purpose of preparing a project implementation plan, and managing the project on a day to day basis. A PMU is headed by the agency responsible for the project. An operational budget for the PMU needs to be allocated. Representatives of relevant SKPDs, other agencies and possibly representatives of the community can also be members of the PMU. The PMU will consider whether or not alternative implementing mechanisms (BOT, Joint venture, CSR, etc.) will be considered in the feasibility study, but also the actions related to changing or implementing regulations (Perda), issuing permits, etc.

Project Implementation Plan (PIP) A document that describes in detail the actions needed for implementing the project, including preparatory activities. The PMU should be in charge of preparing and managing it. It covers the project cycle -a sequence of events and activities usually starting with a feasibility study, project design, financing, land acquisition, tendering, procurement, construction supervision, monitoring and evaluation, as well as operation and maintenance. It clearly describes the division of responsibilities, time-line and budgets needed. It specifies what decisions are needed, when, and by whom. A project is normally undertaken by a contractor, government department, a combination of public and private actors, a consortium, etc. Different actors can be responsible for different parts of the project cycle. The PMU will update the PIP over the course of developing the project. At the start, the PIP will focus on the activities to prepare a detailed design, feasibility study and tender strategy. Based on the choices made related to the implementing mechanisms (traditional, PPP, joint venture, communities, etc.), the PIP can be further detailed for procurement, construction and O&M.

Institutional Enabling Actions for “Green Team” and PMUs We will use the results of the Green Cities Program (Asian Development Bank, Bappenas, Kementerian PUPR) as a starting point to further intensify our efforts to transform Batam into the greenest city in Indonesia. On top of the specific actions we have formulated for prioritized programs and projects, we intend to further improve the institutional set-up needed for a well- informed and timely decision making process.

Informs / key Steering Mayor Committee decisions

Monitoring Progress/ / guidance reporting “Green Team”

Monitoring/ guidance Progress/ reporting

Taskforce / PMU Taskforce / PMU Taskforce / PMU Taskforce GCAP – Waste – Water – Green taxes

A Steering Committee (SC) will monitor and guide the progress on GCAP and actions on a quarterly basis. The Mayor will chair the SC that further consists of heads of SKPDs in the field of green attributes, and other stakeholders. As chair of the “Green Team”, the head of Bappeda will keep the Mayor informed about the progress to enable the Mayor to make decisions when needed. The “Green Team” will coordinate programs and projects and the interfaces between programs and projects. They will also update the GCAP every 2 years. The “Green Team”will meet bi-weekly to monitor progress on specific projects and actions. Those in charge of specific programs and projects will inform the “Green Team” about their progress and specific issues, decisions or guidance they need. The “Green Team” will determine the agenda for meetings with the SC and prepare these meetings. Specific task-forces (PMU) will be set-up to drive the implementation of programs and projects on a day to day basis. The task-forces will be made up of representatives of relevant SKPDs and other agencies and led by the agency/ body responsible for the sector.

Institutional Enabling Actions What? Who? When? Mayoral Decree on set-up and installation of SC and Mayor Update in 2106 “Green Team” incl. description of roles, SOP, membership and budgets Continuation of Mayor’s decree including budget Head of Bappeda annually allocation Work-plan “Green Team” including initiating the set-up “Green Team” as and when of specific task forces/ PMUs for agreed projects required Evaluation of performance of “Green Team” Steering Committee bi-yearly

The Six Priority Programs – Action Plans The Action Plans that were included in the GCAP are shown on the following pages.

Green Water – Action Plan Batam Program: Improving water quality in Duriangkang Reservoir

Why? Duriangkang Reservoir has been operated since 2001 and is the largest reservoir of 7 existing reservoirs in Batam Island which is used as a source of raw water for drinking water, with a storage capacity of 78.56 million m3 and a freshwater area of 23.4 square km. It provides around 75% of the freshwater supply for Batam. Water quality is affected by industrial and human activities in the catchment, and storage capacity is also being affected by ongoing silting of the reservoir through elevated suspended solids in surface runoff due to land clearance and construction in the catchments. Protection of this key reservoir is crucial to maintaining a sustainable water supply. There is a need to coordinate on ongoing activities to reduce pollution in the cachments and the reservoir protected area to reduce contamination, also wetlands and other measures can be constructed within the reservoir protected area to make further improvements to influent water quality.

Current status Current average water quality is poor, defined as, COD: 134.61mg/l, BOD5: is 58.22mg/l, ammonia: 10.5mg/l. There is illegal activity in the water catchment protected area, such as illegal housing and fish ponds. Furthermore there is heavy construction within the drainage catchments of the reservoir and (linked with the Sanitation program) poorly constructed and managed off site sanitation within the catchment. Annually, BP Batam cleares the water hyacinth plant (Eichhornia crassipes) in surface water reservoirs that can cover about 25 hectares on Duriangkang Dams. Also periodically the reservoir is dredged of sediments.

Goal The main objective of this project is to improve reservoir water quality to improve raw water quality for more efficient treatment and provide a cleaner, healthier and more attractive ecosystem, through integrated management of the catchments.

Results 1. Reduce pollution of the environment. 2. Improving the quality of water and the aesthetics of the reservoir.

Benefits 1. Improving quality of the environment; 2. Limited operational costs; 3. Smell reduction; 4. Improving efficiency of downstream water treatment

Success indicators (targets) Area Ecotech Garden 2010 0 m2 2019 5,550 m2 COD 2010 134mg/l 2019 80mg/l BOD5 2010 58mg/l 2019 50mg/l Ammonia 2010 10.5mg/l 2019 6mg/l

Key risks Even though the projects are relatively well defined, the technology is straightforward, and the capacity is there to deliver them, key risks are: 1. Availability of Management Organization 2. Source of Funds Availability (APBD, APBN) 3. Availability of regulations and enforcement 4. The approval of Parliament and the Local Government of Batam City

Risk mitigation These risks can be mitigated to the extent possible by prioritizing the following measures and allocating sufficient resources to their implementation: 1. Implement regulatory updates as soon as possible while local political will is present (before policy / regime changes occur). 2. Establish a working group to coordinate this program and other activities related to Duriangkang Reservoir. 3. Undertake a social marketing strategy to engage public awareness for environmental management around the dam and disseminate information.

Project WAT1: Preparation, including establishing a Duriangkang Reservoir Catchment Management Unit.

Collaboration between agencies is necessary to implement an integrated project to improve and protect water quality in the Duriangkang Reservoir. This unit will provide better coordination of ongoing activities; develop a plan to implement a project for integrated measures to treat surface water flowing into the reservoir; and, develop a public awareness raising campaign to increase the awareness of improved local environmental management. The Catchment Management Unit will be developed under BP Batam, but will include or collaborate with members of:  Bappeda  Ministry of Public Works  Dinas Housing  Dinas City Cleaning and Parks  L:aw enforcement

Action Description and responsibilites Timeframe WAT1.1 A Catchment Management Unit (CMU) will be established to be 2016 responsible for managing ongoing activities related to water quality management in the Duriangkang Reservoir, and coordinate with relevant stakeholders. WAT1.2 CMU agrees responsibilities for ongoing activities including annual 2017 monitoring, dredging, and vegetation clearing. WAT1.3 Evaluate and update the monitoring plan, purchase monitoring 2017 equipment, develop a simple baseline. WAT1.4 Liaise with the Sanitation Committee (see Program B) on householde 2017 waste management within the catchments. WAT1.5 Review regulations related to the protection of catchment areas, 2017 and measures in place to enforce these regulations. WAT1.6 Work with Bappeda to develop a resettlement plan for illegal 2017 residents in the protected catchment area. WAT1.6 Work with law enforcement to stop other illegal activities in the 2017 protected catchment area. WAT1.7 CMU to further develop the concept for integrated surface water 2017 treatment within the catchment. WAT1.8 A public campaign is required to raise awareness local and establish 2017 community support for the success of the project. It should be continuous and sustained but also will be necessary to promote community participation in planning, design, and implementation of any local treatment measures. Responsible BP Batam agency Estimated Limited hardware costs (budget needs) Implementing Allocate own budgets mechanism, funding & financing Other partners Bappeda Ministry of Public Works Dinas Housing Dinas City Cleaning and Parks L:aw enforcement Local communities Illegal residents

Project WAT2: Planning, Design and construction of Integrated surface water treatment measures (including Ecotech garden)

The project is designed to reduce pollution to the reservoir from surface waters. The Project is expected to integrate a number of treatment components, including but not limited to:  Household ecotech garden pilot projects to treat grey water and/or setic tank effluent.  Check dams in streams and drains to retain sediment.  Trash screens to screen rubbush and debris with safe access for cleaning.  Constructed wetlands (large scale Ecotech garden) to remove organic and sediment loads.  Oxidation ponds Planning should be undertaken to integrate the above aspects in partnership with residents within the catchment areas of the reservoir. A combined outline design, costing and feasibility assessment should lead into dedtailed design and construction.

Working Principle of Constructed wetalnds:

A constructed wetland (or ecotech garden) is an engineered sequence of water bodies designed to filter and treat waterborne pollutants found insewage, industrial effluent or storm water runoff. Constructed wetlands are used for wastewater treatment, greywater treatment, or surface runoff and can be incorporated into an ecological sanitation approach. They can be used without primary treatment, or after a septic tank for primary treatment, in order to separate the solids from the liquid effluent. Vegetation in a wetland provides a substrate (roots, stems, and leaves) upon which microorganisms can grow as they break down organic materials. Different species of aquatic plants have different rates of heavy metal uptake. Many regulatory agencies list treatment wetlands as one of their recommended best management practices for controlling urban runoff.

