Document of

The World Bank

FOR OFFICIAL USE ONLY

,( Al. 2 i')-3k^

Report No. 5529-In])

STAFF APPRAISAL REPORT

INDONESIA

TRANSMIGRATION V PROJFCT

(National Mapping and Settlement Planning)

May 16, 1985

Agr1.culture 4 DivisionEast Asia and Pacific Regional Office

This document bas a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank autborization.

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CLURRENCY EQUIVALENTS (May 1985)

US$1.O00 Rupiah (Rp) 1,100Rtp 1 million =US$909

WEIGHTS AND MEASURES

1 kilometer (km) = 0.62 miles1 hectare (ha) = 2.47 acres1 kilogram (kg) = 2.2 pounds1 ton = 2,205 pounds

GOVERNMENT OF INDONESIA FISCAL YEAR

April I - March 31

INDONESIAN FIVE-YEAR PLANS

Repelita I - First Five-year Plan, 1969-74Repelita II - Second Five-year Plan, 1974-79Repelita III - Third Five-year Plan, 1979-84Repelita IV - Fourth Five-year Plan, 1984-89

PRINCIPAL ABBREVIATIONS AND ACRONYMS USED

ARMS - Airborne Radar Mapping SystemBAKOSURTANAL - Badan Koordinasi Survey dan PemetaanyNasional; National

Coordinating Agency for Surveying and HappingBAPPENAS - Badan Perencanaan PemibanLgunan Nasiorial; NatiLonal

Development Planning AgencyDG - Directorate GeneralDGSP - Directorate General for Settlement PreparationGOI - Covernment of IndonesiaLRDC - Land Resource Development Corporation of the Overseas

Development Administration (United Kingdom)M4OF - Ministry of FinanceHOT - Ministry of TransUigrationPANKCIM - Penyiapan Pemukiman; Settlement Preparation OfficePLP - PenyiLapan Lahan Pemukiman - Directorate of Land

Preparation within DGSPSEKNEG - Sekretariat Negara; State SecretariatSFSE - Site Feasibility Studies and EngineeringSKP - Satuan Kawasan Pengembang; Transmigration Development Unit

of 1,500 to 2,000 families consisting of 4-5 SPsSLAR - Side Looking Airborne RadarSOE - Statement of ExpenditureSP - Satuan Pe=ukiman - Village units of 300 to 400 families

eachTAG - Technical Advisory Group within Bina Program PankimTAT - Technical Advisory Team within BakosurtanalTST - Technical Support Team within PLP..PP - Wilayah Partial Pengembangan Regional Development Unit

consisting of several StPs

FOR OMCIL USE ONLY-2-

GLOSSARY

Bina Program (Pankim) - Directorate of Planning within the DirectorateGeneral of Settlement Preparation

Other Islands - The islands of Indonesia excluding Java, Madura, Baliand, occasionally, Lombok.

Kakanwil - Provincial Head of Ministry of TransmigrationPrimpro - Project OfficerPusdiklat - Staff Training Center within HOTSisipan - Small scale transmigration settlements designed to

fill gaps between large scale settlements.

This do_men e as a cd d_u n and mybe sdby rinP I o* in 8h pewfance oft Wir oiduuts 1 o m y ot odhewie diclonsed wid_ut Wod danautria

INDONESIA

TRANSMICRATION V PROJECT(National Mapping and Settlement Planning)

Table of Contents

Page No.

LOAN AND PROJECT SUMMARY .. ............... .................... iii

I. BACKGROUND .................. ................................. 1

Introduction .............. ................................... 1The Agricultural Sector ......................... ............... 1Transmigration .............................................. 3Bank Group Involvement in Transmigration ................... 7International Assistance for Transmigration .... ............ 10

II. PROJECT FORMULATION ............... .10

Objectives ............... 10Project Rationale .......................................... 11The Role of the Bank ...... . ...... . 13Project Scope and Areas .................. i................ 14Alternatives Considered During Project Preparation ......... 16Main Issues .................... ............................... ............ 16

III. THE PROJECT ................................................... 18

Components ......................................... .. 18Special Project Features . * .. ............................ . 21Cost Estimates ........ ..................................... 25Financing Plan ............................................ . 27Procurement ........................................................ 27Disbursement ................................................ 29

IV. PROJECT IMPLEMENTATION . . ... ... .......... ... 30

Executing Agencies .. .......................... ... ............. 30Organization and Management ............ .................... 31Implementation Schedule .. ................................. . 33Monitoring and Evaluation .............. ... . ............... ..... 34Accounts, Audits and Reporting ...................... ........ 34

This report is based on the findings of an appraisal mission to Indonesia inNovember - December 1984. The mission consisted of Messrs. J.- P. Baudelaire(Mission Leader), M. Cackler, R. Calderisi and M. Zenick (Bank), and G. Cazauxand J. Bolton (Consultants). Ms. Gloria Davis (Bank) assisted in the reviewof the social aspects of the project.

Page No.

V. PROJECT ANALYSIS ............. * ...... ......... 35

Cost Effectiveness......................... ............ .... 35Economic Impact ............................................ 36Social and Environmental Impact ............................ 38Project Risks ............ : 39

VI. AGREEMENTS TO BE REACHED AND RECOMMENDATION .................. 40

Assurances ......... .,, ,, 40Conditions of Effectiveness .............. 0 ............... 41Conditions of Disbursement ..........o.......o........... .... 41'Recommendation ......... *.............. 41

LIST OF TABLES IN THE MAIN REPORT

1.1 Transmigration Programs (1969 to 1989).. ........ ...........0 52.1 Repelita IV National Planning Targets ..... ..................... 142.2 Repelita IV Transmigration Planning Targets by

Covernment Agency .............. ....o........... . 152.3 Location of Potential Transmigration Sites ...................... 153.1 Consultant Services ...... .. -o . ...- o-6 ... 223.2 Project Cost Summary ...... o.........*...00*.0..*...... .. *** 263.3 Expected Price Increases ...o .................................. 263.4 Procurement ... o ............. .... 295.1 Repelita IIr Average Cost per Transmigrant Family ............... 35

ANNEXES TO THE MAIN REPORT

1. Selected Project Tables and ChartsTable 1 - Project Cost SummaryTable 2 - Project Component by YearTable 3 - Summary Account by YearTable 4 - Financing Plan and Proposed Allocation of Loan FundsTable 5 - Estimated Schedule of Loan DisbursementsChart 1 - Phasing of ActivitiesChart 2 - Recruitment of First Group of ConsultantsChart 3 - Project Start-Up Activities (Bakosurtanal)

2. Project Agencies (Organization Charts)3. Statements of Expenditure4. Summary Terms of Reference for Phase II and III Studies5. Transmigration Policies Start-Up Activities (Bakosurtanal)6. Costs and Benefits of Alternative Settlement Models7. Selected Documents and Data Available in the Project File

MAPS

A18787 Location of Regional Offices and Consultant ContractsA18791 National Mapping and Settlement Planning - SumatraA18792 National Mapping and Settlement Planning - Kalimantan and SulawesiA18794 National Mapping and Settlement Planning - Irian Jaya

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INDONESIA

TRANSMIGRATION V PROJECT(National Mapping and Settlement Planning)

Loan and Project Sumuary

Borrrower: Republic of Indonesia

Amount: US$160.0 million equivalent

Terms: Repayable in 20 years, including a five-year graceperiod, at the standard variable interest rate.

Project Description: The project would be a continuation of the Bank's assis-tance to the Government of Indonesia (GOI) in base map-ping and transmigration settlement planning. Its mainobjectives would be to (a) support the planning oftransmigration and other development programs in theOther Islands by accelerating the national mappingprogram; (b) promote the welfare of transmigrants andlocal people through better physical planning of settle-ments; (c) improve the quality and economic viability ofthe transmigration program by providing program supportand institution building; and (d) strengthen the skillsof GOI staff and domestic consultants.

The project would include: (a) a four-year time sliceof the national mapping program consisting of aerialphotography, the preparation of base maps and altimetriclevelling in the Other Islands; (b) physical planningfor 300,000 sponsored and spontaneous transmigrantfamilies to be settled in Sumatra, Kalimantan and IrianJaya; and (c) a 1987 transmigration program review,technical assistance and training for the projectexecuting agencies and domestic consultants. Inaddition, the project would strengthen the social andenvironmental monitoring and evaluation of the transmi-gration program by coordinating efforts to solve prob-lems that may arise during implementation and providingdetailed guidance to the central and the provincialgovernment teams to safeguard the interest of localpeople and protect the environment.

The project ezecuting agencies will be the NationalCoordinating Agency for Mapping and Surveying(Bakosurtanal) and three offices of the Ministry ofTransmigration: the Directorate of Planning andProgramming, the Directorate of Land Preparation and theStaff Training Center.

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The major project risk would be that GOI may be unableto use the information provided under the project in atimely manner due to financial and managerialconstraints. There is also concern about the potentialimpact of the project on local populations. Thesesubjects have been considered in project design byincluding program support, training, revised terms ofreference for consultants, and improved monitoringprocedures.

Estimated Costs LocaL Foreign Total-------(US$ million)----…-

Aerial Photography and Base Mapping 9.0 13.9 22.9Settlement Planning 65.0 67.9 132.9Program Support 27.9 29.0 56.9

Total Base Costs /a 101.9 110.8 212.7

Physical contingencies 10.1 11.1 21.2Price contingencies 21.5 19.9 41.4

Total Project Costs /a 133.5 141.8 275.3

Financing Plan:

IBRD 18.2 141.8 160.0cOI 115.3 - 115.3

Total 133.5 141.8 275.3

Estimated Disbursements: Bank FY 1986 1987 1988 1989 1990 1991-----------… US$ million) --------------

Annual 13.0 13.0 35.0 57.0 32.0 10.0Cumulative 13.0 26.0 61.0 118.0 150.0 160.0

Economic Rate of Return: Not applicable for this project.

/a Including taxes and duties estimated at US$8.3 million. Total projectcosts excluding taxes and duties are estimated at US$267.0 million.

INDONESIA

TRANSMICRATION V PROJECT(National Mapping and Settlement Planning)

I. BACKGROUND

Introduction

1.01 The Covernment of Indonesia (GOI) has requested Bank assistance forthe physical pLanning of the transmigration program under the Fourth Five YearPlan (Repelita IV; 1984-89). The proposed project, which would include basemapping, settlement planning and program support, has been prepared by theDirectorate of Planning and Programming (Bina Program Pankim), the Directorateof Land Preparation and Physical Infrastructure (PLP) and the NationaL Coordi-nating Agency for Surveys and Mapping (Bakosurtanal). The preparation workwas partly financed under the Bank-financed Transmigration III project. Thisreport is based on project preparation reports submitted to the appraisalmission in November/December 1984. In order to avoid an interruption ofcurrent activities, and a hiatus in external funding for the preparation ofsettLement plans, the proposed project would need to become effective aroundOctober/November 1985, i.e., when the second round of settlement planningstudies (SFSE 1982), financed under the Transmigration III project, would benearing completion.

The Agricultural Sector

1.02 Objectives. GOI's major objectives for the agricultural and ruralsector are to:

(a) Create productive employment to raise incomes of the rural poor.

(b) Increase domestic food supply to kecp pace with rising demand.

(c) Expand agricultural exports, particularly of tree crops.

(d) Ensure productive, sustainable use of Indonesia's varied land, waterand other natural resources.

1.03 Role and Performance. Despite a 4% average annual growth in pro-duction, agriculture's share of GDP declined from 40X in 1968 to 30% in 1983,due mainly to the increased value of oil production. Nevertheless, the agri-cultural and rural sector remains of overwhelming importance to the greatmajority of Indonesians. Nearly 80% of the population lives in rural areas,and agriculture is the major source of income for about two-thirds of ruralhouseholds and one-tenth of urban households. Some 16 million smallholderfamilies produce subsistence and cash crops on 14 million ha, while 1,800estates occupying 2.2 million ha produce mainly rubber, sugar, tea, palm oil,

and tobacco.

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1.04 Food Crops. COX has traditionally concentrated on increasing theproduction of rice, the preferred staple food of the great majority ofIndonesians. Rice production increased rapidly (4.5 p.a.) between 1970 and1983, chiefly due to irrigation rehabilitation, the increased use offertilizer and high-yielding seed and also to the large expansion of croppedareas under the transmigration program. Estimated 1984 production is 25.5million tons and it is expected that a large measure of self-sufficiency cannow be sustained. Over the past decade, the output of secondary food crops(maize, cassava, soybeans, peanuts and sweet potatoes) grew more slowly, at anaverage of only 1.6Z p.a. Yield improvement through intensified research andsupport services, and expansion of the harvested area, would serve many of thepoorest parts of Java and especially the Other Islands where transmigration isopening up more land.

1.05 Tree Crops. Tree crops occupy about one-third of total cropped land(coconuts and rubber account for 802 of this), and generate about 432 of totalnon-oil export revenues. Smallholders cultivate 80X of the rubber area andvirtually all coconuts, coffee, cloves and pepper. Tea and oil palm are grownprimarily on estates. Expansion of smallholder tree crops is of high prior-ity, given the vast area of over-aged and low yielding smallholder rubber andcoconuts, the good market prospects and employment potential for these crops,and the Other Islands' land availability and natural comparative advantage inthem. Bank staff prepared a Tree Crop Sector Review in 1984 which iscurrently being discussed with GOI to determine the direction of futureinvestments in this sector.

1.06 Area Development. Rural development programs designed to meet basicneeds and to generate employment and production have been developed for cer-tain critically poor areas of Java and the Other Islands. Projects in Javaare particularly important as cultivable land there is almost fully utilized,and in some higher watersheds cultivation already exceeds environmentally safelimits, contributing to increasing erosion, downstream flooding, and siltationof ports, dams and irrigation canals. GOI is implementing area development,watershed development and upland farming development projects to address thisproblem.

1.07 Bank Lending for Agriculture. Since the first of 20 irrigation andswamp reclamation projects for Indonesia was approved in 1968, the BankGroup's agricultural lending to the country expanded to include 10 projects inestate and smallholder tree crops, plus projects in fertilizer production anddistribution, sugar, livestock, fisheries, research, extension, training,seeds, upland farming, area development, resource surveying and mapping, andtransmigration. Within the context of GOI's agricultural objectives andpriorities, future Bank lending is expected to focus on:

(a) A diversified irrigation, flood protection, drainage and swampreclamation program to intensify rice cropping on Java and to expandwater resources infrastructure in the Other Islands.

(b) Smallholder and nucleus estate tree crop planting programsemphasizing increased rubber and edible oil production, andindustrial forest estates.

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(c) Area development projects aimed at:

(i) Watershed management to conserve soil and ensure Long-termproductivity in the densely populated areas of Java.

(ii) Multisectoral development targeted at the least developed areasof the Other Islands.

(iii) Rural works programs to improve basic infrastructure.

(iv) Transmigration, including project. to improve settlementplanning and the welfare of existing transmigrants throughsecond stage development.

Transmigration

1.08 The Need for a Transmigration Program. Of Indonesia's population ofabout 155 million, over 95 million reside in Java, an island with about 7Z ofthe nation's land. Seventy percent of Java's total area is cultivated and theaverage population density of about 700 peopLe/sq km can reach 2,000 people/sqkm in irrigated areas. Meanwhile, vast tracts of forest and coastal land lieuncultivated in the Other Islands. The low population densities in some areas(e.g., 12 people/sq km in Kalimantan, three people/sq km in Irian Jaya) impederegional development and economic growth. These facts have been so strikingfor so long that programs to wed the underutilized labor of Java with theunderutilized land of the Other Islands have been carried out since thebeginning of this century.

1.09 Objectives. The major objectives of Indonesia's transmigrationprogram are to:

(a) Improve living standards and employment opportunities ofimpoverished and landless laborers from Java, Madura, Bali andLombok.

(b) Alleviate population pressures on these islands, especially inenvironmentally vulnerable areas.

(c) Promote balanced population distribution and regional developmentthroughout Indonesia.

(d) Increase food and tree crop production.

1.10 The Government Transmigration Program. The policies of the trans-migration program for the Fourth Five-Y^ar Plan (Repelita IV) are given in"Guidelines of State Policy" Chapter IV of 1983 by the National Planning Board(Bappenas) and in "Transmigration Policies in Repelita IV" of March 1985 bythe Ministry of Transmigration (MOT). The Indonesian transmigration programis the largest voluntary resettlement scheme in the world. The fourcategories of transmigrants are:

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(a) The sponsored transmigrants vho are Landless agricultural laborersor smallhoLders living at near mubsistence level. These trans-migrants receive extensive support from the Covernmnt during theinitial five years of settlement in the form of transport, land,housing, sociaL services and a subsistence and agricultu'al packagefor the firnt few years after settlemnt.

(b) The local transmiiRrants who live in the settlemeait areas to bedeveloped and their murroundings and who receive the same benefitsas the sponsored transmigrants. The number of local transmigrantscan amount to 20Z, or more, of the total capacity of the settlementsto be developed (par&. 2.22).

Cc) The registered spjntaneous transmiarants who move at their ownexpense and settle in a settlement site of their choice. Thesetransmigrants receive the same amount of land as the sponsoredtransmigrants and berefit from the same social-economic services.But direct government support is Lower and is mostly provided inform of credit rather than subsidy.

(d) Unregistered spontaneous transmigrants who move on their own to asite of their choice and who are not entitled to Government support.

1.11 To become a sponsored, LocaL or registered spontaneous transmigrantthe applicants must meet a number of selection criteria relating to Indonesiancitizenship, voluntary registration, Low income near subsistence, knowledge offarming or of a special skill, being married and below 40 years of age, beingin good health and absence of :riwinal record. In March 1985 the MOT hadregistered 445,222 applications from potential sponsored tranasmigrant fami-lies; this is much in excess of the absorptive capacity of the settlementsites currently available. Many sponsored transmigrant families will have towait more than four years before being resettled.

1.12 Criteria for Site Selection. The criteria for site selection haveevolved over the years. In colonial times they were directed towards thedevelopment of plantations through the supply of labor force. Today thepolicy is to establish economically viable new communities by allocating landto transmigrants and providing basic infrastructure for regional development(para. 3.11). Site selection is not limited to areas easily accessib'le. Forthe sake of equity, the policy is also to initiate development in remote areasincluding lands along uiational borders so that local people can also beneiitfrom the social and economic development resulting transmigration. TheProvincial governments and their planning offices, the Bappedas, propose landto the MOT in consultation with district officers and village heads. Thefinal selection of sites depends on the outcome of detailed technical andeconomic studies carried out by KOT in three phases. Sites which cannotensure sustained agriculture because of poor soils and topography or involve ahigh social or environmental risk are systematically rejected.

1.13 SettLement Models. The MOT has a policy to develop seven sectlementmodels to ensure a target income of at least twice the subsistance level,i.e., about 2.4 tons of rice equivalent per year and per family, by the end ofthe five- year period following settlement. The models are upland food crops,wetland food crops, tree crops, aquaculture, animal husbandry, industry andmining, and agro-forestry. Of thcse seven settlement models only the firstthree have been impLemented on a large scale, with emphasis on the food cropand tree crop models during Repelita IV. The other models are being studiedand will be tested on a pilot basis during the same period.

1.14 Program Implementation. Before the mid-1970. both the size andquality of the transmigration program were limited by shortages of funds. Inaddition, pre-settlement preparation through the Plan As You Proceed (PAYP)system was poor, and agricultural services were frcquently unavailable.Consequently tranimigrant communities dependent on rainfed agriculture oftenremained at subsistence levels. During the first two five-year plans,Repelits I (1969-74) and JI (1974-79), Government moved 46,000 and 83,000families, rtspectiveLy.

1.15 In preparing the Repelita III (1979-84) transmigration program, COI,prompted by its improved resource position from increased oil revenues andconcern about shortfalls in rice production, decided to increase its targetfor settlement to 500,000 families over these five years. To achieve thisambitious target, COI reorganized the transmigration program, giving imple-menting responsibilities to the specialized line Ministries (Agriculture,Public Works). Despite a slow start, under these new arrangements Covernmentwas able to settle about 366,000 families under the fully sponsored programand identify another 169,000 families who moved spontaneously. In all about2.0 million people moved during Repelita III. The tranimigration target forRepelita IV (1984-89) is 750,000 families, a 50% increase over Repelita III.

