Indonesia

FY 2001 Program Description and Activity Data Sheets

>> Regional Overview >> Indonesia Overview

FY 2001 Program Since mid-1998, the United States and its partners have helped Indonesians address an array of social and environmental concerns, advance an unprecedented democratic transition, and stimulate economic recovery. The early returns are encouraging: free and fair parliamentary elections and the presidential vote; economic indicators showing signs of recovery; a coalition cabinet that includes a number of reformers; and the government's willingness to take on complex economic, political, social and natural resource issues. Many new government leaders come from the NGO sector that has benefited from longstanding USAID support; many of them are taking on new challenges and seeking U.S. assistance to do so. FY 2000 and FY 2001 DA and ESF resources will permit USAID, and its partner organizations, to help Indonesia deal with the multiple crises that are afflicting its fledgling democracy: social unrest; ethnic, class and religious conflict; separatist movements; corruption; social welfare needs; natural resources degradation; and uncertain protection of human and property rights. It will allow USAID to support reformers within the government to strengthen the key processes and institutions required for efficient governance. It will provide funding and technical support for civil society organizations and media efforts to increase accountability and provide access for private citizens to the political process. The major theme running through all areas of USAID's dynamic strategy in Indonesia is justice: the right of the average Indonesian citizen to due process, to fair and equal treatment, to access to the political system, and to legal recourse if aggrieved. Progress on justice sector reform will be critical to calming social unrest and establishing the context for sustainable economic growth. Assistance in FY 2001 will build on that provided in FY 2000 to strengthen key GOI institutions and civil society organizations. The program will provide technical assistance in judicial sector reform, including assistance in developing professional and competent legal organizations. The program will work with the national and local parliaments to improve their capacity for research and analysis and to draft legislative and constituent communications. In addition, the program will provide training for political parties and for newly elected parliamentarians to enable them to be responsible, accountable, transparent, and active participants in the governance of the country. It will also work with government organizations and independent regulatory agencies on improved governance; support media and advocacy groups; and help promote human rights, ethnic and religious tolerance, and conflict resolution and reconciliation. USAID will continue to implement these programs through a consortium of NGOs, both local and U.S.-based, and through long-term technical advisors. USAID will continue work on economic reform, focusing on the financial sector, bank and corporate debt, and also including efforts on competition, anti-corruption, secured transactions and increased certainty for investors. It will encourage small business development, particularly through support for microfinance lending, and will continue to assist NGOs and universities involved in increasing public participation in the economic reform process. USAID's health program will continue its focus on the most vulnerable, protecting poor women and children by improving access to essential primary health services, supporting monitoring systems to improve efficiency of resource allocation, and encouraging better health information and nutrition. To improve food security for those most in need, particularly Indonesia's growing number of internally displaced, USAID will support better food management and policies, and increased food accessibility and humanitarian assistance. USAID will work with the GOI and other donors to increase employment in targeted urban areas through the creation of temporary jobs that build, maintain, and rehabilitate basic infrastructure and community facilities. USAID will help strengthen environmental management and protect areas under increased stress from the financial crisis while continuing to respond to global environmental issues. Assistance will go to indigenous NGOs and local governments to strengthen environmental management and restructure essential energy and water services in urban areas. The program will work with local governments to increase their capacity to handle the additional responsibilities flowing from the decentralization reforms, including greater community participation in management of local resources and planning for public works. The situation in Indonesia remains extraordinarily fluid, with quickly evolving crises often being matched by equally sudden opportunities in a very dynamic situation. USAID's program seeks to retain a high degree of flexibility to respond effectively to these challenges, but, as a result, specific targets and performance indicators, especially in the areas of democracy and governance, may have to be adjusted more frequently than in more traditional assistance programs. ACTIVITY DATA SHEET PROGRAM: Indonesia TITLE AND NUMBER: Democratic Transition Strengthened, 497-007 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $14,500,000 DA; $11,000,000 ESF PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $14,400,000 DA; $26,000,000 ESF INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2003 Summary: The overall goal of this activity is to strengthen key democratic institutions at a time when Indonesia's democratic transition is at its most critical phase. With a popularly elected and legitimate government now leading the country, there are great opportunities for Indonesia to build a true democracy for the first time in its history. This will require sustained international support. USAID significantly contributed to the critical first phase of the transition, the completion of free and fair parliamentary and presidential elections last year. Indonesia's transition to democracy, however, is far from complete. The reform process seeks to do away with deeply ingrained corrupt and authoritarian institutions and practices. It directly threatens powerful sponsors of the old system and they, in turn, threaten the transition to democracy. USAID's program will strengthen key democratic institutions in the crucial post-election period--civil society organizations, the media, political parties, newly elected parliamentarians. It also supports the development of sustainable, representative democratic institutions-both national and local parliaments-and helps build a framework for an improved justice sector in which they can flourish. In addition, the program works with civic organizations and the GOI on the development of new approaches and processes for conflict resolution and reconciliation-critical for Indonesia's social stability given its current unrest and a history of unresolved abuses. Key Results: Five key intermediate results are necessary to achieve this objective: 1) formation of a representative government; 2) establishment of democratic and effective governance; 3) participation by effective national civil society organizations in the political process; 4) national reconciliation and conflict reduction; and 5) formation of a free and professional media. Performance and Prospects: The successful completion of internationally recognized free and fair elections led to the formation of a representative government, the first key result. Supported by USAID's extensive assistance program, the elections put in place a reform-minded