AMDAL Reform and decentralization: Opportunities for Innovation in Indonesia

FY05 Status Report

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Table of Contents

1. Summary

2. Background, Objectives and Activities

3. Policy Dialogue

4. Provincial Pilots

5. Supporting Analytical Studies

6. Team, Budget and Timeline

Annex I – Status, Next Steps and Expected Outputs for Each Activity

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1. SUMMARY 1.1 Context This TA is about the core issue of adapting regulatory regimes to the changed circumstances of decentralization, from an environmental management perspective. AMDAL is essentially the only EM policy instrument that has currency in Indonesia, and as a result has a tendency to be overused, not surprisingly with little effect in terms of improving the quality of investments in most cases. The TA is based on a scoping exercise carried out in early 2004, which identified a range of reform issues for improving AMDAL effectiveness, both those that can be specifically attributed to the challenges of decentralization and others of a more generic type.

One of the key conclusions of the scoping report was that, more than ever, AMDAL reform needs to be informed by the operational realities facing sub-national authorities charged with implementing AMDAL regulations. Consequently, the Bank’s approach to supporting AMDAL reform has been to strengthen the quality of dialogue between different tiers of government. This is being achieved via a combination of empirical research linked to the establishment of fora and channels for discussion at both national and sub-national levels. The TA, which forms a part of the Ministry of Environment’s ‘AMDAL Revitalizasi’ Project, will inform the development of the Academic Draft for revisions to AMDAL Regulation No. 27/1999.

1.2 Summary Status

The project started in October 2004 and is due to be completed in 12 months. In brief, project status at the mid-term point is the following:

• Policy Dialogue: Received from KLH in mid-April a draft policy paper on proposed reforms to PP 27/1999, providing the Bank with an opportunity to respond in good time, on the basis of pilot and analytical work currently underway, and summarized below.

• Provincial Pilots: Two pilots have been initiated, one in West Java and one in East Kalimantan with the objective of developing and field testing an ‘alternative’ AMDAL system better suited to local needs, though consistent with national standards. KLH is supportive of the process, and this can be considered to be an important step in the project. Positive responses from province and district levels are indicative of significant local buy in to the need for greater responsibility for AMDAL to be devolved to sub-national level.

• Analytical Activities: Three out of 4 analytical studies are well advanced (public participation, AMDAL good practices, alternative EM tools) and, as intended, contributing directly to the development of the provincial pilots. The remaining study on private sector engagement is due to start early in the coming FY.

1.3 How the Study Works

One of the key issues raised at the review meeting in September of last year related to inter-linkages between the various components of the TA, specifically how the analytical studies would inform the development of the provincial pilots and inform policy dialogue. Figure 1 provides the theoretical basis for how the TA works, which at the mid-

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term point in this project can begin to be described in some detail. For example, the provincial pilots have identified several key reform areas for AMDAL including the need to clarify linkages between AMDAL and development permitting, and for AMDAL to deliver much clearer and operational Environmental Management Plans. The study on AMDAL Good Practice has provided several examples of the way in which more resourceful local authorities in Indonesia have addressed these two areas in very practical ways. This information is now being actively discussed both within the context of the development of provincial AMDAL models, but equally at the level of reforms to PP 27/1999. The issue of AMDAL scope is an area that is dominating the dialogue on AMDAL reform at all levels, and particularly at province level in West Java and East Kalimantan. Here, the study on alternative environmental management tools is informing on the linkages between EIA and its ‘nearest neighbor’ environmental policy instruments, and this will enable a much tighter definition of the scope of AMDAL to be introduced into national and province level legislation. The widely held view that improving the ‘downstream’ implementation of AMDAL (ie. EMPs) is a ‘top 3’ issue for AMDAL reform will also be heavily dependent on developing alternative and complementary policy instruments

Figure 1. How the AMDAL TA Works

1.4. Links to the CAS

This TA has been designed to inform several critical elements of the Bank’s Country Assistance Strategy (2004-2007) including: improving the investment climate, making local government work; and improving services for the poor (see Figure 2). In terms of the investment climate work, environmental regulation in one of a number of areas where greater clarity and predictability needs to be introduced. This can help to improve the basic operating rules for development planning and reduce costs both for the Bureaucracy and for investors by introducing clearer and more streamlined procedures. We have seen measures to begin to address this issue being applied both in East Java and DKI Jakarta (albeit with varying degrees of success) which provides a real basis of experience from which to discuss the need for further regulatory reforms. There is also a need to promote

National/Sub-national POLICY DIALOGUE

Provincial Pilot

Provincial Pilot

Analytical

Study 2

Analytical

Study 3

Analytical

Study 4

Analytical

Study 1

Decentralized & Improved

AMDAL

Current AMDAL

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more quality dialogue between the private sector and different tiers of government on this issue, and this is a further focus area for this TA.

In terms of improving the effectiveness of local government, our approach has been to focus on where there is willingness to reform, in order to develop ‘models’ that can ultimately be applied more widely. As described above, critical elements of improving local governance include clarifying and strengthening the mandates that local authorities have for AMDAL, and also strengthening the participation of non-governmental stakeholders in the process. More broadly, the development of a more effective AMDAL system is clearly ‘pro-poor’ because badly designed and environmentally damaging investments tend to disproportionately affect the poorer and more vulnerable elements in society.

Figure 2. The AMDAL TA and the Indonesia CAS

1.5 Looking Ahead This study is the first of its kind in collection substantial empirical evidence on the post-decentralisation performance of AMDAL which, as we have established, is the primary policy instrument for environmental management in Indonesia at this time. Although the outputs are primarily directed towards influencing key environmental policy reforms, many of the lessons learned will be of broader relevance to development outcomes that the Bank is trying to achieve. The Local Services Platform (and/or its “evolution”) provides a strategic framework for much of this work. One of the main ‘products’ of the TA will be a practical tool to strengthen AMDAL implementation at sub-national level, based on the West Java and East Kalimantan case experience. The tool can be used in the context of future sub-national loan preparation work. It could have the additional benefit of accelerating progress in Indonesia towards introducing a country systems approach to environmental and social safeguards,

Improving the

Investment Climate

Making

Services Work Better for the

Poor

Making Local Government

Work

LOCAL SERVICE PLATFORM

AMDAL REVITALIZATION TA

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particularly if this approach were to be applied (initially) at the level of a province or region in Indonesia, rather than countrywide.