Table 1.1: TRANSMICRATION PROCRAMS (1969-89)

No. of Repelita I Repelita II Repelita III Repelita IV TotalFamilies (1969/74) (1974/19) (1979/84) (1984/89)/a

Sponsored 46,000 83,000 366,000 450,000 929,000Spontaneous /b 17,000 35,000 169,000 300,000 529,000

Total 63,000 118,000 535,000 750,000 1,458,000

/a Targets7i Families with limited or no Government assistance.

1.16 The Impact of Transmigration. The transmigration program has hadseveral beneficial effects on the country's economy. First, in the agricul-tural sector it has substantially contributed to the increase in food pro-duction which can be estimated at about 20% of the annual incremental rice

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production during Repelita III. The increase was achieved through the expan-sion of areas cropped by over 500,000 ha rather than through improvedproductivity in settlement areas. It is believed that during Repelita IV theimpact on food production will further increase due to the continued expansionof the program and to the improied productivity in existing settlements. Thecontribution of transmigration to the tree crop sector has not beensignificant under Repelita III, but should increase under Repelita IV becauseof a new emphasis now being put on tree crops in transmigration. Second, thetransmigration program has had a positive impact on population and employmentin both the donor and recipient regions. In Java it is currently estimatedthat the transmigration program reduces the annual population growth by aboutone-third. Under Repelita III it has moved about 2.0 million people and it isforecasted that, if the target of 750,000 families is achieved, under RepelitaIV the population growth of Java will decrease from 1.7Z p.a. to 1.1% p.a.The impact on the labor force is even more significant. It is estimated thatduring Repelita III about 700,000 new jobs were created at a unit cost ofabout US$4,200. During Repelita IV, if the targets are met, the transmig-ration program will have created on average about 200,000 new jobs per year atan estimated cost of US$5,200 per job, equivalent to about 30% of the annualincremental labor force in Java.

1.17 The transmigration program has also had a substantial impact on thecountry's social welfare. It has provided improved education and healthservices to transmigrant families and local people and has succeeded inraising the social status of landless farmers to that of full farmers who ownland (2 to 5 ha). It has also generated a flow of spontaneous transmigrantswho usually settle in the vicinity of the new transmigration villages to takeadvantage of the infrastructure and services created by the Government. TheMOT has estimated the number of spontaneous transmigrants during Repelita IIIat around 169,000 families or about 30% of the total number oftransmigrants. They generally derive their earnings partly from croppingsmall plots of land cleared by themselves and partly from working as agri-cultural laborers. Of the 366,000 sponsored transmigrant families settledduring Repelita III, the MOT has officially recorded that only about 2,000families have left their new settlements to return to their original homes.Although this figure may underestimate the actual situation, most authoritiesagree that return migration to date is less than 5Z of the families moved.

1.18 The transmigration program has other unquantifiable benefits. Ithas aided regional development and has increased the economic justification ofinfrastructure such as roads and bridges in sparsely populated areas. Insending regions it has reduced soil erosion and migration to urban centers.The savings on soil protection works and urban development, though notquanitifed, are substantial. In brief, the total investment for trans-migration, estimated at about US$1.8 billion during Repelita III or 5 of thetotal government development budget, has played more than its due share inpromoting employment and social welfare among the Indonesian people.

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Bank Group Involvement in Transmigration

1.19 Since 1974, the Bank Group has been involved in the evolution ofIndonesia's transmigration program through four Transmigration projects, twoSwamp Reclamation projects, the Transmigration Sector Review and to a lesserextent through Nucleus Estate and Smallholder projects. In total the Bank hasfinanced about 10% of the transmigration program since 1974, and contributedsubstantially to improvements- in the program. Bank supported projects haveint-oduced several innovative features including improved site screening andevaluation, new techniques for mapping, better program management and agricul-tural support services, and procedures for avoiding waste of valuable forestresources.

1.20 Transmigration I. The first Bank-assisted transmigration project(Ln. 1318-IND) was approved in 1976 and completed in 1983. It consisted oftwo pilot schemes in southern Sumatra: (a) the settlement of 4,500 familiesnear Baturaja; and (b) the rehabilitation (second stage development) of anexisting settlement of 12,000 families in Way Abung. Baturaja farmers wereprovided with 5.0 ha farms (including one ha of established rubber trees), onehead of cattle for draft power, free agricultural inputs for three years, ahouse and one year of subsistence supplies.

1.21 The Project Performance Audit Report (No. 5157 of June 25, 1984)concluded chat the project was successful. The Baturaja settlement demon-strated that good agricultural results can be achieved on red/yeLlow podzolicsoils, provided farmers apply an adequate package of inputs and soil manage-ment techniques. Marketable food surpluses were produced and the resultingincomes, together with future revenues to be generated by the rubber plots,are expected to greatly exceed transmigrants' real incomes at their places oforigin. The development of cassava industries at Way Abung is a promisingsign of the effect of transmigration settlements on secondary economic activi-ties. Besides these economic benefits, the development of the Baturajasettlement has attracted a large number of spontaneous transmigrant familiesinto the area, and spontaneous transmigrants living in the settlement nowcomprise some 27Z of all settlers.

1.22 Transmigration II. In 1979 Transmigration II (Ln. 1707/Cr. 919-IND)was approved and was expected to serve as a model for transmigration duringRepelita III (1979-84). The project was intended to settle 30,000 familiesalong the new Trans-Sumatra highway in Jambi Province and to rehabilitate anexisting settlement of 4,000 transmigrant families at Singkut through secondstage development. Given high program targets, the GOI and the Bank Groupwere interested in rapid preparation and settlement and relatively low perfamily costs. The project had a number of features to support theseobjectives:

(a) To accelerate preparation, the project was appraised on the basis ofpreliminary mapping, while detailed surveys and village design wereincorporated within the project.

(b) To increase the pace of development, mechanical land clearing wasplanned and its cost and qualitv were to be closely monitored.

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(c) To keep costs low and promote food self-sufficiency, an agriculturalsupport package was developed for rainfed food crops.

(d) The introduction of tree crops was also planned, but left for alater stage of development.

1.23 The settlement component of the Transmigration II project encounteredseveral start-up problems mostly due to a shortage of land. Detailed mappingrevealed that flat land suitable for food crops in the original project areain Jambi could accommodate only about 10,000 of the proposed 30,000 families.The project was reformulated to settle about 20,000 families in Jambi andnewly identified sites in South Sumatra and the balance of funds was reallo-cated to site screening and evaluation studies. Settlement commenced inOctober 1981 and is expected to be completed by end-1986, one and a half yearsbehind schedule.

1.24 The site screening and evaluation component, known as the SiteFeasibility Studies and Engineering (SFSE) 1980 planning program, was carriedout in three phases: Phase I for basic land resources studies, regionalplanning and general site screening, Phase II for field studies and siteevaluation and Phase III for detailed engineering and final site planning.These studies were carried out by consultants under the supervision of theCity and Regional Planning Directorate (DITADA) of the Ministry of PublicWorks with the assistance of an expatriate Technical Advisory Group (TAG).The consultants and TAG were funded by the project. The SFSE 1980 planningprogram was only partially successful due to insufficient coordination betweengovernment agencies, poor Phase I planning and inflexible site selectioncriteria based on only one farming model. The SFSE 1980 planning program wasalso weak in the financial and economic evaluation of settlements. Learningfrom these experiences, steps were taken to avoid such difficulties insubsequent projects as described below.

1.25 Transmigration III. In 1983 the Transmigration III project (Ln.2248-IND) was approved. Under the project GOI is extending and improving itsplanning for a large-scale transmigration program. The project follows up onTransmigration II by financing a second round of feasibility studies (SFSE1982) for the eventual settlement of 300,000 families during Repelita IV. TheSFSE 1982 program is an improvement over the SFSE 1980 program because of:

(a) An emphasis on better Phase I planning.

(b) New terms of reference involving a larger number of farming modelsand the financial evaluation of typical settlements.

(c) The testing of new airborne radar and laser mapping techniques.

(d) The subdivision of Phase III studies into Phase III A (before landclearing) and III B (after land clearing).

(e) The designation of a Project Coordinator within the Ministry ofTransmigration to coordinate the main government agencies concernedwith Bank-assisted transmigration projects.

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(f) Technical support to HOT through the provision of a TechnicalAdvisory Group attached to Bina Program.

1.26 These improvements have reduced the rate of site rejection experi-enced under Transmigration II. Transmigration III also includes: (a) stafftraining in MOT, (b) agricultural research in support of transmigration, and(c) technical assistance to the Ministry of Population and Environment tomonitor and improve the environmental soundness of transmigration projects.Finally, the project includes the settlement of 2,000 families adjacent to thefirst Bank-assisted project in Baturaja, South Sumatra, and additional ser-vices and facilities in the existing settlement. Both the planning andsettlement components of Transmigration III are proceeding satisfactorily,although the planning component is about six months behind schedule because ofdelays in the supply of airphotos which were not financed under the projectand slow production of Phase II studies. These difficulties are beingaddressed and steps have been taken to avoid their repetition under theproposed project. Other components have also been delayed and have as yet hadonly a limited impact on the transmigration program.

1.27 Transmigration IV. This project (Ln. 2288-IND) in East Kalimantanwas also approved in 1983, and addresses several aspects of the transmigrationprogram. First, it is helping resolve the problems of clearing productionforests by introducing contracting procedures which ensure the recovery ofcommercially valuable timber. Second, it should improve transmigrant incomesby introducing tree crops in the early settlement period. Third, the projectwould improve coordination of Bank-assisted projects and help to develop pro-cedures to facilitate implementation of the GOI transmigration program. Dueto delays in contracting and mobilizing equipment, construction activitiesstarted in November 1984, but are now progressing satisfactorily.

1.28 Swamp Reclamation I. In 1980 the Bank approved its first project intidal swamp reclamation for transmigration (Ln. 1958-IND). The project wouldreclaim some 9,000 ha in Sumatra for 3,200 families and demonstrate improvedmethods of implementation, land reclamation, land clearing and agriculturaldevelopment. About 30X of the families have now been settled.

1.29 Swamp Reclamation II. In May 1984 the Bank approved the SwampReclamation II project (La. 2431-IND) designed to reclaim 30,000 ha of tidalswamps and settle 11,500 transmigrant families in South Sumatra Province. Theproject will also supports institution building for the Directorate of SwampReclamation (P3S), lowland agricultural research and studies for future swampreclamation and rehabilitation projects.

1.30 Transmigration Sector Review. In 1981 the Bank reviewed the GOIupland and swamp transmigration programs (Transmigration Program Review,Report No. 3170-IND). A major conclusion was that income prospects fromrainfed food crops were limited and a greater role should be given to mixedfarming systems including tree crops in upland schemes. The report alsorecommended that increased attention be given to site selection and evalu-ation, institution building, and staff training, and that a major effort bemade to promote better resource utilization through the development ofgrasslands and the utilization of timber from forested areas which are clean

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cleared. In FY8S a study is being undertaken to find means to acceleratespontaneous migration to lower overall transmigration program costs perfamily, and in FY86 the Transmigration Sector Review of 1981 will be updated.

International Assistance for Transmigration

1.31 The international and bilateral financing agencies have sub-stantially contributed to the transmigration program. Among the major con-tributors are the World Food Program (WFP) (US$66.3 million) in Sumatra,Kalimantan and Sulawesi; the Asian Development Bank (ADB) (US$34.3 million) inSulawesi; USAID (US$20.8) mostly in the Luwo Project, Sulawesi; the FederalRepublic of Germany (DM 86.5 million) mostly in the East KalimantanTransmigration Development Project (TAD); and the Netherlands (DC 26 million)mostly in Bangkulu. UNDP/FAO, UNDP/OPE, France and United Kingdom are alsoproviding technical assistance to the Ministry of Transmigration. In additionto this direct assistance other countries such as Australia and Canada havecontributed indirectly by providing substantial assistance to Bakosurtanal forthe mapping of the Other Islands. The MOT plans on a pipeline of projects forRepelita IV to be financed with the assistance of the Bank, ADB, WFP, UNDP,Japan, USAID and other members of the IGGI countries. External financing isexpected to be US$750 million including the proposed project.

II. PROJECT FORMULATION

Objectives

2.01 Transmigration V is a mapping, resource evaluation and settlementplanning project to support Indonesia's transmigration and regional develop-ment programs. It would improve and expand the surveying, mapping and plan-ning of large, relatively unknown areas of Indonesia and improve the economicand social analyses undertaken in site planning. The project's first objec-tive is to improve the quality of site selection in order to promote thewelfare of transmigrants and local peopLe living within the transmigrationareas and provide a sound basis for regional development over the 10 yearperiod following the arrival of settlers. The second objective is to promoteinstitution building through coordination of training activities and technicalassistance to the implementing agencies. The third objective is the develop-ment of the national consuLtant industry by the association of foreign andnational consultants under the large consultant component. The project wouldaccomplish these objectives by:

(a) Accelerating and expanding the surveying and mapping capabilities ofthe National Coordinating Agency for Surveys and Mapping(Bakosurtanal) to support transmigration and regional developmentprograms in the Other Islands.

(b) Assisting the Directorate General for Settlement Preparation (DGSP)within the MOT in carrying out physical plans and developmentstudies for 300,000 sponsored, local and spontaneous transmigrantfamilies as part of the settlement target fir Repelita IV.

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(c) Providing program support and training to Bakosurtanal and DGSP toimprove their overall operations and in particular their capacity tosupervise the implementation of physical plans and settlementconstruction works.

(d) Improving the ability of DGSP t2 undertake economic, social andenvironmental monitaring and evaluation of proposed sites andfarming systems for both transmigrants and local populations livingin the settlement areas.

(e) Providing for the transfer of plans for settlements based on treecrops to the Directorate General of Estates within the Ministry ofAgriculture for implementation under their Nucleus Estate andSmallhoLder projects.

(f) Ensuring skill transfer and training to national consulting firmsworking in joint venture with foreign consultant firms by includinga training component in each contract.

Project Rationale

2.02 Basic resource evaluation is one of the most important tasks facingOI as it implements its agricultural and regional development strategy.Large areas of the country remain unsurveyed and unevaluated. The continuedsurveying, mapping and planning of these large, relatively unknown lands iscrucial in order to support GOI's transmigration and regional developmentprograms.

2.03 The planning provided under the project will have several beneficialeffects. Firs:, it is one of the best means to ensure the economic welfare offuture settlers while protecting the interests of local people living in thesettlement areas. Methodical planning in three phases over a period of threeto four years provides ample time to consider all aspects of settlementdevelopment and adjust plans to local conditions. Second, planning under thisproject will include sites for sponsored, local and spontaneous transmigrantswhich were not included in previous planning programs. The planning for localand spontaneous transmigrants should cLarify the situation of numerous illegalsquatters who move into settlement areas during the planning process. Third,the planning will be sufficiently broad in scope so that even if GOI does notmeet its settlement targets during Repelita IV, the plans will not be lost asthey will still be useful for other regional or agricultural (e.g., treecrops) projects or for subsequent transmigration programs.

2.04 The proposed project would build upon the work of the previous Bank-assisted projects by financing a third round of SFSE studies, aerial photo-graphs and base maps, and technical assistance to the main GOI agenciesinvolved in resource evaluation and settlement planning. As the -transmigra-tion program has evolved, the methodical step-by-step approach to settlementplanning has proved to be the most economic and efficient means to proceed.The specific rationales for the major project components are discussed below.

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2.05 Base Mapping. Indonesia's base mapping is inadequate andincomplete. Over the past eight years an effort has been made by Bakosurtanaland other Government agencies, with the assistance of the Bank-financedNational Resource Survey and Mapping Project (Loan 1197-IND) and bilateralaid, to produce a new series of base maps at scales of 1/100,000, 1/50,000 and1/25,000.

2.06 Bakosurtanal has estimated that without external assistance it wouldtake more than 17 years to complete the national base mapping program and thatbefore completion of this program many of the existing aerial photographswould become obsolete. To avoid the loss of valuable mapping material,Bakosurtanal has designed a seven-year program to complete the nation's basemapping and has requested the Bank's assistance during the first four years.

2.07 The present lack of reliable base maps and of altimetric networks,particularly in the Other Islands, has hampered the transmigration program andregional deveLopment projects. Some settlements have been mislocated as aresult of poor Phase I studies, large-scale aerial photographs for settlementplanning have been taken over inappropdiate areas, and many sites had to berejected during Phase 1I studies. To overcome the lack of base maps, underthe Transmigration III project consultants have been engaged by MOT (DGSP) toprepare maps at scaLe 1/50,000. The production of these maps under thesupervision of an agency which is not specialized in mapping has been timeconsuming, inaccurate and expensive.

2.08 To improve the quality of settlement planning and realize economiesof scale, GOI has decided that under the proposed project all base maps andaerial photography needed for the transmigration program would be carried outby a single agencv, namely Bakosurtanal.

2.09 Settlement Planning. The amount of work involved in settlementplanning under the proposed project is too large (about 6.5 million ha) andtoo diverse to be undertaken by the staff of Bina Program Pankim alone. Therecruitment of experienced international and local consulting firms to assistBina Program in its technical and programming functions is essential for thesound preparation of settLement pLans within the time constraints imposed bythe transmigration program.

2.10 The settlement planning component would be implemented in threephases, as in the previous study programs, with added emphasis on severalinnovative features concerning new mapping techniques, criteria for siteselection and feasibility studies, and the preparation of settlement anddeveLopment plans. Automated mapping with airborne radar/laser remote sensingdevices may be used depending on the results of the pilot mapping projectspresently carried out under the Transmigration III project (see para. 1.25).The use of these advanced technologies has become desirable in view of thelarge areas (2.0 million ha) to be surveyed annually in remote tropicalforests. If successful, they would increase the speed and accuracy oftopographical surveys and may also reduce costs. The project will alsoinclude other innovative features such as the study of potential sites inflood plain areas and will evaluate a number of new settLement models based onsmall-scale irrigation and drainage works, agro-forestry activities (rattan

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and sago), small-scale industriGs (limestone quarrying), fish farming, live-stock, tree crops and others. The major criteria for the implementation ofthese new models will be their replicability and economic viability.

2.11 Program Support and Institution Building. MOT was created in 1983by combining directorates from several ministries (Annex 2) and faces moreimplementation problems than would an older institution. Organizationalchanges since MOT's creation, including the establishment of new coordinatingbodies and the decentralization of some operations, will have beneficialeffects in the medium term (Annex 2), but in the short term direct programsupport in the form of technical assistance and training is required toimprove the quality of settlements. Management support to the Ministry at acentral level is being provided through the Transmigration IV project. Directprogram support to DGSP has also been supported by the Bank under the Transmi-gration III project through the financing of a Technical Advisory Groupattached to Bina Program. Direct prog-am support to DGSP needs to be con-tinued and expanded to the Directorate of Land Preparation and PhysicalInfrastructure (PLP).

2.12 Training. In addition tc direct program support, the organizationalchanges described above have also increased the need for staff training withinDGSP. On-the-job training through the Technical Advisory Groups at bothcentraL and regional levels, and formal training through courses, workshopsand overseas fellowships, are also required. All training activities carriedout under the project will be coordinated by the Staff Training Center(Pusdiklat) which also needs some assistance. In addition, the local consul-tant industry needs strengthening to cope with the large transmigrationplanning program. The project will ensure that skill transfer and on-the-jobtraining is provided through each major consultant contract.

