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Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No. 3065a-114D

Public Disclosure Authorized INDONESIA

SWAMPRECLAMAITON PROJECT

STAFF APPRAISAL REPORT Public Disclosure Authorized

February 23, 1981 Public Disclosure Authorized Projects Department East Asia and.Pacific Regional Office

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

US$1.0U = Rupiahs (Rp) 6Z5 Rp 1.00 = US$0.0016 Rp 1 oillion = US$1,600

WEIGHTS AND MEASURES- 1ETRIC SYST&1,1

1 millimeter (mm) = 0.039 inches I meter (i) = 39.37 inches 1 kilometer (km) 0.62 miles 1 square kilometer (sq km) = 0.386 square miles 1 hectare (ha) 2.47 -acres 1 cubic meter (cu m) 35.31 cubic feet I million cubic meters (NCM) = 811 acre feet 1 liter (1) 0.264 gallons (USA) 1 liter/second (1/sec) = 0.035 cubic feet per second I kilogram (kg) = 2.2 pounds 1 metric ton (ton) 2,205 pounds

INDONESIAN FISCAL YEAR

April 1 - tiarch 31

ABbREVIATIOi.S

A.RD - Agency for Agricultural Research and Development BI%AS - Bimbingan 4assal Swa Sembada haihan Liakanan - ;lass Guidance for Self-Sufficiency in Foodstuffs, a farm input-credit package program BRI - iank Rakyat Indonesia - People½s Bank of Indonesia BULOG - National Food Procurement and iistribution Agency DGA - Directorate General of Agrarian Affairs (Cadastral Office) DGCK - Directorate General of Cipta karya, (hIousing,Urbani and Regional Development) DGT - Directorate General of Transuigration DGWRD - Directorate General of lWaterResources Development DPU - Departemen Pekerjaan Umur Dan Tenaga Listrik - Public Works Ministry GOI - Government of Indonesia IPB - Institut Pertanian Bogor - bogor Agricultural University IPEDA - Land Tax IRRI - International Rice ResearclhInstitute ITE - Institut Teknologi Bandung - band&ng Institute of Technology JMT - Junior Minister (~Iinistry)for Transmigration KUD - Village Unit Cooperative FOR COFICLIL USE ONLY

MOA - Ministry of Agriculture MOH - Ministry of Health O&M - Operation and Maintenance P4S - Proyek Peibukaan Persawahan Pasang.Surut - Proiect Unit for Tidal Swamp Reclamation PTPT - Penyapatan Tanah Pemukimnn Transmigrasi - Directorate of land preparation for transmigration settlement (in charge of land clearing) REPELITA - Rencana Pembangunan Lima Tahun - Five Year Development Plan SAE - Survey Agro Economi-Agroeconoiaic Survey SID - Surveys, investigations and designs UGM - University of Gajah Mada

GLOSSARY

Alang-alang - (Imperata cylindrica) a coarse grass which establishes itself after slash and burn operations Hak Pakai - Individual right of use or exploitation of assigned land Hak Milik - Right to full ownership of land KabuDaten - District Kecamatan - Subdistrict Marga - A community grouping under traditional (Adat) law PUSKESMAS - Community health center

This documenthas a restricteddistribution and may be ued by recipients only in the performance of their officialduties. Its contents may not othenris be disclosed without World Bank authorization. INDONESIA

SWAMPRECLAMATION PROJECT I

Table of Contents

Page No.

1. BACKGROUND ...... I

General ...... I The Agricultural and Rural Sector . . . . .1 Development Strategies ...... 2 Swamp Reclamation and Development ...... 5 Project Formulation ...... 8

2. THE PROJECT AREA ...... 10

Location ...... 10 Climate ...... 10 topography and Soils ...... 10 Hydrology and Hydrometry ...... 12 Water Supply, Demand and Quality ...... 14 Drinking Water ...... 14 Population ...... 15 Land Tenure ...... 16 Access, Serv;-4- and Existing Development ...... 17 Existing Agric-u.~:ure ...... 18

3. THE PROJECT ...... 19

Project DT-h iption ...... 119 Project WorKs ...... 19 Agricultural Development ...... 21 Physical Development ...... 21 Settlement ...... 23 Community Development ...... 24 Status of Field Data, Planning and Design ...... 26 Implementation Schedule ...... 27 Consulting Services ...... 27 Cost Estimates ...... 29 Financing ...... 29 Procurement ...... 29 Disbursements ...... 33 Accounts and Audits ...... 33 Environmental Effects ...... 33 - ii -

Page No.

4. ORGANIZATIONOA MANAGEEEJD . N.T...... 34

General ...... 34 Agricultural Support Services ...... , ...... 36 Operation and Maintenance*..*.*...... 38 Monitoring and Evaluation ...... 39

5. AGRICULTURAL PRODUCTION ...... 40

Cropping Patterns ...... 40 Cropping Calendar ...... 42 Yields ...... 42 Production ...... 43 Drying, Storage and Processing ...... 43 Livestock and Fisheries ...... 44

6. MARKETPROSPECTS, PRICES, FARUMINCOMES AND PROJECT CHARGES . . 44

Market Prosp2cts ...... 44 Prices ...... 4...... 45 Farm Incomes ...... 46 Project Charges ...... 47

7. BENEFITS, JUSTIFICATION AND RISKS ...... 48

Benefits ...... 48 Labor Costs and ienefits ...... 49 Investment Costs ...... 51 Economic Rate of Return ...... 51 Sensitivity AnAlysis ...... 51 Risks ...... 53

8. AGREEMENTSREACHED AND RECOMMENDATIONS...... 53

LIST OF TABLES IN MAIN REPORT

1.1. Reclaimed Areas and Settled Families in Tide-Affected Swamps 7 2.1 Meteorological Data ...... 11 2.2 Spring Tide Ranges ...... 13 2.3 Salinity Iitrusion ...... 13 2.4 Water Balance for Rainfed Household Consumptive Use . . . . . 15 3.1 Consulting Services ...... 30 3.2 Pro4ect Cost Summary ...... 31 4.1 Initial Seeds and Agrochemical Package ...... 37 5.1 Projected Agricultural Yields ...... 42 5.2 Agricultural Production ...... 43 7.1 Sensitivity Analysis ...... 52 - iii -

LIST OF ANNEXES - TABLES

ANNEX 1

Il. Cost Estimate 2. Schedule of Expenditures 3. Cost Estimate by Category of works 4. Proposed Allocation of Loan Proceeds 5. Estimated Schedule of Disbursements 6. Bill of Quantities and Costs 7. Village Facilities E.. Consulting Services: Categories and Estimated Schedule 9. Consulting Services - Cost Breakdown 10. List of Equipment and Supplies

AIMNEX 2

1. Price Structures for Agricultural Outputs 2. Price Structures for Agricultural Inputs 3. Net Economic Benefits from Rice (Paddy) Production 4. Net Economic Benefits from Soybean and Corn Production 5. Coconut Prodction Volumes and Values C. Banana Production Volumes and Values 7. Assumed Labor Inputs per Cropped Hectare &. Development of Typical Transmigrant Family Labor Force 9. Economic Value of Family Labor in Areas of Origin and Settlement 10. EcoPomic Rate of Return Calculation I 1. Representative Farm Nodel 1 2. Representati-ve Settler Family income Analysis 13. Rent and Cost Recovery Calculation Summary

AJNNEX 3

Schedule of Early E'vents

ANNEX 4

Studies and Investigations, Terms of Reference

ANNEX 5

List of References

LIST OF FIGURES

3.1 Implementation Schedule (21825) 4.1 Organization of the Directorate General of Water Resources Development (18765) 4.2 P45 Organization Chart (21493) 4.3 P4S Provincial Office Organization (21491) 5.1 Proposed Field-lot Cropping Calendar (21085)

LIST OF MAPS

IBRD 14919, 14920 I)DNESIA

APPRAISAL OF SWAMPRECLAMATION PROJECT I

1. BACKGROUND

General 1.01 The Government of Indonesia (COI) has requested Bank Group assistance in reclaiming and developing about 9,000 ha (gross) of swampland at Karang Agung in South Sumatra, and in settling approximately 3,200 families. GOl also requested a number of related studies including an inventory of reclaimable swamplands; upgrading of existing swamp developments; ecologic impacts; and the availability of groundwater for drinking purposes at Karang Agung. The proposed project would provide for drainage, clearing and development of the land; housing and public facilities; selection, transport, settling and subsistence of settled families; and agricultural support services and studies.

1.02 Tne potential reclamation and development of 200,000 ha at Karang Agung has been studied by P4S /1 and consultants (under Irrigation Project VII, Loan 1268-IND) and subsequently an area of about 9,000 ha was idertified with the assistance of Bank missions as a first stage develcpment. This report is based on the findings of an appraisal mission composed of Messrs. I. Naor, J. Goldberg, W.P. Ting and J.K. Coiilter which visited Indonesia in November 1979.

The Agricultural and Rural Sector

1.03 Objectives. The Government-s major objectives for the agricultural and rural sector are to: (a) create productive employment to raise incomes of the rural poor; (b) increase domestic food supply to keep pace with rising demand; (c) expand agricultural exporrs particularly of smallholder tree crops; and (d) ensure productive, su n__nable use of Indonesia-s varied land, water and other natural resources.

1.04 Despite a 4% average annual growth of production, agriculture's share of GDP has declined from 40% to 30% since 1968, while its share of exports dropped from 45% to 33% due mainly to the markedly increased value of oil exports. Nevertheless, the agricultural and rural sector remains of overwhelming importance to the great majority of Indonesians; nearly 80% of the population lives in rural areas, and agriculture is the major source of income for about two-thirds of rural households and

/1 P4S - Proyek Peinbukaan Persawahan Pasang Surut - Project Unit for Tidal Swamp Reclamation, in the Directorate of S-oampDevelopment, Directorate General of Water Resources Development, (DGWRD), Ministry of Public Works. -2-

one-tenth of urban households. Some 15.6 million smallholder families produce subsistence and cash crops on 15.8 million ha, while 1,800 estates occupying 2.2 million ha produce mainly rubber, sugar, tea, palm oil, and tobacco.

Development Strategies

1.05 Employment. Agriculture-s share of total employment decreased from 69% in 1961 to 64% in September 1971, while in 1976 it ranged between 66% in March and 60% in October./1 Nevertheless, agriculture remained by far the largest single source (with 46%) of new employment during 1971-76. Outside Java, employment prospects in agriculture appear quite promising, given the sustained increases in the smallholder area, due to land reclamation and irrigation development, including both Government-sponsored and spontaneous transmigration. In Java, rehabilitation of irrigation systems, which generated significant employment in the last decade, should continue to provide additional construction and farm work.

1.06 Food Crops. Given its limited manpower and financial resources, GOI has concentrated on increasing the production of rice, the preferred staple food of the great majoritv of Indonesians. Rie-e production increased rapidly (4.5% p.a.) between 1968 aad i974, chiefly due to irrigation rehabilitation and the provision to irrigated rice growers of fertilizer and high-yielding variety seed, financed largely through the BIMAS credit program. The growth rate slowed markedly to 1.7% p.a. over 1974-77, in the wake of severe declines in fertilizer usage (due to restrictions on private sector fertilizer trade), successive seasons of untimely rainfall, and unprecedented attacks by pests and diseases, principally the brown pla-- -aper and associated viruses. In 1978 rice production increased by 10% with favorable weather, improved and liberalized fertilizer distribution, and nationwide Government-sponsored distribution of recently introduced pe-t-resistant varieties. Preliminary estimates for 1979 suggest a rice production increase of only 2% over 1978 due, mainly, to insufficient rainfal - --ver the past decade, output of secondary food crops (maize, cassava, soybeans, peanuts, and sweet potatoes) grew more slowly, at an average of only 1.6% p.a., composed of a 1.1% p.a. average decline in area (much of this land shifting to irrigated rice) and a 2.7% p.a. increase in yield. These gains in food output did not keep pace with the 3.5-4.0% p.a. increase in demand due to rising population and incomes. Indonesia became the world's largest rice importer, with a record import of 2.3 nullion tons in 1977, about 1.3 million tons in 1978 and about 2 million tons in 1979. Simultaneously, -heat imports rose to 1.4 million tons in 1978, but dropped to 1.2 million tons in 1979; cassava exports nearly disappeared, and soybean, maize, and coconut oil imports began to grow. The -Indonesia Supply Prospects for Major Food Crops (Report No. 2374-IND of March 3, 1979) concluded that even with expanded irrigation, and

/1 The share of agrfcultural employment in March ranged between 63% in java and 72% in the Other Islands. The corresponding fiTuixs in October were 57% and 66% respectively. The seasonal differences represented a drop of 6.7 million workers in agricultural employment. - 3 -

improved technology, extension, credit and marketing, food production growth would not exceed 3.5% p.a., leaving a basic food deficit up to at least 1990, of which a rice deficit alone would be 2-3 million tons a year.

1.07 Tree Crops. The Government has embarked on a major effort to develop smallholder tree crops outside Java as part of its national rubber and coconut replanting and transmigration programs. The objective is to improve production on existing plantations while developing large areas of new land for settlement. One of the Government's main approaches has been to use public estate companies to plant tree crops on land to be settled by local -1-andless families as well as by transmigrants. These companies clear the land and provide settlers with planting material, other inputs, processing and marketing facilities. This approach is appropriate in view of constraining management and technical capabilities.

1.08 Future Strategy. To prevent a widening food production consump-, tion gap, productivity and area under rice and secondary food crops must be increased. In Java, rice-cropping intensity could be raised through storage and irrigaton projects although relocation of inhabitants of reservoir sites may delay progress. Yields and cropping intensity can also be increased by constructing tertiary irrigation and drainage systems, developing groundwater potential and improving support services. In the Other Islands there is considerable potential for new irrigation and swamp reclamation and development schemes which GOI is attempting to develop. Despite a scarcity of high-yielding varieties of secondary food crops, yields of existing varieties could be increased by improved husbandry, including fertilizers and insecticides. 001 is just beginning to give serious ---ion to marketing, credit, seeds and research aimed at varietal improvement of secondary crops.

1.09 Area Development and Transmigration. In 1978. about 85 million people lived in Java, at a density approaching 650 perss --:sq km. The island, with 7% of Indonesia's land area, has 45X of the cropped area and 63% of the population. Java generally has more fertile soils and better infrastructure than the Other Islands; however, its cultivable land is almost fully utilized. In some watersheds where cualtivationalready exceeds ecologically safe limits, contributing to increasing erosion, flooding, and siltation of reservoirs, irrigation canals and ports, GO is preparing Integrated watershed development projects to address this problem. The primary program for new area development in the Other Islands, as well as for creating employment and settlement nuclei for Javanese migrants, is transmigration. An organized transamigrationprogram is important for regional and natural resource development in the Other Islands, production of food and export crops, and creation of employment and decent living conditions for landless Javanese. Unfortunately, this program has long been hampered by unrealistic expectations of its potential for resolving Java's population problems and for stimulating large-scale regional developmant, by overly ambitious targets, and by weak, uncoordinated implementation. Confronted by management problems, GOI reorganized the program in preparation for Repelita III, by transferring implementation rf-3ponsibility from the Directorate General of Transmigration -4-

to line agencies normally responsible for each sector (para. 1.15). This measure needs to be complemented by continued attention to technical and policy issues including: (a) the suitability of the land for food crops; (b) the role of tree crops and livestock; (c) appropriate target incomes and farm sizes; (d) the extent of Government financial, marketing and other services to settlers; and (e) the role of spontaneous migration.

1.10 Role of Government. While the private sector should be encouraged to expand its role in agricultural input supply, marketing, and processing, Government continues to bear the major responsibility for infrastructure, resource conservation, and other services. Despite marked improvements over the past decade, centralized procedures, weak regioral planning, and technical and managerial manpower constraints have impeded planning and implementation of agricultural and rural development. C-01s concern for area development has also increased the need to strengthen provincial and local planning capabilities. Future programs responaive to GOI's stated objectives will necessarily be complex, requiring closely coordinated implementation programs, agricultural research, extension, input supply, credit, land development, transport, pricing policies and marketing. GOI must therefore continue to strengthen its key rural development institu- tions, particularly through education, recruitment, training and retention of technical manpower.

1.11 Bank Group Lending Strategy. GOI and the Bank Group generally agree on overall objectives and strategies for the rural sector. While views sometimes differ on the relative emphasis to be given to different investments, and on the technical design of some proife-e. such differences are not impeding Bank Group operations generally and are ;sually resolved by further analysis and dialogue.

1.12 Projects. Since the first of 15 irrigation projects was approved in 1968, the Bank Group-s agricultural lending has -- :ldly expanded to include estate and smallholder tree crops, fertilizer production and distribution, sugar, livestock, fisheries, research, extension, training, seeds, transmigration, and resource survey and mapping. The Operations Evaluation Department-s Sector Operations Review of Bank Group agricultural lending in Indonesia (Report No. 2166, dated August 9, 1?78) concluded that despite deficiencies in some projects, the Bank's portfolio in Indonesian agriculture was -of overall good quality and likely to contribute substantially to increased production." Within the context of GOIs agricultural objectives and priorities, as outlined in Repelita III, future Bank lending is expected to focus on:

(a) a diversified irrigation, flood protection, drainage and swamp reclamation program to intensify rice cropping on Java and to expand water resources infrastructure in the Other Islands;

(b) smallholder and nucleus estate tree crop planting programs including industrial forest estates; and - 5 -

(c) area development projects aimed at (i) watershed management to conserve soil and ensure long-term productivity in the densely populated areas of Java; (ii) rural works programs; and (iii) transmigration.

Swamp Reciam&tion and Development

1.13 Introduction. Indonesia-s land mass includes an estimated 35 million ha of swamps, nearly equally divided among Sumatra, Kalimantan and Irian Jaya. These include an estimated 30 million ha of seasonally or permanently inundated inland swamps and an estimated 5 million ha of coastal and near coastal swamps, some of which are inundated during high tides by fresh or brackish water. One of the main resources of swamps are their soils which are covered by primary or secondary swamp forests. Although the aggregate arable s,wampland has not yet beea assessed in detail, there is no doubt that it has a considerable potential to produce rice and other food and tree crops under controlled water management. Historically, coastal and near coastal swampland along tidal river estuaries in Sumatra and Kalimantan has attracted migrating sanjarese from South Kalimantan and Buginese from South Sulawesi who have spontaneously reclaimed an estimated area of more than 300,000 ha by digging shallow canals slightly above low tides, perpendicular to rivers where water is fresn year round. Through these canals, tides irrigate (and drain) adjacent lands in the tidal range. This has enabled settlers to grow rice, vegetables, and a variety of other food and tree crops. Planned swamp recla- nation began by the Dutch as early as 1939 at Purwosari, near Banjarmasin, in South Kalimantan, followed in the l'30s and early 1960s by six small Govern- ment-sponsored projects in South and West Kalimantan; but it was only d` m itS first five year program, Repelita I, in 1969-73 that the Gcvernment began reclaiming large areas, penetrating inland from coastal rivers. It was then that P43 was established within the Ministry of Public Works to construct navigation canals connecting river estuaries, and open up contiguous areas for agricultural development and settlements maialy by constructing draing---- caaals. During this period some 33,000 ha were opened up in Sumatra and Kalimantan and about 8,700 families from overpopulated Java and Bali were settled. Two universities - Gajah Mada of Jokjakarta (UGM) and ITB /1 of Bandung - were enrolled to assist in designing reclamation projects, and each followed a distinct design pattern. UGM, which designed projects for Kalimantan, employed a 'herring-bone' or fork-like layout of canals, with reservoirs at their ends (to flush out toxic water from the canal system during low tides) whereas ITB, which designed projects for South Srmatra, employed a rectangular grid layout of canals, but without reservoirs.

1.L4 These reclamation activities brought new problems to developers as inLand penetration encountered unarable deep peats and soils that became acidic and nonproductive when drying out. Nonetheless, the Government reclaimed an additional 42,000 ha of tidal swamps during Repelita II (1974-78)

/1 Institute Teknologi Bandung - Technological Institute, Bandung. and plans to reclaim 0.4 million ha during Repelita III (1979-83). Though the operation as a whole hao, been slow, it has been successful, as a whole,in reclaiming swamps and in developing them agriculturally, demon- strating their potential contribution to the transaigration program. The major weaknesses in the reclamation program have been poor implementation management, particularly delays in the settlement of transmigrants, which resulted in considerable idle investments; poor land clearing, which delayed agricultural production and benefits, and inadequate agricultural supports which resulted in less than optimal crop yields. Table 1.1 shows tidal swamps reclaimed and families settled by the Government during Repelita I and Repelita II.

1.15 To overcome aanagement weaknesses in the transmigration program as a whole and to enable its expansion and acceleration, Presidential Decree No. 26 was formulated and issued on August 31, 1978 (para. 1.09). Principally this decree allocated responsibility for implementation to the various ministries ordinarily responsible for each sector, and the coordination of implementation to the Junior Ministry of Transmigration (JMT). In the swamp reclamation program, where the canals are the communication arteriee, various agencies within the Ministry of Public W7orks (para. 4.01) are responsible for the implementation of the hydraulic infrastructure and land clearing; the Directorate General of Transmigration (DGT) is responsible for housing, village development and settling of transmigrants, and the Directorate General of Foodcrops Agriculture (DGFCA) bears major responsibility to support agricultural development. To overcome technical and administrative staff deficiencies in the impl+mentation of the transmigration program, the Bank, under Transmigration P....,ect II (Loan 170- 919-IND) is now assisting a massive effort in institutional support, which includes the training of staff of participating line agencies, strengthening of the coordinating capacity of the JMT and the capacity of DGFCA to deLiver agricultural supplies and services. A similar effort is planned under the proposed project to train the staff of implementing agencies to czr- aut thie reclamation and development program of swamp~z.

1.16 Agricultural Development. Agricultural production records of swamp developments indicate that swamp soils, excluding deep peaLs and drained and oxidized potential acid-sulphate soils are capable of producing field crops and tree crops. Of ten Governmer t-sponsored projects developed during the past decade and many small, older, spontaneous developments, only one has been practically abandoned when its potential acid-sulphate soils became highly acidic and toxic as a result of overdrainage (Cinta Manis, para. 2.18). Ten years of farming at Upang (in a delta adjacent to that of Karang Agung) under minimum water management and low inputs produced an average paddy crop of 2-2.5 t/:naof local and improved varieties and a test farm, in the same area, produced more than 3.5 t/ha of improved rice varieties under an application of 90 kg/ha of nitrogen fertilizers. While these yields appear low compared to the 4-5 t/ha obtained on irrigated soils in Java, they are well above the 1.7 t/ha yield of upland paddy with prcoper inputs, projected for upland transmigration developments. Upang's experience confirmed by other ongoing swamp developments, indicates the - 7 -

Table 1.1: RECLAIHED AREAS AND SETTLED FAMILIES IN TIDE- AFFECTED SWAMPS/a

Area (ha) No. of familles

Repelita I (1969-73)

Sumatra Sumatra ~~~~~~~904 355 Jaml 6,802 2,584 Cinta Manis 4,450 749 Delta Upang 5,377 1,354

Kalimantan TarabanLuar 3,705 1,252 Tamban Lupak 946 421 Barambai 4,200 890 Jelapat 1,978 646 Jejangkit 2,000 500

Total 30,362 8,751

Repelita II (1974-78)/

Sumatra Riau 14,816 700 Jambi 2,900 500 Cinta Manis 1,634 500 Delta Upang 3,046 1,000 Telang 6,000 3,310

Kalimantan Risan 4,380 1,050 Arus Deras 7,047 1,550 Tamban Luar 480 250 Belawang 1,260 750

Total 41,563 9,610

Average yearly achievement: Repelita 1 6,072 i,750 Repelita II 8,31^ 1,922

/a Source: P4S and DGT records.

/b As of March 1978. -8-

capability of swamp soils (with the exceptions stated above) to produce crops at moderate yields, giving settlers on small holdings in reclaimed swamps a reasonable financial incentive. It is not surprising therefore that no difficulties have been encountered in mustering candidates for transmaigrationto reclaimed swamplands.