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2. BACKGROUND, OBJECTIVES, AND ACTIVITIES 2.1 Background and Objectives

This AMDAL TA Program supports the Ministry of Environment’s (KLH) efforts to strengthen the institutional and policy framework for environmental impact assessment (AMDAL), and adapt it to the requirements and needs of decentralized administration. The TA helps selected local governments (district and provincial) to think through their needs in terms of AMDAL reform, and to advocate these needs more effectively to national counterparts. This program has been developed based on the findings of a scoping exercise1 carried out in early 2004, together with lengthy consultations with KLH to identify specific areas of assistance needed to strengthen AMDAL Revitalizasi (further elaborated in the project concept note). A formal request for support from KLH was received by the Bank in June 2004.

This TA is also part of a broader program of support to Indonesia’s improved system for environmental management. This includes an ASEM grant to provide technical assistance to KLH to improve the overall scope, quality, and implementation of its Good Environmental Governance Program and related activities. The TA also supports the Bank’s Local Services Platform.2. The platform strategy hinges on working with national and district governments to improve basic operating rules for development planning. Developing an appropriate, flexible, and effective package for improving district level environmental management supports the district platform concept in a difficult and important regulatory arena, and will therefore contribute to the overall quality of district development.

Finally, the AMDAL TA also feeds into the enhanced upstream policy and institutional analysis to support the Bank’s plan to increase its reliance on using country systems in Bank operations.3 Though countries like Indonesia are not taking part in the country systems pilot because of the deficiencies in their national EIA systems, the work undertaken under this TA can assist the reform process and increase the likelihood that Indonesia could eventually rely on the local system in the medium term.

2.2 Activities4 2.2.1 Policy Dialogue on AMDAL Reform KLH has initiated national and province level policy dialogue via bi-lateral discussions with key central government agencies and a series of regional consultation meetings to engage more effectively selected local governments on critical AMDAL reform issues.

1 See the AMDAL Scoping Exercise Concept Note, and the AMDAL Scoping Exercise Draft Final Report. 2 See: Indonesia Country Assistance Strategy 2004-2007; and also Enhancing Governance And Poverty Reduction At The Local Level In Indonesia – Partnership Proposal, September 20, 2004 Draft. 3 Ref: Expanding the Use of County Systems in Bank-Supported Operations: Issues and Proposals; Operations Policies and Country Services, March 2005. 4 For a detailed description of the activities and outputs refer to Concept Note for the AMDAL Reform and decentralization: Opportunities for Innovation in Indonesia, which was reviewed and cleared by the Indonesia Country Team and EASES Management Team on September 27th, 2004.

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The Bank is supporting this dialogue both through the key components of this TA and, more directly, periodic discussions local and national level counterparts.

2.2.2 Develop and Pilot Provincial AMDAL Models5.

The provincial pilots are to be carried out in 4 stages including: preparation, field testing, finalization, and dissemination. The outputs for this activity will include the development of actual Provincial AMDAL Models; and Guidance Notes for Replication of the Provincial AMDAL Models elsewhere.

2.2.3 Analytical Activities

Analytical pieces are being carried out in 4 areas to respond to specific requests made to the Bank by KLH, broaden the AMDAL-related knowledge base and complement the preparation of the provincial pilots. They include:

• A Review of AMDAL Good Practice and Comparison of AMDAL against International Norms to identify what is ‘right’ with AMDAL, and benchmark against international best practices. The analysis focuses on a selected set on issues, which were agreed with both national and local level counterparts, and also considered critical by other TA partners.

• An Assessment of Alternative Environmental Management Tools for Indonesia to evaluate alternatives tools that can help improve the effectiveness and efficiency of AMDAL, and also strengthen existing environmental management structures.

• A Study on AMDAL and the Investment Climate in order to assess the incentives necessary for the private sector to drive up the quality of AMDAL, and also to identify AMDAL related issues that the private sector could help push in the context of KLH AMDAL Revitalization Program for the EIA process to become more transparent and predictable.

• A Review and Assessment of Public Participation in EIA and Access to Information to evaluate the level and quality of both public participation and availability of information in the overall AMDAL process, and identify the incentives and conditions necessary for greater public involvement and information disclosure.

Expected outputs for these activities will include: (i) discussion papers/technical notes presenting the findings of each analytical piece, which will inform and help stimulating a more effective national debate on AMDAL reform; and (ii) a comprehensive Final Report, based on the conclusions of the above outputs as well as the findings of the provincial pilots. This report will be an input to the KLH’s background document supporting the preparation of the academic draft for the new EIA regulation.

5 For a detailed description of the provincial pilot refer to the self-standing AMDAL Pilot Proposal prepared by Qipra

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3. POLICY DIALOGUE ON AMDAL REFORM 3.1 Context

The Ministry of Environment has engaged in far-reaching consultations at all levels of government for this phase of reform to AMDAL (the fourth since inception in 1986), reflecting its changing role in the era of regional autonomy; part regulator and part facilitator. Consultations have been structured around 3 regional level seminars supported by numerous lower level discussions with local environmental authorities, leading to national level seminars to be held towards the end of 2005 (reform of AMDAL Regulation 27/1999). The consultations inform a technical team within the Ministry with responsibility for policy thinking and proposing revisions to the Regulation to the Minister and his special advisers. The technical team is led by Isa Karmisa (Deputy Minister IV, Environmental Impact Management)6 and is supported by an Advisory Group chaired by the Deputy Minister including KLH representatives, independent experts and a World Bank representative. The Advisory Group has met once to date (February 2005) with 2 further meetings planned before the end of 2005. The Bank’s approach to supporting the policy dialogue recognizes that local environmental authorities are best placed to provide much of the input required to reform AMDAL, but that the mechanisms to engender required national to local dialogue need to be strengthened. This TA builds partnerships with some of the most capable local authorities in Indonesia to develop and field test some of the best ideas that they have for reform. This is achieved by working both at the national level with the KLH technical team via a system of ‘counterparts’ established for each work area, and the province level through the establishment of working groups and stakeholder forums (in the 2 pilot provinces). In this sense, the provincial pilots and the analytical studies that support them have become integral components of the policy dialogue. So far, this structure has been found to be effective in enabling a coordinated approach to each work area and ensuring that the outputs are provided in a form that are most useful to our partners (both national and sub-national). Further discreet activities that we have carried out include: facilitation of KLH regional AMDAL seminars, support for the establishment of the Advisory Group (including hiring 3 independent experts to advise the government), and regular technical and progress related discussions with KLH officials.

