The World BankFOR OFFICIAL USE ONLY

Report No. P-4149-IND

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN AN AMOUNT EQUIVALENT TO US$58.1 MILLION

TO THE

REPUBLIC OF INDONESIA

FOR A

MANPOWER DEVELOPMENT AND TRAINING PROJECT

May 1, 1986

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit - Indonesian Rupiah (Rp)

US$1 = Rp 1,100Rp. 1 million = US$909

FISCAL YEAR

April 1 - March 31

SCHOOL YEAR

July 1 - June 30

PRINCIPAL ABBREVIATIONS AND ACRONYMS USED

BAPPEDA - Regional Development Planning BoardBAPPENAS - National Development Planning AgencyBLK - Vocational Training Center (under the Ministry of Manpower)BNI 1946 - Bank Negara Indonesia 1946CIDA - Canadian International Development Agencycoi - Government of IndonesiaILO - International Labor OrganizationIfMIS - Indonesian Manpower Management Information SystemITDU - Industrial Training Development UnitJIVT - Joint Industrial Vocational Training SchemeKADIN - Indonesian Chamber of CommerceKLK - Rural Training CenterMEC - Ministry of Education and CultureMOF - Ministry of FinancemOM - Ministry of ManpowerNPC - National Productivity CenterNVTC - National Vocational Training CouncilPPF - Project Preparation FacilityPUSDIKLAT - Ministry of Manpower Central Office for Education and TrainingRepelita - National Five-Year Development Plan (Repelita I, 1969-74;

Repelita II, 1974-79; Repelita III, 1979-84; Repelita IV,1984-89; Repelita V, 1989-94)

SEKNEG - State Secretariat for Procurement MattersSTM - Senior Secondary Technical School (under the MEC)UNDP - United Nations Development Programme

FOR OMCAL USE ONLY

INDONESIA

MANPOWER DEVELOPMENT AND TRAINING PROJECT

Loan and Project Summary

Borrower : Republic of Indonesia

Amount : US$58.1 million equivalent

Terms : Repayable in 20 years, including five years of grace, at thestandard variable interest rate.

ProjectDescription: The proposed project would assist the Ministry of Manpower by

financing consultant services, staff training, civil works,equipment, furniture and project-related operating costs to:(a) strengthen labor market and manpower planning informationsystems at the national and regional levels; (b) improve theMinistry's management systems and the management capability ofthe Ministry's senior and middle-level national and regionalstaff; (c) establish a national vocational training system(including a joint training scheme with industry, and occupa-tional standards and certification); (d) upgrade the Ministry'sexisting skills training facilities and programs in accordancewith employment and industrial development needs; and (e) developin selected provinces support for in-plant training by industry,training for self-employment and for the informal sector, andmobile training. The main benefits would be: (i) improved labormarket and manpower information and planning systems at nationaland provincial levels; (ii) more effective management of trainingand establishment of a national training system, includingoccupational standards, skills standards and tests and anapprenticeship system; (iii) upgrading of basic training andestablishment of a capacity for training about 20,000 people eachyear in key skills and occupations at advanced levels and inspecialist skills; (iv) improved efficiency in utilization oftraining resources; and (v) development and improvement in keyareas of in-plant industrial training, training for self-employment and the informal sector, and mobile training. Inaddition, the project would include arrangements for monitoringof training costs and outcomes to provi6e the information onwhich to base subsequent long-term development of training.

Risks: The main risk is possible delay in implementation. To lessenthis risk, detailed consideration was given to the projectmanagement, implementation and monitoring arrangements. Theproject size and scope has been limited. In addition, arrange-ments have been agreed for continuing the existing East Javaregional program of technical assistance through loan financing

This document ha anrstreddibution and ny be uud by rfcints only in the peforane §of thdr oici dutel Its ontents may not otbrwie be diaedd withut Wodd Bank authorzaon.

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of an extension to the existing UNDP-ILO project; this willensure the presence of consultants from the outset of theproject. Project activities have been designed in detail andpreparation for implementation is well advanced. Agreement hasbeen reached on a system for close Bank monitoring includingdetailed review of annual plans and budgets.

Estimated Costs:

Local Foreign Total(USS MilL2on)

Labor market and manpowerplanning information systems 4.4 4.4 8.8

Training management 5.7 6.7 12.4The national training system 3.1 2.2 5.3Vocational training programs (BLK) 5.8 10.8 16.6Instructor training 6.0 7.9 13.9In-plant training, supervisory training and

productivity 3.4 3.1 6.5Training for self-employment and the informal sector 0.7 1.2 1.9Mobile training 0.8 1.2 2.0

Base Cost 29.9 37.5 67.4

Physical contingencies 2.4 2.5 4.9Price contingencies 7.8 10.6 18.4

Total Project Cost /a 40.1 50.6 90.7

Project Preparation Advance - 0.4 0.4

Total Financing Required 40.1 51.0 91.1

Financing Plan: Local Foreign Total- (USillton)

IBRD 7.1 51.0 58.1Government 33.0 - 33.0

Total 40.1 51.0 91.1

Estimated Disbursements:

Bank FY 1987 1988 1989 1990 1991 1992 1993- - -tU$ m=iTion)

Annual 1.0 2.5 10.5 13.0 13.5 11.5 6.1Cumulative 1.0 3.5 14.0 27.0 40.5 52.0 58.1

Rate of Return: Not applicable

Staff Appraisal Report: Report No. 5861-IND, dated May 1, 1986.

Map: IBRD No. 19401.

/a Includes taxes and duties of about US$3.2 million.

REPORT AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLICOF INDONESIA FOR THE MANPOWER DEVELOPMENT AND TRAINING PROJECT

1. I submit the following report and recommendation on a proposed loanto the Republic of Indonesia for the equivalent of US$58.1 million to helpfinance the Manpower Development and Training Project. The loan would have aterm of 20 years, including five years of grace, at the standard variableinterest rate.

PART I - THE ECONOMY!'

2. An economic report, entitled "Indonesia: Policies for Growth andEmployment" (No. 5597-IND, dated April 23, 1985), was distributed to theExecutive Directors on April 30, 1985. Annex I gives selected social andeconomic indicators for the country.

Background

3. The Republic of Indonesia is a highly diverse country spread acrossan archipelago of more than 13,000 islands with a land area of about 2 mil-lion km2. It now has a population of over 155 million, growing at about 2.2%p.a., and is the world's fifth most populous nation. The country has adiversified resource base, with plentiful primary energy resources, signifi-cant mineral deposits, large timber potential and a developed system of agri-cultural commodity production and export. A high proportion of these primaryresources are located on the sparsely populated islands of Sumatra andKalimantan, while two thirds of the population live on Java, which has areaswith some of the highest rural population densities in the world. About aquarter of the population lives in urban areas, and the current rate of urbanpopulation growth is about 4% p.a. The 1983 estimate of GNP 17 r capita isUS$560, which places Indonesia among middle income countries.-

Macroeconomic Developments and Resource Management

4. Until 1981, the economny had been growing at almost 8% p.a. for overa decade. This growth was associated with rapid increases in public expendi-tures, total investment and savings. The initial impetus for this occurred inthe period of recovery from the turbulence of the mid-1960s. The Government

1/ Substantially unchanged from the President's Report on a Gas DistributionProject (No. P-4287-IND), circulated under cover of R86-96 datedApril 17, 1986, and approved by the Executing Directors on May 6, 1986.

2/ On the basis of the World Bank's system of country classification andAtlas methodology for calculation of CNP.

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of Indonesia (GOI) took effective action to restore macroeconomic stability,Liberalize the economy, rehabilitate infrastructure, and provide incentivesfor domestic and foreign private investment. However, the dominant externalinfluence over the past decade has been the huge expansion, and significantvariability, in foreign exchange earnings from oil. Net exports from the oiland gas sector rose from US$0.6 billion in 1973/74 to US$10.6 billion in1980/81, when the current account enjoyed a surplus of US$2.1 billion. Oilreceipts also provided about 60Z of Central Government receipts by 1980/81 andhelped finance a sustained increase in demand. The pattern of expenditureshas also helped foster diversified growth. Of particular note has been thesupport for agriculture, through investment in infrastructure and support ser-vices. This supported an agricultural growth rate of almost 4Z p.a. over thepast decade, and led to the recent achievement of self-sufficiency in rice.Manufacturing also enjoyed a high growth rate during the 1970s (of about 14Xp.a.), although this was from a very low base and predominantly orientedtoward the protected domestic market.

5. During 1982, the Indonesian economy was affected adversely by theprotracted international recession and the accompanying decline in exportearnings, especially from oil. These developments led to a sharp turnaroundin Indonesia's external resource position and a fall in real per capitaincomes. In response, the Government acted promptly to ensure that the coun-try's balance of payments situation was manageable and to provide a basis forlonger-term structural transformation. Particular attention was paid toreducing Indonesia's dependence on oil for export earnings and public reve-nues. Specific measures introduced over the past two years include:

(a) a 28% devaluation of the rupiah against the US dollar in March 1983,without any change in the policy of full convertibility;

(b) a major rephasing (postponement/cancellation) of large-scale andimport-intensive public investments, especially in the industrialsector;

(c) successive price increases for petroleum products, which havelargely eliminated domestic subsidies;

(d) a far-reaching financial reform, including the liberalization ofinterest rates and the abandonment of credit ceilings;

Ce) introduction of a comprehensive tax reform program, aimed atincreasing government revenues by broadening the tax base, simplify-ing the structure of rates and improving administration; and

(f) an ongoing effort to reduce the unfavorable impact of the regulatoryframework, including simplification of investment approval proce-dures and a major reorganization of customs, ports and shippingoperations.

6. These measures, aided by more favorable trends in the world economy,are already having their desired impact. GDP, led by strong performance inthe oil (including LNG and refining) and agriculture sectors, rose by an esti-

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mated 4.7Z in 1983 and 6.5Z in 1984. The balance of payments situation isalso improving. In particular, the current account deficit was reduced fromUS$7.1 billion (8.5Z of GNP) in 1982183 to an estimated US$1.9 billion (2.4Zof GNP) in 1984/85. The major factors responsible for this improvement areimport cuts, resulting from the Government's efforts to curb aggregate demand,and higher export earnings from non-oil products, due to recovery in theindustrial countries and the Government's policies to promote non-oilexports. The Government's restraint is also evident in the budget, where realexpenditures have probably fallen over the past three years. This fiscal dis-cipline, in turn, helped keep domestic inflation down to about 12Z in 1983 and91 in 1984, despite the inevitable pressures associated with the 1983 devalua-tion and the petroleum price adjustments. Faced with the prospect of evenlower oil prices in the year ahead, the Government recently announced anaustere budget for 1986/87. In particular, total expenditure is projected tofall by 71 (compared to budgeted levels in 1985/86), with a 222 reduction inthe development budget.

