Indonesia: Infrastructure Reform Sector Development Program - Subprogram 3

Sovereign Project | 40009-043 Status: Closed


ADB is supporting Indonesia’s reforms in the infrastructure sector to attract private sector investments. Subprogram 3 of the project assists in improving the policy, institutional, and legal framework; implementing reforms for  transportation, power, oil and gas, water supply and sanitation, and telecommunications; and facilitating the preparation of public-private partnerships.

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Project Name Infrastructure Reform Sector Development Program - Subprogram 3
Project Number 40009-043
Country Indonesia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2708-INO: Infrastructure Reform Sector Development Program (Subprogram 3)
Ordinary capital resources US$ 200.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector

Energy - Energy sector development and institutional reform

Information and communication technology - ICT strategy and policy, and capacity development

Public sector management - Economic affairs management

Transport - Transport policies and institutional development

Water and other urban infrastructure and services - Urban policy, institutional and capacity development

Gender Equity and Mainstreaming
Description The Government fully recognized that private sector participation (PSP) could not be taken for granted, and that major structural and institutional reforms were needed. The IRSDP, formulated jointly by the Government and its principal development partners, supports a comprehensive medium-term reform agenda in various infrastructure sectors. The program loan supports three key reform pillars which are (i) strategic cross-sector reforms, (ii) sector-specific reforms for transportation, power, oil and gas, water supply and sanitation, and telecommunications; and (iii) facilitation of the preparation of public-private partnerships (PPP) resulting in sound model infrastructure projects that can be replicated.
Project Rationale and Linkage to Country/Regional Strategy Prior to the 1997 Asian financial crisis, Indonesia was able to use infrastructure development to support poverty reduction and economic development. However, the financial shock resulted in cancellation or suspension of many planned public and private infrastructure projects. During 1998-2004, the Government was burdened with the more urgent tasks of financial sector restructuring and fiscal consolidation. As a result, infrastructure investments, which accounted for more than 6% of GDP before 1998, fell to a low of 2% in 2000 and fluctuated around 3% in 2001-2006, reflecting a sharp decline in public and private spending. Until recently, little infrastructure expansion took place, with just some basic preservation and maintenance of infrastructure assets. Though investment in infrastructure has started to turn around in recent years, expenditure levels have yet to rebound to pre-crises levels (Figure 1). By 2008, infrastructure investment had risen to over 3.95% of GDP, but was still insufficient to meet the country's growth aspirations and the growing demand from existing infrastructure users, let alone satisfy the large population who lack access to basic infrastructure services. Last year, in response to the global financial crisis, a substantial infrastructure component was included in the Government's fiscal stimulus package, while this year infrastructure allocations are have risen further by 5.5% as announced in the 2011 budget. The Government has pursued a wide program of reform and has been taking difficult but important actions in key sectors such as power and water. The Government projects that an additional 2% of GDP per year in infrastructure investments is needed to reach 6% growth with increased access for the underserved.
Impact Improved investment climate in Indonesia's economy.
Project Outcome
Description of Outcome Enhanced infrastructure provision and access.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Component 1: Cross-sector policy, institutional, and legal framework

1. Improved PSP framework

2. Improved cross-sector coordination

3. Transparent risk-sharing decisions

4. Financing facility for lending for PPP projects

5. Formulated consistent PSO policy across sectors

6. 5-year rolling pipeline of projects

Component 2: Sector-specific reforms

7. Strengthened sector legal framework

8. Improved infrastructure sector development planning

9. Implemented anticorruption measures in the road sector

10. Completed debt restructuring program for PDAMs

Component 3: Facilitation of PPP project transactions

11. Adopted standard bidding documents for PPP projects

12. Completed pre-feasibility studies and tendering for at least 2 PPP projects

13. Provide PDF support for project preparation and transaction execution

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Country wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services To be determined
Procurement To be determined
Responsible ADB Officer Carmen M. Ricerra
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
National Development Planning Agency (BAPPENAS)
Jl. Taman Suropati No. 2
Jakarta 10310
Concept Clearance 18 Jan 2011
Fact Finding 01 Mar 2010 to 18 Jan 2011
MRM 18 Jan 2011
Approval 01 Dec 2010
Last Review Mission -
PDS Creation Date 26 Oct 2010
Last PDS Update 26 Oct 2010

Loan 2708-INO

Approval Signing Date Effectivity Date Closing
Original Revised Actual
01 Dec 2010 20 Dec 2010 28 Dec 2010 31 Mar 2011 - 29 Dec 2010
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 200.00 Cumulative Contract Awards
ADB 200.00 01 Dec 2010 200.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 01 Dec 2010 200.00 0.00 100%

Safeguard Documents

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Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents

See also: Independent Evaluation

None currently available.

Related Publications

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