The Role of the Bank

2.13 The Bank continues to supporr COI's commitment to improving thequality of the transmigration program in order to meet its national and sectorgoals, including increased regional food supply, poverty alleviation, develop-ment of lesser developed regions, employment creation, reduction of populationpressure in critical areas, training and institution building. Bank financialassistance has been requested because of the scale and scope of the proposedprogram, which is not attractive to commercial lenders, and because of thecontinuing success of Bank assistance in the similar Transmigration III proj-ect. Through Transmigration III and other Bank-assisted projects, MOT hasintroduced higher construction standards for transmigration settlements, morecomprehensive support services for transmigrants and a higher level ofeconomic and social analysis of potential sites, which are now being adoptedfor the rest of the transmigration program. As the transmigration programproceeds, the number of settlements to be planned increases and the studiesbecome more detailed and complex. The demand for program support, technicalassistance, and training also increases which makes Bank assistance vital.The Bank's assistance in transmigration (US$438.5 million committed to date)has played and would continue to play a constructive role in improvingadministrative capacity and reducing implementation constraints.

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Project Scope and Areas

2.14 The scope of the physical planning component of the proposed projecthas been derived from the planning requirements for the transmigration targetsfor RepeliL. IV as shown below;

Table 2.1: REPELITA IV NATIONAL PLANNING TARGETS

No. of Families /a

Repelita IV settlement target 750,000Repelita V first year pipeline 250,000

Subtotal 1,000,000

Less existing studies from Repelita III 100,000Net planning requirement for Repelita IV 900,000

/a Sponsored, local and spontaneous transmigrants.

2.15 It is possible that despite improved planning and administrativeprocedures provided under the project, the actual settlement during theRepelita IV period may be less than GOI's target of 750,000 families, mostlybecause of delays already observed in the first year of Repelita IV andincreased difficulties of access and implementation in remote areas ofKalimantan and Irian Jaya. The number of spontaneous transmigrants may alsobe lower than expected, unless GOI sets up special programs to promoteinexpensive transport to those remote regions. The total planning target for900,000 families under Repelita IV should be considered in this light.

2.16 According to GOI's plans the planning for this target of 900,000families would be carried out by various government agencies as follows:

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Table 2.2: REPELITA IV TRANSMIGRATION PLANNING TARGETS BY GOVERNMENT AGENCY

Agency No. of Families /a

Ministry of TransmigrationDC Settlement Preparation (Bina Program):Transmigration III project (ongoing) 200,000Transmigration V project (proposed) 300,000Local Budget (APBN) 150,000

Ministry of AgricultureDG Estates:Nucleus Estate and Smallholder projects 130,000/b

Ministry of Public WorksDG Wlater Resources Development:Swamp Reclamation andIrrigation projects 80,000/c

Ministry of Home AffairsProvincial Offices (in liaison with DGSP):Small-scale projects (Sisipan) 40,000

Total 900,000

/a Sponsored, local and spontaneous.Tb Phase II studies will be carried out by MOT.Tc Phase III studies will be carried out by MOT.

2.17 Physical planning for the 300,000 sponsored, local and spontaneoustransmigrant families to be assisted under the proposed project requires theidentification of about 330 potential settlement sites (Phase II studies) andfeasibility studies for about 225 sites (Phase III studies) as indicatd in thefollowing table.

Table 2.3: LOCATION OF POTENTIAL TRANSMIGRATION SITES

Potential Potentialsettlement sites Feasibility studies number of

Regions (Phase II studies) (Phase III studies) families

West Kalimantan 75 45 60,000Central Kalimantan 80 50 65,000East Kalimantan 75 35 75,000Irian Jaya 60 60 55,000Sumatra 40 35 45,000

Total 330 225 300,000

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The exact location of these potential sites is being pLotted by Bina ProgramPankim an photo maps at scale 11250,000 under the project start-up activitiesfinanced under the on-going Transmigration III project. Half of these sites(165) would be selected by October 1985 as a condition of loan effective-ness. The other half should be ready six months later by April 1986. Thiswill allow the planning consultants to mobilize on schedule. MapsA18791/92/94 of Sumatra, Kalimantan and Irian Jaya show the approximate loca-tions of the potential settlement sites to be studied under the project. Itis noteworthy that the location of these sites has been based on preliminaryland resource and land use maps carried out by Bina Program Pankim and that inthe case of Irian Jaya they are all placed in the sparsely populated low-landareas (mostly along the coast), and not in the central highlands where most ofthe local people live.

Alternatives Considered During Project Preparation

2.18 The main alternatives considered during project preparation were asfollows:

(a) The aerial photography and mapping component was expanded and mergedwith the national mapping program carried out by Bakosurtanal torealize economies of scale and improve the quality of maps used forsettlement planning. The alternative initially considered by COIwas to implement these components through DGSP as under the Transmi-gration III project. Experience has shown that this alternativewould have led to higher costs, less accuracy and deLays in settle-ment planning.

(b) The study of alternative farm models was initiated during projectpreparation, including small-scale irrigation and limestonequarrying in Sumatra, agro-forestry based on rattan in Kalimantanand sago development in Irian Jaya. These studies showed the needto diversify the number of farm models and to include in the PhaseII and III studies development options other than those based on dryland food crops. Accordingly, the TORs for the studies financedunder this project have been revised to address this.

(c) Program support to PLP (Directorate for Land Preparation) wasconsidered to ensure the proper utilization of the physical plansand improve the quality of construction works. The alternative ofnot providing program support to PLP could have led to a waste ofresources in both settlement planning and construction, due to thelack of experience of the provincial transmigration offices.

Main Issues

2.19 Laser and Radar Mapping. These two "state of the art" mappingsystems are being tested in Indonesia under the Transmigration III project,and their use will depend on their technical and economic performance. Adetailed evaluation of these systems should be undertaken by MOT before April1986 to determine whether their utilization is warranted under the proposedproject. If the systems are successful, some cost savings could result. How-

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ever, project cost estimates have been conservatively based on conventionalmapping and surveying methods.

2.20 Institution Building. Previous transmigration efforts have beenhampered by organizational problemi (Annex 2). Although the situation con-tinues to improve, not all of the Bank's recommendations have yet been adop-ted. However, this should not hold up the proposed project, since improve-ments have been observed and are expected to continue during the periodcovered by the project. For example, in the area of spontaneous transmigra-tion, Bank staff are currently assisting the Government through the economicand sector work program.

2.21 Local Populations. A significant part of Indonesia's futuretransmigration program is expected to be in KAalimantan and Irian Jaya, wherelocal populations are ethnically and culturally different from the mostlyJavanese transmigrants. While local attitudes towards the transmigrationprogram have varied among provinces, there has been a remarkable receptivenessto settlers in most parts of Indonesia. Some provinces, such as SouthSumatra, are so convinced of the regional dvelopment benefits of the programthat the locaL authorities have consistently sought higher levels of newarrivals. One of the reasons for this receptive attitude has been that largeareas of Sumatra, Kalimantan Arid Sulawesi contained land which was plainlyavailable for development and was not required by local residents. However,as the transmigration program has grown, it bas become increasingly difficultto avoid populated areas, as suitable wilderness areas have become scarce.Land rights are an increasingly important element in site selection decisions,and many sites have been rejected purely on the basis of prior land claims.The determination of existing land rights is complicated in many areas bytraditional law (or adat) and culture, expecially in remote "tribal" areaswhere hunting and gathering or shifting cultivation are the predominant meansof economic subsistence. Arrangements for ensuring the availability of landfor transmigration and other purposes are the focus of considerable attentionwithin Indonesia and are expected to become even more systematic duringproject implementation.

2.22 For several years, it has been Government policy that 10% oftransmigrant plots should be made available to local people. Recently, it hasbeen decided that this should be raised to 20% and, in Irian Jaya, GOI hasannounced that up to 50% of the places could be allocated to local appli-cants. While it is unlikely that such a large number of pLaces will be takenup by local people, the policy is indicative oF Covernment's concern that con-flicts should not arise between newcomers and the local population as a resultof unfavorable comparisons between the living conditions of the transmigrantsand the circumstances of the indigenous population.

2.23 The Bank's policy is to assist projects only when satisfied that theBorrower supports and can implement measures that will effectively safeguardthe integrity and well-being of the local people who may be affected. Carefulconsideration was given during project formulation Eo ensure that thisrequirement would be fully satisfied (paras. 3.12, 5.09 and Annex 5 summarizethe GOI policies related to local populations).

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2.24 Implementation Capability. A recurring question has been whethercOr will be able to meet its settlement target during Repelita IV and there-fore make full and timely use of the Btudies prepared under the proposed pro-ject. During Repelita III, GOI has demonstrated its abiLity to achieve set-tlement targets. Given this experience, it is reasonable to expect that thestudios to be financed under the proposed project will be put to effectiveuse. Should the targete not be met the plans prepared under the project wouldbe used for the Repelita V transmigration program and for other regionaldevelopment projects.

III. THE PROJECT

Components

3.01 The main project components are:

(a) Aerial Photography and Base Mapping consisting of a national mappingprogram for the Other Islands and Land resource and land use basemaps for Sumatra, Kalimantan and Irian Jaya.

(b) Transmigration Settlement Planning for 300,000 sponsored andspontaneous transmigrant families in Sumatra, Kalimantan and IrianJaya, including regional, site screening and setilement feasibilitystudies.

(c) Program Support and Institution Building for DGSP, a 1987transmigration program review, technical advisory teams, andtraining for the project implementing agencies and the nationalconsuLtant industry.

3.02 Details of project components are maintained in the Project File(Annex 7) and are summarized below:

(a) Aerial Photography and Base Mapping to be carried out byBakosurtanal. This component would be a follow-up of the NationalResource Survey and Mapping project (Loan 1197-IND). It wouldencompass a four-year time-slice of the national mapping programconsisting of aerial photography at scale 1/50,000 covering about520,000 sq km in West Kalimantan, Sumatra and East Timor; basetopographic maps at scale 1/50,000 of Kalimantan, Sulawesi and partof Irian Jaya (about 1,100 sheets), aiid at scale 1/100,000 of IrianJaya (about 120 sheets); and leveling networks of Sumatra, Sulawesiand parts of Kalimantan for a totaL length of about 9,000 km (MapsNo. A 18791/92/94). A detailed description of this component isgiven in the Project File (Working Paper No. C5).

(b) Transmigration Settlement Planning to be carried out by consultantfirms under the supervision of Bina Program Pankim. This componentwould be a follow-up of the Transmigration lII Project(Loan 2248-IND). It would consist of:

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(i) Phase I studies (regional development maps at scale 1/250,000).Existing studiefs would be reviewed taking into account (a)existing regional devei?pment units (WPP) consisting of severalsettlement units (SKP - )X (b) land resource and land use mapscarried out by LRDC at scale 1/250,000 of Sumatra, Irian Jayaand parts of Kalimantan based on interpretation of satelliteand radar imagery and aerial photography; and (c) maps andadditional information provided by other agencies. New Phase Istudies for potential sites would also be drawn up to supportthe Rapolita V settlement planning program.

tii) Phase II studies 2/ (site scraening and evaluation at scale1/50,000) for about 330 potential settlements sites in Sumatra,Kilimantan and rrian Jaya based on TORs which include studiesof the social and economic impact of settlements on the localpopulation and alternative development options. Each *tudywill consist of aerial photo interpretation and field recon-naissance surveys of about a 20,000 ha gross area. The object-ives of Phase II studies are to (a) screen potential settlementunits; (b) assess the suitability of the area for a particulartype of development; (c) study the local people living in andaround the areas to be developed and datermine their attitudesand needs with respect to transmigration; and (d) draw up amaster plan at scale 1/50,000 and a preliminary developmentplan of each settlement unit.

(iii) Phase III studies 21 (feasibility at scale 1/20,000) for about225 settlement sites of which 130 are in Kalimantan, 35 inSumatra and 60 in Irian Jaya. These studies would be based onrevised TORs to give more emphasis to non-standard farm modelssuch as livestock, tree cropc and wet land development in addi-tion to the standard upland food crop model. Each Phase IIIstudy will survey in detail a gross area of about 10,000 ha.These studies will (a) determine the technical, economic andsocial feasibility of the development activities proposed underPhase II studies; (b) determine the land rights of localpeople, the method of participation and the compensationarrangements; (c) draw up a settlement structure plan at scale1/20,000 showing the locations of the roads, village boundar-ies, the areas reserved for house lots, local people and agri-cultural fields, and lands to be cleared; and (d) prepare adetailed development plan for each settlement unit for thefirst five years of settlement and an indicative developmentplan for the following five years.

1/ Satuan Kawasan Pengembang - Transmigration settlement units of 1,500 to2,000 families subdivided into 4 to 5 villages of 300 to 400 familieseach.

2/ Summary TORs for Phase II and III studies are presented in Annex 4.

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(c) Program Support and Institution Building. This component, thebackground of which is given in Annex 2, would consist of:

(i) Special studies carried out by consultants to _ pport thenationaL transmigration program and adjust or develop new pol-icies. These studies include a detailed review of the transmi-gration program in 1987 consisting, inter alia, of agriculturalmodels, physical implementation, budgetary allocations, expen-ditures, and social and environmental aspects. The 1987program review will also include a socio-economic evaluation ofselected settlements in Sumatra, Kalimantan and Irian Jaya. Alimited number of related special studies would be undertakento resolve unforeseen problems during project implementation oras a result of the 1987 program review.

(ii) Continued Support for a Central T2Shnical Adviscry Group (TAG)and six Regional Advisory Groups - to assist Bina ProgramPankim and the provincial transmigration offices in projectmanagement, accounting, economic and social evaluations,supervision of national and foreign consultants engaged insettlement planning and training of Bina Program and provincialstaff.

Ciii) Establishment of a Central Technical Support Team (TST) andSeven Regional Technical Teams - to assist the Directorate forLand Preparation (PLP) by (a) providing liaison with Bina Pro-gram and the provincial heads of HOT (Kakanwils); (b) preparingstandard and special bidding and contract documents; (c) organ-izing maintenance of transmigration roads and facilities;(d) supervising the final designs and construction works;(e) developing a monitoring information system; and (f) train-ing the PLP and provincial staff.

(iv) Establishment of a Technical Advisory Team (TAT) to assistBakosurtanal in project management, the development of softwareand the resolution of scientific and technological problems inautomated cartography, digital mapping and advanced geodesy.

(v) Training for Bakosurtanal, Bina Program, PLP and other MOTstaff including refresher courses, workshops, overseas fellow-ships, the production of two fiLms and audio-visual aids. Inaddition, the project will provide consultant services to theStaff Training Center (Pusdiklat) to carry out a skill gap

3/ The Regional TAGs are located in Palembang/Pekanbaru (Sumatra); Pontianak,Palangkaraya/Banjarmasin and Samarinda (Kalimantan); and Jayapura andMerauke (Irian Jaya) (Map A 18787).

4/ The Regional TSTs are located in the same places as for the Regional TAGsplus Ujung Pandang (Sulawesi).

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analysis and prepare a major training program for MOT staff.The project will also provide on-the-job training and skilltransfer to national consultants through training componentsincLuded in each Phase II and III study contract. Details onthe training component are described in the Project File(Working Paper C4).

Special Project Features

3.03 Consultant Services. This project has a large consultant componentwhich represents about 80Z of total project costs. It will involve therecruitment of about 30 consultant firms with a total of about 9,800expatriate man-months and 12,800 national man-months. Table 3.1 summarizesthe number of consultant firms and the man-month requirements per projectcomponent. Experience gained under the Transmigration III project, which alsoincluded a large consultant component amounting to 7,Z cf totaL project costs,led to several improvements in the recruitment and implementation ofconsultant services under the proposed project:

(a) The recruitment of consultant services was initiated one year beforethe expected loan effectiveness to avoid a gap in the production ofsettlement plans.

(b) The short listing of consultant firms was done through national andinternational advertising to ensure the broadest coverage ofnationalities.

(c) Foreign firms were requested to associate themselves with nationalfirms to ensure skill transfer and on-the-job training.

(d) The recruitment of Phase II and II' consultants will be done in twogroups to avoid overburdening the administrative services of BinaProgram.

(e) The selection procedures were discussed and agreed during loannegotiations.

(f) Phase II and III study contracts will be set up on a lump sum basisper study with minimal control of the man-months to increaseconsultant productivity and timely submission of studies.

3.04 Under the Transmigration III project, Bina Program, with the assis-tance of its TAG, has demonstrated its ability to handle lar-e consultant con-tracts though some delays occurred in the processing of invoices. The paymentof Phase II and III studies on a lump sum basis and assistance to the projectcoordinator in accounting procedures provided under the project should over-come this problem.

3.05 Settlement planning for 300,000 transmigrant families will requirethe survey of about 6.5 million ha at Phase II study level and 2.5 million haat Phase III study level. The very size of studies, together with the limited

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time available requires the use of about 14 large multi-disciplinary consul-tant teams with contract values ranging from US$5 million to US$10 millioneach. Currently national consultant firms are either too small or insuffi-ciently experienced to carry out contracts of this size by themselves. Theassociation of foreign firms with local firms will overcome this problem andwill largely benefit the national consultant industry: first, by providingmore than half of the total number of man-months required to implement theproject, and second, by gaining managerial and technical skills through atraining component built into each contract. At the end of the project it isexpected that some national firms or consortia of national firms will be ableto compete with international firms in settlement planning in Indonesia andabroad.

3.06 Details on the recruitment of these consulting firms and on the costand implementation of contracts are given in paras. 3.21 and 4.09. Because ofthe importance of the Phase II and III studies and the key role in projectimplementation of the Technical Support Teams to Bina Program, PLP andBakosurtanal, detailed TORs were agreed during loan negotiations (see Annex 4for summary TORs of Phase II and III studies and staffing).

Table 3.1: CONSULTANT SERVICES

No. of Foreign NationaLconsulting professionaL professionalfirms staff staff

(--- man-months) …

A. Settlement PlanningPhase I studies (Bina Program) 1 80 150Phase II studies (Bina Program) 14 2,800 3,000Phase III studies (Bina Program) /a 4,200 4,500

Subtotal 15 7,080 7,650

B. Program SupportSpecial studies (Bina Program) 2 80 150Central TAG (Bina Program) 1 495 576Regional TAG (Bina Program) 1 509 426Central TST (PLP) 1 480 .20Regional TST (PLP) 7 900 3,200TAT (Bakosurtanal) 1 220 -Training (Pusdiklat) 1 48 52

Subtotal 14 2,732 5,124

Total 29 9,812 12,774

/a Phase II and Phase III studies will be contracted together.

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3.07 Radar/Laser Mapping. Topographical surveying in tropical forest isa challenge. Aerial contour mapping for Phase II and III studies is notsuitable as airphocos show the tree canopy and not the ground level. Groundsurveying is currently the only methol possible. It is slow and expensivebecause of the cutting of traverses rhrough thick forests. It can also be oflesser quality due to the hardship of the environment (mosquitos, wildanimals, thick vegetation, swamps) and to the problems of adequate supervisionin remote areas.

3.08 These difficulties have led GOI, with the assistance of the StanfordResearch Institute under Bank financing (Transmigration III), to develop anairborne radar mapping system (ARMS) for automatic topographic mapping atscale 1/10,000 with 5 m contour intervals. The system is based on the prin-ciple of using radar waves which can penetrate the thick tree cover. Thoughground profiling is now feasible after three years of testing in the UnitedStates and in Indonesia, automatic mapping is not yet usable for large-scaleoperations due to erratic measurements of the altimetric positioning system.Human interpretation is still required and the radar sensor has some limita-tions in rugged terrain. A final technical and financial evaluation of theARMS is expected before January 1986.

3.09 In view of the delays in developing the ARMS and in order to promotecompetition, COI will soon carry out a pilot airborne laser mapping projectunder Bank financing (Transmigration III). Laser ground profiling techniqueshave been developed by private firms and have been used successfully forseveral years in the United States and Canada. Though this technique does notrequire further research work, the pilot project will allow its testing andadjustment to Indonesian conditions. A complete evaluation of this system andits comparison to ARMS are expected by January 1986.

3.10 Should either or both of these mapping techniques prove to beapplicable on a large scale at an equal or lower cost than conventional groundsurveying they would be incorporated in the second group of Phase II and IIIconsultant contracts because of their greater accuracy, rapidity and possiblylower costs.