Action Description and responsibilites Timeframe WAT2.1 CMU to appoint Project Management Unit and develop project 2017 implementation plan WAT2.2 Consult communities in developing design concepts and future ownership, 2017 operation and maintenance. WAT1.3 Commission outline design costing and feasibility study to cover 2017 hydrological assessment, hydraulic design and topography, ecological design, biological treatment design and sedimentation. Design should be gravity fed to reduce operation and maintnenace costs (no pumpng). WAT1.4 BP Batam to allocate and approve budget. 2018

WAT1.5 Tender detailed design and construction 2018

WAT1.6 CMU to oversee construction. 2018

WAT1.7 Continue monitoring and evaluation of the scheme against baseline and 2019 scale up the project to improve the ecological and aesthetic value of the reservoir. Responsible BP Batam agency Estimated Preparation: IDR 2.8 Million costs (budget Construction: IDR2,500 Million needs) Operation and maintenance: integrated with existing activities.

Implementing Allocate own budgets mechanism, funding & financing Other partners Local community groups and residents.

Green Waste – Action Plan Batam Program: Improvement of on-site sanitation system in parallel with ongoing wastewater network and treatment project

Why? Batam does have an existing sewerage system in the Batam Centre, which is run down and does not operate effectively. The remainder of the island has no other significant existing domestic sewerage system. Duriangkang reservoir is the main source of more than 50 percent of Batam's fresh water supply. The dam was built in the inlet to the bay to create the catchment area. The reservoir is now has a fresh water with area of 23.4 square kilometers. More than 50% of the city’s domestic waste-water enters the Duriangkang reservoir, this drastically reduces the water quality and increases the treatment intensity required for water distribution – it is not efficient. The reservoir water is treated before distribution to consumers but the reservoirs are highly polluted. BOD levels in the reservoirs regularly exceed the BOD standard by 50 times; levels in excess of 180 mg/L have been recorded in the reservoirs. Many parts of the city have basic on‐site systems such as septic tanks and pit latrines. These areas have been identified and management structures recommended for the safe removal of septic tank sludge and the design and management of improved pit latrine systems. The government of Indonesia has introduced the “100-0-100” program to raise the quality of life for Indonesia’s citizens. The numbers symbolizes: 100% of citizens having access to clean drinking water, 0% living in slums, and 100% having access to good sanitation by 2019. To meet this target, the government will have no choice but to forcefully support rapid, sustainable and inclusive economic growth and improved access to basic infrastructure services to achieve 100%-0%-100%.

Current status Currently, there is no effective regulation in place to ensure that sludge (or septage) is removed (pumped) at regular intervals, and the operation of tankers for septage pumping is not well managed. As a result of both poor construction and operation, it is also estimated that about 70% of septic tanks have contaminated the ground water. The direct relationship between diseases such as cholera, hepatitis and dysentery and the unrestricted discharges of residential sewage is well documented and therefore this program aims to improve the City wide system for management of on-site sanitation. To increase coverage, the City Government of Batam has already decided to develop a new city-wide sanitation strategy. In 2012, the Directorate General of Human Settlements in the Ministry of Public Works & Housing provided technical assistance through Indii (AusAid) to prepare a Master Plan and Feasibility Study for the sewerage system of Batam City. The document indicated four locations for waste-water treatment plant (IPAL), among others one in the Kecamatan of Batam Centre (capacity 35 liter/second) and another in Bengkong (250 liter/detik). The Governments of Korea and the Republic of Indonesia have signed a US$ 50M loan agreement for design and construction of the sewerage system in Batam Center. This program for on site waste water management has to work along side these two ongoing sanitation inititives to provide an integrated sanitation system for our City.

Goal The main objective of this program is to provide by 2020 a city-wide central sewerage system including regular on-site services to desludge human waste (septage) from individual septic tanks and improve facilities for individual household and communal septic tanks which are viable and meet technical and environmental requirements. A number of parallel activities are required to support this main goal including the passage of a septage management by law, the provision of a

fleet of septage pumping trucks, construction of a new STP (Septage Treatment Plant), some restructuring of institutional responsibilities, and capacity development. A further objective is to provide full cost recovery of staff and operational expenses.

Results 1. Improved the sanitation facilities by providing regular septage desludging services for the areas without sewerage system; 2. Improved sewerage services in Batam Centre by providing of wastewater collection system for the areas of Batam Centre including drainage, pump station, and transmission line as well as waste water treatment facilities. 3. Reduced the level of pollution in Duriangkang reservoir as the main fresh water source for Batam island and coastal water 4. DKP Organization strengthened and trained to implement O&M sewerage management system for Batam Centre area; 5. Population of Batam educated to use, and pay for, the sewerage services.

Benefits 1. Reduces the sanitation impact on both groundwater and surface water (particularly Duriangkang reservoir), to protect the environment and the natural resources and thus on human health. 2. Strengthens resistance to ecological hazards. 3. Provides a public service that is efficient and reliable, economically viable, socially acceptable, and technically and institutionally appropriate. 4. Provides regulatory and management oversight for the septic tank design, construction, and use of septic tanks as well as septage transportation, treatment and disposal. 5. Equitable access to water and sanitation services is considered a human right, which constitutes the basis for a life in dignity. Water and improved sanitation both must be available, accessible, of good quality and affordable.

Success indicators (targets) on Sewerage & Sanitation Sewers pipeline networks 2015 2 km 2020 81 km Sewers House Connections 2015 0 households 2020 11,000 households Regular Septage Pumping Customers 2015 1,500 families 2020 5,000 families

Key risks Even though the projects are relatively well defined, the technology is straightforward, and the capacity is there to deliver them, key risks are: 1. Delayed approval of the regulation and law governing on-and-off site sanitation; 2. Cooperation between the City and the BP Batam is not guaranteed yet. A lack of mechanisms for inter-agency collaboration on planning and service delivery, bearing in mind the range of organizations that have a stake in sanitation. 3. Low interest of the community on aspects of septic tank sanitation is not easily improved and may slow down implementation;

4. An under-developed (and unregulated) role for the private sector in service delivery and maintenance (for example in the safe removal, treatment and disposal of septic tank sludge).

Risk mitigation These risks can be mitigated to the extent possible by prioritizing the following measures and allocating sufficient resources to their implementation: 1. Implement regulatory updates as soon as possible while local political will is present (before policy / regime changes occur). 2. Establish a working group to coordinate this program and other sanitary activities 3. Undertake a social marketing strategy to engage citizens in environmental aspects of sanitation and disseminate information.

Project SAN1: Preparatory Actions for Sanitation Program

This first project consists of a number of actions to enable further projects in the sanitation program. Including:

 Review current Sanitation Masperplan and Feasibility study.  Establish a City Sanitation Committee  Create a Sanitation baseline for the City  Public campaign and socialization Program

The review of the Waste water masterplan confirms the current understanding of where the efforts in sewer network expansion and imporved septage management should be focused. A number of smaller discrete systems need to be considered on a drainage catchment basis. The natural gradients mean waste-water collection in most of the service areas are able to function via gravity, and will therefore minimize energy use. A Sanitation Committee is to be established to coordinate monitoring and related projects, coordinate planning, and promote the advocacy of good sanitation practices among residents. Collaboration among various stakeholders (e.g. DPRD as policymakers, regulatory agencies, Bappeda, Housing Agency, household users, society groups, private collection and transport companies, PT ATB as the operators of clean water, regular desludging septage management and both sewerage system wastewater treatment plants and the end-user of treated sludge), is crucial to move towards a functioning City wide sanitation management system. It is necessary to create and establish a sanitation baseline for the Batam City to help evaluate progress under this program and develop projects to address other specific issues which become apparent to reduce the environmental impact of the City and help achieve our Green Vision. This project will be led by Bappeda and the City Sanitation Committee, and future annual monitoring will occur according to an agreed monitoring plan. The baseline will include, and the following indicators may also be established:  % of sealed septic tanks,  Number of desludging customers  Number and construction type of septic tanks  Connections to piped sewerage  Water quality (biological and chemical) monitoring at selected indicator wells/boreholes and/or streams.  Occurrence of waterborne diseases among residents. Engaging stakeholders from the beginning of program development helps in determining the actual sanitation needs, information and capacity gaps, as well as their perception towards the project. It is also proven to be effective in designing tools for raising awareness, ensuring public acceptability, tariff setting, and easing program implementation.

Action Description and responsibilites Timeframe SAN1.1 Bappeda to Establish a City Sanitation Committee, including a core team to 2016 act as a Project Management Unit (PMU). The comittee contains members from all relevant stakeholders, including Bappeda, BA Batam, the Cleaning and Landscaping Agency, Environment Agency, Health Agency, PDAM, and the Provincial government. Working group to coordinate with Green Team on the implementation of this Program and projects within it. SAN1.2 Sanitation committee PMU drafts an annual monitoring plan, and 2017 coordinates the 1st year (City Sanitation baseline). SAN1.3 Sanitation committee PMU reviews existing Sanitation Masterplan and 2017 Feasibility Study for gaps and updates City sanitation plans, particularly relating to septage management. SAN1.4 Once plans are developed further a public campaign is required to establish 2017-18 community support for the success of the project, it should be continuous and sustained and include:  raising awarenesds of the benefits of imporved sanitation  increasing demand for sanitation infrastructure and services through marketing;  ensuring public acceptability of regulations and tariffs; and  easing project implementation.

