Wmulin of~ DESK min 7lCIAIL UI2Z ON ., MoSzt> No. P-2136-IND REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF INDONESIA FOR A NON-FORMAL EDUCATION PROJECT August 19, 1977 lls t c 2 oUD Ey b3 I e by wgfq ely f lr p&fG S ~~~~~~~oyl me acawX k (OLOC2g fe di wtn WOU0 MMS. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Wmulin of~ DESK
min 7lCIAIL UI2Z ON .,
MoSzt> No. P-2136-IND
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
TO
THE REPUBLIC OF INDONESIA
FOR A
NON-FORMAL EDUCATION PROJECT
August 19, 1977
lls t c 2 oUD Ey b3 I e by wgfq ely f lr p&fG S~~~~~~~oyl me acawX k (OLOC2g fe di wtn WOU0 MMS.
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CURRENCY EQUIVALENTS
Currency Unit = Indonesia rupiah (Rp)
US$1 = Rp 415Rp 1 = $00024Rp 1 million = $2,410Rp 1 billion = $2,410,000
GLOSSARY
Balai Penmas - Training, Materials Development and Evaluation Centers,Penmas
BP3K - Office of Educational Research and Development, DECButsi - National Development Volunteer ServiceDEC - Department of Education and CultureIKIP - Secondary Teacher Training CollegeKabupaten - Administrative DistrictKecamaten - Administrative SubdistrictLAN - Institute of Public AdministrationNTCC - National Technical Coordinating Committee (for Non-Formal
Education)PIU - Project Implementation UnitPLPM - Educational Center, PenmasPramuka - Scouting MovementUnicef - United Nations International Children 's Emergency FundUSAID - United States Agency for International Development
YEARS
Fiscal Year - April 1 - March 31School Year - January 1 - December 31
FOR OFFICIAL USE ONLY
INDONESIA
NON-FORMAL EDUCATION PROJECT
LOAN AND PROJECT SUMMARY
Borrower: Republic of Indonesia
Amount: $15 million equivalent in various currencies
Terms: Twenty years including five years of grace, withinterest rate at 8% per annum.
Project Description: The purpose of the project is to strengthen thecapacity of Penmas, the government agencyresponsible for out-of-school education, toprovide effective non-formal education programsby helping it overcome existing problems inadministration, training, materials development,evaluation and budgeting in seven provincescomprising the majority of the population ofIndonesia.
In support of the above objectives, the project wouldfinance physical facilities, regular in-service train-ing for Penmas staff, non-formal instructional mater-ials development, a basic learning fund, programmonitoring and evaluation, and related technicalassistance.
In strengthening Penmas, the project would providevocational training and basic education to about2.5 million Indonesians in seven provinces between
1979 and 1982, increasing to one million personsannually thereafter. The service thus providedwould reach approximately 30% of the out-of-schoolpopulation over a ten-year period. The prioritytarget groups would be the poorest segments ofthe population, with special emphasis on women,out-of-school youths and young adults.
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
Financing Plan: The proposed loan would finance the foreignexchange component estimated at $15.0 million or45% of the total cost, the local costs amountingto $18.1 million would be met by the Government.
Estimated Disbursements: Bank FY 1978 1979 1980 1981 1982($ million)
Appraisal Report: No. 1606-IND, dated August 19, 1977.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATION OF THE PRESIDENT OFTHE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOANTO THE REPUBLIC OF INDONESIA
FOR A NON-FORMAL EDUCATION PROJECT
1. I submit the following report and recommendation on a proposedloan to the Republic of Indonesia for the equivalent of $15 million to helpfinance a Non-formal Education Project. The loan would have a term of 20 years,including five years' of grace, with interest at 8% per annum.
PART I - THE ECONOMY /1
2. The last economic report on Indonesia, "Indonesia: RecentDevelopments and Medium-Term Perspective," of March 8, 1977 (1516-IND)described the recovery of the economy from the world recession and thefinancial troubles of Pertamina, the state oil company, and examined someof the important development issues which the country faces in the next fewyears.
3. During Indonesia's First Development Plan period (1969/70-1973/74)/2,the rehabilitation of the Indonesian economy was almost completed. Transport,power, irrigation works and other infrastructure facilities, after years ofneglect, were greatly improved and strengthened. Agricultural output expan-ded at an average rate of 4.5% a year and foundations of modern industry -fertilizer, cement, etc. - were laid. During this period, the annual rateof economic growth exceeded 7.5%; domestic savings and investment also roserapidly. With the start of the Second Development Plan period (1974/75-1978/79), the Government expected that rehabilitation would be completed anda start made on a course of long-term development which would assure not onlya satisfactory rate of economic growth but also a wider distribution ofincome. The first two years of the Plan were dominated by the developmentsin the oil sector - the sharp increase in the price of oil and Pertamina'sserious financial difficulties. The latter arose from Pertamina's under-taking of a large and diversified investment program without arrangingsatisfactory financing. With the onset of the world recession, bank creditbecame much more restrictive. Pertamina was unable to roll over its short-term debt and failed to meet the financial obligations which were fallingdue. In the event, the Government stepped in and undertook to honor the oilcompany's obligations. The repayment of these obligations, along with thefall in export earnings as a result of the recession, necessitated largeforeign commercial borrowing, seriously strained the Government's budgetaryresources and Indonesia's balance of payments, and led to a sharp decline inthe foreign exchange reserves.
/1 Paragraphs 2-14 are identical to those contained in the correspondingsection in the President's Report (No. P-2111-IND) on the Second PopulationProject, which was approved on June 30, 1977.
/2 Indonesian fiscal year April 1 to March 31.
4. During 1976/77 Indonesia's exports recovered strongly followingimprovements in the world economy, and rose to a level higher than expectedearlier. Imports continued to increase rapidly, but the rate of priceincrease slowed down and Indonesia's terms of trade improved. Most ofPertamina's short-term debt had been repaid by the end of 1975/76, anddisbursements on foreign borrowing continued to be high in 1976/77. As aresult, Indonesia's foreign exchange reserves rose to a more comfortablelevel, i.e. $1.2 billion at the end of 1976 (and even higher levels in recentmonths) corresponding to about two months of imports.
5. The Government's budgetary position was also much better in 1976/77.With the boost in oil exports and a further renegotiation of oil contracts,oil revenues rose by close to 40%. Non-oil revenues also rose over and abovethe amounts budgeted, mainly as a result of Government efforts to curbsmuggling and a more rigorous collection of customs duties. The additionalrevenues together with continued restraint in increasing current expendituresenabled the Government not only to increase development expenditures substan-tially but also to repay the debt to Bank Indonesia, which it had incurred inthe previous year. This helped to neutralize the monetary expansion onaccount of the accumulation of foreign exchange reserves. The rate ofinflation over the year decreased, from a high of 17% in the first quarter toonly a modest increase in the last two quarters of 1976/77, giving an averageincrease of less than 15% for the year as a whole.
6. In 1976, the domestic economv recovered in other respects also.The available indicators suggest that industrial output and private invest-ment rose faster than in the previous two years. The output and prices oftree crops rose with foreign demand, thus raising the incomes of the producers.This provided a welcome relief to the small producers, who had suffered fromthe declining foreign prices of their produce combined with rising domesticprices of consumer goods. However, the production of food crops slackened,and rice output failed to rise appreciably for the second year in succession.The domestic price of rice was kept stable by means of very substantialimports, which reached 1.6 million tons (about 10% of domestic consumption)in 1976/77. Early in the year floods, and later on drought, affected boththe wet season and dry season harvests. More importantly, a pest infesta-tion afflicted large areas in Java, particularly those planted with the highyielding varieties of rice, and the area under BIMAS and INMAS (the twocredit extension schemes for rice growers) remained fairly constant over thelast three years following a rapid increase during the First DevelopmentPlan period. Rice output also failed to increase because the use offertilizer did not rise despite ample availability. The Government has nowrelaxed controls on the distribution of fertilizer and set its fertilizer/riceprice ratio at a level that should encourage fertilizer use.
7. The large increase in the oil revenues over the past three yearshas been invested, not consumed. Government development expenditures morethan quadrupled over this period and in 1976/77 amounted to Rp 2 trillion(or about $5 billion); even after allowing for the high rate of inflationdevelopment expenditures rose in real terms by 35% a year. Rough estimatesindicate that at present more than 20% of GNP is being invested in Indonesia.
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8. The effect of the high level of investment expenditures, however,cannot yet be seen in the growth of the Indonesian economy. In fact, theeconomic growth in the first three years of Indonesia's Second DevelopmentPlan, i.e. 1974/75 - 1976/77, has been somewhat slower than the observedlong-term trend rate of 7.5% a year. The world recession, uncertaintiesfollowing the Pertamina crisis and domestic inflation (which made certaindomestic industries uncompetitive with imports), all had a dampening effecton the growth of the economy. Indonesia's growth rate also failed to accel-erate because the economic benefits from investments in recent years havebeen slow in coming and because the growth in the private sector slackened.New investment has been concentrated on relatively capital-intensive indus-trial and infrastructure projects with long gestation periods; some projects,such as Krakatau steel and the LNG, have been further delayed by slow imple-mentation. Moreover, the realization of economic benefits from investmentsin such sectors as transportation, telecommunications, etc. depends on thegrowth in demand which in turn is determined by the growth of the rest of theeconomy, which in Indonesia is mostly the private sector. Unfortunately, theprivate sector seems to have failed to provide the necessary momentum ofgrowth. The indications are that investments in this sector, because of theGovernment's attempts to control domestic inflation or because of the worldrecession, rose only modestly in the first two years of the Plan.
9. The orientation of the public sector investments was partly affectedby the Government's takeover of Pertamina's projects in the non-oil sector,but was also a result of its attempt to raise investment rapidly in responseto the sharply rising oil revenues. It was easier and quicker to developcapital-intensive projects; plans for several of them in fact existed evenbefore the improvement in public finances. On the other hand, new projectsin such sectors as rural development, transmigration, health and educationgenerally required not only innovation but also setting up new institutions.Nevertheless, the Government views the orientation of its investment programwith some concern. As part of its efforts to rescue Pertamina from bankruptcy,it initiated a careful review of all public sector investment proposals andstrengthened its control over the direction of investments. Where practicable,the Government rejected or scaled down costly proposals. The budget for1977/78 provides for a larger share of development expenditures in suchsectors as agriculture, health, family planning, education and regionaldevelopment.
10. Reliable data on the recent trends in employment are not available.The labor force has been increasing at a rate of more than one millionpersons a year, but the current level of unemployment and the extent ofunderemployment are not known. While considerable investment activity andgeneral economic prosperity is in evidence in urban and rural areas ofIndonesia, there is no indication that the.labor market has tightened or thatthe wages of unskilled workers have more than kept pace with domestic infla-tion. However, the Government's efforts at family planning appear to haveyielded impressive results. Preliminary estimates from an inter-censalsurvey in 1976 indicate that since 1971 the birth rate in Java and Bali hasdeclined significantly.
11. The long-term consequences of the Pertamina crisis remain in theform of large foreign debt and burdensome unfinished investment projects.
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The heavy foreign borrowing in the last two years has raised the level ofdebt service, which is now expected to reach $1.87 billion by 1980 or closeto 17% of the projected export earnings compared to 13% in 1976. This doesnot take account of the contingent liabilities incurred with regard to thehire-purchase of tankers, the exact amount of which is subject to litigation.