3.11 Criteria for Site Selection. The diversity of the transmigrationprogram in terms of geographical areas, types of transmigrants and economicactivities require that a comprehensive set of criteria for the selection ofsettlement sites be given to the planning agency and its consultants. Anassurance was received during loan negotiations that necessary measures wouldbe taken by MOT to ensure that settlement on sites identified by the projectwould only occur in areas whose technical, economic, social and environmentalsuitability for development have been established in accordance with criteriasatisfactory to the Borrower and the Bank. Such criteia include thefollowing:

(a) Technical

- Sites would be accessible through existing waterways and road-ways, or similar facilities to be provided in the future.

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Sites would have soils capable of sustaining crops witheconomic levels of inputs.

Topographic conditions would be adequate for construction ofsettler villages and implementation of the development modelforeseen.

Water resources on the sites would be adequate for drinkingpurposes.

(b) Economic

- Sites would permit the attainment of income levels by thetransmigrants equivalent to at least 2.4 tons of annual riceproduction per family within five years of settlement (this isequal to twice the current estimate of subsistence foodproduction).

- The economic rates of return (ERRs) of proposed farming modelsshould normally be based on quantifiable costs and benefits andbe greater than or equal to the opportunity cost of capital inIndonesia (currently estimated to be 10%). Recommendations tobase new settlements with lower ERRs on expected non-quantifi-able economic and social benefits would require carefuljustification.

:c) Social

- Sites should permit the provision of adequate health,education, family planning and other community services tosettlers within the first five years of settlement.

- Local people wishing to participate in the program would beaccommodated on the sites, to an extent of 20% in mostprovinces and up to 50% in Irian Jaya.

- Local people should stand to benefit from settlement activitiesin their areas, e.g., through parallel development programs orservices.

- The cultural identity of local populations would be maintainedand the economic development of their areas would be promotedat a pace which they considered reasonable. Settlementarrangements would hence need to take into account theparticular requirements of local people, for example, huntersand gatherers and shifting cultivators.

(d) Environmental

To minimize erosion and protect watersheds, no settlement wouldbe sited on sLopes of more than 8% for food crops and more than25% for tree crops.

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- Protection forests and wildlife reserves, as well as areas ofparticular ecological importance (primary rain forest and areasjudged to contain rare flora and fauna), would be avoided.

3.12 Social and Environmental Evaluations. Because the transmigrationprogram is expanding into more, remote areas of Indonesia, the proposed projectwould include several features to strengthen social and environmental evalua-tions and improve the design of project components. In particular, thesefeatures would take into account the presence of local populations in thesettlement areas and safeguard their interests.

(a) Phase II and III studies would be strengthened in the field ofsocial evaluations. Consultant TORs and staffing would reflect thispoint.

(b) Consultants would be required to study development options includingthe participation of up to 20Z local people for a given site (up to50Z in the case of Irian Jaya) as indicated in the Repelita IVdocument on transmigration. Proposed sites would be rejected as inthe past where the number of local people or land tenure issues arelikely to lead to significant difficulties.

Cc) The Technical Advisory Group within Bina Program would assist insupervising and monitoring the social and environmental aspects ofthe Phase II and III studies by employing two anthropologists/sociologists (one national, one expatriate), and one environmen-talist on a full-time basis.

(d) Phase II and III studies would be reviewed by the Project WorkingGroup (para. 4.05) to ensure, inter alia, that the social andenvironmental aspects are adequately covered before proceeding tosettlement.

Ce) The functions of the Technical Settlement Planning and DevelopmentTeams would be enlarged to provide guidance to the Minister ofTransmigration and to the DGSP and their consultants on social andenvironmental issues (see para. 4.07).

Cost Estimates

3'13 Total project costs are estimated at US$275.3 million includingUS$8.3 million in taxes and duties and US$141.8 million (52%) in foreignexchange (Table 3.2). Base costs are expressed in mid-1985 values. Projectcosts by year of expenditure are shown in Annex 1, Tables 2 and 3. Detailedcost tables are included in the Project File (Working Paper Cl).

3.14 Quantities and costs are based on the experience and estimates ofconsultants working with MOT under the Transmigration III project. Quantitieswere revised and costs were updated and adjusted to mid-1985 values.

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3.15 Cost estimates include physical contingencies at the rate of 10% ofbase costs and are estimated at US$21.2 million. Price contingencies arebased on the projected increases shown in Table 3.3 and are estimated at 18%of base costs plus physical contingencies. The average tax rate on projectcomponents is estimated at 3X. It has been assumed that radar/Laser mappingsystems would not be used on the areas to be studied at Phase II and IIILeveLs (paras. 3.07-3.10). Should these systems prove to be workable duringproject implementation, the cost of the Phase II and III studies may decrease.The applicable amount of any cost savings would be cancelLed Erom the Bankloan.

Table 3.2: PROJECT COST SUMMARY /a

TotalForeign Base

Local Foreign Total Local Foreign Total Exchange Costs-- (I Rp billion) --- ---(US$ million)----- (2) (Z)

Aerial photography &base mapping 10.0 15.2 25.2 9.0 13.9 22.9 60 11

Settlement planning 71.4 74.7 146.1 65.0 67.9 132.9 51 62

Program Support 30.7 31.9 62.6 27.9 29.0 56.9 51 27

Total Base Costs /b 112.1 121.8 233.9 101.9 110.8 212.7 52 100Physical contingencies/c 11.2 12.2 23.4 10.1 11.1 21.2 52 10Price contingencies/d 23.5 22.0 45.5 21.5 19.9 41.4 48 19

Total Project Costs 146.8 156.0 302.8 133.5 141.8 275.3 52 129

/a US$1.00 = Rp 1,100.7,b Including taxes and duties estimated at US$8.3 million. Total project costs excluding

taxes and duties are estimated at US$267.0 million./c Total physical contingencies are 10% of base costs.7r Local price contingencies are 19% and foreign price contingencies 16Z of the

respective base costs plus physical contingencies.

Table 3.3: EXPECTED PRICE INCREASES (Z)

Calendar Year 1984 1985 1986 1987-90 1991.

Loca: 9.0 8.0 8.0 8.0 5.0Foreign -2.8 5.0 7.5 8.0 5.0

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Financing Plan

3.16 The proposed Bank loan of US$160.0 million would cover 60% of totalproject costs (less taxes and duties). The Bank loan wouLd be equivalent to100% of the project's foreign costs and 14% of local costs. GOI, through theMinistry of Finance (MOF), would allocate funds for the rest of project coststo the four project implementing agencies (Bakosurtanal, Bina Program, PLP andPusdiklat) (Annex 1, Table 4):

3.17 Flow of Funds. The four project agencies would each prepare annualbudget requests in October each year for submission to MOF and BAPPENAS. MOPwould then issue the formal approval of the four budgets before the start ofthe fiscal year on April 1. Funds would be released to the project agenciesthe quarter before they are needed. MOF would prefinance the Bank share ofproject expenditures except for those items for which it is expected that theBank will make direct payment.

Procurement

3.18 Detailed procurement procedures have been discussed with GOI and aresummarized below and in Table 3.4.

3.19 Aerial Photography and Maps nrepared under contract (US$23.2million). Aerial photography, 625 base maps, and altimetric networks would beprocured in eight contracts through International Competitive Bidding (ICB) inaccordance with Bank guidelines.

3.20 Equipment and Supplies (US$3.7 million). Materials, spare parts,maintenance services, printing and equipment for the mapping to be carried outdirectly by Bakosurtanal, and audio-visual aids and other equipment and sup-plies for the training component will be procured through ICB for items whichcan be purchased economically and efficiently in bulk (US$2.6 million; esti-mated at 70% of the total cost of these items) and international and nationalprudent shopping for smaller quantities subject to Bank prior approval forlots exceeding US$200,000 each (US$1.1 million; estimated at 30% of the totalcost of these items).

3.21 Consultant services (US$223.7 million) will be recruited inter-nationally in accordance with Bank guidelines and will be open to both nation-al and foreign firms. However, foreign firms will be requested to associatethemselves with local firms in order to carry out the technical assistance andtraining components which will be built into each contract. Foreign andnational firms will be free to choose their associates. Except for the PhaseII and III studies and those listed below, the selection procedure will be theshort listing of at least five, firms by GOI, with technical and financial pro-posals submitted according to the two envelope systam. Technical proposalswill be evaluated first according to a point system acceptable to the Bank,which was agreed to during loan negotiations. After negotiations with thehighest evaluated firm, the remaining financial proposals will be sent backunopened to the unsuccessful firms. This procedure will not be followed forthe following contracts:

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(a) Phase II and III studies (US$153.7 million). It was agreed with GOIthat the short listing of consultant firms will be done through aninternational notice of prequalification published in the BusinessEdition of the Development Forum. The criteria for prequalificationwere agreed during project appraisal and criteria for final selec-tion, based on a technical evaluation with price considerations,were agreed during negotiations. Cost considerations are appropri-ate because of the repetitive and straight-forward nature of thestudies and also because the staff input for Phase II and IIIstudies is reLatively well known. However, the weight given to thefinancial proposals would not exceed 40%. Phase If and III studieswilL be divided into 14 packages with not less than .our consultantfirms invited to submit proposals for each package. The prequalifi-cation of consultant firms for the first group of six packages wasapproved during loan negotiations.

(b) Central and Regional TAGs (Bina Program) (US$21.8 million). In viewof the key role played by the existing consultants, Sir M. MacDonaldand Partners, in the implementation of the Transmigration IIIproject and in the preparation of the Transmigration V project, theDG for Settlement Preparation has given a preliminary indicationthat GOI may wish to negotiate directly a new contract with thisfirm rather than to calL for new proposals. This is to reduce costsand improve efficiency by maintaining continuity. Should COI infact recommend the renewal of the existing contract, the Bank wouldhave no objection to renewing the Central TAG, (estimated atUS$11.0 million) and possibly the six Regional TAGs (estimated atUS$10.8 million), depending on the circumstances at the time ofcontract renewal. Should COI decide not to renew the TAG contractthere would be a phasing out period during which some key staff ofthe existing TAG would overlap with the new team of advisors for aperiod for 4-6 months.

Cc) Land Resource/Use Mapping (US$2.0 million) will continue to becarried out by the LRDC team because of existing financing arrange-ment between GOI and the United Kingdom. GO1 finances the cost ofLRDC staff except for social benefits which are financed by theUnited Kingdom. A request for extending the existing Memorandum ofUnderstanding between the two countries for a period of 18 monthswas sent by GOI in April 1985.

(d) Short Term Individual Consultants (US$1.0 million). Directcontracting with prior GOI and Bank clearance will be applied forcontract values below US$200,000. Otherwise the general procedurewilL apply.

3.22 Training (US$4.2 million). Workshops, courses, study tours, andfellowships are not applicable for normal procurement and will be arranged inaccordance with GOI practice acceptable to the Bank. Activities overUS$100,000 will be subject to prior GOI and Bank approval.

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Table 3.4: PROCUREMENT /a(US$ million)

Procurement method TotaiProject element ICB/b Other/c N.A./d cost

Air photos and maps 23.2 - 1.0 24.2(13.9) t-) (13.9)

Equipment and supplies 2.6 1.1 - 3.7(1.5) (0.7) (2.2)

Consultants 209.7 14.0 - 223.7(131.4) (8.8) (140.2)

Training 4.2 - 4.2(3.7) (3.7)

Administration and overheads - - 19.5 19.5

Total Cost 235.5 19.3 20.5 275.3(Bank Financed)/e (146.8) (13.2) (-) (160.0)

la Including physical and price contingencies. Figures in parentheses arethe respective amounts financed by the Bank.

lb Including the international recruitment of consultants.7T Other means of procurement include prudent shopping for equipment and

supplies, training expenses, direct hire of the LRDC and Central TAGconsulting firms and individuals required for short term assignments.

/d Not appLicable. Includes Bakosurtanal staff required for map making andGOt administration and overheads.

/e These figures are approximate and depend on the use of unallocatedfunds. See also Annex 1, Table 4 (Proposed Allocation of Loan Proceeds).

Disbursement

3.23 The proposed allocation of the Bank loan is shown in Annex 1,Table 4 and summarized below.

(a) 602 of expenditures for aerial photographs, maps and levelingnetworks carried out by contract.

(b) 60% of expenditures for equipment, materials and supplies formapping and training.

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Cc) 60% of expenditures for Local training expenses and 100X expendi-tures for foreign training expenses.

(d) 100% of total expenditures for consultant services up to a maximumdisbursement of US$14 million and 60% thereafter.

3.24 For most components, disbursements would be made on the basis ofstandard documentation. Stitements of expenditure (SOEs) would be used formaterials, spare parts, maintenance services and replacement of equipmentpurchased directly by Bakosurtanal in lots under US$200,000 as described inpara. 3.20 and for training materials and expenses. Detailed documentationfor SOEs would be retained in Indonesia and made available to Bank supervisionmissions (see Annex 3).

3.25 Project works would be completed by December 31, 1989 and disburse-ments woul16 be finished 12 months thereafter. An estimated schedule of dis-bursements is shown in Annex 1, Table 5. Because the project is limited to a4 1/2 year time-slice of the transmigration program and because of the largeconsultant :omponent, disbursements are expected to be completed in 5 1/2years, faster Lhan the average for all Indonesian projects, which disburse anaverage of 77% of total disbursements by the end of the 5 1/2 years. The loanclosing date would be December 31, 1990.

3.26 Conditions of disbursement for the second group of eight Phase IIand III consultants would be that:

(a) Bakosurtan;il has completed the aerial survey data and base maps ofabout 110 additional potential settlement sites required for themobilization of these consultants.

(b) GOI has approved and signed the consultant contract for the Centraland Regional Technical Advisory Groups (Bina Program).

IV. PROJECT IMPLEMENTATION

Executing Agencies

4.01 The Directorate of Settlement Planning and Programming (Bina ProgramPankim) and the Directorate of Land Preparation (PLP), both of the Ministry ofTransmigration, and the National Coordinating Agency for Surveys and Mapping(Bakosurtanal) will be the three major project executing agencies. Theseagencies are briefly described below and further information is given inAnnex 2. The MOT Staff Training Center (Pusdiklat) will also receive sometechnical assistance under the project.

4.02 Bina Program Pankim and PLP are directorates within the DirectorateGeneral of Settlement Preparation (DGSP) of MOT (Annex 2, Chart 1). Both areheaded by a Director and assisted by several Sub-Directors (Annex 2, Charts 2and 3). They are centralized agencies with little direct communication withprovincial authorities. Bina Program Pankim has been supported by Banktransmigration projects since 1980 through the financing of site screening and

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evaluation studies and of a Technical Advisory Group (TAC). Bina ProgramPankim has proved to be capable of managing large settlement planning programsof over US$25 miLlion per year with the assistance of international andnational consulting firms. On the other hand, PLP has received littLe assis-tance from the Bank or other agencies except for the financing of a Limitednumber of construction contracts in Sumatra and Kalimantan. The decentral-ization of construction activities in 1984 in favor of the Provincial Repre-sentatives of MOT (KakanwiLs) has disrupted the construction program andcreated a large demand for technical assistance to support PLP at the centraland regional leveLs. The construction program during Repelita IV will be inthe order of US$300 million per year.

4.03 Bakosurtanal coordinates and implements land resource inventoriesand evaluation surveys and the production of base topographic and thematicmaps intended for pubLic use. It is technically attached to the Ministry ofResearch and Technology and administratively to the State Secretariat. It isheaded by a Chairman assisted by two Deputies and a Head of Center (Annex 2,Chart 4). Since 1980 Bakosurtanal has received Bank assistance through theNational Survey and Resource Mapping project for new buildings and modernequipment and bilateral assistance (Canada and Australia) for aerial photo-graphy and base mapping. Bakosurtanal, after a slow start, has proved to bean agency capable of managing large programs under national and externalfunding. Its expenditures over the past five years were around US$10 millionper year. The completion of the Canadian, Australian and Bank projects in1984 has created a large demand for new funds which will be partLy provided bythe proposed project.

Organization and Management

4.04 Individual project components would be carried out by:

(a) Bakosurtanal for the aerial photography, base mapping, altimetriclevelling networks, the Technical Advisory Team and the training ofits staff.

(b) Bina Program Pankim for land resource mapping, the Phase I, II andIII settlement planning studies, the Technical Advisory Groups, thespecial studies in coordination with the Planning Bureau and thetraining of its staff including the organization of a nationalworkshop and the preparation of audio-visual aids on settlementplanning in coordination with Pusdiklat.

(c) PLP for the Technical Support Teams and the training of its staffincluding the organization of a national workshop on settlement con-struction and the preparation of audio-visual aids in coordinationwith Pusdiklat.

(d) Pusdiklat for some limited technical assistance to aid MOT's overalltraining program and the coordination of the training activitiescarried out by Bina Program Pankim and PLP.

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4.05 The project would be coordinated and supervised by the existing MOTCoordirator for Bank-ausisted projects, who is the MOT's Secretary General.In addition, a Project Working Croup would be set up within the existingSettlement Planning Technical Team and representatives at the Director level(Echelon 2) would be designated from the Ministries of Transmigration,Agriculture, Forestry, Home Affairs, Population and Environment, and SocialAffairs and from relevant provinciiL authorities. Representatives ofBappenas, Sekneg and Bakosurt4nal would aLso participate when necessary.

4.06 The chairman of the Project Working Group wouLd ba the Director ofBina Program Pankim, reporting to the Minister of Transmigration through theDCSP. The Project Working Group wouLd generally meet monthly and would makerecommendations to the Minister of Transmigration on:

(a) Settlement planning and construction.

(b) Regional planning and special studies.

(c) Phase II studies and the development options prooosed.

(d) Phase III studies and the executing agencies responsible forimplementing the construction and deveLopment of the proposedsettlements.

4.07 In addition, the National and Provincial teams/committees set upunder Presidential Decree No. 59/1984 and Ministry of Home Affairs RegulationNo. 15/1975 would be utilized in providing guidance to the Minister ofTransmigration and to the DGSP and their consultants on, among others, socialand environmental issues.

(a) The Settlement Planning Technical Team chaired by the DirectorGeneral for Settlement Preparation would make policy recommendationson the planning of the transmigration program based on Phase I, II,III and other reLevant studies including the social andenvironmentaL aspects and the proposals affecting local people.

(b) The SettLement Development Technical Team chaired t)y the DirectorCeneral for Mobilization and Development would make policyrecommendations on the development aspects of the transmigrationprogram based on Phase III and other relevant studies including,inter alia, monitoring and evaluating the social and environmentalaspects following the arrival of transmigrants.

(c) The provincial and district Land Allocation Committees chaired bythe provincial and district heads of the DG Agraria within theMinistry of Home Affairs would discuss and agree on existing landuse, land requirements and compensation arrangements based on PhaseI, II, III and other reLevant studies with local people affected bythe transmigration program.

4.08 An assurance was received during negotiations that the ProjectWorking Group would be set up and that the Technical Teams and the ProvinciaLand District Committees would be effectively used.

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Implementation ScheduLe

4.09 The project will be implemented in about 41 years from November1985, the estimated date of loan effectiveness, to end-1989. The duration andphasing of project activities are summarized in Annex 1, Chart 1. The twocritical sequences of events for the timely implementation of the project arethe completion of project start-up activities and the recruitment of keyconsultants: (a) the first group of six Phase II and III consultants; (b) theCentral Technical Support Team (PLP); and (c) the Technical Advisory Team(Bakosurtanal). Annex 1, Charts 2 and 3 give the detailed sequences of theseactivities.

4.10 Conditions of loan effectiveness would be that:

(a) Bakosurtanal has completed, under the project start up activities,the aerial survey data and base maps of about 110 potential settle-ment sites required for the mobilization of the first group of sixPhase 11 and III consultants.

(b) COI has approved and signed the consultant contracts for the CentralTechnical Support Team (PLP) and the Technical Advisory Team(Bakosurtanal).

4.11 The recruitment of the second group of eight Phase 11 and IIIconsultants is scheduled to aLlow the completion of the settlement planningsix months before the end of Repelita IV. The mapping, technical support andtraining components will be implemented continuousLy throughout the projectperiod. Other project components including aerial photography, regional landresource mapping, Phase I studies and special studies will be implemented asrequired. An assurance was received during negotiations that the 1987 trans-migration program review (para. 3.02c) would be completed by , ptember 30,1987 and discussed with the Bank by November 30, 1987.