3.2 Summary Status At the mid-term point, this TA is poised to begin informing in a substantive manner on key AMDAL reform issues. During the early stages (October 2004 to January 2005) much of the dialogue at both national and sub-national levels focused on coordination issues, as well as clarifying the specific objectives and outputs of each piece of work. The successful launch of 2 provincial pilots in February of this year marked an end to this phase, demonstrating buy-in from the Government and vindication for the innovative approach taken by the Bank in its Concept Note. Over this period efforts were also made to promote closer team working between the Bank and KLH on the analytical studies.

6 A new Deputy Minister will shortly be appointed with responsibility for Environmental Impact Management and Spatial Planning, following recent internal restructuring.

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Although there have been disagreements at times, differences of opinion have been voiced in a very open and constructive manner and this has made it much easier to make necessary adjustments. The release in April of KLH’s preliminary paper on AMDAL reform signals the beginning of a more intense phase in the policy dialogue, but also provides further indication of the level of trust that has been built up between KLH and the Bank. The paper sets out an ambitious agenda for revision of Regulation 27/1999, building principally on results of the regional consultation seminars, as further summarized below. In addition, Table 1 summarises key events held since June 2004 including 2 regional level consultation seminars held in Jakarta and Solo, the first Advisory Group meeting held in Jakarta in February 2005, and the launch of the 2 provincial pilots in February (West Java) and March (East Kalimantan) 2005 respectively.

3.3 Preliminary Findings The KLH preliminary paper on AMDAL reform takes the view that many of the weaknesses in AMDAL can be addressed by strengthening the powers of the Minister/Governors to enforce the AMDAL legislation. Although it recognizes that EIA itself is rarely the point at which enforcement measures can most effectively be applied, it also points to fundamental weaknesses that exist in development permitting which, in the view of some in KLH, justifies the need for a more direct approach in the case of EIA violations.

Clearly within the context of decentralization, the effectiveness of measures to enforce AMDAL (rather than the permits that it supports) will depend upon technical capacity and resources available at sub-national levels, as well as the efficiency and integrity of local judicial processes. This is a point that is clearly understood at sub-national level, with some provinces tending towards a more balanced use of incentives to reward good practice with the ‘threat’ of administrative sanctions for persistent violators. Making instances of violations public can also be an effective way of introducing greater accountability. More of this sub-national experience, which is based on the operational realities of implementing AMDAL, will be introduced into the dialogue over the coming months.

The paper also questions the competency of district and municipal environmental authorities and their AMDAL Commissions to evaluate AMDAL documentation, both from the perspective of technical capacity and ‘capture’ of the process by the licensing authority. The suggestion is made that district/municipal authority for AMDAL approval should be withdrawn and placed at province or national level. The means of achieving this is still under discussion and is likely to be the subject of the next regional consultation seminar. For example, cancellation of KepMen 41/2000 which allows the establishment of district level AMDAL Commissions could be viewed as somewhat antagonistic and likely to breed ‘rogue’ districts. A combination of measures including revisions to screening procedures, increasing the use of alternative EM tools, and making AMDAL commissions more independent and open to public scrutiny could provide more effective ways of improving ‘competence’ in the long-term. Views from provincial authorities will be critical in developing an approach to resolving this issue. For example, the early indications are that not all

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provinces would welcome a re-consolidation of authority for AMDAL from district to province levels.

In other key reform areas such as environmental screening and scoping, simplifying AMDAL documents, the structure and role of AMDAL review commissions, making environmental management plans (RKL/RPL) more operational, and engaging non-governmental stakeholders, there appears to be consistency between the KLH paper and early results of the provincial pilots and analytical studies. However, more time is needed to consolidate and report on these early findings and for KLH to further develop their own thinking in these areas. 3.4 Next Steps

Over the next few months there will several opportunities to discuss the policy implications of the various outputs of this TA including: 2 further Advisory Group meetings, the first likely to be towards the end of the June; province level progress workshops in both West Java and East Kalimantan; seminars on AMDAL Good Practice (30 May) and public participation (to be arranged); potentially a further KLH lead regional consultation seminar; and national seminars on revisions to Regulation 27/1999 towards the end of 2005.

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4. PROVINCIAL PILOTS

4.1. Context

The provincial pilots currently being conducted in West Java and East Kalimantan serve as a vehicle to generate ideas for reforming the existing national AMDAL, in order to better reflect trends in decentralization that have emerged since the regional autonomy. The objectives of the pilots are to: assess the feasibility of developing province level AMDAL systems; promote substantive sub-national to national policy dialogue; and provide related inputs and recommendations to the Ministry of Environment regarding reform of Regulation No.27/1999. The Provincial AMDAL system is expected to be more consistent with local conditions (both environmentally and capacity-wise), and thus more likely to be effective at this level. Consequently, it is likely that a provincial system will have elements that vary from the national AMDAL system. This implies a need for greater flexibility to be introduced into existing legislation and guidelines. West Java and East Kalimantan were selected based on criteria agreed with KLH. West Java is one of the most advanced provinces in Indonesia from the perspective of environmental management and is judged to have the necessary capacity both to develop a regional AMDAL model and to implement resulting changes to AMDAL. East Kalimantan has specific experience of working effectively with the oil and gas industry and responded very positively to greater innovation being introduced through AMDAL and related policy instruments. In both cases, all key procedural steps in AMDAL will be reviewed but the resulting ‘model’ AMDAL that is developed for each location will be different, reflecting differing needs and priorities. 4.2 Summary Status