president and vice-president accountable to the people. The results achieved under the electoral phase of the program fully met performance expectations. Of an electorate of approximately 110 million people, voter education programs reached 100 million Indonesians in 26 provinces introducing democratic concepts, tolerance and voting practices. Over 93% of the eligible voters participated in this election. Technical assistance provided to election officials improved election management and administrative systems. Support for Indonesian election monitoring organizations resulted in over 600,000 non-partisan volunteers recruited, trained and deployed to the 320,000 polling stations located throughout the country. The first nationally representative, statistical sample of the election results (and the world's largest parallel vote tabulation) confirmed voting results in a highly objective and impartial manner defusing self-interested and exaggerated claims of fraud by the smaller political parties. Under the second and third intermediate results, NGOs, supported by USAID, have successfully advocated changes at the community level. The NGOs efforts have been instrumental in countering attempts by old elites to reverse the democratic transition. More specifically, NGO-generated policy changes have brought about improved governance at the national and regional levels, including within eight Ministerial-level and two governors' offices, the military, and the national police. It is now crucial for Indonesia to begin to build governmental competence so that the expectations of civil society are not disappointed. USAID will pursue programs in governance and legal and judicial reform. USAID will concentrate on enactment of legislation for the basis of an independent judiciary, constitutional and electoral reforms, the strengthening of judicial monitoring, and expanding legal and judicial services to ordinary people, particularly those in emerging conflict environments. A key element of a robust democracy will be the development of competent political leadership and strengthened institutional capacity of political organizations. In FY 2000 and 2001, USAID will support an extensive program focussing on conflict resolution, parliamentary development and legal reform. Conflict resolution programs will address emerging conflict environments and preventive conflict resolution activities. Initially the target areas will include Aceh, Ambon, Papua (formerly Irian Jaya) and Mulakas. Additional program resources will focus on the development of the institutional and sustainable capacity for peace throughout Indonesia. In FY 2000 and FY 2001, USAID will expand programs with parliamentary representatives that enhance legislative drafting skills, provide research and analysis on important issues, emphasize budgetary oversight, and strengthen member and staff capabilities to respond to constituent needs. USAID support will enable parliament to engage effectively with the executive branch to build national consensus for reform. An important step towards achieving the fourth intermediate result was the completion and dissemination of the first regional assessment on conflict resolution. The assessment received the personal attention of the new President, and was instrumental in the GOI's order to remove territorial forces from Aceh, whose presence had exacerbated the region's instability. Follow-up activities that will build local capacity to address the conflict are underway. This type of regional conflict assessment is a vital building block in the formulation of a comprehensive and integrated strategy to ameliorate regional conflicts in Indonesia. In addition, over 200 grants were issued to local NGOs, many of which were designed to resolve local and regional conflicts. Transparency in the election was ensured with the development of a USAID-led national election media and operations center. The center became the hub for election communication and information transfer throughout Indonesia and internationally. Over 150 national and international media organizations representing print, radio, television, and cable participated in the media and operations center. C-Span-style coverage of the presidential and vice-presidential elections and the related proceedings of the parliamentary and consultative assemblies facilitated unparalleled accountability and transparency in the parliamentary process - an openness that is continuing today. USAID is continuing to strengthen NGO institutional and technical capacity to advocate for policy reforms in human rights, free speech, and religious tolerance, as well as in economic, environmental, social safety net, and other policy reforms. Confronted by powerful counter reform interests benefiting from significant and pervasive corruption, monitoring and advocacy organizations are mounting a vigorous defense of transparency and accountability in the executive and legislative branches of government. Given the unstable environment in the country, the progress being achieved by Indonesian NGOs is fully meeting expectations. In FY 2000 and FY 2001, USAID democratic strengthening programs will help consolidate political reforms and address the challenges from counter reform groups that remain very powerful. Programs are underway to address the escalating conflict in troubled regions especially in Aceh and Irian Jaya. Human rights and reconciliation programs are addressing the brutal suppression of the rights of Indonesians during the Suharto-era, resulting in the release of political prisoners, the reassessment of the role of the military in troubled regions, and a growing awareness of the need for national truth, justice and reconciliation. Possible Adjustments to Plans: Monitoring activities are underway to track carefully the dynamic political environment. It is clear that USAID will have to shift resources away from civil society development to strengthening institutional competency through reform and anti-corruption programs. USAID will adjust assistance activities according to changing conditions and circumstances in order to encourage a transparent, participatory, inclusive and informed public dialogue on the laws, regulations and procedures governing political life. Other Donor Programs: USAID is coordinating democratic strengthening and civil society building activities with multi-lateral and bilateral donor organizations. These include the United Nations Development Program (UNDP), World Bank, and 15 other bilateral donor assistance programs, such as Australia, the European Union, Great Britain and Canada. Total contributions from the multilateral and bilateral donors (excluding the U.S.) for the democracy and governance sector are estimated at $35 million for FY 2000, with an additional estimated $9 million from the GOI. Principal Contractors, Grantees or Agencies: Approximately 200 Indonesian civil society organizations; the National Democratic Institute for International Affairs; the International Republican Institute; the International Foundation for Election Systems; Participating Agencies Collaborating Together (PACT); the Trickle-Up Foundation, Chemonics International; the American Center for International Labor Solidarity; and the Public Affairs Office. Selected Performance Measures: Baseline Actual (1999) Target (2000) Target (2001) Number of instances of measurable impacts on the formulation of government policies due to activities of grantee NGOs 19 (1995) 101 150 200 Number of regional or national conflict resolution assessments performed 0 (1998) 1 2 2 Number of subsequent conflict resolution programs developed 0 (1999) 0 1 2 Number of articles and/or broadcasts addressing transition or election issues N/A 1,258 1,300 1,400 