Responsible Bappeda and City Sanitation Committee agency Estimated Preparation (design, procure): ~ this activity is only software costs (budget Socialisation: Rp 500 million annually needs) Realization (CAPEX): ~ this activity is only software Maintenance & operation: ~ this activity is only software Implementing Not applicable mechanism, funding & financing Other partners Batam: Bappeda Office Provincial: Dinas PU National Government: Ministry of Public Works and Housings; Social/ communities: Sanitation Working Group and Green Communities

Project SAN2: Establish regular septage pumping (desludging) and management system

It is important that these services are implemented in a coordinated and holistic way including institutional and cost recovery aspects to provide a sustainable service to the residents of Batam. It is planned to transfer

the responsibility for collection and disposal of waste to DKP (Department of City Cleaning and Parks), as they are best placed to manage such operational activities.

Action Description and responsibilites Timeframe SAN2.1 To promote sustained operation and enable this off site sanitation 2016 program, Batam city government will draft and adopt, through its legislative body (DPRD), a local regulation (Perda) detailing Batam city’s Septage Management System. The regulation will state the rationale, user fees, operation, management (roles and responsibilities), and penalties. Unless otherwise repealed or amended, the septage management ordinance remains valid, thereby ensuring sustained operation. Consideration will be given to including local design standards. SAN2.2 Establish a Memorandum of Agreement between the City and BP Batam 2017 that future septage pumping (collection) and management will be undertaken by the City (DKP). SAN2.3 DKP and sanitation working group to liaise with Provincial Government on 2017 most appropriate mechanism for expanding Septage treatment capacity. SAN2.4 The City government will acquire additional septage pumping trucks (2 per 2017 year) from The Ministry of Public Works under a grant to the City who will (annual) then hand them over to DKP. SAN2.5 DKP will establish an internal operation unit to manage and conduct 2017 septage collection (every 2 years) and disposal. SAN2.6 Operation Unit to prepare and approve standard operational procedures 2017 (SOP) for septage management. SAN2.7 DKP will coordinate with the City government to review and set tariffs 2017 (including for adjoining municipalities) and establish a system to recover operational costs from user fees (septage pumping). SAN2.8 DKP to consider utilizing private sector companies to provide efficient 2017 septage collection and transport services. Responsible Dinas Kebersihan & Pertamanan (DKP) agency

Estimated Preparation (SOP, socialisation): Rp. 1500 million costs (budget) Realization (construction): Desludging trucks will be provided as grant by DGHS. Maintenance & operation: approximately Rp. 15,000/customer/month Implementing  OBA (Government Grant) for equipment mechanism,  Improved cost recovery for financing operational improvements funding &  International Technical Assistance for Capacity Development and Training. financing  Private sector contractors to provide efficient septage pumping and transport services. Other partners Batam: Sanitation Working Group, Bappeda, DKP (transfer of vehicles and responsibilities), Environment Agency (regarding advocacy), Regional: Other municipalities (regarding tariff setting), DKP Social/ communities: Green Communities, social groups such as the Lions Club and AKKOPSI, users, poor households. Private sector: for septage collection and transport. International: Technical assistance for capacity development and training. Project SAN3: Construct communal septic tanks in the area of Cagar Budaya (Kampung-Kampung Tua)

The Kampung Tua serves as an old village for housing Batam natives who lived there before 1970. The

cultural and historic value of these sites must be preserved. The City has a responsibility to provide sanitation services to the residents. Communal septic tanks are seens as the most cost effective and appropriate solution as land availability is limited. The communal systems will be designed, built and maintained by the City.

Action Description and responsibilites Timeframe SAN3.1 DKP to set up PMU to deliver this as a separate project. SAN3.2 Community consultation on placement, sizing, appropriate design etc. SAN3.3 DKP PMU to tender for appropriate detailed engineering design, enabling 2017 affordable O&M costs. SAN3.4 Approval, land compaensation, develop construction program. SAN3.5 Construction supervision and management 2017 SAN3.6 Inclusion of all Kampung Tua communal tanks in septage pumping and 2017 management system Responsible Dinas Kebersihan & Pertamanan (DKP) agency

Estimated Preparation (DED, socialization): Rp. 500 million costs (budget) Realization (construction): Rp. 2 billion Maintenance & operation: Rp. 10,000/customer/month Implementing  Direct, local design and construction contracts mechanism, funding & financing Other partners Batam: Sanitation Working Group, DKP, Environment Agency (regarding advocacy) Social/ communities: Heads of communities, households, females.

Batam Green Waste Action Plan Program: Environmentally Friendly SWM System including WTE plant in Telaga Punggur

Why? It is estimated that within 5 years, there will be no more space for Batam City to dump its waste. Therefore, a solution is needed so that solid waste disposal needs can continue to be met. As the amount of waste in Batam is growing rapidly, it is believed that the investment costs of such a project is feasible and can be offset through revenue. Utilisation of urban waste is one of the national priorities in the new and renewable energy area as stipulated in the National Research Agenda 2010-2014, which is also become one of the motives for converting garbage into energy. Garbage has always been a problem of big cities in Indonesia including Batam. The discrepancy between an increasing volume of waste and the limitation of landfill sites will obviously become an issue if not handled carefully. Municipal solid waste has a potential of converting biomass energy into electricity. Given the limited land resource for landfills, the cost of investment and operating of landfill site, the need to recover material waste as a useful resource, the City of Batam, with support from the Central Government, would like to partner with a competent investor in the bid to convert waste-to- energy using the appropriate and scientifically approved technology that converts municipal waste into energy. Waste to energy is a very relevant issue for Batam City because its commercial and industrial base includes several high energy use industries. One major issue that is being addressed is the capacity of the PLN’s electricity distribution network and the need to reinforce it. It is important to note that, when considering waste-to-energy as a sustainable way of managing both waste and providing energy, no single technology dominates – there is no “one size fits all” solution. On-going WtE projects worldwide have shown various technological approaches based on varying criteria, needs, limitations, opportunities and public acceptability.

Current status A series of legislations and policies has been enacted in Indonesia in order to effectively manage municipal solid waste (MSW), promote its utilization as a source of energy, and protect the environment. The City of Batam, supported by the Central Government has identified -among others- the investment in a Waste-to-Energy plant as a viable alternative and a priority for an integrated municipal waste management. In June 2015, the transaction for a WtE project for the City of Batam under a PPP (KPBU) scheme was declared failed for several reasons: 1. The investment (CAPEX) for the incinerator technology was estimated at USD 10 million with a payback period of 11 years, with the result that the investor required a bylaw (Perda) to guarantee return on its investment. 2. In 2014, the municipal government of Batam submitted a Draft Bylaw on the Tipping Fee (Ranperda Tentang Bea Gerbang) to the City Council. It stipulated the responsibility of the municipality in providing the investor with a reasonable profit margin. The tipping fee was set at the maximum legally allowed IDR 300,000 per ton, with the lowest bidder winning the contract. Based on a daily volume of 1,000 tonnes of waste, the City had to allocate a budget of IDR 110 billion per year, which was deemed too high, and rejected by the Council. 3. Another problem was that the cost of energy supplied by the WtE plant did not match the purchasing capacity of the electricity company (PLN). Based on a Regulation of the Ministry of Energy and Human Resources (ESDM), the electricity company can pay only IRD 850 /

KWh, whereas the electricity from the WtE plant should cost IDR 1,350 /Kwh, causing a gap of IDR 500 /KWh. 4. Finally, the Consortium (SITA-Hitachi Zosen-Itochu) that submitted the winning bid fell apart because SITA withdrew from the Consortium without stating a clear reason.

Goals The objective of this project is to develop an environmentally friendly SWM system in the Telaga Punggur final disposal site (TPA) that includes a waste-to-energy plant using the available modern technology that would absorb all municipal solid waste, and mitigate climate change. The power generated shall be sold to the PLN’s national grid at a fee that would enable the investor to get returns on their investment. The feasibility study, preliminary design, and budgetary cost estimation will be conducted as part of this project shall be expected to be well prepared to enable the City Government of Batam to effectively pre-qualify bidders and evaluate their proposals and bids. The goals of this project are: 1. Implementation of feasible and appropriate technology for integrated municipal solid waste management focusing on waste to energy scheme; 2. Reduction of municipal solid waste to be disposed of in landfill in target areas and utilization of MSW for energy generation.

Results The Program is expected to have the following results:

1. Infrastructure: Improved SW collection and an operational WtE power plant combined with a sanitary landfill site; 2. Organization: an effective and environmentally friendly management and enforcement system; and 3. Finance: Improved cost recovery for SWM.

Benefits 1. Promotes energy efficiency and the use of renewable natural resources, in which the methane gas and other recovery materials from Telaga Punggur landfill site can be used to generate electricity energy. 2. Reduces impact on the environment of Batam and around the Telaga Punggur landfill site (create a clean, safe, and healthy environment). 3. Increasing regional’s revenue in the total budget plan of Batam. 4. Helps strengthen the resilience to ecological hazards. 5. Reduces greenhouse gas emissions by as much as 1,540,000 tons of CO2 annually.