Progress in West Java is more advanced than East Kalimantan, since confirmation for East Kalimantan as a pilot was only agreed with KLH in January 2005. The process involves 5 stages: Preparation; Formulation of basic framework; Formulation of detailed AMDAL mechanism; Field testing; and Finalisation and dissemination (see Figure 3). West Java is currently engaged in Stage 3 (detailed AMDAL mechanism) while East Kalimantan is completing Stage 1 (preparation phase), having recently obtained a commitment to participate from the province and several participating districts. The current status of the work is further elaborated in Table 1.

4.3 Preliminary Findings Preliminary findings are based on the West Java pilot in view of its relative advancement. The ‘kick-off’ workshop and subsequent capacity assessment confirmed that there is considerable sub-national support for developing a model province level AMDAL based on needs and conditions in West Java. Specific areas that have dominated the discussions to date include the need to:

• Define the objectives, purpose and scope of AMDAL with more precision in order to avoid overuse/misuse;

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• Revise AMDAL screening procedures in order to more effectively reflect local conditions and to use it less frequently but to greater effect;

• Introduce more effective links between AMDAL and development permitting;

• Introduce a document review process that can deliver clarity, relevance, greater scientific rigour, and more informed public commentary; and

• Develop clear and operational environmental management plans, also closely tied to the permitting process.

Several indicators also suggest that West Java has the potential not only to develop a workable provincial AMDAL system but equally to effectively implement such a system in the medium long-term. For example West Java has recently completed its Provincial Environmental Management Strategy involving extensive data collection across a range of key environmental variables, which has the potential to greatly strengthen the relevance of AMDAL to development planning. Furthermore, the Government of West Java plans to introduce EMS based pollution management both as an alternative policy instrument to AMDAL and as a means of complementing AMDAL and increasing its effectiveness. The Provincial BPLHD also has good links with district and municipal environmental authorities and is recognized for its leadership in environmental management, supported also by the Bandung Institute of Technology. 4.4 Next Steps

Priority focus on ensuring that the East Kalimantan pilot progresses more rapidly over the coming months to ensure that both are completed on time.

Figure 3. Regional Pilots Preparation

November 2005

West Java is here

East Kalimantan is here

August 2005

DEFINITION OF PROJECTBOUNDARIES & MECHANISMS

PILOT PROVINCESELECTION

ASSESSMENT OFPILOT AREAPOTENTIAL

FORMULATION OFBASIC FRAMEWORKPROVINCIAL AMDAL

INITIALWORKSHOP

SEMINAR/ FGD

BASIC FRAMEWORKPROPINCVIAL AMDAL

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3

4

STEP 1

PILOT TEST

CONCEPT FINALIZATION

SEMINAR/FGD

FORMULATIONDETAILED MECHANISM

PROVINCIAL AMDAL

DETAILED MECHANISMPROVINCIAL AMDAL

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6

7

STEP 2

June 2005

work steps

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5. SUPPORTING ANALYTICAL STUDIES

5.1 A Review of AMDAL Good Practice and Comparison of AMDAL against International Norms

5.1.1 Context

The basic premise behind this study is that building a better understanding of home grown good practice in EIA provides the best starting point for initiating policy reform, while acknowledging also that international experience can enrich the debate and stimulate innovative thinking. It takes a close look at a 10 Indonesian EIAs (completed since decentralization and considered to be measurably better than average) and identifies factors contributing to improved performance. Conclusions and lessons learned are then compared with relevant international experience, specifically countries with decentralized EIA systems. The study will contribute to the wider objectives of AMDAL reform in several ways, helping to:

• Develop the provincial pilots – the findings of the study will be used in finalizing the design of the pilots, providing an assessment of what works well in AMDAL within the context of decentralization;

• Contribute to other analytical studies – providing additional lessons learned and context both for the studies on public participation and alternative EM tools;

• Support policy dialogue – by providing specific examples of tried and tested ways of improving the implementation of different elements of AMDAL.

CASE STUDY LOCATION

SECTOR EXAMPLE GOOD PRACTICE

DKI Jakarta Housing development, North Jakarta

Significant public involvement resulting in strong technical inputs from BPLHD on mitigation, particularly flooding.

Factory expansion, BASF Proponent consulted with local communities during scoping on issues of disturbance and air pollution

South Sulawesi Coal Fired Power Plant (200 MW)

AMDAL studies substantively informed technical feasibility

Port development (2 piers, supporting access roads and facilities)

Strong technical contribution made by AMDAL process in relation to sedimentation issues, influencing port design.

West Java (Kab. Bandung)

Housing and recreational facilities (North Bandung)

AMDAL Commission effective in increasing quality of AMDAL

Class A Hospital (Padalarang) Effective use of national screening guidelines

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City of Surabaya Shopping Mall (20 hectares) Strong public involvement due to potential impact on cultural heritage site

Toll Road (12.5 km) Strong public interest and involvement leading to design changes to several bridges

Jogjakarta Shopping Mall Model AMDAL overall including clear linkages between AMDAL and development permitting

Factory development (milk products)

Effective scoping carried out and clear and operational EMP produced.

5.1.2 Summary Status The field-work involving case study research at province and district level is complete and reporting is being finalized. The next key event will be a workshop to review the findings of the field work-for all participating environmental authorities, to be held on 30 May. Final reporting will be completed by mid June 2005. The current status of the work is further elaborated in Table I.