4.12 Status of Implementation. Start-up activities for the project are.being financed under the Transmigration III project (Annex 1, Charts 2 and3). Drafting of (a) bidding documents for the procurement of erial photo-graphy and (b) an agreement between MOT and BakosurtanaL on sub-contractingprocedures were reviewed and approved during the post-appraisa mission inMarch 1985. To aid project effectiveness, Bakosurtanal will continue toproduce semi-controlled photo-mosaics at scale 1/100,000 under a previousagreement.

4.13 The notice of prequalification for Phase II and III consultants wasadvertised in the Development Forum Business Edition of January 21, 1985.Prequalification documents were received on February 16, 1985 by Bina ProgramPankim and the short listing of five consultant firms for each of the firstsix study packages was agreed upon during loan negotiations. TORs forPhase II and III consultants and the technical advisory groups and evaluationcriteria for the selection of firms have also been agreed upon during loannegotiations.

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Monitoring and Evaluation

4.14 Bina Program, in conjunction with the PLP, Bakosurtanal and theirrespective technical support teams, will be responsible for monitoring phy-sical progress and in particular for ensuring adherence to the standards setout in the consultants' TORs. Special attention would be given to the useful-ness of the radar/laser mapping technology when the information is availablein January 1986, and to the potential impact of the site selection studies onlocal people and the environment.

4.15 One of the special studies to be financed under the project will bea detailed review of the transmigration program in 1987. It will cover themajor aspects of the transmigration program, including targets, the rate ofimplementation, budgetary allocations and expenditures, land availability,physical planning, land clearing, construction, farm models, agriculturalproduction and coordination with other agencies. In addition, it wiLl carryout a socio-economic survey of five selected settlements (1 in Sumatra, 2 inKalimantan, and 2 in Irian Jaya) and make a special assessment of social andenvironmental aspects, including land compensation procedures and the protec-tion of local'people's interests particularly in Irian Jaya and Kalimantan.The conclusions of the 1987 Review would be taken into account in determiningany adjustments necessary to complete the Transmigration V project.

Accounts, Audits and Reporting

4.16 Project accounts will be subject to two audits: (a) by theInspector General of MOT, and (b) by the Director General of State FinancialControl (BPKP). Assurances were received at negotiations that:

(a) A1l implementing agencies involved in the project would maintainseparate accounts for the project, and all contracts, orders andreceipts will be kept for at least one year after the closing of theloan.

(b) Agency accounts would be audited annually by independent auditorsacceptable to the Bank.

(c) The accounts, audit reports and copies of the SOEs for each imple-menting agency would be forwarded to and summarized by MOT'sCoordinator for Bank assisted projects in a report which would betransmitted to the Bank within nine months of the close of each GOIfiscal year.

4.17 Quarterly and annual progress reports as well as Project CompletionReports will be prepared by Bina Program, PLP, Pusdiklat and Bakosurtanal withthe assistance of their respective technical support teams. Among otherthings:

(a) Special attention will be given during reporting to the impact ofsettlement planning on local populations and environmental aspects.

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(b) ALl reports will be consolidated in one report by the MOTCoordinator for Bank assisted projects before submission to theBank.

(c) A consolidated Project Completion Report will be submitted to theBank no later than six months after loan closing.

V. PROJECT ANALYSIS

Cost Effectiveness

5.01 During Repelita III the average cost of the transmigration programwas estimated at US$5,720 (in mid-1985 values) per transmigrant family.

Table 5.1: REPELITA III AVERAGE COST PER TRANSMIGRANT FAMILY

Costper family/a Percent

(US$)

SettLement planning 440 8Infrastructure and housing 2,700 47Transport and subsistence allowance 1,150 20Agricultural supplies and services 1,150 20Land titling and administration 280 5

Total 5,720 100

/a Based on a dryland food crop model excluding the costs of secondarydevelopment.

5.02 The average cost during Repelita IV is expected to be somewhathigher at about US$7,000 for the dry land food crops model because of theremoteness of the new settlement areas (Kalimantan and Irian Jaya) whichrequire higher infrastructure and transport costs.

5.03 Under the project the total cost of settlement planning will beUS$500 per family or 7.1Z of total establishment costs. This percentage islower than during Repelita III and is in line with the planning costs requiredfor other major investment projects. These planning costs include thetechnical support teams to Bina Program and PLP which would be equivalent toUS$38 and US$67 per family respectively. The cost of these teams represents7.6% of the investment in settlement planning and 3.4X of the investment inconstruction and is in line with similar investment projects. The improvedsettlement planning and the technical support teams are expected to lead to

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savings of up to two to three times their nominal cost. Such savings couldinclude more efficient planning Leading to lower site rejection during theplanning process; higher crop production and therefore less need forgovernment support during the development period; and improved constructionmethods and supervision leading to smaller investment and maintenance costs.

Economic Impact

5.04 The project is expected to lead to the settlement of about 300,000transmigrant families through its physical planning component. These people,who are largely landless with little prospect of obtaining land in their over-crowded places of origin, qualify as "the poorest of the poor" in Indonesia.Given the worsening problems of erosion and other environmental hazards causedby the already intense pressure on rural land in Java and Bali, transmigrationrepresents a major means of increasing the number of people directly employedin agricultural production. Rural irrigation works and other basic governmentagricultural programs primarily affec: those with land who are underemployedduring an off-season. They create few new landholders, as opposed to trans-migration. In the long term even suitable transmigration land will run outand further employment gains will have to come from the off-farm rural orurban sectors. In the short to medium term, however, job creation caused byindustrialization and attendant increases in the service sector are expectedto lag greatly behind the need for jobs. While the reLative costs per jobamong the aLternatives of "urban industrial," "urban service," "transmigra-tion," etc. continue to be researched through the Bank's on-going economic andsector work, it is clear that the high and rapidly increasing demand for jobsin rural Java and Bali will exceed the supply from all of these potentialsources, and at the margin the transmigration program has no lower cost"competitors" for absorbing this surplus ruraL labor. Given this stark fact,GOI has little alternative but to proceed with a large scale transmigrationand land distribution program. Based on the experience gained over the past20 years, including four Bank-financed projects (paras. 1.20 to 1.27), and thecost effectiveness of thorough planning described above, the land resourceevaluation and planning components of the proposed project represent the mostefficient and economic means to ensure a sound basis for the transmigrationprogram.

5.05 Transmigration V is primarily a mapping and site evaluation projectin support of a much larger regional development program. The many benefitsof improved mapping and site selection cannot be adequately quantified andrelated to the costs to be incurred under this specific project and no mean-ingful economic rate of return calculation for the project can be made. How-ever, it is important for GOI and the Bank to be assured that there is suffi-cient economic and social justification for the proposed project, especiaLlysince this project will identify sites in more remote and thus more costlyareas of the country than in the past. In addition to the job creation bene-fits described above and a "without" case of continuing erosion and otherdamage to the environment of rural Java and Bali, an analysis has been done toexamine the likely economic returns (based only on quantified costs and bene-fits) which can be expected when the transmigrants are actually settled on thesites identified and planned under this project. The results of this analysisare presented in Annex 6 and the Project File (Working Paper C2) and can besummarized as follows:

- 37 -

(a) The first stage development of the upland food crops model,consisting of clearing 0.25 ha for the house lot and 1.0 ha for thefirst food crop lot and the supply of a minimal agricultural packageof inputs during the first three years, is likely to result insubsistence farming. Economic rates of return (ERRs) would be lowand in remote areas such as Irian Jaya and parts of Kalimantan mightapproach zero, due largely to high investments in infrastructure.In addition, some families (assuming a normal distribution of"poor," "average" and "good" farmers) may sometimes be unable toreach the target income of 2.4 tons of rice equivalent, particularlyin years with below average rainfall. COI recognizes this danger,and regards this first stage development as an interim settlementstage to be followed by a second stage development.

(b) The addition of a second stage development, especially when cattleare supplied for draft power to the upland and wecland farm models,can result in food surpluses in excess of the target income andsatisfactory ERRs. A second stage development involving tree cropsalso points to a satisfactory ERR although it may be subject to thesame potential year-to-year fluctuations in self sufficiency in theearLy years of development. Because of the greater financial andmanagerial requirements of establishing sites based on models withsecond stage development, COI's Repelita IV settlement targets mayprove to be ambitious. The pace of implementation of transmigrationis a subject which will continue to be analyzed through the Bank'seconomic and sector work.

5.06 The likely ERRs for a series of possible models with second stagedevelopment in remote areas such as Irian Jaya and Kalimantan are, at 72-12Z,Lower than estimated in traditional transmigration areas such as Sumatra (10%-152). These lower returns result from the lack of existing infrastructure andthe higher transport costs involved. Some of the ERRs, based on quantifiablecosts and benefits only, are also lover than the opportunity cost of capitalin Indonesia which is currently estimated at 10%. However, unquantifiableeconomic and social benefits which must be taken into account include thesocial value of providing land to the landless, increased food security andimproved regional development. On a more human level, all of the Bank'seconomic and sector work to date, as well as the experience of previous andcurrent projects, suggest that family incomes on well-planned transmigrationsites can reach US$1,000 to US$2,000 per year or higher (3.5 to 7.0 tons ofrice equivalent), which is several times incomes in the transmigrants' placesof origin. These are issues of prime social and politicaL importance inIndonesia which the Government is addressing with the support of the Bank.Weighing the tradeoffs of competing claims on scarce development resourcescontinues to form a major part of the Bank's economic and sector work and thepolicy dialogue with GOI. When the quantified and nonquantified benefits oftransmigration in these more remote areas are considered together, one mayconclude that the transmigration program for these areas is consistent withthe national development priorities held by Government and supported by theBank. The proposed Transmigration V project supports and seeks to improve theoverall transmigration program in the most economic and efficient means yetidentified.

- 38 -

Social and Environmental Impact

5.07 Local Populations. Although local attitudes toward transmigrationhave varied from province to province, local populations have been generallyreceptive to transmigration with its associated infrastructure, employment andsocial benefits such as improved schools and health facilities and lower costlabor supply from which they benefit. With some notable exceptions, such asLampung province in South Sumatra, transmigrants are a minority in theprovinces where they have settled and they have not seriously compromised theinfluence of local groups in their own provinces.

5.08 As the scale of the program expands, however, and transmigrants aresent to new areas and/or remote sites, it is inevitable that they will belocated among people who are ethnically different or who are sparsely settledand relatively unacculturated. Such people are found in project areas in bothKalimantan and Irian Jaya. The people in these areas are of concern for tworeasons. First, those who are relatively unintegrated into the larger societymay be unaware of their own rights and interests. Second, those who areeither unacculturated or ethnically distinct need particularly careful consid-eration to ensure that they benefit from development.

5.09 In order to overcome these concerns it is GOI's policy to:

(a) Develop transmigration settlements only when satisfied that they aretechnically socially, economically and environmentally viableaccording to extensive studies carried out under the project.

(b) Include on a voluntary basis the local people living in and aroundthe proposed settlement areas to raise their living standards to thesame level as that of transmigrants.

Cc) Give equal access to economic and social infrastructure and servicesto all sponsored and local transmigrants.

(d) Discuss and agree on compensation arrangements with local people inthe event that any land to be developed for transmigration involvescustomary land rights.

(e) Formalize the release of land rights and compensation arrangementsthrough standardized procedures to be implemented by the provincialand district Land Allocation Committees.

5.10 Perhaps one of the most sensitive issues in new settlement areascenters on the release of customary land use rights and the estimates ofequitable compensation for local users. A recent Presidential Decree(No. 59/1984) formally delegates the coordination of the transmigration pro-gram, through the Minister of Transmigration to the Governors and their pro-vincial staff. Under this new decree the Governors will, among other things,be responsible for ensuring that conflicting claims on the land are resolvedin order to reduce the present high rate of settlement site rejection.

- 39 -

5.11 GOI has in the past, under Transmigration II and III Projects, andwill continue, under the proposed project, to reject sites for which agree-ments cannot be reached with local users or when the number of local people issuch that the creation of a transmigration settlement would create seriousconflicting land claims. For example, in Irian Jaya, the sites proposed underthe project are located in the sparsely populated lowlands which have lessLand rights problems than in the highlands where the bulk of the indigenouspopulation lives.

5.12 The proposed project, which entaiLs advanced pLanning, offers theopportunity to further develop those standards and procedures which willbenefit transmigrants and local populations. The consultant and institutionalarrangements to insure this are described in Chapters 3 and 4.

5.13 The Role of Women. The project has no component specificallyconcerned with women. However, it is a resource evaluation and site planningproject in direct support of the transmigration program, which treats thefamily as the basic economic unit. The transmigration program is concernedwith raising rural incomes, increasing local employment and improving nutri-tional and educational levels for all family members, and each family memberis expected to benefit fairly.

5.14 Environmental Effects. One reason for the transmigration program isto reduce the overcultivation of environmentally vulnerabLe areas on over-crowded Java and Bali. This project wilL therefore have indirect beneficialenvironmental effects on the sending areas. More important, the primary pur-pose of this project is to improve the selection and design of transmigrationsites. Especially as the transmigration program expands to relatively unknownareas of Indonesia, careful site selection is essential to prevent inappropri-ate sites and farming systems being developed. As in the case of Transmigra-tion III, the Phase I, II and III studies will use environmental suitabilityas a criterion in deciding whether to proceed or reject a proposed site forfurther consideration. For example, food crop areas are restricted to slopesunder 82, and tree crops to slopes under 25Z. The methodical evaluation,screening and selection of sites under this project thus has the potential toprovide enormous environmental benefits in both the sending and receivingareas.

5.15 In addition, the roles of the Ministries of Population and Environ-ment and of Social Affairs in the decision process of the transmigration pro-gram would be strengthened under the project by incorporating them in (a) theTechnical Teams reviewing social-environmental matters and (b) the ProjectWorking Group in charge of reviewing and recommending the acceptance of thePhase II and III studies to the Minister of Transmigration.

Project Risks

5.16 Managerial. The effectiveness of this type of project depends heav-ily upon the .trength and the timely mobilization of the Technical AdvisoryGroups. In the past, the time required to mobilize the Bina Program TAGcaused delays in program administration. Under this project the contract with

- 40 -

the current Bina Program TAG (which has been financed under Transmigra-tion III) will be extended at Least one year to provide several months overlapshould another firm receive the TAG contract to complete Transmigration V.

5.17 Another managerial risk has to do with the implementation capacityof MOT to use the information provided under the project to successfully carryout the transmigration program. If, because of the pressures to acceleratethe transmigration program in order to accomodate the large number of familieswho wish to transmigrate, MOT fails to incorporate the recommendations of thestudies financed under the project, then some of the benefits of the projectcould be reduced. The risk of this happening is minimized given the expe-rience of Transmigration III and the continuing monitoring and evaluation ofthe transmigration planning process provided by this project.

5.18 SociaL. If, contrary to GOI's stated policy, transmigration were tobecome identified with the forced participation of local people or result inmajor disadvantages to local people, then the program may be unable to go for-ward at the planned rate and the benefits of this project would be reduced.However, the primary objective of this project is to improve the quality ofsite selection in order to promote the welfare not only of transmigrants butaLso of local people. The components built into the project to insure thatthe welfare of local people is taken fully into account minimize the socialrisk.

5.19 With the precautions mentioned, the risks are judged to beacceptable.

VI. AGREEMENTS REACHED AND RECOMMENDATION

Assurances

6.01 The following assurances were obtained at negotiations:

(a) Consultants will be recruited internationally in accordance withBank guidelines (para. 3.21).

(b) The Project Working Group, the Technical Teams and the Provincialand District Land Allocation Committees will be set up or usedeffectively during project implementation (para. 4.08).

(c) A detailed transmigration program review would be completed bySeptember 30, 1987 (para. 4.11).

(d) Quarterly and annual progress reports as well as Project CompletionReports will be prepared by Bina Program, PLP, Pusdiklat andBakosurtanal. These reports will be consolidated by the MOTCoordinator for World Bank assisted project (para. 4.17).

(e) Necessary measures will be taken by MOT to ensure that settlementson sites identified by the project would only occur in areas whosetechnical, economic, social and environmental suitability for

- 41 -

development have been established in accordance with agreed criteria(para. 3.11).

Conditions of Effectiveness

6.02 The following would be conditions of effectiveness:

(a) Bina Program has selected 165 potential settlement sites to bestudied under this project (para. 2.17).

(b) Bakosurtanal has completed the aerial survey data and base maps ofabout 110 potential settlement sites required for the mobilizationof the first group of six Phase II and III consultants(para. 4.10(a)).

(c) COI has approved and signed the consultant contracts for the CentralTechnical Support Team (PLP) and the Technical Advisory Team(Bakosurtanal) (para. 4.10(b)).

Conditions of Disbursement

6.03 The following would be conditions of disbursement for the secondgroup of eight Phase II and III consultants:

(a) Bakosurtanal has completed the aerial survey data and base maps ofabout 110 additional potential settlement sites required for themobilization of these consultants (para. 3.26(a)).

(b) GOI has approved and signed the consultant contract for theTechnical Advisory Group (Bina Program) (para. 3.26(b)).

Recommendation

6.04 With the above assurances and conditions, the project would be suit-able for a Bank loan of US$160 million for a term of 20 years, including afive-year grace period, at the standard variable interest rate. The Borrowerwould be the Republic of Indonesia.

-42- ANNEX 1Table 1

INDONESIA

TRANSHICRATION V PROJICT

National Mappin, "nu Sattlleunt Planning

Project Cost Summary

2 total-- (Rp billion) - - (US$ million) - 2 eoreLgn baslLocal Foreign Total Local Foreign Total exchange costs

Aerial Photosraphy & Base NappinsAerial photography 4.7 8.6 13.3 4.3 7.8 12.1 64 6Base mapping 4.0 5.2 9.2 3.7 4.7 8.4 56 4Altimetric networks 1.2 1.5 2.7 1.1 1.3 2.4 55 1

Subtotal Aerial Photography 6 Base Mapping 10.0 15.2 25.2 9.1 13.9 22.9 60 11

Settlement Plann..gPhase I studies 1.6 2.0 3.6 1.4 1.8 3.2 56 2Phase II studies 27.3 29.1 56.4 24.8 26.5 51.2 52 24Phase III studies 42.6 43.6 86.2 38.7 39.7 78.4 51 37

Subtotal Settlement Planning 71.4 74.7 146.1 64.9 67.9 132.9 51 62

t-rogram SupportSpecial studies 0.4 1.2 1.6 0.4 1.1 1.5 72 1Technical support teams 27.8 27.6 55.4 25.3 25.1 50.3 50 24Training 2.4 3.2 5.6 2.2 2.9 5.1 57 2

Subtotal Program Support 30.7 31.9 62.6 27.9 29.0 56.9 51 27

Total lase Costs 112.1 121.9 234.0 101.9 110.3 212.7 52 100

Physical contingencies 11.2 12.1 23.3 10.1 11.0 21.2 52 10Price contingencies 23.6 21.9 45.5 21.5 19.9 41.4 48 19

Total Project Costs 146.9 156.0 302.8 133.5 141.8 275.3 52 129

Note: Some totals may not add precisely due to rounding.