12. The prospects for Indonesia's export are generally good; theprincipal constraint is expected to be quantities available for export ratherthan foreign demand. Indonesia's export earnings, at least over the nextfive years, are expected to rise rapidly and it should not be difficult tomeet the debt service obligations and still to finance essential imports ofconsumer, intermediate and capital goods. However, to maintain the pace ofdevelopment, Indonesia will continue to need a substantial inflow of foreignassistance on concessional terms. In order to keep the debt service burdenmanageable, resort to commercial borrowing in the next few years will have tobe kept to a minimum. It is estimated that Indonesia will need $2.1 billionin new external financing commitments in 1977, and about the same amount nextyear, of which no more than one-third should be on commercial terms. At themeeting of the Inter-Governmental Group on Indonesia (IGGI) in April 1977,aid pledges of over $500 million from bilateral sources were made. Thelikely commitments from those IGGI donor countries which did not pledge, fromthe multilateral agencies and from OPEC and East European countries shouldraise the total of official development assistance to $1.5 billion.
13. The heavy foreign debt service requirements will also reduce thepublic sector resources available for investment. The net resource transfersfrom abroad are expected to decline from $1.56 billion in 1976/77 to about$640 million in 1980/81, or from about 5% to 1% of GNP. In order to maintainthe high rate of domestic investment already reached, the Government wouldneed to raise substantial additional revenue over the next few years, thebulk of which would have to come from non-oil sources. The additionalrevenue raising effort is also necessary to keep inflation under control.The Government has already taken steps in this direction; income tax proced-ures have been simplified and import duties are being more strictly enforced.These measures as well as some additional ones need to be vigorously pursued.
14. The medium-term outlook of the Indonesian economy is good. Overthe last eight years, GNP rose at an average rate of 7.5% a year, and foodproduction expanded in step. This rate of growth could be maintained infuture if the rate of investment continues to be high and the orientation ofinvestments is shifted to less capital-intensive forms. Thus the Government sefforts in mobilising domestic resources and careful investment planningwould be crucial in maintaining the relatively high rate of economic growthand creation of employment opportunities. The Government would also need topay special attention to the production of rice, and food crops generally, sothat the recent setbacks remain a temporary phenomenon.
PART II - BANK GROUP OPERATIONS IN INDONESIA
15. The discussion in Part I of this report underscores the need fora development program which provides productive work opportunities (with
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resultant increased-incomes) for Indonesia's presently underemployed andgrowing labor-force. Major efforts are needed to increase labor-intensiveemployment and programs directed towards improving the incomes of the poor andtheir living standards. To assist the Government in attaining its goals, theBank is planning to increase its commitments to Indonesia and in particular tosupport projects designed to: improve agricultural credit; rehabilitate andexpand irrigation systems; assist transmigration and other land developmentoutside Java and Bali for and by smallholders; increase nonagricultural employ-ment in the rural areas and small towns through the establishment of small-scale industries and rural credit schemes; develop the electric power system;construct urgently needed water supply and transport facilities.
16. As of, June 30, 1977, Indonesia had received 37 IDA credits totaling,net of cancellations, $561.3 million and 27 Bank loans amounting to 51,312.5 mil-lion. At that date, IFC investments totaled $61.3 million. The share ofthe Bank Group in Indonesia's total external debt (disbursed) outstanding atthe end of 1976 was about 6% and the share of debt service was less than 1%.By 1978 these ratios are expected to increase to around 12% and 5%, respec-tively. Annex II contains a summary statement of IDA Credits, Bank Loans andIFC Investments as of June 30, 1977, as well as notes on the execution ofongoing projects.
17. To date, agriculture accounts for just over one third of all Banklending to Indonesia, including four IDA credits for estate rehabilitation,nine Bank loans and IDA credits for the rehabilitation and expansion of theirrigation systems, two for fisheries, and one each for seeds production,beef cattle,. siugar, smallholder tea, smallholder rubber, agriculture research,food crkppextension services, transmigration and nutrition development. TheOperations-atnd.Evaluation Department of the Bank is undertaking a study ofBank Group lending in the agricultural sector. In the industrial sector, theBank has Iassisted 'in four projects to expand PUSRI's fertilizer production,and distribution 'capacity, four for development finance companies (Government-owned and private) which play a major role in fostering the growth of indus-trial enterprises, and one for the Pulo Gadung industrial estate. Loans andcredits have also been extended to the education (including technical andagricultural education, textbook production, vocational education and civilservice and teacher t-raining),, telecommunications, tourism, power generationand distribution, transportation (including highways, interisland shipping,railroads and ports), population, urban and water supply sectors. A loan wasalso extended for a national resource survey and mapping project and fourcredits for technical assistance to aid the Government in preparing andformulating its development programs and projects.
18. Bank lending to Indonesia started with an IDA Credit in 1968 forirrigation rehabilitation; lending on Bank terms began in June 1974. Dis-bursements on loans and credits are now at satisfactory levels. TheIndonesian authorities have'become increasingly aware of the cost to thecountry of the delays in project execution caused by cumbersome proceduresand of the need to establish an effective control system in BAPPENAS (theNational Development Planning Agency). At the Government's request, the Bank
arranged in 1974 for assistance under the Fourth Technical Assistance Credit(Credit 451-IND) to help set up a monitoring and control system. It is hopedthat the system, which is due to commence operation shortly, will lead tobetter project administration.
19. The proposed loan is the first to be presented to the ExecutiveDirectors this fiscal year. Projects for nucleus estate development, smallenterprise credit, rural credit, and power are expected to be ready for pre-sentation in the first part of this fiscal year.
Progress Under Previous Education Projects
20. IDA has made three credits (totaling $24.4 million) and the Banktwo loans (totaling $56 million) for education projects in Indonesia. Theseprojects were designed to develop skilled manpower in areas crucial to theeconomic and social development of Indonesia and to improve the quality ofthe education system. The first credit (Cr. 219-IND, 1970) financed theconstruction of five centralized workshops (TTCs) to strengthen practicalinstruction for 14 satellite senior secondary schools. The project wascompleted on schedule in 1976 and the project completion report has beenprepared. The second education project (Cr. 288-IND, 1972) aims at upgradingand expanding middle level agricultural training; the project is being imple-mented satisfactorily with minor delays and 26 of the 27 project institutionshave been completed. The third project (Cr. 387-IND, 1973) is contributingto the improvement of basic education through the production, testing anddistribution of 138 million primary school textbooks and the in-service train-ing of 350,000 primary school teachers and upgrading of 2,800 supervisors.The distribution of the first 31 million textbooks has been completed.Production of 49 million textbooks scheduled for 1977 is well under way.Teacher training is being conducted on a large scale, but it has proveddifficult to keep the training program in phase with book deliveries.Project management, together with UNESCO specialists, is working to overcomethis problem. The fourth education project (Ln. 1237-IND, 1976) seeks tostrengthen technical/vocational training and civil service training.Initial implementation is satisfactory and the disbursements are on schedule.A fifth education project (Ln. 1433-IND, 1977), financed under a loan of$19.0 million, which became effective on July 7, 1977, is designed to raisethe quality of primary and secondary education by improving the knowledge andteaching skills of graduates of teacher training institutions.
PART III - NON-FORMAL EDUCATION IN INDONESIA
Socio-Economic Background
21. The cultural and economic disparities of Indonesia's populationpose major problems for the Government in developing its potential manpower.Although a national language was adopted nearly 30 years ago, and is used
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in formal school classes, many people still rely on one of 230 local dialectsfor everyday communications. Lack of access to formal schooling is reflectedin a 40% rate of illiteracy. Not suprisingly, the illiteracy rate is highestin the rural areas where 80% of the population resides. This in turn contri-butes to the income and employment disparities between rural areas and urbanlocalities where educational opportunities are greater. More than 40 millionpeople are currently in the labor force and a million workers are being addedeach year. The Government is aware of the need for offering appropriatetraining to these labor force entrants as well as the more than 10 millionworkers estimated to be unemployed or underemployed. A high share of theseworkers are women and lower income youths in rural areas. To help relievethis situation Government is looking to its directorate for out-of-schooleducation (Penmas) for a strengthening of nonformal, out-of-school learningopportunities focusing on skill training.
Non-Formal Education
22. Since the 1950s the Government has encouraged and supported thedevelopment of non-formal education programs to complement the formal educa-tion system. At present, several Government agencies provide out-of-schooleducation and training. Chief among them is Penmas, located within theDirectorate General for Out-of-School Education, Youth and Sports in theDepartment of Education and Culture (DEC). Others include the extensiondirectorates of the Departments of: Social Affairs; Manpower, Transmigrationand Cooperatives; Home Affairs; and Agriculture. Non-formal education is alsosupported by semi-autonomous agencies, including Butsi (the National Develop-ment Volunteer Service) and Pramuka (the Scouting Movement), and by private(non-profit and commercial) organizations.
23. The existing system of non-formal education and training hasdeveloped in the absence of a central coordinating mechanism. In recognitionof the need for such a mechanism, the Government created a National TechnicalCoordinating Committee (NTCC) in.1975. The NTCC is responsible for developingand implementing a national policy for non-formal education and training. Itis chaired by the Director General for Out-of-School Education, Youth andSports, and comprises representatives of 12 government and private agencieswhich provide non-formal education. A secretariat to the NTCC, chaired bythe director of Penmas and consisting of 17 officials, was appointed in early1977 to increase its effectiveness.
24. The involvement of many agencies in non-formal education derivesfrom the inability of any single agency to cater to the practical trainingdemands of the 40 million Indonesians who have had little or no formal educa-tion. Most of the agencies provide specialized training related to their ownfields of expertise and programs, and focus on a particular subgroup of theout-of-school population. The Penmas directorate, however, has a mandate toprovide a broad range of basic vocational skill training and education to allout-of-school youth and illiterate adults, numbering 17 million and 23 mil-lion, respectively.
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25. Penmas was established in 1946. Initially, it served an adultclientele in a small number of villages. By 1972, Penmas was providing a widevariety of courses in skill training, women's education, community development,literacy and numeracy to an estimated 600,000 youths and adults annually. Ithas been particularly concerned with reaching women who have comprised abouthalf of its clientele. Staff and facilities were established throughout thecountry, with major activities focused on large population concentrationson Java and in North Sumatra and South Sulawesi. Training provided by Penmaslends support for the Government's integrated subdistrict and village planningprograms and for ongoing community development activities including those inthe areas of public infrastructure (Inpres), health, nutrition, family planning,irrigation and small-scale industry. Penmas has a staff of 6,500 (of whom2,500 are professionals) who support village learning activities from 3,300local offices. This staff has established a close working relationship withlocal government officials who ensure coordination of Penmas activitieswith other non-formal education and development programs at the local level.Penmas has also developed an ability to organize villagers into groups willingto meet regularly to pursue educational activities.
26. The content of Penmas' programs has centered on four core learningareas:
(a) vocational training in cottage industries, para-agriculturalskills and basic technological and home/community improvementskills;
(b) family life education in health, hygiene, nutrition, childcare,and family planning;
(c) community education, including leadership training and coursesin local government and community development techniques; and
(d) basic education in literacy and numeracy.
While vocational training activities have produced the most direct benefitsin the form of supplementary incomes or employment, these have been hamperedby insufficient funds and inadequate supply of consumable materials. Themajority of courses have been provided in the areas of family life andbasic education. The literacy courses are presently under review by thePenmas Directorate in light of data showing high dropout and low literacyretention rates.