5.1.3 Preliminary Findings Some of the more interesting examples of good practice that have emerged from the study to date include:

• The use of incentive systems to reward better performance from the private sector, for example in the form of an award system that recognizes companies that have consistently met their EMP obligations;

• Measures to increase public confidence in AMDAL, for example by holding AMDAL Commission meetings at sub-district level in order to increase the visibility of the process to project affected people;

• More effective advocacy across government specifically when environmental authorities take the time to explain AMDAL procedures to key agencies involved in development planning and permitting activities, discuss different approaches in implementing the procedures and provide regular updates;

• Related to the previous point, the use of regulatory and administrative measures to increase integration of AMDAL with development planning and permitting, including integration with other environmental management procedures (such as waste water discharge permits); and

• Making better use of existing AMDAL procedures and tools, for example by developing clearer and more operational Environmental Management Plans (EMPs) where all key actions are agreed with the developer in advance.

In terms of underlying factors contributing to good practice, early indications point to the importance of public interest/scrutiny generating a greater sense of visibility and accountability among public servants at the higher levels. This factor is perhaps most evident in medium to large size metropolitan areas where the additional factor that the environmental consequences of economic development are most evident, and where there

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is more vigorous public debate on environmental issues. Co-financing by a donor agency or large foreign investors can have the effect of increasing levels of coordination between environmental authorities and other government agencies as well as strengthening specific aspects of AMDAL, such as public participation. Broader measures taken to increase the efficiency of bureaucracies in order to promote inward investment can also lead to better integration of AMDAL procedures with those of other government agencies. For example, in Greater Jakarta and Surabaya Metropolitan areas attempts made to streamline development permitting have had the additional effect of re-inforcing AMDAL approval as a key step in the process. 5.1.4 Next Steps

Further analysis of the case studies is required as a basis for the proposed end of May workshop, which will be used to validate study findings and to identify good practice examples with the greatest potential for replicability elsewhere in Indonesia.

5.2. Assessment of Alternative Environmental Management Tools for Indonesia 5.2.1 Context In many countries environmental management is addressed via a range of different approaches each with its own procedures and analytical tools; EIA is one such approach and is applied particularly in the context of planning new developments. In Indonesia, however, the AMDAL process is the only environmental management approach that has currency, and is therefore used too frequently, and often to limited effect. This places significant burden on already weak institutional and human resource capacity, which an evolution in alternative environmental management tools could do much to resolve.

5.2.2 Summary Status. A constructive dialogue has been initiated with KLH to define the scope and objectives of the proposed study; as a result, the team acquired a better idea of what KLH currently understand to be the world of environmental management alternatives. Based on this improved understanding, the Bank team has provided feedback regarding the relevance and feasibility of the alternative management tools identified by KLH. We have also suggested to move the focus of the ongoing discussion from how the Bank could respond the specific KLH’ s requests for support, to how any existing combination of statutory and non-statutory EM approaches and tools could be improve help make AMDAL more efficient, and strengthen overall environmental management. In addition, the KLH appears to still want the Bank support for the preparation of an analytical piece, presenting an overview of what is the current experience with alternative environmental management tools in other countries. The current status of the work is further elaborated in Table I.

5.2.3 Preliminary Findings

• The Indonesian experience with alternative environmental management tools is the non-systematic use of environmental auditing, ISO 14000 certification, and market-based instruments such as ecolabeling and pollution charges. Yet, since the beginning of decentralization, this is being done without any particular national level guidance on how to use these instruments, and/or outside any

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appropriately developed regulatory framework for such instruments to function properly in place.

• A critical issue is to achieve a better understanding regarding the definition, appropriateness, and feasibility of some of the alternative environmental management tools for Indonesia, particularly in the context of decentralized environmental management framework.

• Ongoing programs like PROPER and GEG are seen as useful and successful to complement existing command and control regulations; however, KLH do not see them directly relevant to the ongoing AMDAL work. The Bank believes that these programs could provide interesting and useful information for the design and implementation of alternative environmental management tools at the sub-national level.

5.2.4 Next Steps

Together with KLH we are in the process of selecting priorities among the alternative environmental management tools already identified. There is strong interest for: (i) Strategic Environmental Assessment; Risk Assessment; (iii) Rapid Environmental Assessment; and (iv) Pollution Control Measures. Then, will jointly draw a workplan for KLH to be able to access the necessary information and expertise that could be needed/useful to show linkages between these tools/policy instruments and a more effective EIA system in Indonesia, and make the case for them to be included in the new AMDAL Law.

5.3 Review and Assessment of Public Participation in EIA and Access to Information

5.3.1 Context Public participation in EIA (AMDAL) has been conducted since the issuance of Decree of the Head of BAPEDAL (Kepka) 08/20007. After 4 years of implementation, KLH recognizes the need to evaluate the Kepka and the implementation of public participation in AMDAL. To identify patterns of implementation, challenges and critical success factors, the study combines a literature review, the findings from previous work on public participation in AMDAL, and from 10 AMDAL case studies conducted after 2000, and where public participation was conducted.

PROJECT AND LOCATION PROPONENT TYPE/

SECTOR NOTES

Coal Mine, Kutai Timur, East Kalimantan

PT Kaltim Prima Coal (private co)

Mining/ private Single activity, complex

Housing Estate, Kec. Gunung Putri, Kab Bogor, West Java

PT. Karya Cantika Kusuma (private co)

Housing development/ private

Single activity, simple

7 In 2002, the World Bank helped KLH to develop a practical guide supporting implementation of Kepka 08/2000.

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Metro Trade Center Mall, Kota Bandung, West Java

PT Margahayu Raya (private co)

Commercial development/ private

Single activity, simple

Banyu Urip Oilfield Development, Jawa Timur

ExxonMobil Oil Indonesia, Inc (private co)

Oil-gas development/ private

Multiple (integrated) activity, complex, onshore

Jakarta Outer RingRoad (JORR)

PT Jasa Marga/ Min of Public Works (government)

Road development/ public

Single activity, long area coverage

Hazardous Waste Landfill, Kab Karawang, West Java

PT. Indobarat Rayon (private)

Hazardous Waste Landfill/ private

Single activity, simple

Sadewa Oilfield Development, Kab. Kutai Kartanegara, East Kalimantan

Unocal Indonesia Company (private)

Oil-gas development/ private

Single activity, simple, offshore

Double Track Railway Kutoarjo – Yogya, Central Java-DI Yogyakarta

Min Communications (government)

Land transportation / public

Single activity, long area coverage

Gonggang Dam, Kab. Magetan, East Java

Kabupten Government of Magetan (government)

Water Resource/ public

Single activity, simple

Housing and Recreation Area, Bandung, West Java

PT Dam Utamasakti Prima (private co)

Housing & tourism development/ private

Multiple (integrated) activity, simple, controversial

5.3.2 Summary Status

The literature review from various sources and the analysis of previous work conducted on public participation is on-going; interviews with case-study resource persons are about to be completed. The findings and recommendations are going to be presented in self standing report, and discussed with counterparts in a workshop planned for the end of June. The current status of the work is further elaborated in Table I.

