46094-001: Neighborhood Upgrading and Shelter Project (Phase 2) | Asian Development Bank

Indonesia: Neighborhood Upgrading and Shelter Project (Phase 2)

Sovereign (Public) Project | 46094-001 Status: Active

ADB is helping some 20 large and medium-sized towns in Indonesia to upgrade basic facilities and services in poor neighbourhoods and establish new settlements for poor families through public private partnerships. The project will develop the capacity of local governments for pro-poor urban planning and management, and establish mechanisms to engage communities in the planning process.

Project Details

Project Officer
Hasanah, Siti Southeast Asia Department Request for information
  • Indonesia
  • Loan
  • Water and other urban infrastructure and services
Project Name Neighborhood Upgrading and Shelter Project (Phase 2)
Project Number 46094-001
Country Indonesia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3122-INO: Neighborhood Upgrading and Shelter (Phase 2)
Ordinary capital resources US$ 74.40 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

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

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The expected impact of the project will be improved living conditions in urban areas. The outcome will be improved infrastructure and access to service delivery in poor urban neighborhoods in 20 project cities. The Project will have three outputs: (i) Institutional capacities for managing pro-poor urban development are strengthened; (ii) Infrastructure investment plans to upgrade poor neighborhoods are aligned with the overall city development plans and implemented; and (iii) Public private partnerships are established to promote new settlements for poor families.
Project Rationale and Linkage to Country/Regional Strategy

Indonesia is one of the fastest urbanizing countries in Asia. Today, about half of the population (51%) lives in cities. The rapid urbanization rate is set to continue. By 2025, it is projected that about 68% of the population will live in urban areas. Many of Indonesia's growing cities face issues to cope with the rapid growth of in-migrants, who are seeking new economic opportunities in cities, but forced to settle in disadvantaged neighborhoods due to limited financial resources, lack of affordable adequate housing and/or failure to find well paid jobs . In 2011, about 12% of the urban population was forced to live in slum areas.

Better public infrastructure is considered vital to sustain inclusive economic growth and further stimulate economic opportunities of the growing urban population. Yet infrastructure improvements have not been able to keep up with the rapid urbanization and infrastructure investment has lagged economic development. Mostly, infrastructure and public services in poor neighborhoods are inadequate to serve the needs of their growing inhabitants. Environmental and social problems related to accessibility to adequate services for the people's daily needs are increasing due to widespread constraints in provision of clean water, insufficient sanitation facilities, deteriorating roads, pathways and drainages, ineffective flood control, lack of constant power supply, and poor solid waste management. Only about 40% of the urban population has access to safe water, and about 28% do not have access to improved sanitation facilities. About 35% of urban areas lack proper drainage systems. Problems are further aggravated by the absence of sound land use planning and land management regulations that are contributing to increased congestion and haphazard informal development. A multi-faceted approach is required to address these challenges, which include strengthening the capacities of city administrations to manage urban development in an environmentally and socially sustainable manner, modernization of land policies and permitting regulations; expanding access to, and targeting of, housing finance and subsidies; increasing community involvement in spatial planning; and engaging the private sector in development planning. Aside from investment in basic urban infrastructure, the rapid urbanization has triggered a growing demand for housing, which needs additional attention. The availability of affordable housing in cities for low-income groups appears to be declining. While estimates of Indonesia's housing deficit vary, all indicate a significant backlog in supply.

Insufficient investments in infrastructure had been identified as one cause for poverty in the National Medium Term Development Plan 2010-2015 (RPJMN), thus improving basic infrastructure is considered an effective catalyst to alleviate poverty and close gaps in income inequality in disadvantaged urban neighborhoods. While Indonesia has generally made good progress towards accelerting achievement of the millennium development goals (MDG), the MDG targets for achieving significant improvement in the livelihood of slum dwellers (MDG target 7D) and halving the proportion of urban households without sustainable access to safe drinking water and basic sanitation (MDG target 7C) need special attention. The project's purpose of upgrading basic public infrastructure in slums will contribute towards meeting both MDG targets.

To address issues of the rapid urbanization the Government launched the _Cities without Slums Program_ and issued Law No. 1/2011 on _Housing and Settlement Areas_. To contribute to the _Cities without Slums Program_ the Government requested the ADB to prepare and partly finance the Neighborhood Upgrading and Shelter Project (NUSP). NUSP will assist about 20 large and medium sized towns to develop and implement inclusive pro-poor city development plans and improve living conditions in slums, through (i) providing resources to local governments and communities for upgrading basic infrastructure in slum areas; (ii) strengthening planning and management capacities of local administrations for inclusive pro-poor urban planning; (iii) establishing sustainable mechanisms to engage communities in urban development planning processes; and (iv) launching public private partnerships (PPPs) to establish affordable housing areas for poor families.