INDONESIA

TRANSHIGRATION V PROJECT

National Mapping and Settlement Planning

Project Components by Year /a

Totals including contingencies Totals Including contingencies(Rp billion) (USS millon)

85186 86/87 87/88 88/89 89/90 Total 85/86 86/87 87/88 88/89 89/90 Total

Aerial Photography & ease MappingAerial photography 6.6 4.4 5.1 - - 16.1 6.0 4.0 4.7 - - 14.6Base mapping 1.8 3.2 2.9 3.3 0.8 11.9 1.6 2.9 2.7 3.0 0.7 10.9Altimetric networks - 0.9 1.4 1.3 - 3.5 - 0.8 1.2 1.2 - 3.2

Subtotal Aerial Photography & Base Mapping 8.3 8.5 9.4 4.6 0.8 31.6 7.6 7.7 8.6 4.2 0.7 28.7

Settlement PlanningPhase I studies - 2.2 1.6 0.8 - 4.5 - 2.0 1.4 0.7 - 4.1Phase It studies 12.8 27.5 29.7 - - 69.9 11.6 25.0 27.0 - - 63.6Phase III studies - 41.9 45.2 24.8 - 112.0 - 38.1 41.1 22.6 - 101.8

Subtotal Settlement Planning 12.8 71.6 76.5 25.6 - 186.S 11.6 65.1 69.5 23.3 - 169.5

Program SupportSpecial studies - - 1.1 0.6 0.6 2.2 - - 1.0 0.5 0.6 2.0Technical support teams 2.2 14.6 22.4 23.4 12.3 74.9 2.0 13.3 20.4 21.3 11.1 68.1Training 0.5 1.3 1.8 2.5 1.5 7.6 0.4 1.2 1.7 2.2 1.4 6.9

Subtotal Program Support 2.7 15.9 25.3 26.4 14.4 84.7 2.4 14.5 23.0 24.0 13.1 77.0

Total Project Costs 23.8 96.0 111.2 56.6 15.1 302.8 21.7 87.3 101.1 51.5 13.8 275.3

/a Project year is April-Mareb. *

Note: Some totals may not add precisely due to rounding.

INDONESIA

TRANSHIGRATION V PROJECT

Ntoal Mpin and Settlement Plannn

Summary Accounts by Year La

Totals including continsencies (Rp billion) Totals including contingencies (US sillion)1985/86 1986/87 1987/88 1988/89 1989/90 Total 1985/86 1986187 1987/88 1988/89 1989/90 Total

Investment CostsAir Photos and Hapa

Prepared under contract 7.3 6.6 7.9 3.3 0.5 25.5 6.6 6.0 7.1 3.0 0.4 23.2Prepared by Bakosurtanal /b 0.5 1.3 0.9 1.0 0.2 3.8 0.4 1.1 0.8 0.9 0.2 3.5

Subtotal 7.7 7.9 8.7 4.3 0.7 29.3 7.0 7.1 8.0 3.9 0.6 26.7

Consultants 13.9 80.4 93.1 46.4 12.3 246.1 1207 73.1 84.7 42.1 11.2 223.7

Trainina E lenses Courses, vorkshops and scholarships 0.4 0.9 1.4 1.5 0.6 4.7 0.3 0.8 1.2 1.3 0.5 4.2Training equipment and supplies 0.1 0.1 0.0 0.5 0.5 1.3 0.1 0.1 0.0 0.5 0.5 1.2

Subtotal 0.5 1.0 1.4 2.0 1.1 6.0 0.4 0.9 1.3 1.8 1.0 5.4

Administration and Overhead 1.7 6.8 7.9 4.0 1.1 21.4 1,5 6.2 7.2 3.6 1.0 19.5

Total Investment Costs 23.8 96.0 111.2 56.6 15.1 302.8 21.7 87.3 101.1 51.5 13.8 275.3

Total Project Costs 23.8 96.0 111.2 56.6 15.1 302.8 21,7 87.3 101.1 51.5 13.8 275.3

/a Project year is April-March.znb Including costs of equipment, supplies and 8akosurtanal staff.

Note: Some totals may not add precisely due to rounding.

45g_ ANNEX 1Table 4

INDONESIA

TRANSMIGRATION V PROJECT

National Mapping and Settlement Planning

Financing Plan and Proposed Allocation of Loan Funds(US$ mLlllon)

Source of FundsCosts Loan Amount Bako- Bina Pusdl-Total X IBRD surtanal program PLP klat

Air photos and maps 21.2 (60) 12.7 8.5 - - -

Equipment and supplies 3.5 (60) 2.1 1.0 0.2 0.2 -

Consultants 204.1 (62)/a 127.1 1.2 62.5 13.3 0.4

Training 3.8 (88)/b 3.4 - 0.2 0.2 -

Administration & overheads 17.7 (0) - 2.2 12.7 2.8 -

Subtotal :50.3 145.3 12.9 75.6 16.5 0.4

Unallocated 25.0 14.7 1.2 7.5 1.6 */c

Total 275.3 160.0 14.1 83.1 18.1 0.4

/a 100% up to US$14.0 million and 60% thereafter.

/b 60X of expenditures within Indonesia and 100% outside Indonesia.

/c Less than US$100,000.

-46 ANNEX 1

INDONESIA

TRANSMIGRATION V PROJECT

National Mapping and Sett.lement Planning

Estimated Schedule of Cumulative Disbursements a

IBRD Indonesiafiscal year Transmigration V all loansand semester US$ million % X

FY86First 1.0 1 1Second 13.0 8 3

FY87First 19.0 12 8Second 26.0 16 14

FY88First 36.0 23 22Second 61.0 38 30

FY89First 90.0 56 40Second 118.0 74 50

FY9oFirst 136.0 85 60Second 150.0 94 69

FY91First 160.0 100 77

Year 7 and beyond - 100

/a Closing date December 31, 1990.

INDONESIA

TRANSKIGRATION V PROJECr

Phasing of Activities

Bank Fiscal Year | FY86 | FY87 | FY I F89 I F90GOI Fiscal Year 85/86 86187 87/88 68189 69 90Calendar Year I 1985 _ 1986 1 1987 _ 1988 1 1989 1190

Jan _Apr July Oct Jan Apr July Oct Jan APr July Oct IJan Apr Jul ct Ja pr J Ot IJan

I. Aerial Photography and I I I I I I I I I I 10a111Basic Mapping I I I I I I I | I | | | I ITransuigration V Start Up I I I I I I I I I I I I I | | | J 4 I | |

Activities /a IxxxxxxxxxxI I I I I I I I I I I 9 IAerial Photography I…-----xxxxxm | | | I | |Base Mapping _--…xxxxxxxxx xxx'lAltimetric Networks Ixxxxx - ---- I I I

It. Settlement Planning .............................. Phase I Studies b I I I I IPhase II and III Studies I I I I I I I I I I I I I I I I | |(lst group) /c - ------------ Ixxxxxx

Phmsee I and III Studies(2nd group) /d __------

III. Program Support to ExecutingAgenciesDina Yrmrau: Central TAG I I I I------

Regional TAGs -…--- _ _______- --------PLP Central TST _ __ _ ______

Regional TSTs I I- - _ IBakosurtanal: TAT _-_____ _----- -Special Studies /e _ _ - l I I 1TrainingL (Bina Program, PLP ll l l l l llI I 1Sand Bakosurtanal) I I |

-------------- Bidding

xxxxxxxxxxxxxxx Implementation

/a To be financed by the Transmigration III project. Not included in Transmigration V cost tables./b Including LRDC land resource and land use base maps.7-c Firat urous of Phase 11 and III studies comorise six consultant firmsa.71 Second group of Phase II and III studies comprise eight consultant firus.7-e Mid-term Repelita IV tranamtgration program reviev.

INDONESIA

TRANSMIGRATION V PROJECT

Recruitment of First Group of Consultants /a

Calendar Year 11984 985 i986IDays O N ID J F I MT I I A I I I D F |IM A|

Notice of Pro-qualification 45 xxxxxx I | | | | | |Pre-qualification 45 I I I xxxxxxClearance GOI & WB 30 I 1 lxxxxxTOR Drafting 90 1 xxxxxxxxxxxxxxx |TOR Clearance GOI & WB 30 ( xxxxxInvitation to Bid |45 I I I | xxxxxxEvaluation of Proposals 1 45 I i lxxxxxx 111111Clearance MOT |30 11 I I 111111 jxxxxxl | | | | | |Clearance Sekneg 130 I I I I I I I I I 1 I xxxxxl I I ||I'Clearance Bappenas 130 111 Il1 xxxxxl | I I I IClearance WB |30 | | xxxxx I I Contract Award 30 xxxxxMobilization |45 | | | I | I xxxxxxContract Implementation 1910 1 xxxxxx

o 0 o

tD M~~~~~~~~td

/a These include: - 7 Phase II and III Consultants- 1 Central Technical Support Team (PLP)- 1 Technical Advisory Team (BakosUrtanal)

INDONESIA

TRANSHIGRATION V PROJECT

Project Start-Up Activities (Bakosurtanal la

= ~ ~ ~ ~ ~ ~~~~~~ ~~~~ I I -_I_

Calendar Year |a| D J 1 1985 1 1986 AJNID IIFIMIAI I JI JI AI S I N I D I J I11IM1 A ITIJI J 1

Semi-Controlled Radar Mosaics (1/50,000) | I 1 I 1 I 1 I I I I I I I I I I I I I I I IKalimantan (165,000 sq.ka) 1180 | | | | | xxxxxxxxxxxxxxxxxxx3 | | | I | I I |Irian Jaya (105,000 sq.km) 1180 | | | | | | | |xxxxxxxxxxxxxxxx xx| | | I I I | | I

Aerial Photopcaphy (1/50,000 & 1130,000) 1 1 1 1 1 1 1 1 I 1 1 1 1 1 1 1 I I I I I I 1(Sumatra, Kalimantan and Irian Jaya I I I I I I I I I I I I I I I I I I I I I I I102,000 sq.Ik) k 1 I I I I I I I I I I I I I I I I I I I I I

Bidding Documents & Specifications | 60 | | xxxxxxx| I I I I I I I I I I I I I I I IClearance COI & WB 1301 I I 1 lxxxl I I I I | I I I I I | I I I |Invitation to Bid 1451 I 1 1 |xxxxxxx| I I I I I I I I I I I I I IEvaluation of Bids 1 30 1 1 I 1 I I lxxxi I I I I I I I I I I I I IClearance GOI & WB 1 30 1 1 1 1 I I 1 lxxxi I I I I I I I I I I I IContract Award 1 i3 1 1 1 1 1 1 1 1 I lxxx I I I I I I I I I I IMobilization 1 451 1 I 1 1 1 I I IxxxxxxI I I I I I I I I IContract Implementation 11801 I I I I I I I I 1 I xxxxxxxxxxxxxxxxxxxII

Rectified Photo Ma2s (1/50.000)Lb I | I I I I I | | I I 1 1 1 1Kalimantan (120 sheets) |I lxxxxxxxxxxxxxxxxxxxxxxxxxxxzxxxxxxxxxxxx x| |xx | |xl IIrian Jaya (80 sheets) I I I I I I | I I I Ixxxxxxxxxxxxxxxxx xxtnKxXlxXXXiHXxxxxx2 I

/a These activities are not financed by the project but are essential for its timely implementation./b Based an existing and new air photos.

.'-~~~~~~~~~~~ 50:

ANNEX 2Page 1

INDONESIA

TRANSMIGRATION V PROJECT(National Rapping and Settlement Planning)

PROJECT AGENCIES

Executing Agencies

1. Ministry of Transmigration. During Repelita I and 11 (1969-1979),the transmigration program was under the responsiblity of the DirectorateGeneral of Transmigration within the Ministry of Manpower and Transmigra-tion. However, in view of the marked increase of this program towards the endof Repelita II, it became necessary in 1978 to involve other governmentalagencies.

2. Presidential Decree No. 13 of 1978 promoted the Director General forTransmigration to the rank of Junior Minister, and Presidential Decree No. 26of 1978 created a series of bodies to develop policy and coordinate the trans-migration program: BAKOPTRANS (composed of Ministers), SATDALTRANS(Directors), SATBIN I (Provincial Officers) and SATBIN II (Districtofficers). Under this organizational structure, each Ministry concerned(Manpower and Transmigration, Public Works, Agriculture, Home Affairs, Tradeand Cooperatives, Education, Health, etc.) was to plan its activities andbudget in consultation with the Junior Minister. In practice, however, theauthority, budget and staff of the Junior Minister were too limited forefficient coordination.

3. During Repelita III (1979-1984), the transmigration program con-tinued its expansion with a target of 500,000 families and in 1983 the JuniorMinister's office was converted to a Ministry incorporating three majorexecuting agencies: (a) the Directorate of Settlement Planning and (b) theDirectorate of Sectlement Construction (both from the Ministry of PublicWorks); and (c) the DG of Transmigration from the Ministry of Manpower andTransmigration.

4. Recently the coordination of the transmigration program was furtherrevised, under Presidential Decree No. 59 of 1984, which created: (a) aSecretariat responsible for coordinating the transmigration program among allagencies concerned; (b) a Suervisory Team to supervise and evaluate thetransmigration program; and (c) a Technical Team composed of Directors fromthe various technical agencies concerned to provide technical advice to theMinister and coordinate the technical aspects of the program.

5. Thus, in the space of six years, the DG of Transmigration hasexpanded to become a full Ministry with increased human and financialresources and the authority to carry out a large program. This dynamicapproach to organizational aspects has improved the management and implemen-tation of the transmigration program, though the Ministry is still too new tofunction with optimal efficiency. The grouping of mobilization, transport,planning and construction activities within the Ministry of Transmigration has

- 51 -ANNEX 2Page 2

streamlined the settlement of transmigrant families, but developmentactivities such as input supply, extension, credit and land titling, which stillremain under the responsibility of other Ministries, namely the Ministries ofAgriculture and Home Affairs, are still lagging. As a result, the agricul-tural and economic development of existing and future settlements remains anarea of concern for Repelita IV and will require further organizationalimprovements, particularly in the relationships between the Ministry of Trans-migration and the Ministries of Agriculture and Home Affairs. Financialmonitoring and staff training are two other aspects which continue to requiresubstantial assistance within MOT.

6. 1/ The Ministry of Transmigration now has a total staff of about 11,100people.- The Minister is assisted by six special advisors who advise him ontopics of a general nature including Legal and International Affairs.Directly under the Minister come the Inspector General, the Secretary General,the DC for Settlement Preparation (DGSP) and the DC for Mobilization andDevelopment (DCMD). At provincial and district levels, the Minister isrepresented, in both the recruitment and settlement areas, by the Kanwil andKorlap staff (see Chart No. 1).

7. Directorate General For Settlement Preparation (DGSP). TheDirectorate General for Settlement Preparation (DCSP) will be the major bene-ficiary of the project. It is responsible for planning and constructingtransmigration settlements and for coordinating these activities with otheragencies. It comprises a Director General, five Directors and a Secretary forAdministrative Affairs. The field staff is limited to project officers(Primpros) (Chart No. 2). Because of its large staff and responsibilities itshould play a major role in the implementation of the transmigrationprogram. However, due to its recent creation in 1983, and to a period oftransition during which there was a large movement of staff between theMinistry of Public Works and MOT, this Directorate General has not been ableto perform with maximum efficiency. This relative weakness was furthercompounded, in April 1984, by the decentralization of construction activitieswhich resulted in considerable delays in the planning and constructionprograms at the beginning of Repelita IV. The first year national settlementprogram is now expected to be about 50% below the fixed target (62,000 insteadof 125,000 families). The two Directorates of DGSP involved in projectactivities are: (a) the Directorate of Planning and Programming and (b) theDirectorate of Land Preparation and Physical Infrastructure.

8. Directorate of Planning and Programming. The Directorate ofPlanning and Programming (Bina Program Pankim) is responsible for settlementplanning within DGSP. Because of the large settlement targets and the multi-disciplinary approach to settlement planning, this Directorate has neither thestaff nor the time to carry out all studies and plans. The activitiesdirectly carried out by Bina Program Pankim include budgeting, preparingregional plans (Phase I studies), coordination with orher agencies, draftingof specifications and guidelines for settlement planning and supervision of

1/ 72 professionals, 67% technicians and 26% support staff.

- 52 -

ANNEX 2Page 3

consultants firms. Other activities include mostly site screening studies(Phase II) and feasibility studies (Phase III) prepared by consultants.

9. Bina Program has a Director, five Subdirectors and one ProjectCoordinator to look after administrative and contract matters (Chart No. 2).Bina Program has six regional offices located at Pekanbaru (Riau), Pontianak(W. Kalimantan), Banjarmasin (S. Kalimantan), Samarinda (E. Kalimantan) andJayapura amd Merauke (Irian Jaya) with a limited staff of one or two officersper office.

10. Bina Program Pankim has been largely supported by two Bank proj-ects. In 1980 the Transmigration II project (Credit 919-IND, Loan 1707-IND)began to progressively replace the "plan as you proceed" method of planning bya sequence of studies in three phases. In 1983 the Transmigration III projectbegan to finance site screening and evaluation studies for 300,000 families.The systematic approach to settlement planning has considerably increased thework load of Bina Program and in 1980 a Technical Advisory Group (TAC) wasformed to assist its staff. In 1983, the TAG was expanded to provideassistance to the six regional offices.

11. With the assistance of the TAG, Bina Program Pankim has proved to becapable of managing large settlement planning programs of over US$25.0 millionper year.

12. Directorate of Land Preparation (PLP). This directorate isresponsible for settlement construction including land clearing, roads,bridges and public buildings (Chart No. 3).

13. Prior to April 1984, settlement construction works were managed bythis directorate from central offices in Jakarta which had full control overconstruction works with the assistance of their project managers (Primpros) inthe provinces. But in April 1984, the responsibilities for construction workswere decentrali-ed and transferred to the Provincial Heads of HOT (Kakanwils).This decentralization had three immediate consequences:

(a) The central offices of PLP lost control over construction workssince the project managers now report to the Provincial Heads of MOTwho in turn report directly to the Minister.

(b) The tendering of new works came almost to a standstill due to thelack of experience of the project managers and Provincial Heads ofMOT in contract administration.

(c) Construction works deteriorated due to the disruption of technicaland financial guidance from the central offices.

14. The project components which would remedy the present situation andmeet the large demand for technical support generated by the decentralizationare:

(a) The provision of technical support to the central PLP offices.

- 53ANNEX 2Page 4

(b) The opening of seven PLP regional offices to reestablish theessential links between the central and provincial offices of PLPand MOT.

(c) The reinforcement of technical capabilities of the MOT provincialoffices through technical support and training activities providedby the central and regional PLP offices.

(d) The transfer of some PLP central staff to the regional offices.

15. The cost of construction works has been estimated at US$1,500 perfamily for land clearing and roads, and at US$1,000 for housing and publicfacilities. Assuming a settlement rate of 125,000 families per year to meetthe Repelita IV target, the PLP will have to impLement and supervise an annualconstruction budget of about US$312.5 million. This high figure justifies thelevel of proposed program support estimated at only 2.8X of the constructionbudget.

16. Bakosurtanal. Bakosurtanal, the National Coordinating Agency forSurveys and Mapping, was established in 1969 under Presidential Decree No.83/69. Its major responsibilities are to coordinate land resource inventoriesand evaluation surveys and to produce all base topographic and thematic mapsfor public use. Bakosurtanal is technically attached to the Ministry ofResearch and Technology and administratively to Secretariat Negara (SEKNEC).Its chairman reports directly to the President of Indonesia.

17. Two deputies and a Head of Center assist the chairman. Bakosurtanalhas a staff of 450 including 71 professionals, 174 technicians and 205 supportstaff (Chart No. 4).

18. Through the National Resource Survey and Happing project funded bythe Bank fLoan No. 1197-IND), Bakosurtanal has trained part of its staff andreceived modern equipment. The Bank project provided mostly overseas non-degree postgraduate training and a few fellowships for Master's degrees. Inaddition, it provided buildings for central administration, laboratories andstorage, mapping equipment, a fully integrated and versatile computerizedmapping system and printing equipment. Under Canadian (CIDA) fundingBakosurtanal received aerial photography for base mapping, two planes (Learjets) for aerial photography and assistance for setting up a national dopplergeodetic network for aerial triangulation bench marks. Australian assistanceprovided aerial photography and topomaps.

19. Currently CIDA's assistance is continuing for the completion of thedoppler geodetic network, and ADB has appraised a Land Resource and EvaluationProject to provide assistance in land surveys and inventories. Australia islikely to continue its assistance for the preparation of 50 topomaps per year.

20. Bakosurtanal, after a slow start, has proved to be an able agencycapable of managing large programs under national and external funding. Itsannual expenditures over the past five years were around US$10 million. Thecompletion of the Canadian, Australian and Bank projects in 1984 has created ademand for new funds which will be provided mostly through the proposed ADBand World Bank loans and partially through the continuation of the CIDA andAustralian technical assistance.