Policies for Medium-Term Growth and Transformation

7. Sustained growth of the non-oil economy by at least 5Z p.a. is pro-bably necessary to have a significant impact on employment creation and pov-erty alleviation over the remainder of this decade. To promote such a growthrate, without generating unmanageable balance of payments pressures, is one ofthe major challenges facing the Government. Successful transformation of theeconomy will require continued action in three key policy areas: managementof the public investment program (and improvements in the regulatory/policyenvironment for private investment), rationalization of the external traderegime and development of the financial sector.

8. The projected import constraint imposes serious limitations on therate at which Indonesia can undertake new investments over the next fewyears. At the same time, some reallocation of resources towards agricultureand the social sectors might be justified, in order to reduce the import con-tent of investment while still meeting the Government's employment objec-tives. It is therefore important that mechanisms are established to facili-tate orderly and rational adjustments to the public investment program. Pos-sible options include preparation of multi-year expenditure plans (at leastfor the larger projects), identification of a core program of high priorityprojects and strengthening of project appraisal/selection procedures. TheGovernment is also considering ways to improve project implementation, so thatinvestment returns can be realized more promptly. Given the budgetary con-straints, it is expected that the private sector will be called upon to playan increasingly important role in capital formation. To encourage this pro-cess, the Government recently announced simplifications in investment approvalprocedures and a major internal reorganization of the Investment CoordinatingBoard.

9. The recent decline in the price of oil has clearly demonstrated theimportance of reducing the economy's heavy dependence on a single source offoreign exchange and, more generally, the need to rationalize the externaltrade regime. The Government has set a target of doubling non-oil exports innominal terms over the next five years. This target should be attainable pro-

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vided that economic recovery in the industrial economies is sustained,Indonesia's access to those markets is not constrained by protectionist mea-sures and, most importantly, Indonesia follows appropriate trade and exchangerate policies. The Government has already introduced a range of export promo-tion measures intended to improve export incentives, ensure ready access tofinance for exporters, raise product quality and enhance marketing capacity.However, over the longer term, there is no effective substitute for comprehen-sive trade reform. On the import side, Indonesia's trade regime has histori-cally been characterized by a predilection for high tariffs and quantitativerestrictions. In March 1985, the Government announced a major reduction inthe range and level of nominal import tariffs. However, other actions -including increased use of import quotas/bans and regulations requiring higherlocal content in production - have served to promote some potentially costlyaid uneconomic investments which could prove counter productive to the exportdrive.

10. The Government's decision to move towards a more liberal financialenvironment raises a number of issues relating to resource mobilization,financial intermediation and credit allocation. Over the longer term, as thescope for subsidized credit is reduced, the banking system will have to playan increasingly important role in mobilizing domestic resources. However,during the transition period, some potential conflicts between the resourcemobilization and credit allocation objectives could arise. For example, theincrease in deposit rates following the recent financial reforms, whileencouraging resource mobilization, has also led to high real lending rateswhich have tended to dampen investment and credit demand. This in turn mayrestrain economic activity. It is therefore important to find ways to reducethe high intermediation costs of banks. Consideration should also be given toother ways of mobilizing financial resources, including development of a capi-tal market, expansion of the bunking network (especially in rural areas) andselective relaxation of restrictions on private banks (combined with increasedbank supervision).

Incomes, Employment and Human Development

11. Indonesia's physical, human and economic resources are very unevenlydistributed between its main regions. Java, for example, accounts for almost50X of Indonesia's GDP and 62Z of its population, but only 7Z of its landarea. Although all five of the country's main regions experienced rapid percapita growth in the 1970s, regional differences in output tended to widen.To a large extent, differences in performance are associated with the impor-tance of the mineral sector, particularly petroleum. However, there are twoimportant processes at work in Indonesia which enable the benefits of growthto be more evenly spread than indicated by output trends. The first of theseis migration. Between 1971 and 1980, 4.3 million people (or 16% of the natur-al increase in population) resettled permanently in provinces outside those oftheir birth. Approximately 1.7 million people moved from Java to the OtherIslands, of whom some 675,000 were resettled through the official transmigra-tion program. There has also been substantial rural-urban migration bothbetween and within provinces. The second process is the redistribution ofincome through the government budget. Regional variations in per capita con-sumption are much less pronounced than differences in per capita output. Thisis largely due to the impact of taxation on the oil sector.

12. An analysis of household expenditures indicates that Indonesia'srapid economic development has been accompanied by significant progress inreducing poverty. Between 1970 and 1980, the proportion of the populationliving in poverty declined from 57Z to 40%; the decline was particularly rapidin the Other Islands and in urban areas. The core of the poverty problem con-tinues to be in rural Java, where landless laborers form a large, and possiblyrising, proportion of the population and where, for most of the 1970s, thereis little evidence of any rise in real agricultural wages. However, there wasa significant rise in real agricultural wages around 1980-81, associated withthe sharp increase in rice output and booming overall economic growth.Increases in rural non-agricultural and urban wages also occurred at thebeginning of the 1980s. Despite the slowdown in economic growth and stabili-zation measures since 1982, the limited available evidence suggests that wagesand incomes have held up, partly as a consequence of continued agriculturalgrowth.

13. In the future, the availability of productive employment will be akey determinant of income distribution. The labor force is expected to growat about 2.3% p.a. over the next decade, while economic growth will be lowerthan in the 1970s. The resultant squeeze in the labor market is not expectedto lead to a dramatic increase in unemployment but there is a serious risk ofstagnant or declining labor income in both rural areas and the urban informalsector. Given the balance of payments constraint facing the country,Indonesia's employment outlook depends crucially on the pattern of economicgrowth, and in particular the extent of labor absorption in the commodity-producing sectors. Although over the long term the structural shift inemployment away from agriculture should continue, this sector will stillaccount for half or more of total employment and the growth in agriculturalincomes will be an important determinant of job opportunities elsewhere innon-farm activities. This will require continued priority to agriculture inthe form of supportive pricing and investment policy, with some shift inemphasis toward the Other Islands. On Java, attention will need to be paid toissues of agricultural diversification and the pace of mechanization. Withrespect to the industrial sector, the development of an efficient, relativelyexport-oriented pattern of production can also contribute to significant laborabsorption in the medium to long term, especially in Java; this will involve acontinuing major role for small-scale firms. If a favorable evolution of theemployment situation is to occur, there will also need to be an appropriatepattern of public expenditure and supportive policies for the urban informalsector; finally, the transmigration program can make a substantial contribu-tion, provided it is closely coordinated with complementary agriculturalinvestment programs, in tree crops, water resources and livestock development.

14. There has been substantial progress in extending the provision ofsocial services throughout the population. Universal enrollment in primaryeducation has been virtually achieved and the enrollment rate in secondaryschools is now about 35%. However, the weak educational base of the popula-tior. continues to be a major obstacle to rapid economic development and a sub-stantial further expansion of secondary and tertiary education will be neces-sary as well as a major effort to raise the quality of the whole system. Inthe health 2ector, there has been a large expansion in facilities, notably atthe sub-district level, but continued investment and an improvement in quality

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will be necessary to increase effectiveness. This will have to be complemen-ted by a major expansion in water supply and sanitation if the improvement inindices of mortality and morbidity during the 1970s is to be maintained. By1981, only 18X of the rural and 40Z of the urban population had access to safewater, compared with government targets of 60X and 75%, respectively, for 1990.

External Capital Flows

15. The recent improvement in Indonesia's balance of payments situationis evidence of the Government's commitment to manage short-term economicshocks. The ongoing program of economic reforms should also help to hold thecurrent account deficit to sustainable levels over the medium term. Even so,continued resource transfers from abroad will still be essential if the Gov-ernment's modest growth targets (5Z p.a.) for the next five years are to beachieved. Staff projections indicate that new public medium- and long-term(MLT) borrowing will have to average about US$5.2 billion p.a. over the nextthree years, including about US$2.5 billion p.a. of official developmentassistance and the balance from import-related credits and unried borrowing.Indonesia is well placed to arrange the necessary financing on reasonableterms; the profile of existing debts is good and a comfortable level of exter-nal resesrves has been rebuilt over the past two years.

16. Total public debt outstanding at the end of 1984 is estimated atUS$22.9 billion, with an additional US$14.0 billion of undisbursed commit-ments. Of the total debt disbursed and outstanding, official assistance(including non-concessional multilateral aid) accounts for 50% and obligationsat variable interest rates for only 24%; there is no short-term public debt.The average maturity of public MLT debt at the end of 1984 is estimated at 16years. The Government continues to manage its external debt quite prudently.Until 1982, Indonesia had succeeded in maintaining its public debt serviceratio, based on net exports (i.e., net of oil sector imports), at or below20%. However, because of the sharp drop in oil export receipts over the pastthree years, the ratio rose to 25% in 1984. With the projected levels andcomposition of borrowings and export earnings, Indonesia's public debt serviceratio, again based on net exports, would rise to about 30% in 1989 and thengradualiy decline in later years. With private MLT debt included, the totaldebt service ratio, based on the conventional concept of gross exports, wouldrise from 21% in 1984 to around 24% in 1989 and decline back to 22% by 1995.While debt management will require careful attention in the coming years, theprojected debt service ratios are not excessive by international standards.