U.S. Finance Table (Microsoft Excel) ACTIVITY DATA SHEET PROGRAM: Indonesia TITLE AND NUMBER: Protecting the Health of the Most Vulnerable Women and Children, 497-008 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $8,000,000 DA; $18,950,000 CSD PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $15,000,000 DA; $18,925,000 CSD INITIAL OBLIGATION: FY 1999 ESTIMATED COMPLETION DATE: FY 2003 Summary: This objective focuses on protecting the health of the most vulnerable--women and children. The economic crisis, subsequent political turmoil, and ongoing local governance changes are creating unprecedented challenges and burdens on the health sector. The rising cost of food, medicine, contraceptives, and other basic commodities has forced many Indonesians to resort to poor quality diets and to delay seeking professional preventive health care. This has resulted in an alarming increase in malnutrition and vitamin deficiency among infants and young children during the most important period of their intellectual development. It has also resulted in dramatic decreases in the use of local community health posts -- the key source of preventive care for pregnant women and young children. Continuing social conflict in several provinces has also resulted in increased numbers of Internally Displaced Persons (IDPs), the most vulnerable of whom are women and children. As a result of the financial crisis, private sector health services are beyond the reach of the bulk of the population and the continued viability of the private sector providing these services is questionable. Therefore, USAID's short-term crisis strategy focuses on assistance to the public sector and to key private non-governmental and religious organizations to sustain the delivery of essential health services to the poor. The financial crisis has reduced the amount of disposable income of the poor resulting in less being spent by families on health. Communication campaigns that promote healthy behavior change and aim to increase the democratic participation of local women's groups and community groups in maintaining responsibility for their families' health. For the longer term, USAID is helping the GOI improve its policies on reproductive and child health, and improve the allocation of resources at local levels of government. Areas of technical focus include: safe pregnancy and delivery; prevention of neonatal and child mortality; nutrition and prevention of micronutrient deficiencies; family planning; and prevention and control of sexually transmitted infections (STIs), including HIV/AIDS. USAID is also providing support for advocacy to newly elected political leaders to build commitment for health promotion. Key Results: Three key intermediate results are necessary to achieve the strategic objective: (1) effective monitoring and surveillance systems are improved and utilized by political decision-makers to guide efficient resource allocation and response; (2) essential preventive health care services are preserved during the crisis period, particularly among the urban poor; and (3) appropriate health behaviors are communicated to mitigate crisis impact and promote recovery. Performance and Prospects: A new, three year, $70 million Strategic Objective Grant Agreement for "Protecting the Health of the Most Vulnerable Women and Children" was developed and signed with the GOI at the end of fiscal year (FY) 1999. This past year, in response to the crisis, USAID and its partners focused on improving policy support to the central government and effecting appropriate responses to the crisis. As a result, key reproductive and child health services continued to be available in the public sector and in over 50 key non-governmental organizations. This helped protect investments and progress made over the last 25 years in reducing fertility and infant mortality, and in minimizing the further spread of HIV/AIDS. USAID support also helped to strengthen national health surveillance systems, as well as the capabilities of senior level decision-makers to analyze data to launch appropriate responses. Since the advent of the crisis, there has been less than a one- percent decline in utilization of family planning on average. Due to the high cost of imported materials, USAID, at the request of the GOI, provided an emergency donation of inter-uterine devices (IUDs), implants and injectables to assist the National Family Planning Coordinating Board (BKKBN) in sustaining free contraceptive delivery to the poorest of the poor. In maternal health, USAID assisted the Ministry of Health and private professional organizations to strengthen medical training for doctors and midwives. USAID's assistance was successful in effecting a major policy change in the Ministry's approach to training -- from didactic learning to a competency-based approach for obstetric care training for village midwives throughout Indonesia. USAID assistance helped retard transmission of sexually transmitted infections (STIs) and HIV/AIDS. At the request of the Ministry of Health, USAID provided an emergency procurement of HIV test kits to the Indonesian Red Cross to preserve national blood testing capability. In addition, USAID influenced a major policy breakthrough among the GOI and religious leaders that will allow the mass media to be used to more effectively promote condom use and other behavior change messages that should slow the spread of HIV/AIDS. The incidence of other STIs appears to be increasing. Thus, in FY 2000, USAID will help the GOI focus on treatment and control measures that must be sustained to maintain low HIV prevalence and reduce the incidence of STIs. Through USAID support, an effective crisis surveillance of nutrition and disease was implemented that allowed immediate targeting of resources toward the most vulnerable groups. Strengthening the capacity of the GOI at all levels to monitor health, nutrition and disease status will continue to be important during the recovery period and beyond. In the area of child health, USAID and its partners were successful in effecting a major policy change within the Ministry of Health: the national vitamin A program now includes supplements for infants aged 6-11 months old and for post-partum women. In addition, USAID recently signed a new agreement that will provide technical assistance to the Ministry of Health and UNICEF to implement the new Vitamin A distribution campaign in four large urban areas. New agreements have also been signed to implement complementary feeding programs for infants age 6-23 months in selected urban slums and rural areas to reduce the incidence of severe and moderate malnutrition. The FY 2000 program will: (a) address behavior issues among those at high risk for HIV and STIs; (b) improve HIV prevention services; (c) improve GOI surveillance systems; and, (d) help local organizations plan, finance, manage and coordinate HIV/STI responses. An extensive review of the child health and nutrition situation conducted in late 1999 will help identify gaps and disparities that will be addressed by USAID and its partners in FY 2000. Several emergency child survival programs will continue in FY 2000 among women and children living in IDP camps in West Kalimantan and East Timor with possible expansion to Aceh, Ambon, and West . In FY 2000, USAID will work with the Ministry of Women's Empowerment, the National Family Planning Coordinating Board, the Ministry of Health, and with key non-governmental and religious organizations to implement a comprehensive new program. This program should help improve political commitment among elected parliamentarians and community leaders for family planning as a women's health and empowerment intervention. A large policy component will work on