Success indicators (targets) Reduction of greenhouse gas emissions (SW Reuse, Recycle, Reduction)

2015 2,567,523 tons CO2/year 2020 1,540,000 tons CO2/year Households served by Municipal SWM 2015 70 % 2020 85 % Solidwaste processing within the landfill 2015 840 tons of waste 2020 1200 tons of waste

Municipal Solidwaste Cost Recovery 2015 80% subsidies by City Government

2020 50% subsidies by City Government

Key risks and Mitigation Measures (WTE only) Although the projects are relatively well defined, the technology is straightforward, and the capacity is there to deliver them, there are key risks including: Key Risks Risk Events Risk Mitigation Measures WTE plant cannot be applied for  Gain WTE experience and improve capacity on local MSW, due to inappropriate decision-making for PPP WTE project. technology and the deficiency of  Emphasize project feasibility study. the project feasibility study  Establish a clear accountability system for WTE & Technology MSW treatment. risk  Consider and evaluate carefully the results of the decisions made by public agency.  Plan remedial measures well beforehand, such as insurance from insurance company. The City government of Batam  Establish public monitoring mechanisms, and (or local GCA) breaches the improve government credit and performance contract and does not pay evaluation systems; subsidy (tipping fee) as promised.  Avoid pursuing political gains for individuals; Government  Obtain credit support from the government in credit risk written form, and look for guarantee from the government by defining the obligations and rights in the contract.  Keep in touch with public agency to have the latest information on relevant policies. There is no legislation (Perda on  Set up clear policy goals in order to avoid different Tipping Fee) and policy to deal public agencies making policies from their own with contractual breaches. perspectives.  There is lack of policies to Specify influencing factors (example, replacement motivate the paying activity of of the government officials, policy inconsistency Legal and between the central and local governments) of political risk the residents and support the WTE project. the risk in the contract to lessen the potential loss.  Include compensation clauses of raising concession price or extending concession period in contract. Insufficient employees and  Set up a complete MSW classification system, and vehicles for MSW transportation establish appropriate legislations and policies to led to the short supply of MSW restrict MSW dumping. to landfill site  Invest more in infrastructure to promote the MSW supply quality of MSW sorting and classification. risk  Strengthen publicity, education, and demonstration activities.  Reach an agreement of “take or pay” with public agency to ensure returns on the project. Neighbored environment will be  Oversee the whole process of emissions strictly. polluted by WTE landfills and  Treat the MSW classification prudently. wastewater due to insufficient  Control emissions according to the legislation. Environment treatment facilities.  Report the contaminants discharged. risk Toxic emissions will be  Make appropriate compensations to residents discharged directly into the air close to the plant. without disposal

It is difficult to charge fees to  Use a flexible concession period mechanism (i.e., local residents for WTE on condition that a reasonable profit is set, treatment facilities whatever the revenue change, and the contract will expire only when the actual profit arrives at the reasonable profit). Payment risk  Include the formulas and conditions for adjusting the subsidy in the contract.  Include the distribution clauses of extra profit between the public and private sectors in the contract. The equipment imported for  Adopt an effective bidding process to select treating waste gas cannot run qualified and experienced private participant. properly because the local  Analyze carefully the characteristics of local MSW, Technology voltage is unstable and adopt suitable technologies. risk  Promote research on WT technology.  Enhance personnel technical training.  Improve experience and capacity through the cooperation with research institutes. Subsidy for MSW treatment and  Make reasonable payment for WTE treatment to payment for power generation private sector. Government are both delayed  Faithfully implement unified price policies of credit risk PLN’s grid-connected power.  Reach an agreement with public agency on surcharge for overdue payment.

Project WAST1: Improvement of SW collection system and organization

Currently, the Municipal Sanitation Agency (DKP) collects 750 tons of household waste, 140 tons of non-toxic industrial waste, and 50 tons of yard and street waste. Anticipating a contiuous growth of Batam’s population, the generation of waste from households, markets, commercial, and public institutions is expected to grow in the next 25 years. Household waste is collected by a private operator under contract with the Municipal Sanitation Agency (DKP). DKP collects waste from public facilities, while industrial waste is collected by a private operator paid for by the industries, but regulated by DKP (providing dumping permits for industrial waste at its landfill site (TPA Telaga Punggur). Household waste is initially disposed at intermediate collection points (TPS) or at 101 household-operated and 10 school-operated ‘waste banks’ who segregate recyclable waste. According the the Ministry of Environment & Forestry, the Central Government aims to establish a so-called parent waste banks in Batam in 2016 to coordinate all other subordinate banks and waste management services. In order to improve living conditions and public health around TPS sites, Batam plans to provide (new covers for) bin containers, and build capacity of local staff to maintain these TPS. Since DKP is also responsible for solid waste collection on surrounding islands, the agency will establish an appropriate number of TPS on each island. Improved coordindation with ‘waste bank’ operators is needed to ensure that non-recyclable waste is properly disposed at a TPS. Raising community awareness is important to promote waste segregation, reduction in waste, and proper disposal. Currently the collection of solid waste from TPS to the TPA is insufficient, leaving waste at TPS sites longer, causing overspills and public health hazards. Additional collection trucks are needed, covering all districts. Waste transportation from the surrounding islands also needs improvement.

Action Description and responsibilities Timeframe WAST1.1 Set-up project management unit (PMU) 2016

WAST1.2 Prepare and approve a project implementation plan (PIP) including detailed 2016 activities, responsibilities, timeline, identification of qualified consultants, budget WAST1.3 Identify gaps in STP distribution and quality of existing storage facilities to 2016 determine investement needs for additional STP, new bin containers with agreed specifications (including on surrounding islands), and other improvements to properly collect waste at neighbourhood level. WAST1.4 Study alternative options for more environmental friendly TPS solutions 2017 (study tour) and propose workable solutions for Batam WAST1.5 Identify human resources requirements to properly maintain all STP sites 2016-17 and prepare budget requirements for proper staffing, education, community outreach, and other initiatives to improve household and commercial waste collection. This will include coordination with Ministry of Environment & Forestry on the establishment of a parent waste bank in the city. WAST1.6 Include appropriate budget for CAPEX and OPEX for improved STP system 2017

WAST1.7 Identify investment needs, opportunities for PPP, and other arrangements 2017 needed to further expand the waste transportation system to meet future needs WAST1.8 Tender for additional waste transport and TPS equipment 2018

WAST1.9 Continued consultations/dialogue with private truck and waste bank 2018-20 operators, and community and commercial stakeholders outreach to further improve collection system and to monitor waste collection performance Responsible Dinas Kebersihan dan Pertamanan (DKP) in cooperation with BP Batam agency (PMU)

Estimated Preparation (design, procure): $ 0.1 million (~Rp 1.3 billion) costs (budget Realization (CAPEX): $ 0.375 million (~Rp 4.9 billion) needs) Maintenance & operation: to be determined

Implementing Options: mechanism,  Traditional procurement and ABPD I and APBD II budgets funding &  JV or management contracts with private sector for waste collection & transportation financing Other Batam: Bappeda, Environmental Agency (environmental documents and issues the partners environmental permit) ; Regional: BP Batam National Government: Ministry of Public Works, Bappenas (PPP book), PT SMI. Social/ communities: Affected communities, waste bank and truck operators

Project WAST2: Improved managerial capacity

While DKP is the main responsible agency for solid waste management in Batam, the city is considering the establishment of a General Municipal Public Service Body (BLUD Persampahan), following the example of other cities. This semi-private entity, like a PDAM, would be responsible for all solid waste management functions, and would need to operate on a cost recovery basis. The Body, in turn, could enter into PPP arrangements with private operators of waste collection trucks and the planned Waste to Energy Plant at the TPA Telaga Punggur (see project WAST3 – Waste to Energy Plant). With operational costs for waste collection and disposal currently at almost twice the amount of total garbage collection fees (Rp.44 billion in OPEX versus Rp.22 billion in fees collected in 2014), there is an urgent need to identify ways to improve fees collection, increase fees, and/or reduce OPEX. Batam could learn from other cities that are doing a better job in reaching full full SWM cost recovery, and then apply these lessons learned. Another improvement need is to ensure that collection regulations are effectively enforced and monitored. A possible opportunity to collaborate with the police and armed forces will be investigated, trialed, and when proven effective, further replicated throughout the city

Action Description and responsibilities Timeframe WAST2.1 Set-up project management unit (PMU) 2016

WAST2.2 Prepare and approve a project implementation plan (PIP) including detailed 2016 activities, responsibilities, timeline, identification of qualified consultants, budget WAST2.3 Compare Batam’s local own revenue (PAD) performance with other cities in 2016 Indonesia and identify cities that perform much better in terms of SWM cost recovery. Organize a study tour to one or more of these cities, and arrange for a partnership/knowledge exchange with a mentor city to help improve PAD performance in Batam. WAST2.4 Draft loal regulations on SWM cost recovery, enact and start implementing 2017-19 the new regulations WAST2.5 Organize consultations with POLRI and TNI to agree on their role in enforcing 2017-19 SWM regulations, particularly at the community level, communicate this role to the general public through a promotion campaign, and start ‘audits’ by POLRI/TNI to prevent random waste dumping. WAST2.6 Identify examples of successful Public Service Bodies in Indonesia, organize a 2017-18 study tour to one or more of these Bodies, and arrange for a

partnership/knowledge exchange with a Public Service Body willing to help with the establishment of BLUD Persampahan. WAST2.7 Draft local regulations on BLUD Persampahan. Identify investment needs 2018 and other arrangements needed to establish BLUDP. WAST2.8 Establish BLUDP and hand-over responsibilities from DKP to the new 2018-19 organization. WAST2.9 Continued consultations/dialogue with government, community and 2017-18 commercial stakeholders to further improve SWM management in Batam Responsible Dinas Kebersihan dan Pertamanan (DKP) in cooperation with BP Batam agency (PMU)

Estimated Preparation (design, procure): to be determined costs (budget needs) Implementing Options: mechanism,  ABPD I and APBD II budgets funding & financing Other Batam: Bappeda, Environmental Agency (environmental documents and issues the partners environmental permit); POLRI, TNI Regional: BP Batam National Government: Ministry of Public Works, Bappenas Social/ communities: Affected communities, commercial and other SW clients

