Quick Facts

Countries:
Where the impacts of the investment may be experienced.
  • Indonesia
Location: Indonesia, nationwide
Whenever identified, the area within countries where the impacts of the investment may be experienced. Exact locations of projects may not be identified fully or at all in project documents. Please review updated project documents and community-led assessments.
Banks:
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
  • Asian Infrastructure Investment Bank (AIIB)
  • World Bank (WB)
Status: Approved
Bank Risk Rating: U
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Board Decision Date: 2017-03-22
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
Borrower or Client: Government of Indonesia
The holder of the loan, grant, or other investment.
Sectors:
The service or industry focus of the investment. A project can have several sectors.
  • Infrastructure
Potential Rights Impacts:
Only for projects receiving a detailed analysis, a broad category of human and environmental rights and frequently at-risk populations.
  • Cultural Rights
  • Housing & Property
  • Indigenous Peoples
  • Labor & Livelihood
  • Right to Health
Investment Amount (USD): $ 100.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.
Project Cost (USD): $ 406.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please see updated project documentation for more information.

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Primary Source

Original disclosure @ AIIB website
Updated in EWS: 2017-11-09
Indonesia: Regional Infrastructure Development Fund Project
AIIB-000012

Project Description
The following Early Warning System SHORT ANALYSIS has been prepared in partnership with the NGO Forum on ADB (NGO Forum). The NGO Forum on ADB is an Asian-led network of civil society organizations, based in Asia and the Pacific region who monitor the Asian Infrastructure Investment Bank and the Asian Development Bank. This alert is based on a review of available project documents at the time of writing. In addition, this alert references the work of Indonesian NGOs, who have been monitoring this project and other Indonesian financial intermediaries. Risk Assessment: Category FI. The project is co-financed by the World Bank (WB) and Asian Infrastructure Investment Bank (AIIB). According to AIIB’s Environmental and Social Framework, the project will apply the World Bank’s policies. The World Bank classifies projects according to the project’s component presenting the highest environmental or social risks including direct, indirect, cumulative and induced impacts as relevant in the Project area. The World Bank classifies a project as “FI” if the financing structure involves the provision of funds to or through a financial intermediary (FI) for the Project. Under that categorization, the Bank delegates to the FI the decision- making on the use of Bank funds. This includes the selection, appraisal, approval and monitoring of Bank-financed subprojects. Related project: The Asian Development Bank (ADB) has also provided technical assistance (TA) under the Stepping Up Investments for Growth Acceleration Program. One of the outputs of that TA seeks to assist the Ministry of Finance in introducing different infrastructure financing modalities through state budget and capital market to provide financing for local infrastructure projects that will be made available through the RIDF. Project type/Sector: Transportation; water, sanitation and flood protection; finance; public administration. Project Summary: The Project seeks funding by the the newly established China-led AIIB. According to AIIB’s Project Summary Information, the objective of the Project is to increase access to infrastructure finance at the subnational level through a sustainable financial intermediary. The Project is expected to support economic and social infrastructure subprojects nationally in the following sectors: transportation; water supply and sanitation; drainage, flood and hazard risks; low-income housing and slum upgrading; and solid waste management systems. You can read more about the eligible sectors and subprojects in the Environmental and Social Management Framework (Table 1). There are two main components of this Project: A. Capital support of up to 400 million USD for the PT Sarana Multi Infrastruktur, which operates RIDF as a financial intermediary, “providing senior debt to subnational governments in Indonesia for economically viable infrastructure projects.” RIDF will extend loans directly to subnational governments as borrowers. “It is anticipated that RIDF’s initial focus will be on district-level (kota and kabupaten) governments, before eventually scaling up to more complex regional and inter-regional projects at the provincial level as its appraisal and financial capacity deepens.” B. A Project Development Facility will be established as part of this project, “with the objective of building a subproject pipeline for RIDF by supporting subnational governments in subproject identification, planning, and preparation.” Location: According to World Bank project documents, the initial list of potential subprojects includes applications from subnational governments located in 20 out of 34 provinces in the country. The sectors of these proposed subprojects include water supply, solid waste management, sewerage, roads and bridge, drainage, irrigation, hospitals and traditional markets. In addition, the roads/ bridges and hospitals comprise the largest sectors i.e. 76% and 21% respectively according to the World Bank data. Resources needed: At the time of writing, subprojects have not yet been approved, and so it is difficult to determine the exact locations, resources needed, and number of households, if any. AIIB Project Number: 000012. WB Project ID: P154947. ADB Project ID: 48134-004 Key dates: The AIIB component of this project was approved on March 22, 2017. The World Bank approved this project on March 10, 2017. The ADB project is active. The expected project implementation period is April 2017-March 2021.