Project Formulation

1.17 The proposed project was identified by DGWRD and a joint Bank/ FA0-CP and Government of Netherlands mission which visited Indonesia in February 1976. As a result of- the mission, a master plan and feasibility studies for the reclamatfon of 200,000 ha of- tidal swamps in South Sumatra and Jambi and engineerint design of^an azea of 20,0D0 ha were financed under Irrigation Project VII (Loan 1268-IND). Additional funds were made available in December 1978 under Irrfgation XII (Loan 1645-IUT) for mapping, detailed designs and construction drawings of Karang Agung, as well as for data collection, preliminary planning and feasibility studies of two other areas in South Sumatra (Lalang - 180,000 ha, hesuji - 50,000 ha) and one area in Central Kalimantan (Sebangau - 120,000 ha).

1.18 The main objective of the proposed project, which is to reclaim and convert swamps into agricultural land and settle transaigrants, is reflected in its formulated hydraulic infrastructure which would include a navigation canal and a network of drainage canals regulated by tertiary control strut- tures. The canals would evacuate excess surface water during the wet season and maintain optimal water levels for the cultivation of rice while field bunds and water levels controls on tertiaries would, during the dry season, prevent harmful overdrainage of peat- -X of potential acid-sulphate soils. The hydraulic system was originally planned to include dikes and a series of tidal and tertiary control structures but was modified to delete expensive tidal control structures and other dikes when it became apparent that about 85% of the project area was above high tide levels, and river water, which could inundate about 15% of the a during spring tides to a maximum depth of 50 cm, was fresh year round.

1.19 Transportation in and out of the project area would be by navigation and the planned canal system would facilitate access by boats to settlements. In order to foster community activities which greatly contribute to a successful agricultural development, settlements would be compact and spaced close to each other. This would result in a reasonably short distance between homes and services such as schools and clinics, and a distance of less than 2 km from houses to farmers fields.

1.20 The management of implementing the proposed project, its infrastructure acd settlement by a number of line agencies, a weak point in past developments, has been planned on the basis of past experience and improve- meats in the management of transmigration projects introduced under Transmi- gration Project II (Loan 1707/Cr. 919-IND). Coordination functions at the site, in the region and at the central level have been defined (para. 4.04), steps taken to ensure suitable staffing, and a consultant has been provided to guide and assist in coordinating the implementation. The quality of land clearing, which in the past was usually unsatisfactory, would be improved as - 9 -

under the proposed project transmigrants themselves would be engaged to clear their own farm plots (para. 3.06). With a vested interest in cleared plots, transmi.grants would be expected to perform better than transient laborers did in the past, and the timing of the operation would close the time gap between clearing and cultivation and prevent a regrowth of scrub before planting. Agricultural supports and services have been planned on the basis of experience in nearby Upang, and would be provided under the management vehicle established under the Second National Agricultural Extension Project (Credit 996-IND).

1.21 fhe size of the proposed projet- area .was limited-to a 9,00,O ha block which could be rapidly implemented and its innovations in project preparation and implementation readily employed in other Government swamp xeclamation developments. Basically, agricultural development would focus on a wet-season, rainfed, rice crop planted on all field plots, and on a dry- season crop of other food crops on about 40% of the field plot area (para. 3.03). A higher cropping intensity coluldbe expected on about 15%-of the project area, benefitting from tidal irrigatica and possibly on larger areas, by low-lift pumpage. However, benefits from such a development have not been considered in the economic analysis.

1.22 The project has also been formulated to assist Government in building its institutional capacity in order to cope with its targeted swamp reclamation program and this is reflected in the proposed technical assistance in project preparation and implementation. Consultants would analyze and address staffing requirements of participating agencies, and would train agencies- staff in reconnaissance investigatio-, :roject preparation and techniques of feasibility analyses, and in supervision of implementation of physical project works.

1.23 Tne following consultants assisted P4S i' "roject preparation:

EXSA International - Topography and Mapping IPB - Institut Pertanian, Bogor: Soil and Agronomic Surveys ITB - Institut Teknologi, Bandung: Master Plan and Engineering design SAE - Survey Agro Economi: Socio-Economic Surveys NEDECO - Dutch Consultants: Feasibility Studies, and general supervision of engineering surveys, planning and design.

1.24 The formulation of the project is consistent with GOI and the Bank-s short-term and long-term objectives and would assist the Government in meeting national goals of providing productive employment, increasing food production and promoting the development of the Other Islands. Though it would not be a completely new type of development to the Government, which is engaged in similar work in neighboring areas as w <1 as in Kalimantan, it would be the first swamp reclamation development financed by the Bank, introducing upgraded techniques and institutional building thus assisting the Government-s efforts in implementing technically and economically feasible swamp developments. - 10 -

2. THE PROJECT AREA

Location

2.G1 The project area is situated about 70 km from the north coast of South Sumatra, in the Musi Banyuasin district, about 80 km northwest of Palembang. It is part of a flat, low-lying plain formed by marine and alluvial deposits. The Air Hitam, a small tributary of the Calik, and the Tungkal-Tenggulan, both tidally affected rivers, border the area on the southeast and southwest respectively and slightly higher grounds border it cn the north and northwestV. The -pro-jecttareaisunderdense scrub and secondary forest which limits access to its interior.

Climate

2.02 The climate is typically tropical, hot and humid year round, with an average annual rainfall of nearly 2,500 mm. The wet season lasts from October to April, with 15 rainy days per month and monthly rainfall ranging between 230 mm and 300 mm. The dry season lasts from May to September, but even then rains ranging between 170 mm in May and 102 mm in July fall during about 8-10 days and heavy downpours are quite frequent. Table 2.1 shows meteorological data of four stations located between 50-90 km from the project area. Rainfall is uniform over the project area, and weather patterns appear to be cyclic with dry years occuring about every four to five years. Temperatures, relative humidities and potential evapotranspiration (recorded at Palembang) are nearly constant throughout the year --d wind velocities are low. Cloud coverage is also fairly constant, and bright sunshine prevails more than 50% of the time.

Topography and Soils

2.03 Most of the area is a flat, swampy, lowland plain, rising gently in a northwestern direction from an elevation of +3.10 m /1 to +3.70 m with minimal micro relief. River banks are slightly higher than the surrounding terrain, but semidetailed surveys did not discern the existence of large, permanently inundated, deep swamps. In the absence of internal waterways and of pronounced gradients, drainage is poor and portions of the area are periodically inundated both as a result of rainfall and as a result of high tides reaching about +3.25 m./2

/1 All elevations calculated from Karang Agung-s Datum (Bench Mark PUTL 101, at Tangung Buyut) whose elevation is +1.930 m above mean sea level.

12 Spring tides reach an elevation of +3.58 m in the Calik-Tungkal River at the eastern border of the project area where a proposed main navigation canal would be connected to the river. Table 2.1: METEOROLOGICALDATA

No. of years of data Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total

Average Rainfall (mm) 258 278 2,295 Stngeang 28 242 212 289 229 172 130 102 105 100 178 252 259 299 2,555 Bayunglincir 207 217 269 259 210 136 105 162 180 74 158 252 302 2,391 Sungai Gerong 23 270 225 323 287 194 99 107 100 (Palembang) 266 285 344 2,862 Sekayu 29 329 250 350 309 195 127 99 148 160 13 15 17 - Average No. of Rainy Days 15 12 15 15 10 9 8 8 9

Dependable 92 195 225 1,697 Rainfall (mm)la 205 165 250 220 140 70 45 52 38

0 27 27 27 27 - Temperature ( C)/a 26 27 27 27 28 27 27 27 78 78 80 83 - Relative Humidity (%)/b 83 82 84 82 83 82 72 78

1.6 1.6 1.6 - Wind Velocity (m/sec)/b 2.0 2.0 1.6 1.6 1.6 1.6 2.0 1.6 1.6

55 66 S8 60 48 - Sunshine (pct of day)/b 56 58 55 59 65 59 59

Potential 3.68 - Evapotranspiration (mm/day)/c 3.80 4.05 3.85 3.75 3.80 3.25 3.90 3.75 4.15 4.o5 4.00

/a At Palembang;equal to or exceeded 75% of the time.

lb Recorded at Palembang.

Xc Calculated by the modified Penman method. - 12 -

2.04 Dominant soils covering nearly 80% of the project area, are periodically flooded, tidal floodplain soils, composed of nearly ripe A1 acidic sulfidic clays (cat clays)./2 In about 651 of the area they are overlain by moderately decomposed acid peats 15-40 cm deep,and in about 15% of the area by similar peats up to 90 cm deep. River plain soils, consisting of poorly drained, nearly ripe acid clays, cover about 10% of the project area and river bank and miscellaneous soils cover the remainder. These latter sails have a relatively high degree of agricultural potential for rice and palawija,/3 and tidal flood plain soils have a moderate capability for these crops under controlled water management. Shallow peats, up to 90 cm i-n thickness, have a moderate to high capability of producing a variety of tree crops, including coconuts, and a moderate capability to produce rice. Peats, deeper than 90 cm, are considered' nonarable and have been excluded 'to the- extent possible in delineating the project area.

Hydrology and Hydrometry

2.05 Data on tides and salinities in the rivers surrounding the project area indicate a tidal fluctuation of 3.50 m and a considerable seasonal longi- tudinal movement of a saline, or brackish, front in the rivers. Table 2.2 shows the tidal ranges observed during spring tides (highest monthly tides) of the wet and dry season respectively. Data recorded at CAL 2 reflect conditions near the project area. Based on these data and on friction losses in the project-s hydraulic networks, the high water level in the center part of the project area will be about +3.25 a.

2.06 Table 2.3 shows the intrusion of salinity from ieasurements carried out in 1977, during spring (maximum) tides and neap (minimuo) tide- 5-r total dissolved solids (TDS), concentrations of 1,000 ppm 14 and 5,000 ppm rrom the mouth of the Banyuasin River (the location of recorder BAN 1). Water containing more than 1,000 ppm TDS would not be suitable for drinking while more thar 5,000 ppm of TDS would rende- the water unsuitable for the irrigation of rice. Though these data are preliminary, requiring verification by ad& - !onal mea- surements during, at least, a 5-year cycle, they indicate a 60-km deep inland intrusion /5 of the saline front during the dry season in the Calik Tungkal- Tenggulan river system under existing flows. The proposed connection of the

A1 The state of ripeness indicates the soil's softness, and consequently, its workability or tillage characteristic. Unripe soils are very soft and practically nontillable.

/2 Because of pyrites these soils become very acid upon drying and are referred to as potential acid-sulphate soils. They should be kept wet to prevent their acidification and loss of agricultural productivity.

/3 Other food crops.

14 ppm = parts per million.

/5 Measured from recording station BAN 1 located at the mouth of the Banyuasin River. - 13 -

project's navigation canal to the Tenggulan river would be about 70 km froa BA,N 1 which would preclude the intrusion of brackish water into the project area.

Table 2.2: SPRING TIDE RANGES (meters)

River Calik Lalang Banyuasin Recording station CAL 1 CAL 2 JAL 1 BAN 1

Wet season - average 3.23 3.38 2.57 3.25 maximum 3.69 3.59 2.77 3.82 minimua 2.64 2.88 2.21 2.50

Dry season - average 2.94 3.04 2.57 2.93 maximum 3.50 3.69 3.07 3.72 minimuf 2.51 2.61 2.28 2.47

Table 2.3: SALINITY INTRUSION /a (M)

Wet season Dry season River 1,000 pps 5,000 ppm 1,000 ppm 5,000 ppm

Calik-Tungkal-Tenggulan Spring tide 45 37 60 60 Neap tide 34 30 60 60

Lalang Spring tide 53 43 60 50 Neap tide 35 30 50 42

/a Measured from BAN 1.

2.07 The hydrologic, hydrometric, soil and topographic surveys confirmed the following points:

(a) The proposed project area of 9,000 ha is not extensively and deeply inundated. Only about 15% of it is up to 50 cm below high tide which limits the extent of tidal irrigation, but reduces the need for protective dikes, eliminates the need for tidal control structures, and enhances the possibility of surface drainage. - 14 -

(b) Surface drainage is required during the rainy season to remove excess rainfall and accumulated river water from low-lying areas. This can be achieved by a shallow, gravity drainage system which will, however, have to be regulated, preferably at the farm and tertiary level to maintain an optimal depth of ponded water in paddies during the wet season and to protect soils by preventing their overdrainage during the dry season.

(c) The intrusion of brackish water into the Calik Tungkal-Tenggulan rivers does not reach the project area-s southwestern border even during the dry season., Conneting.. the proposed..pro.jectw.&.drainage.- system to the river at that point would eliminate the need of expensive tidal control structures.

(d) 7Jndercontrolled land development (minimum disturbance of topsoil) and controlled water management, the soils of the proposed project area are capable of producing rice, various field crops and tree crops.

Water Supply, Demand and Quality

2.08 A water balance for rainfed wet-season (six-month) rice crop and a secondary dry-season crop shows that under average rainfall conditions a wet- season rice crop and a dry-season secondary crop could be grown but water deficits could be expected to occur during the dry season in about 25% of the years limiting the dry-season cropping intensity. The shortage of rain would cause a minor, gradual loss of peat top soil as a result of subsidence and oxidation./1

Drinking Water

2.09 Analyses of alternative drinking water supplies in the proposed project area indicate that rainwater would be the most economic resource; groundwater could be more dependable, but its use would require investigations before it could be considered. River water was found to be bacteriologically unsafe without treatment. Table 2.4 shows a water balance based on dependable rainfall - as would occur 75% of the time, a potential retention of rainwater from a 30 sq m roof (at a runoff coefficient of 0.85) and a minimum consumption use of 10 1/capita/day./2 Considering the deficit during the months of July through September, storage of about 1,400 1 should be provided to each household to ensure sufficient drinking and cooking water during dry periods.

/1 A much greater loss could be expected if field bunds and tertiary controls were not provided.

/2 10 1/capita/day has been considered the minimal requirement at nearby Upang Delta for drinking and cooking. - 15 -

Table 2.4: WAlER BALANCE FOR RAINFED HOUSEHOLDCONSUMPTIVE USE

Dependable Roof 'a Household /b Month rainfall runoff consumptive use Balance mm (cu m)

January 205 5.2 1.6 +3.6 February 165 4.2 1.4 +2.8 March 250 6.4 1.6 - +4.8- April 220 5.6 1.5 +4.1 May 140 3.6 1.6 +2.0 June 7) 1.8 1.5 +0.3 July 45 1.1 1.6 -0.5 August 52 1.3 1.6 -0.3 September 38 1.0 1.5 -0.5 October 92 2.3 1.6 +0.7 Iovember 195 5.0 1.5 +3.5 December 225 5.7 1.6 44.1

/a 85% of the rainfall from a 30 sq m roof.

/b Consumptive water use of a family of five based on 10 1/capita/day.

Population

2.10 Existing Population. The existing popllation of the district of Musi Bany-uasin, in which Karang Agung is located, consists of three major groups: Malays - native to the province, Buginese - settlers originating from the Bone listrict in South Sulawesi and migrating through large Buginese settlements in Jambi province, Javanese and Balinese - chiefly concentrated in Government-reclaimed and settled swamplands (Upang, Telang, Cinta Manis). The population of Karang Agung (2,000 sq km) is about 12,000; approximately 52% are Buginese, 40% are native Malay, and 8% are Javanese. Over half have settled in Karang Agung within the past decade. The local clan (marga) seats of Penuguan and Tungkal Ilir, with populations (including surrounding villages) of 2,500 each, serve as marketing, processing and administrative centers for the upstream portion of Karang Agung, and would provide those services for the settlers in the proposed project area, which is unpopulated at present.

2.11 Characteristics of Transmigrant Famiiies. A recent survey of the Government-sponsored transmigrants in the four main blocks of the nearby Delta Upang swamp reclamation scheme shows a typical transmigrant family at the time of settleme-itto consist of five persons; a husband and wife aged - 16 -

35 and 29 years respectively, and three children aged about 10, 7 and 3 years. Within ten years, a typical family has one more child. This implies a family labor force of 1.7 adults in the year of settlement, increasing SJowly to about 4 labor units in the thirteenth year after settlement. This s-oall family labor force is a major factor in the slow pace of land &nvelopment in ongoing projects and explains the need for hired labor at peak scasons in initial years. the development of the settler family labor force is analyzed in Annex 2, Table 8.

2.12 Migratory Labor. Large forces of migratory labor arrive annually for the rice harvest in the reclaimed swamps of the district-from outside; the district (Lampung Province, the Ogan Komering districts of South Sumatra the upland region of Pangkalan Balai and nearby fishing villages), and from upland areas within the district. These laborers, working on traditionally large holdings of Malays and Buginese (who are heavily engaged in fishing and forestry) supply about one-third of the total labor input.

Land Tenure

2.13 Control of land and resources is complex, with local and govern- mental syst-ms frequently operating side by side. The margas, traditionally controlling resources in Sumatra, grant land ownership rights for nominal tax payments to marga members and land use rights to other, nonmarga settlers. They also control the planting of coconuts and other perennial crops on land to which ownership rights had not been assigned, and auction annually the exploitation of valuable common resources such as fishing grounds and the right to harvest nipah palm groves. Government, in coordination with the margas, grants timber concessions which now cover most of the primary forests in the region. These concession agreements, however, are terminated by conversion of an area for transaigration following a mandatory minimum of one year-s advance notice to the concessionaire. The Government-s swamp reclamation program has not caused serious conflicts with the local population/l because construction of na'rigationcanals by the Government has opened up labor opportunities and possibilities for settlement by local people, while public services (health centers, markets, schools) have served also local residents. The final step in the land tenure process, the granting of official individual cadastral titles, has been largely confined to government- sponsored settlers.

2.14 Land tenure would pose no constraint for development as an area of 1,500 sq km of Karang Agung has been declared a transmigration area /2 and the proposed project area excludes settled lands along the river.

/1 Conflicts have, however, occasionally broken out between Buginese settlers and local communities.

/2 South Sumatra-s Governor-s Decrees #995/KPTS/I/1979 and I 1019/DPTS/I/ 1980. - 17 -

Access, Services and Existing Developments

2.15 Access. All transport in the region is waterborne. The rivers connecting Karang Agung and Palembang 11 are plied by a varied, mostly privately owned fleet which includes commercial cargo and passenger river ferries of up to 50 tons capacity, sailing and rowing junks of 10-30 tons capacity, motorized carrier vessels of 5-10 tons capacity and small speedboat taxis. Many settlers of established settlements own rowing or motorized boats. All the major rivers have sufficient draft during low tide for the heaviest locally used barges, and river traffic is unimpeded year-round.

2.16- Supporting Services. Commercial facilities In Penuguan and Tungkal Ilir are adequate to serve the proposed project area in the early years. Both towns have daily markets and large-scale markets two days each week. There are 12 small private rice mills in Tungkal flir, one cooperative mill and two private rice mills at Penuguan. Nevertheless, about half the rice surolus is shipped unhusked to Palembang. Cooperative marketing and agricultural input supply centers (BUbJD/KUD)are established in both towns, but have not yet made a major impact in the area. Agricultuzal extension services have been provided by one extension field worker (PPL)/2 who has been visiting the Penuguan area from the subdistrict capital once a fortnight most of the year and has been staying in the area during the rice planting season. Technical backup for this PPL has been provided by a regional subject matter specialist (PPS)i3 stationed in Sungsang, six hours downriver by boat. These extension services, insufficient for the proposed project, would be expanded (para. 3.03). Agricultural research, carried out presently at a station at Upang would be supplemented by a substation to be establ-ishedin the project area. Education services are scarce in the project area. There are a few elementary schools in the two marga villages with Government-supported schools serving indigenous and Javanese settlers and other schools operated independently by Bugiuese, whose teachers come from South Sulawesi and Jambi. The nearest secondary school is in Upang, but affluent families send their sons to Palembang for secondary schooling.

2.17 Existing Swamp Development in Neighboring Areas - Delta Uoang. The development of nearby Delta Upang 60 km downstream from Palembang on the estuary of the Musi River began in 1969. After initial difficult years, the area is fairly well established now with over 2,300 Government settled families and several hundred spontaneous Javanese, local and Buginese settlers farming the land. Upang now has a market town and a full complement of social, agricultural and commercial infrastructure. Land development, and particularly tertiary development, is still proceeding.

/1 Palembang is the largest metropolis in the southern half of Sumatra with a population exceeding one million. It is the center of Indonesia's oil refining and fertilizer industries and an important timber processing and shipping port.

/2 Penyuluh Pertanian Lapangan.

/3 Penyuluh Pertanian Spesialis. - 18 -

2.18 Cinta Mauis. In 1971 an inland swamp at Cinta Man.s near Palembang, some 80 km from the coast, was reclaimed and settled, but failed to reach its objective of sustained agricultural production. The main reason for this failure appears to have been insufficient attention to soil constraints, manifested by a lack of water management which permitted soils to dry, oxidize and acidify. Cinta Manis is now populated by 750 Government- sponsored and 500 spontaneous settler families, most of whose labor force work in nearby Palembang.

2.19 Telang Delta and Saleh Sugihan. The development of the Telang I scheme, straddling the peninsula west of the Musi and east of the -Telang River, started in the mid-1970s and settlers have been arrivilg-As-ot-f98'. It has since accepted settlers at a faster pace: than any other swamp reclamation project In Indonesia, with nearly 3,000 families now established. The Telang II project, on the peninsula to the west of Upang between the Telang and Banyuasin River estuaries, is in an advanced stage of land development. Some 6,000 ha at two developments at Air Saleh and Sungei Sugihan, east of Upang, are being reclaimed and cleared to receive the first groups of settlers in 1980. P4S has excavated navigation canals across these deltaic islands and peninsulas improving access and transport to settlement areas, while facilitating spontaneous settlements along canal banks.

Existing Agriculture

2.20 At present, only a narrow strip of land along river banks on the periphery of the project area is agriculturally developed. Buginese, who settled this land spontaneously, grow paddy and fruits. A more intense pattern is observed at reclaimed swamps at Upang and Telang where settled transmigrants cultivate fruit trees, cereals, vegetables and some rice in intensively cultivated houselots, while most of the rice is produced in farm plots, usually several years following settlement. Most farm plots have no water level controls and as a result farmers are forced to transplant rice twice in low-lying areas to protect the young crop from excessive inundation. Nurseries are usually prepared around the middle of October, fields are prepared (with minimum hand tillage) till mid-December, and transplanting takes place twice during December-January, The commonly used local varieties require about 110-120 days to mature and are harvested during May-June. Farmers apply little or no fertilizers, pesticides or insecticides. Paddy yields range between 2-2.5 t/ha, corn yields average 0.7 t/ha, coconut yields average about 7,000 nuts/ha/year, and bananas about 1,200 bunches/ha/year. In addition to growing crops, some farmers participate in a Government-supported cattle fattening program. The Institut Pertanian Bogor (IPB), under contract with P4S, operates a test farm at Upang where fertilizer response and varietal trials have been carried out for a number of years. The results of these trials indicate that under proper water management and fertilizers (mostly nitrogen), rice yields attain 3.5 t/ha. - 19 -

3. THE PROJECT

Project Description

3.01 The proposed project - a low-cost swamp development scheme - would comprise land reclamation, settlement of transmigrants and agricultural development. It would include a system of open canals for surface drainage of a gross area of 9,000 ha and for tidal irrigation of about 15% of this area. The canal system would evacuate excess surface water during the rainy season while- field bunds would maintain an optimal depth of water for rice < cultivation during the wet season, and, together with tertiary controls, would facilitate the maintenance of a high water table to prevent the drying and oxidation of peats and potential acid-sulphate soil during the dry season. The proposed project works Include the removal of trees and brush to clear a net area of about 7,200 ha, for division into about 3,200 house and farm plots, the construction of housing, the clearing of about 420 na for village facilities and their construction, transporting and settling about 2,800 families from Java or Bali and about 400 local families, and supporting agricultural and community services. The project would include four studies, monitoring and evaluation and provide technical and institutional support to the main executing and coordinating agencies P4S, PTPT,/l DGT, DGCK,/2 and JMT.

Project Works

3.02 The proposed project would include:

Hydraulic Infrastruetvre

(a) A navigation canal about 9 km long; about 6 primary canals of a total length of about 24 km; about 102 secondary canals of a total length of about 196 km; and about 185 km of tertiaries.

