Indonesia

ILO work in Indonesia on local-resource intensive rural infrastructure started in 1993 with the management of a World Bank-financed labour-based district roads project, aiming to upgrade labour-based methods already in use in Indonesia. Focussing on four pilot districts in two provinces, the project successfully developed and introduced improved techniques, supervision and organization for labour-based construction and improvement and maintenance of local roads. The project however did not succeed in mainstreaming labour-based technology in the country's mainstream investment programmes as the political climate was not very receptive to the technology during the mid-90s.

As a result of the Asian financial crisis there has been a dramatic increase in the number of Indonesians unemployed and those living in poverty. It is estimated that unemployment will increase and that 45 million people will be unemployed by the year 2004. In 1999 around 15% of the population lived below a poverty line of 1 dollar a day and, around 66% below a poverty line of 2 dollar a day. Poverty and rural infrastructure are linked, also in Indonesia, and with the transfer of responsibilities for rural infrastructure development and maintenance to the local governments in 2001 a new opportunity has been created to introduce local resource intensive strategies for rural infrastructure development in Indonesia

ASIST-AP has been working in Indonesia at two levels to develop a national programme for sustainable rural infrastructure development. Since 1999 it has worked at the national level with KIMPRASWIL, BAPPENAS, the Ministry of Home Affairs and the Coordinating Ministry for Economic Affairs to develop a "nation-wide programme to mainstream labour-based technology in the country's public investment programmes" and to draft a "sustainable rural infrastructure for employment creation and poverty alleviation strategy".

At the local lev el ASIST-AP has been working since mid-2001 in collaboration with the Gadjah Mada University with 2 Kabupaten to support the country's decentralization process in particular in relation to rural infrastucture development. This work is done under an Integrated Rural Accessibility Planning (IRAP) demonstration project.

ASIST-AP has assisted in the conduct of a series of participatory workshops at the national and local level to explore priorities and strategies for using sustainable rural infrastructure development to create employment and alleviate poverty in Indonesia. The workshops also identified areas for ASIST AP assistance in developing these strategies and programmes in the context of the 4 technical fields: local level access planning, labour-based technology, small contracting and local level maintenance systems.

Recent activities clearly demonstrate that the Government has taken on the ASIST-AP initiative and is serious about developing sustainable rural infrastructure development strategies. Additional support from ASIST AP remains necessary to move the initiative forward and to develop a number of pilot projects which will complement the work at policy level. The country strategy is based on the priority areas for assistance identified through the different workshops and consultations.

Country Strategy


The overall objective of ASIST-AP's work in Indonesia is to create decent employment and alleviate poverty through sustainable rural infrastructure works. For this reason, the Programme intends to collaborate with the Government and the country's main donors to influence their infrastructure investment programmes in favour of employment creation and poverty alleviation and at no additional cost to these investment programmes. The strategy ASIST-AP has developed to reach this objective is eight-fold:

Assist in the establishment of a Rural Infrastructure Coordination Forum. A "High-level Consultation Meeting on Rural Infrastructure Development in the context of Employment Creation and Poverty Alleviation" agreed to create an inter-agency forum responsible for exploring priorities and strategies for using infrastructure development to create employment and alleviate poverty in Indonesia.

Continue to provide assistance in developing a country strategy for sustainable rural infrastructure development. ASIST AP has assisted KIMPRASWIL in preparing a draft strategy paper. This strategy needs to be further developed into a country strategy for sustainable rural infrastructure development.

Assist the Rural Infrastructure Coordination Forum in developing its agenda for coordinating activities and in the development of a data base and information center on sustainable rural infrastructure. The Forum, once established, will meet regularly and ASIST AP will continue to provide technical support to it. ASIST AP will also support the Government through the Forum in identifying investment opportunities where sustainable rural infrastructure development procedures and technologies could be integrated.

A key concern of ILO's decent work programme is the working and living conditions of the labour force. In line with the policy to reduce the decent work deficit, ASIST AP will study the options how it could contribute more to improve the working conditions in the rural infrastructure sectors. The first step will be to assess the actual situation with regard the relevant labour policies and practices. A follow-up activity would be a set of recommendations for addressing decent work deficits.