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PART II - BANK CROUP OPERATIONS IN INDONESIA 3J

17. As of March 31, 1986, Indonesia had received 48 IDA credits total-ling US$896.49 million (less cancellations) and 107 Bank loans amounting toUS$8,149.54 million (less cancellations). IFC commitments totalledUS$163.2 million. Annex II contains a summary of IDA credits, Bank loans andIFC investments as of March 31, 1986. The share of the Bank Group inIndonesia's total (disbursed) external debt outstanding at the end of 1983 was13.12, and the Bank's share of debt service 10.32, compared with 13.3Z and7.9Z, respectively, in 1982. From 1968 until 1974, all lending to Indonesiawas made through IDA. Due to the country's improved creditworthiness follow-ing the comodity and oil price boom in 1973/74, the bulk of the Bank Croup'slending in the remainder of the 1970s was t.arough IBRD loans, with a modestamount of IDA lending being justified primarily on poverty grounds, as the percapita CNP was well below the IDA cutoff level. IDA lending was discontinuedin FY80. Given the critical importance of agriculture (including transmi-gration) for employment, food security and exports, over one third of BankGroup-assisted projects have been in this sector. In addition, loans andcredits have been extended to virtually all other sectors of the economy,including transportation, education, urban development, water supply, ruraldevelopment, industrial development financing (including small-scaleindustry), power, telecomnunications, population and nutrition, and technicalassistance.

18. During Repelitas I (1969-74) and II (1974-79), and in line with theobjectives of these first two Five-Year Plans, a high proportion of Bank Grouplending was directed initially toward the rehabilitation and then the expan-sion of infrastructure and production facilities. Special attention was alsogiven to meeting the shortage of skilled manpower and technical assistanceneeded for preinvestment studies and project execution. Repelita III (1979-84), published in early 1979, stressed the need for continued high growth andstability, but departed from previous plans by placing special emphasis onmore equitable income distribution and poverty alleviation. This focus, whichwas fully in line with the conclusions of the Bank's economic work, requiredgreater attention to employment generation (particularly in the industrialsector) and to improvements in basic public services. While Bank lending wasalready consistent with these objectives, increased emphasis has been given tothese priorities. However, the adverse economic developments that occurred inthe latter half of the plan period and the measures taken to address them, ledto a reshaping of development objectives for Repelita IV (1984-89). Theseemphasize restoring growth of incomes and employment while continuing finan-cial prudence, promoting structural change toward a more diversified economy,and maintaining efforts to improve income distribution and alleviate poverty.This shift in focus has underscored the need to follow through on reforms thathave already been initiated, seek increased efficiencies in the economy,

3/ Substantially unchanged from the President's Report on Gas DistributionProject (No. P-4287-IND), circulated under cover of R86-96 datedApril 17, 1986, and approved by the Executive Directors on May 6, 1986.

mobilize domestic resources to finance needed investments and recurrentexpenditures, and foster a policy environment conducive to the achievement ofrequired changes.

19. The Bank has gear?d its lending and economic work program to addressthese needs and to maintain a high level. of resource transfer. The approachis to continue to emphasize the ongoing dialogue on economic policy that hasbeen a cornerstone of the Bank's relationship with the Government for manyyears, and to coordinate discussion of macroeconomic issues with advice oninstitutional and policy reform in important sectors and subsectors, coupledwith lending operations and technical assistance that meet priority needs andsupport institutional improvements in specific areas. Emphasis in economicwork is being given to trade and industrial issues, development of the finan-cial system, and public resource management. In the lending program, agricul-ture continues to receive the most attention. However, the program is broadlybased, and includes increasing emphasis on education and human resource deve-lopment. Continued attention is being given to power and energy, where theBank is concentrating on policies to diversify Indonesia's energy base,rationalize pricing and improve sector planning. In transportation, the Bankis focussing on efficiency improvements in the maritime sector and on improv-ing the national network of highways and rural roads. In urban developmentand water supply, lending is being directed more and more to developing inno-vative low-cost solutions, providing for cost recovery and strengthening localinstitutions, in order to minimize demands on the government bcdget and decen-tralize the responsibility for addressing basic needs. In all, the Bank'slending program is intended to contribute about 20% of Indonesia's capitalrequirements during the next 3 years and is expected to be an importantcatalyst in attracting other funds. Where possible, we are seeking also towiden the impact of Bank lending through technical assistance, as well ascomplementary investments and coordinated policy dialogue with other donors.This is especially true in our lending programs for power, urban development,water supply and transportation.

20. T,h.,re has been an improvement in the last few years in the disburse-ment ratio - from a low of 132 in FYB0 to over 17% in FY85. The poor FY80ratio was in large part merely a result of the rapid increase in commitmentsduring the FY77-79 period, when total Bank/IDA commitments to Indonesiaincreased by 122% compared to a Bank-wide increase of 83%. However, it alsoreflected implementation difficulties arising out of the Government's budget-ary, procurement and payment procedures, as well as the severe shortage ofmanagerial and technical manpower in Indonesia. A number of steps have beentaken by the Government and the Bank to add.ess these issues. Several specialBank missions have visited Indonesia to analyze the problems and make recom-mendations for simplifying budgetary and financial procedures. The Governmentand the Bank have also instituted formal and regular joint review proceduresto identify general and project-specific problems and work out correctivemeasures. Procurement seminars were held in Jakarta in September 1979,

41 The ratio of actual disbursements during the fiscal year to thecumulative undisbursed amount at the beginning of the fiscal year.

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November 1981 and May 1984. As a consequence of these joint initiatives, theGovernment has taken measures to streamline some of the complex budgetary andfinancial procedures affecting project implementation. In addition, in orderto reduce disbursement delays due to initial project implementation difficul-ties, many operations are now being presented for Board consideration at alater stage in the project cycle. The combined effects of all of these acti-vities are reflected in the increase in disbursements from US$206 million inFY79 to US$728 million in FY85. It is nevertheless clear that continuedefforts to improve project implementation and the pace of disbursements arerequired, as Indonesia continues to show a disbursement ratio below the Bank-wide average. A number of initiatives are underway. The Bank is helping theGovernment in a special effort to identify problems in the construction indus-try with a view to developing appropriate remedial actions and policies, asweaknesses in the domestic contracting industry have been identified as one ofthe major causes of implementation problems in Indonesia. Efforts are alsounderway to develop standardized tender documents in order to speed theprocurement process, and to improve project monitoring and land acquisitionprocedures. It is the Bank's and the Government's intention to devote conti-nued attention to these and other aspects of project implementation in thecoming year, in order to ensure that maximum benefit is realized from theGovernment's investments, Bank-assisted and other.

PART III - THE SECTOR

Employment and Demand for Skilled Manpower

21. Expansion of employment opportunities and improvement in the qualityof manpower are key elements in the manpower policies of the Government ofIndonesia in its Fourth Development Plan, Repelita IV, 1984-89. The Govern-ment projected that both the labor force and employment would increase byabout 9.3 million over the period 1984-89. The manufacturing sector wasexpected to create up to 1.9 million new employment opportunities, with thefastest growing subsectors expected to be metals and machinery and chemicalprocessing. Self-employment and the informal sector were expected to accountfor about three-quarters of new employment outside agriculture and thegovernment policy is to assist self-employment and the informal sectordirectly through training and other support.

22. Projections based on Repelita IV indicate that in each of the basicindustrial trades there will be demand for several tens of thousands ofadditional skilled workers. Although expectations for the rate of growth ofindustrialization have been reduced, the need for skilled workers willcontinue to exceed the supply. In addition, there will be a need for skillsupgrading of existing workers in order for Indonesian firms to achieveinternational competitiveness and better product quality. The Government isthus faced with a variety of urgent training needs, including skills trainingfor new entrants to the labor market and upgrading of skills of existingindustrial workers, skills training for workers for overseas employment, andtraining for people to become productively self-employed or to enter theinformal sector.

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Supply of Skilled Manpower

23. The principal sources of trained manpower for industrial skilledemployment are the Vocational Training Centers (BLKs) of the Ministry ofManpower (MOM) and the Senior Technical Secondary Schools (STMs) of theMinistry of Education and Culture (MEC). Both provide training to only alimited skill level. The MOM has established 33 medium and large BLKs - 16established with the aid of biLateral donors over the period from 1956 and 17established since 1974 with loan funds under the Bank-supported FourthEducation Project (Ln. 1237-IND). The BLKs' main programs are two to threemonth basic skill training courses for unemployed youth. The main skill areasare automotive, mechanical, construction, electrical, welding, comercial,secretarial, miscellaneous and agriculture. The minimum admission age is 18and there is normally no educational entry requirement. The 33 medium andlarge BLKs have a training capacity of about 8,600 places, equivalent atpresent to about 25,000 trainees each year. The MOM has also established about60 small, rural training centers (KLKs) - part of a target of 120 smallcenters, expected to be established by 1986/87, which will provide trainingrelated to both industrial and rural occupations. These small centers, nowbeing brought into use with equipment procured under export credit agreements,will have a total training capacity of about 10,000 places, equivalent toabout 35,000 trainees per year. The MOM also provides a relatively largeprogram of mobile training and the 1985/86 target for trainees in mobile unitsis about 75,000. Mobile training has not been formally evaluated but fromobservation it appears that many mobile units are no longer effective.

24. The major problem for the BLKs is the lack of skills and experienceof instructors. During Repelita IV the MOM aims to train 650,000 persons.This would require some 5,400 instructors in comparison with the present 1,800instructors. Recently recruited staff are mainly STK graduates with only 6 to12 months training and no industrial experience. Since salary levels are nothigh enough to attract a large number of 2xperienced skilled workers fromindustry it will be necessary for the MOM to continue the less satisfactoryapproach of recruiting secondary technical school graduates as instructors andproviding them with adequate skills, instructor training and industrialexperience. Another serious problem is the low efficiency of utilization ofresources. Most of the centers appear to run only two three-month courseseach year. At the time of appraisal, the overall efficiency in ut.lization ofaccommodation in the sample of BLKs visited was estimated to be less than 25%;the project is expected to raise this figure to 75%.

25. A survey of a sample of firms in July 1984 showed that the shortbasic training courses of the BLK are not relevant to industrial needs.However, a recent tracer study of BLK graduates has shown that they are doingbetter in the labor market than similar young people who did not go to a BLK,although in absolute terms the job record is not good. The findings fromthese surveys point to the need, and justification, for upgrading the centers,developing relevant and longer training, recruiting and training an adequatenumber of instructors and establishing close links between the centers andindustry.