(b) About 204 km of small drains for about 100 hamlets.

(d) About 800 tertiary control structures, 204 outlet structures for hamlet drains, 10 pedestrian bridges on the navigation and primary canals, 102 pedestrian bridges on secondary canals, 100 small jetties at hamlets, 2 navigation jetties and one primary control structure to be built at the confluence of one primary canal and the navigation canal (para. 3.04).

/1 Directorate of Land Preparation for Transmigration Sectiement, Ministry of Public Works.

/2 Directorate General for Housing, Urban and Regional Development, Ministry of Public Works. - 20 -

Land Clearance, Site Preparation and Housing

(a) Manual land clearance, including felling, cutting and burning of trees and shrubs from about 7,200 ha and their subdivision into 3,200 houselots of 0.5 ha each and 3,200 farm plots of 1.75 ha each (para. 3.06).

(b) Manual land clearance of about 420 ha for village facilities (paras. 3.18, 3.20, 4,lCG and 4.13).

(c) The construction of about 3,200 houses for transmlgrants and the provision of about 22,400 barrels (7/family) or equivalent for the storage of drinking water (para. 2.09).

Community Development and Settler Relocation

(a) Resettlement of about 2,800 families from Java or Bali and of about 400 local families wishing to settle in the project;

(b) Construction of community facilities in seven villages one of uhich wouo> be a mair, village, including six subhealth centers (sub-PiUSKESMAS)and one health center (PUSKESMAS), seven primary schools, one lower secondary school, places of worship, a bank, and a market area. Construction of a base camp which would include quarters for construction supervisors, permanently stationed and visiting officials.

(c) Provision of agricultural implements, and a subsistence food supple- mient over an 18-month period to all resettled families (para. 3.13).

(d) Malaria control in tne settlement area (para. 3.19).

(e) Procurement of boats, generators, telecommunication, miscellaneous equipment, and supplies (Annex 1, Table 10).

Agricultural Support

(a) Provision of rice seeds, vegetable and tree seedlings for home gardens, fertilizers and pesticides (para. 4.08).

(b) Provision of a properly staffed rural extension center (REC), a research substation, two warehouses, one small rice mill and office space (paras. 4.10 and 4.13).

Studies, Institutional Support and Monitoring

Provision of consultants to train and assist implementing agencies in preparing an inventory of coastal and near coasta_. swamps, in - 21 -

assessing the viability of upgrading existing swamp developments, in determining environmental Impacts in studying grouindwateravail- ability anid in monitoring the proposed development (para. 3.25).

Ag-riculturalDevelopment

3.03 The agricultural development plan of the project area is based on the cultivation of a rainfed wet-season rice crop progressively covering 100% of the area of all farm plots, and the cultivation of other food crops during the dry season (drawing on residual soil moisture) progressively covering 40% of the area of all farm plots (para. 1.21). -Houselots would be cultivated with a mixture of perennfal n aQnuat rcips.-The project (through DGFCA) would provide settlers with an initial seeds and agrochemical package (para. 4.08). Extension services would be provided by DGFCA under the management vehicle established under the Second National Agricultural Extension Project (Credit 996-INWi) and research and varietal trials would be provided by AARD. Sufficient funds are available under the Second National Agricultural Extension Project and assurances were obtained that DGFCA would provide permaniently two middle-level extension workers (PPMs) and six field ex -nsion workers (PPLs) under the part-time supervision of a subject matter specialist (PPS), and AARD would provide permanently adeqtuatelytrained staff, as required, to carry out agricultural research.

Physical Development

3.04 The Hydraulic Infrastructure. The proposed project would be served by a centrally located navigation canal and a network of primary, secondary and tertiary canals. The navigation canal commencing at the Tungkal-Tenggulan River at the southwest border of the project area would be excavated to -1.25 n (Karang Agung Datum) with 2:1 (H:V) side slopes and a bottom width of 8 m. Six primary canals would branch off the navigation canal at right angles, would each be about 4,000 m long, about 3-3.50 m deep (below average ground levels) and have a minimum bottom width of 1.50 m. Their cross section area would be determined by drainage evacuation requirements and their near horizontal bottom gradient would able two directional flow. There would be no structures at their confluences with the navigation canal (excepting one primary canal where a pilot tidal control structure would be built) and hence water levels in canals would fluctuate with the tides. The canals would be passable by small boats most of the time except during low tides. Secondary canals would be constructed at a spacing of about 400 m, perpendicular to primary canals, each extending for 2,000 m. Their cross section would be determined by drainage evacuation requirements or by irrigation requirements (for about 1,300 ha under the command of high tides). Navigation, primary and secondary canals would be mechanically excavated, and if dredged, be properly drained in order to minimize damage to farmlands from dumped, potentially toxic subsoils. Excavating equipment would be floated to the site on pontoons and, to reduce ground pressures, would be - 22 -

operated from wooden mats. In view of the low consistency of excavated soils, the shaping of embankments would be deferred by 6-12 months (depending on rainfall) after excavation. Manually excavated tertiary canals would be located along the boundaries of farm plots, and sized to evacuate 4.5 l/sec/ha./l At the turnout of each tertiary a stop log equipped wooden check would be built for the control of water levels.

3.05 Field Bunds. Bunds would be constructed along the perimeter of farm plots to facilitate the control of water levels in paddies during the wet season and prevent soil water depletion (by horizontal movement through highly pervious peats) during the dry season. They would project about 30 ca above ground, founded on cThy 'sbsoiEs, oe 40 cm below ground surface, and have an average cross-sectional area of about 0.28 sq m.

3.06 Land Clearing. About 7,200 ha would be cleared manually for cultivation and settlement and 420 ha would be similarly cleared for village facillties. This activity would include felling and cutting up of trees,/2 removal of swamp brush, windrowing and burning of all wood not usable in the construction of houses. Felling and cutting would be done by workers using chainsaws, axes and handsaws. Based on experience in ongoing clearing operations at nearby Telang, about 65 man-days would be required to clear 1 ha of which 30 man-diys would be expended by chain saw teams (each consisting of I skilled operator and 9 unskilled workers) to fell and cut trees; 30 man-days would be required to cut secondary growth and shrubs, and 5 man-days would be required to burn the nonusable wood. Before the arrival of the transmigrants, a strip of about 400 m on either side or primary canals would be cleared for transmigrants hamlets by a contractor using imported laborers, while three months after settling transmigrants would be employed (by a contractor) to clear their farm plots (para. 1.20).

3.07 Subdivision. Subdivision into plots would be carried out after land clearing, and a peat survey, which would exclude from development any plot in which the depth of peat exceeded 90 cm./3 Taking advantage of the flat terrain, the area would be subdivided into rectangular blocks bounded by secondary canals. Each secondary block would be subdivided into a 16 ha (net) hamlet area located near primary canals, and a net farm area of 56 ha.

/1 This rate was calculated from a design storm of 134 mm, recurring on the average every 2 years. Excess surface water would be evacuated from paddies in less than 7 days under prevailing tides.

/2 But not destumping so as not to expose potential acid-sulphate subsoils.

/3 Although semi-detailed soil surveys already excluded most areas of deep peats from the proposed development, this survey would ensure that no farmers would be settled on isolated pockets of deep peats. - 23 -

3.08 Houses and Couunity Facilities. About 3,200 settlers houses measuring approximately 34 sq i each (to BAPPENAS standard) would be built of local wood on 0.5 ha houselots in about 100 hamlets located along primary canals. Seven barrels or their equivalert would be provided to each settler to collect and store about 1,400 liters of rainwater for drinking and cooking. Sanitary facilities (pit latrines) would be provided for each house at a minimum distance of about 15 m. About 14 hamlets would be served by one village where a primary school of six classrooms (para. 3.20), a health subeeater (para. 3.18), a place of worship, a village office, -a storage area and staff houses would be constructed - Thet-e"'wou6dId" li t&taT tfsven- villages, one of which would be a main village with expanded administration facilities, a primary and a l.ower see2ondary school, a health center, plots for artisans wishing to settle in the area and space for a market place.

3.09 Base Camp and Associat-J FacilXties. A base camp would be buIlt near the planned inlet of the navigation canal, to house construction supervision and management staff./l This camp would include offices, mess halls, living quarters, well water supply, generating and communication facilities. At the completion of construction, the camp would be used to house permanently stationed 0&M staff and visiting officials.

Settlement

3.10 Settlement of transmigrants under the proposed project would follow procedures employed in other transmigration projects including recruitment, selection, transport, provision of tools, subsistence supplies, assistance and guidance during and after settling.

3.11 Recruitment. Recruitment of transmigrants should pose no particular problem as more than 500,000 families in Java and Bali have registered for transmigration. GOT criteria assigns priority to recruitment from:

(a) ecologically threatened areas;

(b) areas in the which population density exceeds 1,000 persons/sq km;

(d) areas subject to recurring disasters;

(e) areas made uninhabitable by development projects (Q.g. reservoirs); and

11 Exclusive of contractor's personnel whose accommodations and office facilities would be Drovided by the contractor adjacent to the base camp. - 24 -

(f) the poorest Kecamatans /I of each Kabupaten./2

3.12 Selection and Transport. The selection process ensures, inter alia, that transmigrants are of reasonably good health, between 25 and 40 years of age, are legally married and have had previous agricultural experience. Transmigrants would be transported to the project area at a targeted rate of about 128 families per month or at the actual rate of the construction of houses and the availability of provisions and support services.

3.13 Provisions. Prior to disembarkation, each family would be given a standard package consisting of mosquito netting, sleeping mats-and cooking utensl-ls- Upon arrival at; the -stite-,Aacifatt-woii reee- agricultural implements, saws and barrels, or equivalent to store drinking water. In addition, each family would receive the first of 18 monthly subsistence rations, containing essential foods and kerosene./3 Specifically, a monthly ration would consist of 50 kg of rice, 5 kg of dried fish, 8 liters of kerosene, 3 kg of sugar, 2 kg of salt and i kg of soap.

3.14 Training. Settlers would be given information by DGT on the characteristics of their new environment, on agricultural production, marketing, use of local resources, appropriate technologies, health, education and village participation. Javanese women who traditionally share decision-maklng and responsibilities for agricultural production and marketing with their husbands would be given information on credit, cooperatives, land titles and cooperative conmunity work.

Commuaity Develonment

3.15 Once transm4grants are on site, DGT would coordinate and promote community development which would include:

(a) registration of new arrivals and settling them on assigned plots;

(b) disseminating economic and social information to settlers;

(d) facilitating the establishment of village development organizations;

(e) record keeping;

/1 Kecamatan: Subdistrict.

/2 Kabupaten: District.

/3 The duration of the subsistence may be extended under adverse conditions (crop failure, etc.). - 25 -

(f) preparation of transfer of communities to provincial adudnistration.

3.16 DGT, in cooperation with the Directorate General of Agrarian Affairs (DGA), would provide each family with right of use title (hak pakai) to their houselot and to their farmplot, within one year of arrival. -t twould provide the migrants with land ownership title (hak milik) to all their land, provided it was farmed, witiin five years of their arrival on site. In accordance with existing regulations, transmigrants would be prohibited from transfering or selling land within ten years after occupancy. An assurance was obtained at negotiations that each settler would receive a certificate evidencing:v

(a) "hak pakai to his land within one year; and

(b) -hak milik- to all his land within five years after his arrival on site.

3.17 Health. The objective of the health component would be to: (a) protect new transmigrants from the risk of malaria; (b) establish a basic health infrastructure; and (c) insure start-up and utilization of services by providing incentives. Health care facilities would be provided at the health center and at the subcenters (para. 3.02). Health services with a prinmary health care approach would focus on immunization, nutrition, health education, family planning and environmental sanitation. The project would also provide for malaria control campaigns in the settlement areas.

3.18 Health Center arnd Subcenter. Construction of a health center -(PUSKES.MAS) at the project's main village would follow establfshed LNPRES standards and include a building of 80 sq m, one separate area of 70 sq i for doctors- quarters and two staff buildings of 50 sq m each. The health center would be provided with three sptedboats. In each of the other six villages, the project would establish a subhealth center comprising one examination room, sto-eroom, etc. (30 ssim) and one staff building (50 sq a). An assurance was obtained from GOI that the first subcenter would be built, equipped and staffea before the settlement of the first transmigrants and the other subcenters, and centers, as villages are built.

3.19 Malaria Control- In view of malaria endemicity and the sus- ceptibility of nonimmune settlers, the project would provide for malaria control campaigns which would include spraying of houses, the detection of passive cases and treatment. In general, the control component would try to reduce malaria prevalence within five years to about 2% during the peak transmission period. Houses would be sprayed before settlement and at six-month intervals by hired spraymen and squad leaders. Passive case detection and treatment would be carried out by the health centers. Technical supervisior of the campaign would rest with the malaria staff at the district level, while the provincial health service would administer it. - 26 -

3.20 Education. The project includes the construction of primary schools (grades 1 to 6) in each of the six villages, and a primary and a lower secondary school (SMP, grades 7 to 9) in the main village. Tne Ministry of Rome Affairs would supervise the construction of the primary schools; the Directorate General of Education would supervise the construction of the lower secondary school, and be responsible for staffing all schools.

Status of Field Data, Planning and Design

3.21 Field Data

(a) Topography and Mapping. Aerial photos to a scale of 1:20,000, ground controls and mosaics were prepared for all of Karang Agungs 200,000 ha in 1976. Ground surveys were carried out along penetration axes opened at 1,000 m intervals which served as basis for a 1:50,000 topographic map. Subsequent surveys discerned errors in spot heights but due to difficult access to the densely covered project area and time constraints, the 1:50,000 map was used in the Master Plan and feasibility studies. In 1978, an additional topographic survey was carried out along planned alignments of the navigation and primary canals, serving the 9,000 ha proposed project area. This survey, correcting earlier errors. led to the deletion of originally planned ring dikes and tidal control structures (para. 1.18), to the realignment of one primary canal and also served for quantity and cost estimates of proposed works. Detailed surveys for subdivision and tertiary design would be carried out after the clearing of land.

(b) Hydrometry. Tidal levels in the river system surrounding Karang Agung have been recorded since June 1977 under a Dutch-assisted program (P4S-BTA60) (para. 2.05). After resolving a difference between the hydrometric and the topographic data base, high and low spring tides of +3.58 m and +0.08 m, respectively, have been used in designing the hydraulic system.

0c) Soils Si-rveys A semi-detailed soil survey for the whole Karang Agung are. of 200,000 ha was based on data obtained from samples -en along'penetration axes mentioned above. Soil classification were prepared from these data and the interpretation of -' pnotos. Areas of deep peats (in excess of 90 cm) were -ded from development, but a supplementary detailed peat y would be carried out during implementation to avoid -tting people on deep peats, unnoticed in past investigations ..ata. 3.07).

Master Plan and Feasibility Studies. Master plan and feasibi- 'ity studies of Karang Agung-s 200,000 ha were carried out during 1976-78 and an area of about 110,000 ha was found suitable for agricultural development. - 27 -

3.23 Design and Contract Documents. Engineering designs of the hydraulic network and physical plans of the proposed project area were completed by the end of 1979, prequaliflcation of contractors in September 1980, and contract documents for the main and secondary hydraulic network in October 1980. Designs were based on the Master Plan, and revised in accordance with additional topographic alignment surveys. They include plans and profiles of navigation, primary and secondary canals, typical designs of bridges, jetties, tertiaries and tertiary structures, quantity and cost estimates. Plans are of sufficient detail to serve as contract drawings. Construction plans for tertiaries would be prepared following clearing and surveys.oLfarnareas=..

Implementation Schedule

3.24 With already completed designs, prequalification of contractors, and contract documents for the main and sezondary hydraulic network, implementation would start in mid-1981 and continue till the end of 1985 (Figure 3.1) mainly by three line agencies (para. 4.01). Most activities would be carried out in parallel, to facilitate an early settling of people aad an early commencement of agricultural development. As an innovation, transmigrants themselves would be employed iP land clearing and on-farm development (para. 3.06) which has been reflected in the implementation schedule. Should this arrangement be unsatisfactory, the schedule would be revised to allow for contractors to employ imported laborers (from Java) for the completion of the~seworks. This, however, should not affect the overall implementation schedule and project cost estimates (para. 3.26). Main and secondary hydraulic systems would be constructed mechanically (para. 3.04), and other works would be constructed manually. Starting with the excavation of the navigation canal, the excavation of primary canals woul5 begin as soon as the excavated navigation canal reached their branch-off points to be followed in a similar manner by the construction of secondary canals. As soon as work progress permitted, hamlet strips would be cleared and houses coi2structed for transmigrants at a rate of at least 128 units/month. The moving and settling of transmigr4nts would start about one month after completing the first group of 128 houses and would continue at this rate or that of housing construction. About three months after arrival on site, each group of settlers would be employed (by a contractor) to clear their farm plots. At a conservativelv estimated rate of 65 iandays/ha, this work would require an average of 120 days by each settler. The operation would be carried out progressively by each newly arrived group of settlers, until all farm plots would be cleared, which would take about .wo years. After land clearing of each block, the area would be surveyed, subdivided and plans prepared for tertiaries. Settlers would be employed in constructing tertiaries and field bunds during the year following settlement.

Consulting Services

3.25 Services of local and internationally recruited consultants would be provided to assist and train implementing agencies (P4S, DC Cipta Karya, PTPT, DGT and JM`T) to carrv out designs, construction supervision and management, and a number of studies. These services would include: - 28 -

Project Implementation

Training and assisting:

(a) P4S in field surveys, final construction drawings, tertiary development, contract documents, construction supervision and construction management;

(b) DG Cipta Karya in subdivision work and in designing rural developments;

(d) DGT in supervising construction of houses, villages and communal facilities; and

(e) JMT in programming and coordinating project implementation.

Studies, Investigations and Monitoring

Training and assisting:

(a) P4S in conducting a nationwide inventory of coastal and near-coastal swamps and in ranking their development;

(b) P4S in conducting an investigation of existing swamp developments to assess the viability of upgrading their infrastructure or support services;

(d) P4S in conducting a groundwater investigation at Karang Agung; and

(e) P4S, DGFCA and DGT in monitoring the physical, ecological and socio-economic impact of the proposed development.

Assurances were obta'ned at negotiations that consultants whose qualifications, experience and terms and conditions of employment would be acceptable to the Bank, would be engaged by P4S for itself and for DGCK, PTPT, DGT, and by JMT. Foreign consultants for .JMT would be provided by modifying the terms of reference of consultants already engaged in the Transmigration Management and Monitoring Services (financed jointly by UNDP and the Bank). All othe foreign consultants would be engaged by P4S. Local consultants for project implementation and for studies (except for monitoring, where each participating agency may hire its own consultants) would be engaged by P4S. Consultants assisting P4S and DGCK in project implementation would be engaged by March 31, 1981, those assisting PTPT, DOT, and JMT would be - 29 - engaged by March 31, 1982. Consultants for studies (a) (b) and (c) above would be engaged by January 31, 1982, for (d) by March 31, 1982 and for (e) by October 31, 1984. The estimated schedule of consultants' assignments and cost breakdowns are given in Annex 1, Tables 8-9. Estimated base costs are given in Table 3.1.

Cost Estimates

3_26 The total project cost is estimated at US$44.6 million (including taxes on civil works, physical contingencies and expected price increases), of which-US$18.9 million (42%) is the foreign currency component-.-Project.costs. are expressed in end-1980 prices; unit costs of civil works have been based on similar costs in outlying areas, land clearing costs on contract prices in neighboring Telang and Saleh Sugihan (using Javanese laborers). Ouantities for the excavation of the navigation and primary canals are based on detailed plans supported by alignment surveys, those of secondaries and tertiaries, on average ground surface elevations. Costs of houses have been based on contract prices in neighboring areas without discounting any lumber which would be available from land clearing. Costs of community facilities, schools, health centers, etc., have been based on BAPPENAS standards and unit construction costs obtained in similar projects. Costs of relocating and settling of transmigrants have been derived from similar projects. Estimated monthly base costs of local and foreign consultants are USS2,062 and USS12,100 respectively for engineers and US$660 for technicians and draftsmen, similar to recent contracts in Indonesia. A 15% allowance for physical contingencies and an additioral allowance for expected price iacreases, calculated on project-t .u=-_allocal cost inflation of 15% during 1981 and 10% during following years and on annual foreign cost inflation of 9% during 1981, 8% during 1982 and 7% thereafter, have been added to project costs./l Details of project costs are given in Annex 1, and summarized in Table 3.2.

Financing

3.27 The proposed Bank loan of US$22 million would finance the foreign excharge cost of US$18.9 million and US$3.1 million of local costs. This would amount to about 50% of total project costs exclusive of taxes. The remaining Rp 14,125 million (US$22.6 million) would be provided by GOT through annual budget appropriations.

Procurement /2

3.28 Civil Works. All mechanically constructed werks which would include the excavation of the navigation, primary, and secondary canals, clearing of right-of-way, blockage of creeks, and construction of the base camp, bridges, jetties, and the tidal control structure, would be grouped into one contract (US$6.3 million) and tendered on the basis of international

/1 As base costs are for end-1980, only half of t.heexpected 1981 inflation rate was applied.

/2 All contract values presented in this section are expressed in base costs in end-1980 currency values. Table 3.1: CONSULTING SERVICES

Man-montlhs Base Costs Local Local Local l.ocal Expatriate engineers technicians Expatriates/a engineers technicians Total ------(US$ million)

Project Implementation

Responsibleagency: P4S 76 168 336 0.92 0.35 0.22 DCCK 1.49 60 180 - 0.12 0.12 0.24 PTPT - 40 80 - 0.09 0.05 0.14 DGT - 32 64 - 0.06 0.04 0.10 JMT 36 /b - - 0.44 - - 0.44 Subtotal 112 300 /c 660 /c 1.36 0.62 0.43 2.41 Studies & Investigations Responsibleagency: P4S 225 5767Le 1,152 /e 2.72 1.19 0.76 4.67 o Total 337 876 1,812 4.08 1.81 1.19 7.08

/a 75% of this cost would be in foreign currency. Lb The consultantwould be recruited from the same firm presentlyengaged to assist JMT in management. monitoringand

/c To be providedby one local firm (or consortium).

/d To be provided by one firm.

/e To be providedby one local firm (or consortium)and by local universities. Table 3.2: PROJECT COST SUMMARY /a

Local Foreign Local Foreign cuirency currency Total currency currency Total - (Rp million) ------(US$ million) ------

I. Project Implementation Reclamation & site preparation /b 3,326 4,108 7,434 5.32 6.57 11.89 Eqtlpment & supplies - 245 245 - .39 .39

Settlers relocation & settlement liousesand village facilities /c 1,873 468 2,341 3.00 .74 3.74 Services, equipment, supplies 1,376 1,039 2,415 2.20 1.66 3.86

Consulting services 894 613 1,507 1.43 .98 2.41 Agricultural supports 36 36 72 .06 .06 .12

II. Studies & Investigations Confulting services 1,641 1,277 2,918 2.63 2.04 4.67 Eq iment, supplies & training - 875 875 - 1.40 1.40

.,tal Base Cost 89661 17,807 14.64 13.84 28.48

Administration 1,389 - 1,389 2.22 - 2.22 Physical contingencies 1,580 1,299 2,879 2.53 2.08 4.61 9.27 Expected price increases 3,946 1,843 5,789 6.31 2.96

Grand Total 16,061 11803 2786 25.70 18.88 44.58

/a All costs are in end-1980 prices.

/b Including land compensation and 5% taxes on civil works.

/c Including 5% taxes on civil works. - 32 -

competitive bidding (ICB) in accordance with Bank Group Guidelines. The above works include -.ll t e equipment-intensive elements in the project. All remaining wcrks, which would be heavily labor-intensive, would not be appropriate for ICB and hence would be tendered on the basis of competitive bidding advertised locally in accordance with Government procedures acceptable to the Bank./l Among these, the following works would be procured as follows:

(a) clearing of houselots and construction of houses and village facilities (US$5.1 million) would be grouped into no more than five packages, each consisting of land clearing and house construction; and

(b) construction of tertiary drain structures and hamlet drain outlets (US$0.7 million) would be grouped into three contracts.

Under these conditions, threshold estimated contract values of civil works requiring Bank review prior to tendering and award would be US$1.5 million.