Seek funding from the bilateral donors to develop and implement small-scale demonstration projects which will provide meat to the policy on sustainable rural infrastructure development. An important activity here is the sourcing of funding to replicate the IRAP demonstration activities in other areas.

Explore options to integrate the sustainable rural infrastructure development procedures and technologies in major donor supported investment programmes. To this effect, ASIST AP will seek to closely collaborate with the main investment donors in Indonesia (World Bank, ADB and Japan). In doing this it will add value to their programmes and support the donors in reaching their objectives of poverty alleviation and employment creation.

Develop guidelines, manuals and training materials on local level access planning, labour-based technology, small-scale contracting and rural infrastructure maintenance tailored to the Indonesian situation and in Bahasa Indonesia.

Develop a pool of local expertise to support the further development of sustainable rural infrastructure procedures and sustain the work that has started after the ASIST AP technical assistance phases out. This will include continue working with the Universities, local consultants and central and local government technicians.
IRAP Demonstration Project

The Gadjah Mada University (UGM) in Yogyakarta collaborates with the ILO/ASIST-AP programme in a project that will test and demonstrate the effects of the application of a local level planning tool called Integrated Rural

Accessibility Planning (IRAP).


In 1996, research was done after the process and implementation of IRAP in Indonesia, through some demonstration projects. A main finding from these preliminary activities was that IRAP is indeed an important potential planning tool for improving rural infrastructure in Indonesia. However it was also concluded that in its format at that time it was deemed unlikely that IRAP could be adopted as a new rural planning tool in Indonesia since the state was still too centrally organized and an officially approved participatory rural development planning process already existed. This all changed with the new decentralization act which became effective on January 1, 2001.

Local Governance


Indonesia is embarking on a process of decentralization. As a direct result, the Kabupaten (district) Governments have been entrusted with more responsibilities in the fields of amongst others infrastructure development, human resource development and socio-economic development. The budgets of, for instance, the Kabupaten Bantul and Kutai have almost doubled compared to last year. An immediate need has emerged at the Kecamatan (sub-district) and Desa (commune) level for developing a capacity in, particularly, infrastructure planning.

The Gadjah Mada University and ILO/ASIST-AP took this opportunity to assist the Government in the decentralization efforts. And by strengthening the capacity at local level to identify, design, implement and maintain infrastructure priorities, knowledge will be gained about the structure, functioning and responsibilities of local Governments that will be useful for the replication of IRAP in other parts of Indonesia.

The project set-up


The main objective of this project is to demonstrate and test the use of IRAP procedures in two pilot districts, Bantul in Yogyakarta (Central Java) and Kutai in East Kalimantan (Borneo). The experiences and outputs will be used to develop guidelines and training materials that are specific for Indonesia. Mr. Roberto Akuwen, an offical of the Muluka BAPPENAS has been detached as the national coordinator of these activities.

On 16 October the set-up of the demonstration project was discussed with senior local government officials of Bantul. It was agreed to do two try-outs with varying set-ups in each distict. In the Bantul District the IRAP methodology would be implemented in 2 Kecamatans. The IRAP team would work in collaboration with counterparts from the Kabupaten. In Kutai the IRAP methodology would be implemented in 4 Desas (comprises a number of villages called Dusun) in 2 Kecamatans.

For the process of further refinement of the IRAP methodology in Indonesia, it will be essential that the Kutai activities and Bantul activities will be complementary. Only then we could use the experiences at Dusun, Desa, Kecamatan and Kabupaten level to develop a local level planning process tailored to the Indonesian situation and prepare guidelines and training materials. Therefore, similar procedures will be used for data collection, mapping and infrastructure inventory. Only the analysis of information and prioritization will take place at different levels and will be slightly different in set-up.

Finally, the experiences at Dusun, Desa, Kecamatan and Kabupaten level will be used to refine a local level planning process that is tailored to the Indonesian situation and prepare specific guidelines and training materials.

Kutai


Kutai is a relatively undeveloped district but with abundant financial resources. The presence of oil and a consequent increased share in national revenues under the new financial decentralization laws have provided Kutai with new opportunities to develop its communities. A rough calculation shows that Kutai's annual budget is now over USD 100 million. The local Government has decided to allocate about USD 100,000 to each of its Desas. These funds should be allocated for infrastructure development (30%), human resource development and socio-economic development. Local capacity in Kutai seems to be a main bottleneck for future development.