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26. Secondary Technical Schools. The senior secondary technical schoolsprovide four year courses which include about 40% practical skills training.There was an enrollment of about 100,000 in public STMs in 1983/84 and anannual output (1983) of about 30,000 in the five broad areas of mechanical,electrical, electronics, automobile and building trades. The Bank-supportedFirst and Fourth Education Projects included the establishment of centralworkshop facilities to upgrade the training provided by STMs. In recent yearsthe Asian Development Bank and the Netherlands Government have providedassistance for the expansion of the STM system.

27. Training in Industry. The Government of Indonesia in Repelita IVplaces a large and increased responsibility on industry for provision oftraining, both for its own immediate needs for skilled manpower and for train-ing people who will subsequently enter the informal sector or establish them-selves in self-employment. The Government proposes that industry and privateinstitutions train 3.8 million people over the five-year period. However, asurvey of industry by Bank and MOM staff in July 1984 indicated that there isrelatively little structured in-plant training. The general practice appearsto be the relatively ineffective one of recruiting unskilled persons andallowing them to "learn on the job" by observation. Industry is willing toincrease its participation in training but in order for it to do so it needsassistance to plan, establish and implement training.

Management of Education and Training

28. Under Presidential Decree No. 34 of 1972, operational responsibilityfor education and training is shared between the MEC, which is responsible forgeneral and vocational education, the MOM, which is responsible for specia-lized and vocational training and the National Institute of Public Administra-tion, which is responsible for staff training in conjunction with the CentralOffices for Education and Training (PUSDIKLATs) in each Ministry.

29. The Role of the MOM. The MOM has two Directorates General. TheDirectorate General of Manpower Development and Placement is responsible fornational manpower planning, vocational training to meet industrial employmentneeds, the coordination of training provided by the private sector, thedevelopment and implementation of employment policies and guidance and place-ment services. The Directorate General of Industrial Relations, andDevelopment and Supervision of Working Conditions is responsible for allaspects of industrial relations, and for industrial safety and health. TheMOM has a Regional Manpower Office in each province and district offices ineach district. The National and Regional Productivity Centers provide laborproductivity and supervisory training and act as advisers within the MOM andin industry. The present training operations of the Ministry are largelycentralized, e.g. enrollment targets, training curricula, staffing andfinancing are determined nationally by the central office. The regionaloffices are responsible for recruitment and selection of trainees. The MOMhas recently established a National Training Council to provide policy adviceon training and to assist with planning, coordination and implementation oftraining. It is at an early stage of work, assembling information on theexisting training system. A Regional Training Council is being established inSurabaya, as a pilot project with ILO-UNDP support. Manpower planning for the

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current five-year development plan comprises forecasts of employment andoccupation based on estimates of output growth by sector. The MOM carries outsurveys by region of industrial enterprises - covering employment, wages andtraining - but little use appears to have been made of the data in theplanning of training.

Training Costs

30. There is very little detailed information available on trainingcosts in Indonesia and it is difficult to identify and attribute actualcapital and current expenditure to training activities. However, on the basisof budget allocations and training targets, the training provided by the BLKsappears to be inexpensive. Information is also lacking on the costs of train-ing in industry. Only a small proportion of firms appear to have trainingbudgets, and those budgets cannot easily be related to training outputs. Thelabor market and manpower planning component of the project would address theissue of monitoring training costs and relating costs to outputs to provide abasis for future policy development.

Issues in Manpower Planning and Training

31. Recognizing the importance of improving both productivity of indus-try and employment prospects, there is an urgent need to strengthen the capa-city of the MOM to establish appropriate training policies and systems and tolead and coordinate manpower development and training in the public andprivate sectors. The issues facing the MOM can be classified as follows.First, there are weaknesses in the manpower planning and training managementsystems. For example, the National Vocational Training Council needs to bebrought into effective operation and similar representative bodies establishedat the provincial level, staff expertise should be strengthened and effectivemanpower and training management information systems developed. Coordinationneeds to be strengthened between the MOM, other ministries and the privatesector. Second, there is no national system for training. Little use is madeof the standard classification of occupations, there is an absence of nationaltraining standards and little skills testing, and there is no formal"apprenticeship" system in the sense of coordinated programs of training toagreed standards involving both off-the-job and in-plant training. Third,there is need for upgrading and improving the relevance of skills training.There is very little specialist and advanced skills training, very littleskills upgrading in conjunction with employment needs, and a lack of supervis-ory training. There is also an urgent need to develop MOM's capacity tosupport the expansion of other forms of training, particularly in-planttraining, mobile training and training for self-employment, and to assembledata about methods, outcomes and costs to provide the basis for long-termpolicies and programs.

Government Strategy

32. Government objectives under Repelita IV include the expansion oftechnical education and vocational training in order to supply skilled man-power to suppo._ Indonesia's policies of industrialization and increasingexports and to enlarge employment opportunities. The Government's targets are

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to double the enrollments in STMs, from 250,000 to 500,000 and in BLKs andmobile training, from 80,000 to 170,000. The MOM is giving attention to theexpansion of training capacity by the construction and equipping of the 120KLKs, developing more advanced and specialist training, making more e ficientuse of training resources and increasing participation of industry intraining. It is also introducing training for self-employment. The MOM hasdrafted a Training Act which would provide a satisfactory legal framework toassist it in the long term to promote the participation of industry intraining, introduce charges for training and other means of cost sharing andestablish skills standards and certification. The MOM is seeking Bankassistance for the development and implementation of this strategy.

33. Two UNDP-ILO projects: the Indonesia Manpower Management andInformation System (IMMIS) Project, and the Employment Creation StrategyProject are strengthening the MOM's capability in manpower planning. AnotherUNDP-ILO technical assistance project is helping the MOM to develop theSurabaya BLK as a model regional center. A Canadian-assisted (CIDA) projectto establish a BLK in Samarinda is nearing completion and a Japanese-aided(Japanese International Cooperation Agency) Instructor Training Center hasjust opened in Jakarta.

Experience with Past Lending

34. Industrial skills development has been the focus of several edu-cation and training projects. Credit 219-IND supported the establishment offive centralized training workshops for practical training for students fromnearby secondary technical schools. Loan 1237-IND supported development ofadditional centralized workshops as well as the establishment of the 17 voca-tional training centers for the MOM. Credit 869-IND and Loan 2290-IND supportthe establishment of a polytechnic system to train engineering technicians.Loan 2258-IND is assisting in the upgrading of manpower in the Ministry ofPublic Works. University development is supported by Loans 1904-IND and 2547-IND, and the supply of high-level scientific and technological manpower byLoan 2599-INDl. Support for the sector also covers agricultural training, non-formal education, teacher training, textbook development and secondaryeducation. An OED Project Performance Audit Report prepared for Credit219-IND (No. 2998, dated June 2, 1980, SecM80-440) stresses the importanceof: including fellowships for development of teachers and schooladministrators; and appointing key staff for project implementation in atimely manner. The Project Completion Report on Loan 1237-IND (May 31, 1985)indicates as the main lessons: (a) the need to provide adequate technicalassistance for both project planning and implementation; (b) the importance ofthe timely appointment and training of a sufficient number of staff; (c) theneed to monitor training outcomes and to give due regard to the quality ofskills training; and td) the importance of effective coordination of projectactivities and implementation. The outcome of that project is a system ofwell equipped training centers, but they lack well-trained and experiencedstaff and their present training is focussed on short basic training programsfor unemployed youth, thus failing to meet other important training needs.

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35. In the light of a deterioration in implementation performance in theeducation sector in FY84 and 85, the Bank and GOI have identified twoimportant factors contributing to poor implementation: (a) project managersnot being committed full-time to project implementation and (b) the lack ofeffective support and monitoring of implementation at the Ministry level.These findings, and the lessons from completed projects, have been taken intoaccount in project design, including the establishment and full-time staffingof a Project Management Office, detailed preparation in advance ofnegotiations, and advance commitment of staff for implementation.

Rationale for Bank Involvement

36. Expansion of employment in manufacturing industry and ofopportunities for self-employment and activities in the informal sector, arekey elements in the Government's manpower and industrial policies. Inaddition to training new entrants to the labor market there will be aconsiderable need for upgrading the skills of existing workers to improve thecompetitiveness of industry. In addition to upgrading its existing trainingresources the Ministry needs to develop new cost-effective training and toexpand training by industry. The MOM is therefore seeking assistance for amajor program in upgrading of skills training and planning and management.The proposed project would build on the Fourth Education Project, Loan 1237-IND and would integrate and expand existing pilot projects. It would address,in a comprehensive manner, the main issues in manpower planning and training,particularly those relating to management and institution building, and to thedevelopment of advanced, specialist and other training relevant to employmentneeds. The project would focus on training for key occupations and prioritysectors of industry. Development of in-plant training by industry, mobiletraining and training for the informal sector would cover only a limitednumber of provinces but the outputs and costs would be monitored and evaluatedto provide the basis for subsequent large-scale development and expansion ofsuch training.

37. An advance of US$383,000 under the Project Preparation Facility(PPF), financed technical assistance to complete project planning. Throughoutproject preparation close attention has been given to the determination ofpriorities and to the implementation capacity of MOM in order to keep thescope of the project within manageable bounds and avoid the implementationproblems encountered under Loan 1237-IND and other education sectorprojects. The proposed project has been designed with particular emphasison: (a) the coordination of implementation action and budgets; (b) staffingof the Project Management Office; (c) the timely provision of technicalassistance throughout implementation; (d) commitment by the Ministry ofappropriate staff resources to implement the project; and (e! close monitoringby the MOM and the Bank.

PART IV - THE PROJECT

38. The project was identified and prepared by the MOM with assistancefrom the Bank, the British Council and the ILO. Appraisal took place in July1985 and negotiations were held in Washington from April 21 to 23, 1986. The

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Government delegation was led by Mr. H. Tambunan, Director General of ManpowerDevelopment and Placement, MOM. A Staff Appraisal Report, No. 5861-IND, isbeing distributed separately. The main features of the project are summarizedin the Loan and Project Summary and supplementary project data are provided inAnnex III.