financial sustainability, contraceptive logistics systems in a decentralized environment, quality improvement, and policy. An advocacy and communication component will strengthen the participation of women's groups, religious groups, and local communities. In FY 2000 and continuing in FY 2001, integrated FP/MCH and HIV/STI services and programs will be expanded and strengthened as responsibility and authority for providing health services is decentralized to district health offices. Planning, finance, and monitoring of service delivery will be implemented at the district level based on guidelines provided from the center for preventive care aimed at protecting the health of women and children. In FY 2001, USAID-funded activities in crisis surveillance of nutrition and disease will allow the GOI and the NGOs to efficiently collect, analyze and disseminate data for monitoring and surveillance. Policy-makers and program managers have indicated they will use this data to determine resource allocation among program priorities. Possible Adjustments to Plans: Under the "Protecting the Health of the Most Vulnerable Women and Children" special objective, a more balanced approach to public and private sector delivery of health services will be used. Over the next year, emphasis will be placed on assisting the GOI to deal with its most significant policy development challenges in the new political environment. Should Indonesia's economic recovery proceed at an accelerated pace, consideration will be given to re-energizing broader private sector involvement in the delivery of health services. Other Donor Programs: The Asian Development Bank (ADB) will support the GOI's Social Safety Net program through the year 2000. Australia is providing $2.6 million in essential drugs, medical supplies and equipment for the eastern islands. Japan is supporting district health services in several provinces with a total of $16 million for medicine and disposable medical supplies. The United Nations Family Planning Agency (UNFPA) is developing a new $14.2 million country plan for 2001 with a focus on reproductive health and adolescents. The United Nations Children's Fund (UNICEF) is also developing a new country plan for 2001 and has initiated supplementary child feeding and revitalization of community health posts in five provinces. The World Bank is supporting reproductive health activities in East and Central Java and is preparing a decentralization project for four provinces. Principal Contractors, Grantees or Agencies: The National Family Planning Coordinating Board; Ministry of Health; Ministry of Women's Empowerment; Midwives Association; Obstetricians and Gynecologists Association; Helen Keller International; The Futures Group; Family Health International; Johns Hopkins University (JHPIEGO and CCP); Pathfinder International; PATH, UNICEF, and World Vision. Selected Performance Measures: Baseline (1998) Actual (1999) Target (2000) Target (2001) The number of provinces in which there has been an increase or no decline during the past year in the percentage of married women currently using modern family planning methods. 8 14 15 18 The percent of deliveries attended by a trained provider in three districts in South Kalimantan. (see note below). 68% 79% 81% 83% The number of children aged 6-11 months in urban areas who consume Vitamin A capsules during the twice yearly campaigns N/A 0 30% 50% The percent of condom use among female commercial sex workers 37% 48% 50% 55% Please note: Mission expects a new family planning indicator to be added since the current program ends in 2000. Also, the maternal health project in South Kalimantan was successfully completed, so the indicator "percent of deliveries attended by a trained provider" will be reported for new program provinces. U.S. Finance Table (Microsoft Excel) ACTIVITY DATA SHEET PROGRAM: Indonesia TITLE AND NUMBER: Improved Food Security for the Most Vulnerable Groups, 497-009 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $3,000,000 DA PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $3,000,000 DA INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2001 Summary: The purpose of this objective is to ensure that affordable basic food items are provided to Indonesians most in need. USAID food resources allowed many drought-impacted people to survive until the return of more normal crops, while food distribution in urban areas provided a crucial safety net to those impacted by the economic crisis. In 1997 and early 1998, El Nino weather patterns resulted in the worst drought in Indonesia's recent history, creating severe shortfalls in food availability and rising prices. USAID responded in FY 1998 with 83,000 tons of commodities for nearly one million beneficiaries. The food was provided through food-for-work and vulnerable group feeding programs, located primarily in the eastern islands. Food insecurity was then compounded by the economic crisis. Inflation, growing poverty, and disruption of the normal food distribution and marketing systems further reduced people's ability to access food. In fact, the May 1998 riots were spurred in part by the rise in food prices. The availability and affordability of rice, cooking oil, sugar and other basic foodstuffs are central to stability in Indonesia. The relatively small resources of the donor community can have important, but limited, impact on the affordability and accessibility of food. Longer-term food security will require GOI interventions to improve its food policy and management practices. To this end, USAID contracted with Development Alternatives Inc. (DAI) to provide food policy support to the GOI. This program is being implemented in association with the GOI Coordinating Ministry of Economy, Finance and Industry, and entails policy dialogue with key Indonesian policy makers, research on critical policy issues, and experiments to test policies in the field. Key Results: Two intermediate results are key to achieving this objective: 1) strengthening GOI food policy and management practices and 2) improving food accessibility. Performance and Prospects: USAID-funded technical assistance has conducted research into rural markets and rice competitiveness and contributed critical input to improving fairness and efficiency of GOI policies with respect to rice pricing, rice trade and rice production, as well as on the role of the national logistics agency (BULOG). In FY 1999, USAID refocused a greater share of its food distribution activities to urban areas, particularly in Java, that had been severely impacted by the economic crisis. During the year, USAID approved close to 56,000 tons of commodities for 860,000 beneficiaries. Another 15,000 tons of commodities have been approved for FY 2000, subject to the availability of funds. The GOI has taken steps to target direct food assistance to those most in need. Through its Special Rice Market Operations, the GOI has regularly provided over nine million families, mostly in rural areas, with heavily subsidized rice. Possible Adjustments to Plans: None. Other Donor Programs: The World Bank and the IMF promote rural development in Indonesia, as reforms to GOI food and agricultural policy are mandated under their programs. The World Food Program has proposed a Protracted Relief and Recovery Operation (PRRO) to continue food assistance as Indonesia recovers from the economic crisis. Other donors, principally Canada, Australia and Japan have indicated a willingness to continue food assistance. With input from USAID, the World Food Program (WFP) has switched its focus from rural to urban areas. WFP has also allocated considerable food resources for the thousands of displaced people as a result of Indonesia's numerous social conflicts. USAID, in