April 2012

Investing in Connectivity:

Proposed DGH Support for MP3EI

2

Connectivity in the Road Sector Faces Strategic Challenges

Low competitiveness of road infrastructure v. SEA region

Current policies are not creating a sustainable modern highway system

Development of high-capacity expressway network is lagging demand

Rising funding allocation needs to expand even further

Road program delivery needs more efficiency and accountability

Change in business model needed

3

Proposed Support for DGH and BPJT

Road Network Planning (Bipran, BPJT)

• - Long-term Masterplan for Road Infrastructure

• - Investment pipeline to improve connectivity in MP3EI corridors

Improved delivery of national road programs (Bintek, Wilayah-Balai)

• - Longer road life, whole life costing

• Asset management devolved to balai

4

The Recommended Six (6) Economic Corridors :

1

2

3

4

5

6

Economic Corridor Mega Hub Hub Potential Area for Development

4

Logistics is part of the supply

chain (supply chain):

1. procurement activities

2. storage

3. delivery / transportation

and service

1

2

3 6

4

5

Eastern Sumatera-North West Java

Northern Java

Kalimantan

Western Sulawesi

East Java-Bali-NT

Papua

Source: Coord. Ministry of Economic

MP3EI Economic Corridors – 12,000 km National Arterial Roads

5

Road Connectivity – Estimated Current and Target Service Levels

0,0 1,0 2,0 3,0 4,0 5,0 6,0

Trans-Sumatra

Trans-Java

Kalimantan

Sulawesi

Bali-NTT

Papua-Maluku

12

34

56

Trip time hr/100 km*

Normalized Trip Times on Economic Corridor Arterial Roads- 2011

Road Trip Time Nautical Add-on

Target Service level

1-1.5 hr/100 km

* Corridor distance

shorter than Arterial

road distance

6

DGH Masterplan for Road Infrastructure 2010-14 Incremental Widening to Minimum Width Standard

3.690

1.430

2.780

3.160

987

1.905

- 2.000 4.000 6.000 8.000 10.000

Sumatra

Java

Kalimantan

Sulawesi

NTT

Maluku-Papua

Road Length, km

Total Length

Improvedlength

• Budget IDR 7 trillion/yr

• Covers 47% of network in 5 yr

• Increments to 4.5, 6 or 7 m width

But comes at high cost:

• No distance saving, little speed

improvement

• Investment repeated in 5-10 yrs

• High cost = 40-60% of full

construction for 20-yr life

• Defers achieving modern asset

• Compounds land issues

7

DGH Support on Road Network Planning

Proposed outputs:

• Long-term 50-yr strategy to plan optimal road infrastructure for sustaining development

• 20-yr pipeline of investment projects in each economic corridor, staged to optimise benefits and spread funding requirements

• Journey time used to define connectivity and infrastructure plan outcomes

• Expressway network defined as backbone of trans-regional connectivity, with staged implementation

• Modernise arterial road network gradually through full renewal of roadway and alignment

Jalan yang belum terbangun digambarkan dengan garis putus-putus

Samarinda

Balikpapan

Banjarmasin

Palangkaraya

Pontianak

Nunukan

Enttikong Putusibau

Aruk

Tayan

Malinau

Tj. Selor

Ng Badau

TRANS KALIMANTAN NATIONAL ROAD PROGRAM

Simanggaris

Expressway >= 7 m 6 m 4.5 – 6 m Not Connected Sea Port

Road standard

Strategic Options

(1) Widen existing road

(2) Realign and rebuild – “road renewal”;

(3) Highway on future expressway location

(4) Expressway in new location

Improving connectivity:

Kalimantan Economic Corridor

Corridor plan evaluates options when

generating project pipeline and

investment profile for Economic

Corridor:

staged over 5, 10,

15 & 20 year periods

9

Improving Connectivity: Trans-Sumatra - Corridor Plan for Staged Development of Capacity in Parallel Facilities over long-term 20-yr period

ARTERIAL NATIONAL ROAD WIDTH

Width m 14

10

7

6

5

101 102 103 104 105 106 107 108 109 110 111 112 113

B Aceh Medan Pekanba Palembg Lampung

Length km 644 694 754 443 0

Total distance 2536 1892 1198 443

EXPRESSWAYDual C'way

Renstra period color code

Baseline

2010-2014

2015-2019

2020-2024

2025-2029

101 102 103 104 105 106 107 108 109 110 111 112 113

B Aceh Medan Pekanba Palembg Lampung

Length km 460 564 610 380 0

Distance km 2014 1554 990 380

2029 2024 2019 2019

2014 2024

2019

2010 Road W

idth

Lampung Medan B Aceh Pekanbaru

10

Corridor Plan Output - Trans-Sumatra Example: Linkage of Development Outcomes and Financing Plan