Project Objectives and Scope

39. The project, which would constitute the first phase of a long-termdevelopment program, would focus on institutional development, the formulationand implementation of new policies for management development and training bythe MOM and the upgrading of MOM's management and training systems. It wouldcontribute to expansion of employment by improving the competitiveness andproductivity of industry through improved skills of industrial manpower and byproviding training and other support for self-employment and che informalsector. The project components would essentially strengthen and improveexisting structures. The proposed project would assist the MOM by financingconsultant services, staff training, civil works, equipment, furniture, andproject-related operating costs to: (a) strengthen labor market and manpowerplanning information systems at national and regional levels; (b) improve theMOM's training management systems and the management capability of the MOM'ssenior and middle level national and regional staff; (c) establish nationaland regional vocational training systems (including a joint industrialvocational training system and occupational standards and certification);(d) upgrade the MOM's skills training facilities and programs in the existing33 medium and large vocational training centers, in accordance with empioymentand industrial development needs; and (e) develop in selected provincessupport for in-plant training by industry, training for self-employment andfor the informal sector and mobile training.

Labor Market and Manpower Planning Information Systems (US$8.8 million,excluding contingencies)

40. Upgrading of Planning and Information Systems. The labor market andmanpower planning information systems initiated under the ILO's IMMIS projectwould be strengthened and improved, particularly at the regional level, toprovide efficient collection, analysis, dissemination and use of labor market,employment and training data. The systems would assist central and regionalgovernment to plan and implement manpower, employment and training policiesand programs, assist employers to recruit and develop a more efficient laborforce and provide individuals with better information about training oppor-tunities and so improve their access to more fruitful employment. The MOM'sorganization for manpower planning would be improved and its capacity tocoordinate manpower planning with other government departments would bestrengthened.

41. In support of these objectives, training for staff of the MOM wouldbe provided through 60 man-years of fellowships for postgraduate trainingoverseas in labor economics and manpower planning and about 300 man-years oflocal training, of which about 60 man-years would be in long courses and theremainder in short specialist courses. The capacity for continued in-servicetraining would be strengthened by the provision of three man-years of localtraining in training methodology. About 100 man-years of local training would

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also be provided for manpower planning staff of other government departments.Ten man-years of both international and domestic consultant services would beprovided to 1ssist with the design and implementation of the systems and thetraining of staff. Computing facilities and software would be provided in theregions to complement the system established in the MOM under the IMMIS project.

42. Labor Market Information and Planning Operations. The operations ofthe MOM's directorates of program development and manpower supply andplacement and the regional manpower departments would increase considerably asthe manpower planning and labor market information systems are established andexpanded. The project would provide the operating costs, including the hiringof survey staff, design and printing of survey instruments, staff travel andsubsistence, analysis of results, printing and publication of data,dissemination of labor market information and follow-up and monitoring ofoutcomes of training programs. Outcomes would include improved preparationand implementation of manpower policies and programs for Repelita V and reli-able comparative data on training costs and outcomes. The program has beenplanned in detail for the first year and in outline for subsequent years.Progress would be reviewed each year and the annual program and budget agreedin advance with the Bank.

Training Management and the National Training System (US$17.7 millionexcluding contingencies)

43. This component would include: (a) strengthening of the managementof training and related staff development; (b) establishment of a nationaltraining system; and (c) establishment of occupational and skills standardsand skills testing.

44. Strengthening of the Management of Training. Management of trainingby the MOM would be improved by rationalization of organization, staff train-ing and the introduction of improved systems particularly for key functionalareas of planning, development of training programs, allocation of resources,and monitoring of outcomes. PUSDIKLAT, which would administer staff training,would be strengthened by an increase in staffing, from 69 to 132 by 1990191,and by staff training and consultant assistance. Computing and other equip-ment would be provided for the MOM's central and regional offices and forPUSDIKLAT. The efficiency of utilization of BLK accommodation and trainingequipment would be improved through the services of experienced physicalfacilities planners and managers. Consultant services would also be providedto support the Project Management Office and to assist the planning of futuredevelopment. In total, the project would finance about 15 man-years ofinternational and 17 man-years of domestic consultant services to assist inthe upgrading of the management systems and the related in-service training ofstaff. About 120 man-years of fellowships would be provided for overseastraining and 80 man-years for local management training. Schedules ofconsultant services and training were agreed during appraisal. Staffdevelopment will be a critical factor in the project's successfulimplementation. At negotiations the Government providet assurances thatannual staff development programs would be implemented, after consultationwith the Bank, for key organizational units and staff, and counterpart teamswould be appointed in accordance with such plans.

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45. Establishment of a National Training System. The project wouldstrengthen the National Training Council's capacity to formulate policyadvice and prepare and monitor manpower development and training plans by theestablishment and training of a small full-time administrative and technicalsecretariat. Based on the experience gained through the pilot project atSurabaya, Regional Training Councils would be established in all other pro-vinces in stages by the end of the project. The project would provide 60 man-months of fellowships for overseas study visits by staff and Council mem-bers. The present unstructured apprenticeship system would be supplemented bya Joint Industrial Vocational Training (JIVT) scheme designed, established,and administered jointly by the MOM and industry. Training would normallyextend over a one to two year period and involve training off the job as wellas in industry. The project would finance the cost of 24 man-months ofinternational and 30 man-months of domestic consultants and 60 man-months offellowships for overseas staff training. The project would also cover theproject-related operating costs.

46. Establishment of Occupational and Skills Standards and SkillsTesting. The existing occupational standards would be reviewed, revised andexpanded. Skills standards would be established in selected priority indus-trial sectors for key occupations. Skills tests would be designed andimplemented and a certification scheme set up. Test facilities would beestablished in BLKs in at least four pilot provinces. The project wouldfinance 90 man-months each of international and domestic consultants to assistwith the design and implementation of standards and tests and the establish-ment of the test facilities, ten man-years of local training, adaptation ofbuildings at the selected BLKs to house the facilities and provision ofequipment and operating costs. By the completion of the project asatisfactory testing system will have been developed for introductionnationally.

Upgrading of Training Systems, Facilities and Programs (US$40.9 million,excluding contingencies)

47. Vocational Training Programs (BLK). To upgrade the quality oftraining, advanced and specialist skills and skills upgrading programs wouldbe developed in about 30 larger BLKs. Training programs related to the needsof regional industry would be developed on a modular basis at basic, advancedand specialist levels for key occupations in selected mAnufacturing industriesand in construction. By the end of the project about 20,000 trainees areexpected to be enrolled annually in a six-month or longer advanced or special-ist skills module. The project would finance a limited amount of buildingadaptation to existing centers to house specialist facilities. No new centerswould be constructed but the efficiency of utilization of buildings would beincreased with double shift operations. Supplementary equipment would beprovided to enable the development of advanced and specialist training.Procurement of equipment would proceed in stages in accordance with theprogram of rationalization and efficient utilization of physical facilities.The project would provide 30 man-years each of international and domestic con-sultant services to assist with the analysis of training needs, and with thedesign, implementation and monitoring of the revised training modules and in-service training of staff. Project-related operating costs would also beincluded.

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48. Instructor Training. The project would establish four regionalinstructor training facilities in existing BLKs and upgrade existinginstructor facilities in six other BLKs. Each new facility would have acapacity of about 100 places and each would require 10-15 well-trainedstaff. Training programs of 24 months would be developed, inclading 6 monthstraining in industry. Short upgrading courses would be developed for existingstaff. The instructor training would be integrated with the training providedat the Japanese assisted center. The project would finance buildingadaptation and equipment for the new centers. Eight man-years each ofinternational and domestic consultant services would be provided to assistwith the design and implementation of the instructor training programs.Fifteen man-years of overseas fellowships would be provided for training ofinstructor training staff. The project would also fund incentive schemes, ona pilot basis, to attract well-qualified staff from industry as part-timeinstructors. About 200 man-years of overseas training fellowships would beprovided for about 100 instructors and senior instructors in programs oftraining and industrial experience. Criteria for selection would includesatisfactory completion of preliminary language training for which 120 man-years of local fellowships would be included in the project. Some 2,000 man-years of local training would also be provided for BLK instructors.

49. Upgrading of In-plant Training, Supervisory Training andProductivity. The project would establish Industrial Training DevelopmentUnits (ITDUs) in six provinces to help industry plan and carry out in-planttraining. The project would upgrade the skills of several thousand workers inkey industries, strengthen links between industry and BLKs, and provide abasis for long-term development of in-plant training. Assistance would alsobe provided to the BLKs in cooperation with Regional Productivity Centers andITDUs in five provinces to design and establish part-time and full-timesupervisory and productivity training and provide related consultancyservices. The project would provide 19 man-years of international and 21 man-years of domestic consultant services to implement the scheme. To support theon-the-job training uf training officers and the related training of ITDU andproductivity center 3taff there would be 20 man-years of overseas training andassignments. Training equipment would be supplied to the selected trainingcenters for temporary use in the firms. The project would also provide partof the other direct costs of training and consultancy services, for example:training materials, honoraria of training staff, travel, testing. Costs andoutcomes would be monitored and arrangements introduced to recover fromindustry part of the costs of providing the services of the ITDUs andproductivity centers.

50. Training for Self-employment and the Informal Sector. The projectwould improve the system of training for self-employment, including entrepren-eurship and management, and for the informal sector. The project, which wouldbe coordinated with existing and planned activities of a similar nature, wouldupgrade the training and consultancy capacity of the productivity centers andthe BLKs. The project would provide five man-years of international and eightman-years of domestic consultant services, 36 man-months of fellowships foroverseas study visits and training, a limited amount of equipment andmaterials and related operating costs.

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51. Mobile Training. The pruiect would upgrade existing mobile trainingprograms to cover industrial training in selected occupations in urban andrural areas in at least eight provinces. Arrangements would include the useof industrial facilities and rented accommodation, with supplementaryequipment and training materials provided by the BLK. In addition to themobile training the project would initiate "open" training whereby trainingwould be delivered by tutors under the supervision of the BLK staff. Mobiletraining programs using different delivery methods would be designed,implemented and monitored so that the outcomes and findings could be used as abasis for the planning of long-term investment. The project would provide sixman-years of international and eight man-years of domestic consultants, 36man-months of fellowships for overseas study visits and training, supple-mentary equipment for use in the 8 centers and the operating costs.