association with the World Bank, the International Monetary Fund (IMF), and other donors, have collaborated to strengthen GOI food policy and to target assistance to those most in need. Principal Contractors, Grantees or Agencies: World Food Program; CARE; CRS; Church World Service; Adventist Development and Relief Agency; World Vision International; Mercy Corps and Development Alternatives, Inc. Selected Performance Measures: Baseline Actual (1999) Target (2000)** Target (2001) Metric tons of U.S.G. food delivered: Commodity--Rice N/A* 54,260 13,180 0 Number of workers employed in Food for Work programs N/A* 73,614 17,880 0 Metric tons of U.S.G. food delivered: Commodity - Soy Blends 1,180 1,360 0 N/A Number of participants included in supplemental feeding program N/A* 41,500 47,830 0 People moving above poverty line as result of policy initiatives. Baseline: 12/98 National Census of 46.1 mil below poverty line     6,000,000   Notes: * No baseline was conducted. ** Pending availability of FY 2000 funds. U.S. Finance Table (Microsoft Excel) ACTIVITY DATA SHEET PROGRAM: Indonesia TITLE AND NUMBER: Urban Environmental and Energy Management Strengthened, 497-010 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $6,500,000 DA PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $8,500,000 DA; $2,000,000 ESF INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2004 Summary: This objective seeks to strengthen participation in local government operations, improve management of urban services, reduce pollution, create jobs, and increase energy efficiency. The objective encompasses USAID's urban and energy programs. Both programs involve policy development and implementation of improved techniques. The urban program focuses on local government processes for providing urban services, emphasizing infrastructure development, finance, and management. The energy program focuses on improving energy policy, emphasizing structural reform, pricing and subsidies, and promoting commercialization of energy resources and energy efficiency. Devolving authority for natural resources management and decision-making to local government is an important step in promoting the sustainable use of Indonesia's natural resources. As part of Indonesia's democratic transition, regulations are being drafted that specify local governments as the primary provider of environmental services. Through the provision of technical experts at key ministries, USAID has supported the Government of Indonesia (GOI) in the formation of these regulations. In addition, USAID has supported the adoption of financial and citizen outreach measures that enable local governments to provide these services on a more sustainable basis. Indonesia's long history of centralized decision making has not permitted local communities to play a role in determining how best to meet their urban environmental needs. The Mission's urban environmental management program has pioneered a new approach to address these issues by forming partnerships with over 100 non-governmental organizations (NGOs) and community groups, so that citizens can work more directly with local governments and play a greater role in the decision making process. USAID is playing a significant role in fiscal and political decentralization, has an extensive program to improve local government capital investment planning, and is creating a program to introduce improved practices for local management of core urban services. Improved energy management requires reforming the current structure of the sector and strengthening the capacity of both central and local government to manage the energy sector. The objective is to improve both economic and technical efficiency by creating transparent, competitive markets, increasing private investment and rationalizing energy pricing through gradual subsidy removal. It is expected that environmental benefits of the reform will be significant, in terms of more efficient use of energy, as well as increased use of cleaner fuels, including renewable energy resources. Key Results: Three intermediate results are critical to meeting this objective: 1) increased community participation in local government operations and planning; 2) improved management and delivery of urban environmental services, and 3) improved efficiency and decreased pollution in energy supply and use. Performance and Prospects: Significant progress has been made in decentralization, employment generation, power sector restructuring, water management, and improved local government planning. USAID's partners in the Ministry of Home Affairs and the Ministry of Finance were the source of much of the substance of Indonesia's new autonomy laws. USAID advisors played a key role in creating a strategic framework for the water sector, now adopted by the Ministry of Home Affairs, while the USAID Water Efficiency Team helped 54 local water authorities improve operations and avoid crisis-induced bankruptcy. With USAID support, the GOI is currently undergoing energy sector reforms, allowing more players into the sector while eroding the traditional government monopoly on energy production. USAID has supported this effort by strengthening the Ministry of Mines and Energy's policy analysis capacity and developing a work plan for critical policy changes. As part of USAID's Crisis Response and Recovery Strategy, urban programs were re-focused to emphasize urban employment generation. Targeting 14 cities with high-unemployment in East and West Java, the program emphasizes community participation in identifying, planning, and implementing community infrastructure projects. More than 80,000 meetings were facilitated between 700 local communities, 100 local NGOs, and local officials, resulting in 1,700 projects approved for financing, with another 1,000 projects in the pipeline. To date, more than 6 million person-days of labor have resulted from implementation of these projects. USAID assistance was also provided to the National Planning Board to improve targeting of social safety net funds to areas of high unemployment. In total, USAID's assistance already in place will produce more than 47 million person days of labor. Promoting more efficient and cleaner energy use is a mainstay of USAID's urban environmental program. Through promoting policy changes, including those in pricing, subsidies, and sector structure, incentives are created for improved energy use. The result is more efficient and less polluting power production. Most recently, USAID has supported efforts to reduce pollution from transportation by supporting national efforts to phase-in unleaded gasoline and improve fuel standards. USAID has supported the restructuring of the electricity sector since 1996. Working closely with the World Bank and the Asian Development Bank, USAID promoted the development of government policies and implementation regulations for power sector restructuring. Over the past two years, USAID has developed a capital investment plan that enables local governments to generate medium-term investment plans. The process emphasizes community participation. USAID assisted six cities and three water authorities in East Java to create such plans. In FY 2000, the success of USAID's efforts to date in electricity sector restructuring has led the GOI to request USAID assistance in developing the necessary policies for reforming the oil and gas sector. USAID is also assisting with general energy policy reform, with the highest priority being given to pricing and subsidy issues. These programs will be the main focus of the energy element of this activity. On the urban environment side in FY 2000, the Ministry of Finance has requested that USAID extend capital investment planning assistance to another 