Project WAST3: Improvements at TPA landfills, including Waste to Energy plant at TPA Telaga Punggur

All solid waste is currently disposed in a controlled landfill site (40 ha) located at Telaga Punggur, managed by DKP. Industries deposit their non-toxic waste in a special site (KABIL) owned by the BDA and managed by a private operator. Toxic industrial waste is collected and managed by PT Prasadha Pamunah Limbah Indonesia and transported to Cileungsi in the district of Bogor (West Java) for treatment. Other TPA sites need to be explored as well, including a site at Batu Aji and Belakang Padang. The latter is to serve a population of 20,000. Additional sites may need to be identified on neighboring islands. Feasbility studes will need to be prepared, and sufficient budget allocated to build, operate and maintain these new sites. Anticipating future demand for waste disposal and green energy, a Waste-to-Energy Plant is planned with a capacity of 700 tons/day. It is expected to generate 15 MW of power that will be sold to PLN. The WtE plant is to be managed by a private operator under a PPP contract. Given the recent failure of a PPP for s similar plant, the government is keen to further study how to make the PPP scheme more attractive to potential investors. A Perda (local regulation) is required as a basis for PJPK about the Environmentally Friendly Technology Based Waste Processing Service Expenses through the Mechanism of Local Government Cooperation with Business Entities. The regulation needs to mention that for the next 20-25 years, Batam will spend it’s APBD (2018-2038) for the "tipping fee" of the private sector that manages PLTSa (Waste to Energy) Plant. The value of the tipping fee will be calculated in a Feasibility study.

Action Description and responsibilities Timeframe

WAST3.1 Set-up project management unit (PMU) 2016

WAST3.2 Prepare and approve a project implementation plan (PIP) including detailed 2016 activities, responsibilities, timeline, identification of qualified consultants, budget

WAST3.3 Identify potential locations for TPAs on neighboring islands, and conduct a FS 2017 for alternative sites/landfill systems. Also conduct a FS and development plan for the Batu Aji site WAST3.4 Determine appropriate TPA/landfill systems for Belakang Padang. Explore 2017-18 challenges in coastal area, and allocate appropriate funding for implementation WAST3.5 Commission Feasibility Study on WtE and landfill including preparation of 2017 ToR, identification & recruitment of qualified consultants, FS implementation WAST3.6 Prepare detailed design (incl. cost estimates) including environmental 2018-19 impact assessment (EIA) WAST3.7 Prepare Tender strategy, determine need to change existing (2013) 2018-19 Technical and Tender Committees, Train new Committtee members (if needed), Tender project(s), select contractor(s), award contract(s) WAST3.8 Arrange permits, land rights and any other regulations needed to realize 2018-19 infrastructure WAST3.9 Prepare and draft tipping fee Perda as a result of financial analysis in the 2018-19 feasibility study, through relevant working groups including Bappeda, finance, dinas DKP and other relevant stakeholders. WAST3.10 Establish BLUDP and hand-over responsibilities from DKP to the new 2018 organization. WAST3.11 Oversee construction up till completion of WtE 2017-18

Responsible Dinas Kebersihan dan Pertamanan (DKP) in cooperation with BP Batam agency (PMU)

Estimated Preparation (design, procure): $ 1 million (~Rp 13 billion) costs (budget Realization (CAPEX): $ 58.5 million (~Rp 760 billion) needs) Maintenance & operation: $ 11 million/yr (~Rp 143 billion/yr)

Implementing Options: mechanism,  ABPD I and APBD II budgets funding & financing Other Batam: Bappeda, Environmental Agency (environmental documents and issues the partners environmental permit); POLRI, TNI Regional: BP Batam National Government: Ministry of Public Works, Bappenas Social/ communities: Affected communities, commercial and other SW clients

Green Transport – Action Plan Program: Development of the “Trans Batam” Bus Rapid Transit System (BRT)

Why? Batam City is suffering from growing traffic congestion and air pollution. This is caused by a rapid increase of motorized vehicles (currently over 1 million, fivefold in comparison to 2000) and a low share of public transport (1.5% of total vehicles). The situation is urgent given the expected population growth from 1 million in 2015 to 2.5 million in 2025. By 2025, there will be 500,000 potential daily BRT customers, a sustainable and financially viable public transport system can be developed based on this potential. Small buses (angkots), motor cycle - and car taxis are owned by small companies and individuals, but they create more problems than they solve because this decentralized and poorly regulated system makes it impossible to work on solutions that can improve the public transport system in a structural and sustainable way. Currently only 10% of the independent licenses are in operation. A solution is needed that will improve traffic conditions and allow citizens to travel comfortably, safely and reliably. Continued reliance on, and uncontrolled growth, of private motorized transportation is deemed unsustainable. Citizens want clean, safe and healthy public transport as part of local economic and social development as well as environmental sustainability. The green benefits include reduced congestion, reduced pollution, improved road safety, and improved mobility.

Current status of planning and decision-making on the proposed BRT The Batam Transport Department (BTD) already designed 11 corridors for the “Trans Batam” system, and currently operates 5 corridors using 48 buses as a Technical Service Unit (UPT). Corridor No.3 has been tried since November 2015, facilitating access to the Sekupang Port.4 If the current fare of IDR 4,000 can be maintained, customers can save about 50% in comparison to other modes of transport.5 However, the current load factor is still far below the economic load factor of 70%. Length ∑ BRT No Point Corridor Transit in Year (km) (unit) Sekupang – Pelab. Sekupang –Tiban – RSAB –My Mart - Balai 1 22.5 12 2014 Batam Center kota – Mega Mall Tg Uncang- Fanindo -Basecamp – Tembesi – Kepri Mall - 2 22.0 10 2015 Batam Center Balaikota – Mega Mall Sekupang - Pelab. Sekupang – Tiban – UIB –Penguin - 3 20.0 10 2015 Jodoh Nagoya Hills – Jodoh Tg Uncang- Pool Damri – Basecamp –Marina - Tg. Riau - Sei 2017 4 18.0 8 Sekupang Harapan - Pelab. Sekupang TM Jodoh – Jodoh – Harbour Bay –Batu Ampar - Sei Panas – 5 15.0 9 2016 Batam Center MyMart -Balaikota - Megamall Perum GMP, Kampung Bagan, Tanjung Piayu – SimpangMangsang, Simpang Bidaayu, Simpang 6 14.0 7 2016 Batam Center Bukit Kemuning, SMPN 16, SMPN 40, dan Tanjung Piayu Laut Mega mall – Tunas – KDA –UNIBA - Botania II- Batam Center- 7 25.0 Botania I -SMA3 - Simpang Bandara - Batu Besar 10 2017 Nongsa - Polda

4 Source: http://batampos.co.id/2015/12/01/dishub-operasikan-empat-bus-trans-batam-trayek-sekupang-jodoh/

5 Source: http://batamekbiz.com/trans-batam-layani-rute-piayu-laut-batam-centre/

Length ∑ BRT No Point Corridor Transit in Year (km) (unit) TM Jodoh- Jodoh – DC Mall – BCS –Sudirman – Telaga 8 29.0 10 2018 Telaga Punggur Punggur Jodoh – Jodoh - Nagoya Hill –Raden Patah – Sudirman – 9 30.0 12 2018 Nongsa Batu Besar – Nongsa Nongsa – Simpang Bandara - Batu Besar – Polda- 10 25.0 10 2019 Telaga Punggur Telaga Punggur Tembesi – Tembesi - 11 60.0 10 2019 Galang Jembatan I - VI Total 280.5 108

Goal A city-wide Bus Rapid Transit system (BRT) is an important pillar to structurally improve traffic conditions. It enables citizens to reach key destinations by means of air-conditioned and eventually low-emission buses that use dedicated bus lanes and have traffic light priority (ITS system) thus allowing comfortable and reliable travel. The Batam Transport Masterplan (2013) contains a lay-out for the city-wide BRT that can serve as a blueprint for its phased implementation. In parallel, Batam wants to set-up a Batam Public Transport Company (BPTC) in the form of a General Municipal Service Agency (BLUD) that will manage and operate the BRT as well as the fleet of buses. However, the possibility of establishing a more corporatized General Municipal Service Enterprise (BUMD) should also be considered.

Expected Results When the Program is completed, the current BRT network will have been expanded to cover the planned network, with improved infrastructure an expanded operational fleet of buses. It is expected to expected to expand and modernize the fleet over time, and gradually replace diesel- fueled buses with hybrid ones or buses running on electricity or gas only. A new Batam Public Transport Company will be establisheded and current operators of smaller vehicles (angkot, becak bermotor and taksi) will be incentivized (and regulated) to join this new public company. They should benefit from this change, for example by a financing mechanism that would make it possible for small operators to join forces and jointly operate new bigger buses on the dedicated lanes as a feeder system.

Expected Benefits 1. Improved urban mobility for citizens. This will improve time spent on travel, and improve access to places of employment. By 2025, there will be 500,000 potential daily BRT customers; 2. Improved road safety and security for passengers and pedestrians alike with a positive impact on quality of life; 3. Reduced air pollution with a positive impact on the quality of life and citizens’ health; 4. Reduced carbon emissions contributing to Indonesia’s commitment to the UN-FCCC; 5. Economic opportunities for low-and-middle class citizens, for example better business outlooks for current operators of angkot and taksi as well as economic activities around stations in transit-oriented development (TOD).

