Indonesia: DSNG Climate-Resilient Community-Based Agroforestry Value Chain Project

Nonsovereign Project | 56221-001

ADB loan will support the expansion of DSNG wood panel facility in Temanggung, from 9,000 cubic meters to 12,000 m3 per month capacity. Proceeds from the ADB loan will finance

capital expenditure, including machinery and equipment enabling greater energy efficiency and water conservation, and associated working capital needs, including the sourcing of timber from

local farmers.

Project Details

  • Project Officer
    Donges, Carine Sophie
    Private Sector Operations Department
    Request for information
  • Approval Date
    16 December 2022
  • Country/Economy
    Indonesia
  • Sector
    • Agriculture, natural resources and rural development
Project Name DSNG Climate-Resilient Community-Based Agroforestry Value Chain Project
Project Number 56221-001
Borrower / Company PT Dharma Satya Nusantara Tbk
Country / Economy Indonesia
Location Nation-wide
Type or Modality of Assistance
4287 Loan Ordinary capital resources USD 15.00 million Approved
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector

Agriculture, natural resources and rural development / Forestry

Gender Equity and Mainstreaming Effective gender mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Office of the Director General, PSOD
Responsible ADB Officer Donges, Carine Sophie
Project Sponsor(s)
Description

ADB loan will support the expansion of DSNG wood panel facility in Temanggung, from 9,000 cubic meters to 12,000 m3 per month capacity. Proceeds from the ADB loan will finance

capital expenditure, including machinery and equipment enabling greater energy efficiency and water conservation, and associated working capital needs, including the sourcing of timber from

local farmers.

Objectives and Scope

The project will finance capital expenditure related to the expansion of DSNG's timber processing plant in Temanggung, Central Java, and incremental working capital needs. Increased production of wood products will provide economic opportunities to rural communities in Java, including creating more than 260 factory jobs and the sourcing of logs from an estimated additional 360 timber farmers. It will promote cultivation of sengon (Albizia chinensis) and jabon (Neolamarckia cadamba) in climate-resilient agroforestry intercropping systems in Indonesia. Through procurement from agroforestry, the project will encourage forest and biodiversity conservation. The project will also support gender inclusion. It is fully aligned with the Government

of Indonesia's social forestry program and its goals of reducing poverty, improving community welfare, protecting forests from degradation, and improving land conservation. Social forestry is identified as a priority area for climate adaptation in Indonesia's nationally determined contributions under the Paris Agreement.3 The TA will focus on building climate-resilient farming practices and the financial literacy of 4,000 farmers, of which at least 1,200 are women.

Linkage to Country/Regional Strategy

The project is aligned with ADB's Strategy 2030, which calls for ADB to (i) scale up its financing for agribusiness, (ii) promote gender equality in at least 75% of its committed operations by 2030, and (iii) build climate and disaster resilience and enhance environmental sustainability. 22 The project is aligned with operational priority (OP) 1 of Strategy 2030 (addressing remaining poverty and reducing inequalities) through job creation. The project will support OP 2 (accelerating progress in gender equality), which seeks to support agribusiness value chains whereby women's work opportunities will be enhanced in higher value-generating activities. The project is aligned with OP 3 (tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability) through its support for climate-resilient agricultural production. The project is also aligned with OP 5 (promoting rural development and food security), which calls for (i) improving rural services, attracting private sector investments; (ii) improving farmer profitability; and (iii) enabling ADB's nonsovereign operations to provide direct support to agribusiness clients, including those engaged in climate-smart agriculture and sustainable forestry. Finally, the project is fully aligned with ADB's country partnership strategy for Indonesia, 20202024, which advocates strengthening resilience and prioritizes private investment and innovative financing, gender equality and socially inclusive approaches, and local and regional economic

development._

The project is aligned with the agribusiness strategy of the Operational Plan for Private Sector Operations, 2019 to 2024, which aims to promote climate-resilient and more environmentally sustainable business models. The project is aligned with ADB's Policy on Forestry, which calls for promoting the integration of forestry with other productive land uses, including small-scale forestry and agroforestry.

Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects ADB has categorized the investment in compliance with ADB's Safeguard Policy Statement (2009) as category B for environment.
Involuntary Resettlement ADB has categorized the investment in compliance with ADB's Safeguard Policy Statement (2009) as category C for involuntary resettlement.
Indigenous Peoples ADB has categorized the investment in compliance with ADB's Safeguard Policy Statement (2009) as category C for indigenous peoples.
Stakeholder Communication, Participation, and Consultation
Timetable for assistance design, processing and implementation
Concept Clearance -
Credit Committee Meeting -
Approval 16 Dec 2022
Last PDS Update 20 Dec 2022

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.

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Title Document Type Document Date
DSNG Climate-Resilient Community-Based Agroforestry Value Chain Project: FAST Report Faster Approach to Small Nonsovereign Transactions Dec 2022

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.

None currently available.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

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The Access to Information Policy (AIP) 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.

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