27. Penmas' main and most successful program delivery technique isthe village-based learning group. Penmas subdistrict fieldworkers identifypriority educational needs, organize learning groups and provide the groupswith instructors and materials. Fieldworkers liaise with these groups througha designated group leader. A second delivery method used by Penmas is train-ing provided at its subdistrict centers. The disadvantage of this methodis that participation is limited to those living in the immediate environs.
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28. The success of Penmas has been mixed as far as reaching the poorestsegments of the out-of-school population is concerned. Its overcentralizedadministration has made it difficult to respond adequately to diverse localconditions. Penmas has also found it difficult to identify and teach a rangeof productive skills broad enough to permit mass participation in vocationaltraining courses. Penmas field staff have often lacked relevant experienceand technical support for its field staff has been particularly deficient inthe areas of training; materials development and supply; and program moni-toring and evaluation. In the past, the Penmas budget was insufficient toprovide the necessary technical support. Furthermore, regular Governmentbudgeting procedures, based on central programming, were not flexible enoughto allow Penmas to respond effectively to local educational needs. Penmasprograms could be more effective if staff efforts were concentrated onproviding technical support for fieldworkers. Effectiveness of fieldwork hasalso been impeded by lack of transport and delays caused by reorganization inthe filling of vacancies which amounted to a third of the total authorizedpositions for fieldworkers.
Government Plans and Programs
29. The Government has formulated a program to revitalize Penmas'activities during the next few years focusing on expanding the number andvariety of vocational training courses. The core of the program wouldbe a reorganization and strengthening of the provincial offices of Penmas.The present administrative and supervisory functions of these offices wouldbe expanded to include systematic technical support for staff training,materials development and evaluation. In addition, the Government plansto equip local field offices, to staff all fieldworker positions and toestablish a Basic Learning Fund for local education activities. To supportthese activities the Penmas development budget will be increased substantiallyin each of the next several years. At the national level, UNICEF is assistingPenmas in the development of improved educational materials.
PART IV- - THE PROJECT
30. The proposed project was appraised- by a Bank mission which visitedIndonesia in November 1976. A report entitled "Indonesia - Appraisal of aNon-formal Education Project" (No. 1606-IND, dated August 19, 1977) and basedon its findings is being distributed separately. Supplementary Project Dataare given in Annex III. Negotiations were held in Washington from July 25to 27, with the Indonesian delegation led by Mr. W.P. Napitupulu, DirectorGeneral of Out-of-School Education, Youth and Sports, Department ofEducation and Culture.
31. The overall purpose of the proposed project is to stengthen thecapacity of Penmas to provide effective non-formal education programs inseven of the country's most heavily populated provinces and thus gainexperience for further expansion to cover the whole country. The objectivesof the project are to:
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(a) strengthen the management and supervision capabilities ofPenmas;
(b) establish a system of regular in-service training for Penmasstaff;
(c) create institutions to develop, produce and distribute improvednon-formal education materials;
(d) introduce a system of continuous evaluation of Penmas programs;and
(e) establish local funds to finance learning activities at the villagelevel.
32. To achieve the above objectives, the project proposes the followingoutlays /1 to finance:
(a) civil works to renovate two existing Penmas training and devel-opment centers and establish four new centers (proposed outlay$2.3 million);
(b) equipment and materials, office furniture and vehicles for Penmasstaff and fieldworkers (proposed outlay $6.1 million);
(c) preparation of approximately 100 new pamphlets and printing of11 million copies together with supporting instructional materialsand development of a system of program monitoring and evaluation(proposed outlay $5.9 million);
(d) regular in-service training for about 3,100 Penmas staff (proposedoutlay $3.2 million);
(e) a fund in 148 districts to support basic learning programs devel-oped with village participation (proposed outlay $0.8 million);and
(f) related technical assistance (proposed outlay $3.2 million).
33. The core of the project is assistance to six provincial centers inJakarta, Bandung, Semerang, Surabaya, Medan, and Ujung Pandang for conductingtraining programs for all provincial staff; developing, testing and producinginstructional materials; and undertaking program evaluation. Existing centersin Jakarta and Bandung would be strengthened and the other centers would benew. These areas were selected because existing Penmas programs and infra-structure, including core staff and adequate transport facilities required toimplement the project, are already concentrated in them; they comprise 85% ofthe population whose daily caloric intake is below a minimum adequate leveland require extensive programs for the development of non-farm skills since
/1 Outlays exclude contingencies.
there is limited potential for the creation of new agricultural employmentopportunities on Java. These centers would provide some 2,150 field workerswith four weeks of training per year, in two sessions. The 680 Penmasdistrict and subdistrict staff would receive two weeks of training per year.Each Penmas center would run an annual training course for two weeks for itsown staff with assistance from staff of the directorate and other agencies.Full-scale training -is expected to commence in July 1979. Prior to that time,the two existing Penmas centers would be utilized for training the staff ofthe four new centers. The Government would draw up annually a trainingprogram satisfactory to the Bank and thereafter implement it (Section 3.13 of
the draft Loan Agreement).
34. Training of provincial staff would focus on building a capacity foreffective training,-materials development and evaluation of provincial programs.Training of district staff would be geared towards improving their capacity toprovide appropriate technical support to fieldworkers. Training of fieldworkerswould center on providing practical experience in such areas as the use andtesting of new instructional materials, assessing village educational needsand establishing village learning groups, observing innovative learningactivities and developing activities for assistance from the Basic LearningFund. In addition, the project would provide assistance to the secondaryteacher training institutes (IKIPs) in the project provinces to improve their
departments of adult and community education.
35. Materials Development. The .project would assist the Penmas centersto develop and produce instructional materials, including pamphlets, posters,slides and tapes. Some of these materials would be based on curricula preparedby Penmas with the help of UNICEF. Each Penmas center would produce materialsas required for its province. At the end of each of their semi-annual trainingprograms, Penmas fieldworkers would select and receive for use by their learninggroups approximately 1,500 pamphlets and supporting materials from among thoseavailable. This process would maximize the relevance of materials and eliminatethe need for shipment. Financing would be provided under the project for costsof developing, testing and producing the materials and for related technicalassistance on the basis of a program satisfactory to the Bank (Section 3.08(b)of the draft Loan Agreement). The Government has agreed that no instructionalmaterials would be mass produced under the project without adequate prior fieldtesting and subsequent revisions, as necessary (Section 3.08(a) of the draft
Loan Agreement).
36. Support Materials. The project would provide instructional equip-ment to the district offices to enable them to provide technical support tofieldworkers. District offices would loan simple audio-visual equipment(including battery-operated slide projectors and cassette recorders) to field-workers as needed for learning group activities. Financing would be providedto equip 148 district and 48 subdistrict offices; to procure six mobile print-ing units; to supply, operate and maintain the equipment; and, to procure thebasic supplies to be allocated to fieldworkers for learning group use.
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Basic Learning Fund
37. To reduce the rigidity of centralized budgetary procedures, theproject would provide a Basic Learning Fund which would be controlled at thedistrict level. The Fund would facilitate a flexible and immediate Penmasresponse to village-specific learning needs and active local participation inthe formulation of learning programs. Grants from the Basic Learning Fund, upto a maximum of Rp 100,000 ($240), would be allocated to finance prioritylearning group activities for which no regular Penmas funds had been designated.Activities to be supported from the Fund would be selected on the basis of suchcriteria as the degree to which a proposed program would create productiveskills, generate income, enhance effectiveness of other local developmentprojects, and involve the least educated/poorest members of a community. Up to50% of each activity would be financed from the Fund and the remainder fromvarious local sources. The Government and the Bank have agreed on criteria tobe applied to select non-formal education activities to be supported by theBasic Learning Fund and procedures to replenish the Fund (Section 3.07(a] [i])of the draft Loan Agreement). Since an important criterion relates to fundinglearning activities to create productive skills and generate income for partici-pants, the Government would ensure that Penmas would continue to provide train-ing to develop productive skills for self-employment and cottage industries(Section 3.07(b) of the draft Loan Agreement).
Learning Programs
38. Under the project Penmas would continue to use the village-basedlearning group as its principle mechanism for program delivery. The projectaims at providing non-formal education and training to about 41,000 learninggroups comprising 830,000 participants annually by 1982. Since 1972 Penmashas reached about 600,000 clients annually mainly in the project provinces.The targeted increase of nearly 30% would be achieved gradually over theimplementation period. In each project province priority would be attachedto serving the poorest and most disadvantaged segments of the out-of-schoolpopulation (both urban and rural), focusing on women, youths and young adults.To facilitate mobility of Penmas staff the project would finance 225 four-wheel vehicles and 1,880 motorcycles.
Evaluation
39. The project would assist Penmas in developing and implementing anevaluation system comprising two main components. The first would be a planningand performance monitoring system managed by staff of the Penmas center; itwould focus on collecting and analyzing information related to the process ofimplementing Penmas activities to be used to modify and improve Penmas opera-tions. The Government would also conduct a second type of evaluation, amid-term review of the project, which it will submit to the Bank for commentby October 31, 1981 (Section 3.09 of the draft Loan Agreement).
Technical Assistance
40. Fellowships. The proposed project includes about nine man-years ofdomestic fellowships and 37 man-years of foreign fellowships for training
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project personnel in areas such as management, materials development,communications theory and printing. Domestic fellowships would be providedto one person from each Penmas center to study materials design and printingfor six months at the Pusat Grafika Institute in Jakarta. Most fellowshipsfor study abroad would be for short-term apprenticeships or study tours,whenever possible within the Asia region. Longer term formal training wouldbe provided to one person in the Penmas Directorate to study compunicationsand advertising theory and to three persons from each of the six SecondaryTeacher Training Colleges (IKIPs) involved in the project to study non-formaleducation curriculum development, training and evaluation. The criteria andprocedures for awarding fellowships would be satisfactory to the Bank(Section 3.07(a)(ii) of the draft Loan Agreement).
41. Specialist Services. The proposed project includes 81 man-yearsof domestic and about 24 man-years of foreign specialist services for thePenmas Directorate and provincial centers to assist in staff training,materials development, evaluation and management; for the Office of EducationalResearch and Development in the Department of Education and Culture to assistin the mid-term review of the project; and for the six project SecondaryTeacher Training Colleges (IKIPs) to assist in strengthening programs in adultand community education to improve the pre-service training of non-formaleducators. The project also provides for the services of local consultantarchitects and an independent auditor. The estimated cost of expatriatespecialists would be about $5,500 per month. The qualifications and experienceof consultants, as well as the terms and conditions of their employment, wouldbe satisfactory to the Bank (Section 3.02 of the draft Loan Agreement).
Project Cost and Financing
42. The total cost of the project is estimated at $33.1 million equiva-lent, including physical contingencies of 10% on all items and price contin-gencies on equipment and expatriate technical assistance of 8% in 1978 and1979 and 7% thereafter and on other project costs of 12% in 1978, 10% in 1979,9% in 1980 and 1981 and 8% in 1982 amounting to $11.7 million. The detailsare shown in the Loan and Project Summary at the front of this report. Theforeign exchange component is estimated at about $15 million, or 45% of thetotal, which the proposed loan would finance; the remainder would be providedby the Government.