Long-term Development

52. The project would provide the institutional and staff developmentwhich would be critical for the long-term development and expansion oftraining. The management capability of the MOM would be improved,particularly for the planning and development of training, and the allocationand efficient utilization of resources. There would be little addition to theMinistry's physical training facilities but the utilization of those resourceswould be improved and the training would be upgraded in line with the needs ofindustry. In the longer term the Ministry's training capacity is expected toneed to be increased and it will be equally important to increase theparticipation of industry in the provision of training. This project wouldupgrade the training by MOM, and establish systems and effective trainingprograms for in-plant, informal sector and mobile training in a iimicedselection of provinces and occupations. The expansion of training would beprcvided under later phases of development based on the experience of thisinitial project. The evaluation of training outcomes, tracer studies oftrainees and the assembly of data on comparative costs would therefore be animportant part of project implementation. This evaluation would be carriedout through operations under the labor market and manpower information andplanning component in conjunction with the monitoring and evaluationactivities of the directorates and central offices of the Directorate Generalof Manpower Development and Placement and coordinated by the monitoring andevaluation staff in the Project Management Office. The project would alsoaddress the issue of recovery of training costs. The feasibility and form offinancial incentives for training by industry to be introduced in Indonesiawould be established through consultant advice and study of training levies,grants and other financial incentives in other countries. Strengthening ofin-plant training would lead to more effective use of indust-ial resources andfacilities to develop and expand training. Fees would be introduced forspecialist, advanced and upgrading training courses.

53. Industry would be closely involved with the development of trainingthrough membership of the Regional Vocational Training Councils and participa-tion through working groups in the development of training programs and train-ing materials and in the establishment and implementation of training stan-dards and tests. The links between the training centers and industry wouldalso be strengthened by joint training schemes and by provision of industrial

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training for BLK staff. The project would also provide a basis for draftingthe decrees to implement the proposed Training Act which is now in draft andwhich includes provisions to enable the Government to require industry toincrease its participation in training.

Project Implementation and Management

54. The Secretary General of the MOM would have overall responsibilityfor the project and for interministerial coordination. The Director Generalof Manpower Development and Placement would be responsible for project execu-tion. Responsibility for the implementation of project activities would beassigned to the relevant directorates, centers and divisions of the MOM. Eachunit would be responsible for the preparation of annual plans and budget, andthe implementation and reporting of project activities. The developmentbudget would be allocated to these units. Designated staff in each unit wouldhave specific full-time project responsibilities. A Project Director's Officehas been established in the Directorate General of Manpower Development andPlacement with a full-time project director and full-time heads of units tocoordinate project activities and loan administration. The Project Director'sOffice would be responsible for the central budget and accounts, centralprocurement of goods and services, support and services to facilitateimplementation, monitoring and evaluation and loan administration includingdisbursement and reporting to the Bank. The appointment of key staff of theProject Director's Office (i.e. the project director, treasurer, manpowerplanning and training area coordinators, staff development coordinator,procurement officer and administrative head) would be a condition ofeffectiveness of the loan.

55. The project would be impLemented over a period of six years. Theimplementation period appears feasible given the advanced stage of projectpreparation and the large amount of technical assistance. Projectimplementation would be facilitated and monitored through: (a) anInterministerial Steering Committee, including senior representatives ofBAPPENAS and Ministry of Finance, meeting quarterly, and chaired by theSecretary General of MOM; and (b) a MOM Technical Committee, comprisingdirectors and other heads responsible for project implementation, togetherwith representatives of BAPPENAS and the Ministry of Finance, meeting monthlyand chaired by the Director General of Manpower Development and Placement.Implementation would be monitored by the Bank through the submission by theMOM of quarterly progress reports and supervision missions. The schedule forimplementation of the project was revie-wed and agreed with the MOM. Thelocation by province of principal project activities was also agreed.Schedules have been agreed for monitoring critical implementation activitiesand dates and for monitoring outcomes. Both would be updated annually andconstitute basic monitoring instruments for the MOM and the Bank. Budgetallocations related to the agreed schedule of activities for the first year,1986/87, have been agreed with the MOM and BAPPENAS, and during negotiationsassurances were obtained that annual plans and budgets would be prepared inconsultation with the Bank.

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Technical Assistance and Staff Development

56. The project would provide substantial programs of staff devel-opment. In total there would be about 420 man-years of overseas training andabout 2,700 man-years of training in Indonesia. The overseas training programis considered to be the minimum required to achieve the necessary level ofstaff development and well within the capacity of the MOM to absorb: it isintended to supplement this with a similar program financed from bilateralassistance. The overseas training programs would be administered by the StaffDevelopment Unit of the Project Director's Office, in close cooperation withPUSDIKLAT. Fellowship candidates would be required to undertake preliminarylanguage training in MOM facilities in the Jakarta BLK and other BLKs. Thiswould be followed by up to six months full-time study in an external course.The project would provide four man-years of consultant services to set uplanguage training, supporting material and operating costs. During negotia-tions assurances were obtained that the criteria and procedures for selectionof fellowships would be satisfactory to the Bank. To complement staffdevelopment, there would about 106 man-years of service by internationalconsultants and 112 man-years by domestic consultants to analyze existingsystems and to assist with the development and implementation of new policies,systems and procedures for planning, management and training.

57. Schedules and terms of reference for training and consultants'services and packaging for technical assistance were agreed beforenegotiations and confirmed by government central agencies, i.e. BAPPENAS,Ministry of Finance and SEKNEG.

58. In view of the critical importance of the assignment of MOM staff toact as counterpart teams on a full-time basis for all consultants, the MOM hasidentified key project staff by name and the composition of counterpart teams,whose duties will be full time on relevant project activities.

59. The staff development and training program for the first year hasbeen agreed. The MOM has identified staff for the award of fellowships in thefirst year and arranged for their language training and training placements.A major input of technical assistance in the first year would be provided bythe project funded expansion and continuation of the UNDP/ILO East JavaRegional (Surabaya) project; the draft program for this regional subprojecthas been reviewed and agreed.

Status of Project Preparation

60. The project was prepared with technical assistance financed by aBank loan under the PPF. Schedules for appointment of consultants, draftbidding documents including terms of reference, draft short lists ofconsultant firms and schedules of training fellowships and programs related toeach project activity have been agreed. Key counterparts have been assignedand cnunterpart teams identified. The East Java Regional program, to beprovided under an expansion of the UNDP-ILO Surabaya project has been agreedand these activities will continue from the beginning of the project. Otherconsultants are expected to be in post by September 1986. Candidates fortraining overseas in 1986/87 would start language training locally in April

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1986. Specifications for computers and related equipment have been preparedand draft master lists drawn up for small tools and replacement of obsoleteequipment. The bidding documents for the first phase of equipment procurementwould be available in January 1987. Construction, which would be a minor partof the project and take the form mainly of adaptation of existing buildings,would begin by mid-1987. In order to avoid delays in implementation duringthe early stages of the project, the Project Director's Office has beenestablished with agreed organization and staffing, the project director hasbeen selected and the government development budget for the first year'sactivities has been agreed.

Cost Estimates and Financing Plan

61. The total cost of the project is estimated at US$91.1 millionequivalent. Base costs are estimated at January 1986 prices. Duties andtaxes on civil works, equipment and services are estimated as aboutUS$3.2 million Project-related operating costs directly attributable toproject activities and allocated within the MOM's development budget areincluded in the project and amount to about 23% of project costs. Theestimates and unit costs were agreed with the MOM on the basis of actualcurrent costs of comparable activities.

62. The foreign exchange component of US$51.0 million, represents about56% of the total estimated cost. Physical contingencies of 10% have beenallowed for construction, equipment and materials, furniture and operatingcosts and 5% for technical assistance. Price contingencies, which are equiva-lent to about 25% of base costs plus physical contingencies were calculated inaccordance with the implementation schedule and the following expected averageannual increases: local - 1986-90, 6.0%; 1991 and beyond, 4.5%; foreign -1986-87, 7.0Z; 1988, 7.5%; 1989, 7.7%; 1990, 7.6%; 1991 and beyond, 4.5%. Theproposed Bank loan of US$58.1 million would finance 66% of the project costsexcluding duties and taxes. Retroactive financing of up to US$0.5 millionwould be provided to cover project expenditures incurred after appraisal, i.e.from November 30, 1985. These include start-up costs of the ProjectDirector's Office, local instructor training and preparation of the firstgroup of staff to be trained overseas.

Annual Costs

63. The annual total project development cost of about US$13 millionwould represent the major part of the Ministry's current development budgetfor training, but it would replace existing activities. The average counter-part budget of about Rp 6 billion per year is reasonable and acceptable evenin the face of expected budget stringency. The routine budget for trainingactivities for 1986/87 is approximately Rp 6.3 billion, an increase of about30X over that of 1985/86 due mainly to increased personnel costs. The long-term effect of the project on the routine budget would be an increase ofapproximately Rp 2 billion per year for training materials, travel and othersupport costs for the upgraded training. This increase would be more thanbalanced by reduction in the development budget on the completion of projectactivities. A significant part of the future routine costs would be carriedby fees charged for specialists and upgrading training for industrialemployees.

- 23 -

Procurement

64. Consultant services would be arranged in packages procured inaccordance with Bank guidelines. Training overseas would be arranged forgroups of staff using the services of international and national agencies.Civil works contracts, for adaptation and small extensions would cost lessthan US$1.0 million each. Based on experience in Indonesia, contracts of thissize in dispersed sites would not be attractive to foreign constructioncompanies; therefore, the contracts of total value of about US$4 million wouldbe awarded after competitive bidding advertised locally in accordance withgovernment procedures which are acceptable to the Bank. Equipment requiredfor specialist and advanced skills and computers would be grouped to theextent possible in packages to facilitate bulk procurement and packagesestimated to cost US$200,000 or more (estimated value US$12.4 million) wouldbe awarded on the basis of International Competitive Bidding (ICB) inaccordance with Bank guidelines. Local manufacturers would be extended amargin of preference of 15Z of the CIF costs of competing imports or theactual custom duties, whichever is lower. Furniture and equipment packagesfor small hand tools and other small items estimated to cost less thanUS$200,000 (estimated value US$1.5 million) and which, because of content, arenot expected to interest foreign suppliers, would be awarded on the basis ofLCB advertised in accordance with government procurement procedures which areacceptable to the Bank. Other equipment arranged in packages not exceedingUS$25,000 in value and aggregating less than US$0.75 million equivalent wouldbe purchased on the basis of quotations from a minimum of three suppliers.Books, computer software and other instructional materials would be procuredthrough direct purchase, after negotiations for the lowest price. A breakdownof project expenditure by procurement category is given in the table below.Prior Bank review of bidding documents and proposed contract awards would berequired for all contracts for equipment awarded on the basis of ICB,estimated to cost about US$12 million (84Z of the value).

