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Indonesia—ADB Water Financing Program Conference
Meeting Report
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ADB organized an in-country conference in Indonesia to build upon the outcomes of the country’s participation in the 2006 Water Financing Program (WFP) Conference and double the country’s water investments. These are the results.
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EVENT DETAILS
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| Date
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7-9 November 2007 |
| Venue
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Bandung, Indonesia |
| Contact |
Ellen Pascua |
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Related Materials
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 Indonesia faces the huge demand of improving water-supply services. Jakarta’s growth brings massive problems—from the need for improved sanitation to the shifting of water use from agriculture to industry—and this puts more pressure on the surrounding river basins. But while the country has made excellent progress in developing water resources policy, implementing changes is proving more difficult, and investments for better management of river basins are badly needed. This in-country WFP Conference aimed to:
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Achieve a clear and shared understanding on the directions in strengthening the partnership between ADB and the Government of Indonesia in the water sector |
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Identify key interventions, issues, and specific projects to be included in ADB-supported pipeline projects in 2008-2010 |
Held on 7-9 November 2007 in Bandung, the conference was attended by more than 100 delegates headed by senior officials from
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National Planning and Development Agency (BAPPENAS) |
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Identify key interventions, issues, and specific projects to be included in ADB-supported pipeline projects in 2008-2010 |
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Ministry of Public Works (MPW) |
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Ministry of Finance |
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West Java Provincial Government |
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Central Government Agencies |
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Netherlands Embassy in Jakarta |
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Various provincial organizations and academe |
The first day of the conference included plenary presentations and discussion on the sector challenges and funding needs, ADB financing and knowledge products and services, good practice examples of innovative investments, and opportunities for further investments. Day 2 featured intensive discussions in two breakout groups. The first group (40% of participants) addressed investment opportunities in urban and rural water supply and sanitation (WSS), and the second group (60%) focused on opportunities in basin water resources and irrigation. Indicative investment plans (lists of Technical Assistance projects [TAs] and loans, and indicative timeframe) were a major output of these sessions. On Day 3, field visits to proposed investment sites around Bandung, were organized. These included
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Citarum River for flood management and community Water Supply and Sanitation, and riverbank improvements |
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Bandung Water Supply for augmentation of bulk water supply to Bandung and water quality improvement works |
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National Water Resources Research Institute of MPW for an update on knowledge management work |
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The discussions focused on the water sector’s challenges, opportunities, and funding requirements. The following are some of the key points raised by senior government officials in the meeting:
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Indonesia’s Medium-Term Development Plan (2005-2009) includes improvement of the welfare of all citizens and improving natural resources management |
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Indonesia’s water sector requires the following investments: |
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Years
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Total
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Funded by Government
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Investments
Needed
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2004-2009
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$8.90 billion
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$4.50 billion
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$4.40 billion
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2010-2015
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$12.50 billion
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$6.30 billion
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$6.20 billion
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In terms of managing water resources, the country is working on reforms in the refinement of laws and government regulations, improvement of the system of data processing and hydrology information, strengthening of IWRM, application of water allocation system, and more. It is focusing on, among others, the |
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development of water resource infrastructure through integrated, efficient, equitable, and sustainable management |
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attention to linkages between upstream and downstream systems |
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non-construction approaches, water resource conservation and, integrated watershed management |
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community participation and partnership among stakeholders |
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The country’s water supply scenario includes an average nonrevenue water of 37% (as of 2004), insufficient financial capacity for the development, operation, and maintenance of systems, and weak performance of water institutions. The target urban and rural water supply coverage for 2009 is 66% (from 41% in 2004) and 30% (from 8% in 2004), to serve 45.8 million and 27.3 million people, respectively. Of the total 318 PDAMs in the country, 44 are considered financially healthy while 164 need financial help. |
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Among the barriers to investments that Indonesia is addressing are the following: |
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Urban and rural water supply
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Finance (cost recovery, tariffs, loan arrears, credit worthiness, and access) |
Utility governance and performance
low sanitation coverage and lack of cost-recovery for sanitation projects
Community empowerment
Ownership and sustainability
Operation and maintenance
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Irrigation and basin management
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Environmental protection
Institutions and capacity building
Community awareness and participation
Water resources infrastructure development
Disaster management
Information systems
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In its presentations, ADB outlined that it can help to support Indonesia’s water sector needs through its Water Financing Program 2006-2010, which offers new modalities such as multitranche financing, local currency financing, nonsovereign public sector financing facility, and other credit enhancement products. ADB will offer three initiatives to support further investments, capacity development and knowledge collaboration with Indonesia: |
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CONCLUSIONS AND FOLLOW-UP ACTIONS
 Indonesia continues to face enormous challenges in the water sector—in infrastructure, capacity development, funding, and project implementation, in an increasingly decentralized environment, and welcomes partnerships, including with ADB. The conference concluded with a commitment to jointly develop further rural, urban and basin water investment programs, supported by capacity development and knowledge collaboration. The program will be elaborated in the first quarter of 2008.
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