Procurement and Disbursement
43. Because of the small size of contracts and the scattered nature ofthe works involved, contracts for civil works, materials and furniture wouldbe awarded following local advertisement and competitive bidding in accordancewith Government regulations which are acceptable to the Bank. Indonesia has awell developed construction industry and foreign firms not already establishedin the country are not likely to bid. Foreign firms or joint ventures meetingthe requirements for doing business in Indonesia would be free to prequalifyand participate. Equipment and vehicle contracts of $50,000 equivalent or morewould be awarded after international competitive bidding in accordance with theBank's guidelines for procurement. In bid comparison, domestic manufacturers
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would be allowed a margin of preference of 15% or the existing customs duty,whichever is lower, over the c.i.f. price of competing imported items. Importsmade directly by the Project Implementation Unit (PIU) for the project wouldbe exempt from customs duties and taxes. The six mobile micro units to printlocal newsletters, which are obtainable only from one manufacturer, hence un-suitable for international competitive bidding, would be procured directly fromthe supplier in accordance with Part B of the Bank's Guidelines for procurement.Equipment purchases which cannot reasonably be grouped to form contracts of atleast $50,000 equivalent could be awarded on the basis of competitive biddingfollowing normal Government procedures which are acceptable to the Bank. Toaccelerate initial project implementation, a maximum of five vehicles, costing$50,000 equivalent or less would be procured through prudent shopping afterreceiving at least three price quotations. Equipment, materials and furniturewhich cannot be reasonably grouped to form contracts of at least $12,500equivalent each, could be purchased through prudent shopping on the basis of aminimum of three price quotations, subject to an overall total of $300,000equivalent. Prior Bank review would be required for all civil works contractsof $200,000 equivalent or more and all equipment and furniture contracts of$50,000 equivalent or more.
44. The proposed loan of $15 million would be disbursed for:
(a) 30% of total expenditures for civil works, engineering andarchitectural services, and furniture;
(b) 100% of the c.i.f. price of imported equipment, materials andvehicles; 95% of the ex-factory price of locally manufacturedequipment and materials, and 65% of the price of imported butlocally procured equipment and materials (40% for vehiclespurchased locally);
(c) 50% of the total costs of local fellowships and staff training;
(d) 50% of the total cost of the Basic Learning Fund; and
(e) 100% of the cost of consultants' services and overseas fellowships.
Organization, Management and Project Implementation
45. The following key functions would be assigned to each Penmas admin-istrative level:
(a) The National Directorate would be responsible for policy devel-opment, programming and national management of Penmas' activi-ties, and for coordinating Penmas' programs with those of otheragencies.
(b) Provincial Centers would develop and produce learning materials,provide in-service training for all staff within the province,and implement an evaluation scheme for provincial programs.
(c) District Offices would provide on-the-job supervision and trainingfor fieldworkers, support fieldworkers with audio-visual equipmentand materials, and control disbursements from the Basic LearningFund. The subdistrict Penmas offices would support fieldworkerswith vocational equipment and specialist teachers.
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(d) Fieldworkers would identify local learning needs, organize learn-ing groups, train group leaders, and assist learning groups toobtain funds, instructors and materials. They would also partic-ipate in developing learning materials at the provincial centersand would deliver materials produced by those centers.
(e) Village Learning Group Leaders would be responsible for sched-uling and managing learning group activities.
Project Implementation
46. The Penmas directorate within the Department of Education and Culturewould be responsible for project implementation. A Project ImplementationUnit (PIU) formed within the directorate in January 1977 includes a director,deputy director, provincial sub-directors, an architect, a procurementofficer, a comptroller, a chief for technical assistance and specialistsin training, learning materials and evaluation. The Government would appointadditional Penmas staff under a schedule satisfactory to the Bank and maintainsuch staff to implement the project (Sections 3.06 and 3.10 of the draft LoanAgreement). Procurement activities for civil works, equipment, materials,furniture, advisory services and fellowships would be handled by the PIU. Inorder to ensure adequate control and maintenance of equipment, the Governmentwould submit to the Bank for comment by December 31, 1978, and thereafterimplement, details of (a) a planning and performance monitoring system forimplementation of all project components and (b) an equipment inventorycontrol and maintenance system (Section 3.11 of the draft Loan Agreement).
47. Implementation Period. Physical implementation of the proposedproject would be completed by mid-1982. The Government has made good progressin the initial stages of implementation with selection of PIU staff and sitesfor the four new Penmas centers and with the appointment of consultant archi-tects. Master equipment lists are being finalized. An inventory has beencompiled of non-formal education materials developed for use in Indonesia.A decree relating to the reorganization of the provincial offices was issued.Key staff have been selected for the provincial Penmas offices in Jakarta andBandung. Finally, the Government has created a working secretariat for theNational Technical Training Committee.
48. Professional Services. Design and supervision of civil works forthe six provincial centers would be carried out by qualified local consultantarchitects acceptable to the Bank. The Government has appointed the consul-tants and sketch plans have been drawn up and found acceptable to the Bank.
49. Sites. Sites for the four new Penmas centers have been selected,adequate budgetary provisions for their purchase have been made and the acqui-sition process has been initiated. The Government has agreed that it would
acquire title to each site six months before the scheduled start of construc-tion at each site (Section 3.05 of the draft Loan Agreement).
Benefits and Justification
50. Despite the rapid expansion of formal education, nearly a third(40 million) of Indonesia's population has had little or no formal schooling.
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This group of out-of-school youth and illiterate adults comprises about halfof the population classified as the severely poor. The group is character-ized by: high rates of unemployment and underemployment; low productivityand income; poor nutrition, health and hygiene; high rates of birth and infantmortality; and a narrow range of physical and mental skills. To providethese out-of-school youths and illiterate adults an opportunity to improvetheir standard of living, they must be taught practical skills and basicknowledge. The proposed project would help to extend relevant learningopportunities to this segment of the population, building on proven resultsfrom experience in smaller programs of this nature.
51. In strengthening Penmas, the project would provide vocationaltraining and basic education to 2.5 million Indonesians in seven provincesbetween 1979 and 1982, increasing to one million persons annually thereafter.The service thus provided would reach approximately 30% of the out-of-schoolpopulation over a 10 year period. In accordance with the emphasis the Govern-ment attaches to improving the equity of educational opportunity, the prioritytarget groups to be served by the project would be the poorest segments of thepopulation, with special emphasis on women and out-of-school youths and youngadults. Some 85% of these persons would be rural inhabitants and the remaining15% would be from urban areas.
52. Near-term benefits expected from improved Penmas' vocationaltraining and basic education under the project would include:
(a) increased incomes and levels of employment for both men and women;
(b) better family health, nutrition and hygiene;
(c) improved community infrastructure; and
(d) increased receptivity to, and effectiveness of, government ser-vices and programs.
In accordance with priorities set under the Second Five-Year DevelopmentPlan, expected long-term benefits would include progress towards equaliza-tion of income distribution and a possible decline in the birth rate dueto a higher level of educational achievement by women.
53. Risks. The benefits expected from the project would depend mainlyon the competence and dedication of staff appointed to the provincial Penmascenters. These individuals determine the quality of educational activities,their relevance to learning needs and their ability to attract participantsfrom the priority learning group. The proposed project includes reasonableprovisions to minimize the risk of poor quality staff by providing special-ized training and technical assistance. While misappropriation of proceedsof the Basic Learning Fund may also be a risk, control at the district level,provided by Penmas officers and representatives of the Department of HomeAffairs, in addition to regular control procedures required by the Depart-ment of Finance, are considered sufficient to limit this risk. The variedand changing needs of out-of-school youth and adults, and the innovative
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character of the nonformal programs, make it likely that some programs mayfail. But continuous evaluation of the project is intended to identify andeliminate unsuccessful programs at an early stage.
PART V - LEGAL INSTRUMENTS AND AUTHORITY
54. The draft Loan Agreement between the Republic of Indonesia and theBank, the Report of the Committee provided for in Article III, Section 4(iii)of the Articles of Agreement of the Bank, and the text of a draft resolutionapproving the proposed loan are being distributed to the Executive Directorsseparately.
55. Special conditions of the project are listed in Section III ofAnnex III of this report.
56. I am satisfied that the proposed loan would comply with theArticles of Agreement of the Bank.
PART VI - RECOMMENDATION
57. I recommend that the Executive Directors approve the proposed loan.
Robert S. McNamaraPresident
by I.P.M. Cargill
Attachments
Washington, D. C.August 19, 1977
ANNE IPage 1T
TABLE 3AINDONESIA - SOCIAL INDICATORS DATA SHEET
LAND AREA (THOU KM2)--------------- INDONESIA REFERENCE COUNTRIES (1970)
TOTAL 1904.3 MOST RECENTAGRIC. 283.8 1960 1970 ESTIMATE BANGLADESH INDIA PHILIPPINES**
GNP PER CAPITA (USS) 70.0 110.0 180.0 90.0 110.0 230.0
POPULATION AND VITAL STATISTICS_______________________________
POPULATION (MID-YR, MILLION) 95.4 116.3 132.1 70.8 547.6 36.9
POPULATION DENSITYPER SQUARE KM. 50.0 61.0 69.0 496.0 167.0 123.0PER SQ. KM. AGRICULTURAL LAND 345.0 411.0 453.0 692.0 308.0 375.0
URBAN POPULATION (X OF TOTAL) 14.9 17.5/A 18.2 6.4 19.8 31.8
AGE STRUCTURE (PERCENT)0 TO 14 YEARS 42.1 /& 44.0 43.9/b 46,4 41.6 45.615 TO 64 YEARS 55.3ja 53.5 53.6/_ 51.0 55.3 51.665 YEARS AND OVER 2.6 2.5 2. e 2*6 3.1 2.8
AGE DEPENDENCY RATIO 0.8/a 0.9 0.9 1.0 0.8 0.9ECONOMIC DEPENDENCY RATIO A.4 ,. 1-3 i.6 A I-iA 1.5
FAMILY PLANNINGACCEPTORS (CUMULATIVE, THOU) .. 259.3 0 6786.2 A .^ 14585.0 354.oUSERS (X OF MARRIED WOMEN) .. .. .. .. .. 2.0
EMPLOYMENT
TOTAL LABOR FORCE (THOUSAND) 34600.0 ,, 44200.0 Z 22300.0 218000.0 12300.0LABOR FORCE IN AGRICULTURE (X) 75.0 .. 69.0/C 71.0 69.0 55.0oAUNEMPLOYED (X OF LABOR FORCE) 5.4 .. 7. . 0. 7.0
INCOME DISTRIBUTION
K OF PRIVATE INCOME PEC'D BY-HIGHEST 5% OF HOUSEHOLDS . .. 337 f 16.7 25.0.HIGHEST 20% OF HOUSEHOLDS .. .. 52.0 / 42.3 /6 53.1 LLOWEST 20% OF HOUSEHOLDS .. .. 6.8 7.9 7 4.7LOWEST 40% OF HOUSEHOLDS .. .. 17.3 T 19.6 13.1
DISTRIBUTION OF LAND OWNERSHIP______________________________
X OWNED BY TOP 10% OF OWNERS 48.0. 34.0% OWNED BY SMALLEST 10% OWNERS 3.0 .10
HEALTH AND NUTRITION
POPULATION PER PHYSICIAN 413o0.0/o 26370.0 16870.0 7600.0 e 4890.0POPULATION PER NURSING PERSON .. 7630.0/d 7290.0/i 72030.0 he 5220.0POPULATION PER HOSPITAL BED 1370.0 A 1640.0 1420.0 B120.0 1610.0 850.0
PER CAPITA SUPPLY OF -CALORIES (X OF REQUIREMENTS) 89.0 91.0 98.0 .. 93.0 100.0PROTEIN (GRAMS PER DAY) 43.0 43.0 .. .. 53.0 45.0
-OF WHICH ANIMAL AND PULSE 15.0 14.0 .. .. 16.0 22.0
DEATH RATE (/THOU) AGES 1-4 .. .. .. . ,, 9.0
EDUCATION-
ADJUSTED ENROLLMENT RATIOPRIMARY SCHOOL 59.0 69.0 79.0 50.0 /g 68.0 108.0SECONDARY SCHOOL 6.0 12.0 l9.0 15.0 .. 48.0
YEARS OF SCHOOLING PROVIDED(FIRST AND SECOND LEVEL) 12.0 12.0 12.0 1D.0 12.0 10.0
Unless otherwia- noted, date for 1960 refer to any year between 1959 and 1961, for 1970 between 1968 and 1970, and for Moat Recent Estimate betwee
1971 and 1975.
