CHAPTER 33 ACCELERATING INFRASTRUCTURE DEVELOPMENT The development of infrastructure is an integral part of national development. Infrastructure is the facilitator of economic growth. Activities in the transportation sector comprise the backbone of activities for the distribution of goods and passengers. The provision of infrastructure, such as electricity and telecommunications, is related to the modernization of the nation and constitutes an essential aspect in the efforts for increasing productivity. The widespread and equitable availability of housing and settlement facilities, such as drinking water and sanitation facilities, and the management of water resources in a sustainable manner, contribute to the enhanced welfare of the people. In addition, infrastructure has an important role in strengthening the unity and cohesion of the nation. The transportation and telecommunication network, from Sabang to Merauke and from Sangir Talaud to Rote, constitutes one of the main uniting means of the Unitary State of the Republic of Indonesia. It has for long been understood that infrastructure is the major facilitator of development in any region. The disparity of welfare among regions can be fairly attributed to the discrepancy in infrastructure among such regions. In this context, the development of infrastructure based on regions will need to be increasingly taken into account. Experience has shown that transportation has an important contribution to the efforts to open up isolated regions and that the availability of irrigation is the precondition to the successful development of agriculture and other sectors. Nevertheless, the provision of infrastructure, encompassing transportation, electricity, energy, post, telecommunications and information, water resources, housing, provision of water services, and environment conservation, has undergone quantitative and qualitative declines. The decline in quality and service provision and the postponement in the development of new infrastructure, can hamper national development. At the same time, the rehabilitation and reconstruction of various damaged infrastructure and the increase in Chapter 33 – 1 existing capacity and of new infrastructure will absorb a substantial amount of funding that cannot possibly be borne by the government by itself. Therefore, the need is very urgent to seek out innovative solutions for solving the problem of the maintenance and repair of damaged infrastructure. There are still many non-cost recovery activities in infrastructure that will become the responsibility of the central as well as regional governments, among others in the development of roads, transportation safety facilities, water resources, and in waste disposal and sanitation facilities. With regard to other activities, the role of the government can be exercised through state capital participation in related State-Owned Enterprises (BUMNs) that are engaged in infrastructure, such as: toll roads, sea ports, airports, drinking water supply, housing, post, electricity, and telecommunications, for which the tariff system has not yet fully become attractive to private investors. Such activities mainly pertain to the PSO (public services obligation). Still, there are also activities that can fully be undertaken by private enterprises, such as electricity generation, telecommunications in urban areas, container sea ports, international airports and airports that are located in tourist destination regions, toll roads in sections in which traffic is heavy. In view of the above problem, in the period of five years ahead, it is necessary that the handling of maintenance/rehabilitation activities and infrastructure development be clearly delineated. Activities that are related to the PSO are to become the responsibility of the government, the central as well as regional governments. The implementation is to be adjusted to the funding capability of the government. In this respect, it is necessary to have a synchronized handling of programs funded by the APBN (National Budget) and the APBDs (Regional Government Budgets). For activities that are undertaken by state-owned enterprises (BUMNs), it is necessary to optimize the use of their company funding. For activities that affect the life of the people at large, government protection is needed, namely to avert the full control by private enterprises, it is imperative to ensure that the use of government capital participation in the relevant BUMNs be as efficient as possible. Chapter 33 – 2 For activities that can be fully carried out by the private sector, it is necessary to further explicate the relevant laws and regulations, especially those pertaining to guarantees and tariff system. With regard to the involvement of private enterprises in the construction of infrastructure, it is necessary to further explicate the authority of the respective private investors and the relevant state owned enterprises, and to avert that the state owned enterprises have monopoly rights for their respective fields of undertaking. I. WATER RESOURCES Water is the basic need of man for the continuation of life and for enhancing his welfare. Development of water resources basically comprises efforts to provide just access to all of the people in obtaining water so that people can live in a healthy, clean, and productive manner. In addition, development of water resources is also aimed at controlling the destructive potential of water so as to create a safe community life. 1.1. WATER RESOURCES PROBLEMS The imbalance between supply and demand in the spatial and temporal perspectives. Indonesia, situated in the tropical area, is the fifth largest nation in terms of water availability. Nevertheless, Indonesia is naturally facing constraints to meet its need for water due to the uneven spatial and temporal spread of water, to the effect that water cannot always be made available, quantitatively and qualitatively, to meet the demand. From the standpoint of its spatial perspective, the island of Java, which is inhabited by 65 percent of the population of Indonesia, only has around 4.5 percent of potential sweet water of the nation. From its whole year distribution, 80 percent of the water available is supplied during the rainy season which lasts five months, while the 20 percent is available in the dry season lasting seven months. The abundant water availability in the rainy season, which has created benefits, also entails potential hazards to man in the form of floods. During the dry season, water scarcity has created another form of hazard to man, namely extended droughts. In 2002, floods had affected 20 provinces varying from low to high intensity ones, while in the same year drought had affected 17 provinces. Chapter 33 – 3 The increased threat to the sustained carrying capacity of water resources in terms of surface as well as ground water. The widening environmental degradation due to the significant destruction of forests has resulted in the decline in the carrying capacity of River Basin Areas for holding and storing water. Most worrying is the indication for the accelerated degradation of water catchment areas. This is indicated by the increasing rate of deforestation from 1.6 million hectare per year in the 1985–1997 period to 2.1 million hectare per year in the 1997–2001 period. This is also shown by the increasing total number of River Basin Areas that are in critical condition, namely totaling 22 areas in 1984, 39 in 1992 and totaling 62 River Basin Areas in 1998. The tendency for the widening extend and increasing number of river basin areas that are in critical condition have already resulted in the increasing scarcity and the increasing destructive capability of water. Moreover, the water scarcity has led to the unwise pattern of water usage, among others in the excessive exploitation of ground water that has resulted in the decline of ground surface and in the quality of ground water, and in the intrusion of sea water. The degradation of ground water is difficult to rehabilitate, so that the continuation of the process will ultimately lead to the occurrence of the environmental disaster with widespread implications. The decline in the capacity to supply water. The growth of settlement and industrial areas has decreased water catching areas and has threatened the capacity of the environment to supply water. On the other hand, the capacity of infrastructure that accommodate water, such as dams and reservoirs, has steadily declined due to increased sedimentation, thereby reducing the continuous water supply capacity for irrigation and raw water purposes. Such condition has been exacerbated by the low quality of operation and maintenance activities, thereby leading a more drastic decline in the services provided by water supplying infrastructure. The increased potential of water conflicts. In line with the population growth and the increased quality of life of the people, the need for raw water by households, settlements, agriculture as well as by industry has also continued to increase. In 2003, the total water need of the country was 112.3 billion cubic meters, and by 2009 it is expected to reach 117.7 billion cubic meters. The increasing demand for water on the one hand, and the increasingly limited availability of water on the other Chapter 33 – 4 hand, will certainly aggravate the water scarcity problem. In the dry season of 2003, Java and Bali experienced a water deficit of 13.1 billion cubic meters. Likewise, the Nusa Tenggara region experienced a water deficit