Early Warning System Project Analysis
APPLICABLE SOCIAL & ENVIRONMENTAL STANDARDS The AIIB will apply the World Bank’s environmental and social safeguard policies. According to World Bank documents, the following environmental and social safeguards are triggered by this project: • Environment Assessment OP/BP 4.01 – This safeguard is triggered because the RIDF will accordingly finance environmental infrastructure investments e.g. water and sewerage plants, sanitary landfill, hazardous waste management facilities, hospital revitalization and urban slums improvement. As the project is categorized as FI, the subprojects to be supported could either be Category A or B. • Natural Habitats OP/ BP 4.04 – Several subprojects may have an impact on natural habitats located in eastern part of Indonesia i.e. Papua, Kalimantan, Sulawesi, NTB. • Forests OP/ BP 4.36 – This safeguard policy is triggered as some of the investment proposals may take place in close proximity to or within forest areas. However, at the time of writing, there is no available detailed information on the said investment proposals. • Pest Management OP 4.09 – There is one proposal, which pertains to irrigation improvement from West Sumatra. • Physical Cultural Resources OP/BP 4.11 – Triggered as some of the subprojects may affect cultural property. • Indigenous Peoples OP/ BP 4.12 - Due to the scope of the RIDF it is also anticipated that it might have an impact on indigenous peoples communities including the Masyarakat Adat or Masyarakat Hukum Adat. • Involuntary Resettlement OP/BP 4.12 – This safeguard policy is triggered, as some of the proposed projects will likely involve land acquisition and/or resettlement. The scope and scale of the social impacts will be determined in the process of reviewing the subproject proposals submitted by subnational governments. • Safety of Dams OP/BP 4.37 – One of the subprojects might also finance the construction of a dam as part of water supply system and water resource management infrastructure. OUR RISK ASSESSMENT A coalition of Indonesian NGOs and international allies have tracked financial intermediary funds and raised concerns over the risks to communities and the environment posted by RIDF and the other Indonesian infrastructure financial intermediaries. Their analysis can be found in the links below (see sources). As noted above, until specific subprojects are disclosed and approved, there are limitations to understanding the risks posed by this project. Based on available Bank documents and the analysis of NGO partners, we believe that the following human rights may be impacted: RIGHT TO HOUSING AND PROPERTY The sectors eligible for subproject financing under this project include water supply and sanitation; solid waste and drainage, low income housing upgrading, transportation and logistics infrastructure and social infrastructure like educational and health facilities. The potential impacts from the proposed 32 subprojects are identified to be from medium to high, significant, diverse and irreversible. Due to this array of possible investments, these subprojects may likely have an impact on the right to housing and property of potentially affected households. According to project documents, PT Sarana Multi Infrastruktur developed an Environment Social and Management Framework which includes a Land Acquisition and Resettlement Policy Framework (LARPF) and a Process Framework to screen and evaluate the subprojects and its corresponding potential land acquisition and resettlement and social impacts. The scope of LARPF includes situation wherein impacts caused by a subproject resulted in involuntary land acquisition, relocation, loss of assets or loss of access to assets, loss of income sources or means of livelihood. Furthermore displacement can also be full or partial, permanent or temporary and includes both physical and economic displacement. RIGHT TO LIVELIHOOD The following categories of impact or loss have also been identified in the LARPF: loss of agricultural land for food security, loss of forest land, loss of crops and trees, loss of structure including shops, and loss of income, venture and job. The corresponding qualified entitled person and entitlements for each loss are also indicated in the Entitlement Matrix for the potential project-affected persons. As mentioned in the previous section, the estimated number of affected