- 24 -

PROJECT EXPENDITURES BY PROCUREMENT CATEGORY(US$ million)

Total costsincluding

Procurement method all contin-Ezpenditure category ICB LCB Other /a gencies /b

Civil works - 4.0 - 4.0(0.9) (0.9)

Equipment, furniture and 12.1 1.5 0.8 14.4materials (8.0) (0.9) (0.4) (9.3)

Consultants /c - - 26.0 26.0(23.4) (23.4)

Overseas training fellowships - - 16.2 16.2(16.2) (16.2)

Local training fellowships - - 8.3 8.3(8.3) (8.3)

Operating costs - - 22.2 22.2t_-) (-)

Total 12.1 5.5 73.5 91.1(8.0) (1.8) (48.3) (58.1)

/a Other procurement includes: recruitment of consultants, placement ofstaff in training, and project related operating costs, e.g. payments ofhonoraria, materials, local travel costs.

;b Values in parentheses are estimated disbursements from loan includ-.ngprice and physical contingencies.

/c Includes project preparation advance.

Disbursements

65. The proposed loan of US$58.1 million would be disbursed over a peri-od of seven years. Disbursements would be made on the basis of (a) 251 of thecost of civil works; (b) 100Z of the c.i.f. cost of imported equipment, furni-ture and materials, 95% of the ex-factory cost of locally manufactured equip-ment, furniture and materials, 65Z of the cost of imported equipment, fur-niture and materials procured locally; (c) 100% of the cost of consultants andfellowships; and (d) refunding of the Project Preparation Advance. To theextent practicable, withdrawal applications would be aggregated in amounts ofUS$100,000 or more prior to submission to the Bank for reimbursement out ofthe proceeds of the loan. Disbursements for civil works, miscellaneous

- 25 -

equipment and furniture items, books, computer software and otherinstructional materials, and local fellowship training, in packages up toUS$25,000, would be based on statements of expenditure. Supporting documentswould be retained and made available for review by visiting Bank missions.All other disbursements would be made against full documentation.

Reporting and Audit

66. Consolidated project accounts would be maintained by the ProjectDirector's Office. The accounts would be maintained in accordance with soundaccounting practices satisfactory to the Bank. The Units concerned would pro-vide to the Bank within nine months of the end of the GOI fiscal year, state-ments reflecting the financial performance and position of the projecttogether with independent auditor's reports including separate audit ofaccounts reLating to disbursement against statements of expenditure. Sixmonths after the Closing Date, MOM would provide to the Bank a project com-pletion report covering all project components.

Benefits and Risks

67. The main benefits would be (a) improved labor market and manpowerinformation and planning systems at national and provincial levels; (b) moreeffective management of training and establishment of a national trainingsystem - occupational standards, skills standards and tests and a jointindustrial vocational training scheme; (c) upgrading of basic training andestablishment of a capacity for training about 20,000 people each year in keyskills and occupations at advanced levels and in specialist skills;(d) improved efficiency in utilization of training resources; and (e) develop-ment and improvement in the key areas of in-plant industrial training, train-ing for self-employment and the informal sector and mobile training. Theproject would also include arrangements for monitoring of costs and outcomesto provide experience on which to base later substantial long-term develop-ments.

68. The main risk is possible delay in implementation. To lessen thisrisk detailed consideration was given to matching the project scope to theresources and implementation capacity of MOM and to the arrangements forproject management and monitoring. In addition, arrangements have been agreedfor continuing the existing East Java regional program of technical assistancethrough loan financing of an extension to the UNDP-ILO project to ensure thepresence of consultants from the outset of the project. Project activitieshave been designed in detail and agreement reached on a system for close Bankmonitoring, including detailed review of annual plans and budgets.

- 26 -

PART V - RECOMMENDATION

69. I am satisfied that the proposed loan would comply with the Articlesof Agreement of the Bank and recommend that the Executive Directors approvethe proposed loan.

A. W. ClausenPresidet.t

AttachmentsMay 1, 1986Washington, D.C.

- 27 ANNEX IPage 1 of 6 pagesINDOEIA - CIAL INlDICATON DT rIUhIA * I GROUPS (HEILSTD AVENAGIS)

HOST OlRn r U TG inSnATn) /br la~~NDoLE DNO MIDOK IxON

19isL imot 1 unnath ASIA & PACIFIC LAT. AU *CA CAR

AIMA ('t110e0 Nq. -0TOTAL 1919.3 1919.3 1919.3SNIaILTKALL 296.3 307.1 315.5

-3 CAPI ) .. .. 560.0 1031.1 1675.9

CEiLOGRAIU OP OIL UIIVAKUT) 66.0 98.0 191.0 566.a 993.6

OL1ss1 am m umnSPOPULATION*NID-IKAA (THOUSANDS) 94660.0 136201.0 1556t9.0URNS PoPUATIO tZ OP TOTAL) 14.6 17.1 24.1 35.9 67.7

PLTIOncnczrousPOPULATION IN TZAR 2000 (HILL) 212.0STATISAR POPULATION (HILL) 368.0POPULATION - 1.6

POPULATION DUwSITPER Sq. um. 49.3 60.5 61.1 386.9 48.0PE SQ. Mi. SRI. LAND 319.3 378.4 413.4 1591.2 91.1

POPULAION SE STNRUCE (I)0-14 YU 40.7 44.0 40.6 38.2 38.5

1544 nRS 56.2 53.4 55.8 57.7 57.165 AND A092 3.0 2.5 3.5 3.5 4.2

POPULATION GOtM RATE (C)TOTAL 2.1 2.0 2.2 2.3 ZAURA 3.7 3.6 4.3 4.1 3.6

CRUDE BIRTH RATE CiPn TInS) 44.2 41.0 34.0 30.1 30.9CRUDE DuET NATE (PR Taws) 22.9 17.6 12.8 9.4 8.0CROSS REPRODHUC0 aT 2.7 2.7 2.1 1.9 2.0

rIIXLY PLAIUIMA T0RS ANNUAL (TIOUS) .. 181.1 3051.0 IcUSERS (C 07 MIRRIED ON) .. .. 58.0 56.5 45.3

mOD a surrmItER OP P000 PR. PER CAPIT(1969-71-100) 93.0 102.0 123.0 124.4 109.6

PR CAPrIA SPiLT OFCALEZS CZ OP REqUIREUTS) 79.0 92.0 112.0 115.7 113.2P.ROTENS (CRAMS PU DAT) 34.0 41.0 53.0 60.3 69.4OF WICK ANIKAL AND PUSE 6.0 6.0 7.0 Id 14.1 34.2

CILD (ACES 1-4) DEATH RATE 21.9 16.1 13.0 7.2 4.8

LIFE EEMCE. AT mIRTH CYEARS) 41.2 47.0 53.5 60.6 64.8INFANT 31. RATE (PER INCUS) 150.0 121.0 101.0 64.9 59.7

ACCSS TO SAFE WATR (rPOP)TOL .. 3.0 23.0 46.0 65.3URN .. 10.0 40.0 57.6 76.5RURAL .. 1.0 18.0 37.1 ".2

ACCESS 10 XCRETA DlSPOSAL(I OF POPULATION)

oTAL .. 15.0 23.0 50.1 5S.3URA .. 19.0 20.0 52.9 73.4RU .. 14.0 24.0 44.7 25.5

POPULATON PEE PHSICIAN 46780.0 26510.0 11530.0 7751.7 1909.7POP. NURSING PERSON 4510.0 /f 7680.0 2300.0 li 2464.8 808.2POP. PE HOSPITAL REDTOTAL 1360.0 1650.0 1720.0 to 1112.1 362.0URBAN 250.0 .. 700.0 7 651 A 422.0RURAL .. .. 3160.0 A 2596.9 2716.7

A5510X5 PER HOSPrTAL MD .. .. .. 41.1 27.5

AVERSE SIZE OP HOUSEHOLDTOTAL 4.4 4.8UR8AN 4.9 5.3IURAL 4.3 4.7

AVERCS NO. oF PzRsONsIROCHTOTAL .. 1.5URBAN .. 1.6RURAL .. 1.5

PERCErTACE OF DIELLINGS WITH ELECT.TOTAL .. ..

URBA .. ..RDuL. . . . .

ANNEX I-28- Page 2 of 6 pages

INDONCSIA - SOCIAL INDICATORS DATA SXEETINDONSUIA REFCRZNCC GROUPS (WCIGHTCD AVCRACCS) /

HOST (OOST RCENT ESTIMATE) lbRCENlT NIDDLE INCOMB IIIDLE INCONE

1960L 197O!! ZST5IATELk ASIA & PACIFIC LAT. AMERICA S CAR

ADJUSTED ENROLUNT RATIOSPRIMARYi TOTAL 71.0 77.0 100.0 100.7 106.7

rALC 86.0 83.0 106.0 104.4 108.5FEMALE 58.0 71.0 94.0 97.2 104.6

SECONDART: TOTAL 6.0 15.0 33.0 47.8 44.2MALE 10.0 20.0 38.0 50.6 42.7FEHALZ 3.0 10.0 27.0 44.8 44.9

VOCATIONAL (t oF SECONDARY) 20.4 22.1 13.9 18.4 13.3

PUPIL-TEACHER RATXOPRIM 39.0 29.0 29.0 30.4 29.9SECDNDAXY 14.0 13.0 16.0 22.2 16.7

PASSENGER CARS/TMOUSAND POP 1.1 2.1 4.4 lC 10.1 46.0RADIO RECEIVERS/THIOSAND POP 7.2 21.9 131.2 172.9 328.3TV RECEIVERSITHOUSAND POP 0.1 0.8 22.6 5B.S 112.4NEWSPAPER ("DAILY GENAL