INDONESIATRANSMIGRATION V PROJECT

(National Mapping and Settbemnt Planning)

Organization Chart of the Directorate SettlmentPlanning & Programming

(Directorate General Settlement Preparatlon)

DIRECTOR

CENTRAL TECHNKCALADVL PROJECT

(TAG) COOROItATOR

S TUDIEG40NAL SJBDI RECONN ANCE | | SUBaT FEASIBI tY

Pha3se IActMtlw Phs 11 AcMte Phis II Actt SIUDE5 l l 1-

REGIOAL OFFICE & REGIONALOfFICE & REGIONAL OFFICE & REGIONAL OFFICE & RIK)AOFFCE& RCIKLOFICE&REGIONAL TAG RGGAGOAG TAG REGIONAL TAG REGIONAL TAG

Pekanbaru/Paenmbang Pontlanak 6anomsin/PoIenkarmya Somadnda JOYIwa

PHASE 11 & III PHASE 11 & 1 PItHASE 11 & 111HASE&III I PHASE I & kI PHASE N & HCONSULTANTS CONSULTANTS j CONSULTANTS CONSUATANTS J CONSLTANS OCONSILTANM

Wodd Bu*-27272

rw

-55 - AN 2

Chart 2

INDONESIATRANSMIGRAJION V PROJECT

(National Mapping and Settlement Planning)

Dlrectorate of Land Preparation (PLP)(Directorate General ofSeMeffrent Pteparaoln)

Organization Chart

DIRECTORLaidnctaah (PP)

CENIRAL TECHNICAL |__StUPPORT TEAm M ()

SE-DIRECTORATE SL.-IRECTORATE SUB-DIRECIORATE SJB-DIRECTORATE SUBDIRECTORATE

Implemntation Sumatra K(olmontn Sulawesl-Mouk Ino_Colnsftmon III1

SECTIONS SECIIONS SECTIONS SECTIONS SECTIONS

I Preparation 1. Acoh - Sumut I Kamantan - Barot 1. Sukt - Sultag 1. JOyaptImplmentation 2. Rlou - Jambi 2 Kollmanton - Sekbbn 2 9 s- S 2. MmuOke

2 Consluctin 3. Sumbor - Bengkulu 3. Kollmanton - Tengoh a Sulair - Tengo 3. Mankwada Technicl 4 Sumse - Larpung A KNrnmantan - rimtr 4. Maluku 4. S9arn

4 Ccstuton

EQuipnenst

aOlb reagion Olfllce Regional iTS Regional Ofice | eglod Office | eginal ONIce | Regional Ofice

PmoteOcer& ProjectOfficer & |toject Oflcer& Paqect Officer & Pralect Officer & Pro| jectOtfter& Proectofllcer|Sote Managers Site Manogers Site Managers Site Manuoers Site Monagers Site Managers Site Monoge's

4- I I - I I I I I

Deatded l l Detrailed l l Dolobr | | DetolbO | | Deldleo l l Detoled Detdled |Engineering Engineerng| EBneuri | g Engneedri |i Engineering Engineering Engineering

& Supesion & Supervision & Supervisson & Suprvision & SpWervision & Supevwson | & Su9evdsionConsuNants Conrsulants Cansultants jtCorulnts Cornstants- CorjsutntCs Conjcrts

Contractors contractors Contfrators Cntrctor | Contractos| Contracts Contaor

Uold Banc-27275

ANNEX 2-56 Chart 3

INDONESIATRANSMIGRATION V PROJECT

(Natonal Mapping and Settlement Planning)Organization Chait d Bakosurtanal

Cholnawn

III

Deputy for Deputy for ResourcesBose Mcng [ Inventoav & Evduotlon

HVdFraphlc Ik l Resources & Envknmfentol|Navigatotn Aapping Center | AaiysksCent

| .. | q b~~~~~~Rpmucin Center l

Cente for DataManoaement & Tialning

Dta Mongement Tralning DWMionDMsBon

Woxid Bank-27273

'Ii

i i i !IiIi I

HA~~~~~i i[i

Il I KHS t' XI I

nE~ II III

-58 ANNEX 3Page I

INWNESIA

TRANSMICRATION V PROJECT(NATIONAL MAPPINC AND SETTLEMENT PLANNING

Statements of Expenditure

Ceneral

1. Statements of expenditure would be used for Bank disbursementagainst the following items:

Loan amountItem Loan Amount /a as X of

(US$'000) total costs

Happing materials lb 450 60XTraining materials 7b 200 60%Other training expenses 3,700 88%

Total 4,350 82Z

/a Including contingencies.7i Purchased under prudent shopping.

2. Prior to the year of implementation the three executing agenciesconcerned (Bina Program, PLP and Bakosurtanal) would submit unit costs for theabove items to BAPPENAS for approval. These costs, reviewed and agreed byBAPPENAS, would serve as the basis for budgeting, and SOEs would be based onactual expenditures and submitted quarterly.

Detailed Features

3. For maps produced by Bakosurtanal, prudent shopping and SOEs will beused for materials (films, photographic paper, chemicals, printing inks andspecial mapping materials), spare parts, maintenance services and smallequipment which will be procured through prudent shopping because they cannotbe purchased economically in buLk through ICB. The amount of prudent shoppingis estimated at 30% of the total cost of these items. Prudent shopping is inline with local and Bank procedures will be used subject to Bank prior non-objection for lots not exceeding US$200,000 each.

- 59 -ANNEX 3Page 2

4. For training materials, training activities and fellowships theresponsible project agency will maintain documentation on the cost of thematerials and the cost of travel, housing, training and follow-up for eachtype of staff member to be trained. This information will be used to deter-mine the cost of training staff. Disbursements will be made against quarterlystatements indicating the number of people trained, the type of training andthe unit cost.

Implementation

5. Technical assistance for project accounting and SOE preparation waSprovided under the technical advisory groups financed by Transmigration IIIand would be continued under Transmigration V. Under the project, finance andaccounting specialists would also develop a training program which wouldinclude bookkeeping and accounting. All SOEs would be subject to a separateauditor's opinion. With these steps the project agencies would be capable ofmaintaining the required accounts.

-60-0NNEX 4Pag'e1

INDONESIA

TRANSMICRATION V PROJECT(NATIONAL MAPPING AND SETTLEMENT PLANNING)

SUMMARY TORs FOR PHASE II AND III STUDIES

Phase II Studies: Reconnaissance and Master Plan

A. General

This is a rapid reconnaissance of areas identified for transmigra-tion and is often referred to as the screening process. One objective is toassess the suitability of the area for a particular form of development, sothat a decision can be made as to whether it is worthwhile undertaking moredetailed surveys. A second objective is to carry out socio-anthropologicalstudies of the local people living in and around the settlement areas to bedeveloped and determine their attitudes towards transmigration. A thirdobjective is to prepare a master plan for developing the sites found to besuitable including a preliminary development plan.

It is assumed that aerial photographs at scale 1/50,000 and1/30,000, rectified semi-controled photo mosaics at scale 1/100,000 and topo-graphic maps at scale 1/50,000 with 25 m contour intervals will be supplied toconsultant firms by Bakosurtanal through Bina Program prior to the implementa-tion of studies.

B. Summary of Activities

The Phase II studies for one settLement unit (SKP) of about1,500-2,000 families (KK) covering a gross area of about 20,000-25,000 ha aresummarized below. The type, density and distribution of field observationsare given in Table 1.

(a) Preliminary interpretation of aerial photographs at scales 1/50,000and 1/30,000.

(b) Investigation of land units and preparation of a land unit map at ascale of 1/50,000, based on air photo interpretation, field observa-tions of slopes and soils along traverses a maximum of 2 km apartover the whole SKP.

(c) Investigation of climate and hydrology based on analysis of existingclimate and hydrological data supplemented by additional field andmap observations of the drainage network and flooding hazard.

(d) Preparation of present land use and forest status maps at a scale of1/50,000 based on air photo interpretation, field investigations andlocal enquiry to establish land availability.

- 61 -ANNEX 4Page 2

(e) Preparation of land suitability maps at scale 1/50,000.

(f) Social-economic studies to establish the activities of the existingpopulations, their 4cc@ss to outside markets and/or traders and thetype and value of goods traded.

(g) Socio-anthropological studies based on direct interviews with localpeople and government officials to asmess the number of inhabitantsin the area, the tribal and administrative organization, the agestructure, the literacy, the health conditions, the land occupied,the desire to participate in the transmigration program, the methodof participation, and the willingness to release land.

(h) Preparation of agricultural development proposals taking intoaccount Local p-ople's attitude and participation.

{i} Preparation of an SKP master plan at a scale of 1:50,000 andmodification of the 1/100,000 regionaL structure plan if necessary.

(j) Preparation of a preliminary 10 year development plan for settlementunits.

(k) Reporting.

(1) Formal and on-the-job training of the national associate staff inthe preparation of Phase II studies.

The composition of the study team and man-month requirements to carry out apackage of 24 Phase II studies per consultant contracts is given in Table 3.

Phase III Studies: Settlement Structure Plan and Economic Feasibility

Phase III studies will be undertaken only for those SKP which,following the reconnaissance Phase II studies, are found to be suitable forfurther development and which have been approved by the Project Working Groupand cleared by the Provincial Authorities. The planning and surveys done inPhase III studies will follow the type of development proposed in Phase IIstudies. In most sites to be developed, standard TOR will apply but in areaswith particular problems or when new development models are considered,special TOR will be proposed by the consultant and approved by the Bank andBina Program.

The objectives of Phase III studies are to:

(a) Confirm that an area is technically suitable for transmigration.

(b) Prepare physical plans and cost estimates for the settlement and inparticular define the areas within which land clearing should takeplace.

(c) Ensure that the proposed development and agricultural activities areeconomically and financially feasible.

-62-ANNEX 4Page 3

(d) Ensure that the proposed settlement is socially and environmentallyviable.

(e) Prepare detailed development plans for each settlement unit.

It is assumed that Phase II maps and reports have been completed andthat recent air photographs of scales 1/50,000 and 1/30,000 and topographicmaps at scale 1/50,000 are readily available through Bina Program.

The Phase III studies for one SKP covering a gross area of about10,000-12,000 ha and consisting of 4-5 villages (SP) of 300 to 400 familieseach are summarized below. The type, dens.ty and distribution of fieldobservations are given in Table 2.

(a) Preparation of a 1/20,000 scale topographic map with, wherenecessary, surveyed control based on traverses no more than 3 kmapart. Topographic detail is derived from field data and,aerialphotographs or from any suitable available control data."

(b) Reconnaissance slope surveys: overall density of one observationper 5 ha, data obtained by measurement every 50 m along traversesCrentisans) not more than 1 km apart. Data to be presented andslope map prepared at 1/20,000 scale using air photo interpretation.

(c) Soil survey at semi-detailed level: overall density of one observa-tion per 25 ha, data obtained from observation every 250 m alongrentisan not more than 1 km apart. Soil map prepared at 1/20,000scale.

(d) Present land use survey: overall density of one observation per5 ha, data obtained from observations every 50 m along rentisan notmore than 1 km apart. Present land use map prepared at 1/20,000scale using air photo interpretation.

(e) Forestry investigations to establish volumes of marketable timberwith a sampling error of 10% at 95% significance level. Minimumsample of 0.5% by area. Proposals for utilization of timber andforest products in the light of existing laws and regulations.

(f) Water resource investigations primarily to establish and preparedesigns for potable water supplies for village sites and fordrainage and flood protection requirements for the SKP.

(g) Preparation of land suitability map at 1/20,000 scale.

1/ This activity will not be required if radar/lasar maps at scale 1/10,000with 5 m contour intervals are available.

- 63 -ANNEX 4Page 4

(h) Preparation of agricultural and other development proposals forincoming tranimigrants and local people.

(i) Preparation of preliminary SP structure plan at 1/20,000 scaleshowing blocks of land within which more detailed surveys forhouselots and arable land should take place and demarking any areasrequired for the use of local people.

(j) Survey of slopes within area of houselots and arable land: oneobservati'n per 1 ha; data ?o tained from observations every 50 malong rentisan 250 m apart.-

(k) Access and main village road alignment survey at 1/20,000 scale.

(1) Preparation of final SP structure plan at scale 1/20,000 showing theland allocations for incoming transmigrants and local people, theviLlage boundaries subdivided into hamlets of 20-50 families, theblocks for houselors, the first arable land, the second farm land,the reserved lands, and the areas to be cleared. Alignments foraccess and village roads will also be shown.

(m) Cost estimates for settlement development and assessment of the landuse rights given up by local people.

(n) Study of regional and environmental setting.

(o) Prepare an economic and financial feasibility study including farmbudgets, cost estimates and benefits to settlers. A comparativeanalysis of costs and benefits of maintaining the area as productiveforest under current or proposed management systems.

(p) Prepare detailed settlement development plans for the first fiveyears of settlement and indicative development plans for thefolliwing five years for each settlement unit.

(q) Recommend, in the most satisfactory way possible, the way of parti-cipation of indigenous people in the transmigration developmentprojects and the most equitable compensation arrangements.

(r) Reporting.

(s) Formal and on-the-job training of the national associate staff inthe preparation of Phase III studies.

The composition of a study team and the man-months requirements forthe implementation of a package of 16 Phase III studies per consultantcontract are given in Table 3.

2/ This activity will not be required if radar/laser maps at scale 1/10,000with 5 meters contour intervals are available.

ANNEX 4Table 1

INDONESIA

TRANSMIGRATION V PROJECT(NATIONAL MAPPING AND SETTLEMENT PLANNING)

TYPE, DENSITY AND DISTRIBUTION OF FIELD OBSERVATIONSIN PHASE II STUDIES

ObservationsMinimum

Type Density Distribution

Slope /a - Clinometer 1/10 ha 1 every 50 m along traversemeasurements Traverse 2 km apart over

whole SKP

Soils - auger boring 1/200 ha I every 1 km along traverseor profile pit Traverse 2 km apart overdescription whole SKP

Present land use- field observation 1/10 ha As for slope measurements- Local enquiry variable All village heads. Some

farmers

Socio- - field observation variable All village and districts headsAnthropology - local enquiry Some villagers.

Hydrology - river flow direc- variable All river intersects alongtion and flood traversehazard

- potable water variable Existing wellssupply

- tidal fluctuation variable All major tide-affected rivers

/a These observations will not be required if radar/laser ground profiles areavailable.

Note: Traverses may be along cut lines (rentisan) or along existing roads orfootpaths where these give representative sections at an appropriate spacing.

-65- ANNEX 4Table 2

INDONESIA

TRANSMIGRATION V PROJECT(NATIONAL MAPPING AND SETTLEMENT PLANNING)

TYPE, DESNITY AND DISTRIBUTION OF FIELD OBSERVATIONSIN PHASE III STUDIES

ObservationsMinimum Distribution

Type Density Maximum spacing

Slope reconnaissance /a- clinometer 1/5 ha I every 50 m along traverse

measurement Traverses 1 km apart

Slope confirmation withinland clearing block /a

- clinometer 1/1.25 ha 1 every 50 m along traversemeasurement Traverses 250 m apart

Soils - auger borings or 1/25 ha 1 every 250 m along traversepit descriptions Traverses 1 km apart

Present land use- field observation 1/5 ha 1 every 50 m along traverse.

Traverses 1 km apart- local enquiry variable All village heads. Minimum of

50 farmers

Forest inventory 0.5% by area Within each major foresttype

Water resources- river flow variable All river intersects along

directions traverses

flood hazard variable- tidal fluctuations variable All tide-affected rivers- potable water supply variable Existing wells

Additioaal bore holesSurface water storage

/a These activities will not be required if radar/laser maps at scaLe 1/10,000with 5 m contour intervals are available.

- 66 -ANNEX 4Table 3

INDONESIATRANSMIGRATION V PROJECT

Settlement PlanningMan-months Requirements per Average Phase II and III Contract

(Assuming 24 Phase II studies and 16 Phase III studiescarried out over a total contract period of 30 months)

Specialists Phase II Studies Phase III Studies TotalForeign National Foreign National Foreign National

Project manager 12 12 18 18 30 30Team leader 18 18 24 24 42 42Topographers 18 20 36 42 54 62Soils specialist 18 20 36 42 54 62Planners 18 18 12 12 30 30Sociologists 12 12 12 12 24 24Agronomists 12 12 18 18 30 30Tree crops - - 12 12 12 12Foresters 12 12 12 12 24 24Agro-economists 12 12 18 18 30 30Aerial Photo. Int. 12 12 12 12 24 24Cartographers 12 12 12 12 24 24Civil engineers 12 14 18 24 30 38Water engineers 12 12 12 12 24 24Training specialists 12 12 18 18 30 30Miscellaneous /a 8 16 30 33 38 49

Total 200 214 300 321 500 535

Average per study 8.3 8.9 18.8 20.0 - -

Total for 14 Packages 2,800 3,000 4,200 4,500 7,000 7,500

/a Includes short-term assignments of the following specialists amongothers: marketing, storage and processing, rural institutions(cooperatives), agricultural credit, regional planning, hydrogeology,health, nutrition, education and fisheries.

- 67 -

ANNEX 5Page 1

INDONESIA

TRANSMIGRATION V PROJECT(NATIONAL MAPPING AND SETTLEMENT PLANNING)

Transmigration Policies under Repelita IV and Impact on Local People I!

Government Policies

1. The government policies for the transmigration program under theFourth Five-Year Plan (Repelita IV - April 1984 to March 1989) are set forthin the "Guidelines of State Policy" of 1983, Chapter IV. According to theseguidelines the transmigration policies focus on:

(a) the improvement in population balance;

(b) the opening up of new production areas, especially agriculturallands, within the framework of regional development;

(c) the reordering of the use, control and ownership of land in theregion from which the transmigrants come, as well as in the newareas; and

Cd) the improvement of living standards of the transmigrants and thesurrounding communities.

2. The guidelines also identify other groups of people who may beconsidered as transmigrants. These others include those who practice shiftingagriculture and lead nomadic lives, and those who work land which should bereserved for conservation purpose or the local population. It is importantalso to appreciate that the transmigration program is not restricted toagricultural activities. Industrial development and trade promotion in ruralareas are part of intended transmigration activities. It is evident that, ifthe standard of living of the transmigrant family is to be improved andtransmigrant activities are to contribute meaningfully to the development ofthe country, the quality of activity planning in all its phases must be of ahigh order and progressively improved.

3. As the scale of the program increases in Repelita IV, more and moreproblems will arise in the implementation process. These are expected, andinclude the choice of proper land, and the complexities associated withreserving land. Also, as more families in Java and Bali express their desireto move and settle in transmigration areas, the problems and policies

/I Most of this annex is based on abstracts of a GOI policy statement datedMarch 1985.

- 68 -ANNEX 5Page 2

connected with seLection and recruitment of migrants become important anddemand attention. At the same time, the issues and policies concerned withthe further development of settlement areas as part of the overall developmentof the receiving regions also will have to be faced. The institutionalcapacity and the effectiveness of the administration to undertake an enlargedprogram more efficiently will assume greater importance in Repelita IV, notonly because the target may become more elusive but also because of pressureon the financial resources available for the program.

Development Efforts in Settlement Areas

4. Each village of 300-500 families is planned to accommodate all threemain types of transmigrants (a) general transmigrants, i.e., families whonormally come from the main transmigration source of Java and Bali; (b)transmigrant families who are originally from the local population; and(c) spontaneous transmigrants, i.e., transmigrants who move to the location attheir own expense. With regard to the transmigrant families originating fromthe local population, priority is given to those families who live near theproject site or whose land has been used as part of the site; families wholead a nomadic life and who practice shifting agriculture, and those who liveon mountains or have very limited land and are poor are also given priority.

5. Within the village, the three types of transmigrants may be totallymixed. This is the ideal arrangement from the point of view of promotingintegration. If this is not feasible, concession may be given for a Limitedseparation of physical dwellings within the village among the various types oftransmigrants. And if this is not practical, the three types of transmigrantsmay live in different villages. With this arrangement they are mixed ac alarger level of settlement, i.e. at the regional settlement level. The newvillage is an embryo of the regular village in the civil administration.Administratively, the village and the transmigrants are within thejurisdiction of the local provincial government. Government activities anddevelopment activities are conducted in the same manner as in reguLarvillages. But, since these are new settlements and the villages are not yetfully established, special development activities are undertaken alongside theregular activities of the local government. The special developmentactivities are undertaken for a period of five years after the arrival oftransmigrants. The objective of these activities is to lay a strongfoundation economically, socially and institutionally so that, at the end ofthat five-year period, the transmigrants are in a position to carry ondevelopment activities on their own.