I-Inldlng Went Irian.
ccThe Philippin.n has been n-lctad as an objectIve country for its geographical iolellriry and b.c.... of It. apparent advance.d niage of ecoceic
development.
INDONESIA 1960 Ia -oclden Went Irlan; lb 1962, Ic 1951-56; /d 1961-63, /s 10 years aod over, ability to rod or write ineither Latio or non-Latin charactern.
1970 I 1961-71; /b 1971; Ic 1968 to 1970, /d inclodiogndwvn /e Total, boopital bed iocooplote.
MOST NKCICEST IISSATE Ia 1970-75; /b 1976; / 1971; /d 1968 to 1975, /e Mostly -ooployd workers seeking theirfirst Jvb; /f Incan reciPinnts; /I Jncloding midwives /6 1972; /i 10 yenta and over,ability to read r write In either Latin or non-Latin characters, j,j Not comparble with 1970.
BANGLADESH 1970 / The 1970-75 popo1ation growth rtet In abnormaly low doe to the ef.cta of the war of indapeodeocenad -as popolati-onoemenr acr..n the borders doting that periad. P-e.etly, th.eaverage popolation growth rate Is estimated at 37.par assntm lb Ratio of popolation woder 15 and 65 and aver to total labor force, /c 1966-67; /d 1967-68;
/e Rngiatered, not all practicing In the -oatry; If Governnt hoapital esalssonsnly, La 7Approi-toatenrollmant as percan.tage of population in 6-10 end 11-15 age graupa.
INDIA 1970 /a Dria of popolation andar 15 and 65 and over to labor force age 15 and ove lb 1967-68; /c Inroding mIdwives;/d 1967.
PHILIPPINES 1970 / An p-eretage of onploynnet, lb Not incloding private vocational nchoo1n.
517, Jine 23, 1977
SDZPINXTIOW OP SOCIA ISsCATOeS
Land Area 15thc k821 Ppolation pa .om ion pero - Popolati on divded by cnke.r of p-raticingTotal - Total nofc aecaprinlig land area and Inad watara. mal and fonale gradoat or.ee, 'trained' or "certified n--e, andcarte .,-oa tra-n -ai-ss of a0 iotr rea cad t-porartly or Paie- acailtary perenoel with trat.nio or enperien-.
.esety for crops, pa torea, market k ktrohon gardea or to Ste fallow. PsPo1ation Per hoaPIta! bed - rPolsIoton dioided by n,eber of hoepito1 bedsa-ilable in pablic and private genral. and speclaiteed hospital and
1N0 per -Peit. (USS) - GNP per ca pita atksat. te -t-rsn narkat prireo r_hbiliatltin - -oer; neioeaors tg kh-. and setabliakhnot forcaloolted by aaa- co reo etbhd oa World Da, Atll.a (1973-75 baate; onatodia1 and preventive care.1960; 1970 and 1975 data. per -apita spply of calorIes . o f rCsrnt) -tapoted fran snargy
eqoivaleni of neat fond auppliee avilabla to coon.try per capita pse day,Pponlation and vial atatttic. availabls toPppites caprisa dsestic prodortion, bptptri loan aeporta. ntd
Poenailo fol-yer atlion Aa f Jly fint f nt -vilabla, average chsnaen in stock, net aoppiea -s1ld. animal feed, needs, qoasttnience:dof .1two -od-Y.sar satnta ",ll aod195 dta in food sr_canstg aod lonee In diartibotion. reqoirtont. wereenlsad
by tAO based an phynilgi-olal .neda for no-na -ciotty end health -onid-Preolatio denei~ft: - eec asar 6 Mid-year popolation per eqars kcilenctar ering enoi-nta tanperator, body osighta, aend,ann dietribtioron of
(100 bectaea)tof tota srea. POPolatton, and a.lloin 10% for -ate at bhcanhold Ina1.
Peeclatton denaty -preare no of agirc. land - Canpoted an show for Per canita pely of nerte (oram ear day) - Protein content of per capitagtoloallnd only. net sopply of food par day; ne t sopply of fond Ia defIned aa above; i-
onota for alS roatrine entebliaked bY USDA to-oir R.....rob Servite-vital eratastice provide forannicnlb ateo 60 gran of total protein per day, andCrode bIrth ,rae pear thooad. averaoe - Ann-aI Sloe birtha per tho...and of SO2 ran o aimal and puma protoin, of whIch 1 gra- ahocid be animal
old-year popolation; ten-year arlil"tic avrae ening in 165 and 1970, protein; these tandorda are lowr than those of 75 gran of total protein
s nd fiva-year an-rga endIng in 1975 for eon trcet e tios 9e and 23 gr-n of animal protein --anavrga for the ourld, propened by FAOtrde d.ach rate eer thojinand. averagSe - A-.oaI death. par thonaand of ntd-ya- to the Third World Pond iSrey.
population; ten-year orith-tic averagne ending in 1 960 and 1970and floe- Per canita -rotatecon froa anima an.d pols - Orstein eupply of foodIYea avsrage ending in 1975 for naa,t drecent estimata. derired fr animals and pulsee in gren par day.Infant_tnsriaity rats (Ithoc) - Ann.a deahs f inf.tto coder one yar of age Death rain (/thon) ages 1-4 - AcooaI d-ath per ihoosand in age group 1-4
ipe thko.and live birth.. y-ar, to chIldre In this age grop, soggeeted as an indicator ofLife nopeotancy at birthb (you) - Average .omber If yeara of lts. ranalng at -aln.trttion.
bIrth; oaoalIly ft on-yea averge. ending tn 1960, 19 70 and 1975 for develop-
tog o_oteriee Ed-ctiobGraerenrod-ctioo rate - Average nober of lion d-oghtsre a wann ill bear Adlsted enrollment rato n rma echool - Enr-1imat of all gee an Per-
in bar onI rep-od-ctivo p-rlvd if she enperianos pra..ntocga-ap-ciftco ag fpsnr shool-age population, incloden children aged 6-11 yearafertilit raiea; onoal11y efiv-year a-e-gea ending in 1960, 1970 sod 1075 hut adjoatod toe different 1engtha of primary edona.cton; for coore ithfor deos,loptg coutriea. -ni-raal edcation, an-o1lomt cay eeced 100. ajne an popiIa ar hboc1
'pooltion oro_d rte (7.)_-total - Coopood -ooa groth racas of nid-yaar or ahor th ffca school age.
popolation for 1950-60, 106-70 and 1970-75. kdatnd enesi"loa .t rilo-se.ondar, school - Coopated beshve, ancondaryIPopoltion groth rate (. ra - Cosputd 0th. growth rtal of total edoc..tin raqairee at leaai foar years of approved primary inatr-tion;
popla-ioc,; different dff.iti-io of -rbac araa nay offenot o parbility of providna gene.ral, ro..taIona or tca..ber training iat-ootione for pupIlsdata anag naatriea. of 12 in 17 yeara of age; correepondence coora ar generally anclIoded.
Urban noewlation (7. of tata1) - Sati of arben to total Popolation; diff.eret Y.ara of achonlian -iuded (flirnt and ancond la-1s) - Total years ofdefinitIons of orhenaraa mayaffact caparability of data .. g .tounele acheallng; at secondary laon, voctional iatrution nay he partially or
AR r:~~~~~~t- (per..rt) V.:- ~~~~~taniesaly exclded.Iacotore pect)- Children (0-li ye-re), working-age (15-64 yeare), atina enra1mn (7 of eocondary) -Vocaioalin:locosild
an etrd (65 yearn ad over) so percentages of mId-year pspoltbon tehnical, Indacta1 1 or hibe Progrn whic opera te idependently oracon doecod-ny rati-bi ofppatcore15ad6 and ovr to choe dnpatonevnt of asodary Innlotoa
of-i agd1 boohddltltrc rat C)-literate ad.lca (able t read avd write) a pn-botnicde dndey ratio Ratio of populoioc coder 15 avd 65 and over to cItg o oa edot papolation sled 15 yn-n and over.
the Iobar force to ag. roco If 15-64 years.Pantly olannlneo-aoceecars 11 hcnliv ..t ) - oalieomhr of a-cpiora .. Inalg
of birth-_control devcee ordr a-aPice of oationeI fanily planning prograPean prron(rn)- Overge tneof pers ona per roon it occpiedn.inc ocption oooynlonl dwellIng i Inrbonaa,dwellings roclodenco.-pernrseo
PIIl ..annng-caera (7. of mariad w-nn) - Peccentago- of married wann of t-tr cr-a cod -noccPied partchl-ern ai115-Ak yoara) oho ca birth-conrol- device to all earrld Occoiddelnawtotnin ce 7)-Oopedcuetoa elig
henones tonon go grop.itdoba ad- roral. ithasa piphed inid oroci,ds piedwtioer fac 1int
Totallabo fero Cihcoan) - fEonoicaIly active pernsoo incloding armed ectity olvng.arrtspnrct of tetal deeIllnga in cean sodforceeo, andnnplayed hot nec.ldiog hoceeina, stodenta, et , definitions oa aea
invaiacosee are not caparble. local dseello cannerted to electrIcicy (t ) Conpoced asbhe for r-raLabor force in, arIcolitore (7.) -tAgriccitoraI labor force (In farmIng, foreatry, dwellings enly.
hantig an fishing) as prern gfeof tora. lakebr force.
Unenel1 d (7. of labor farc) U.- ployed.- ar na Ily.defined as persons who Conapttonar bl an d nillieg to tabskaJob, outofejob on a Iven day, r-jind oct Raio recivers (per thoc eor) - All typra of receIvers fr rdio breadca..n
of a Job , ad se:eking wor foapsnified ninian period net e..ceeding onn to general pob1ic per thoceand of pepolation, enclodes folic..n.d r-eiversnab, my fltde -oPari bewe cerIee doe to different definition In counirina and in yeara when rng.tsractin of radio nets wa in effect;ef onnployed and eourn of deta, e.g.,-oPIaynent office atocitica, a.-Pi. data for r.eat yearn may not he canparabl since east -ontri- abolIshede_r.Y., canpo1sory onoploynent narce licenatg.