3.29 Contracts for clearing of farm plots US$2.2 million; on-farm works (excavation of tertiary drains and construction of field bunds, US$0.8 million) would also be inappropriate for ICB as they would be implemented employing transmigrants, would not attract international bidders and hence would be procured under competitive bidding advertised locally in accordance with Government procedures acceptable to the Bank. To better synchronize the clearing of houselots (managed by PTPT) and the construction of houses (managed by DGT), and to facilitate the use in construction of any usable timber from clearing. 9-' two agencies have agreed to advertise and evaluate bids jointly and award each package to one contractor.

3.30 Equipment, Materials and Training. A total of about US$2.0 mi_lion worth of equipment and materials (including aerial photography and the provision of drilling esr-pment, supplies and training) would be procured under the project (Annex 1, Table 10) in addition to US$0.4 million of farm tools and supplies to settlers. Of this, boats, radios, generators, lab and testing equipment (US$1.25 million) would be procured by P4S under ICE. A preference limited to 15% of the c.i.f. price of imported goods, or the customs duty, whichever is lower, would be extended to local manufacturers of such items in the evaluation of bids. All remaining equipment and materials could not be grouped in packages sufficiently large to attract international bidders and hence would be procured through GOI procurement procedures acceptable to the Bank. Under these conditions, threshold estimated contract values of equipment and material requiring Bank review prior to tendering and award would be $200,000.

/1 In mid-1980 Government introduced local procurement guidelines which included measures to strengthen indigenous, small, contractors by promoting their participation in Government sponsored work in their district. These procedures will permit efficien.t procurement under the project. - 33 -

3.31 During negotiations for the fourteenth (Loan 1811-IND) and fifteenth (Credit 995-IND) irrigation projects, ar.understanding was reached with GOI on the use and content of standard contract documents for civil works and equipment to be procured by ICB. The understanding on the use and content of standard contract documents for locally advertised competitive bidding was reached in September 1980. It is expected that implementing agencies will use standard General Conditions in their contract documents.

Disbursements

3.32 Disbursements for equipment and materials required for construction supervision and for studies would be at the rate of 100% of the foreign exchange costs of directly imported equipment and materials, /1 95% of the ex-factory cost of locally manufactured equipment and materials. Funds for remaining equipment and materials would be provided fully by GOI_ Disburse- ments for civil works would be made only against the 1CB contract and the LCB contract for land clearing of farnplots (specified in para. 3.28), at the rate of 100% of total expenditures, with direct disbursement to the contractors. Funds for remaining civil works would be provided fully by GOI. Disbursements for consulting services, for project implementation /2 and for studies 13 would be financed at a rate of 100% by the Bank. Assurances were obtained at negotiations that the Government would commence the groundwater investigation by March 1982 and monitoring by June 1984. Estimated schedule of expenditures and disbursements and the proposed allocation v_A loan nroceedsare presented in Annex 1, Tables 2, 4 and 5.

Accounts and Audits

3.33 Assurances were obtained from GGI that: (a) all implementing agencies would maintain separate accounts for the project; (b) these accounts would be audited by independent auditors, acceptable to the Bank; and (c) these audited accounts would be s4t.zitted to the Bank Group within six months of the close of each fiscal year together with the auditor's comments and opinion.

Environmental Effects

3.34 The environmental impact of swampland development, especially in South Sumatra, has been studied by the Center for Natural Resources Management

/1 Except for equipment and materials required for an investigation of groundwater and monitoring which would be wholly funded by GOI.

12 Except for consultants for DGCK who would be financed from funds provided under Irrigation XII (Loan 1654-IND) and consultants for DGT who would be financed by the Government.

/3 Except for an investigation of groundwater and monitoring of the project. The Government would fully disburse the cost of consultants for these activities. - 34

and Environmental Studies of Bogor Agricultural University which concluded that if mangroves were preserved in coastal areas, the reclamation of swamps would have little adverse environmental effects. P4S follows this directive in the ongoing swamp reclamation program. There is, however, a need to collect additional data on water quality and soil productivity in settled areas. The proposed project would study these aspects in a number of on-going developments and in the project area itself (para. 3.25).

4. ORGANIZATIONAND MANAGEMENT

ene~rai

4.01 The organization and management of the proposed project has been formulated in line with GOI policies entrusting the implementation of project components to line agencies normally responsible for those activities. On this basis, three line agencies would implement the physical components of the project: P4S would implemerntthe hydraulic infrastructure; PTPT would implement land clearing; and DGT would be responsible for the construction of houses, village facilities, tr?nsport and settlement of transmigrants, and coordinate social services for a period of about five years. Subdivision would be supported by DG Cipta KaTya which would plan villages and DGA (Directorate General of Agrarian Affairs) which would survey and register titles to individual plots. Agricultural support to the project would be given by DGFCA from inception and throughout the lfe of the project. In response to the needs nf this multiagency operation, lines or authority and responsibility have vee. defined and specific coordination responsibilities delineated at various activity levels.

4.02 Field Operations. The first agency in the field would be P4S, whose site manager would supervise the co^--tructionof the hydraulic system and its related structures. As other operations would depend on the progress of this construction, closely following it, the Government agreed to entrust !-he field coordination of all other activities which include land clearing, housing, and settlement of people to the P4S site manager until the completion of main and secondary hydraulic infrastructure, in the fourth construction year. The supervision of each of these activities would, however, rest with the site manager of the respective responsible agency- Thus from the second construction year, PTPT-s site manager would supervise the clearing of houselots and farm plots, while DGT-s site manager would supervise the construction of houses and village facilities, the supDly of provisions and the settlement of people, and coordinate the field activities of settlement supporting agencies (IXFCA, Ministries of Health and Education). The latter would take over the coordination of all field activities from P4S- site manager after the completion of the main and secondary hydraulic network and until handing over the administration of the -35 -

axea to local authorities. An assurance was obtained from GOI that P4S would post their site manager by March 31, 1981 and that PTPT and OGT would post qualified and experienced site managers by January 31, 1982.

4.03 Regional Operation. Contract management and back-up services to ":>ld operations would be handled by regioaal offices of participating line a;esz1es, lcated at Palembang, and coordinated by a Regional Coordinator irs, the Junior Minister of Transmigration-s Office. This official would isoc coordinate the implementation of other Bank-supported transmigration projects in the region. His main function would be to follow closely the progress of contracning and implementation- of physical works and to plan and. regulate the flow of transmigrants to the project area. Re would coordinate the services to be rendered by regional agencies including tK H4inistries of Health, Education and Agriculture and would report monthly progress of operations to the Junior Minister of Transmigration, alerting him of any shortcomings or potential bottlenecks in the operation which may require intervention at headquarters of line agencies or ministries. An assurance was obtained that this official would be appointed by December 31, 1981.

4.04 Headquarters Operation. Headquarters of line agencies would plan the implementation of components of the project for which they are responsible. Each agency, assisted by consultants, would prepare plans, designs, contract documents, budgets, and assuming complete control of the quality and timely completion of its contribution and operations of its regional and field staff, take immediate action in case of slippages. The coordination of headquarters activities would be .he responsibility of the Project Coord>,r ~inthe Office of the Junior Minister of Trausmigration, who has been designated under Transmigration Project 11 (Loan 1707/Cr. 919) to fulfill this function for all Bank-supported transmigration projects.

4.05 To strengthen project coordination furtner, a consultant would be engaged to advise the Project Coordinator, Regioaal Coordinator and the on-site field coordinator. The consultant, who would be recruited from those engaged by the Junior M-irtister of Transmigration (para. 3.25) would assist in preparing timetables, follow up on implementing procedures, alert participating or supporting agencies on actions to be taken, advise on remedial action in case of slippages and establish a streamlined mechanism of information exchange and decision making to reduce the workload imposed by this and other projects. The consultant would also assess the manpowec needs of participating agencies to execute GOI-s targeted swamp reclamation program and propose a staffing recruitment program.

4.06 Annual implementation timetables would be prepared at the headquarters of participa.ing line agencies in close collaboration with regional managers, reviewed jointly and adjusted. An integrated timetable would then be prepared by the Project Coordinator and budgetary allocations based on it. Each agency would be responsible for updating its work program on a monthly basis and communicating any significant changes to the Project Coordinator - 36 -

who would then readjust the integrated timetable in cooperation with other concerned agencles. Critical slippages would be brought to the immediate attention of all agencies, which would adjust their operations accordingly.

AgricriAtural Support Services

4.07 The Ministry of Agriculture (MOA), Bank Rakyat Indonesia (BRI) and Directorate General of Cooperatives (DGC) would provide the agricultural support to the proposed project. As these agencies have presently no facilities in the area, the provision of necessary infrastructure and facilities for their staff would be constructed as part of,community facilities. The agencies would mobilize and prepare their--staff- to"Artrve in the area during the settling of transmigrants.

4.08 Seeds and Agrochemicals. DCFCA would supply each transmigrant family upon arrival with an initial seed package of food and vegetable crops and perennial seedlings .or their home gardens. Additionally, in the first year of settlement DGFCA would supply 150 kg of urea, 100 kg of ?SP, 4 liters of insecticide and 1 kg of rodenticide (Table 4.1). rhe initial seed package would contain sefficient food crop and vegetable seeds to enaLle a farmer to repiant part of his area should he experieuce a crop failure in the first year. DCFCA would ensure that inputs are made available to farmers when needed.

4.09 Seed FarEs. The central seed station (Kebun Benih Sentral) in Sout Sumatra in cooperation with CRIA would be responsible for production of foun- dation seeds. Two seed farms, one in Upang (10 ha) and one presently under consti-

4.10 Agricultural Extension. A rural extension center (REC) would be constructed by DGFCA under the Second National Agricultural Extension Pro ct (Credit 996-IND). Two middle-level extension workers (PPMs) and six field extension workers (PFLs) would be appointed to provide extension services to farixn2rsin the -roject area. As the local agroclimatic conditions differ fro those at the transmigrants- place of origin, PPLs would advise farmers on varieties, cultural practices and pest control (para. 3.03). The subject matter specialist (PPS) stationed at Sungsang would make fortnightly visits to the REC to train the PPLs on production techniques developed for swamps at Upang-s test farm. He would also plan and supervise verification trials in farmers- fields, familiarize himself with the production constraints in the project area, and participate in adaptive trials with research staff at the project substation (sec para. 4.13). -37 -

Table 4.1: INITIAL SEEDS ANDAGROCHEMICAL PACKAGE

Total Total/family Unit cost cost

1. Seed and Perennial Seedling Package

A- Food Crops (kg) (Rpfkg) Rp)

Rice 50 220 11,000 Corn 3 150 450 Soybean 1 500 500 Groundnut 10 500 5,000 Mungbean 1 350 350 Cassava 500 (cuttings) 3 1,500

B. Vegetables (g) (Rp/g)

Chili 25 10 250 String bean 50 3 150 Miscellaneous 25 5 125

C. Perennials (No.) (Rp/unit)

Jack fruit (plants) 4 200 800 Banana (suckers) 10 250 2,500 Papaya (seedlings) 10 250 2,500 Pineapple "slips) 25 50 1,250 Coconut (seedlings) 15 700 10,500 f-ffee (seedlings) 15 250 3;'750 Clove (plants) 4 350 1,400

Subtotal 42,025

2. Agrochemicals (kg) (Rp/kg)

Urea 150 120 18,000 TSP 100 115 11,500 Pesticide (liter) 4 6,500 26,000 Rodeaticide 3,000 3,000

Subtotal 58,500

Total 100.525 38

4.11 Farmers- Cooperatives. The DGT would construct two warehouses, one of 50 sq a for fertilizer storage and one of 100 sq m for grain storage; a 500 sq a drying floor; one small rice will (1-2 ton rice/day); one 30 sq a rice mill shelter; and 15 sq m office space for the KDD (village un-it cooperative). The DGC would be responsible for tralning and staffing the KUD with qualified personnel, and maintaining the village cooperative infrastructure until the KlD is able to operate and maintain it on its own.

4.12 BRI. The Bank Rakyat Indonesia (BRI) wouid staff one village unit (VU) bank in the main village of the project area. BRI would provide

short-term production credit under the BIMAS program through the VU. -

4.13 Research. AARD would be responsible to fund and carry out research in the project area. A research substation (20 ha) adjacent to the REC would be e6tablished under the project. The facilities would include one 20 sq m general laboratory cum office, one 20 sq m store, one 70 sq A house and one 50 sq m house. The substation would be provided with field, laboratory, offlce, and meteorological equipment; furniture; field inputs; bicycles and a speed boat. Research and support staff would undertake testing of available cropping patterns developed for swamps and modify them to suit local needs. Research would be aimed at developing appropriate and feasible farming practices for transmigrants and would include food crops, tree crops, cattle and poultry. The siting of the research substation and REC in the same area and sharing of common facilities would encourage closer interaztion between research and extension personnel and ensure a two-way flow of information.

Operation and Maiw--=nce (O&M)

4.14 The hydraulic infrastructure (navigation, primary and secondary canals) would be maintained by the regional office of the Public Works Ministry (DPU) at Palembang, after a two-year 'running in period following completion of construction during which P4S would train DPU staff in maintaining and operating the infrastructure. An O&M office would be established at the base carp of the project area three years after the start of construction. As the small size of the proposed project would not justify the acquisition of costly draglines, manual labor would be employed where feasible, supplemented by DPU-s own equipment or contract work. Assurances were obtained from GOI that sufficient funds would be provided for operation and maintenance, half of them by August 15 of each year, and the other half in two installments until all budgeted amounts have been made available, that a detailed annual O&M plan be worked out, the first by May 31, 1984 and that a project O&M office be staffed with qualified personnel by May 31, 1984.

4.15 On-farm works, tertiaries and farm bunds, would be operated and maintained by the settlers with P4S assistance. Common elements of villages and hamlets such as hamlet drains and outlets would be maintained by the residents of each hamlet, as done in other ongoing developments. - 39 -

4.16 Public buildings (schools, health centers etc.) constructed by DGT, vould be operated and maintained by the appropriate ministries. The Ministry of Religious Affairs would supply religious leaders to places of worship in each village. The Directorate General of Education (Ministry of Education) vould supply teachers and would supervise school curricula. The Directorate General of Community Health would supply staff and equipment for the subcenters and the health center, and would arrange for malaria control, and nutrition activities. The Ministry of Home Affairs would appoint village heads and arrange the integration of the project-s new villages Into the existiag administrative structi-re, after DGT completes its adfinistration, about. five years after settlement starts.

4. 17 Agricultural support services would be operated and maintained by DGFCA-s annual budgets. Facilities and equipaent of village cooperatives, constructed by DCT, would be transferred to DGC, DGT, which would operate and maintain them until cooperatives become financiaUy viable. The management of co-ops would be turned over to their aembers, who would appoint staff for that puxpose. The infrastructure would be turned over to KUDs, who would maintain It and its equipment from earnlngs generated by its activities.

Mozm1toring and Evaluation

41-i Implementation Monitorng8 The implementation of the proposed -advelopment would be monitored and evaluated by the Regional Coordinator at Palembang, focussing on the technical and administrative performance of each participating agency and on identifying factors constraining the attainment of timetables or causing cost overruns_

4.19 Physical, socioeconomic conditions of the proposed development and its ecological impact would be monitored by P4S, DGFCA, DGT, and DC Fisheries from fifth implementation year and on. An assurance was obtained from GOI that it would provide funds, staff and equipment required for monitoring for five years and report its findings annually. Monitoring activities would focus on the following subjects:

(a) operation and maintenance requirements of the hydraulic system; (P4S)

(b) cropping patterns and their response to soil-water management; (DGFCA)

(d) subsidence of soils; (P4S)

(e) changes in soil fertility; (DGFCA)

(f) effects on fish; (DG Fisheries)

(g) the incidence and prevention of pests; (DGFCA)

(h) actual farm budgets and farm incomes; (DGFCA),

(1) off-farm activities; (DGT) and

(j) development of villages and of supporting and administrative services (DGT).

5. AGRICULTURALPRODUCTION

5.01 The project would bring into agricultural production aver 7,200 ha of presently undeveloped swamp land, allocated to 3,200 settler families on the basis of 2.25 ha per family. While the total land allocation per family is the same as in ongoing swamp reclamation schemes in the region, the portlon allocated to the houselot would be enlarged from 0.25 ha presently allocated to houselots in other projects to 0.5 ha, and the field plot would be reduced to 1.75 ha. This innovation is based on the repeated observation in the older schemes that the houselot- is rapidly put into intensive year- round cultivation, often with higher value crops, while the e'-ltivation of field plots, at some distance from the house, invariably lags. There are several reasons for this, the first being that a mother with small children can much more easily work within eye and earshot of the house than at a distance. The second reason is that work in the houselot avoids the time invested in walking to the field plot and back, and is particularly amenable to short period investments of labor. Finally, houseplots naturally benefit from improved pest surveillance and from fertilization by household wastes. The size of the houselot is limited, however, by the goal of providing nucleated settlements for purposes of providing efficient access, social and agricultural services, and coEmminitylife.

Cropping Patterns

5.02 Based on previous experience, the houselot will be used for a mixture of annual and perennial crops, while the field plot will be used exclusively for annual crops. Bouselot crops grown in existing areas include wet rice (during the rainy season), corn, soybeans, coconuts, banaaas, cassava, taro, various beans, tobacco, peanuts, pineapple, sweet potatoes, and various tropical fruits, depending on farmer preferences, - 41 -

skills, and price expectations. To simplify the agricultural and economic analyses, it is assumed that the hboxselot would be divided into 0.25 ha devoted to annual crops (wet rice in the rainy season, corn in the dry season) and 0.2 ha to perennials, represented by 0.1 ha of bananas and 0.1 ha of coconuts. It is assumed that cultivation and planting of the entire houselot would take place within the year following settlement, as experienced in other projects and due to the fact that bouselots would be cleared before arrival of settlers.

5.03 Starting about three months after their arrival, settlers would devote at least one full dry season to participating in the clearing of field plots (para. 3.06). Thus, settlers would --not-be -expected- to cowenee- planting of these plots until between 6 and 15 months after their arrival. Planting of field plots would begin with a wet-season rice crop, assumed to cover only 60% (1.05 ha) of the plot area allowing for space taken up by unburned stumps, logs, roots, windrows, and other debris. The proportion of the field plot devoted to wet-season rice is assumed to approach progressively 100% over the next four rainy seasons, as woody materials gradually decompose or are burned and chopped away. The assumption of wet- season rice monoculture is in accord with both past experience and the appropriateness of this crop to the climate, soil, topography, and planned water regime of the project area, in the context of smallholder settlement.

5.04 A departure from, or acceleration of cultivation practices in ongoing developments is projected in regard to an expected relatively rapid initiation of a dry-season upland crop (soybeans) in field plots. In ongoing developments, this cultivation has been hampered b-u lack of moisture during the dry season, the widespread presence of uncultivable deep peats, and attacks by pests from uncleared belts of forest intersecting agricultural areas. The proposed project differs importantly from other developments in the following aspects:

(a) an improved measure of water control with water level control structures on tertiary drains and clay-to-clay field bunds to prevent overdrainage during the dry season, as well as the potential capability to irrigate 15% of the area through tidal action;

(b) the intentional location of the project in an area without deep peats; and

(c) clearing of the entire agricultural area during the construction phase, relieving the settlers of subsequent years of difficult clearing work without adequate tools, organization and direction; also, the moderation of the pest (rats, boars, birds, insects) menace by clearing the entire area.

Given these improvements, it is assumed here that IOX of the field plot will be planted to a dry-season upland crop two years after settlement, rising - 42-

progressively to an intensity of 40Z over the subsequent four years. A higher final cropping intenslty is unlikely due to moisture deficiencies (para. 2.08).

Cropping Calendar

5.05 Farmers would be expected to grow wet-season paddy from October to June. Depending on available rainfall, seedlings would be transplanted between December and January and the crop harvested fros May to June. Secondary food crops would be grown from June to October. The planting of food crops in houselots would follow the same cropping calendar as for farm plots. Perennial tree crops and tropical fruits wouldbe- established in-the-e houselots soon after settling. The proposed cropping calendar shown in Figure 5.1 was based on climatic considerations and on demand and supply of labor for each operation (Annex 2, Table 7).

Yields

5.06 Projected initial and final agricultural ylelds and periods of yield development are presented in Table 5.1 below:

Table 5.1: PROJECTED AGRICULTURALYIELDS

Crops Initial yield Final yield Development period

Houselots

Paddy (tons/ha) 1.0 2.6 8 years Corn (tons/ha) 0.6 1.2 6 years Coconuts (nuts/ha) 1,500 8,500 14 years Bananas (bunches/ha) 600 1,200 7 years

Field Plots

Paddy (tons/ha) 1.2 2.4 7 years Soybeans (tons/ha) 0.5 1.0 6 years

Assumed yields and their development over time are based on actual experience in nearby areas of potential acid-sulphate soils, particularly in the older blocks of Upang, where agricultural development has proceeded for abcut eight years. Details of yield development and assumed input usage by year are presented in Annex 2, Table 11 for a representative settler family, and on an aggregate basis for each crop, taking into account the phased arrival of the settlers, in Annex 2, Tables 3-7. Assumed input usage is actually greater than present settler practice and should enable settlers under the present project to achieve higher final yields over the long term, - 43 -

particularly of paddy. Asstmptions of slow buildup of yields and cropping iatensity attempt to give adequate weight to the typical difficulties faced by settlers anywhere, including the coastal swamp region of SumAtra, in converting rough scrub-covered terrain into agricultural land. The pecullar difficulties faced by settlers in the swamps include the control of soil aoisture to prevent soil toxicity, and an almost total reliance on manual cultivation and handsLashing of weeds, as the soils in the region would not support conventional four-wheel or pedestrian tractors or even draft animals until several years of cropping and drainage have passed. Erosion by water or wind, a comon problem in the uplands, would not be a factor here.

Productlo_

5.07 Assumed production buildup of the various crops is presented in the respective Annex 2 tables. Production and bc1meconsumption at full development is summarized in the following Table 5.2.

Table 5.2: AGRICULTURALPRODUCTIONI

Productlon at full Estimated settler Crop development consumption Year

Paddy (tons) 15,520 4,000 1992 corn (tons) 960 6000i4t Soybeans (tons) 2,240 300 1992 Coconuts (nuts) 2,721,000 1,750,000 1999 Bananas (bunches) 382,000 290,000 1992

Thus, by the 1990s the project area is expected to ship about 12,000 tons of paddy (7,300 tons of ailled rice), 2,000 tons of soybeans or other secondary food crops, a million fresh coconuts and 90,000 bunches of bananas (representing a variety of fruits) to food deficit points in the region, chiefly to Palembang (para. 6.01).

Drying, Storage, and Processing

5.08 Farmers would be expected to sun-dry paddy in houselots and on mats and store dry paddy in their bouases. The BUUDs/KUDs would be equipped with concrete drying floors (para. 4.11), and private millers or traders, expected to move into the area, would also provide paddv drying facilities. The project would provide a warehouse suitable for grain storage, while milling facilities would be provided chiefly by private millers (para. 2.16). -44-

Livestock and Fisheries

5.09 The Directorate General of Animal fusbandrv (DGAH) is considering the introduction of cattle fattening and breeding on a credit basis to Interested farmers. The cattle could be fed in part with some of the abundant weeds, and their nanure could be used to fertilize houselots. As this scheme would be expected to be limited in its initial scope, no specific actions need be taken under the project and no benefits were taken into account in calculating project benefits.

5.10 Fishing would be expected to be an important activity of the transmigrants both for the supply of protein as well as -a.source. of. incOAe.. Fishing areas would be in the estuaries of the rivezs and in adjacent mangroves and would be leased from the narga at annual auctions. The project itself would not include a special fishery component, as standing water bodies in the project area would be drained, and fishing in the drainage system could not compete with fishing in the nearby rivers.