5.3.3 Preliminary Findings Several provincial governments have developed and issued local regulations on public participation to reinforce the need for it and/or institute more specific guidelines. Yet, the implementation of both the national and local level specific regulations remains weak, mostly due to:

• Lack of specificity/relevance of inputs from the public to the AMDAL process due to a limited understanding of what AMDAL is (and its limits), and to the failure of other development planning processes (preceding AMDAL; i.e. spatial planning process, development planning process) to communicate with the public. This decreases the overall impact of the public participation process, which result mostly in suggestions for impact mitigation and monitoring, and sharing of information on existing environmental conditions but rarely in any significant changes in project location and/or design.

• Affected communities generally receive information about AMDAL from local authorities, and are represented by local community leaders, both formal (Village Head, RT/RW Head, Lurah, BPD, LPM) and informal. These leaders tend to reiterate already expressed concerns/comment without inquiring whether that issue had been

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addressed in the ANDAL document or not. In addition, documents are generally not available at locations near the project site for affected communities to review; and in the majority of the cases they have only access to project information through presentations during public consultation meetings as the original AMDAL documents are viewed as too scientific for the public to understand.

One of the implications of these early findings is that existing regulations on public participation in AMDAL may be too demanding in terms of resources needed, particularly for sub-national level consultations. It is also clear that the way in which project affected people receive information is having a significant impact on the effectiveness of public participation. Here, it will be important for revisions to Kepka 08/2000 and AMDAL regulation 27/1999 to take account of the different traditions that exist, in terms of consultations, from one region of Indonesia to another.

As with other aspects of AMDAL, there is a critical need here for the regulations to provide a more meaningful balance between central prescriptive approaches (which have to do with ensuring ‘consistency’ from one region to another) with more discretionary approaches based on local information (which have to do with the ‘quality’ of the process. For example, while national guidance can stipulate the need for project affected people to be identified and informed in good time, local authorities are often better placed to identify how information should be transmitted from project proponent to affected person.

5.3.4 Next Steps

Further analysis of the case studies is being done; the results will be discussed in a workshop to be held in June.

20

6. TEAM, BUDGET AND TIMELINE 6.1. Team Since the inception of the TA, Qipra Kualitas Galang (an Indonesian consulting firm specializing in institutional and policy development, and public participation in environmental affairs) was hired on October 15th, 2004 to design and run two AMDAL Provincial Pilots, and carry out an analytical piece on AMDAL and Public Participation. In addition, the selection and hiring of the two Indonesian consultants Mess. Wati Suhadi and Nila Octaviani, needed to support Mr. Angus Mackay for the preparation of the analytical piece on the AMDAL Good Practice has been completed. In addition, the Team has benefited from guidance, and just-in-time inputs from the peer reviewers, particularly Mr. Glenn Morgan, and Jean Roger Mercier, regarding internationally recognized EIA best practices relevant for Indonesia, and examples of effective public participation and disclosure of information of Bank projects in Indonesia. Finally, the relationship and collaboration with the Local Government Platform Team in Jakarta, the QACU Group, and the ENV Team working on Institutional Development and Governance in HQ has been strengthened through the sharing of information and preliminary findings of the ongoing AMDAL work.

6.2 Budget In FY 05, the TA has received funding for a total of $190,000 from BB and TFs; specifically: (i) BB funds amounted to $90,000 (of which $60,000 from the CMU and $ 30,000 from the Safeguard Thematic Review Budget); and (ii) TF funds totaled some 100,000 (of which $80,000 from DFID TF for Poverty and Environment, and $20,000 from Dutch CTF for IDA countries). As of the beginning of May 2005, we have spent some 85 percent of our funds; given the existing commitments and agreed payment schedules, the remaining 15 percent will be spent by no later than mid-June 2005. In addition, in FY05 funding from the BNPP TF for about $150,000 was also secured; however, the actual allocation of these funds did not materialize until mid-April 2005 due to the Dutch Ministry of Foreign Affairs’ request for a new contribution agreement to be signed between the Netherlands and the World Bank to regulate any future Dutch funding contribution to the Bank. The new agreement was signed at the beginning of last April, thus allowing us to request an interim budget, pending actual transfer of the funds, which is going to be done in the next four to six weeks. The delay in receiving the BNPP funds resulted in cash flow constraints; these were managed by accessing funds from the DFID TF for Poverty and Environment, and by postponing the start of the analytical piece on AMDAL and the Investment Climate: The Private Sector Perspective.

6.3. Timeline The AMDAL TA is to be developed and implemented over a 12 months timeline, starting from beginning-mid October 2004. Individual timelines for the development and completion of the different activities under the TA were also agreed within the Team, and in collaboration with the peer reviewers, which are presented in the following table. To date, the agreed schedules are found realistic for five of the six activities; the exception being the study on AMDAL and the Investment Climate: The Private Sector Perspective, which has been delayed due to funding constraints (see budget section for details).