households in each province should be duly accounted for and meaningful consultations should also undertake in all the phases of the project implementation. INDIGENOUS PEOPLES RIGHTS According to Bank documents, “it is also anticipated that it might have an impact on indigenous peoples communities including the Masyarakat Adat or Masyarakat Hukum Adat.” In the Indigenous Peoples Planning Framework, the term “Indigenous Peoples” is often associated with “Masyarakat Hukum Adat” (or MHA--Customary Law Communities), which is a common terminology, used in Indonesian Laws and Regulations to describe groups of people with similar characteristics. These include self – identification as members of a distinct indigenous cultural group, collective attachment to geographically distinct habitats, customary cultural, economic or political institutions and have an indigenous language. As mentioned earlier, the scope of subprojects are mostly scattered throughout the country. Hence indigenous peoples might be present and adversely affected in these sites particularly if the large subprojects are located in rural or remote areas such as regional roads. The presence and impacts of IPs can only be evaluated during the review of subproject proposals. RIGHT TO HEALTH The Environment and Social Impact Assessment identified environmental issues and risks on physical, chemical and biological hazards related to occupational health and safety. There is also an anticipation of possible exposure to infections and diseases and exposure to radiation and fire safety relevant to the social infrastructure investments i.e. construction of healthcare facilities which might pose some risks. RIGHT TO CULTURE Some of the subprojects might affect archaeological, historical or unique natural values that cannot be ascertained yet as of this writing. However an anticipation of this potential impact might impede on the cultural rights of the potentially project affected persons. LABOR RIGHTS The project may also have social impacts, such as the influx of workers from outside the subproject site, temporary relocation for traders of markets and disturbance on the access roads and livelihoods. The specific details of these are not yet disclosed in available project documents but it was noted in the ESIA that consultations with affected communities relevant to the subproject activities like the need for labor force and requirements and its impacts will be undertaken.
Investment Description
Bank financing: As previously indicated, the project is co–financed by the AIIB and the World Bank. AIIB and World Bank will finance $100 USD million each for the Capital Support component for the RIDF. The Government of Indonesia will also support $200 USD million for the same component. The RIDF Project Development Facility will be financed through a $3 USD million grant financing from Switzerland and another $3 USD million of Borrower contribution. Borrower: Ministry of Finance. Implementing Agency: PT Sarana Multi Infrastrutuk (Persero) Total project cost: $406 USD million
Contact Information
AIIB: Mr. Sylvester Hsu Project Team Leader / Senior Investment Operations Specialist Email: shsu@aiib.org World Bank: Mr. Marcus Lee Task Team Leader / Senior Urban Economist Email: mlee1@worldbank.org Borrower: Ms. Ayu Sukorini Director of Loans and Grants, Directorate General of Budget Financing and Risk Management, Ministry of Finance Email: ayusukorini.mof@gmail.com Implementation Agency: Ms. Emma Sri Martini President Director, PT. SMI Email: emma@ptsmi.co.id CONSULTATIONS According to World Bank documents, stakeholder consultations on the draft Environmental and Social Management Framework were conducted on 21 – 22 June 2016 in Jakarta only. In addition the relevant inputs are incorporated into the final draft of the ESMF. The final ESMF is disclosed on the PT SMI website and on the World Bank website. Bank documents state that specific subproject safeguards instruments, such as environmental impact assessments, “will be subject to consultations and disclosure by the SGs. The timing for consultations shall be carried out prior to subproject appraisal. The SGs will disclose the EIA [Environmental Impact Assessment], EMP [Environmental Management Plan], LARAP [Land and Acquisition and Resettlement Action Plan], IPP [Indigenous Peoples Plan], etc. at the planning stage of subproject preparation, in their