Development Activities in Irian Jaya

6. The province of Irian Jaya has an area of about 420,000 km2 andaccounts for 22% of the land surface of Indonesia. Its capital (iayapura) isabout 3,500 km from Jakarta. Eighty percent of the province is covered bydense forest and jungle and the greater part of the territory is mountainouswith a high centraL range of mountains running from east to west across mostof the province. The highest peak in the chain has an altitude of 5,490 m andten other mountains are over 4,900 m high. Soil conditions in the south aregenerally poor, but better in the north. In the shallow soils of the south

- 69 -

ANNEX 5Page 3

and southwest, heavy rainfall year-round sustains a complex river system, andpoor drainage in low lying areas has produced thousands of square kilometersof mangrove swamps and tidal forests. Transport connections throughout theisland are very poor, and access to the central highlands is virtually impos-sible, except by air.

7. Although the province is the size of Spain or California, it hasonly about 1.2 million inhabitants. Two-thirds of these (about 800,000) areindigenous to the province, and half of these (about 400,000) live mostly inthe highlands of the province. (The island of Java, which is about one-thirdthe size of Irian Jaya, has about 95 million inhabitants.) Irian Jaya andKalimantan together account for about half of the total land area of Indonesiabut only 52 of the population. According to the 1980 Censul, they have thelowest population densities in the country (3 and 12 per km , respectively,compared with 690 in Java).

8. The main products of rrian Jaya are crude oil (US$691 million in1982), copper (US$128 million) and tuna (US$3.4 million). Timber and coaldeposits are barely exploited, owing mainly to marketing difficulties, andthere are undetermined reserves of important minerals such as gold anduranium. Rattan and copra are also produced on a small scale.

9. The pace of development in some provinces has been slower than inothers. However, the Government is now making special efforts to compensatefor this "late start" of these provinces and has assigned high priority tointroduce basic infrastructure and services. Development expenditures inIrian Jaya in 1980/81 were among the highest in Indonesia; about US$42 percapita compared with an average of about US$20 nationwide. Only three otherprovinces received more development funds on a per capita basis: DKI Jakarta,Bengkulu, East Kalimantan and South-East Sulawesi. Routine expenditures weremore than twice as high in Irian Jaya that year as in any other province.

l. Nevertheless, Irian Jaya remains one of the least developedprovinces of Indonesia. Only 52% of the population over 10 years of age isliterate, compared with a high of 91% in North Sulawesi, and a range of 65-80%in most other provinces. With West Kalimantan, it has the lowest proportionof eligible children 'n primary school (66.9%) and the eighth lowest percentin junior high school. The estimated infant mortality rate in 1980 was 124per thousand births, compared with a national average of 105. Only two otherprovinces had worse records: West Nusa Tenggara (188) and Central Sulawesi(129). Fertility rates were higher in Irian Jaya and Maluku (6.5 children perwoman) than in any other province, compared with a national average of 4.5 andthe national low of 3.4 in Yogyakarta.

11. JDF. One of the major participants in the development program inthe province is the Irian Jaya Joint Development Foundation (JDF), which isco-financed by the Government of Indonesia and the UNDP. JDF was set up in1970 to administer the remaining funds from the United Nations Fund for theDevelopment of West Irian (FUNDWI), which operated during the period1962-69. JDF engaged in a variety of development activities ranging fromloans to small farmers and businessmen to the occasional major project such asa cocoa estate at Ransiki in the "Bird's Head" area of the province which is

- 70 -

ANNEX 5Page 4

being co-financed with the Commonwealth Development Corporation (CDC). JDF'soperations were expanded in 1980 when the Ministry of Finance offered anadditional capital contribution of US$10 million. To permit a higher level ofoperations, JDF's lending portfolio consists of about 1,000 active borrowersand (excluding the cocoa project at Ransiki) amounts to about $52 million.

12. Bank Activities. Three of the 9 consulting firms performing workunder the Transmigration III Project (Loan No. 2248-IND) are active in IrianJaya. In addition the Second Swamp Reclamation Project approved in May 1984includes preparation of a master plan for the development of swamp areas inthe province. (Irian Jaya accounts for some 4 million of the 6 million ha ofpotentially recoverable swamp Land in Indonesia.) A regionaL development planwill be prepared for Irian Jaya under a proposed Bank project for Indonesia'seastern islands. This component is expected to be financed by the UNDP andexecuted in close association with the Bank. Engineering studies are underway with funds from the East-Java Water Supply Project (Loan No. 2275-IND) toprepare urban water supply investments for the province. Also imminent isBank support for the development of a nursing school at Manokwari under aproposed Health Manpower Development Project. Depending on the outcome of theregional planning study mentioned above, there may be a case for preparing aBank project centered on the development of the indigenous communities of theprovince.

13. Other Donors. Other financing agencies have aLso been involved inIrian Jaya's development. Australia has financed aerial mapping of theprovince and engineering designs for water supply development in ten towns.As mentioned above, CDC has supported a cocoa production project nearManokwari.

14. Government is satisfied that substantial progress has been madeduring Repelita III (1979-84) in achieving food self-sufficiency within theprovince, and the Government is now placing emphasis on the introduction ofexport crops. Priority under Repelita IV (1984-89) is to be given to thedevelopment of agricultural support services, transmigration, infrastructureand mining and energy. As far as possible, the subregional focus is to be onthe North Coast as well as on the development of the Central Highlands.

Land Alienation and Compensation Arrangements

15. The most sensitive issue in new settlement areas centers on existingland rights. Provincial government authorities have always been involved inthe planning process for transmigration, but a recent Presidential Decree (No.59/84) formally delegates coordination of the transmigration program to theProvincial Governors to ensure, among other things, that conflicting landclaims and reLated site rejections are kept to a minimum. Land allocationcommittees at the provincial and district level are intended to determine theavailability of prospective sites well before their physical and agriculturalsuitability is established. These committees represent important potentialusers of the land, e.g., the Ministries of Transmigration Forestry, Mines andEnergy, the Directorate General of Estates in the Ministry of Agriculture, andthe Directorate in the Ministry of Home Affairs responsible for assessing theland rights of local residents (Agraria).

- 71 -

ANNEX 5Page 5

16. Under Indonesian law (both traditional and formal), individuals havea right of use but not of ownership, of entitled land. The national agrarianlaw (1960) also provides for the right of eminent domain whereby theCovernment can appropriate land for development purposes with suitablecompensation. This right has'been exercised slowly and unevenly throughoutthe country depending on local customs and feelings. Where it has beenexercised, compensation is usually based on explicit agreements between localcommunity Leaders (such as clan heads in local areas) and Governmentofficials. Instead of cash, compensation usually takes the form of capitalgoods (such as outboard motors), housing materials (such as roofing), roadimprovements and even scholarships.

17. Past evaluation studies resuLted in a high rate of rejection ofpotential sites, not only because of unfavorable topographicaL or soilconditions, but also as a result of alternative land claims by local people orother potential users. On the basis of this experience, the Government hasdecided to move "up stream" the involvement of Agraria and key agencies in theselection and assessment of settlement sites. For example, land allocationcommittees will meet and designate specific areas for transmigration as far aspossible, prior to the initiation of Phase II studies. In principle, thisshould eliminate or at least reduce the number of instances where "suitable"sites are found to be utiLized or committed to other purposes and it shouldlimit unnecessary expenditures on detailed studies.

18. At the same time, the Covernment is determined that more attentionshould be given to designing a development "approach" which will serve theeconomic and social needs of local residents, as well as the transmigrants.Under the proposed project the terms of reference for the Phase II and IIIstudies require existing farming systems to be studied and local expectationsassessed regarding the introduction of alternative farming systems. Localattitudes about compensation or exchange of land will also be explored. Usingthe preferred farming system, suitable land will be allocated to meet therequirements of the local inhabitants. The exact manner in which this will beachieved will depend on local circumstances, but specific guidelines will beestablished to govern all sites. Once the existing farming systems and/orneeds of the local communities are established, land evaluation work underPhase III-A studies will then be oriented to selecting an appropriate farmingsystem which would extend over the remaining suitable land in the area.

19. A detailed assessment of Local practices and wishes will also beimportant for correcting shortcomings in some past settlement sites. Huntingand gathering rights in adjacent areas will need to be protected andprovisions made for the supply of livestock and the setting aside of woodedareas for fuel. Land compensation arrangements will need to take into accountforgone hunting and gathering rights in "unpopulated" forest areas, and notjust cultivated land which may be very limited in some areas.

Programs to Benefit Transmigrants and Local Residents

20. In cases were local residents may wish to join transmigrantcommunities to benefit from schools, health services and the like, Governmentis prepared to allocate up to 50% of sites to local settlers, although demand

- 72 -

ANNEX 5Page 6

is not expected to exceed 10-20Z of such places. Where locals are settled intransmigration communities, greater attention would be paid to extension aslocal settlers have much less experience than transmigrants with crops intro-duced on transmigration schemes. In all cases, settlement in transmigrationschemes would be voluntary and where local residents do not wish to partici-pate directly in the new settlements, the Government intends to improve theirexisting community through rural or regional development projects andconsuLtant plans would make recommendations on the improvement needed.

22. The Government intends to study ways and means to improve the livingstandard of indigenous inhabitants under a Regional development study to beprepared with UNDP and Bank assistance. The information resulting from thetransmigration planning studies would also provide guidance in the preparationof future area development projects.

- 73 -

ANNEX 6Page I

INWONESIA

TRANSMIGRATION V PROJECT

(NATIONAL MAPPINC AND SETTLEMENT PLANNINC)

Costs and Benefits of Alternative Settlement Models

Summary

1. Unlike most Bank-assisted projects, the Transmigration V StaffAppraisal Report does not include an economic rate of return (ERR)calculation. This is because Transmigration V is primarily a mapping and siteevaluation project in support of a much larger development program. The manybenefits of improved mapping and site selection cannot be adequately quanti-fied and related to the costs to be incurred under this specific project andno meaningful ERR calculation for the project can be made. However, it isimportant for COI and the Bank to be reasonably assured that there is suffi-cient economic and social justification for the proposed Transmigration Vproject. Therefore, this annex reviews some analyses of the likely costs andbenefits which may be expected when actual settlement takes place as a resultof the studies financed under Transmigration V. If the costs and benefits ofthese eventual settlements are judged acceptable, then it follows that theTransmigration V project, which supports the effective implementation of thesesettlements, may also be presumed acceptable.

2. The analyses of the farm models tested indicate that transmigrantsin relatively remote areas such as Irian Jaya and parts of Kalimantan will beable to become self-sufficient in basic food production and achieve signifi-cantly higher incomes than in their places of origin. These farm models alsoshow that the potential ERRs in these remote regions, based only on quanti-fiable costs and benefits, while positive, will be lower than historicallyexperienced in areas such as Sumatra, and may be in some cases be lower thanthe opportunity cost of capital in Indonesia, which is currently assumed to be10%. This i- not unexpected given higher mobilization and transport costs,the remoteness from potential markets, and particularly the much higrer infra-structure costs required in the new transmigration areas. For example, thefull costs of implementation in Irian Jaya, including infrastructure, havebeen estimated at US$7,000 to US$10,000 per family depending on the locationand farm model assumed. This is significantly higher than the Repelita IIInational average of US$5,700 (in 1985 values).

3. These increased costs and lower ERRs (based on quantifiable costsand benefits) of transmigration in more remote areas must be weighed againstthe many unquantifiable economic and social benefits. These include thesocial value of providing land to the landless, the reduction of soil degrada-tion and erosion in Java, increased food production and food security,improved regional development, and higher employment at a lower cost per jobthan might be expected in Java. When the quantified and nonquantif.ed bene-fits of transmigration in these more remote areas are considered together, onemay conclude that the transmigration program for these areas is fully consis-

- 74 "ANNEX 6Page 2

tent with the national development priorities hold by Covernment and supportedby the World Bank. Therefore, one may further conclude that the Transmigra-tion V project, which supports and seeks to improve the overall tranamigrationprogram through site evaluation and planning in the most economic and effi-cient means yet identified, is also justified.

ModeLs Analyzed

4. There are two basic models for upland and lowland sites:

(a) An upland model of 2.0 ha to 3.5 ha which includes a 0.25 ha house-plot (lhome garden), 1.0 ha food crop area and 0.75 ha to 2.25 ha forsubsequent development, e.g., of tree crops or additional foodcrops. The introduction of cattle is generally assumed to benecessary for cultivating more than 1.25 ha of dryland food crops.

(b) A lowland (swamp reclamation) model of 2.25 ha which includes a 0.25ha housepLot and 2.0 ha of land suitable for bunded rainfed rice.Some secondary fooa crops (palawija) may also be cropped during thedry season.

5. In both models, the hotaseplots and 1.0 ha of land are cleared andprepared before the arrival of the settlers. During the first year thefarmers are supported by the provision of food, tools and seed. Fertilizerand pesticides are provided for 3 years. In subsequent years "second stagedevelopment" is expected to take place. The three types of second stagedevelopment tested here are: (a) the introduction of cattle and expansion ofthe dryland food crop area to 2.0 ha; (b) the planting of 2.0 ha of rubber,one each in years 3 and 6; and (c) the expansion of the bunded wetland area to2.0 ha.

6. The above models have been tested for a "base case" ERR in IrianJaya, where transmigration costs are expected to be relatively high. Eachmodel assumes the 0.25 ha houseplot and an annual fertilizer application of200 kg. One sensitivity analysis includes 20% higher establishment costs torepresent especially remote areas requiring large amounts of primaryinfrastructure. Another sensitivity analysis includes 15% Lower establishmentcosts, corresponding to actual Repelita III figures, to approximate particu-larly accessible sites. This sensitivity analysis may also be considered aproxy for inclusion of lower cost spontaneous transmigrants into the ERRmethodology. The amount of food surplus (deficit) in kg of rice equivalentproduced by each model is shown, as is the labor surplus (deficit) in man-daysin the peak month. The results are presented in Table 1 of this Annex.

Conclusions

7. In general, it appears that the ERRs of the upland (assuming secondstage development) and wetland models may hover around the opportunity cost ofcapital of 10%. The first phase cultivation of 1.0 ha of dryland foodcropshas had mixed results in traditional transmigration areas in Sumatra, andwould be even more dubious in a remote area such as Irian Jaya, where thehigher investment costs might cause the ERR to approach zero.

- 75 -ANNEX 6Page 3

8. It should be noted that the tested models involving second stagedevelopment may require more labor than is available in the "standard" five-member transmigrant family. While the inflow of spontaneous transmigrants(especially family members) can and do make up some of the labor deficit, theaverage transmigrant family may be unable, especially in early years, todevelop the targeted amount of land, and/or the estimated per capita incomewithin a family could remain lower than targeted because of the outside laborinput required. In addition, field observations show that when the two basicmodels are unaccompanied by sufficient levels of inves.ment and technicalassistance the results can be subsistence agriculture or possibly below in thecase of inexperienced farmers. Furthermore, the lack of cash income can blockthe development process and settlements may stagnate at the poverty level.The economic rates of return and per capita income can be improved bysupporting second stage development activities as quickly as possible. Twoways to encourage this include:

(a) The addition of one or two head of cattle to the standard drylandfood crop to alleviate some labor constraints and produce marketablesurpluses. Of special note is the fact that the addition of cattleis a reLatively low cost means of secondary stage developmentcompared to, e.g., the introduction of trec crops.

(b) Reducing the food crop area to subsistence in the case of a treecrop model and increasing the area and the speed with which treecrops are developed. This would be dependent upon access toGovernment credit programs to provide the investment capitalrequired and protect the smallholders' welfare in the years beforethe trees produce income.

Further Work

9. A more detailed agronomic analysis of the models described in thisanalysis may be found in Project File (Working Paper C2, Farm Models Used forthe Evaluation of Production and for Economic Analyses of Indonesian Trans-migration Projects).

INDONESIA

TRANSM'IGRATION V PROJECT

National Mapping and Settlement Planning

Costs and Benefits of Alt.rnative Settlement Mbdels

Establish- Ave. labor surplus Ave. annualment costs --------- ERR (X) - (deficit) in food surplus

Summary of Models /a (US$) /b Base /c +20% /d -15% /e peak month (m-d) (kg) /f

Upland Models1. 1.0 ha dryland Li 7,000 6 3 8 (8) 1,2072. 2.0 ha dryland and 1 cow 7,840 12 8 14 (38) 3,314 33. 1.0 ha dryland declining to 0.5 ha, 10,041 9 7 10 (14) 463

1.0 ha rubber in year 3 & 1.0 harubber in year 6

Wetland (9wamps) Model4. 2.0 ha bunded wetland and .25 na 9,040 10 7 11 (38) 2,342

secondary food crops (palawija)

/a Base case of all models includes 0.25 ha houseplot and 200 kg of fertilzer/ha/year.7E Including all social infrastructure costs. However, 50% (US$700) of these costs are excluded from ERR calculations

on the grounds that tranemigrants would receive such goods and services even if they remain in their )riginal areas./c Base case for Irian Jaya.T7 Base case establishment costs +20%. For especially remote areas of Irian Jaya requiring large investments in pri-

mary infrastructure./e Base case establial'Ae1t costs -15X. Based on Repelita III transmigration sites located in easily accessable areas

such as in Sumatra. I.-I/f In kg of rice equivalent. 0 a

7 Not an official model. Shown here for illustrative purposes. II!

-77- ANNEX 7

INDONESIA

TRANSHIGRATION V PROJECT(NATIONAL MAPPING AND SETTLEMENT PLANNING)

(NATIONAL MAPPING AND SETTLEMENT PLANNINC)

Selected Documents and Data Available in the Project File

A. Selected Material on Project Subsector

Al Transmigration Policies in Repelita IV (MOT, March 1985)A2 Transmigration Program Review (IBRD, April 1981, Report No. 3170-IND)A3 Transmigration I Project Performance and Audit Report (IBRD,

June 1984, Report No. 5157-IND)A4 Transmigration Management Development and Monitoring Services. Findl

Report (UNDP/OPE/INS.791001, Sept. 1983)A5 Conclusions from Evaluation cf Transmigration Implementation in

Repelita III (Junior Ministry of Tr.uzsmigration, Jan. 1983,translation)

A6 Tribal Peoples and Economic Development (IBRD, May 1982)A7 Transmigration: Achievements, Problems, Prospects by H.W. Arndt

(Bulletin of Indonesian Economic Studies, Vol. XIX, No. 3, December1983)

A8 Indonesia's Transmigration Program (IBRD, World Development Report,1984, Box 505 p. 93, May 1984)

B. Background Material on the Project

B1 Transmigration Project Preparation (Bina Program, Nov. 1934)B2 Completion of Base Mapping to Support the Transmigration Program

(Bakosurtanal, Nov. 19.,.jB3 Proposal for a Technical Assistance Team to the Directorate of

Settlement Preparation (PLP, Dec. 1984)B4 Physical Planning for Transmigration (Bina Program, July 1983)B5 Advisory Manuals (2) for Phase II and III studies (Bina Program,

Oct.. 1982)B6 Site Screening and Evaluation Studies - Mid-Term Review (Bina

Program/Technical Advisory Group, Oct. 1984)87 Quarterly Progress Reports (Bina Program/Technical Advisory Group,

Nov. 1982 to Oct. 1984).B8 DITADA Transmigration Advisory P!anning Group. Final Report

(DITADA/TAG, June 1983)

C. Working Papers and Tables Prepared by Bank Staff

Cl Detailed Cost TablesC2 Farm Models used for the Evaluation of Production and Economic

Analysis of Indonesian Transmigration ProjectsC3 Detailed Project ComponentsC4 TrainingC5 Aerial Photography and Base Mapping

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