20 cities throughout Java and in parts of Sumatra and South Sulawesi. In addition, new USAID urban assistance is now being designed to meet the need for improved skills within local governments. Implementation, which will begin in mid-2000, will emphasize improving core urban management processes, such as performance budgeting, financial management, competitive procurement, and service delivery. The new activity will include a USAID Resource Cities program involving up to 12 Indonesian cities in partnerships with U.S. cities. Particular emphasis will be given to demonstrating how councils, officials, the business community, NGOs, and ordinary citizens can work together to enable cities to improve living and economic conditions. The activities undertaken in FY 2000 will continue in FY 2001 with the focus being energy policy implementation of subsidy reduction, and oil and gas sector reform. The urban resource management and Resource Cities will be the basic elements of the urban environment activities. Possible Adjustments to Plans: Local governments are widely diverse in Indonesia. Evaluation of initial experience in providing cost-effective technical assistance and training directly to them will form the basis for adjusting implementation plans. Plans may also need to be adjusted as the legal and regulatory framework for local government is revised. In addition, targets for employment generation will need to be revised to correspond to future "social safety net" policies of the new government. Other Donor Programs: The World Bank, the Asian Development Bank (ADB), the United Nations Development Program, Germany, and several smaller donors are active in supporting decentralization, local government, and energy reform. USAID is considered by these donors to have particular strengths in the areas of local government finance, service delivery, urban management practices, and capacity building and training in the energy sector. New World Bank and ADB lending programs will support local government development. Principal Contractors, Grantees, or Agencies: The principal contractor for delivery of urban assistance is Research Triangle Institute, with CARE as a principal subcontractor. The contractor for the Water Efficiency Team is Chemonics, Inc. The principal contractor for assistance to local governments is the International City/County Management Association (ICMA). Implementation of activities by ICMA is expected to start by April, 2000. The principal contractors for energy reform assistance are Advanced Engineering Associates International (AEAI) and Carana Corporation. Carana Corporation has been involved in electricity restructuring since 1997. AEAI was brought into oil, gas and general energy policy in FY 1999. Selected Performance Measures: Baseline (1998) Actual (1999) Target (2000) Target (2001) Number of local governments using participatory medium term planning: 0 0 20 30 Increased employment in urban community infrastructure, cumulative (millions of person days): 0 5 12 47 Number of local governments using improved management tools and practices: 0 0 10 50 Improved efficiency and decreased pollution in energy supply and use - Global Climate Change indicator - local and global air pollution reduced or avoided (metric tons of CO2 equivalent, cumulative): 2 mill. 3 mill. 4 mill. 5 mill. U.S. Finance Table (Microsoft Excel) ACTIVITY DATA SHEET PROGRAM: Indonesia TITLE AND NUMBER: Recovery of Economic and Financial Systems, 497-011 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $13,550,000 DA; $12,000,000 ESF PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $12,675,000 DA; $18,000,000 ESF INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2003 Summary: This objective aims to help Indonesia's economy recover and achieve a high equitable growth path through the reform of policies and governance in the public sector, corporate debt and governance restructuring, bank and financial system strengthening, and enhancing public participation in economic policy making. The new government inherited severe financial and economic crises. Fortunately, the economy appears to have stabilized and is beginning to recover. the Indonesian economy grew 1.8% in the second quarter of 1999, the first positive growth since the last quarter of 1997; inflation has been zero since the beginning of the year; benchmark interest rates are currently 12% to 13% having fallen from a high of more than 70%; and, the exchange rate has strengthened to around 7200 Rupiah per U.S. dollar. However, much must be done in terms of policies, restructuring and institutional building to turn the nascent recovery into sustainable, rapid, and equitable growth. The new government must urgently address an overwhelming array of problems in the face of deeply entrenched vested interests and with weak governing institutions. Monumental bank and corporate debt restructuring needs to be undertaken so that commercial and trade credit can support the recovering economy. Credibility and competence of key economic institutions, such as the central bank, capital market authority, tax administration, and the legal and judicial system, must be rebuilt after having been eroded under thirty years of autocratic and corrupt rule. Substantial reforms, in such areas as fiscal, trade, and legal, are essential for sustained, equitable growth. Key Results: The four key intermediate results are: 1) public sector policy and governance reformed; 2) corporate sector restructured and governance improved; 3) financial sector restructured and governance improved; and (4) strengthened public participation in economic policy making. Performance and Prospects: During the past year, USAID engaged the government, often successfully, on a wide range of issues - fiscal decentralization, development strategy, poverty alleviation, financial restructuring, and small business, monetary, and competition policy. For instance, technical assistance provided to the Bank of Indonesia and the Indonesia Bank Restructuring Agency (IBRA) helped in debt restructuring and bank recapitalization. It helped establish the guidelines for debt forgiveness for small businesses and tax treatment of debt deals. However, the lack of political will has hampered the restructuring of debts and the recovery of assets. USAID technical assistance helped the GOI craft four major laws related to competition, anti-corruption, arbitration and secured transactions. The competition law was one of the most significant passed in 1999. It defines the rules for competitive behavior by business firms in Indonesia. The secured transaction law provides a legal basis for registering secured interests in assets used as collateral - vital to a modern credit market, and something that was previously lacking. USAID will now direct its focus towards helping the GOI implement these laws. In addition, USAID contributed to the development of a consumer protection law and a warehouse receipts system. The latter will contribute to solving trade finance problems by making it easier to discount receipts for goods in warehouses, as well assist in the successful implementation of a futures commodities exchange. To encourage sound economic policy directions in the new government, prior to the June election, USAID funded 17 "road shows" by the University of Indonesia's Institute for Social and Economic Research and the Economics Department of Gadjah Mada University to discuss the economic issues facing the nation. USAID also contributed to raising the quality of the economics debate prior to the general election through sponsoring weekly debate sessions in Jakarta that were attended by a large number of political parties. These debates were shown on Indonesian television and were reported