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Road Rehabilitation Project In Indonesia Targets Poor Areas

MANILA, PHILIPPINES (11 December 2000) - The Asian Development Bank (ADB) today approved a US$190 million loan for a road rehabilitation project in Indonesia which will target poor areas. The project will improve trading opportunities for poor farmers and small-scale entrepreneurs and provide better access for the poor to basic health and education facilities.

The project supports the Government's program of road and bridge rehabilitation works on priority road sections in 15 provinces of Sumatra, Java, Kalimantan and Sulawesi during four years to the end of 2004. It will also help to reformulate and implement road sector policies, especially those related to road user charges, cost recovery, earmarking of funds for maintenance, vehicle overloading and road safety. In addition, the project will provide capacity building in road and bridge works.

Since the Asian financial crisis, the Government has been preoccupied with such urgent issues as macroeconomic stabilization and corporate sector restructuring. During 1998-2000, the budget was under severe stress and this resulted in cuts in essential expenditures in the road sector. Continued support to the road sector is critical to preserve priority road sections and support economic recovery.

"The project will support economic recovery and contribute to poverty reduction by selecting road sections in poor areas, thus providing employment opportunities to underemployed rural workers and facilitating access of the rural population to markets, and education and health facilities," says, ADB's senior transport specialist Patrick Giraud.

The project will focus on national and provincial roads. District roads may be included if they are priority roads for economic recovery or poverty reduction. Eight of the 15 provinces in the project area have a poverty incidence higher than the national average.

The ADB loan accounts for 76 percent of the total project cost of $250 million. The balance will be borne by the Government. The loan will come from ADB's ordinary capital resources with a term of 24 years, including a grace period of four years. The executing agency for the project is the Directorate General of Regional Infrastructure Development of the Ministry of Settlement and Regional Infrastructure.

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