6. MARKETPROSPECTS, PRICES, FARM INCOMES AND PROJECT CHARGES

Market Prospects

6.01 Dle to its size and the effective demand generated by its large growth industries, Palembang is, and would continue to be, the major market for all surplus produce of the project area. Although there are secondary markets close to the project area, particularly Sungsang, the ys- of most agricultural products are set by the demands of Palembang. These prices are in many cases much higher than elsewhere in Indonesia, due to Palembang's locat0on in the middle of extensive swamplands, far from major agricultural surplus regions. This is particularly true for products which are not marketed or regulated by the Government-s logistics agencies, such as coconuts, bananas and other fruit. For example, coconuts are currently shipped fresh and unhusked to Palembang from the project area for a qu.ayside price of Rp 100 (US$0.16) per nut, and bananas fetch an average of Rp 625 (US$1.00) per bunch for the same market. Soybeans and corn, which are also not yet effectively covered by a Government procurement system, are also relatively high priced in the swamp region at about Rp 250 (US$0.40) and Rp 90 (US$0.14) per kg, respectively. The local prices for most other commodities which would be produced on houselots (para. 5.02) exceed those in Java, and farmers apparently experience no difficulty in selling these crops to traders even in small volumes.

6.02 Both Sumatra as a whole and South Sumatra Province in particular are rice-deficit areas, with the total deficit of the province estimated at over 100,000 tons of rice per annum or 20Z of provincial consumption. Aside from Palembang itself, 7 of the provinces 11 districts must import rice from the 4 surplus districta in the province (MUsi Banyuasin providing - 45 -

about 30,000 tons per annum), from surplus districts in neighboring provinces, and from overseas. At the margin, project area production would substi- tute for foreign imports, a major agricultural policy goal in a country which in recent years has been the largest rice importer in the world.

6.03 Alongside the thriving private marketing channels described above (paras. 2.15-2.16), project area farmers would have access to the Government logistical system which supports producer prices for paddy and, eventually, for corn and soybeans as well. Under the system, the village cooperatives (KUDs) function as purchasing agents for the Government-s food procurement authority (BULOG/DOLOG), which maintains a floor price for paddy throughout Indonesia. This is currently Rp 105 (US$0.17)/kg for 14% moist paddy. The recently instituted BULOG support prices for soybeans and corn (Rp 210 and Rp 70 per kg respectively) are below the actual market prices prevailing in the region, and are thus anticipated to exert little influence on farm-gate prices in view of the small impact of the production of the proposed project on local markets. The BULOG rice price is expected to serve as a good Irdicator of actual farm-gate prices, particularly once new KUDs are established in the proposed settlement area. DOLOG, BULOG-s subsidiary in the province, would arrange the transport of paddy purchased by the KUD from the local KUD warehouse to its own warehouses in Palembang.

Prices

6.04 Farm inputs and outputs have been valued in terms of constant 1980 currency values for both the farm budgets and economic analyses. For rice, soybeans, corn, and fertilizers, projections of economic prices were based on world market price forecasts produced by the Bank-s Commodity Division, adjusted for transportation, processing, and handling costs down to the farm-gate level (Annex 2, Tables 1-2). For coconuts and the local varieties of bananas, which are sold fresh to the regional market, actual current farn-gate prices were used for the 1980 base year, adjusted Gver time proportionally with Bank projections of world market copra and banana prices. The economic prices of agrochemicals (insecticides and rodenticides) have been assumed to remain constant i- real terms, while economic prices for seeds and coconut and banana planting materials have been assumed to vary proportionally with the prices of the respective agricultural outputs. In order to value the project output of paddy, it was assumed that 30% of such output would be milled into high quality rice (5% brokens); 50% into medium grades (25-30% brokens) valued at 75% of high quality; and 20% into low grade rice (42% brokens) valued at 60% of high quality. A unit of project rice output would thus be valued in ec--omic terms-at 80% of the world market price for 5% brokens. The economic price for paddy at the farm-gate would, on this basis, rise from US$230/ton in 1980 to US$270/ton in 1990, in constant terms.

6.05 Ristorically, the Government has followed a policy of keeping consumer food prices low by selling imported rice below its cost and keeping domestic floor prices low. To mitigate the effect of this policy on farm - 46 -

income, the Government has simultaneously subsidized fertilizer, pesticides, and seeds. In the last five years, however, GOI has substantially raised domestic floor prices to encourage paddy production. This change in policy, combined with the fall of world prices from the record levels of 1973/74, has brought farm-gate prices fairly close to world market levels, taking into account the quality differences. It is assumed that the BblOG floor price for paddy will continue to rise with the world market price, moving proportionally closer to it over the coming decade.

Farm Incomes

6.06 For farm income analysis a'detailed year-by-yeartmodel (Annnex2,' Table 12) has been prepared for a representative settler family arriving during the second half of 1983. The cropping pattern and agricultural development of this family farm (Annex 2, Table ll) is similar to that described in Chapter 5, and its supply of casual labor for wages (Annex 2, Table 9) and engagement of hired labor would follow the pattern discussed in paras. 7.05-7.09. The model shows that the family requires considerable subsistence assistance in the first 18 months of settlement, as its first small crop of paddy in the houselot would not be harvested until May/June 1984, followed by a small secondary food crop (corn) in the houselot harvested in September/October 1984, and augmented over that period by earnings of between Rp 36,000 (US$58) and Rp 68,000 (US$109) for 45 to 85 days of labor on land-clearing and drain excavation operations. Estimated conservatively, earned income during the first year of settlement could amount to no more than Rp 76,000 (US$122), fa-mbelow the bare subsistence level of Rp 110,000 (US$176) the family survived orn before it migrated. During the second year of settlement the family would initiate planting of the newly cleared field plots, with the first large rice crop ready for harvest in May/June 1985. Thus, until this time the family would require the subsistence provisions provided under the project (para. 3.13).

6.07 The end of the second year of settlement should see the family in a markedly improved agricultural and financial positio., Its first large paddy crop should be harvested, the 1,640 kg of paddy harvested being about 600 kg greater than the familys annual subsistence needs. Secondary food crop production (corn and soybeans, or equivalently cassava, peanuts, sweet potatoes, taro, beans, vegetables, etc.) should roughly equal household consumption, while rapidly maturing fruits (bananas, pineapples) should be meeting a large part of family needs, as should houselot poultry flocks and part-time fishing in the nearby rivers. The household at this stage would be largely self-reliant for food except for meat, and should have a net annual cash income of about Rp 140,000 (US$220), half from labor earnings and half from paddy sales, to purchase supplemental food, clothing, other consumer goods and agr'cultural inputs. Subsequen, years should witness a rapid growth (24% per annum) in the gross financial value of farm cutput, from Rp 269,000 (USS430) in 1984/85 to Rp 958,000 (us$1,530) in 1990/9i. Net family income, including labor earnings and payments for agricultural inputs and land taxes, would rise at a slightly slower rate (19%) over this period, from Rp 326,000 (US$520) in i984/85 to Rp 9i0,000 (iUS$1,460) in. 1990/91. - 47 -

6.08 Settler family income would continue to rise slowly after 1991, as slowly maturing tree crops in the houselot (e.g. coconuts, fruit, cloves, coffee) come into full bearing, and particularly as maturing children engage more heavily in labor activities off the family farm or get married and form new families and farms of their own. The maximum settler family net income, before departure of adult children, about 12 years after settlement, would be about Rp 1 million (US$1,600) for a family of six members, or Rp 167,000 (US$267) per capita, in 1980 currency values. This level of income would compare favorably with incomes of settlers in other transmigration areas.

Project Charges

6.09 As in all of the transmigration projects, settlers would pay no taxes or project charges until DCT transfers administration of settlements to the Provincial Government, about five years after settlement. After that, settlers would pay a national land tax (IPEDA), at a rate calculated on the basis of the assessed 'with project- land capability and productivity. In addition, settlers would operate and maintain all tertiary and hamlet drain systems. This arrangement is similar to that in effect in irrigation projects, with the exception of the initial grace period, which in this case would release transmigrant settlers from financial obligations during their settling period. The land tax would contribute towards the operation and maintenance costs of the main and secondary systems and as it is assessed as a percentage of the estimated value of farm production, it would increase as crop yields rise. At full agricultural development, IPEDA would reach an estimated Rp 9,000/ha or Rp 19,800 (US$32) per settler farm. GOI has tied disbursements under its local infrastructure development program (INPRES) to IPEDA collection and as a result IPEDA collection, as observed elsewhere in Indonesia, is expected to be high.

6.10 In calculating cost recovery, all administration, infrastructure, land development and settlement costs, and physical contingencies have been included; on the basis of these costs the recovery by IPEDA taxes yields a cost recovery index of 2%. The rent recovery index is 11% (Annex 2, Table 13). These rates, which are quite low if one considers only projects in Java, are in liae with those obtaining in other transmigration projects (5% cost recovery for Transmigration II Project - Loan 1707/Cr. 919-IND) and with those in new irrigation projects in the Other Islands (3% cost recovery for Irrigation Project XV, (Cr. 995-IND). They are justified considering present and projected income levels of settlers in this project, which are and will remain below present and projected critical consumption levels (assuming an average growth rate of 4.5% per annum)./l It would be counter productive to the Government-s efforts to resettle people from Java if they were to be taxed in resettlement areas more than farmers in other parts of Indonesia, where lands are better and agricultural risks are much lower. As a matter of policy, the Government has not contemplated recovery of costs in transmigration projects; considering the low income projected and the personal risks entailed, cost recovery during the initial years of settlement not only would be unjustified on equity grounds but could also prove a disincentive to parti-ipation.

/L Real consumption expenditure of the bottom 40% of the population is expected to increase at 3.5% to 5.5% annually. - 48 -

7. BENEFITS, JUSTIFICATION AND RISKS

7.01 e.it benefits to be derived from the project depend to a large zxtent ou -.;e wiay the settlers respond to the opportunities and challenges offered then by the project, particularly in regard to water management, the loice of c:ops to be cultivated, the intensity with which they cultivate the land, the range or inputs, and the amount of off-firm work engaged in during the long slack seasonrswhen available labor supply exceeds the pro,ect area's own agricultural demands. The latter is a benefit of the project, as the proJect its-lf locates the settlers in a region where labor is scarce and seascual wages in agriculture, forestry, fishing, construction transport and other activities are much higher than in Java/Bali.

7.02 The benefits of timber extraction facilitated by improved access provided under the project, which are qiite important in many settlement projects, are negligible here due to the location of the project in an area of secondary forest and scrub, and are not accounte' for in this analysis. The social benefits of establish5ng self-reliant land-owring farmers from dependent, economically marginal families are also not accounted for, although they are significant. Independent surveys of established settlers in nearby swamp reclamation projects, including some where agricultural development has been unsatisfactory, indicate that an insignificant proportion (2%) of the settlers leave a project area, and that nearly all (99%) of those who remain feel better off than in their areas of origin, which must reflect improvements in both their Financial and social status. In general, the economic behavior of the settlers unde: the present project has been projected on the basis of surveys and observations of older project areas in the region (paras. 2.17-2.19).

Benefits

7.03 The pattern and pace of ptojected agricultuiraldevelopment of the smallholdings, and final yields, production and input usage are discus-d In Chapter 5 and derailed in Annex 2, Tables 3-7. Yield development and increases in 7set-seasonrice cropping intensity have been estimated on the basis of trends in the region. The agricultural model is based on five crops whi-ch are well known to the settlers, without livestock; in fact cropping patterns will be more complex as individual farmers adopt different crops which provide even higher returns.

7.04 As presented in Annex 2, Table 10, rice is the agricultural linch- pin of the proJect, both in the early years, when it provIdes over 75% of the net agricultural production benefits, and at full development, when it still provides over 67% of such benefits.!L A dry-season upland crop (corn)

/1 This, despite the fact that all hired labor required by the farms i-s ascribed to rice production (Annex 2, Table 3). - 49 -

on :7alf the bouselot area provides small but early benefirs, typical-ly subsistence food for the wet season, while in the longer term, the development of tne dry-season crop (soybeans) in the fields contributes 15% of total agricultural benefits. Among the houselot perennials, a mixture is projected of early producincg crops (bananas) and those with a longer maturity per-tod (coconuts) requiring considerably less labor.

Labor Costs a -1 Benefits

7.05 Settler labor figures in the economic analysis of this project as both a cost and a benefit. The- apportunity. cost of. settler labor throughout the project period has been assumed to be equal to their Incomes in their point of origin, as the project itself would remove the settlers from the Java/Bali labor force. On the basis of recent suirveys, these incomes are estimated to average annually Rp 110,000/family (US$176/family)_/1 Real vages are assumed to remain constant over time, in accord with several village-level sociological studies in Java which have indicated this to Fe true dturingthe past decade. However, it is assumed that the opportunity cost of settler family labor increases over time (Ainex 2, Table 9) as the children mature and reach the age when they would have entered the labor market in the home region. In the economic analysis, it is assumed that the children t-'ouldhave earned the same real wages as their parents, agricultural or casual laborers.

7.06 The employment pattern in the settlement area represents a familiar cycle. In the early years (1982-85), there will generally be an excess of settler labor over and above the requirements of the slowly de--oping farms. By 1985/86 new settler arrivals will cease, and most of the settlers will be attempting to cultivate most of their land during the wet season and to initiate dry-season cropping on a portion of the field plots, in additior. to intensive cultivation of the houselot. At this point, the need for hired migratory labor during the peak seasons (May/June for harvesting the rice crop and planting the soybean crop, November/December for transplanting the rice crop) commences, reaching a peak of i27,000 man-days in 1987/88 and declining to zero in 1991/92 (para. 7.07; Annex 2, Table ). Increasing farm labor requirements over time follow from -he gradually increasing intensity of land use, including the houselots, to a maximum of 153% at full development, in 1990/91. Requiremsentsfor hired labor were determined on the basis of a monthly analysis of settler labor supply and demand for the various arriving groups. Family labor supply development was based on Annex 2, Table 8, while farm labor needs were derived from the scheJule presented in Annex 2, Table 7 and the hectarage of various crops presented in Annex 2, Tables 3-6.

/1 This could be earned typically by 160 days of labor by the father at Rp 500/day (US$0.80/day) and 120 days of labor by the mother at Rp 250/ day (US$0.40/day). 50- -

7.07 The settler family labor force increases Inexorablv over time (Annex 2, Table 8) as the children mature- Vhile considerable settler surplus labor is available during the slack months (particularly July-September and February-April) of even the busiest years, the lack of need for any migratory hired labor during the peak operations after 1991 is an indication of considerable underemployment of the family on the farm itself after that year. Tle key parameters are obviously the assumed family size (four children) and the amount of land given to a family. While a larger farm plot would provide more on-farm employment in the long run, it would also reduce the total number of families participating in the transuigration program, demand increasing (and perhaps unfeasible) numbers Of migratory laborers during the peak seasons of the middle years, and represent a poorer return on investment in opening up the settlement area due to slower increases in intensity of land use.

7.08 The farm size and agricultural model presented here, which provides 516 days of productive employment /1 per farm per annum at full development, Ss considered a reasonable resolution of these tradeoffs. The maximum calculated amount of hired migratory labor required during the single peak month of the development period (58,000 man-days in June 1988, equivalent to 1,000 migrant families) is estimated to be feasible at the margin, given the very large flows of migratory labor in the region (para. 2-12). The final farm income provided by the model is reasonable in the Indonesian context. The total investment of settling one family on 2.25 ha of reclaimed swamps is aDout USS7,300 (in end-1980 prices), including the cost of infrastructure, site preparation, settling, supports and physfcal contingencies, and is close to that of settling a family on 2.25 ha of cleared uplands. 7tal land allocation is similar to that in other transmigration projects thus fitting the Goveruimert-soverall program. Finally, the pace of agricultural development and cultivation of the land is both feasible and economically attractive (para. 7.11).

7.09 Given the agricultcral model discussed above, settler families would engage in a consi-ferableamount of nonfarm work in slack agricultural seasons, and the rev.ards of this labor are accounted as benefits due to the project (Annex 2, Tables 9-10). In the first instance, each settler family head would be offered the opportunity to work at least 130 days during the first two years after settlement on land clearing and drain and bund construction within his settlement block. Contracts for those activities would specify the payment of Rp 800/day (US$1.28) for settler labor, which is considered a fair estimate of agricultural wage rates in the Karang Agung region, and which is used in the economic analysis for both peak-season labor hired by the farm and for all off-farm work by settlers. Javanese laborers working with contractors, and local people and transmigrants working with timber and construction companies generally earn much more, typically between Rp 1,200 (USSI.92) and Rp 1,800 (US$2.88) per day,

JI Valued :n economic terms it an average of Rp 2,125 (US$3.40) per man-day equivalent. - 51 -

but this work involves weeks or months in remote jungle far from families, and entails more hardship- After the first two years, settler families are assumed to work an average of 50 days per year off-farm during their slack periods until about 10 years after settlement, when grown children are assumed to begin to engage heavily in off-farm work (fishing, logging, work in lumber milLs and in transport) helping on the family farm oaly during peak seasons. This projection accords closely with observed practice, except that it abstracts from eventual formation of new families aad new farms by grown children, which is economically much aore attractive than wage labor.

Investment Costs

7.10 All project base costs and related physical contingencies, including those of infrastructure, settlement, subsistence provisions, administration, and consultants working on project implementation, were included in the costs for the purpose of economic ana'.sis. Such costs total US$27-6 million (Rp 17.2 uillion) in 1980 Drices.i In addition to the above costs, an estimate of US$300,000 per year (hS$42/settled ha/year) has been charged to the maintenance of the infrastructure and the provision of basic agricultural and settlement services, commencing immediately after the investment period and continuing throughout the life of the project. Foreign and local costs aad benefits have been converted into border prices using the official exchange rate of Rp 625 = US$1.00 and a standard conversion factor of 1-

Economic Rate of Return

7.11 Usiag the foregoing assumptions and discounting project costs and benefits through 35 years, the economic rate of return is 13Z (Annex 2, Table 10).

Sensitlvity Analysis

7-12 Sensitivity analysis -as used to determine which variables would be crucial to the succoss of the project. To that end, crossover values for a IOZ discount rate were calculated for a number of variables. The crossover value is the valae of the variable tested for which the project's ret present value, calcJlated at 10X discount rate, is zero, or, equivalently the value beyond which the economic rate of return would be below lOZ. Therefore, the greater the difference between the crossover value and the value assumed in the analysis, the less sensitive the economic rate of return is to the tested variable.

/1 Including base costs and physical contingencies of civil works and houses (US$18.44 million), services, equipment and supplies (US$4.58 million) and consulting services and administration costs (US$4.56 million). These Costs do not include studies and an advisor in the Office of the Junior Minister for Transmigration, who would fulfill a coordination and programming function. -52-

7.13 Crossover values shown Inl Table 7.1 i-ndicate that :he vabi. itv o' the project is relatively insensitive to substantia! departures from appraisal assumptions. A 36% increase in investment costs. above conservatively estimated base costs and 157 physical cont .-. z4enc;ies. -wouldbe required to reduce the rate ot return to 10Z. Sir.iariv, The entire agricultural benefit stream would have to decrease by 23/ *- value, !noldingt other assumptions constant, to reach the same result. Regarding ouroiy physical factors, the yield of the paddy crop (the ma ior 7ro- eCtei soC) ce of benefits) would have to drop by one-third, to the low level of 1.h3 tor._/ha, to lower the rnturn to that leve!./! Combining worst case agric-sltural outcomes, the totai absence of a drv-season. crop i7 the fie'cds '!here assumed to be soybeans) through.out the three-decade--roject ho-ri -r, lrre with a 14% drop in wet-season paddy yields to 2.09 tons/ha would be requirred to reach that result_/2 Finally, a delay ot the entire setrlenrent progran and agricultural benefit stream by 33 months, while maintaining Ohe original investment schedule, would be required to invalidate pro-,ect t easibility. The results of these analyses show that the Project is i-zdeed viable even under adverse conditions.

Table 7.1: SFNSIrIV-TTY A?:ALYSIS

Appraisal Crossover Percent value valuie change

Total investment costs (constant 'SS million) 2 7.5 37.C +36 Annual agricultural benefit stream (constant USS million),a 5.6 S.3 -23 Paddy yields at fu ll development (tons/ha) 2_43 7.-3 --33 Paddy yields at full developrMent (tons/ha) with no dr---season field cropping 2. 3 2 - -1g Delay of total agricultural benefit strearn (months) 0 33-

/a At full development. Calcutla ions were based on a reduced benefit stream over the life of the project.

.1 Sssuming that the saie inputs and hired lahor appropriare to a yield o'f over 2.4 tons/ha would continue to be applied.

/2 Assuning thac reduced croppin- :tensiz v and yieldc wuou`d nolt be r,arZia7ly corpensated for by reduced in.rut usage and hiring (o l.abr. ad n7ore se-tler wage employment, which would agair raise ,ti rate o: r !;:rn above iO7. - 53 -

Ri sks

7.14 Risks pertaining to the proposed project are environmental and orga- nizationdl. Environmental problems could develop by ignoring constraints imposed by soils in the project area while organizational problems could develop by poor implementation management.

7.15 Environmental Factors- The achievement of targetted rice yields on potential acid-sulphate soili as found in the project area, requires a high soil moisture in order to prevent these soils from oxidizing and acidification. The project addressesrthis requirement-and provides. nec.essary safe- guards: impervious bunds along perimeters of farm plots and checlkson tertiary canals to maintain sufficiently nigh water levels in fields. Experience on similar soils in neighboriflgareas shows that with these arrangements risk of soils acidification is minimal.

7.16 Organizational Factors- The project has made arrangements for properly coordinated implementation of works, settlement o' people and support services. Although agricultural development and benefits could be delayed by the failure on part of management to coordinate activities of participating agencies, heavy input of Government staff and consultants, the advanced stage of project preparation and a strong commitment to the transmigration and swamp reclamation program should cininize this risk.

8. AGREENENTS REACHEDAND RFCOMMENDATIONS

8.01 During negotiations agreements were reached with the Govern- ment on the following points:

(a) DGFCA would provide pernanently two PPMs and six PPLs under the part-time supervision of a PPS for extension services, and AARD would provide permanentl-: adequately trained staff, as required, to carry out agricultural research (para. 3.03);

(b) DGT in coop'ration with DGA would assign "Right of Use (hak pakai) certificates for houselots and farm plots to settlers one year after settling, and assign titles (hak milik) to their land within five years after settling (para. 3.16);

(c) Vae first health subcenter would he built, equipped and staffed before the settlement of the first transnigrants and the other subcenters and centers, as villages are built (para- 3.18);

(d) A suitably qualified regional coordinator would be appointed by JMT not later than T)ecember 31, 1981 (para. 4.03);

(e) Consultants whose qualifications, experience and terms and conditions of employment would be acceptable to the Bank, would be engaged by P4S for itself and for DGCK, PTPT, DGT, and by JMT. - 54 -

Consultants assisting P4S and DGCK in project implementation would be engaged by March 31, 1981, while those asisting PTPT, DGT, and JMT would be engaged by March 31, 1982. By January 31, 1982 P4S would engage consultants to assist in (i) carrying out a nationwide inventory of coastal and near-coastal swamp developments; (ii) carrying out a survey of selected existing developments to assess the viability of their upgrading; and (iii) carrying out an environmental impact study of selected swamp developments. By March 31, 1982 P4S would engage consultants to assist ln carrying out an investigation of groundwater at Karang Agung. By October 31, 1984, the Government would engage consultants to assist P4S, DGFCA, DGT and DC Fisheries in monttoting the physiea1, ec:6ogfcal and socio-economic impact of the project (para. 3.25).

(f) Separate project accounts would be maintained by each implementing agency which would be annually audited by independent auditors acceptable to the Bank, and submitted to the Bank within six month after the close of each fiscal year (para. 3-33);

(g) P4S would post a qualified and experienced site manager by March 31, 1981 and PTPT and DGT would post qualified and experienced site managers by January 31, 1982 (para. 4-02):

(h) GOI will allocate adequate funds to properly maintain the constructed project infrastructure including the navigation, primary, secondary canals and all structures providing half of annual funds by August 15 of each year, and the second half in two installments until all budgeted amounts have been made available. Annual detailed O&M plans would be prepared and a project O&M office with suitably qualified staff would be established by May 31, 1984.

(i) The physical, socio-economic conditions and ecological impact of the development would be monitored by GOT during 1985-1989 and reported annually (para. 4-19).