The proposed project is included in the ADB Country Operations Business Plan (COBP 2013-2014). Supporting government's efforts to achieve more inclusive growth through improving infrastructure, particularly by supporting catalytic projects to develop community-driven basic infrastructure for poor communities, and improving access to water supply and sanitation in selected cities is included in ADB's country partnership strategy (CPS) 2012-2014. The project will contribute to achieve the targets of the CPS Results Framework and ADB's Strategy 2020. The project is also aligned with ADB's Urban Operational Plan 2010-2012 as it (i) provides support to urban shelter sector programs; (ii) contributes to upgrading of local infrastructure in the four core areas of water supply, sanitation, water management and urban transport; and (iii) improves community services, employment opportunities and livelihood development. The proposed project builds on lessons from (i) the Neighborhood Upgrading and Shelter Sector Project (NUSSP, Loans 2072/2073-INO), which closed in December 2010 and was rated successful , (ii) the Rural Infrastructure Support to PNPM Mandiri Project (Loan 2449-INO), and (iii) the ongoing Urban Sanitation and Rural Infrastructure Support to PNPM Mandiri Project (Loan 2768-INO). All projects were/are implemented by MPW. In particular the following lessons have been incorporated into the project design: (i) the importance of involving beneficiaries in the planning and implementation of neighborhood upgrading, (ii) clearly defined landownership and strong political commitment to support pro-poor urban development, (iii) advantages to promote integrated development approaches and link upgrading investments of individual communities with the overall city development planning, (iv) reduce the number of project cities and neighborhoods to cut down transaction costs in project management, (v) increase the investment amount per neighborhood to boost up means for improving the living conditions in slums in a more broader way, (vi) transparent fund flow and implementation mechanisms and promoting community control of decision-making over resources and investment choices; (vii) strong accountability procedures, such as public disclosure of budgets and contracts; and (viii) training for communities in establishing effective mechanisms to operate and maintain new infrastructure.

Impact Improved living conditions in urban areas.
Project Outcome
Description of Outcome Improved infrastructure and access to service delivery in poor urban neighborhoods in project cities
Progress Toward Outcome Even though the project start-up was delayed, the project outcome is expected to be attained. To further ensure the achievement of outcome, the loan closing date has been extended to 31 December 2019.
Implementation Progress
Description of Project Outputs

Institutional capacities for managing pro-poor urban development in an environmentally and socially sustainable manner are strengthened

Infrastructure investment plans to upgrade poor neighborhoods are aligned with the overall city development plans and implemented

New Settlements for poor families established.

Status of Implementation Progress (Outputs, Activities, and Issues)

The Slum Improvement Action Plans have been prepared in 20 project cites. The documents have been made as the reference for planning slum upgrading programs.

The cities' infrastructure investments to upgrade slums and poor neighborhoods are in line with the overall development plans.

In accordance with the government recent changes on asset transfers, the new site development (NSD) component has been revised from build and sell to build and rent. The NSD component is expected to start in fourth quarter of 2017.

Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

The project is categorized as environmental category B.

Upgrading slum infrastructure will, overall, have positive impacts on the environment and improve the quality of live of the urban population.

Involuntary Resettlement

Land acquisition was required in project sites at Kapuas and Pekalongan.

Required documents are being completed.

Indigenous Peoples The Project is not expected to have any negative impacts on indigenous peoples.
Stakeholder Communication, Participation, and Consultation
During Project Design Consultations with all project stakeholders including potential beneficiaries have been carried out.
During Project Implementation During projec implementation, consultations particularly with community members (beneficiaries) will continue.
Business Opportunities
Consulting Services

The project will require an estimated 2,297 person-months of national consulting services at national and district/city levels. Community advisors to assist community in planning and implementing the project will also be recruited (About 3,900 person-months of community advisors will be required under the management consultant team at the regional level).

Consulting service requirement:

A national team of management consultants will assist the PMU and three regional teams of management consultants will cover the following regions: (i) West (Sumatra and Kalimantan), (ii) Central (Java and Nusa Tenggara), and (iii) East (Sulawesi and Maluku). The national management consultant (NMC) will be responsible to help the DGHS in the overall project management and implementation. The NMC will also be tasked to supervise and evaluate the performance of the RMCs. NMC should ensure that works carried out by the RMCs are in line with the project design and guidelines. RMCs will report to the DGHS and the NMC. In implementing their tasks and responsibilities, RMCs will be guided by project guidelines and procedures (JUKLAK/JUKNIS and other guidelines) that will be prepared by DGHS with the supports from the NMC.