to have significantly changed or clarified perceptions of the economic policies of the political parties. With the successful conclusion of the selection of a president who has a legitimate mandate, the new government needs to make rapid progress in implementing the policies and practices necessary for economic recovery and achievement of a sound development path. Among the daunting challenges are: making real progress on bank and corporate restructuring, resuming credit, increasing exports and foreign investment, and reestablishing the competence and credibility of economic institutions, including the judicial system. Overall, significant positive economic growth is expected in FY 2000 as these challenges are met. FY 2000 and FY 2001 resources will be used to continue assistance in the areas of: 1. Banking and financial sector restructuring 2. Corporate debt and governance restructuring 3. Public sector policy and governance reform 4. Public participation in economic-policy making 5. Microenterprise development Continued reform of Indonesia's banking systems is needed to restore the flow of capital necessary to re-ignite economic activity and growth. USAID will provide technical assistance to IBRA to develop its institutional and staff capacities, to support the actual restructuring of troubled banks, and to help rebuild the banking system on sound, responsible, and transparent principles. Funding will be used to help put in place the systemic reforms necessary for sustained banking sector recovery, including strengthened bank supervision, improved accounting principles, policies, and standards, improved lending practices based upon sound risk analysis, and development of more effective financial instruments. In FY 2001, USAID, in cooperation with the Department of the Treasury, will continue and expand efforts under the Jakarta Initiative (private debt workouts outside of the formal court system). We will support the GOI's efforts to develop and implement new legislation for secured transactions, arbitration, and expanded competition. In addition, resources will be directed towards strengthening the economic and regulatory bodies that enforce economic laws and regulations, including the judiciary, the anti-monopoly commission, and the capital markets exchange. USAID and the Department of Treasury will provide long-term technical experts that will assist the GOI develop and implement budget, fiscal, monetary, exchange rate, and trade policy and laws. Technical assistance will also be provided to analyze and review pricing/subsidy reforms that are necessary to help the GOI reduce or eliminate budget deficits. Support will be provided in the energy and power sectors as well as food policy reform. In FY 2001, indigenous NGOs will be provided with assistance to improve their advocacy skills and create linkages with policy-oriented NGOs in the U.S. This program will help transfer knowledge and skills to Indonesian institutions, thereby enhancing their ability to contribute meaningfully to the dialogue between the private and public sectors on economic policy issues. USAID will also provide assistance to bank credit programs that support small and micro-enterprises as well as business and management expertise directly to these enterprises. Technical assistance that will help improve the enabling environment for small business development and growth will be provided to the GOI. Possible Adjustment to Plans: Activities will be adjusted in response to opportunities as they unfold under the new government and changing economic conditions. Other Donor Programs: Most important are the reform efforts led by the IMF under a newly signed three-year extended arrangement for $4 billion. The ADB is implementing the Financial Governance Reforms Sector Development Program to help provide an adequate institutional and regulatory framework to manage the country's financial sector. The World Bank, a key participant in the IMF-led rescue package for Indonesia, will provide $4.5 billion in loans to Indonesia by the year 2000. Much of this assistance will go to support macroeconomic stability, financial sector reform and trade policy initiatives. Principal Contractors, Grantee or Agencies: Government Agencies: Bappenas (Agency for National Development Planning), Ministry of Industry and Trade, Central Bank: Bank Indonesia, Ministry of Finance, Indonesia Bank Restructuring Agency , The Jakarta Initiative, Ministry of Justice, Ministry of Cooperatives and Small Business, Central Bureau of Statistics, Coordinating Ministry for Economics, Finance and Development Supervision. Grantees: University of Gajah Mada, University of Indonesia, the Asia Foundation, University of Maryland, University of San Francisco. Contractors: Barents Group, Nathan Associates, Checchi. Selected Performance Measures: Baseline (1998) Actual (1999) Target (2000) Target (2001) Sum of U.S. dollar value of Indonesia's non-oil and gas imports and exports for the calendar year $73.3 billion $57.45 billion $77 billion $83 billion Level of outstanding credit (real Rupiah) at the end of the calendar year (December) Rp.251,262 trillion Rp.252 trillion Rp.258.8 trillion Rp.274.3 trillion Cumulative value of loans in Rupiah or U.S. dollar restructured under the auspices of JITF as of the end of December TBD $625 million $3 billion $6 billion A simple cumulative counts of the enactments, laws, regulations, decrees, and rules passed or modified by Government in selected areas through end of December 0 4 4 7 Cumulative substantial engagements through end of December; policy workshops, press articles, policy dialogues, collaboration activities, analytical documents. 0 389 700 1100 Please note: Indicators have been revised to better measure the effects of the comprehensive economic growth program that was put in place after the 1997 Indonesian economic and financial crises. U.S. Finance Table (Microsoft Excel) ACTIVITY DATA SHEET PROGRAM: Indonesia TITLE AND NUMBER: Strengthened and Decentralized Natural Resources Management, 497-012 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $7,500,000 DA PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $7,500,000 DA; $4,000,000 ESF INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2003 Summary: Fundamental modification to the regime of control of Indonesia's natural resources faces entrenched interests that have benefited from years of close relations with prior administrations. Control over vast areas of wealth is at stake, and the new rules are only now being written. Local control over natural resources will be an essential step to realizing more sustainable utilization of the resources, the maintenance of ecosystem functions, and the conservation of biological diversity. This objective aims to "push the envelope" on decentralization, particularly more pluralistic management of forests, protected areas, and coastal zones. The new GOI commitment to decentralization and regional autonomy in Indonesia, giving significant new authorities to local governments, offers both new opportunities and new threats to Indonesia's natural resources. USAID's body of experience in promoting accountability and participation in natural resources management over the last few years, coupled with strong relationships with official counterparts and NGOs, makes USAID strategically placed to play a significant role in informing and contributing to the resolution of these issues. This will be accomplished by systematically using its field activities to develop, test and disseminate examples of devolved authorities that result in effective and accountable management of coastal resources, protected areas, and forest resources Key results: Three key intermediate results are necessary to achieve