Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Report No.
PIC4422
Project Name
Indonesia-Maluku Regional Development... Project
Region
East Asia and Pacific
Sector
Urban Development
Project ID
IDPA37095
Borrower
Republic of Indonesia
Executing Agencies
Directorate General of Regional Development, Ministry of Home Affairs (DG BANGDA) and Maluku BAPPEDA
Estimated Project Cost
US$ 45 million
Date PID Prepared
November 5, 1996
Proposed Appraisal Date
March 15,
1997
Proposed Negotiations Date
April 15,
1997
Background: The majority of Maluku's population of about two million is concentrated in two geophysical areas: small islands of historical significance which were chosen as naval strongholds (Ternate, Tidore, Ambon, Kai Kecil) and which remain as key municipal and administrative centers; and lightly populated coastal areas tracing the circumference of the larger islands. The importance of the sea is captured by the statistic that nearly 90t of all villages are categorized as being coastal. These villages are primarily engaged in estate crops, subsistence farming and fishing. The population density is low at persons per km2 and drops further with the exclusion of small, highlypopulated islands. This population distribution presents two challenges for development: (1) many normal rural/urban linkages are broken by the sea; and (2) populations are not compact both because of the widelyscattered distribution of the islands in the province and because settlements are arranged around the circumference of the islands. These features raise costs of providing services and inputs, and of collecting and marketing production. Seram in Central Maluku has the highest island population at 350,000 (1990 census) followed by Ambon island (222,000) and Haahera (183,000). The Gross Regional Domestic Product (GRDP) per capita in Maluku was about 77T of the national average and grew at about 5.8w during most of the last decade. The sectoral distribution of GRDP is approximately 34t agriculture (including fisheries); 20t trade; 17t other services; and 13t manufacturing and industry. About 68t of the labor force were engaged in agriculture and fisheries versus 13t in public services and 8t in trade. Trend projections over the next few years show only a few percentage points drop in labor in agriculture, picked up by manufacturing and trade. Coconuts account for 55t of planted area--double the area planted
in food crops and double the area in all other estate (cloves, cacao, nutmeg, coffee and cashew)--and a similar share of the value of agriculture production. The total coconut area in Maluku has expanded 31- over the six years ending in 1994. Production has fallen 5t over the same period since most recent plantings have not begun producing at their potential and older trees are tapering off in yield. Copra generates two-thirds of cash crop income. Maluku has a well-endowed marine and agriculture resource base with rich soils and adequate rainfall. The major constraint is the geographic distribution of the population which is spread around the circumference of islands which are themselves widely-scattered. These features affect the concentration of markets and effective demand, the efficiency of service delivery and the diffusion of technology. The approach to surmount this obstacle is interventions tied to processing and higher-valued commodities through targeting specific markets and a fairly narrow band of outputs. The productivity of inputs must be high relative to transportation costs and the value of off-island exports must also be high relative to transportation. Remote areas do have a comparative advantage in supplying local demand for some staple commodities. Sector Issues and Government Strategy: The Government's five-year development plan for Eastern Indonesia, as set out in REPELITA VI (1994/95 - 1998/99), emphasizes: agricultural development including improved productivity, irrigation development, and enhanced services; infrastructure development including inter-island transport; human resource development; industrial development, with agro-processing being highlighted; deconcentration and decentralization of planning, and implementation.
and
administration,
The strategy supports much higher development expenditure (the development budgets for the Eastern Provinces (APBD) tripled during the early 1990s) and targets higher growth rates for Eastern Indonesia than for the rest of the country. It is intended to advance objectives of regional equity, a more spatially-balanced growth pattern, improved rural/urban linkages, and strengthened national unity. The leading sectoral challenges are to: raise agricultural productivity through technology creation and dissemination, particularly in treecrops; and through semitechnical irrigation development and completion of some schemes; overcome constraints in input availability, which block technology adoption;
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information,
and credit
raise value-added processing of agricultural and fisheries commodities; reduce trade restrictions and increase trade linkages to transmit consumer prices of higher-valued commodities upstream to farmgate; increase beneficiary participation in project design and implementation; and decentralize government activities, decision-making and service provision. Lessons Learned from Past Operations: Imperatives from the experience with area development projects outside Indonesia are: avoid complex designs; resist establishing specialized, new administrative structures; and avoid the diffusion of implementation responsibility. The capacity for mid-course corrections raises the probability of success as demonstrated in the Indonesian portfolio and internationally. OED's study of area development projects (September, 1993) reiterated these themes and stressed the importance of a process approach rather than specifying a priori targets. Lessons from the Upland Projects emphasize the need for diversified farming systems research; access to credit (and the utility of initial subsidization of new inputs in selected circumstances); political commitment to and policy support for rural development; capable interagency coordination without too many layers and agencies involved; and simple, flexible designs which can evolve and be re-evaluated. The Tree Crops Small Holder Project illustrates the importance of quality planting material, support for nurseries, the value of perennial undercrops, and the capacity for cost recovery except when plantings are substandard. The proposed project should incorporate these lessons by: having relatively few, focused components with a capacity to adapt; having early community involvement in design, beginning with the social assessment stage; having strong links to agro-ecological area research early in the implementation cycle; front-loading attention to financing, marketing and infrastructure; creating awareness and incentives for diffusion of technology beyond immediate beneficiaries; adjusting credit and payment terms for tree crops and addressing land tenure concerns if necessary; screening irrigation development sites for water availability, adequate population, andexisting paddy cultivation, and imposing cost control ceilings.