Pesee.nger cars (Par thoc eon) - Pa..s.ngnr care canprise notar cars sea tingInrcon diacribution - Percentage If private inoon (both in -ab snd bind) less than eight parsun; eeciadea abh1la.c.a. hearses and elittar
rctned by rIchest 5%, rtcheat 207., pooret 207., and poorest 40% of house- nehiia.lholds. rletriotepy (kwh/yr per cspl - Astnaa cnoapriton of industria1, c ercia1,
publie n prvate e1ctrinitY in kilowatt hour per capita,geralDiatribation of land aesrshis_-Pnrre.tages of Sad nnd by wealthtsat 1% base.d o redcindt,wtoiaieac o esI grtd htl allo--
and poorest 107. of land sners ing for imparts and aeperta at electricIty.Newspint (ba/yr Pear rap) - Per capita annal cons_ptita in kilogram
goaitb and Notritlon Patadfran donsaic production pine net imports ofIsarPPesltion pear phyafian. - Popolactan divided by nomber of practIcIngtdIf_pr.
pbyeictns qoalgoied iron a nedica1 achool at ontn-ity leval.
Eaat Asia 4 Pacific RegiceaIOffice
ANNEX IPave 20
INDONESIA
ECONOMIC INDICATORS
GROSS NATIONAL PRODUCT IN 197S ANNUAL RATE OF GROWrH (S. constant prices)
Bank credit to Public Sector .. -14.0 7.2 15.4 297.3 7.0
Bank credit to Private Sector *- 57.7 81.6 28.1 16.3 24.9
NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period
covered.1/ Conversion at an exchange rate of Rp 390 US$1.
2Y Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated5 consistsmainly of unemployed workers seeking their first job.
not available
not applicable
East Asia & Pacific Programs
June 30, 1977
ANNEX I
Pace 21
TRADE PADM6TS AND CAPITAL FL40W
BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1973-75)
1974 1975 1976 US $ /1 %(M I Rons USS Provisional
Exports: 4351 4738 6033 Oil (net) 1897 50.4
Oil (net) 2169 2921 3650 Rubber 416 11.0
Non oil 2182 1817 2383 Timber 602 16.0
Imports -4220 -5533 -6297 Palm oil 132 3.5
Resource gap 131 - 795 - 264 Tin 138 3.7
Factor service: - 210 - 462 - 781 Coffee 99 2.6
Interest - 64 - 178 - 354
Investment income - 146 - 284 - 427 All other commodities 483 12.8
Balance on Current Account -79 -1257 -1045 Total 3767 100,0
Direct Foreign Investment 462 497 432 EXTERNAL DEBT. DECEMBER 31. 1976
Net MLT BorrowingDisbursements 664 2395 2365 Us $ Mil
Amortization - 80 - 322 - 435
Subtotal 584 2073 1930 Public Debt, incl, guaranteed 10,140
Capital Grants 62 .. .. Non-Guaranteed Private Debt
Other Capital (net) - 126 -2250 - 205 Total outstanding & Disbursed
Other items n.e.i -214 - 46 -_375 I/
Increase in Reserves (+) 689 - 983 737 DEBT SERVICE RATIO for 1976
Thr$ou hJ1 1971 Since August 1971 Outstanding & Disbursed 310.9 435.6ThroghRp31 175 Sinc Auust197 Ubdisbursed 1,001.6 125.7
Rp 1000 - US$2 67 US 1.00 - RU 415 Outstanding incl. Undisbursed 1,312.5 561.3
1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services, with oil exports on a net basis(i.e. excluding factor payments and imports of the oil companies)
not available
not applicable
East Asia & Pacific ProgramsJune 30, 1977
ANNEX IIPage 22
THE STATUS OF BANK GROUP OPERATIONS IN INDONESIA
A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of June 30, 1977)
US$ MillionLoan/ Amounts (less cancellations)Credit Fiscal UndisbursedNumber Year Purpose Bank IDA Bank/IDA
Eleven credits closed 129.4 0.0
194 1970 Second Agricultural Estates 17.0 0.4195 1970 Second Irrigation Rehabilitation 18.5 0.4
220 1971 Third Irrigation Rehabilitation 14.5 0.5246 1971 Seeds 7.5 1.5259 1971 Tea 15.0 2.6260 1971 Second Highway 34.0 0.7
334 1973 Second Electricity Distribution 40.0 3.2355 1973 Beef Cattle Development 3.6 1.5358 1973 North Sumatra Smallholder Development 5.0 1.1387 1973 Third Education 13.5 8.1388 1973 Third Highway 14.0 2.2399 1973 West Java Thermal Power 46.0 8.0400 1973 Smallholder and Private Estate Tea 7.8 7.0405 1973 Sugar Industry Rehabilitation 50.0 7.3
428 1974 Pulo Gadung Industrial Estate 16.5 10.8436 1974 Private Development Finance Co. of
Indonesia (PDFCI) 10.0 5.9451 1974 Fourth Technical Assistance 5.0 4.0479 1974 Bali Tourism 16.0 14.1480 1974 Fisheries Credit 6.5 3.2
514 1975 Jatiluhur Irrigation Extension 30.0 28.6
1005 1974 Railway 48.0 20.81040 1975 Jakarta Urban Development 25.0 6.91049 1975 Five Cities Water Supply 14.5 12.11054 1975 Development Finance Co.
(BAPINDO II) 50.0 11.9
ANNEX IIPage 23
US$ Million
Loan/ Amounts (less cancellations)Credit Fiscal UndisbursedNumber Year Purpose Bank IDA Bank/IDA
1089 1975 Second Fertilizer Expansion 115.0 7.01100 1975 Sixth Irrigation 65.0 58.81127 1975 Fourth Power 41.0 31.0
1139 1976 Fertilizer Distribution 68.0 17.91179 1976 Agricultural Research & Extension 21.5 21.41197 1976 National Resource Survey &
Credit No. 194 Second Agricultural Estates: US$17 Million Credit ofJune 15, 1970; Effective Date: February 9, 1971;Closing Date: December 31, 1977.
Project progress is good in the oil palm group which has surpassedthe appraisal report target for new planting by 100%. Progress in therubber group has been unsatisfactory with only 50% of the appraisal reporttarget for new planting achieved. Planting costs are excessive and invest-ment planning weak. The project has suffered from management deficienciesand shortage of funds for investment. The Minister of Agriculture hasrecently made the necessary changes in management of the rubber group andthe Government is expected to review its financial policies, particularlywith regard to dividends.
Credit No. 195 Second Irrigation Rehabilitation: US$18.5 Million Creditof June 15, 1970; Effective Date: December 31, 1970;Closing Date: November 30, 1977.
Progress has been delayed first by initial difficulties in equipmentprocurement and civil works execution, and later, by rising construction costs.Project completion will therefore be about 2-1/2 years behind schedule. Therehabilitated and new facilities are technically sound and hydraulicallyadequate. The quality of maintenance of completed works is improving withthe availability of operation and maintenance funds substantially higher thanprevious levels. The credit is about 96% disbursed and the remaining fundswill finance all outstanding civil works. The estimated project cost hasmore than doubled since appraisal due to high inflation rates and increases incontract quantities, but the estimated economic rate of return remains satis-factory because rice prices and yields have been higher than those projectedduring appraisal.
Credit Nio. 220 Third Irrigation Rehabilitation: US$14.5 Million Creditof lovember 6, 1970; Effective Date: May 28, 1971;Closing Date: December 31, 1977.
Overall project completion is expected by October 1977, about twoyears behind schedule. The problems which caused this delay - difficultiesin preparation of contract documents, late financial allocations, heavy
/1 These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to reportany problems which are being encountered, and the action being takento remedy them. They should be read in this sense, and with the under-standing that they do not purport to present a balanced evaluation ofstrengths and weaknesses in project execution.
ANNEX IIPage 26
rains in the 1973 construction season and, more recently, high inflation ratesand consequent civil works cost overruns - have been mainly overcome, buttime lost cannot be regained. The quality of maintenance of completed worksis improving with the availability of operation and maintenance funds sub-stantially higher than previous levels. The estimated project cost is abouttwice the appraisal estimate, but rice prices and yields substantially higherthan those projected at appraisal 'enable the project to achieve an estimatedeconomic rate of return of over 20%.
Credit No. 246 Seeds: US$7.5 Million Credit of May 19, 1971;Effective Date: December 7, 1971; Closing Date:September 30, 1977.
Land at Sukamandi will be developed to its fullest extent (2,450 ha)at an annual rate of 500 ha, and not limited to 1,600 ha as previously agreed.Significant results for 1976/77, expressed as percentages of appraisalestimates are: (a) area under production - 2,020 ha (54%), (b) yields ofrice seed - 2.9 tons/ha (72%), and (c) production of certified seed -4,900 tons (42%). Due to cost escalations and implementation difficulties,only one seed multiplication district, Klaten, out of the three planned atappraisal, has been developed. Total area developed so far is 180 ha of atotal estimate of 500 ha. National Seeds Corporation's cost of productioncontinues to be high and it is not commercially viable even with increases inproduction. Therefore, it will need continued financial support from theGovernment.
Credit No. 259 Tea: US$15 Million Credit of June 24, 1971; EffectiveDate: September 17, 1971; Closing Date:June 30, 1978.
Nearly all the targets set at appraisal have been achieved one yearbefore project completion, but factory capacity still has to be increasedto take account of the increased production which exceeds appraisal estimatesby about 5,000 tons. Inflation and additional construction and equipment costsare expected to increase project costs by about 17% above appraisal estimate.
Credit No. 260 Second Highway: US$34 Million Credit of June 24, 1971;Effective Date: August 10, 1971; Closing Date:December 31,1978.
Quality of work is satisfactory and cost overruns have been rela-tively small despite sharp price increases due to efforts to reduce constructionquantities, and to cost savings for consulting services. Construction workis completed; however, postponement of the Closing Date to December 31, 1978has been agreed to permit payments for the completion of detailed engineeringof the Padang-Medan Road, the initiation of which was delayed to reconsiderroad design standards in relation to those recently developed for the highwaybetterment program and to take into account IDA's recommendations regardingstandards for urban portions of the road.
ANNEX IIPage 27
Credit No. 288 Second Education: US$6.3 Million Credit of March 9,1972; Effective Date: June 7, 1972;Closing Date: March 30, 1978.
The project is being implemented with minor delay. All civil worksare expected to be completed by September 1977. Twenty-six of the 27 projectinstitutions have been completed. Furniture and equipment are being delivered.The expert services are virtually completed. Progress of the fellowshipprogram and teacher training is satisfactory. The Government has madebudgetary provisions to meet the cost overruns. Disbursements have improved.Delayed implementation required postponement of the Closing Date by 15 months
to March 30, 1978.
Credit No. 289 Fourth Irrigation Rehabilitation: US$12.5 Million Creditof March 9, 1972; Effective Date: May 5. 1972; ClosingDate: December 31, 1978.
The construction program has escalated in cost by 190% over theappraisal estimate due to an increase in the magnitude of the works and priceescalation due to unexpected inflation. The bulk of the remaining work willbe accomplished largely with Government funds. Completion of the project isexpected by September 1978. The Government has, therefore, requested that theClosing Date be postponed to December 31, 1978. Feasibility studiesincluded in the project have been completed and groundwater investigationsare nearing completion.