The IRAP team was requested to work at Desa level and develop a capacity at Desa level for identifying, designing, implementing and maintaining rural infrastructure projects. This would be done in collaboration with counterparts from also the Kecamatan and Kabupaten level, to ensure that capacity for replication at the next higher levels is also established.

Bantul


A major concern in Bantul is the present size of the Kabupaten road network. The responsibility for the 950km will be reduced to 650 km by the tranfer of responsibilities for 300 km of roads to the Desas. Bantul will be assisted in defining the process by which to prioritize roads and building capacity at Desa level for maintenance planning.

During a meeting on 17 October with the mayor of Bantul, he expressed his deepest interest in the approach, and suggested to present the initial outputs during the annual local Government meeting in Jakarta in mid-2002. As a regional representative he could ask for a time allocations during this seminar to explain in detail the effects and challenges of the exercise. The mayor sees IRAP as an important tool in the decentralization/democratization process he is developing in Bantul. He seeks to increase the responsibilities and resources of the Kecamatans. Local capacity to plan and implement project is a sine-qua-non in this process.

Training


A series of orientation workshops and training was conducted during the last quarter of 2001 to introduce IRAP to local counterpart staff and train them in data-collection, road inventory, and mapping activities. A regional workshop was held in early March 2002 to introduce procedures for priorisation. This workshop was attended by a number of representatives from other Kabupaten that have shown interest in the approach.

Next...

In the next few months the staff will work with the local governments to complete the data analysis and identify infrastructure priorities. The IRAP demonstration activities at local government level are planned to be completed before the end of June 2002 in order for the priorities to be considered for Government funding. Annual budgets are discussed and presented to the local legislatures towards the end of May each year.

Developments at Macro Level


As indicated under point 1 of the country strategy, ASIST-AP supports the establishment of a Rural Infrastructure Coordination Forum. For this reason two workshops were organised on the role of Rural Infrastructure Development in employment creation and poverty alleviation.

  • The first workshop
In November 2001, ILO conducted a National Level Workshop on Labour-based Technology to explore priorities and strategies for using infrastructure development to create employment and alleviate poverty in Indonesia. The Workshop identified areas for ILO's assistance to assist at the national level in developing strategies and programmes for resource-intensive public works and to assist the national agencies in the transfer of certain responsibilities to the local governments. This was done in the context of the 4 technical fields: local level access planning, labour-based technology, small contracting and local level maintenance systems. A similar follow-up exercise was conducted at Kabupaten and Kecamatan level in 5 provinces: West Papua, Southeast Sulawesi, east Kalimantan, west Java and South Sumatra.

  • The second workshop
A second workshop titled "High-level Consultation Meeting on Rural Infrastructure Development in the context of Employment Creation and Poverty Alleviation" was held in Jakarta on February 15 2002 to review the work done earlier on strategy development and the results of the different stakeholder's workshops at national and local level. Over 50 senior government officials representing 15 ministries attended the meeting. The meeting agreed on the following agenda for follow-up work: Establishment of a rural infrastructure coordination forum which meets on a regular basis;

The development of i) a data base and information center; ii) a policy and institutional framework for rural infrastructure development; iii) a country strategy for rural infrastructure development and iv) an implementation scheme, through integrated demonstration projects;

Technical assistance for i) developing central and local policies, strategies and regulations for infrastructure development and financing; ii) integrated planning, implementation, monitoring and evaluation, and developing standards, guidelines and manuals for infrastructure development, training for Governments, public and privates sector, develop an investment plan for rural infrastructure.

Next...

The workshop is part of an ongoing process. An immediate follow-up priority now is to establish the rural infrastructure forum which will refine the agenda and develop a plan of action. ILO ASIST-AP has been assisting the Government of Indonesia with the earlier work in relation to the draft strategy for rural infrastructure development which seeks to optimize the employment effect and maximize the impact on poverty alleviation. The Coordinating Ministry of Economic Affairs which has taken a lead role in further developing the strategy and related programme has asked ILO ASIST-AP to provide further guidance and assistance in the further development of the strategy, demonstration projects and other follow-up.