21

Timeline Activities 1 2 3 4 5 6 7 8 9 10 11 12 Policy Dialogue Best practices review Public participation Alternative EM tools Private sector review Provincial pilots Mid-term report Final report; Input to the academic draft for the new AMDAL regulation

22

AN

NE

X I Status, next Steps and E

xpected Outputs for E

ach Activity under the A

MD

AL

TA

Activity

Status N

ext Steps E

xpected Outputs

Policy Dialogue betw

een Different Tiers of

Governm

ents The W

B is supporting policy dialogue on AM

DA

L reform

in various ways:

(i) supporting the organization and delivery of KLH

regional consultation m

eetings; (ii) provision of substantive inputs at these m

eetings through presentations on international experience in EIA

and on enforcem

ent and EIA;

(iii) funding 3 national AM

DA

L experts to attend A

dvisory group meetings w

hich will provide a sounding

board to KLH

in the development of revisions to

Regulation 27/1999;

(iv) supporting the dialogue between K

LH and sub-

national authorities through the medium

of 2 provincial pilots and analytical studies (see below

). (v) O

n-going monthly technical level and progress

related discussions with K

LH.

June 2004: Formal request to the W

orld Bank from

KLH

on C

ooperation on the improvem

ent of the Indonesian EIA

System.

June 2004: Participation in regional workshop on A

MD

AL

and Enforcement, in Jakarta. W

B presented international experience on EIA

and enforcement.

August 2004: Facilitation of regional level w

orkshop on A

MD

AL R

evitalization, in Solo. Participating regions including: East, Central and W

est Java, Jogjakarta, Bali, N

TT, NTB and South Sum

atra. WB

presentation provided on International Experience in EIA

.

October 2004: M

eeting with D

eputy Minister IV

to initiate the W

B’s support for A

MD

AL R

evitalisation.

October 2004 onw

ards: Routine technical level meetings w

ith K

LH counterparts to discuss and consult on the progress of

the overall AM

DA

L initiative.

Novem

ber 2004: KLH

/WB

initial team m

eeting to present the w

ork program and address need for synergies and

collaborative working.

February 2005: AM

DA

L Revitalisation A

dvisory Group

established with first m

eeting held.

February 2005: Bandung m

eeting to launch the West Java

provincial pilot study on AM

DA

L system developm

ent.

March 2005: Sam

arinda meeting to launch the East

Kalim

antan provincial pilot study on AM

DA

L system

development.

April 2005: K

LH first draft of the background paper

informing the academ

ic draft for the new EIA

regulation shared w

ith the WB

AM

DA

L team for inform

ation and com

ments.

WB

AM

DA

L team to

provide comm

ents on the K

LH first draft of the

background paper inform

ing the academic

draft for the new EIA

regulation

Participation in the second A

dvisory Group m

eeting, scheduled late June 2005.

Participation in proposed sem

inar on an academic

draft for revision of PP 27/1999.

Contribution/input to the

preparation of KLH

’s paper inform

ing the academic draft

for the new EIA

regulation, to be com

pleted by Novem

ber 2005.

23

Activity

Status N

ext Steps E

xpected Outputs

Provincial Pilot Studies (i) Preparation phase, w

hich involves diagnosis of existing A

MD

AL practices, review

of existing institutions and capabilities, form

ulation of ‘the model’

AM

DA

L system including proposed variations from

the existing system

, consultation and agreement of the m

odel at local and national level. (ii) Field testing w

ill be carried out on real (pre-selected) investm

ent projects followed by w

orkshops to discuss successes and failures as w

ell as necessary revisions to the m

odel. (iii) Finalization and dissem

ination will take into account

both the results of the pilots and of the analytical studies tow

ards leading to national consultations that would help

to draw out the w

ider policy implications of the w

ork. ToRs and H

iring of Consultants: ToR

s drafted in July/A

ugust 2004. Request for Expressions of Interest published in Jakarta Post on 7 Septem

ber 2004. 31 EoIs received. Eight firm

s shortlisted from w

hich Qipra

Kualitas G

alang selected under CQ

S procedures on 15 O

ctober 2004.

West Java and East K

alimantan have agreed on being the

location for the AM

DA

L pilots, and KLH

has also agreed on the choice of these tw

o local governments. Start up m

eetings in both locations w

ere held in February and March 2005.

In West Java

- Kick off w

orkshop on AM

DA

L implem

entation, February 3 2005

- Assessm

ent of potential for AM

DA

L reform com

pleted at province level and in 9 districts and m

unicipalities

- Two m

eetings of the West Java w

orking group held

- Basic fram

ework for developm

ent of a West Java Province

AM

DA

L system com

pleted.

In East Kalim

antan

- Kick off w

orkshop held on 29 March 2005

- Assessm

ent of potential for AM

DA

L reform com

pleted at province level and in 3 out of 4 planned districts and m

unicipalities.

In West Java: Fine tuning

of basic framew

ork and selection of a project to use as a basis for field testing.

In East Kalim

antan: Wider

consultations required to build further com

mitm

ent from

stakeholders. A

further workshop is

planned in Late May/early

June.

Provincial AM

DA

L Model in

the form of a report (English

and in Indonesian) detailing agreed m

odifications (based on field testing) to existing A

MD

AL procedures

Guidance N

ote for Replication

of Provincial AM

DA

L Model

(English and in Indonesian) that docum

ents the process used in developing the M

odel, so that other regions and interested parties can learn from

this experience.

Study on AM

DA

L Good Practice

The study focuses on identifying examples of Indonesian

and international EIA good practice in a num

ber of key areas (pre-agreed w

ith KLH

) including: enforcement of

EIA processes; screening and scoping procedures, EIA

reporting, and review

and approval procedures. Case studies of Indonesian good practice are com

pared with

standards is a selection of comparable countries

elsewhere. The results of the exercise w

ill inform the

development of the provincial pilots and provide

background empirical input to the B

ank’s final report (see below

). TO

Rs andHiring of C

onsultants: Study ToRs drafted in

late Decem

ber. Interviews for national consultants

carried out in Decem

ber and early January. 2 consultants identified and contracted in m

id February 2005

The study was launched in D

ecember 2004.

