On the feasibility of a new multi-partner

Indonesian infrastructure institute...

Some Early Findings

Dr Chris Hale The University of Melbourne

Infrastructure Development Pathways

• Reference ‘high quality’ infrastructure development pathways

• East Asian mega-cities: Tokyo, Seoul, Taipei, major Chinese cities

• Success stories among medium-sized cities: Munich, Washington DC, Singapore, Melbourne (?)

Conceptual precedent - International Scan

Infrastructure Research Units

• University units the main models, but others

• Need exceptional and specialist research staff to be effective

• Australian “co-operative research centres” combine university, industry and government in a collaborative, pool-funded model – reasonably successful

• CRCs involve mix of cash, in-kind contribution

• Grant funding awarded to best proposals

Professional Institutes

• Networking & info exchange within profession

• Some lobbying on member’s behalf

• Focused on entry to professional status rather than career development

• American Planning Association, Engineers Australia etc

• Struggle to handle cross-disciplinary activity

• No known institute focused on infrastructure

Industry Associations

• Networking can be a strength

• Can be very active with events

• Some have broad membership base

• Membership fee structure may be relevant

• Better examples have research activity

• Straddle into lobbying

• Can lose sight of ‘public interest’, become narrow in approach

NGOs

• Seem to be improving, becoming more prominent and professional

• Often have strong environmental, social elements

• Advocacy

• Sometimes reaching a broader public, audience

Infrastructure in Government, internationally

• Models of infrastructure delivery evolving rapidly

• So is stance and expectations of government

• Increasing demands for independence, expertise, even-handed assessment – but is this ultimately best placed coming from government...?

• When government-owned is done right, it is brilliant (eg – HK MTR)

• Best practice seems to be “a process”

• Only build the best: “star” projects

Seamless infrastructure delivery – the new definition of ‘best practice’

• 1) Strategies and plans

• 2) Project concept

• 3) Modelling, analysis

• 4) Basic concept design

• 5) Pre-feasibility assessment, comparison of alternatives

• 6) Refinement, more design work

• 7) Business case, BCR

• 8) Financing options

• 9) Assessment

• 10) Compare to other projects

• 11) Decide (including on implementation package)

• 12) Build

Organising an institute around meaningful themes

• Balance specialisation & breadth

• Common themes (procurement, finance) but widely differing technical context

• Varied stakeholders

• Project risk profiles very different (eg - rail v road v power supply)

• Cross-cut from geographic/ regional/locational context

Stakeholder discussion during September SIG meetings – a summary

Integrated Metropolitan Infrastructure

• patchy application of urban design guidelines • incorporation of effective transport infrastructure and

options in new developments • Accountability • multi-modal integration • sheer scale of Jakarta as a mega-city • Jakarta’s mix of old and new urban development

patterns • effectiveness from plans into implementation • incorporation of waste management facilities and

operations into urban landscape

Policy, Procurement & Investment

• land acquisition • problems in procurement model selection • mis-matches between government project priorities and

willingness of private sector • impacts of major infrastructure projects not fully

considered – including social impacts such as urban heritage

• uncertainty and trust issues between public and private sectors

• bid costs in PPP and other projects • legal complexity and uncertainty • sovereign risks • decentralization and its impacts • budget limitations, resourcing • problems with rate of project realization.

Commercial Transport

• freight movement efficiency (including balance between use of small and large trucks)

• utilization of rail for inter-city or inter-nodal freight • whether cost or price incentives appropriate to support mode shift

from road to rail • ‘perverse incentives’ at play (incl low cost of heavy vehicle

registration, fuel subsidy) • questions over structure of rail track access charging • broader pricing questions • fuel subsidy, as an ‘input based’ measure overwhelming ability to

drive policy effectively via ‘output-based’ measures • ‘too many’ freight trips being made, due perhaps to low cost of

driver labour • a ‘financing gap’ between freight and commercial transport plans

and implementation.