  • National Strategic Workshop 2008
It has been agreed that a National Strategic Workshop will be organised in 2008. It has also been agreed that future work of the ILO in this technical field would focus at the provincial level as responsibilities for infrastructure development have been decentralized to the local level. For this purpose, EIIP has carried out a comprehensive study in three provinces (Maluku, Papua and NTT) on how the tools can most effectively be incorporated into the rural infrastructure development programmes of these provinces. The outcome of this work will be used in the National Strategic Workshop and will be further developed into project outlines for possible donor support.

As a reply to world-wide economic crisis, the Indonesian government launched a comprehensive fiscal stimulus package, with public infrastructure investment as one of its key component. The Indonesian government is interested in knowing better the impact of public spending on employment, their cost-effectiveness, not only with regard to the fiscal stimulus package, but also with regard to their regular expenditures (budgeting process, infrastructure investment, public works programmes).

Evaluation: DySAM


On request by CMEA, EMP/INVEST, ILO, Geneva, undertook a fact-finding mission to evaluate the need, but also the options for the development of an analytical tool to evaluate the impact of public investment, in particular infrastructure investment, on employment, including different technological choices (labour intensity).

During the mission, the ILO identified what kind of tools already exist in Indonesia and, based on that identification, to come up with a concrete proposal for the development of a specific analytical tool in the national context. Various Ministries, Employers’ and Workers’ Organizations as well as universities (University of Gadjah Mada, Jogjakarta, University of Indonesia, Jakarta) were met during the mission and in two joint meetings under the leadership of CMEA, with the participation of various Ministries (Ministry of Public Works, of Manpower, of Finances, Bappenas) and the national statistical office BPS, an analytical tool was presented and discussed with participants.

Impact evaluation: DySAM


A dynamic SAM could be designed to support and strengthen national development strategies by analyzing the effects of investment planning and national budgeting on the economy and, specifically, to explore the relationship between intensive employment strategies and job creation and ultimately, poverty reduction.

The project mostly supports the following priority within the current National Medium-Term Development Plan 2004-2009 (RPJM National), “enhancing the prosperity of the Indonesian people”.

The combination of experience in labour market, social (poverty), economic and technological issues gives a strong comparative advantage to the ILO in the provision of technical assistance in this context.

The objective of the project is to strengthen the capacity of government institutions, related institutions and universities to analyze, through simulations, the possible impact of various public investment options on Indonesia’s labour market.

Institutional framework and management arrangements


In close consultation with the ILO, the CMEA will be responsible for the establishment of the institutional arrangements that will be required for the development of the DySAM. For the system development it is proposed that BPS will have a leading role and that a specialized university with substantial knowledge in SAM/CGE modelling will be involved as a partner as well.

Inputs from the users’ side – i.e. concerned line ministries – could be organized through a working group. Apart from BPS, knowledgeable universities and concerned/interest line ministries, representatives of employers and workers’ organizations could also be invited to participate in the working group. The leadership of the working group should preferably be with a line ministry that will make intensive use of the SAM for decision-making and policy advice. This ministry could be seen as the ‘National Champion’ responsible for ensuring local ownership and promoting the development, introduction and mainstreaming of the DySAM.

From the ILO side, the project will be technically and operationally backstopped by ILO, Geneva and ILO Jakarta.

Expected impact


The Government will have a flexible and user-friendly tool at its disposal and will be able to use it on a regular basis, in order to make effective decisions on policy options during the budgeting process, MTDP, special initiatives (e.g. fiscal stimulus package), etc., with regard to:

Optimizing the employment impact of public investment (or other public policies, e.g. industrial, agricultural policies) and the national budget in general.

Effectively targeting specific groups of workers (e.g. by gender, age groups, skill level).

Effectively targeting specific types of jobs and methods of production (e.g. capital versus labour-intensive methods)

As a result, the employment impact of public decisions will be optimized, which will contribute to integrating larger parts of the population into (more) productive employment and thus contribute to a more sustainable and inclusive growth path and a decline in poverty.