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Project Objectives and Description: The objectives of the project are to: raise productivity in food crops, tree crops, management of village level fisheries;
and improve
raise the value of transported commodities through credit and technical support for improved processing; credit for and public investment in storage/warehouses; and market linkages; satisfy village demand for water supply, disease control, and credit;
agricultural pest and
institutional strengthening of farmer self-help groups; NGOs; research institutes, local and regional governments; and technical agencies. The four project components would be: 1. Agricultural Productivity: (a) Semi-technical irrigation development of about 6,000 hectares in north Seram; northeast Buru; and around Wasile Bay in HALTENG. (b) Technology diffusion for coconuts (both traditional and hybrid varieties on up to 30,000 hectares, mostly on Seram and in Maluku Utara; some improved pruning and pest control for cacao. (c) Technology diffusion for food crops. (d) Improved fisheries management. 2.
Value-Added Processing,
Storage and Transportation.
3. Village Based Initiatives and Credit. Village-determined investment is expected to be for water supply; goat and chicken vaccination; pest control; specialized commodities (kemiri, chilies, trepang); and revolving credit for processing and other infrastructure. 4. Institutional Strengthening. (Government and non-government NGOs; farmer & community self-help groups; AIAT research substations at Makariki (Seram) and possibly Kao (Haahera Utara); local governments; local technical agencies; and project management. Institutional Framework: BANGDA in the Ministry of Home Affairs would be the lead central agency. The Governor has already appointed an inter-departmental Task Force (Pokja) for preparation with BAPPEDA as Secretariat. The project would be managed by a Provincial Coordination Committee (PCC) chaired by BAPPEDA I at the provincial level, responsible for coordination, planning, supervision, monitoring, and technical support. The committee would include the Water Resources Management Kanwil, Agriculture Kanwil, and the Dinas-Dinas of agriculture, public works and community development. The Ambon Assessment Institute for Agricultural Technology would have Director level representation. For the three targeted Kabupaten, a project coordinator would be appointed at BAPPEDA TK II, with project managers (PIMPROs) appointed for the lead - 4 -
participating Dinas-Dinas. Community Development Facilitators would assist with the selection and guidance of village based initiatives. A Secretariat would be established to monitor credit and revolving credit (this excludes block grants to villages). This would be modeled on the GTZ Project Linking Banks and Self-Help Groups. Benefits and Target Population: The target population would comprise: 1. Coastal fishing/tree crop communities in Maluku Tengah (mostly on Seram), Haahera Utara and Haahera Tengah. About 300 villages as direct beneficiaries with a total population of 335,000 would be targeted. 2. Rice and food crop producers including transmigrants in wellestablished sites. About 7,000 households (40,000 beneficiaries) would benefit from new semi-technical irrigation (east of Wahai on Seram; northeast Buru; Wasile Bay area of Halteng--Dodaga and some adjacent schemes; and possibly around Kao. 3. Commodity processors and traders in three Kabupaten who would benefit from agricultural and marine processing technology and marketing, warehousing, and sea transport infrastructure. Off-farm employment generation is expected. 4. Populations of targeted areas would benefit from village initiatives (water supply), revolving credit, passenger waiting rooms and dock improvements. 5. Indirect beneficiaries would be reached through adaptive research, demonstration plots and technology diffusion. The project benefits would be: 1. Income generation targeted to poorer communities. Nearly 70% of target villages are classified as "backward" or poor (IDT) versus 58% for Maluku as a whole and 33% for Indonesia. Income generation is to be achieved through a strategy of providing new 'technology', capturing more value in processing and agro-business before shipment, avoiding losses and spoilage during storage and transportation, improving marine transport facilities, and relieving credit constraints. 2. Welfare improvements in the form of consumer surplus from relatively lower rice and copra oil prices (overcoming transportation costs with local production for rice and introducing more efficient pressing/extraction for copra); improving water supplies, and other village-identified initiatives; and improved transportation infrastructure. 3. Sustainable resource use through better fisheries management and increasing productivity and off-farm income generation to take pressure off of fragile habitats. This project would contribute to the conservation objectives of a proposed Maluku Conservation and Natural Resources Management Project being prepared in tandem.
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4. Institutional strengthening of self-help groups; water users associations; local governments; agricultural research stations; and technical agencies. Environmental and Social Aspects: The project involves no resettlement and is expected have no major detrimental impacts on the environment. On the contrary, sustainability of near-shore marine resource use is expected to improve through research, community-based management, stock assessment, and moratoria in key areas/seasons. The project is being designed together with the Maluku Conservation and Natural Resources Management Project which will, inter alia, protect watersheds and thereby promote the sustainability of irrigation investment through safeguarding water availability and controlling siltation. The Conservation Project will also protect mangroves and establish/manage marine conservation areas which will contribute to productivity in fisheries. These benefits of the Conservation Project for regional development will be reciprocated. Regional development interventions under the proposed project will raise productivity in tree and food crops, shift emphasis to down-stream processing, stabilize land use patterns and reduce encroachment, and concentrate economic development away from some critical habitats in conservation areas. A number of social issues involving indigenous peoples as beneficiary groups will be addressed during preparation and implementation. Social and needs assessments have already been conducted in the major geographic areas of the project.
Contact Point:
Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202)458-5454 Fax No.: (202)522-1500
Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by The Public Information Center week ending November 8, 1996.
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