– Long-term 20-yr Period

1,8 3 3 3 3 1,7 3,6 0 2,6

47,9

58,6

20,2

7

1,5

0

0

10

20

30

40

50

60

70

80

R1 R2 R3 R45-Y

ear

Sp

en

din

g e

stim

ate

(ID

R T

)

RENSTRA PERIOD

Financing Plan

Rd Presv Rd Widening Exwy GOI Exwy PrivSec

0

10

20

30

40

50

60

70

2010 2015 2020 2025 2030

TRA

VEL

TIM

E (h

r)

Connectivity: Travel Time from South to

North

B Aceh

Medan

Pekanb

Palem

Boukh

11

Accelerating Expressway Development

• Development expected to accelerate – but land and private finance risks will dictate

• Need broader financing modality, better use of available public funds

0

500

1000

1500

2000

2500

3000

3500

1980 1990 2000 2010 2020 2030

Tota

l le

ngt

h, k

m

Operational Implementing Planned

IndII Support:

• Assist delivery of Trans-Sumatra & East Java expressways

• Define “expressway” classification in Road Law

• Update long-term plan for expressway network

• Advice on viability gap funding & PPP modalities

• Support project preparation with VGF

• Management: Strengthen BPJT, consider expressway authority

12

0

10

20

30

40

50

60

70

80

90

2005 2010 2015 2020 2025A

nn

ual

Exp

en

dit

ure

IDR

t

Total Highway Expenditure to Meet Connectivity Goals - Long-term Plan to 2029

Exw-PS

Exw-GOI

Devel-DGH

Presvn - DGH

Mgt - DGH

0,0

1,0

2,0

3,0

4,0

2000 2010 2020 2030 2040

Avg

Tri

p T

ime

(h

r/1

00

km

) Economic Corridor avg trip time

0

10000

20000

30000

2005 2010 2015 2020 2025Ne

two

rk le

ngt

h a

t Lo

S (k

m)

Expanding Level of Service

Exway

LOS-A

Funding Forecasts to Achieve Connectivity Goals and Modernisation of Road Network

• Long range forecasts of

funding requirements built

from the investment pipeline

• Supports scenario planning

- pace of development

- public-private share

• Modernising whole network

in 15 yr requires allocations

to double

Plan forecast

IndII Support for DGH - 1

Enhance Planning of National Road Development: - Expedite national connectivity and mobility

- Reform road development planning process - Efficient deployment of expanded private and public funds - Accelerate development of expressway network

• Build comprehensive process for planning road network development with expenditure forecasts and pipeline of projects

• Prepare long-range capacity expansion profiles for six economic corridors, include pipeline of projects and financing plan

• Develop an optimal 20-yr strategy for financing development of the expressway and arterial road networks

• Assist BPJT to build capacity for processing the enlarged expressway development program, and transactions with viability gap funding

14

DGH Support for Network Planning: Activity packaging

Package 1: Connectivity in Eastern Indonesia • Preparation of 20-yr investment plans for 4 MP3EI

corridors (Kalimantan, Sulawesi, NTT, Maluku-Papua) • Prepare 5-year pipeline of capacity expansion projects on

arterial road network & budget estimates • Planning procedures upgraded to include strategy on

capacity expansion and road renewal Package 2: Connectivity in Sumatra and Java

• Advisory support on expressway package preparation for E Java and Sumatra corridors, including financing

• Classification and updating of expressway plan • Capacity & policy support to Bipran and BPJT • Preparation of 20-yr investment plans for MP3EI corridors

IndII Support for DGH - 2

Improve efficiency national road program delivery: - Reduced life-cycle costs, improved performance and life of road assets

- Improved design and delivery of projects; - Improved management of road and bridge assets; and - Improved transparency and accountablity for performance

• Implement new design guide – longer life pavements

• Prepare road renewal project pipeline for heavily trafficked corridors in East Sumatra and Java (Balais 3, 4 and 5)

• Build balai capacity for managing national road network - devolved road management process, new system and.

• Assist 1-3 Balais with preparation of 3-year programs 2013-15 using new system;

• Apply new project design methods, contract preparation and supervision in selected heavy traffic corridors.

Approach for Support to DGH and MPW

• Facilitate delivery of DGH program: • Working with Directorates to design and implement program

• Demonstrating applications and reforms through outputs

• Supporting MTEF budget preparations in 2012, 2013 & 2014

• Progressive engagement: • Hold-points for review after initial stage and annual stages

• Governance: • Building reliable data & information database for shared use

• Deploy strategic KPI for travel time, asset age and activity costs

• Launch public disclosure – possibly under CoST Initiative

• Support MPW administrative reform measures

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