Credit No. 300 Population: US$13.2 Million Credit of April 20, 1972;Effective Date: November 2, 1972; Closing Date:June 30, 1978
The national family planning program, of which the project is anintegral part, is expanding in terms of the numbers of new acceptors recruitedannually and now covers about 15% of all married women in the reproductiveage group. Implementation of the civil works component is now on schedule;because of the shift in strategy from static to mobile services, and becauseof a large-scale Government-financed program to construct and rehabilitateMaternal and Child Health/Family Planning centers, the Government hasrequested a reduction in the number of centers to be constructed under theproject, to which IDA and the United Nations Fund for Population Activities(as partners in jointly financing the project) have agreed.
Credit No. 310 Development Finance Co. (BAPINDO I): US$10 Million Creditof June 7, 1972; Effective Date: August 10, 1972;Closing Date: August 31, 1977.
Prior to the original Closing Date which was December 31, 1976, about$700,000 remained undisbursed and the Closing Date was postponed to August 31,1977 to allow time for BAPINDO to submit documents for reimbursement.
ANNEX IIPage 28
Credit No. 318 Inter-Island Fleet Rehabilitation: US$8.5 MillionCredit of June 28, 1972; Effective Date: OcTtober 19,1972; Closing Date: September 30, 1978.
At the request of the Government the Closing Date has been post-poned to September 30, 1978 in order to provide for several new projects ofship rehabilitation. It is expected that the Credit will be fully disbursedby the new Closing Date but that, due to sharply increased costs, just overhalf the tonnage of shipping expected at appraisal will have been rehabili-tated.
Credit No. 319 Fourth Agricultural Estates: US$11 Million Credit ofJune 28, 1972; Effective Date: January 30, 1973;Closing Date: June 30, 1981.
Progress of the project continues to be satisfactory, with plantingsof rubber and oil palm ahead of appraisal estimates and in excellent condition.The project has been expanded to 15,500 ha (originally 11,400 ha) and negotia-tions are under way to finance the additional costs involved (about Rp 7.6 bil-lion). Technical problems exist in processing and equipment maintenance butmanagement is taking steps to overcome them. Production, profitability andcosts of PNP X are satisfactory, while the capital structure is to be improvedduring the course of the proposed Nucleus Estates and Smallholders I Project.PNP X is participating in the execution of both the NES I Project and theTransmigration and Rural Development Project (Loan 1318-IND).
Credit No. 334 Second Electricity Distribution: US$40 Million Creditof September 29, 1972; Effective Date: March 12, 1973;Closing Date: December 31, 1977.
The Jakarta distribution program financed from Credits 165-IND and334-IND (together $55 million) encountered implementation delays due to procure-ment problems and cumbersome management procedures. As a result the project istwo years behind the original schedule. These difficulties have been resolvedand recent progress is encouraging and no further delays are expected. TheClosing Date has been,postponed from December 31, 1976 to December 31, 1977.
Credit No. 355 Beef Cattle Development: US$3.6 Million Credit ofJanuary 31, 1973; Effective Date: May 30, 1973;Closing Date: March 31, 1980.
Several problems have seriously delayed project implementation.Government's budget allocation has been insufficient, and financial manage-ment and coordination have been weak. The last supervision mission undertooka thorough project review and its recommendations, which included major changesin project scope and objectives, were approved by the Executive Directors inJune 1977.
ANNEX IIPage 29
Credit No. 358 North Sumatera Smallholder Development: US$5 Million Creditof February 14, 1973; Effective Date: August 13, 1973;Closing Date: December 31, 1981
The project's goals of oil palm and rubber plantings by smallholder
participants should be completed by the end of 1977 at the present rate ofprogress, which is now ahead of schedule. Costs of the project have increasedfrom $10 million estimated at appraisal to about $26 million by completiondate. However, higher than anticipated output of and prices for rubber andpalm oil and changes in project development techniques have more than compen-sated the cost increases, and the project's return to the economy is likelyto be higher than anticipated at appraisal. No effective mechanism for thecredit-assisted portion of the project has yet been developed.
Credit No. 387 Third Education: US$13.5 Million Credit of June 1, 1973;Effective Date: August 29, 1973;Closing Date: December 31, 1981
The project finances the production and distribution of 138 millionprimary school textbooks, and related in-service training for 350,000 primaryschool teachers. Distribution of the first 31 million textbooks has beencompleted and they are beginning to be used in schools this year. Productionof 49 million textbooks scheduled for 1977 is well under way. Teachingequipment has been procured and delivered. Project management has been streng-thened by addition of Indonesian staff to a reorganized project unit, and byrecruitment of specialists under a technical assistance contract signed withUNESCO. Teacher training is being conducted on a large scale but it hasproved difficult to keep the training program in phase with book deliveries.Project management together with UNESCO specialists are working to overcomethis problem.
Credit No. 388 Third Highway: US$14 Million Credit of June 1, 1973;Effective Date: June 25, 1973;Closing Date: December 31, 1978.
Construction work on the two North Sulawesi road sections in theproject was started early in 1974 under two contracts. Contractors havebeen delayed mainly because of long mobilization periods and unusuallyadverse climatic conditions. Construction costs are likely to exceed originalestimates by more than 100%, mainly due to sharply escalated prices. Most ofthe feasibility and detailed design studies have been completed. The trainingprogram component was satisfactorily prepared and is being implemented bythe Government.
Credit No. 399 West Java Thermal Power: US$46 Million Credit ofJune 22, 1973; Effective Date: August 28, 1973;Closing Date: June 30, 1978.
Bids received for the first two 100 MW units at Muara Karang wereabout 65% higher than estimated at the time of appraisal. This, togetherwith construction cost increases, has resulted in an increase in the totalproject cost of more than 100%. Government will provide the additional funds
ANNEX IIPage 30
required. PLN has satisfactorily met the initial targets in its financialrecovery plan provided for under the terms of the Credit Agreement.
Credit No. 400 Smallholder and Private Estate Tea: US$7.8 Million Credit ofJune 22, 1973; Effective Date: November 30, 1973;Closing Date: March 31, 1982.
Fewer than anticipated credit applications have necessitated scaling-down project targets from 10,000 ha to about 6,000 ha for smallholder tea andfrom 3,500 ha to 2,300 ha for estates tea. The demand by farmers for technicalassistance has been encouraging. Over 3,000 farmers have been instructed intea cultivation at village-level courses and at the Project Management Unit(PMU) training center. The project spin-off has been excellent; about 2,000 haof tea were replanted or rehabilitated using funds outside the credit programbut still under the influence of the PMU. A marketing study indicates thattea consumption in Indonesia increases by 5% yearly and all of the tea producedby the project will be consumed domestically.
Credit No. 405 Sugar Industry Rehabilitation: US$50 Million Credit ofJune 26, 1973; Effective Date: April 22, 1974;Closing Date: June 30, 1979.
The project is on schedule and about 65% completed. The JointSugar Projects Unit is efficiently supervising the procurement and installa-tion of machinery and equipment. The two PTPs which are involved in therehabilitation process are both in a weak financial position and thisproblem requires attention. Consultant services are gradually being phasedout as planned except for the sugar research station which still requires amajor input.
Credit No. 428 Pulo Gadung Industrial Estate: US$16.5 Million Creditof September 14, 1973; Effective Date: November 13,1973; Closing Date: December 31, 1978.
The estate is progressing satisfactorily. Of 430 ha of raw landearmarked for acquisition, 290 ha had been acquired as of May 1977 andacquisition of another 31 ha is under negotiation. 104 ha of the 129 ha ofdeveloped land have been sold: to 83 firms. Factory employment at full capa-city will be around 17,000 and an estimated 1,400 are employed on the averagein both factory construction and land development. Overall, operations areprofitable. The return on capital investment, which is now projected to be20.6%, is significantly higher than the appraisal forecast of 13.4%. This isdue to the fact that developed land values are rising faster than the costof raw land and development.
ANNEX IIPage 31
Credit No. 436 Private Development Finance Company of Indonesia(PDFCI): US$10 Million Credit of November 2, 1973;Effective Date: March 6, 1974; Closing Date:December 31, 1978.
Despite a long start-up period and difficulties in recruitingqualified staff, the project has progressed satisfactorily. The Credit isalmost fully committed.
Credit No. 451 Fourth Technical Assistance: US$5 Million Credit ofJanuary 2, 1974; Effective Date: February 15, 1974;Closing Date: December 31, 1977.
Progress under the project is satisfactory.
Credit No. 479 Bali Tourism: US$16.0 Million Credit of June 14, 1974;Effective Date: December 4, 1974; Closing Date:August 31, 1979.
The construction of major infrastructure for the Nusa Dua tourismestate, including the hotel training school is under way and is scheduled forcompletion in December 1978. The completion of project components outsidethe estate (roads) is scheduled for October 1979, about one year later thanplanned at project appraisal. Visitor traffic to Bali has increased rapidlydue to a considerable number of charter flights coming to Bali. Promotionalefforts to encourage investors have been intensified, anticipating the openingof a first hotel by early 1980 at the latest. IFC is considering participationin financing the first hotel of about 400 rooms.
Credit No. 480 Fisheries Credit: US$6.5 Million Credit of June 14, 1974;Effective Date: January 8, 1975; Closing Date: June 30, 1979.
After some initial delays, the project on the whole has generallybeen progressing satisfactorily. Construction of shore facilities at Ambonis nearing completion. Boat construction is under way and the contract forequipment has been awarded. The quality of lending for fishpond developmentneeds to be improved; BRI has investigated this matter recently and and itsreport is expected shortly.
Credit No. 514 Jatiluhur Irrigation Extension: US$30 Mlillion Creditof October 3, 1974; Effective Date: January 10, 1975;Closing Date: December 31, 1980.
Initial organizational difficulties and a delay in awarding thefirst construction contract caused a delay of about 18 months in the project
ANNEX IIPage 32
schedule. The first construction activity started in February 1977, thenext four are scheduled for November 1977, and the last two for May 1978.From a revision of bid prices for the first contract, the total cost of civilworks is now estimated to be about 35% higher than at the time of the lastreview of project progress.
Loan No. 1005 Railway: US$48.0 Million Loan of June 14, 1974;Effective Date: August 16, 1974; Closing Date:December 31, 1978.
Procurement is now well under way and almost all contracts havebeen signed or are about to be signed. Project execution is behind scheduledue to initial slow procurement and execution of works. Freight trafficcontinued to decline in 1976, due largely to poor service. Passenger traffichas also declined. Better results are expected in the latter half of 1977,after the arrival of new locomotives and rolling stock, and with operationsimproved with the aid of consultants. The financial performance of therailway deteriorated in 1976, due mainly to the declining traffic.
Loan No. 1040 Jakarta Urban Development: US$25 Million Loan ofSeptember 27, 1974; Effective,Date: January 15, 1975;Closing Date: December 31, 1977.
The kampung improvement part of the project is substantiallycomplete. Some 2,080 ha have been upgraded as compared with the originalplan of 1,980 ha. The sites and services component is about 15 months behindschedule. This is primarily due to land acquisition problems encountered inthe early stages of the project. Project costs are expected to be about 7%above the appraisal estimate. The allocation of plots and core houses isexpected to begin in July. Some problems have arisen with regard to theprocedures to be utilized in allocating the plots, and these are beingreviewed currently by the Government.
Loan No. 1049 Five Cities Water Supply:. US$14.5 Million Loan ofOctober 31, 1974; Effective Date: May 21, 1975;Closing Date: June 30, 1980.