8.02 With the above assurances the project would be suitable for a Rank loan of ITSS22 million with a 20-year maturity including a grace period of five years. The borrower would be the Republic of Indonesia. ~~.~J9tttC.SJO.- 2R0J8C

Con ffo1809 :

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- 9$9'. $2 .00~~~~~~C 0...'.o - - 7 7 100~~~~~~~~~~~~~~~~

4707 30.406 '9o.o.037 >0 '9 100~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 71>~~e.. q.3~~~on7 - 3 100~P --I 5656 - 7AbleANEX 2i

INDXONESIA

SWA4fP RECLAMATION PROJECT I

Schedule of Fxpenditures (USS 1eoo)

Indonesian fiscal veer 1981/82 IS82i83 '983/84 &984/85 1985/86 oc. p Local Foro LocalIPot Local r al For. Loc-al For. Local tor. Tot

Reclamation and Site -.Daration Civi! works /a 244 543 600 :,6Z7 1.129 2,0i7 ;.766 1,S97 :,584 688 1,32 6h,572 '1,8 iquip=ent: and supplies - 259 - :33 - - - - 392 3

Base cost 244 8.2' 600 1.760 1,129 2,01? 1,766 ',697 1,584 688 5.323 '.,9t4 12,2 Physical contingencies 3. 120 90 264 *168 302 265 255 238 I3i4 798 I 045 ! g Expected price increas&s 12 44 12_7 2S66 394 480 882 56' : ,05 7 3.14 2 ,472 ., 4.

9 Totl ' 293 966 ,,7 24.Q i.69i 2,79 9 , 2,8 979 r 96 8,93 ii2

Settlers Relocat ion and Settlement ftouses 4 village facilities - 55': :25 1,2Y0 320 1.O1 275 115 29 ',99S 749 3.7 Ser-:Ices. equipmen- and

supplies - 10)4 293 266 1. 0 4' 789 806 48P 58 i6 2,2° :,663 3.

Base cost - 104 794 39: 2.325 -,109 1 ,907 763 73 45 5,199 2 41I 7.61 Physical contingencles - ;6 :18 S9 349 166 286 !i- 26 6 17'9 361 1.1 Expected price increases - :66 78 903 264 944 256 114 '9 2.02. 602 2.6

Total - :25 i S C83,4'7 1,539 3,137 1 133 313 70 8 005 '.375 11.

Consult i ng Services Rase cost 3!4 36 405 2'S 302 30! 275 2i8 134 82 1,430 05 2.4 Physical contingencies 46 2' 6: 35 4' 45 42 34 21 13 215 *48 3 Expected price increases 27 6 85 3S 104 72 116 74 90 3c 447 22

.otal 387 163 5: 3:$ 45; 418 453 326 24-, 130 * ?i7 1,i 3,4

Agricultural Supports base cost 58 Si' - ' ------S8 se Physical contingencies 8 8 - _ _ _ , 8 Expected price Incrases 3 -

,ort1 7. 69 ------5G

Studles and investigatIon Consulting services 7!76 536 ; 5 82' 626 6(00 - 229 82 * 2* 7,744 4,6 Equipaent & supplies ° - S *0S - - - ,4

Base Cost 7S'. : .33- 1 ,005 :,43: S24' 00 _-,1 _2 P '0 ' Phvsical contIngence.s !'S 20( ;5; -24 94 9: - - 34 :3 '97 ;1 91 Expected price increases 66 69 1': 213 2:6 142 - '52 37 .4S 461 1,1'

Total 9' 7 :.60X :366 ;,858 °3S 832 - - 4;5 32 3,664 4,-' 8,

Administration Civil ~rks (103) '0 - 236 3; 347 27 :,22? -,2 Settler relocation (;OZ3 'C - - 3P 3 267 - 2 - c 7 Studies (5t) $ - 9' - - - ' - 3 2

Base cost :79 - 44'.:9 - 6- - ?4 - 2,2 Physica! contIngencIes '7 - 69 - 9' - ' - - 3 Expected price increases 3 - 3' -58 - 7 -

Total 209 550 - 943 964 - S i. - 3,2

CRAND IOTAL 90 7 2, 923 4 34' j9 ,97,588 7,467 3.978 4 42' ,,P 0 8 :.889 44,51

/a Including land compensatlon and 5% tax ANNEX I Table 3

INDONESIA

SWAMP RECLAMATION PROJECT I

Cost Estimate by Category of Works

Net Physical Expected Total base contin- price project cost Taxes gencies increase cost US$ nillion

I. Civil Works (a) Land clearing; canals 1.61 0.10 0.26 0.23 2.20 (b) Land clearing; ple'ts 3.56 0.19 0.56 1.56 5.87 (c) Earthworks; zanals 2.72 0.14 0.43 0.97 4.26 (d) Earthworks; tertiaries, bunds 0.80 0.04 0.13 0.29 1.26 (e) Structures; canals, base camp 2.01 0.12 0.32 0.78 3.23 (f) Structures; tertiaries 0.48 0.02 0.08 0.17 0.75 (g) Houses & village facilities 3.55 0.19 0.56 1.27 5.57 (h) Buildings; agric. support 0.08 - 0.01 0.03 0.12 (i) Land compensation 0.10 - - - 0.10

Subtotal 14.91 0.8C 2.35 5.30 23.36

T. Services, Equipment & Supplies (a) Construction supervision equipment 0.39 - 0.05 0.03 0.47 (b) Settlers relocation 1.13 - 0.17 0.36 1.66 (c) Settlers supplies & tools 0.37 - 0.05 0.12 0.54 (d) Health equipment & supplies 0.13 - 0.02 0.04 0.19 (e) Subsistence to settlers 2.24 - 0.35 0.70 3.29 (f) Inventory, upgrading & ecological studies, equipment & training 0.85 - 0.14 0.29 1.28 (g) Groundwater study equipment 0.22 - 0.03 0.08 0.33 (h) Monitoring equipment 0.33 - 0-04 0.11 0.48 (i) Agricultural support equipment 0.03 - - 0.01 0.04 (j) Administration 2.22 - 0.34 0.72 3.28

Subtotal 7.91 - 1.19 2.46 11.56

1. Consulting Services (a) Construction supervision P4S 1.49 - 0.23 0.32 2.04 PTPT 0.24 - 0.04 0.05 0.33 DGCK 0.14 - 0.02 0.03 0.19 DGT 0.10 - 0.01 0.02 0.13 JMT 0.44 0.06 0.09 0.59 (b) Studies and investigations Inventory, upgrading & ecological impact 4.05 - 0.61 0.86 5.52 (c) Monitoring 0.31 - 0.05 0.07 0.43 (d) Groundwater study 0.31 - 0.05 0.07 0.43

Subtotal 7.08 - 1.07 1.51 9.66

Total 29.90 0.80 4.61 9.27 44.58 ANNEX I - 58 - Table 4

INDONESIA

SWAMP RECL AITIOtJ PROJECT I

Proposed Allocatlon of Loan Proceeds

Net base cost and expected price Loan Disbursement increases amount percentage USS million

1. Civil Works (a) Land clearing; canals 1_84 1.84 100 (b) Land clearing; house lots & villages Z 2'.' - 0 (c) Land clearing; farm plots 2.89 2_89 100 (d) Earthworks; canals 3.69 3.69 100 (e) F-arthworks; tertiaries, bunds 1.09 - 0 (f) Strucreres; canals, base camp 2.19 2.79 100 (g) Structures; tertiaries 0.65 - 0 (h) Houses & village facilities 4.82 - 0 (i) Buildings; agric. support 0.11 - 0 (j) Land compensation 0.10 - 0

Subtotal 20.21 11.21 56

1!. Services, Equipment & Supplies (a) Construction supervision equipment 0.42 0.42 100 (b) Settlers relocation 1.49 - 0 (c) Settlers supplies 4 torols 0.49 - 0 (d) Health equipment & supplies 0.17 - 0 (e) Subsistence to seLi-s'S 2.94 - 0 (f) Inventory, upgrading 4 ecological studies, equipment & training 1.14 1_14 100

(g) Groundv-ater study equipent 0.30 - (h) Monitoring equipment 0.44 - 0 (t) Agricultt ral support equipment 0.04 - 0 (j) Aduinistration 2.94 - 0

Subtotal 10.37 1.56 16

III. Consulting Services (a) C,onstrucrton supervIsion P4S 1.81 I.Ri 100 PTPT 0.29 0.29 100 DCOY /a 0.17 - 0 DCT / 0.12 - 0 JTh 0.53 0.53 100 (b) Studies and investigations Inventory, upgrading & ecological inpact 4-91 4.91 100 Groundwater Investigation 0.38 - C Monitoring 0.38 - 0

Subtotal 8.54 7.54 86

Total 39.17 20.31 52

IV. Unallocated Physical contingencies 461 1.69 37

Total 43-7R 22.00 30

Taxes 0.80 - 0

GR.AD TOTAL 44.58 22.00

/a Financed under Irrigation XII (Loan 1645-IND) lb Financed by OI. -59- Table 5

INDONESTA

SWAMP RECLAMaT1ON PROJECT I

Estimated Schedule of Disbursements

IBRD fiscal Cumulative year and disbursement semester (US$ million)

FY82 First _ Second 1.2

FY83 First 3.0 Second 6.0

FY84 First 8.0 Se cond 10-0

FY85 First 12.0 Second 14.0

FY86 First 19.0 Second 22.0 AhNEX I Table 6 - 60 - Page 1

INDONESIA

SWAMP RECLAMATION PROJECT I

Bill of Quantities and Costs /a

Unit Item Unit Quantity cost Total Rip -000

1. Land Clearing

1.1 Mechanical clearing Navigation canal ha 84 2,000 168,000 PriLary canals ha 177 1,553 274,881 Secondaries ha 490 1,110 543,900 Base camp ha 2 2,000 4,000 Creeks ha 48 1,553 74,544

1.2 Manual Land Clearing Farm plots ha 5,600 227 1,272,999 House lots ha 1,60, 481 770,800 Public facilities ha 420 481 202,020

Subtotal 3,311144

2. Earthworks Rp Rp 000

2.1 Mechanical earthworks Navigation canal cu m 734,000 715 524,810 Primary canal cu m 757,000 715 541,255 Secondary canals cu m 876,000 715 626,340 Shaping embankments ha 115 231,000 26,565 Blockage of creeks cu m 40,000 1,000 40,000 Fill of base camp cu m 16,000 715 11,000 Stabilization of base camp cu m 1,500 6,600 9,900

2.2 Maaual Earthworks Tertiary canals cu m 141,000 990 179,190 Settlement drains cu m 112,000 990 110,880 Field bunds cu m 350,950 990 347,440

Subtotal 2 241738O

la All costs are for end of 1980 and include a 5Z tax on civil works. -61- ANNEX I Table 6 Page 2

Unit Item Unit Quantity cost Total ----- Rp 000-

1. Structures

3.1 Bridges Navigation canal ea 1 15,730 14,300 Primary canals ea 9 7,683 62,865 Secondary canals ea 102 3,400 315,282

3.2 Tertiary structures ea 788 439 314,999 3.3 Settlement drain cutlets ea 204 451 92,004 3.4 Settlement jetties ea 102 2,700 275,400 3.5 Navigation jetties ea 2 19,100 38,200 3.6 Tidal control structure ea 1 287,000 287,000 3.7 Base camp Houses (A) sq m 180 110 19,800 Houses (B) sq m 2,160 73 156,816 Offices sq m 400 8 33,300 Workshop sq m 400 66 26,400 WLs ea 1 3,438

Subtotal l,639,704

4. Settlement

4.1 Settlers houses /a ea 3,200 575 1,839,200 4.2 Basic villages /b ea 6 56 333,96C 4.3 Main village /b ea 1 169 168,773 4.4 MobiLizatior. and transport ea 2,800 /c 252 705,100 4.5 Tools and supplies ea 3,200 72 228,800 4.6 Subsistence package ea 3,200 436 1,398,999

Subtotal 4,674,832

/a including all material and construction costs of houses, 7 barrels/family for drinking water; I pit latrine.

lb See Table 7 for breakdown.

/c Java and Bali based transmigrants. Four hundred indigenous families are expected to settle by themselves. -62 -ANNTEX I Tabie 7

INDONESIA

SWAMP RECLAMATION PROJECT I

Village Facilities

Uynit Item Unit Quantity cost Total ____ Rp '000

1. Basic Village (6 total) Ofrice sq m 40 55 2,200 Storage sq m 40 35 1,400 Mosque sq m 56 50 2,800 Meeting place sq m 50 50 2,500 Primary school sq m 320 60 i9C?J0 Staff houses sq m 300 50 - ^) Village head house sq m 50 50 j Health subcenter sq m 80 62.5 _')0

Subtotal 5_>,00

2. m-=Village (I total) Office sq m 108 55 5,940 Storage sq m 54 35 1,890 Post and security sq m 54 50 2,700 Bank sq m 36 50 1,800 Mosque sq m 91 50 4,550 Meeting place sq m 135 50 6,750 Primary school sq m 320 60 19,200 Lower secondary school sq m 320 60 19,200 Staff houses sq im 600 50 30,000 Village head house sq m 75 60 4,500 Health center sq m 250 62.5 15,625 REC sq m 166 62.5 10,375 Agr. research sq in 160 62 5 10,000 KUD/Coop sq m 475 44 20,900

Subtotal 153,430 AMIWEX I - 63- Table 8

I ND0lPYSA

SWAMP R ELAMATI0N PROJECT I

Consulting Services: Categorles and Estimated Schedule

Indonzstan Fiscal Year 198l/82 1982/83 1983/34 1984/85 1985/86 Total man morths

1. Project Iwoleuen'-~t1on

31.1 Foreign Consultants P4S - Construction engineer La '2 12 12 *2 9 57 - Surveying specialist - - 7 - - 7 - Short-terc experts 4 4 4 - 12

TM- Project Coo'dinator - 12 12 12 - 36

Subtotal 16 28 35 24 9 112

1.2 Local Consultants t4S - Engineers 36 36 36 36 24 168 - Teinulc tans 72 72 72 72 48 336

PTPT - Engineers - 8 12 12 8 40 - Technicians - 16 24 24 16 80

DOCK - Engineers 36 24 - - - 60 - Technicians 108 72 - - - 180

DC?' - Engineers - 8 12 12 - 32 - -"chnicians - 16 24 24 - 64

Subtotal fe. ?roject nplenentation - Engtnee-s 72 76 60 60 32 300 - Technictans 180 l76 120 120 64 660

Ir. Studfes and investigations p4S: -ynE2ry Studfdes Foretgn consultants 24 48 48 - 120 Local consultants: - Engineers 48 96 96 - 240 - Technlilans 96 192 192 - - 480

P45: Unrading Studies Foreign consultants 18 36 18 - - 72 Local consultants: - Engineers 30 60 30 - - 120 - Technicians 60 120 60 - - 240

P4S: Eviro Studies Foreign consultants 8 4 - - 12 Local consultants: -Engineers 60 48 - - - 108 - Technirians 120 96 - - - 216

P4CS Gtoundwater Studies Foreign consultants 9 3 - - - 12 Local consultants: - Engineers 36 12 - - - 48 - Technicians 72 24 - - - 96

P4S- P sl.ologland Socio-Econooic lt,nltorinA /b Foreign consultants - - - - 9 9 Local consultants: - Englnears - - - 60 60 - Technicians - - - - 120 120

Subtotal for Studies and Investigatioa: Foreign consultants 59 91 66 - 9 225 Local consultants: - Engineere 174 216 126 60 576 - Technicians 348 432 252 _ 120 j~15

L_ This engineer would also assIst PTPT and DCT mainly in the field. l& Consultants wtsld be engaged by P4S (pars. 4-19). - 64 - ANNEX I Table 9

INDONESIA

SWAMPRECLAMATION PROJECT I

Consulting Services-Cost Breakdown /a

Expatriates Local Foreign Local Total consultants Item currency currency cost Local currency US$/rnn month

Billing Rate Basic salary 3,060 - 3,060 685 Social benefits 827 - 827 154 Home office overhead 2,440 - 2,440 570 Overseas allowrance /b 867 - 867 178 Net fee 452 - 452 113

Subtotal 7,646 - 7,646 1,700

Reimbursable Expenses Mobilization and travel International travel 627 - 627 _ Relocation 350 - 350 - Subsistence en route 67 - 67 33 Miscellaneous 138 - 138 20

Subtotal 1,182 - 1,182 53

Duty Station Expenses Local duty travel - 187 187 34 Per diem - 308 308 47 Field office overhead - 494 494 46 Housing and utilities - 1,481 1,481 79 Transport - 802 802 103

Subtotal - 3,272 3,272 309

Total 8,828 '.L_72 12,100/c 2,062/d

/a Based on recent contracts, projected to end-1980 prices. /b Field allowance for local consultants. /c May vary between $9,700 and $13,700 depending on nationality and experience. Id Applies to engineers, senior agronomists, senior economists and senior surveyors. Cost of draftsmen and technicians averages $660/man-monrth. - 65 - ANNEX 1 Table 10 Page 1

INDONESIA

SWAMP RECLAMATION PROJECT I

List of Equipment and Supplies

Desciiption Quantity Unit cost -TdtaYcost ~~us$ -

For Base Camp

Generators (25 kva) 3 27,500 82,500 Radio equipment (SST) LS 23,760 23,760 Workshop equipment LS 116,160 116,160 Misc. water supplv and storage LS 35,200 35,200 equipment

Subtotal 257,620

1¾or Construction Supervision

Boats 6 12,000 72,000 Surveying equipment LS 59,000 59,000 Office equipment LS 3,750 3,750

Subtotal 134,750

For Health Services

Boats 3 12,000 36,000 Medical and office equipment LS 16,000 16,000 Sprayers and parts LS 12,000 12,000 Insecticides LS 67,000 67,000

Subtotal 131.000

For Agricultural Supports

Field and meteorological equipment is 11,000 11,000 Boats 1 12,000 12,000 Bicycles 6 200 1,200 Laboratory equipment LS 6,800 Office equipment LS 3,000

Subtotal 3 ANNEX I - 66 - Table 10 Page 2

Description Quantity Unit cost Total cost USS …

For Stueies and Investigations

(a) Inventory study Boats 3 12,000 36,000 Water and soil testing equipment LS 34,000 Stereoscopic equipnent LS 35,000 Satellite imagery, aerial photos LS 150,000

Subt,tal 255,000

(b) Upgrading study Boats 6 12,000 72,000 Meteorologic and hydrometric equipment LS 150,000 Water and soil testing equipment 2 35,000 70,000 Surveying equipnent LS 80,000

Subtotal 372,000

Subtotal 120,000

(d) Groundwater investigations Portable drilling equipment 2 70,000 140,000 Casings and screens 500 m 30 15,000 Compressor 2 20,000 40,000 Water level and quality testing equipment 5 5,000 25,000

Subtotal 220,000

(e) Mlonitoring Meteorological and hydrometric equipment LS 68,000 Surveying equipment LS 75,000 Water and soil testing equipment 2 35,000 70,000 Laboratory equipment 120,000

Subtotal 333X000

Total for studi?s and investigations 1 300,000

Grand total 1,8527370 -67 - AIEX 2 Table I

IWDONESIA

SWM(P RMCLAfuTto PROJECT I

Price Structures for Agricultrral Outputa (lSS - 1980 currency valnes)

Opera- ltemas tion 1980 1985 1990

Rice (ton) Export price. Ihai St brokens. f.o.b. Bangkok 46S4 527 544 Quality adjustmer /a 8-% 371- 422 --35 Freight and insurance - 20 20 20 C-i-f. price, Palembang - 391 442 455 Eransfer to utiolesalers - 3 3 3 Mills to .. holesalers - 2 2 2 Ex-%il price. Palembang - 392 443 456 Conversion to paddy 63Z 247 279 287 Milling and cleaning costs less value of byproducts - 5 5 5 ?addv ttaosport, Karang Agung to Palesbang and cransfer to wholesalers - 3 8 Randling, transfer and storage, farm to wharf - 4 4 4 Economic farr.-gate price, tSS/ton - 230 262 270 Economic farm-gate pri-e, Rp/kg /b - 144 164 169 (Financial farm-gate price. Rp/kg) (105 ) (115) (i30) Sovbeans (ton) Expo-t price. f-o-b. US G,lf port /c 281 331 395 Freight and insurance + 35 35 35 Transfer to Palembang ,holesaler 4- 3 3 3 ramsport, Karang Agung to Palembang wA olesaIer - 7 7 7 Econoiic far-gate price, MS/ton - 312 362 426 Economiic farm-gate price. Rp/kg /b - 195 226 266 (Financ'al farm-gate price, Rp/kg) (250 ) (270) (290) Corn fron) Export pu'ce. f.o.b- MS Gulf port i72 189 194 Freight and tnsuranc4 4 35 35 35 Transfer to Palembang ubolesater + 3 3 3 Transport. tarang Agung to Palembang wkolesaler - 7 7 7 Econonic farm-gate price, TD;S/tot Id 203 220 225 Economic farm-gate price, Tp/kg , - 127 138 141 (Financial farm-gate price, fP/kg) (90 ) (100) (110) Fresh Coconuts (nut) Index of world copra price in constant terms inde" (100%) (96%) (89%) Economic and financial farm-gate price, 1SS 0-160 0-153 0.142 Economic and financial farm-gate price, Rp lb - 100 96 89 Fresh Bananas (bunch) index of wrld export price of bananas in colistant terms index (100) (96%) (92%) Econoutc and finanrial farm-gate price, ISS 1-00 0.96 0.92 Economic and financtal farm-gate price, Rp /b - 625 600 575

Ia A.sumed outpuit qualtty nix as follows: 30X high quality (5% broke-s); 50Z wed iam grade. (25-30Z brokens) valzxed at 75% of high quality; and 20C low pjal:itv(42t brokens) ralued at 'G% of high quality- /b Prices are converted at the official excnange rate of Rp 625 - USSI-00- c Fiqual to standard price projections. c.itf. Rotterdam, minus T!SSZO/ton insurance and freight from Gulf port to Rotcerdan- !d It is Iikelv that only a small market:ble surplus of corn woild be arailable abo-e the settLers own 'subsistence requirements. The economic fanr_ate value of subsistence produce would actually be higher than recorded here, ,is such produce eouldhare tr, Se tbported tnto the project area either via Palembang or from other wamp region settlemenrts (ljpang) in the absence of pro,ductlon- AM 2 Table 2

I1DONESIA

SIJSAP RECLAMATIONPROJECT I

Price Structures for Agricultural Inputs (USS - 1980 currency values)

Opera- Items tlio-z 1980 1985 1990

Ure" - 46Z N (ton) World export price, f.o.b. Europe 201 272 300 Ex-factory price, Palembang /a 216 287 315 Handling and distribution to retail - level, Kararig Agung + 11 11 11 Storage and transfer to farm + 4 4 4 Econoatic farm-gate price, US$/ton - 231 302 330 Economc farn-gate price, Rp/kg /b 1144 189 206 (Financial farm-gate price, Rp/kg) (120) (140) (166)

TSP - '6Z P (tori) World export price, f-o.b- Florida 148 208 2'0 Freight & insurance to Palembang /a + 30 30 30 Handling and distribution to retail level, Karang Agung 4+ 11 11 11 Storage and transfer to farm 4 4 4 4 Economic farm-gate price, USS/ton - 193 253 255 Economic farm-gate price, Rp/kg /b - 121 158 159 (Financial farm-gate price, Rp/kg) (115) (125) (135) rnsecticides (liter) Economic farm-gate price, US$ 10.40 10.40 10-40 Economic farw-gate price, Rp 6,500 6,500 6,500 (Financial farw-gate price, Rp) (2,000) (2,500) (3,000)

Rodenticide - Zinc Phosphide (kg) Economic farm-gate price, US$ 6.70 6.70 6.70 Economic farm-gate price, Rp 4,200 4,200 4,200 (Financial farm-ga2e price, Rp) 2,300 2,600 2,800

Purchased Seeds Rice Economic farm-gate price: US$/kg 0.35 0.42 0.48 Rp/kg 220 260 300 Financial farm-gate price, Rp/kg 150 180 220 Soybean Economic far-gate price: LISS/kg C.64 0.72 0.e0 Rp/kg 400 450 500 Financial farm-gate price, Rp/kg 300 350 400 Coconut Economic and financial far=-gate pcice: US$/seedling 1.12 I-05 1.00 Rp/seedling 700 65¶ b25 Bananas Economic and financial far--gate price: USS/sucker 0.40 0.38 0.37 Rp/sucker 250 240 230