Each regional team will also have city coordinators; which will be assigned specifically in each participating city/district. The community advisors will also be contracted under the regional consultant contracts. The national team will assist the DGHS is the overall project management and implementation. The RMCs will assist DGHS and LCOs in the project management and implementation at the regional level through providing technical and managerial support, establishing and implementing a sound financial management and monitoring system, implementing the complaints-handling mechanism, implementing the PPMS, which is a part of the M&E framework, and (vi) undertaking training of community advisors, and community members (BKM/CIO).

Three individual consultants will also be recruited to carry out an independent monitoring and evaluation of the safeguards. At the end of project implementation, a team of consultant will be recruited to conduct an impact evaluation and assist the EA in the preparation of a project completion report.

Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a standard quality cost ratio of 80:20. The consultants will be recruited in accordance with ADB's Guidelines on the Use of Consultants (2013, as amended from time to time). The management consultants as well as the impact evaluation consultants will be recruited through national firms.

Procurement All procurement to be financed under the ADB loan will be carried out in accordance with ADB's Procurement Guidelines (2012, as amended from time to time). Depending on the complexity of technical designs to upgrade infrastructure, civil works will be carried out directly by the communities or tendered to construction firms. It is expected that a large proportion of civil works will be managed by communities through their CIOs and carried out by local manual labor. Simple civil works for neighborhood investments will be contracted out to the communities based on an agreement between a BLM/CIO and city Satker/LCO, and in compliance with the requirements for community participation in procurement as specified in ADB's Procurement Guidelines. Community contracts will include evidence of community facilitation, the design of facilities to be constructed under the contract, a community O&M plan for these facilities, and clear duties and responsibilities of both parties for the project activities. The first two community contracts in selected five cities will be submitted to ADB for prior approval. All contracts will be monitored under the management information system. More complex infrastructure upgrading works, which the community is considered not to have sufficient capacity, will be contracted out to firms/contractor to be engaged by the EA through the city satkers.
Responsible ADB Officer Hasanah, Siti
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Indonesia Resident Mission
Executing Agencies
Directorate General of Human Settlements,MOPW
Jl. Pattimura No. 20
Kebayoran Baru
Jakarta, Indonesia
Concept Clearance 14 Jun 2013
Fact Finding 04 Jul 2013 to 19 Sep 2013
MRM 21 Oct 2013
Approval 31 Mar 2014
Last Review Mission -
Last PDS Update 19 Sep 2017

Loan 3122-INO

Approval Signing Date Effectivity Date Closing
Original Revised Actual
31 Mar 2014 23 Apr 2014 17 Jul 2014 30 Jun 2018 31 Dec 2019 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 102.00 Cumulative Contract Awards
ADB 74.40 31 Mar 2014 57.26 0.00 77%
Counterpart 27.60 Cumulative Disbursements
Cofinancing 0.00 31 Mar 2014 58.55 0.00 79%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Safeguard Documents See also: Safeguards

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.

Title Document Type Document Date
Neighborhood Upgrading and Shelter Project (Phase 2): Annual Environmental Monitoring Report (January-December 2016) Environmental and Social Monitoring Reports Sep 2017
Neighborhood Upgrading and Shelter Project - Phase 2 Environmental Assessment and Review Framework Jan 2014
Neighbourhood Upgrading and Shelter Project Resettlement Frameworks Nov 2013
Neighbourhood Upgrading and Shelter Project Environmental Assessment and Review Framework Nov 2013

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.


No tenders for this project were found.

Contracts Awarded

Contract Title Approval Number Contract Date Contractor Contractor Address Executing Agency Contract Description Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
CIVIL WORKS THROUGH COMMUNITY CONTRACTS IN 20 CITI ES, 2017 Loan 3122 17 Jul 2017 VARIOUS VARIOUS INDONESIA Directorate General of Human Settlements,MOPW Construction 9795091 9793621
Reconstruction of Tumnub Kork Srok Irrigation System at Varin Commune, Varin District, Siem Reap Province Loan 3122 02 Jan 2017 Various Various Indonesia Directorate General of Human Settlements, MOPW Others 237408.72 240241.25

Procurement Plan