Key Risks and Mitigation An initial risk assessment informed Batam about the key risks of developing the BRT:

1. Limited knowledge and capacity to implement a BRT can result in delays, cost overruns and poor implementation. To mitigate this risk, the management of interfaces between different technical projects and between infrastructure delivery and setting up the BPTC (BLUD) deserves special attention. The need for capacity building and consultant assistance will be further detailed in the project implementation plan (PIP). 2. The BRT has significant impact on Batam’s communities, especially current operators of smaller vehicles (angkot, taksi) with the potential to cause considerable resistance and backlash. To mitigate this risk, the project implementation plan (PIP) for the BPTC needs to involve them in designing appropriate mechanisms for association and/or integration into the BRT system.

Investment Summary (2016 estimates) Project Description Timeline Preparation CAPEX OPEX Finance (billion IDR) (5 year) (annual) I Batam Public Transport 2016-2019 Rp 500 Rp 9.3 Rp 1,5 PPP Company (BUMD) million billion billion II BRT infrastructure 2016-2020 Rp. 1,5 Rp. 25,2 Rp. 2.5 Public billion billion billion III BRT bus fleet 2019- tbd tbd tbd PPP

Success indicators (targets) Public transport share (from 1.5% now) 2020 10% 2025 15% Targets are indicative and will be determined in detail based on detailed design for phase 1 and business plan for new transport company.

TRANS1: Establish a new Batam Public Transport Company

It is not critical at the moment to implement institutional change but this should be considered as early as possible to improve operational efficiencies and facilitate private sector engagement and financing in Batam’s public transport sector which has a high potential for growth. It is proposed to upgrade the current BRT Technical Service Unit (UPT) to a General Public Service Agency (BLUD) through a Local Regulation. The new Batam Public Transport Company (BPTC) will have ultimate responsibility to plan, develop, operate and manage, promote and market the BRT service and bus fleet. The business plan for the company will include details about the goals, responsibilities, management structure and operating procedures including possible external maintainance of bus fleets, stations and bus lanes. Choices made will have a direct relation with the tender strategy for infrastructure and procurement of buses, and will be monitored for consistency. The ongoing BRT expansion work and expansion in the near future is expected to be managed under the existing Technical Unit but transport of these responsibilities to a public company should be considered as soon as possible.

Action Description and responsibilities Timeframe TRANS1.1 Set-up project management unit (PMU) to be led by the BTD in partnership 2016 with BP Batam, coordinated by Bappeda.

TRANS1.2 Prepare project implementation plan (PIP) for creating a Transport Company, including detailed activities, responsibilities, need for external assistance, engaging stakeholders, approvals and timeline. TRANS1.3 Commission the drafting of an Academic Paper as the basis for drafting a Local Regulation on BRT under a BPTC (BLUD) TRANS1.4 Study the possibility of a corporate BUMD as an alternative to the BLUD, and make recommendations TRANS1.5 Draft and approve Local Regulation on BRT and BPTC approved by City Council TRANS1.6 Develop Business plan for the operation and funding of BTPC (including set up costs) and BRT infrastructure. TRANS1.7 Arrange funding for the operation of the BPTC (both upfront investments for set-up, office infrastructure; funding requirement is subject to results of the business plan; possibly BPTC will be responsible for maintaining infrastructure as well) TRANS1.8 Develop and manage a marketing campaign with permanent and real time Public Information System for promoting the BRT system TRANS1.9 Develop and manage smart payment system

TRANS1.10 Restructure and regulate the current system of minibuses (angkoy) and draft a local regulation to establish a new integrated public transport network (unifying existing formal and informal operators), including Public Service Obligation. TRANS1.11 Procurement, operation and maintenance of BRT fleet (rolling stock) through Central government assistance. APBD II (traditional procurement)

Responsible Batam Transport Department in partnership with BP Batam agency Estimated Preparation (design): Rp. 1 billion costs (budget Realization (construction): Rp. 3 billion (marketing); 1.6 billion (smart payment system) needs) Maintenance & operation: to be determined Implementing  Traditional procurement mechanism, funding & financing Other Batam: Bappeda, partners Regional: BP Batam, Universities National: DG of Land Transportation, Liaise with Medan who also plan to set up a (BLUD) Social/ communities: Affected communities, informal operators, citizens (survey) Private: Industry with large workforces, parking operators, private BRT operators

TRANS2: Expand BRT infrastructure to 11 corridors.

The Planned BRT corridors should be realized over the next 5 years: Corridors 3 to 11 are still not in full operations. This sub-project includes construction of bus lanes, ACTS, traffic lights, signs, elevated bus stops, shelters, and line painting. The Project Management Unit (PMU) required to initiate action will prepare a project implementation plan (PIP). It will specify more detailed choices to be made. It will be considered to bundle the detailed design of all related infrastructure, even in cases that different government departments will become responsible for funding and tendering different infrastructure (tender strategy). A tender strategy will be prepared that will take into account the division of responsibilities for operation and maintenance between stakeholders such

as the Batam Development Authority (BP Batam), Batam Department of Public Works (Bina Marga), the Batam Department of Transport, the Batam Public Transport Company (once established) and private companies/ investors.

Action Description and responsibilities Timeframe TRANS2.1 Set-up project management unit (PMU) to be led by the BTD in partnership 2016 with BP Batam, coordinated by Bappeda. TRANS2.2 Prepare project preparation & implementation plan (PIP) including detailed activities, responsibilities, time-line, need for external assistance (consultants), budget etc. TRANS2.3 Approve project implementation plan (PIP) and budget

TRANS2.4 Review and evaluate existing systems, technologies, networks and development planning. TRANS2.5 Coordinate consultation with all relevant stakeholders

TRANS2.6 Prepare tender strategy

TRANS2.7 Arrange funding for infrastructure

TRANS2.8 Arrange permits, land rights and any other regulations needed to realize infrastructure TRANS2.9 Tender project(s), select contractor(s), award contract(s)

TRANS2.10 Construction supervision and project completion

TRANS2.11 Periodical monitoring and evaluation of results

Responsible Batam Transport Department (or BPTC) in partnership with BP Batam agency Estimated Preparation (design): Rp. 2.5 Billion costs (budget Realization (construction): Bus stops and shelters, Rp. 3.6 Billion; Ground marking, 7.4 needs) Billion; Other infrastructure, Rp, 10 Billion Maintenance & operation: Rb. 1.25 Billion (annually) Implementing  Traditional procurement mechanism,  Funding by APBD II funding & financing Other Batam: Batam Bappeda, Office of Bina Marga, Office of Perkim, Environmental Agency, partners Department of Housing and Settlement (builds park & ride facilities), Department of Parks (prunes the trees along the BRT corridor), Environmental Agency (environmental documents and environmental permits) Central government: BP Batam, National Transport Authority, Department of land transportation (Ministry of transportation), Organda (Land Transport Organization) Private sector/ government enterprises: newly formed Batam public transport organization (BLUD), private operators (BRT Bus Manager, parking management) Social/ communities: citizens of Batam

Green Transport – Action Plan Program: Development of Network of Bicycle Lanes and Footpaths in Batam City

Why? Batam is suffering from growing traffic congestion and air pollution. This is caused by a rapid increase of motorized vehicles (currently over 1 million, fivefold in comparison to 2000) and a low share of public transport (1.5% of total vehicles). The situation is urgent given the expected population growth from 1.03 million in 2015 to 1.52 million in 2020. Continued reliance on, and uncontrolled growth, of private motorized transportation is deemed unsustainable. While our citizens want clean, safe and healthy public transport options (see Program D – Development of the “Trans Batam” Bus Rapid Transit System), we are also keen to promote the use of non-motorized modes of traffic (walking, bicycling) by providing exclusive pedestrian and bicycles lanes. While in the short-term a reduction of motorized private transport is sought, ultimately we aim to transition from a motor-vehicle oriented society to a multi-modal society. Currently only the town center has dedicated pedestrian pathways, but still insufficient. Because Batam’s built-up area is not very dense, it has good potential for non-motorized transport (NMT). Shaded/canopied pedestrian walkways and bicycle paths (essential in tropical climates) can be segregated from automotive roads. We would like to design our major streets for walkable communities, with ample safe crossings, pedestrian signals, cycle lanes, and shaded public areas and walkways. To further encourage non-motorized transportation, we will pay specific attention to integrating NMT modalities with the new public transportation options. We consider NMT facilities provision as an integral part our BRT system development. Another priority is the need to provide a safe environment for pedestrians, transit users and cyclists as they are the most vulnerable users on urban streets.

Planning and decision-making on non-motorized transport In 2008, the mayor of Batam, together with ten other Asian mayors, signed the Kyoto Declaration. Under the declaration, the mayor pledged to provide exclusive pedestrian and bicycles lanes and ensure safe and comfortable movement of women, children, the elderly and people with disabilities. BP Batam developed a transportation master plan in 2014. This plan includes 20kms of bicycle lanes, in addition to development of a BRT system. The city of Batam has yet to include non-motorized transportation in its Spatial Development Plan (RTRW). The responsibilities for planning, construction and operation of NMT needs to be coordinated between BP Batam and the municipality, with the latter taking responsibility. A NMT Master Plan should be developed for the period 2016-2035.

Goal The NMT Masterplan 2016-2035 should connect NMT and MT modes of transportation (such as the Trans Batam Ferry and the Trans Batam BRT) in Batam’s RTRW that is currently being prepared, integrate with the new Medium-term Development Plan (RPJMD), and create opportunities for Transit Oriented Development (TOD). A total of 78kms of bicycle lanes and 36kms of footpath network will be constructed in strategic areas in the city. NMT facilities will connect other modes of transport. We will add shading, pedestrian crossings, and other features to make walking more enjoyable and safe in areas with

significant pedestrian use. We will add sufficient parking at strategic areas, such as larger BRT stations, major facilities, to encourage multi-modal transport.