websites, a public space accessible to affected groups, local NGOs and other stakeholders. In addition, PT SMI will also disclose such instruments in its website, upon endorsement of the SGs getting the loan from RIDF and support from PDF.” PUBLIC INFORMATION DISCLOSURE POLICIES Based on AIIB’s Public Information Interim Policy, the public has the right to access information. Such information on AIIB’s policies and decision-making determines the public’s participation and ultimately on environmental and social sustainability and safeguards. This Policy will be fundamental to understanding and monitoring the AIIB’s impact, as well as carrying our corrective measures when needed. Similar to other multilateral development banks, the AIIB should also provide the possibility of appeal in cases where a requester believes that the AIIB client or the AIIB have improperly restricted access to information. Information disclosure requests can be sent to: information@aiib.org. Additionally, the World Bank’s Access to Information policy requires the World Bank to disclose any information in possession of the Bank, subject to a list of exceptions. Information disclosure requests can be sent online at: http://www.worldbank.org/en/access-to-information/request-submission PROJECT – LEVEL GRIEVANCE MECHANISM Bank documents state that the “SG should establish a grievance redress mechanism (GRM) for [project-affected persons] by the subproject. LG can use the existing well-functioning GRM, in case it is available.” Bank documents state that the process, procedures, requirements for complaints to be solved during the land acquisition process will follow the Law 2/2012 and its implementing regulations (including amendments). Relevant institutions, such as district/city, sub-districts, and village governments will be involved in addressing complaints. When the grievance cannot be addressed, it will be resolved through litigation procedures as set forth in Law No. 2/2012 and Presidential regulation No. 71/2012. Additional information about the grievance mechanisms can be found in the Environmental and Social Management Framework (Section 5.5 for general and Section 6.9 for indigenous peoples). INSPECTION PANEL- WORLD BANK ACCOUNTABILITY MECHANISM The World Bank Inspection Panel is an independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by a World Bank-financed project. It is not necessary to exhaust the grievance mechanism procedures before accessing the Inspection Panel. If you submit a complaint to the Inspection Panel, they may investigate to assess whether the World Bank is following its own policies and procedures for preventing harm to people or the environment. You can learn more about the Inspection Panel and how to file a complaint at: http://ewebapps.worldbank.org/apps/ip/Pages/Home.aspx. AIIB OVERSIGHT MECHANISM In addition, the AIIB has a Bank Oversight Mechanism. According to AIIB’s policies, “people who believe they have been or are likely to be adversely affected by a failure of the Bank to implement the ESP may also submit complaints to the Bank’s oversight mechanism in accordance with the policies and procedures to be established by the Bank for such mechanism.” However, at the time of writing, it is unclear what the exact scope and function of this Oversight Mechanism will be. SOURCES FOR THIS EWS ANALYSIS: CSO Reports and Correspondence A coalition of Indonesian NGOs and international allies have tracked financial intermediary funds, conducting analyses of substantial risks to communities and the environment and identifying potential violations of WB, IFC and ADB safeguards in the context of the RIDF and the other Indonesian infrastructure financial intermediaries. Those resources, including reports and correspondence detailing concerns over financial intermediary lending, are available at: http://www.safeguardcomments.org/infrastructure--financial-intermediaries.html Specifically, on March 2017, the coalition of Indonesian NGOs sent a letter and memo to the World Bank Group, listing concerns related to RIDF. The March 2017 NGO letter is available at: http://nebula.wsimg.com/882160dcde423195c25e878640e7d289?AccessKeyId=BBECBE2DB5DCCE90DECA&disposition=0&alloworigin=1 The March 2017 NGO memorandum is available at: http://nebula.wsimg.com/0b8dbdb85275a9ba8701672680510f23?AccessKeyId=BBECBE2DB5DCCE90DECA&disposition=0&alloworigin=1
Bank Documents