Due to administrative and managerial problems the project isrunning 13-18 months behind schedule. This delay together with higher ratesof inflation than anticipated is expected to increase project costs 25-30%above the appraisal estimate. Detailed engineering and preparation of tenderdocuments have been completed and the project has reached its constructionphase. The reorganization of the Directorate of Sanitary Engineering and theestablishment and development of local water enterprises are proceedingsatisfactorily.
ANNEX IIPage 33
Loan No. 1054 Development Finance Co. (BAPINDO II): US$50 MillionLoan of November 20. 1974; Effective Date: January 14,1975; Closing Date: December 31, 1978.
The loan is expected to be fully committed in the fourth quarter of1977. Despite significant institutional improvements achieved by BAPINDO,the company has still a high level of arrears; its appraisal work is slow andadministrative costs are excessive. These problems are being addressedthrough a Program of Action discussed and agreed among the Government,BAPINDO and the Bank.
Loan No. 1089 Second Fertilizer Expansion: US$115 Million Loan ofFebruary 28, 1975; Effective Date: April 29, 1975;Closing Date: August 31. 1978.
The project (PUSRI III) was mechanically completed in December 1976,one month ahead of schedule. As there was a slight delay in the completionof the related gas project, the gas requirement of PUSRI III for start-upduring November 15, 1976 - January 7, 1977 was met by advancing the scheduledshutdown of PUSRI II for annual maintenance by two months. Meanwhile, thePUSRI III gas system has been completed. Total cost of PUSRI III is expectedto be within the appraisal estimate.
Loan No. 1100 Sixth Irrigation: US$65 Million Loan of April 10,1975; Effective Date: June 20, 1975; Closing Date:June 30, 1982.
Most of the project programs have advanced well during the pastyear. Design of works for the Cirebon and Rentang subproject systems arebeyond the capability of PROSIDA to execute, and assistance has been providedin Irrigation VIII to expedite this work. Critical review of the program forbenefit monitoring is under way.
Loan No. 1127 Fourth Power: US$41 Million Loan of June 17, 1975;Effective Date: October 23, 1975; Closing Date:June 30, 1980.
The project provides for the expansion of the Muara Karang thermalpower station at Jakarta by addition of a third 100 MW generating unit. Thegeneral construction contracts covering this unit as well as the first twofinanced under Credit 399-IND have been awarded. The project is on scheduleand expected to be completed in early 1980.
ANNEX IIPage 34
Loan No. 1139 Fertilizer Distribution: US$68 Million Loan ofJuly 10, 1975; Effective Date: August 28, 1975;Closing Date: December 31, 1979.
All the contracts for the original project have been let and mostmaterials and three-ships have been delivered to Indonesia. Savings of about$30 million were realized in the original project. Procurement of anadditional ship and bulk reception facilities to serve expansion of fertilizeroutput beyond that anticipated at appraisal was approved by the ExecutiveDirectors on April 5, 1977. The expanded project is under way and is likelyto be completed successfully by the revised Closing Date, postponed by oneyear.
Loan No. 1179 Agricultural Research and Extension: US$21.5 Million Loanof December 19, 1975; Effective Date: February 23, 1976;Closing Date: December 31, 1981.
Project implementation which at time of supervision in February 1977was about one year behind schedule has now speeded up. The contract forresearch services has been signed and the key members of the consultantsteam are now in position. The executive architects were appointed inApril 1977 and schematic designs for research centers will be ready forBank approval in September 1977.
Loan No. 1197 National Resource Survey and Mapping Project: US$13.0 MillionLoan of February 5, 1976; Effective Date: April 2,1976; Closing Date: December 31, 1981.
The project is lagging slightly behind original appraisal schedulesin the areas of construction of facilities, procurement of equipment, andaerial photography, chiefly for reasons beyond the control of the projectagency, BAKOSURTANAL. Construction is well under way at the Cibinong site.Bids for the first large package of printing, cartographic, and aerialphotography processing equipment are currently being evaluated. Aerial photo-graphy and remote sensor imagery was tendered in June 1977. Trainingprograms and the work of expert advisors engaged under the project areprogressing well.
Loan No. 1236 Fourth Highway Project: US$130 Million Loan of April 15, 1976;Effective Date: August 13, 1976; Closing Date: December 31,1980.
Contracts have been signed or awarded for the construction of thefirst package of roads totaling 585 km and for nine consultancy assignments;bidding has also been completed for the second package of roads. Progress isabout six to nine months behind the initial project implementa-tion schedule, mainly due to the unforeseen bunching of many activities
ANNEX IIPage 35
(negotiations for the consultancy assignments, prequalification of contrac-tors, tendering, etc.) and a general shortage of staff to deal with therapidly increasing work load.
Loan No. 1237 Fourth Education Project: US$37 Million Loan of April 15,1976; Effective Date: June 17, 1976; Closing Date:December 31, 1980.
The project suffered initially an eight-month delay due to latesigning of the Funds-in-Trust agreements with the UN agencies providingtechnical assistance. However, since January 1977, no further delays occurredand good progress is being made in implementation. Designs for all threesubprojects have been prepared by consultants and approved by the Bank. Mostsites have been acquired and surveyed. Construction firms have been pre-qualified. Tenders for construction of 14 of 24 project institutions will becalled in the next six months. Equipment lists are in advanced stages ofpreparation. Eleven additional technical assistance specialists assumedtheir posts over the last six months and the technical assistance program isproceeding satisfactorily.
Loan No. 1250 Second Shipping Project: US$54 Million Loan of May 20, 1976;Effective Date: October 8, 1976; Closing Date:December 31, 1980.
Delay in the appointments of a number of consultants, most ofwhich have now been made, has caused a slow start to the project and has slowedproject implementation and disbursements. The financial position of the stateshipping company (PELNI) is unsatisfactory, and further deterioration couldcause financial problems for the project entity (PANN). The Governmentis aware of this potential problem and is considering steps to deal with it.The project is being closely followed.
Loan No. 1254 Third Fertilizer Expansion Project: US$70 Million Loan ofMay 20, 1976; Effective Date: August 15, 1976; Closing Date:June 30, 1979.
The project (PUSRI IV), which is designed to have an annual cap-acity of 570,000 tons of urea, is about four months ahead of schedule,but the related gas project is experiencing some delay. Efforts are beingmade by the Government to accelerate the gas project. According to presentindications, PUSRI IV is likely to be commissioned in mid-October 1977. Nocost overrun is foreseen for this project.
Loan No. 1259 Fifth Power Project: US$90 Million Loan of May 20, 1976;Effective Date: September 20, 1976; Closing Date:March 31, 1981.
The procurement of equipment is under way.
ANNEX IIPage 36
Loan No. 1267 National Food Crops Extension Project; US$22 Million Loanof June 4, 1976; Effective Date: September 21, 1976; ClosingDate: June 30, 1982.
Construction and procurement programs for the 1977 and 1978 Indonesianfiscal years are now well under way and there are good possibilities that theywill be completed ahead of schedule. The new extension methods have alreadybeen adopted in all provinces, but on a limited scale pending the recruitmentand training of staff, procurement of vehicles, and construction of buildings.
Loan No. 1268 Seventh Irrigation Project: US$33 Million Loan of June 4,1976; Effective Date: September 21, 1976; Closing Date:December 31, 1981.
The implementing agencies have completed the prequalification forcontractors and consultants and the project is ahead of schedule in the NorthSadang area, in the mapping program and in preparation of the constructionschedule for tertiary development.
Loan No. 1318 Transmigration and Rural Development Project: US$30 MillionLoan of July 21. 1976; Effective Date: February 28, 1977;Closing Date: December 31, 1981.
The first village has been constructed, and the first settlers movedfrom Java in October 1976. Development of second years program is now under-way, but may be slightly behind schedule.
Loan No. 1336 Second Urban Development Project: US$52.5 Million Loan ofNovember 4, 1976; Effective Date: March 28, 1977; Closing Date:March 31, 1980.
The progress of civil works is ahead of schedule, and costs aregenerally within the estimates. Progress is being made in developing Govern-ment capabilities in undertaking a nationwide kampung improvement program inthe future.
Loan No. 1337 Tanjung Priok Port Project: US$32 Million Loan of November 4,1976; Effective Date: March 3, 1977; Closing Date:December 31, 1979.
Tanjung Priok Port traffic during 1976 slightly exceeded appraisalforecasts for total dry cargo, and petroleum products exceeded forecastsby 20%. Technical difficulties have delayed the award of the first construc-tion contract. A mission is in the field to review the problems.
ANNEX IIPage 37
Loan No. 1363 Second PDFCI Prolect: US$15 Million Loan of January 28, 1977;Effective Date: April 21, 1977; Closing Date: June 30, 1981.
This loan became effective on April 21, 1977.
Loan No. 1365 Sixth Power Project: US$116 Million Loan of February 4, 1977;Effective Date: June 6, 1977;Closing Date: December 31, 1982.
This loan became effective on June 6, 1977.
Loan No. 1373 Nutrition Development Project: US$13.0 Million Loan ofMarch 14. 1977; Effective Date: March 31, 1977; ClosingDate: March 31, 1982.
This loan became effective on March 31, 1977.
Loan No. 1433 Teacher Training Project: US$19.0 Million Loan of June 6, 1977;Effective Date: July 7, 1977;Closing Date: June 30, 1983.
This loan became effective on July 7, 1977.
Loan No. 1434 Eighth Irrigation Project: US$63.0 Million Loan of June 6, 1977;Effective Date: July 7, 1977;Closing Date: March 31, 1983.
This loan became effective on July 7, 1977.
Loan No. 1435 Ninth Irrigation Project: US$35.0 Million Loan of June 6, 1977;Effective Date: July 7, 1977,Closing Date: December 31, 1981.
This loan became effective on July 7, 1977.
Loan No. 1437 BAPINDO III Project: US$40.0 Million Loan of June 6, 1977;Closing Date: September 30, 1981.
This loan is expected to become effective in September 1977.
ANNEX III
INDONESIA Page 38
NON-FORMAL EDUCATION PROJECT
SUPPLEMENTARY DATA SHEET
Section I: Timetable of Key Events
(a) Time taken to prepare project: 18 months
(b) Project prepared by: Government
(c) First presented to the Bank: June 1976
(d) First mission to consider project: June 1976
(e) Departure of Appraisal mission: November 1976
(f) Planning Implementation mission: March 1977
(g) Completion of negotiations: July 27, 1977
(h) Planned effectiveness: mid-December 1977
Section II: Special Bank Implementation Actions
The Resident Staff in Jakarta will assist the Government in earlyimplementation of the project.
Section III: Special Conditions
(a) The Government will draw up annually a training program satisfactoryto the Bank (para. 33).
(b) Instructional materials developed under the project will be ade-quately field tested before being mass produced (para. 35).
(c) Penmas will continue to provide training to develop productiveskills for self-employment and cottage industries (para. 37);
(d) The results of a mid-term evaluation of the project will be sub-mitted to the Bank for comment by October 31, 1981 (para. 39).
(e) The criteria and procedures for awarding fellowships will besatisfactory to the Bank (para. 40).
(f) By December 31, 1978 the Government will submit to the Bank forreview, details of: a project planning and performance monitoringsystem and an equipment inventory control and maintenance system(para. 46).
(g) Government will acquire land title to each site six months beforethe scheduled start of construction at each site (para. 49).