this objective: 1) roles and responsibilities for natural resource decision-making and management clarified; 2) capability of identified parties to execute their natural resource related responsibilities improved; and 3) decisions regarding natural resource utilization and management developed in a more transparent, accountable inclusive and empirically-based manner. Performance and Prospects: Progress on clarification of roles and responsibilities related to natural resource management was very good as evidenced by results obtained on the indicator "Number of Policy Advances Along Policy and Enabling Condition Index." Recently passed legislation on decentralization has relied on policy support from USAID implementing partner organizations in drafting implementing regulations relating to forestry, coastal and protected areas resources. These organizations have worked to unite government and non-government interests on the new legislation and to improve the quality and transparency of the policy formulation process itself. Community resource mapping programs by several partner organizations over the last several years have resulted in the adoption of community-managed zones in parks and incorporation of the maps into local plans in twenty areas. A good example of this is the result of work by several partners in Lore Lindu National Park. There, a formal decree awarded both the Katu and Robo Behoa people the right to remain in, and to control, their traditional lands located within the Park boundaries. These groups have already proven themselves to be more effective than the park rangers in keeping illegal loggers and poachers from operating in the national park. Progress in building the capability of identified natural resource stakeholders was also higher than expected as measured by our Institutional Development Framework (IDF) indicator. This year USAID implementing partner organizations were clearly more comfortable with the Institutional Development Framework (IDF), a matrix of institutional strengthening benchmarks developed by USAID, including components that track an institution's oversight/vision, management resources, human resources, financial resources and external resources. The IDF has been adapted for use beyond its intended target, NGOs, to include other stakeholders such as universities and government management units. For example, the tool was tailored for Indonesia's national park management units in Gunung Gede Pangrango National Park (West Java), Bunaken Marine National Park (North Sulawesi), and Wasur National Park (Irian Jaya), and Kerinci Seblat National Park (Sumatra). The IDF helped these management units to determine their organizational priorities and a method for achieving them. Park managers were taught how to use the IDF on an annual basis to assist in budget planning and for measuring improvement of the park over time. These experiences resulted in the development of an IDF Users Guide, making the IDF tool accessible to all of Indonesia's thirty-nine national parks. Finally, progress on promoting more pluralistic natural resource decision-making and management was generally on target. Management plans and agreements are a useful way to indicate increasing pluralism and the sheer number obtained this year is a reflection of the increased willingness of government to work with non-governmental stakeholders on natural resources management. These agreements have been struck with varying degrees of success between different entities (e.g. resource user groups, entire communities, adat groups, private sector companies, and local government units). Good implementation of the agreements has been supported by concurrent training/education of the resource users (e.g. biology of resources, market analysis). In FY 2000, the NRM program will be engaged, particularly with the central government, in the development of implementing guidelines and regulations on resource management in order to implement the existing laws. The NRM program will also concentrate as much on the process of policy development as on the content of the laws themselves. Devolving increased authority for natural resource management and decision-making to local government is an important and necessary step in promoting the sustainable use of Indonesia's natural resources. The NRM program will work to strengthen non-governmental constituencies who value the resources in their natural state and who can influence official policy and resource practices in the field. Shaping and amplifying the popular voice by engaging community, business, religious and academic groups, NGOs, the media and other elements of civil society in the development of environmentally beneficial policies increases the likelihood of appropriate policy formulation and enactment. There is a need to consolidate and disseminate the lessons learned from field efforts to capture stakeholder interests in resource management techniques so that they may be used to proactively inform policy formulation and implementation as well as local development planning as it relates to natural resources. In addition to synthesizing and communicating lessons learned from existing initiatives, activities will focus on both deepen the experience gained from these field sites and, possibly, to initiate strategic new field investments. Even while roles and responsibilities for natural resource planning and policy making are being sorted out, these sites can continue to push the envelope within the existing natural resources policy and planning framework, inform new policy and planning initiatives, and provide "learning sites" for training on natural resource management techniques. FY 2001 will reflect expansion of the successes of these programs in other regions. The focus will be involvement of local communities in the implementation of the rules and guidelines for decentralized resource management. The information dissemination process will also require additional support to ensure clear understanding of the issues surrounding the uses of the natural resources, in particular forestry. Possible Adjustment to Plans: The full ramifications of decentralization are not yet known. Thus, the program balance between national policy and local capacity building may have to be modified as the situation evolves. Other Donor Programs: Other donors such as the World Bank, the ADB and Australia AID are replicating the community-based approaches which USAID introduced. Multilateral banks, bilateral donors, and international research centers work with USAID to support Indonesia's forestry conservation. The Government of Japan works with USAID on biodiversity conservation. Canada, Finland and Japan work with USAID in the formulation of forestry policy. Principal Contractors, Grantees or Agencies: Ministry of Forestry, Ministry of Home Affairs, Ministry of Environment, Bappenas, Ministry of Maritime Exploration, local universities, World Wildlife Fund Indonesia, Conservation International Indonesia, The Nature Conservancy, Biodiversity Support Program, University of Rhode Islands, and International Resources Group. Selected Performance Measures: Baseline Actual (1999) Target (2000) Target (2001) Number of Targeted Institutions Exceeding 2.5 on the Institutional Development Framework (IDF) 13 (1998) 40 35 44 Number of Policy Advances Along Policy and Enabling Condition Index 28 (1997) 493 364 447 Number of site-specific management plans/agreements between stakeholders that are GOI recognized and under implementation 12 (1997) 78 92 131 U.S. Finance Table (Microsoft Excel)

:  :  :  :  :  :  :  :  :  :  What's New : FOIA Requests : Privacy Policy : Email This Page : Plug-ins : FAQs : Help Desk : Contact Us : Site Map Last Updated on: November 17, 2000