/a Urea Is valued e:-PUSRI plant, Palembang. Price projections for bagged urea, f.o-b. Europe have been adjusted to Asian aarkets by adding a transport prewulm of US$15/ton. /b Prices are converted at the official exchange rate of Rp 625 - USSI.00- SWlAI'FQ`CLARATION PFnJP.CT I

Net Fconnmlomenenltta Prom Rlce ,Paddy)Prodhict ion -(198n 1is)

1882/83 1983/A4 I /984/85 1985/8 A6 98A6/q7 1 (87/pA 19(Rq/89 IqRI/90 I10(/Qt Iol./92

Prodtict ifon llarvetted area (ha) 168 1,919 11630 4,76h s,130 5,872 6,?10 6,400 6,400 6,400 Co'mposite yleltd h (ton/a ;i) 1.0 1,1? 1,29 1.51 1.73 1.93 2.11 2.28 2,30 Production (ionr-) 2.41 )68 2,(40 4,1h69 7,180 9,210 11,71n 13,120 14,60 IS1,00 15,52( Crots valhie of prottdu,Unn /bh (0;$) 41,0(1 5447, 00 I,193,000 1,881,000 2,431,000 3,n00,000 3,502,000 3,930,0O0 4,131,000 4,191,0nO I'u rohanad inu !is (rrWWl7k-g7f111'1-1T11;,--tS 17 19 I5 30 3S ( tons) 41 51 56 58 3 33 60i 120 160 206 267 (US$) /h 328 158 171 700 9,000 20n,000 36,000 40,00, 64,000 85,0r0 TSI' (kg/ha)h0 106,000 118,000 12,0oo0 1( It 11 18 21 (tons) 25 28 29 2 19 40 60 AO 106 I1I 160 (OSS) /) 4n0 179 186 4,200 10,O0) 6,000 270,000 27,000 33,000 41,000 45,000 t stnc tcled 47,000 (1/hliI n,s 0,6 o.7 1.0 l.2. 1.3 1.5 1.5 1,6 I,7 , (1) AS 1,10( 2,50o 4,800 6 ,400 7,7nn 9,200 9,600 10,200 140,900 ' (trs.s /h 900 11,80 (o,00n 40,n0o 66,000 0,000 6,000 no,00oo00 0 106,000 I13,000 ttodenticlJo (ko2/b) )- n.5 0,3 0,nI, ?12 (,1 0.15 n.1.5 (kg) 0.6 0,17 hS I ,n0) [,100 so0 640 77n0 9?0 96n (015) /b 1,020 1,090 600 f,00 7,00nn 3,0n0)n 4,,000 5,0 6,00n 7,000 Scedl ¾ (kg/ha) 7,no0 8,0o0 25 ?5 ?5 5 30 30 130 30 (Lons) i0 30 48 QlQ1 1,0 17? 1R7 92? (C ) /t, 192 142 /a 127,000 7 50,0001,), 69,0009, A80,000 88,000 (1,000 3,000 03,000 lt rv.l lahbor /dl (mia -day/h) - - - 13 tol 22 17 a rtan'-1,,y~al(o'~ I - - - 61>o,000 103,000, 127,00)108,000 48,000 9,n00 (12;$5) - * _ 78,000)(( 112,000 163,000 138,000 61,00n 12,000

.'e t vo1,oc of prndiw Ino (1'S$) 38,4(0 515I,0r00o , ,00om 1, ,.4I ,000 2,0c9,n1,0(',5 s 89,0 3,w f l,0 3,524,000n 3,750,0)00 1,R08,000

/a l.nLipobStLo of violds 4f housclotH And fiolds of setILler grouptialt varlous phasesof aettlantent and developner(t. T7 Vol6; H ,if nutplit a,1d inputs Interpolated froemprtce utructores 1, Tribles I and.t2. rf 81IL, s eod for fI rit Iwo yLears providedg 8rult Ia by ), Tranim I rastrand accoin t for In s5ittIoment cos ts, 7Tl Alit l rod ktho r rc u,ilred for farin work Is attrIhuted here to pvrodutc rice tIon, arinl Vtt iied at 1uS$I. 27 (Rp A00) per man-day. Requiurementsfor hiIr,ld Iz, wtr.r ,iet,'rml rined .on the Salta of A mollth y analyal a of settIer Iaborsupply and demandfor the vrlinis arrI vtr4 pRronPs,not on ltl IVet.Ldge 11illoal hat7Sl. Alhor supply pro)Octions tiore halted on the model presentedt In Table 8, laibor demadndfrom the schedule presented lu Tl,a 7 :,.u Ia. to i.-ragv of various , ropfs prosented tin tins tahlta and Tables 4-01. TIiie val2e of settler" own labor Is acco'snted Table .q for In -70- AW TaK

1NOONESIA

SIJANP RECLA?ArTIONPIRoJECT I

Set Econoaic Benefitz From Soybean and Cora Production ( 1980 OVSS

1983/84 198.4/85 1985/86 1986/87 1987/88 1988/89 1989/90 199(/91 1

Soybeans

Production

*Rarvested area (ha) 120 470 1,050 1,600 2,050- 2,240 2,240 Composite yield (ton/ha) 0.50 0.59 O.-64 0.737 .R-l * GA? Production (cons) 60 280 670 1,170 1,670 2,036 2,170 Gross value of production /a (US$) - 71,000 101,000 252,000 454,000 670,000 R43,h300 924,000) 9

Purchased Input Usage lb

TSP (kg/ha) 10 13 14 17 18 21 24 (tons) 1.2 6h1 14.7 27.2 36-9 47.0 65.0 (USS) la 30° 1,500 3,700 6,r00 9,400 11,90n 16,600

insecticides (1/ha) 0.5 r).6 0.6 0.1 0.8 0.9 1.0 (1) 60 280 630 1,129 1,640 2,016 2,?40 (USs) /a 600 2,900 6,600 11,600 17,000 21,000 23,300

Seed (kg/ha) 20 25 25 25 30 20 30 (tons) 2.4 11.8 26.3 40.0 61.5 67.2 67.2 (USS) /a 1,700 8,500 20,000 30,000 47,000 53,000 54,0090

.1et value of production (USS) - 28,400 88,100 221,700 405,600 596,6(0 757,100 830,100 R Corn

Production

Harvested area (ha) 331 524 800 RO0 900fO Rm g00 Composite yield (ton/ha) 0.60 0-73 C.R1 °.Q6 1.06 1.15 1.18 1.20 Production (tons) :(00 380 650 770 R50 q2O 940 960 Gross value of production la (US$) 43,000 33,000 143,000 171,000 189,000 205,0On 210.000 216,(00 2 Purchased Input Usage /b

TSP (kgfha) 10 15 1° ?7 1 3( 'in 30 (tons) 3.3 7.9 14.4 21.6 24-0 24.n 24.0 24.0 (USS) /a P00 2,000 3,700 5,'O-,o 6,100 6,10 6,100t 6,100

Seed la (kg/ha) 10 10 i 12 13 14 15 I5 (cons) 3.3 5.2 8.9 9.6 1°n4 11 12.0 12.° (USS) -a 700 1.100 1q0fl 2,100 2,300 2.500 2,700 7,70n

Net value of production (USS) 41,500 79.90n 137.400 163.400 180,600 116,400 201,200 207,2-0 2

/a S'alues of o,;rputs and tnputs interpolated from price structures in Tables I and 2.

/b Ali hied iabor for far= work attributed to r!Le production (Table 1). tNDONBST- SWAPRL AT1QHMOJECT I

Coconut Production Volumes and Yslues JL (1980 Us$)

Coconut Production build-up /b Value of Investment Grouip A Group B Group C Group D Group E Total productton Cost (USU) Jun/Dec 1982 Jun,Dec 1983 Jun/Dec 1984 Jan/Jun 1983 Jan/Jun 1984 production (US$) /c /d

1982/83 (67 ha planted) -11,100 1983/84 (77 ha planted) (66 ha planted) -23,200 1984/85 (12 ha planted) (78 ha planted) -17,500 ' 985/86 ,986/87 1987/88 …------…------'000 fresh nuts -----.--- 1988/89 101 - - - 101 15,000 1989/90 168 H16 - 99 - 383 54,000 1990/9l 201 193 48 165 117 724 103,000 1991/92 268 231 80 198 195 972 138,000 1992/93 335 308 96 264 234 1,237 175,000 1993/q4 402 385 128 330 312 1,557 221,000 1994/95 469 462 160 396 390 1,877 266,000 1995/96 536 539 192 462 468 2, 197 312,000 1996/97 570 616 224 528 546 2,484 353,000 1997/98 570 655 256 561 624 2,666 378,000 1998/99 570 655 272 561 663 2,721 386,000

2015 570 655 272 561 663 2,721 386,000

La All coconuts aswsumedto be planted In houselot.

Lb For each planting, it is assumed that bearing will commence six years after planting, that 120 trees/ha would bear, that the initialyLeld would be 1,500 nuts/ha (12.5 nute/tree), rising thereafter in annual increments to 2,500; 3,000;:4,000; 5,000; 6,000; 7,000; 8,000; and 8,500 nuts/ha (70 nuts/tree).

L Fconoisc value of output projected from Table 1.

/d Assuming ISO seedlings/ha purchased of which 120 survive. For cost of asbdling, see Table 2. Some of the chemicals allocated to field crops (Tablet 3 and 4) vili be applied to houselot perennials. All labor hired by farm assumed to be used in rice culture. Family labor on perennials assuned at 210 man-days/ha/year (Table 0l).

CM1 WfONES LA

SWAMiPRECIANATION PROJECT I

Banana ProductLon Volumes and Values L (1980 US$)

Banana Production Build-up /b Value of Investment Group A Group B Group C Group D Group e Total production Cost Jun/Dec (US$) 1982 Jun/Dec 1983 Jun/Dec 1984 Jan/Jun 19R3 faTl/nhi 1984 production (US$) LC /d

------_'000-----_------'OoO freah bunches ------1982/83 (67 ha planted) - - 1983/84 40 -20,000 (77 ha planted) (65 ha planted) 40 38,800 -41,000 1984/85 40 46 (31 ha pLanted) 39 (19 ha planted) 1985/86 125 120,000 -31,000 40 46 19 39 47 191 l13,300 1986/87 60 46 19 39 47 211 200,500 198)/88 6O 69 19 59 47 254 238,700 i 1988/89 60 69 28 59 71 1989/90 287 266,900 N 80 6- 28 59 71 307 1990/91 282,400 80 92 , 28 78 71 349 321,000 1991/92 80 9; 37 78 95 382 351,000 1992/93 80 92 37 78 95 382 352,000

2015 80 92 37 78 95 382 352,000

.La All bananas assumed to be planted in houselot. Lb For each planting, it ls assumed that ue.iring wilL commence one year after planting, that 600 plants/ha would bear, that the initial yield would he 600 burtchtsl/hla rttiltn the.-eafter in annual increments to 600; 600; 900; 900; 900; and 1,200 bunches/ha. Lc economic value of output projected from TabLe 1. Ld Assuming 750 suckers/ha purchased of w^ch 600 nurvive. For co8t of sucker, see TaLble 2. Some of the chemicals allocated ,fdcrnns(Tseea 8 and 4) will be applied to houselot perenniala. All labor hired by farm aaumed to be used in rice N cuiture. FPmtll l1ator on perennialA assumed at 210 man-days/ha/year (Table 8). - 73 - ANMFX 2 Table 7

INDONESIA

SWAMP RECLAMATION PROJCT I

Assumed Labor Inputs Per Cropped Rectare (Man-day equivalents)

Roteyard Dry-season perennials Wet-season soybeans (bananas and Month rice and corn coconuts)

January 24 15 February 9 - 20 March 9 - 20 April 9 - 20 May 33 - 10 June 26 26 10 July - 24 25 August 14 25 September 36 25 October 9 20 20 November 32 - 10 December 29 - 10

Total Per Crop 180 120 210 -74- AN Tab~

IhD0NESIA

SWAMP RLAMATION PROJECT I

Developmeat of Typical Transmigrant Family lAbor Force

man-days Man-d

No. of _Ae structure (vears) Family Adilt available availa years First Second Third Foutrth size labor (normal (pe settled Father /a Mother lb child /c child /c child /c child /c (person5) unilts months) /d motbas

0 35 29 10 7 3 - 5 1.7- 43 44 1 36 30 1 1 8 4 - 5 1.7 43 46 2 37 31 12 9 5 0 6 1.5 38 41 3 38 32 13 10 6 1 6 1.8 45 49 11 39 33 14 11 7 2 6 1.9 48 51 5 40 34 15 12 8 3 6 2.0 50 54 6 41 35 16 13 9 4 6 2.3 58 62 7 42 36 17 14 10 5 6 2-6 65 70 8 43 37 18 15 11 6 6 2.8 70 76 9 44 38 19 16 12 7 6 3.1 78 84 10 45 39 20 17 13 8 6 3.3 83 89 1 1 46 40 21 18 14 9 6 3.6 90 97 12 47 41 22 19 15 10 6 3.7 91 99 13 48 42 23 20 16 I 1 6 3.9 98 106 14 49 43 24 21 17 12 6 4.1 102 110 1I 5 44 25 22 18 13 6 4-3 109 117

/a Males 19 years wf age and above are assumed to pro-vide 1.0 adult labor Units.

1b Farmales 18 years of age and above are assumed to provide 0.7 adult labor units, except during the vear childbirth when they provide 0.5 units-

!c For simplicity it is asaumed that 50% of the children are mal'e, 50% female, and that an 18 year old or adult child provides 0.85 adult labor units. Labor input of teenaged children Is assumed to increase lollows:

Age (years': 13 14 15 16 17 18 Proportion of adult input: 10% 20t 30% 60% P.3Z 100; Adul. labor unzs: 0.09 0.17 0.25 0-51 0.68 0.85

The average age of marriage among local trausmigrant families is 23 for men and 18 for wmen, and the f two children may actually leave the home after their 21st year to establish their own homes, in that event. the familv labor force would level off at 3 labor units., as the inheriting chfild and his spouse sume nore work responsibilities and the aging parents gradually less. To simplify calculation of long- term settlement benefits, all children are here assumed to remain on original farm through project perfod, and to engage in wage labor rather than forming new farms.

/d Assuming 25 working davs per month-

Ie Assuming 27 workIng davs per ronth.

Source: 3ased on Agro-Economic Sur-.ev data froma 1977 sur:ey ia Delta l2pang. reported i- Reference I 'Table 1), Voi. 71, p. 255. - 75 - AWFl 2 Table 9

IN7NESIA

S3WAls RECL&.A_TIOM?!nJFCT I:

Economic t'alue of Fazilv Labor in Areas of Origin and Settlement la (1980 U.SS)

Prcjected off-farm earnings tn settleeow^t area /f Opporturnity cost of Total famailv labor in Java!Biali Group A Groap B Group C Group D rroup E off-farm Value of Cumlative Value of (672 (770 (315 (655 (78O labor off-f-f-7 Departure departure labe- /e families) faailies) families) families) families) (030 labr /g (fa3iilies) (fauilies) (tS$) --- (man-days per faraily worked off f.rm) - days) (05$)

3 1, 327!b 1,327 23-4,O0 45 - - - -3, 1,558/c 2,885 508,0009 5 - 'C5 - 147X3,7 31 T1H 3,200 563,000 soSC 615 4c 2!1) 26^t,000O - 563,0.O in) so 85 In 4s 6, 21 4,000 7 - 563.000 so 50 50 "0 50 160 20%,000 - 563.000 50 50 50 9° 91O 160 2o5,0m0 7, - 563,000 50) 50^ 5 5, c,^ 160 20S,0W00 - 563, 000 0 5e 50 9O 50 1760 205s,000 'I. - 563,000 50 50 50 50 5" 160 205,000 sz - 563,000 50 50 5 *0 5 160 205,000^ ,3 - R45,000 125 50 50 50 50 210 26$,00u 74 - P45,000 125 125 590 125 50 317 406f,00 - 48b5,000 760 125 725 1} 125 4C0 629,000 7',>- 1,126,000i 260 260 125 260 129 653 874,0,0 ,- 1,126,000 260 260 2w0 260 260 R32 I,4305,000^. O 1,12(6,000"- 460 260 260>( 260 260 066 1,237,000 1,408,00^w077 - 466 _69 60 460 260 1,291 1,602,000 -OAJ4J - 1,408,013^0 4i6' 460 460( 460 460 1,472 1,884,000)

- 1,4m0,^w00 460 460 460 4&0 46f1 1,472 1.RP4,000

i zcable estimates the total pportunltv cost oa withdrawing t'he 3.2^00 settler families fr.m the Javalball labor utce, and the wage or labor share earnings of t1e settler fasmilles in rhe sertlesaent area (5rarane Agqung) The analy- s would change ooly neglIgibl, by re,lace.7ent of 1)Z of the transais.grants with settlers from Sumatra- The economic -The of settler labor on their own a:ss is registered hy the net value of agricultusral production (Tahle 10), 7 9 ._ragiog at f7ull develovment Rp (.-S"007fanilv(- 1S.6/fanllv) or RP 2,125/rmanday (^'SS340fmadayV

-OUDS A e-d D- roups B and roup C-

-lued lnitia1lv at ' Sil6/fantlv(Rp per/fa-ily-er annu.- -his could be earned typically by 160 days of labor 9 the father at i'SSO80day (Rp 00/davy and 120 davy o; labor by the motrher at '5SO..40/dav (Rp 250/day). Value of a~llv labor increases as children reach naturitf r, d find work at same real wages and with sarae frequenry as -rents

30 ma-days of pafd labor are requfred from each family during first two years of settlerent for land clearing and -. ation of tertiarv drains- This is ro.r-;hlythe aamir, which car. be spared from farm opecratiorsduring the first - years_ Thereafter labor -uriag slack seasons, other tran on other settler farms on an. exchange bas-s, inc7udlr,g -her consrtrction operations, :ofgt:nf, fisheries, transport, traeo, and artisan activities are assumed l1mitee by -^ to 50 zaon-days ver ann,=, out of -,el over 7B'fl

9 '1 oft-atn labor is valued at ' -2 /aan--dav (p ROO?'man-daj- as Is all nonfamilv labor hired by farr. (Tahle 3) for - season wrk duri7.. eariy se:.le-^eat years. - 76 - ANNE.'( 2 Tatle I

INDONESIA

SWA_P RECLAMATION PROJECT I

EconomLic Rate of Ret-urn Calculation (1980 US$ million)

Net value Agricultural production benefits (cost) of Net Soy- Coco- Bana- settler Project O&M project Rice /a beans lb Corn lb nuts Ic nas Id Total labor /e costs7/f costs benefitt

1981/82 - - - - -2.18 - -2.18 1982/83 0.04 - -0.01 -0.02 0.0l -0.20 -5.10 - -5.29 1983/84 0.52 - 0.04 -0.02 - 0.54 -0.32 -8.85 - -8.63 1984/85 1.10 0.02 0.08 -0.02 0.09 i.18 -0.30 -8.08 - -7.20 1985/86 1.65 0.09 0.14 - 0.18 2.06 -0.35 -3.35 - -1.64 1986/87 2.09 0.22 0.16 - 0.20 2.67 -0.36 - -C 9 2.01 198,/88 2.59 0.41 0.18 - 0.24 3.42 -0.36 - -0.30 2.76 1988/89 3.06 0.60 0.20 0.02 0.27 4.15 -0.36 - -0.30 3.49 1989/90 3.52 0.76 0.20 0.05 0.28 4.81 -0.36 - -0.30 4.15 1990/91 3.75 0.83 0.21 0.10 0.32 5.21 -0.36 - -0.30 4.55 1991/92 3.81 0.86 0.21 0.14 0.35 5.37 -0.36 - -0.30 4.71 1992/93 3.81 0.86 0.21 0.18 0.35 5.41 -0.58 - -0.30 4.53 1993/94 3.81 0.86 0.21 0.22 0.35 5.45 -0.44 - -0.30 4.71 1994/95 3.81 0.86 0.21 0.27 0.35 5.50 -0.22 - -0.3 4.98 1995/96 3.81 0.86 0.21 0.31 0.35 5.54 -0.25 - -0.30 4.99 1996/97 3.81 0.86 0.21 0.35 0.35 5.58 -0.06 - -0.30 5.22 1997/98 3.81 0.86 0.21 0.38 0.35 5.61 0.11 - -0.30 5.42 1998/99 3.81 0.86 0.21 0.39 0.35 5.62 0.19 - -0.30 5.51 1999/2000 3.81 0.86 0.21 0.39 0.35 5.E2 0.48 - -0.30 5.80

2015 3_81 0.86 0.21 0.39 0.35 5.62 0.48 - -0.30 5.80

Economic rate of return = 13Z. la Froz Table 3. /b From Table 4. /c From Table 5. Td From Tab'e 6. /e From Table 9, representirg a netting oct of the opportunity cost of settler labor in the area of origin (Java/Bali) against off-farm wages of settlers in the project area (Karang Agung). If Base costs and physical cOutingencies from relevant items In Annex 1, Table 3. ~:,4WA- I A11. It4 jLepaseotat(veFarm Modeli

:DLVsic3 Farm O'tpucs ad ipt

Crop year 2a 16683/64 164P4/A 5 1 665IA",II 7 1987 /;z qRl/66 q69/00 I0M/61I 16iQ5?q~ l 66/tQ 1 1 01/O 1664.'95 jqo,96 lq"4/97 1997/98

Area P lantL i (ha)

Paddy (wet season) n03 ). 2 5 0).75 '1 0. 0. 25 0.35 02 5 0,3 0% ( .5 1.5 02 5 0, 25 Corn (dry godson) 2,3 0,5 (3 . 0.2 0,5 0,5 ). 25 ,5 -54 2 .2S 0 .2 0).2 5 Co0 302t8 0.I 0( O.101k(O 1 >0 fj 0 01 >10 1,1 000I 0,1 0. 10r Bananas 'i.1'~~~ (>10 020 (>10 07 040 010~~i fl010 12,1 1)0I'In 0 ,I 0,( m 01

ftc Id PadUpy (wet acln 5 123 14 4 ' 1.I 25 1 '1$ I75 / I15 145 1.,75 7's Sy he-ns (.A ryv s e s,on) - ( ,5 5 070I 0 ,704 '270 > 07 it,70 07 0 0. 70 ('70 (1.70)

I cc lot

Corn (tons/hla) '4 > 1 1 . 2 1.3 IA >2 1,12 I. 1.,2 I,2

Ba' nanas Chunce 1 /(, N11

tat/v lionsini) - 1,2 1.5 I.' iN' 'I 34 I2103, I)o '.4 I20132 3,5 3/ro I2 1,4 fi)nn 3,4 I ,?n2,1~~~~~~~(nn1)

Prtodklc ci1on P. dd y (12I 35 .4' 33 '5 ,¼ ,/ (45 .% 45 4 ,, "45 4,5 46R5 4A 5 Corn (toins) U( ) NA N ,(5 '-' t1'5 1 010,, t,3' In3 04 2,30 1()30 0.312 COCoInult ( Iki,t 5) ' .- 511 350 300l '.00 500 700 800 850) IIanir11as Chuchs . N(N a'n 60' 3 IS) I 120 120 I20 (20 120

1 'h1~~jca1ni!~~ (per hlt /h t'ei(paddy) (kg) IS (6 2 3 4I 35 65 85 58 ¶8 V"V (paddy) (kg) ( 'I (5 Ii 1 (61 2 7 363 92 t 32 26 7 261 j151 (corn A so Ybeans) (kg) IH' (5 I6 I I' 1) in (0 7' I0 30 30 30 0 3 0 I3setNtIlc IdCs ( padI.iv (I) 0, >0 1,2 .1 1" I" 1, . . 17l.1. 11, Insert lcilies Issybeans) I) - 0, 1,!~. 0,'I 0,Q .1(, . N 1,N , , , . Ro'Ieai ct(rl (paddy) (kg) .55( '5 (0. 01,I f~'2 11 .1 6 , 17 I11 '.12I 0,(7I 07I 11, 0.1' Padd,y seed (kg) 3 .1 I"3 V5). 330 50 I0 30 0 30) 30 30 1 Sceoi soybeansq (kg;) 2'N 1 ' 101 >5 70(I I 01 Solcorn (kg) 10 11 3 5 ' V 30 30 I1 0 0

t-ihor I npukts ( per (cnr0)

