Southeast Asia

ADB prepared a results-based country strategy and program for 2006–2009, which is fully aligned with the Government’s medium-term development plan. The country strategy and program addresses a selected number of constraints on achieving higher pro-poor, sustainable economic growth, and improved social development. The focus is on five areas of engagement, including infrastructure development, financial sector deepening, decentralization, faster achievement of the Millennium Development Goals, and environment and natural resources management. Particular attention is given to supporting the Government’s reform program, and to increased private sector participation in financing the country’s development needs, especially in infrastructure.

ADB, in coordination with other development partners, helped the Government formulate policy reforms concerning the investment climate, infrastructure development, and financial sector deepening. The Government announced three policy packages in these areas. The infrastructure policy package sets out reform goals in nine infrastructure sectors, supplemented by measures to boost investment. The investment climate policy package supports broad-ranging reforms on tax, customs, investment law, and labor. The financial sector reform package aims to strengthen the banking and nonbanking sectors and diversify sources of financial intermediation. A small and medium-sized enterprise reform package is being prepared.

ADB loan approvals reached $784.8 million, with emphasis on supporting the Government’s reform program to strengthen macroeconomic management, governance, and the investment climate, and to accelerate infrastructure development. This includes a $75.0 million nonsovereign public sector loan and $125.0 million in commercial loans under ADB’s B-loan program for the South Sumatra to West Java Phase II Gas Pipeline Project. ADB also provided $7.1 million for seven technical assistance projects. In November 2006, ADB approved an Infrastructure Reform Sector Development Program worth $400.0 million, to improve the investment climate and promote infrastructure development. As part of this program, ADB provided an investment loan of $26.5 million—supplemented by a $7.6 million cofinancing grant from the Government of the Netherlands—to establish the Infrastructure Project Development Facility.

Under its medium-term development plan for 2005–2009, Indonesia aims to boost sustainable economic growth to 7%. ADB provided $200 million for the second Development Policy Support Program in conjunction with World Bank assistance of $600 million, and additional proposed assistance from the Government of Japan. The assistance focuses on improving the investment climate and strengthening public financial management to improve the use of fiscal resources.

ADB also approved a $50 million loan for public and private madrasahs at the primary, junior, and secondary levels in 27 poor districts in 3 provinces. The project will enable the madrasahs to meet national education standards for personnel, facilities, and teaching–learning materials; and give 120,000 students access to education.

Another loan for $33.3 million supports a project to develop small-scale and low-cost aquaculture production systems that are economically sound and environmentally friendly. The project will also increase the incomes and improve the health of 14,000 poor fish farmers by enhancing aquaculture production, supply, and productivity.

In response to the earthquake that hit Yogyakarta and Central Java in May 2006, ADB, together with other development partners, took the lead in helping the Government prepare the damage and loss assessment.

Particular attention is given to supporting Indonesia’s reform program, and to increased private sector participation in financing development needs, especially in infrastructure

A Tentative New Beginning in Aceh

Wreckage after the tsunami

On the tragic morning tsunami waves ripped through the village of Meunasah Tuah in Indonesia’s Aceh region, little more than devastation was left in their wake.

“The water was as high as the coconut trees,” says Mohamed Zein, who lost his wife and every member of his immediate family, save one brother, to the violent torrents on 26 December 2004.

Only 170 of the village’s 3,000 families had any surviving members, and every last family suffered the loss of a loved one. Not a single family survived intact.

“The greatest gift we can give to these families who have already been through so much is simply an opportunity to create a better and lasting future for themselves,” says ADB Managing Director General Rajat Nag. To this end, a key component of ADB’s $382 million assistance program for Aceh, of which $331 million is in grant form, is helping tsunami-affected families earn a living through farming and livestock rearing.

For Mohamed Zakir and his family, this has meant a chance to start their lives anew. He was at sea in his fishing boat when the tsunami struck. While his wife, Nurjanna, miraculously survived by grabbing on to a passing truck tire, the couple lost their only child to the ferocious waters.

Like many men who once fished the rugged waters off Aceh, Mohamed Zakir has lost his love for life at sea. Under this ADB-supported initiative, impoverished families receive training and support so they can earn a dependable living raising livestock.

In Meunasah Tuah, 200 goats were divided among 25 of the community’s neediest families for them to breed and sell. Goat curry is one of Aceh’s most popular dishes, and there is never a shortage of demand at local markets, so families can depend on a steady source of income. The fact that Mohamed Zakir has been able to change his trade from fishing to goat breeding has also helped allay the worries of his wife, who says she never wants her husband or their newborn son to ever have to rely on the ocean for survival.

Although nothing can take away the pain Mohamed and Nurjanna continue to endure, the recent addition to the family is a source of new joy, and they take comfort in the fact that they now have the resources they need to provide for their son.