Water Supply & Sanitation

• complex interactions between capital and operational financing • financing packages • loan terms and duration for water supply or wastewater projects • land acquisition • accountability and transparency • predictability and certainty for investors • “politics” • jurisdictional issues, including the fact that many projects cross

administrative boundaries • commitments from local governments to long term arrangements; • general standards of sanitation across Indonesia and the idea that a

major sanitation investment effort is needed • sectoral laws and regulations • effectiveness of vertical and horizontal integration within sector

• providing ‘best practice’ clusters in smaller cities and regional locations

• having geographic foci

• progressing into activity in smaller cities over time

• having a segmentation strategy (according to locations and city scale)

• providing services and support through a ‘needs-based’ approach

• including at least some less-developed regions

• acting to drive policy

• supporting funding applications made by smaller government actors

Energy Supply

• tariff setting

• Maintenance

• Efficiency

• new supply sources (such as solar)

• economic viability of generation

• project financing, guarantees, lender responses, and uncertainty

• progress toward coverage or ‘electrification’ goals (ie from 75% to 95%).

Regional & Rural • dilution of impacts and understanding for policies developed at the centre • availability of decent, appropriate reference cases for cities other than

Jakarta • less money and fewer resources for delivering quality infrastructure • generally under-developed infrastructure of all kinds • ineffective regional politics • different priorities to central government • different and diverse systems of government • diversity and non-uniformity across the archipelago • the level of inclusion or exclusion from the centre of various locations • the large number of smaller cities in Indonesia • questions around boundaries and regionalization per se • land reform • ‘extractive’ practices in regional and rural areas • labour conditions • the issue of ‘grid scale’ and market scale for infrastructure systems in rural

areas • different/alternative systems or technologies may be more appropriate for

infrastructure solutions in rural areas (particularly in energy and water).

Suggested Functions & Operations

• a focus on open communication • providing recommendations for implementation

co-ordination • providing practice reviews and explanation • undertaking new research (with government buy-

in) • a new project or policy evaluation capability • independent policy analysis and/or advocacy • Publishing • Providing ‘context’ for policy development

• organizing and delivering events and fora for high-level discussion

• provision of expert knowledge

• interaction and exchange

• dissemination and communication

• skills development

• a source of impartial public interest advice

• adding value (within the sector)

• delivering case studies

• an independent assessment capability

• providing broader independence within the sector

• sustaining a public interest focus

• informing professionals about standards of better practice and conduct

• open discussion of options and issues

• balancing different stakeholders (both public and private) as active members

• having potential status as a statutory body

• and/or potentially being associated with a university.

• knowledge exchange • critical analysis • being a “think tank” • providing background studies • providing peer review (for policies, plans, projects) • actively considering social, economic and environmental

perspectives • providing a destination for formal stakeholder engagement

programs related to government activities • being multi-partner in terms of involved stakeholders • could also undertake some commercial activity • could be quasi-public • should enhance government policy-making • tracking of statistics - sectoral, and sub-sectoral

performance • generating new evidence and knowledge • supporting improved transparency and accountability.

Synthesis of core functions

New research & studies

Professional skills development

Knowledge exchange, communication &

dissemination

Independent analysis & peer review of plans, policies

Integrating & supporting diverse

stakeholders –

Jakarta & beyond

Potential Structure

Board & executive staff

*strategy & governance

*operations & budget

*membership & publicity

*events, training, knowledge exchange & dissemination

*research contracts

SIG

integrated metropolitan infrastructure

(example only)

SIG

policy & investment

(example only)

SIG

commercial transport

(example only)

other SIG

other SIG

Resourcing at Mature Phases (indicative only)

Item Annual $USD at 2014

Commissioned original research $400,000

Independent professional board members (4 at 0.2 FTE)

$156,000

Executive staffing (one CEO, one admin) $260,000

General operating $80,000

Total Cash $896,000

Office space In-kind

Board members – major funding partners (4-8)

In-kind

Data and access to information In-kind

Staff time from partners - supporting research activity, events

In-kind

Early Recommendations

• Should be a vehicle for supporting broad-based infrastructure-led economic development

• “Separate but close” to government

• Core focus – “value adding” through enhanced sectoral skills and capabilities

• Membership base – strength in diversity

• New commissioned research – the focus of exchange, information, ideas and capabilities

• The ‘public interest’ as shared driver

• Topics and themes – broad coverage across infrastructure