Expected Results Improve urban mobility by integrating motorized and non-motorized modes of transportation, creating a clean, safe and healthy NMT system as part of local economic and social development as well as environmental sustainability.

Expected Benefits 1. Improved urban mobility both for long distances (buses) and short distances (bicycle lanes and pedestrian walkways) for citizens; 2. Improved road safety and security for passengers and pedestrians alike with a positive impact on quality of life; 3. Reduced pedestrian related road accidents; 4. Reduced air pollution with a positive impact on the quality of life and citizens’ health; 5. Reduced carbon emissions contributing to Indonesia’s commitment to the UN-FCCC;

Key Risks and Mitigation An initial assessment of the key risks of developing the NMT network:

1. The current lack of coordination combined with overlapping authorities between the various stakeholders including the municipality of Batam and the Batam Development Authority (BP Batam) can hamper development; this will necessitate the creation of an integrated committee or organization (PMU). 2. The need for significant public funding for expropriation and securing the rights-of-way and other practical bottlenecks that can hamper construction; private funding under CSR to pay for beautification and maintenance is not assured, so this will also necessitate the creation of an integrated committee or organization (PMU).

Investment Summary (2016) Project Description Timeline Preparation CAPEX OPEX Finance (billion Rp) (once) (annual) I Infrastructure 2016-2020 Rp. 700 million Rp 10 billion Rp. 200 Public million II Management 2016-2019 Rp. 200 million 0 0 PPP II CSR 2019 0 Rp.500million 0 CSR

Success indicators (targets) Year Pedestrian walks Bicycle path December 2018 28.8 km 52 km December 2020 36.0 km 78 km

Share of NMT as % of total public transport for short distances December 2018 3% 1% December 2020 5% 2% Targets are indicative and will be determined in detail based on detailed design for phase 1 and business plan for new transport company.

Project NMT1: Develop Master Plan & Detailed Engineering Designs for Non-Motorized Traffic

Based on the Program Brief (attached), this Project includes the following sub-projects: (A) Prepare a Non- Motorized Traffic Master Plan for 2016-2035, and (B) Detailed Engineering Designs. This program is led by the Batam Department of Transportation (BDT), and should be developed in close collaboration with BPTC, the Batam Public Transport Company established under Program D – Development of the “Trans Batam” Bus Rapid Transit System. BDT will also seek input from BP Batam and Bappeda. The NMT Master Plan will follow, and seek to support, the spatial plans set out in the latest RTRW, and specifically will focus on creating walkable communities, and feeder connections with BRT and other modes of public transport. The Plan will focus on short-term interventions (2016-2020), and medium- to long term interventions (2020-2035). The initial focus will be on creating additional NMT facilitates (paths, lanes, crossings, etc), while the medium- to long term focus will be on further integating NMT into a multi-modal transport system, with specific emphasis on BRT. The initial designs should focus on cost-efficient and safe solutions for integrating NMT with motorized modes of transportation in the period 2016-2020. Designs are needed for 36kms of footpaths (including shading, pedestrian crossings, markings, and other features), and 78kms of dedicated bicycle paths (including markings, crossiings, etc).

Action Description and responsibilities Timeframe

TRAN3.1 Set up a project management unit (PMU) to plan and design Non-Motorized 2016 Traffic investments TRAN3.2 Prepare and approve project implementation plan (PIP) and budget for 2017 2016-2020 TRAN3.3 Identify and hire consultants to assist in the development of a NMT Master 2017 Plan. The focus here is on driving the development of the Master Plan through own resources TRAN3.4 Develop the NMT Master Plan and ensure approval and enactment of 2017-18 associated local regulations TRAN3.5 Prepare ToR and select qualified consultants for DED preparation 2017 TRAN3.6 Finalize the DED for pedestrian pathways and bicycle lanes, including Bill of 2017 Quantities (BOQ) TRAN3.7 Develop Project Preparation Plan and Budget and get DED and get these 2018 approved by City Council Responsible Batam Department of Transportation: Preparing this program as an integral part of the agency business plan for the Batam Public Transport Company

Estimated Rp. 700 million costs (budget)

Implementati  Funding by APBN, and APBD II. on mechanisms, funding & finance Other Batam: Batam Public Transport Company, Bappeda, Department of Public Works partners Regional: BP Batam Social/ communities: Affected communities Central government: Directorate General of Land Transportation Social/ communities: Affected communities

Project NMT2: Constrtuct Non-Motorized Traffic Interventions

Based on the Program Brief (attached), this Project includes the following sub-projects: (A) build the network of bicycle lanes and foothpaths, (B) install road safety features, and (C) landscaping of new paths/lanes during 2017-2020. This program is led by the Batam Department of Transportation (BDT), and should be developed in close collaboration with BPTC, the Batam Public Transport Company established under Program D – Development of the “Trans Batam” Bus Rapid Transit System. BDT will also seek input from BP Batam and Bappeda. Foothpaths and bicycle lanes will predominantly be constructed along existing traffic corrdidors. An important focus for construction will be to minimize the construction impact on traffic flows (minimal traffic congestion) and living environment (especially in downtown areas). When planning for, and during construction, BDT will seek continuous coordination with relevant government entities, such as POLRI, and neighbourhood representatives. Where possible, BDT will select local contractors for the implementation works, and will encourage the use of locally available construction materials.

Action Description and responsibilities Timeframe

TRAN3.1 Set up a project management unit (PMU) to implement the Non-Motorized 2016 Traffic investments. This PMU may be the same as the one set up for the Master Planning, but will also include POLRI and possibly neighbourhood representatives for affected areas. TRAN3.2 Allocate sufficient budgets for project preparation and implementation for 2017 2017-2020 TRAN3.3 Pappeda to coordinate consultation and collaboration among all 2017-20 stakeholders TRAN3.4 Prepare Tender Documents, and award projects to (local) contractors for all 2017-18 works. Bids will be packaged by area. All bids will include hardscape (paths/lanes, markings, etc), landscaping (trees, canopies and other shading structures, plantings and other ‘natural dividers’), and safety measures (crossings, safety railings, streetlighting, etc). BTD will issue bids in tranches from late 2017-2019). TRAN3.5 Supervise the construction works (if needed a consultant may be hired to 2018-20 assist), test-run and approve completed works TRAN3.6 Monitor and evaluate progress and results. This may include conducting 2019-20 surveys in affected areas. As this is the first stage of construction the focus will be on learning from feedback. One aim is to determine most effective shading and safety solutions based on actual usage. TRAN3.7 Develop Project Plan and Budget and get DED and get these approved by 2018 City Council Responsible Batam Department of Transportation agency

Estimated Rp. 10,000,000,000,- costs (budget)

Implementati  Funding by APBN, and APBD II. on mechanisms, funding & finance

Other Batam: Batam Public Transport Company, Bappeda, Department of Public Works partners Regional: BP Batam Social/ communities: Affected communities Central government: Directorate General of Land Transportation Social/ communities: Affected communities

Green Water– Action Plan Program: Improvement of urban drainage and flood control system

Green Water – Action Plan Program: Improvement of urban drainage and flood control system

Why? Our city currently hasflood inundation problems in 9 sub-districts (Kecamatan) over 45 sites during the rainy seasons due to the advancing urbanization of Batam City where flood plains have been improperly occupied and developed, and where local drainage problems have not been adequately considered and handled. Flooding has an adverse impact on the economy, and also the safety of residents. Impermeable areas are rapidly developing and drainage systems are not adequate to cope with the additional stormwater runoff. There is a need for improved draiange and flood management and also regulations to reduce surface runoff production from new developments, including water retention on site, reduced permeable surface areas, as well as design of suitably sized drains. The most affected areas are located in the urbanized area Batam Centre, Sungai Harapan, Marina, Sungai Pelungut, Buliang dan Duriangkang and included some private housing complexes. Flood flows can damage built assets, create loss of earnings and GDP, and impact on human safety. The lack of a standard set of performance indicators for urban drainage is seen by many, including Bappenas, as a serious disincentive for funding in the sector for without measureable and verifiable outputs of project success, justification for budget expenditure becomes difficult; however, defining the performance of a storm drainage system is not straightforward.

Current status There is no updated Urban Drainage and Flood Control (UDFC) Master Plan for Batam City. The first UDFC Master Plan was established in early 1980 by BP Batam and since then there is no planning document even after the establishment of an autonomous Batam City local government in year 1999.To improve the situation, the City Government of Batam has already decided to develop a new integrated urban Drainage and Flood Control Master Plan.

Goal The contemporary engineering approach to drainage is to recognise storm water is part of the total water cycle. Consideration needs to be given to the impact on the receiving environment, its integration into the built environment, and to recognize Batam’s water supply is a limited resource and the urban drainage system provides opportunities to provide important water resources. Successful integration of elements of Batam’ urban drainage systems into the urban landscape can provide benefits to all stakeholders. These resources can enhance visual amenity, provide recreational opportunities and can help to engender a sense of 'ownership' and focus for the local community. Preserving, and in some cases restoring, natural features of drainage lines and waterways, such as natural channels, wetlands and riparian vegetation can often be advantageous to both the environment as well as enhancing visual amenity.

Results 1. An urban drainage and flood control master plan for Batam City. 2. Better integrated and maintained sustainable drainage infrastructure. 3. Flood hazard management/warning plan

Benefits 1. Minimise economic impacts of flooding, in GDP and earnings losses. 2. Increase urban resilienece 3. Reduce impacts of floods on health, safety and built assets. 4. Ensure future development don’t have impacts on downstream properties. 5. Safeguard Batam’s water resources

Success indicators (targets)

Flooded areas 2015 45 sites 2020 20 sites

Key risks 1. Uncontrolled development

Risk mitigation 1. Approve a drainage and flood risk master plan which is integrated into the City’s spatial development plans and enforce development control.