Fant Iy Ilabhor hoAN-a1, s(1 3r 1' ;> ,1 -A 4 p6 50)7 54 6I(444SI s SIc

NA 'r-'p yea rs beg~In wi t Oitw -,sc t ofth l no I 5C,36o0, 10.,NI ''tIher -B Perennl -to;' plan'ting' OIntei,;N5 wv b)h n'ppl)e'I t" , 1eit I 1( 21't1I )iN rela,''-AI''I 06 jr-"9~n

0AMP_RFl&0.AATION I1t0JFCT I

Repri-qtert3vue 8 ttler FAmily Income Ailaly83s In -9t89-3-r-x-R J-tDcme1983 (Rp)3

1983/8. 3984 'i398S 3989/86/8th 1)8,/87 1987/88 1Q988/89 13989/90 1990/91 1991'92 I 992/93 1993/94 1994 /95

Crons Agr !L%,ltorill

3'addv 27, SOCI 1 884 6ot3 .'f .'00 3 S 6O31 .23,60 53 63S000604, SO0 630,500 8i0,s00 6300,500 630,500 630,500 sn 'VI).~m?) - .)i"24, 30010( ~ 96,6' 700?0- 9 0 1 9f, 80( 79sn)90),ooo6' Po3,000 203,0no 203 ,000 203, 000 203,000 Corn I , 311/ 20. 000 5, 01) '9,400n 79,400 32,4 00 33,000 33, 000 33,000 33,000 33,000 33,000 COVINI)10 - - - - - 13,400 22, 300 26 700 3 5,600 44, 500 53,400 - 36, 000 36, 000 tS, .00 S3 3{o 5n !00 '1,800 6s9,000 69, 000 ,000 69,0no 69, 00

S,3ti tatI 1 . 80) 2l6,9,90 379Q90?0 9t) 4)00 bt?,2,9P 9900 9 05700 st80 962,20o 97L,100 980,noo000 90()

6F,j_ndjt,rna 'n

Vrtal fntrti I3e,r 00 ,?no,00 W.O 3,1'00 9, 300 1 ,80 l 137,6(00 19, 300 19, i0n 19,3O 139,300 19, 300 .sP fertt 3 Itrer tOO3 2,40f0 3,0, I,003 6, 800 8,7 00 1,(0 I1l, 6O I 1, 600 11,600 11,600 1,60 1 lnnn,-r3,IIi di 00 2 40(1 4 ,00 6,100 7, 900 0, 200 11,400 12, 300 12,100 1-2,300 32,300 12,^300 0x Roet '1, 3001d' , t0( 400 500 600 800pill 300 3,0oo0(3 , 000 ,oo00,Ono 0,o3000 Seed ii, f"'~ ,00 1,0 0no I,3 100 18,800 20 2o'1 ,30( 22,000 22,000 2)2 000 22,00 22,000 13lre.l iabor -- 2 60 ?f,0o '7 600 4 , 600 21,600 7,20O 2,40 -

Suh ot.t,I i1 0 44 2O 96,900 il on0 9_9t0 8 3800 73,4 _8,6 6 6_00 6,200 66,20o

r1tFtIAllnd Tnx - - - - - 6,0O ;,CG 1i4, 000 I 5,500 3o, 000 38, s3o 1 9, 800

F'et A5triul1tural ___e

Off2-Farun FarninKs J lf,()000 68,000 40,0)0 40, 000 40,000 40,000 40,000 40,000 40,000 40,000 300,0000 300, 000

rI t a I S t t e r ladil _ Income0 _ 325j8t3 3?5j?00 :492j900 621,900 853900 1 400 918, 100 927 900 995,400 1,002,900

g!a hItanedon ph yItaI ,i ant It I (t of 1n dkits an d outptp t a resen ted I2i n Annex 2, Teb 33, paid IabeL dAVe pre nced I nex 2, TableI , and f insanltal pr t~ee presented In AnleX 2, TaMIPA I Al1(l 2.

11n I(983/85, InitiAl COConut adl bnanakl plantlog malertals (Pp 28,500) tind paddy seed (Rp 8,000) would be supplied to settlers by the prov iniell Department of Food Crops Agric u1lturv, It Is ae8eime0 here thelt th3e setLIers would purchase only corn and aoybeAn seed ti,rtngt 'IlONCeyeAri. co

Lc t i", oni dAti; Riven in Annex 2, Table 9 And A dli3ly opportunity Wvge rte, of Rp 800.

_ - 79 - ANNEX 2 Table 13

INDONESIA

SWAMPRECLAMATION PROJECT I

Rent and Cost Recovery Calculation Summary

Values per farm (RpM 000)

A. At Full Agricultural Development

1. Gross value of farm production /a 1,000 2. Less cash production costs /a 66 3. Equals net cash income 934 4. Less imputed family labor cost /b 413 5. Less imputed farmers- management /c 50 6. Less allowance for risk/uncertainty /d 250 7. Less general taxes /e 50 8. Equals project rent If 171 9. IPEDA land taxes /a 20

B. Discounted Cash Flows over Project Life X

10. Project rent 770 11. Project costs (including 0&M costs) 5,031 12. Land taxes 86 13. Rent recovery (%) 11 14. Cost recovery (%) 2

/a From Annex 2, Table 12.

/b 516 davs labor p.a. at Rp 800/day.

/c At 5Z of gross value of farm production.

/d At 25% of gr ss value of farm production.

/e Village taxes, at 5% of gross value of farm production.

/f Project rent is first positive in the sixth year of settlement, at the same time that IPEDA payments are assumed to commence. ly Net present value of project rent, cost, and land taxes. which are discoulntedat 10% per year through 2015. Costs include physical contingencies and administration. - 80 - AN EX 3

INDONESIA

SWAMP RECLAMATION PROJECT I

Schedule of Early Events

Target Date

1. P4S post site manager 3/31/81

2. P4S and DGCCK engage consultants 3/31/81

3. First ICB contract awarded 4/15/81

4 PTPT and DGT post site managers 1/31/82

5. PTPT, DGT and JM1l engage consultants 3/31/82

6. First LCB for clearing of house lots and for construction of houses and village facilities

(a) Issue bid documents 9/1/&1

(b) Award contracts 4/15/82

7. Start moving and settling of transmigrants 8/1/82

8. Second LCB for clearing farm plots and tertiary earthworks

(a) Issue bid documents 4/1/82

(b) Award contracts 8/1/82

9. Fourth LCB for tertiary - and hamlet drair. outlet structure

(a) Issue bid documents 2/1/84

(b) Award contracts 6/1/84 - 81 - ANNEX 4 Page 1

INIDO!ELSIA

SWAMP RECLAMATION PROJECT I

STUDIES AND INVESTIGATIONS

Terms of Reference

I. Nationwide Inventory of Coastal and Near-Coastal Swamp Developments

1. The object of the study, which would be conducted by P4S and consultants, is to prepare a nationwide inventory of potentially reclaimable coastal and near-coastal swamps and rank the priority of their development. A second object of the study is to train P4S- staff in the interpretation of remote sensing techniques, in establishing criteria of reconnaissance surveys and in programming and planning swamp developments. The scope of the inventory is to collect, collate and screen available data, eliminate unsuitable sites, investigate, on a reconnaissance level, sites of an apparent development potential and rank the priority of their development according to their physical characteristics, available data, etc.

2. P4S and consultants would analyze and interpret satellite imagery, aerial photos and maps, collate and analyze reports on soils and land capability, existing land use, morphology, forests, tides, floods, water quality and fisheries. After screening the data and eliminating unsuitable sites, supplementary field data, on a reconnaissance level, would be collected for apparent, promising, sites, and analyzed. In this process, particular attention would be given to the dynamics of settlement (through time ser!e' of satellite Imagery and aerial photos), and to morphological changes.

3. At the conclusion of this work phase, a list of potential development sites wouild be prepared, ranked by their development priority. Consultants would also prepare terms of reference for master plan and feasibility studies, detailing needs for minimum additional data required at each work phase, and feasible techniques of obtaining them, and establishing necessary manpower requirements.

4. P4S would provide all available data to consultants conducting the study, review all consultant reports, follow the progress of works and evaluate results prior to the departure of the consultants. Work is expected to be completed within 36 months of the arrival of the consultant staff. - 82 - A:.NEX4 Page 2

.MNPOWER, EQUIPMENT, SUPPLIES AND COST ESTIMATE

Local Expatriate Technicians & Engineers /a Engineers /a support staff Totai (man-conths)

I. Manpower

Land resources specialists (incl team leader) 36 72 144 iiydrologist 36 108 216 Draiaage engineer 24 60 120 Forest expert 6 - Short-term specialists 18 -

Total 120 240 480

Lnit cost USS 12,100 2,062 660

Total cost LSS000 1,452 494.9 316.8 2,263.7

II. Equipment, Supplies Quantity Unit cost Total cost UsS -000 Boats 3 12 iater and soil testing equipment LS 3- Stereoscopic equipment LS 35 Satellite imagery and aerial photos LS 150

Total 255

Ill Training

Two fellowships in remote sensing interpretation and in reconnaissance techniques LS 50

Base cost 1981/82 1982/83 1983/84 IV- Total Cost of Study ---- (US$S000) ------

Xanpower 2,263.7 453 905.3 905.4 Equipment, supplies 255.5 100 155 - Training 50.0 25 25

Total base cost 2 568 578 1,085.3 905.4

/a Including academi-ally qualified professionals of other disciplines- - 83 - ANNFEX 4 Page 3

II- INVESTIGATION OF EXISTING SWAMP DEVELOPNF1:XS FOR UPGRADING

1. The object of the investigation, which would he conducted by P4S and b, consultants, is to determine upgrading needs of about 12 existing Government-sponsored and about 6 spontaneous swamp developments In Sumatra and Kalimantan. the investigations would primarily focus on the Infra- structure, soils, cropping patterns, pest and weed controls, and yield responses to water management and other inputs. Socio-economic conditions in the satne areas would be investigated separately under a study funded under Trans=igration 1I (Loan 17 0 7/Cr. 919-IN')) by teams from local universities (Sriwijaya University in Smatra and Lamhung Mangkurat TJniversity in Kalimantan).

2. P4S and consuitants would examine characteristics, operational features and conditions of the hydranlic infrastructure in the selected developments and note deficiencies and upgrading requirements. They would collect and analyze data on the extent and depth of inundations resulting from tides, floods or rain; the quality of tidal water during the dry and wet season, and its effect on soils and crops. Consultants would monitor periodically quality of drainage effluents, soil pli and study the subsidence and oxidation of peats-

3. P4S and consultants would determine past and present cropping patterns, cropping intensities, inputs a.-_ yields and assess factors constraining the attainment of higher yields. They would prepare a short feasibility study of upgrading three selected developments, including two Government-sponsored and one spontaneous (development. Finally, they would prepare a work program for follow-up surveys, desions and implementation, specifying data requirements and site specific methodologies for surveys and designs.

4- P4S would coordinate this study with the socio-economic survey and the ecological impact study, follow and review the consultants- work and all their reports, and evaluate it prior to the consultants- departur-?. T!ork is expected to be completed within 36 months after the arrival of consjltant staff. - 84 - ANNEX 4 Page 4

MANPOWER, EQUIPMENT, SU-PPLIES AND COST ESTIMATE

Local Expatriate Technicians S Engineers /a Engineers /a support staff Total … ------…- (man-months) ------

I. Manpower

Hydraulic engineers (incl tea-m leader) 36 72 144 Agronornists 12 24 48 Soil experts 12 12 24 Hydrologists 3 12 24 Economists 3 - Short-term specialists 6 -

Total 72 120 240

Unit cost US$ 12,100 2,062 660

Total cost USS000 871.2 247.4 158.4 1,277.0

Ii. Equipment, Supplies Quantity Unit cost Total cost ------…US$- 000 Boats 6 12 72 Meteorological and hydrometric equipment LS '50 Water and soil testing equipment 2 35 70 Surveying equipment LS 80

Total 372

Base cost 981/82 1982/83 1983,/84 III. Total Cost of Study - (US$-O00)

Manpower 1,277 319.3 o38.5 319.2 Equipment, supplies 372 280.0 92.0 -

Total hase cost 1,649 599.3 730.5 319.2

/a Including academically qualified professionals of other &dsciplines. -85- ANNEX 4 Page 5

III. IMPACT STUDY OF SWAMPDEVELOPMENTS

1.. The object of the study, whIch would be conducted by P4S and by consultants, is to assess the ecological *.mpactof swamp developments and formulate integrated area management strategies and related monitoring and valaation procedures.

2. Consultants would investigate the ecological impact in about 6 existing, Government-sponsored, swamp developments and spontaneous-settled areas included amongst the developments which would be studied for upgrading (Sttudy1I), focussing, inter alia on the following issues:

(a) the effects of deforestation and agriculture on river and estuarine ecology and fisheries surrounding developed areas;

(b) the effects of swamp developments on pests and malaria;

(d) the effects of swamp development on the chemical and bacteriological quality of water in svstems within and surrounding developed areas during dry and wet seasons;

(e) the effect of Government-sponsored developments on the local population and on spontaneotus settlers;

(f) together with P4S staff formulate management development models, optimizing the exploitation of all available resources.

3. At the conclusion of the study, consultants would express their findings in terms which could be applied in monitoring, and would prepare detailed terms of reference for monitoring and evaluation procedures of swamp developments.

4. P4S would participate in this study, coordinate it with Studies I and II under this project, review the consultants- reports, follow progress, and evaluate findings prior to the departure of the consultants. The study would be expected L') be completed within 24 months after the arrival of c nsultaut staff. - 86- ANNEX 4 Page 6

MANPOWER,EQUIPI1ENT, SUPPLIES AND COST ESTI1ATE

______aIc Expatriate Technicians & Engineers /a Engineers ia support staff Total - (man-months) -----

I. Manpower

Environmentalist 5 48 96 Fishery experts 2 30 60 Agronomists 3 30 60 Resource Economist 2 - -

Total 12 108 216

Unit cost US$ 12,100 2,062 660

Total cost US$-000 145.2 222-7 142.6 510.5

II. Equipment, Supplies Quantity Unit cost Total cost US$ -000 Water and soil testing equipment 2 35 70 Laboratory and fish sampling LS 50 equipment

Total 120 llI. Training

Two fellowships in ecologic impact studies LS 50

Base cost 1981/82 1982/83 IV. Total Cost of Study …---- -S(US00000)- - …

Manpower 510.5 299.7 210.8 Equipment, supplies 120.0 120.0 - Training 50.0 50.0

Total base cost 680.5 469.7 210.8

/a Including academically qualified professionals of other disciplines. - 87 - ANNEX 4 Page 7

IV. GROUNDWATER INVESTIGATION AT KARANG ACUNG

1. The object of the investigation, which would be sponsored by P4S and conducted by consultants is to assess the availability of groundwater at Karang Agung for drinking purposes and to analy7e the feasibility of its exploitation.

2- Consultants would collect and collate hydro-geologic data, Prepare a plan and drill test borings at about 12 sites. T)rillings would be logged, test pumped and the quality of the water would he analyzed chenically and bacteriologically.

3. Based on the results of the test borings and on estimated costs of production wells, consultants would analyze the feasibility of groundwater exploitation in the Karang Agung area for drinking purposes.

4. P4S would review the consultants reports, follow progress and evaluate findings prior to the departure of the consultants. The study would be expected to be completed within 24 months after the arrival of consultant staff. - 38 - ANNEX 4 Page 8

MANPOWER, EQUIPMENT, SERVICES AND COST ESTIMATE

Local Expatriate Technicians & Engineers /a Engineers /a support staff Total -- … (man-months)

I. Manpower

Groundwater hydrologists 12 42 96 Drilling superintendent 6 -

Total 12 48 96

Unit cost US$ 12,100 2,062 660

Total cost USS-000 145.2 99 63.4 307.6

II. Equipment, Supplies Quantity Unit cost Total cost ----- uSs$-000 Use of portable drilling equipment LS 140 Casings and screens 500 m 30 15 Use of compressor LS 40 Water level and quality testing equipment 5 5 25

Total 220

Base cost 1981/82 1982/83 III. Total Cost of Study - (US$'000)

Manpower 397.6 230.6 77 Equipment, supplies 220.0 220 -

Total base cost 527.6 450.6 77 la Including other academically qualified professionals and qualiWied drilling superintendents. - 39 - ANNEX 4 Page 9

V. MONITORING THE PHYSICAL, ECOLOGICAL AND SOCIO-ECON(' G IMPACT GF THE PROPOSED DEVELOPMENT

1. The objective of monitoring which would be conducted by P4S, DGFCA, DG Fisheries, DGT and consultants is to study the effects of the proposed project on soils, water, fishes and people.

2. Employing procedures developed under Study II the proposed project would be monitored for a period of abou- five years (starting in the fifth implementation year) focussing, inter alia, on the following subjects under the respoasibility of agencies listed in brackets:

- operation and maintenance of the hydraulic system (P4S) - cropping patterns and their response to soil-water management and inputs (DGFCA) - changes in water quality in the project-s hydraulic systems and in the neighboring river systems (P4S) - subsidence of soils (P4S) - changes in soil fertility (DGFCA) - effects on fish in surrounding rivers (DC Fisheries) - incidence and prevention of pests (DGFCA) - actual farm budgets and farm incomes (DCFCA) - off-farm activities, (DGT) and - development of villages and of supporting social and administrative services (DOT)

3. P4S would coordinate all monitoring activities, eview the consultants reports, follow progress and evaluate findings semi-annually. A final report would be issued five-and-a-half years after the start of monitoring operations- - 90

ANNEX 4 Page 10

MANPOWER,EQUIPMENT, SERVICES AND COST ES-rIMATE

Local Expatriate Technicians & Engineers /a Engineers /a support staff Total (man-months)

I. Manpower

Hydraulic engineers 3 15 30 Soil experts 2 10 30 Agronomists 2 15 20 Sociologists 2 10 20 Fishery experts - 10 20

Total 9 60 120

Unit cost US5$ 12,100 2,062 660

Total cost US$000 108.9 123.7 79.2 311

II. Equipment, Supplies Quantity Unit cost Total cost Us$-Oo0 Meteorological and hydrometric equipment LS 68 Surveying equipment LS 75 Water and soil testing equipment 2 35 70 Laboratory equipment LS 120

Total 333

III. Total Cost of Study Base Cost 1982/83 1985/86 …-- --- US$000 -

Manpower 311.8 311.8 Equipment, supplies 333.0 333

Total base cost 644.8 333 311.8

/a Including academically qualified professi>nals of other disciplines. 91 - ANNEX 5

INDONESIA

SWAMP RECLAMATION PROJECT I

List of References

1. "Feasibility Study of the Karang Agung Area, Main Report," Nede>- Euroconsult, August 1978.

2. "Feasibility Study of the Karang Agung Area, Annex M, 9,000 ha Implemen- tation Project," Nedeco-Etiroconsult, October 1979.

3. "Agro Socioeconomic Study in the Tidal Swamp Area of Karang Agung, Sub-P4S South Sumatra, Final Report," Agro-Economic survey (llidayat, Suhud. V.T. Manurung) for Ministry of Public Works, March 1978.

4. "Social and Economic Aspects of Tidal Swamp Land Development," William L. Collier, February 5, 1979.

5- "Development Problems and Conflicts in the Coastal Zone of Sumatra: Swamps are for People,' William L. Collier, December 18, 1978. iNDONESIA SWAMPRECLAMATION PROJECT I Implerimenta1)onSehedule

¢9611 66e2 t98104384

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\1RDPFl., Yao, 1881 1662 1383 1D84 I 1988 . bc - = -Al IK0.0m4 o. K2'000 166.000 t.1I

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140,, Ol.tb.t,o 4ts4110ain to.oto.,. ttttoll#l ,otltlot .Coo,¶lOtt.to.olmttbuo000,0., ,Vt,rldBn4t-7187 Not.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0 Organizationo4 the DirectorateBenerat o4 Water Re.ourees DGv 86opmanf:

MINISTER OF PUBLIC WORKS

ASSISTANTSTO I MINISTER OF DIRECTOR.GENERALOF PUBLIC WORKS _ WA TER RESOURCES FOR WATER RE- DEVELOPMENT SOURCESDEVELOP_ MENT12i DIVISION OF FOREIGN SEORETAF-HATLOAN ADMINISTRATION

ZLII -- ...- ,_ 'I, -

HYDFAULiC ORECORA DIRECTORATEOF DIRECTORATE DIRECTORATEOF DIRECTORATE O PROGRAMMING OF RIVERS | SWAMPS OF IRRIGATION EQUIPMENT ENGINEERING

f P4S PROJECTUNIT GENERAL MANAGER FOR TIDAL SVVAMP PROSiDA/PIBD RECLAMATION

WorvdBmnk - 18765 INDONESIA SWAMPRECLAMATION PROJECT I P48Or94anztt,on Chart

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P4S Provirwial Manager

Assistant Manager

Cashier

Head of ~Staff|

Supervisor| Proect Manage

Technical Supervisors Technica Site Managers Affairs a r

O&M O&M

Personnel n SiteFnnel Finance & OSupervnoes mnin. Admin|

1W'Norkshop r

Wor!d Bank - 2491 Figure 5.1

INDONESIA SWAMPRECLAMATION PROJECTI ProposedField Plot Cropping Calendar

j F M A M i J A S 0 N D

T~~~~~~~~~~~~~~

Wet SeasDn T T Paddy M 16,400 ha) H

C Dry Season Soybean} |M-_ (2.240 hal H Notation: C - Cultivation N - Nursery T - Transplant M -Management H - Harvest

-Avmage

-0 - Dependable-- Rainfall (rqn)

400_ 325 (Total 2,390mm)

3~(0 7 8 300 250~~~~~~~~~~~~~~5 -- 220 ~~~~~~~~~~~~~225 200 11 55 1200 j t65 < t 60

_j L1t40 1 lTocal 1697mm)

Dependar,!e 100 100 100 92 1 Rainfall (mm) L-.20 52 7 _ ~~145

J F M A M J J A S O N D

World Bank -21085 30 0 . 36 109* 1120 -- MALAYSIA MALAYSI < SINGAPORE

b-~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~. =. vb

,OOOha~~~~~~e'o Pio.,9R i .

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.Kaf4nq A9J0f S%Op Study Area 200,000ha \ 2g . Beiiti o ___ , BELITUNG .BANGKA 120,009hx

\ 1 ,/inKAxy Amc Kar~g Awrg Protect Ar 9.000 ha 120 -- h \\b';<15,000haS0anpStudyg > Mesoji Ares 8es}S\ - 2 ~ \ 59.000ha _ b,k 0 ,0-0aySpnhSSrt25f0h \ Z~~~~~WaySeouzi Extension axld J\ rrs,etleat Projet 25,000 ha

Sekau SubiStuieCt Bekri Sub-proiect 8,600 1 65,000 ht- way KandisSub-project t250iha iuiung Subrojct24300 ha 1n mngtS | DraiqageSub-proteCt 5.0W0 * Way KeqSub&roiCt3.b hi * Dra J-ive h t Projec- 253.000 ha -, - Project4 2_. Oha /250haT-D- t~h D Serio Rk,e( Oraf.w~ & INDONESIA S 'K RentangSb-proyeC 92000 FoodhranPr ~~~~AKAR1-m,'-Cmfsb;> SdkuD-sae ui,po a30, AIrAMPRECLAMAT ION PROJECTI 7r'& 12CS.OO upper & Lower Jaeilrdtw'anWduk Kero S CibeeT Study Area N / i4s. * PROJECT AREA CoktuhStu4y Area SWAMP STUDY AREAS 7.OD)ha Cila-dok Study Area jS 5s80 ha -Lw iau-- S , ; . ,IRRIGATlON PROJECTS I-XV Cont FloodP-ro

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