A total of 10 A

MD

AL good practice case studies have been

completed in the follow

ing locations: Bandung, D

KI Jakarta,

Makassar, Jogjarkarta and Surabaya. These location w

ere selected jointly w

ith KLH

as locations where the potential for

good practice is high.

Indonesian drafts of 6 out of 10 case studies have been subm

itted to KLH

and local authorities for comm

ent. A

workshop is planned for the end of M

ay to bring together all participating local authorities and discuss key issues em

erging.

The workshop w

ill enable the production of a preliminary

report forming the basis for a com

parison with selected

international experience (both in South East Asia and other

regions). This may also lead to a study tour to 2-3 countries

Com

pletion of the case studies w

rite up in Indonesian and English

Organization of W

orkshop to review

results of the case studies, set for 31 M

ay.

Write up of the self

standing report sum

marizing the m

ain findings of the various case studies national w

orkshop

Possible study tour to selected countries w

ith

Self standing report which w

ill provide inputs to the final A

MD

AL report, and also to the

KLH

academic draft of the new

A

MD

AL regulation

24

Activity

Status N

ext Steps E

xpected Outputs

for selected KLH

and local authority officials.

comparable experience.

Study on Public Participation A

combination of em

pirical/case study based research and a broader review

of existing public consultation docum

ents, surveys, focus groups and interviews w

ill assess the level and quality of public participation in the A

MD

AL process. This activity w

ill help inform

preparation of the region specific AM

DA

L models, and

also provide a broader assessment of the conditions and

incentives necessary for greater public involvement in

AM

DA

L. This work w

ill complem

ent KLH

ongoing A

MD

AL perform

ance evaluation for large-scale public sector investm

ents. ToRs and H

iring of Consultants: Q

ipra Kualitas G

alang retained for this study (see above).

Following a lengthy process of consultation w

ith KLH

, the study w

as launched in January 2005. Key steps taken to date

include:

Developm

ent of criteria and indicators to be used in evaluating case studies

Review

of previous work carried out in Indonesia on public

participation.

10 case study projects have been identified for detailed review

, including a mix of project types, different proponents

and different regions of Indonesia.

The interviews w

ith a variety of stakeholders involved in each of the case studies have been com

pleted.

Design of w

orkshop to be held in late June/early July for presentation of prelim

inary study findings.

Com

pletion of the case studies and w

rite up in Indonesian and English

Workshop to review

findings, to be held in June/July.

Write up of the self

standing report sum

marizing the m

ain findings of the various case studies

Self standing report which w

ill provide inputs to the final A

MD

AL report, and also to the

KLH

academic draft of the new

A

MD

AL regulation

Study on Alternative M

anagement T

ools This activity w

ill evaluate alternatives to the use of EIA

to measure the environm

ental impacts of

projects/activities and/or development program

s. It will

complem

ent and feed into the ongoing activities of the A

SEM Environm

ental Governance and Sustainable

Cities Initiative, and the G

ood Environmental

Governance Program

of the Ministry of Environm

ent, and its execution w

ill be coordinated with the K

LH’s

teams currently involved in these tw

o activities

ToRs and Hiring of C

onsultants: to be completed in July

2005 based on further discussions with K

LH to

determine specific EM

tools where further w

ork is required. .

The study was launched in February 2005. A

greement on the

general scope and content of work has been achieved w

ith K

LH

A m

enu of alternative environmental m

anagement tools have

been identified in collaboration with K

LH. There is on-going

dialogue on identifying which of these are m

ost appropriate in the context of Indonesia, as a basis for provision of specific W

B advice in key areas. Tracing the track record of

the application of various EM tools in Indonesia (and their

potential to increase the efficiency of AM

DA

L) is a vital com

ponent to this work under discussion.

Technical level discussion w

ith KLH

EM tools team

on identification of appropriate options for Indonesia, based on draft table jointly produced by K

LH and W

B.

Self standing report which w

ill provide inputs to the final A

MD

AL report, and also to the

KLH

academic draft of the new

A

MD

AL regulation

25

Activity

Status N

ext Steps E

xpected Outputs

Study on Private Sector This analytical piece w

ill focus on : (i) AM

DA

L as a significant investm

ent climate issue in Indonesia; (ii)

reforms to A

MD

AL necessary for private sector to

perceived it as supporting new investm

ent; (iii) kinds of public-private sector partnerships needed to help drive up the quality of A

MD

AL. A

series of surveys will be

carried out focusing on key sectors, analysis of data from

industry associations, and a comparison w

ith international best practice. It w

ill also identify specific issues that the private sector could cham

pion ‘to push’ K

LH’s A

MD

AL revitalization agenda, but also feed into

the broader work that the B

ank is currently doing under the Investm

ent Clim

ate Um

brella Initiative. ToRs and H

iring of Consultants: to be com

pleted.

The start of this analytical piece was put on hold due to a

delay in the approval process of the BN

PP funds.

Finalise precise scope of w

ork with K

LH.

Identification and hiring of the local consultants

Beginning of the study

Self standing report which w

ill provide inputs to the final A

MD

AL report, and also to the

KLH

academic draft of the new

A

MD

AL regulation

Internal Bank R

eview and T

echnical Inputs This w

ork is considered internally as one of the more

innovative initiatives currently underway on

environmental m

anagement in EA

P, especially in the context of the use of C

ountry Systems in Bank

Operations.

Shared with Q

AC

U the concept note, and keep them

inform

ed of the implem

entation progress of the TA

Organized B

BLs both in JK

T and HQ

to share the prelim

inary findings of the TA w

ork to the WB

environment

comm

unity

The AM

DA

L Revitalization w

ork was featured during ESSD

W

eek in the Session on Environmental Institutions and

Governance to show

case through regional examples the

breadth of the WB w

ork in strengthening environmental

institutional capacity and improving governance at national

and local level. Other countries featured in the sessions w

ere India and Y

emen

ongoing R

aise awareness on the scope

and impact of the w

ork done in the context of environm

ental governance in Indonesia

AM

DA

L Reform

and Decentralization: O

pportunities for Innovation in Indonesia Final R

eport

Starting the preparation Final R

eport