Project UDFC-1: Prepare a new Master Plan for Urban Drainage and Flood Control System

It is necessary to create and establish a new Urban Drainage and Flood Control (UDFC) system for our City. This new Master plan is an important tool to to identify remedial drainage projects for construction, and also to guide new land development projects (in collaboration with BP Batam) to be consistent with Batam island drainage needs. The master plan also provides valuable input to the City’s RPJMD (2016-2020) Five Year Capital Investment Program, and help to identify and acquire land or access for future capital improvements and areas for preservation of raw water sources (In Line with Green Water and Sanitation Programs) to reduce the environmental impact of the City and help achieve our Green Vision. This project will be led by Dinas PU in collboration with Bappeda of Batam City and BP Batam. The Master Planning will:  Flood hazard areas under existing and various future development conditions must be defined;  Take into account climate change;  Identify flooding problem areas, and infrastructure that will require improvements where future development is planned;  Preparation of conceptual plans for drainage and flood control infrastructure, with short medium and long term priorities;  follow the Ministry of Public Works guidelines No. 12 /PRT/M/2014 regarding the Urban Drainage Management.  Provide recommendations for improved floodplain management and river enhancement, to keep new land development out of floodplains, while emphasizing their natural and beneficial functions.  Provide recommendations on catchment management and land use planning.  Provide recommendations on, generic design (design flood, design storm etc), construction and maintenance.  Develop recommendations on monitoring, information services, and flood warning.  Develop procedures for the reporting of information on flooding incidences and advice to residents. Engaging stakeholders, including both upstream and downstream developers and landowenrs, from the beginning of project development helps in determining the actual drainage needs.

Action Description and responsibilities Timeframe

UDFC-1.1 A PMU (Project Management Unit) shall be established that needs to 2017 design and coordinate and monitor related projects, and promote the advocacy of good urban drainage practices among residents and housing developers. The PMU contains members from all relevant stakeholders, including Bappeda, Dinas PU (Public Works Agency), Highways Agency, Dinas Tata Bangunan (Building Codes Agency), DKP (the Cleaning and Landscaping Agency), BLH (Environment Agency), Health Agency, BP Batam, and the Provincial government and the Ministry of Public Works & Housings (DG of Human Settlements and DG Water Resources). PMU to coordinate with Green Team on the implementation of this Program. UDFC-1.2 PMU will prepare a robust terms of references (TOR) for the 2017 preparation Master Plan. A competitive tender consultancy procurement will be done in order to get the maximum results. UDFC-1.3 The Consultant to work with relevant City stakeholders in developing 2017 new Master Plan as guided by the Ministry of Public Works regulation No. 12 /PRT/M/2014 regarding the Urban Drainage Management, including the environment agency, highways agency, social groups etc. Responsible agency Dinas PU (PMU) Estimated costs Preparation (design, procure): Rp. 2,400,000,000 (budget needs) Implementing Traditional procurement mechanism, funding & financing Other partners Batam City: Bappeda, City spatial planning agency Provincial: River Basin Authorithy (Balai Wilayah Sungai) National Government: Ministry of Public Works Private: REI (Housing Estate Developers) Social/ communities: Universities, NGOs, Sanitation Working Group and Green Communities

Project UDFC-2: Implement construction of priority drainage infrastructure

This will include aspects related to design, construction and maintenance of priority drains and related infrastructure. The construction works will follow the Ministry of Public Works regulation No. 12 /PRT/M/2014 regarding the Urban Drainage Management as well as to refer for the Environmental Management & Monitoring plans (RKL & RPL).

Action Description and responsibilities Timeframe

UDFC-2.1 Commission consultants to develop detailed engineering design (DED) 2017-2018 for prioritised infrastructure, including production of: Hydraulic calculations, design notes, construction drawings, technical specifications, bills of quantities, and cost estimates UDFC-2.2 PMU will conduct an enviromental study (AMDAL) according to the 2018 environmental law No. 5/2012, such that construction of drainage canal > 5km and sedimentation excavation >500,000 m3 has to provide the full EIA study. UDFC-2.3 PMU to arrange all the necessary permits and coordinate with all 2019 utility providers (i.e. water supply pipelines with PT ATB, telecommunication lines with PT Telkom and other private services,

gas pipeline with PT PGN, eleectricity with Bright PLN Batam, etc) UDFC-2.4 Construction to commence from downstream first, and will compy 2019-20 with the environmental management and monitoring plans (RKL & RPL). UDFC-2.5 Drainage maintenance unit (public works) to develop a maintenance (asset management) opertional procedure, including a rational basis for ranking maintenance projects for implementation (given the limited budget available through APBD), inspection of assets, and responding to reported failures/damages. Responsible agency Batam Public Works Agency (Dinas PU)

Estimated costs Preparation (design): Rp. 1,500,000,000 (budget needs) Realization (construction): to be determined based on the DED works.

Implementing  Traditional procurement mechanism,  Funding by APBN, ABPD I and APBD II funding & financing Other partners Batam: Bappeda, PMU, BLH, Transport, Private sector: Housing Estate Developers Provincial: Balai wilayah Sungai Social/ communities: Poor communities and households regarding appropriate design.

Project UDFC-3: Non Structural Measures

The non structural measures is meaning to protect the urban drainage system from the software perspective (non-phisycal works) will include the following activities:  Establish Perda (local regulations) on urban drainage and flood control.  Prepare community flood preparedness.  Prepare an Emergency response.

Action Description and responsibilities Timeframe

UDFC-3.1 Public works to draft academic paper and local regulation including: 2017-2018  Developers will be required to fund and construct on site water quality treatment to meet Best Practice Objectives for the removal of litter, total suspended solids, total nitrogen and total phosphorus.  Developers will be required to fund the infrastructure necessary to cater for upstream rural flows.  The Housing Developers will be required to maintain existing (pre-development) runoff rates and volumes by including infiltration and retention features into landscaping and design. Legislation for flood reduction measures should be incorporated within the technical legislation covering urban development, regional development, environmental management, resource management, communication, housing etc. UDFC-3.2 Councillors approval of local regulation 2018

UDFC-3.3 Commission an academic study to develop a hydrological design 2019 manual to assist developers in sizing and designing sustainable drainage systems. Including standard, soil group, appropriate rainfall-

runoff methods, design storms (5, 10 ,25yr) and durations for the design of retention, infiltration, and conveyance features. UDFC-3.4 Public works to Develop a flood emergency warning and response 2019 plan. UDFC-3.5 Public Works to report annually to Bappeda, Spatial planning agency, annual and BP Batam to assist with development control around floodplains. Responsible agency Batam Public Works Agency (Dinas PU)

Estimated costs Preparation (design): Rp. 500,000,000 (budget needs)

Implementing  Traditional procurement mechanism,  Funding by APBN, ABPD I and APBD II funding & financing Other partners Batam: Bappeda,

The Six Priority Programs – Finance Actions

Fiscal Capacity The Green Team concluded that there are possibilities to further increase own local income (PAD). Possible specific actions to increase PAD that were brought up by the Green Team are: - Introduce electronic tax collection system. This will increase collection rates, for example for restaurant tax and entertainment tax - Improve database for IMB (building permits) and PBB (property tax) The Green Team intends to develop a RIAP (revenues improvement action plan) to further explore these and other options and to formulate specific actions to achieve this. To improve budgets available for capital expenditures, the Green Team sees opportunities to decrease annual unused cash balances by improving procurement and planning. This could partly free up funds for capital projects. Possible specific actions identified are: - Advanced procurement: Batam can start procurement procedures before the local budget (APBD) is officially formalized. By this Batam can avoid delays. - Batam is already making use of E-procurement system (electronic). An intitial analysis of the potential borrowing capacity showed that Batam could potentially borrow over 3.000 billion Rupiah (~230 million USD) in 2016 and over 5.000 trillion Rupiah (~424 million USD) between 2016 and 2020. The Green Team indicates that this looks promising. The Green Team will discuss with high level decision makers, the possibility of attracting loans for green actions and projects that do add value to Batam’s economy and liveability but for which no budgets are currently available and actions to further explore this opportunity. The city will put special attention to its low classification (score 0,25) according to MoF Regulation no.33/PMK.07/2015 on Map of Local Government Fiscal Capacity. The following pages show the result of the Fiscal Analysis and Financial Assessment Report.

Alternative Mechanisms to attract finance Table 1 below summarizes the result of exploring the potential for applying alternative mechanisms to priority programs. The Green Team learned that alternative mechanisms can be applied to a BOT contract for new bulk water treatment facility, Waste to Energy and BRT. Actions aimed at further exploring and applying these models have been incorporated in the action plans for these priority programs.

Table 1 – Summary of Batam Action Plans

Project & owner (A) (B) (C) (D) (E) (rows)/ financing Financing Funding Implementing Financing sources Funding sources options (columns) mechanism (options) (options) Waste to Energy BOT (contract); Investor has Tipping fee: new (ii) BU Joint withdrawn regulation required Venture (company public & private) Bus Rapid Transit BUMD/ BLUD Private sector: National and city (own company) buses and budgets: dedicated possibly stations bus lines International National budgets: buses development institutes: business plan BUMD (GiZ), detailed design buslanes (ITDP) Human Waste Batam city: APBN; Management – PLT2 septic tanks, Batam city: sceptic trucks tanks trucks