INTEREST") CIRCULAUIONPER THWSAND POPULAION 11.0 .. 14.9 65.3 81.1

CNMA ANNUAL ATTENDANCZ/CAPITA 2.8 .. 1.0 /c 3.4 2.4

TOTAL LABOR FORCE (TWUS) 34791.0 41090.0 54417.0FINLE (PERCET 27.8 30.9 29.3 33.6 23.6A*RCULTURE (PERCET) 75.0 66.0 58.0 /C 52.2 31.4INUSTRY (PERCT) 8.0 10.0 12.0 IC 17.9 24.3

PARTICIPATION RATE (PERCENT)TOTAL 36.7 35.4 35.0 38.9 33.5MALE 54.2 49.5 49.6 50.8 51.3PEKALE 20.0 21.6 20.4 26.8 15.9

ECONIC DEPENDENCI RATIO 1.2 1.3 1.3 1.1 1.3

1 DISZTXOPERCENT OF PRIVATE INCOMERECEIE B

HIGHEST 52 OF NOUSEHOLDS . .- 23.5 /1RIGHEST 20 OF US'l.OWS .. .. 49.4 8.O0LOWEST 20X OF HOUSEHOLDS .. .. 6.6 7 6.4LOS 40 OF USEOLDS .. .. 16.4 15.5

PovYr Tr GROrSESTI7MTED ABSOLUTE POVERT INCOMELEVEL CUSS PER CAPXTA)

URBA .. 124.0 /b 124.0 /h .. 288.3RURAL 106.0 Th 106.0 7; 151.9 185.3

LSTIUED RELATIVE POVERTY LICMELVL CUSS PER CAPITA)

URBAN .. .. 119.0 /h 177.9 519.8RURAL .. .. 98.0 7;; 164.7 359.7

ESTIMATED POP. BELOW ABSOLUTEPOVZETY INCM LEVEL (Z)

URBAN .. 51.0 /b 26.0 /h 23.5RURAL .. 59.07 66 .0 71 37.8

NOT AVAILABLENOT APPLICABLE

N O T E S

/a The group averages for eah inldicator are population-weighted ariitbtc mean. COvrae of countremamong the indicator. depends on availabilty of data and is not uniform.

/b Unles othbarwis noted. "Data for 1960" refer to any year between 1959 and 1961; "Data fOr 1970" betwee1969 and 1971; and data for "Most Recent Eatate" between 1981 and 1983.

/c 1980; /d 1977; /a 1979; /f 1962; IL 1976; /h 1980 price.

JUNE, 1985

-29- ANNEX IPage 3 of 6 paseo

DdONS OF SOCIaL WCAWMNmA ug im 4dam dwa. t allyJ upi i motau_iw _ knd Mi1t sodal be _t tmy y eot wbi_ammIIUycomparablabaum of ibm uk of mWadaibdhddamidom an oommbyad hfdlamtounvium aail=wtwmmalm b aa ha a a. oauidmu.muM toila iaofumltud. ad_cu _ t. ad cbscua ea mmodlam.o banmomul.Ts m A oupa a (I) d_um cry p* do eib jct mummd(2)a) co _ py withacauwbighravmp ibm ib coutryWrongp of dosbjab comy (.map for 'Hib l_anne Oil EBpomui" grow wham M"Mlioun Noh AMi md MIl East' aIs udo bmmummofsroumsoculiuwl _aUi.l In db I Mpup dam aw a .ne_ pOPtiaos waihi a,Ibmsic m f_ _athdiuor *ad shows _ly wba maiyofdbcoutrii a Vow basdt for tot law. SInhe ibdw ovap ofcoum amonte lndmpmadso.bm avaiabit daa ami Is un udmri.cauton ust bm.mcud sauin d iamoo ladd or 1c auuu. t'bmmavwapemmo uoul blacopaa i* valum of. ldimacrat a td-eao_imuomm mum beawan~op

ARLA (thousand sqknL) GCm* An* Jta (par rheaJd-Number of live births in the year

teed-Total suface arm compninig land area and inabd water; per th and of mid-year population; 1960. 1970. and 1913 data.1960,1970 and 1983 data. Cm* DGmeh Awe (pwr t_)-Number or death in the year

*demkinal-2htimate of agrcturl are used temporaily or per thoustd of mnd-year populam 1960, 1970, and 1983 data.pemnnaemdy for crops. pasures, market and kitchen grden or to Gmss R _bpwdi Rat-Average number of daughter a womanhe fallow, 1960, 1970 nd 1962 datu. wil bear in ber normal reproductive period if she e

pmet agespecif ktrdity rtes; uually 1-yer av e endiugGNP PER CAPITA (USS)-GNP per capita estimates at current in 1960. 1970. and 1983.market price, calculated by same conversion method as World F P Amed (thuusa)-Annual num-Bank AtAw (196143 basis); 1983 data. ber of accpos of birth-control devices under auspices of naional

ENERGY CONSUMPTION PER CAPITA-Annual apparnt family planning program.consumption of commercial prinmry energy (coal od lignite. Fiuy Phvis -Uswm (pwastof .jmw d w.umea-The pen-petroeum. natural gas and hydro-. nuclear and geothermal elec- tale of mar.ed wome of child-bearing aC wbo are practicing ortricity) in kilograms of oil equivalent per capita: 1960. 1970. and whose busxnds are practcing any form of contraception. Women1982 data. of child-bearing age are generally women aged 15-49. althougb ror

some countries contraceptive usae is measurd ror other agePOPULATION AND VITAL STATISTCS groups.

Totaf hplri.Mu. "- Yew (thmuAdsj-As of July 1l 1960.1970. FOOD AND NUTRIONand 1963 data.Cr5.. Pepomkria (prrcear of roeaI)-Ratio of urb,an to total Iu. .fF.de doPrCaia(1-1-Ijnexfprcaptas annual production of all food commodities. Productionpopulation: differenmt definitions of urban areas may affect compar- excludes anmal feed and seed for agriculture. Food commoditiesability of data among counties: 1960.*1970. and 1983 data. ldude prmary commodie (e.g. sugae instead of sugar)

_updt h*cfiw which are edible and contain nutrients (eg. cofee and tea areftlario in year 2000-The projection of population for 2000. exduded); they comps cereals. root crops. publ oil seeds.made for each economy separatdy. Sutrting with information on vwegetbs fruit nuts. suica and sgr bees livesoc andtotal population by age and sex. fertility rates, mortality rtes. and livestock products. Aegg4 te production of each country is basedinternational migation in the base year 19S0. tFe paumerst on national average producer price weights; 196165. 1970. andwere projected at Ave-year intervals on the basis of generalized 1932 data..ssumpdions until the population became stationary. Per CWta Snply efCalbks (percew afreq1rm_ rnmar)-Comput-Stationary populaton-is one in which age- and sex-specific mor- ed from calorie equivalent of net food supplies available in countryality rates have not changed over a long period. while agpeific per capita per day. Available supplies comprise domestic produc-crtility rates have simultanously remained it replacemnxt level uon. imports less export and changes in stock. Net supplies(net rproduction rate - 1. In such a population. the birtb rate is exclude animal feed. seeds for use in agriculture. quantities used inconstant and equal to the death rate. the age structure is also food processing. and losses in distribution. Requirements wereconstant. and the growth rate is zero. The stationary population estimated by FAO based on physiological needs for normal activitysize was estimated on the basis of the projected characteristics of and health considering environmental temperature. body weights.the population in the year 2000. and the rate of decline of rertility age and sex distribution of population and allowing 10 percent forrate to replacement klvel. waste at household level; 1961. 1970 and 1982 data.Population Moientum-Is the tendency for population growth to Pkr Capi Sppy .of weien (grans per dayi-Protem content ofcontinue beyond the time that replacement-leve fertility has been per capita net supply of food per day. Net supply of food is definedachieved: that is. even after the net reproducUon rate has reached as above. Requirenents for all countries established by USDAunity. The momentun of a population in the year : is measured as provide for minimum allowance of 60 grams of total protein pera ratio of the ultimate stationary population to the population in day and 20 grams of animal and pulse protein, of which 10 gramsthe year t. given the assumption that fertility remains at replace. should be animal protein. These standards.are lower than those ofment level from year t onward. 1985 data. 75 grains of total protein and 23 gnras of animal protein as an

*p-Iad De.t*u average for the world. proposed by FAO in the Third World FoodPer sq.km.-Mid-yea. population per square kilometer (100 bec Supply. 1961. 1970 and 1982 data.tares) of total area; 1960. 1970. and 1983 data. Per Caparein Supply &on Auidmamd Pus-Protetn supplyPer sq.m. agrkicdul lAnd-Computed as above for agricultural of foodderived from animals and pulses in grans per day. 196145.land only. 1960. 1970. and 1982 data. 1970 and 1977 data.FbpuLuie Aze Struaire (percei)-Chuldren (0-14 years). work- CAii (dez 14) Death Rae (per Mouruamd)-Number of deaths ofing age (15-4 yearsm). and retired (65 years and over) as percentage childrn aged 1-4 years per thousand children in the same ageof mid-year population; 1960. 1970. and 1983 data. group in a given year. For most developing countres data deTivedPopClmrien Gmwl Rate (perentt-oAnn-Annual growthr tes of from life tables; 1960. 1970 and 1983 data.total mid-year population for 1950-60. 1960-70. and 1970-83. HEALHPeptm Grox th Ra (percrue-haaAnnual growth rates Lfe Ezpecsacy at Mpt (yewn)-Number of years a newbomof urban population for 1950-60. 1960-70. .nd 1970-83 data. infant would live if prevailing patterns of mortality For all people

- 30- _ANNE[ IPage 4 of 6 pages

at dm of of its bh w go say the - throughout i[t Uk lfei-macher Radi - P.Lry,. oJd aconiku-Total studW on.1960 1970 and 1963 dU. rold i pdrimy ad secondary kvel divided by numbm orhw p Rt (fR r uu dNumb of infat who di taces zi th rr0ponn kveLbefowWis an oew of aper thousa live birth in a lvn

yar. 190. 1970 An 1913 data CI ijO NA s SO lie (Pmwr. . W, -E wan, _ hsameq Ci a (per _i_esmpe. - r car an-_.d-Nuber of people (ta ubn and ru) wit rmsown p motor cans m g ms than eight prosm aldude ranbul-aom to s watr apply (includes urae sfae waus or chs d military vddcLntated but unconosa wat mh = that from prtecd | A (p typ of irars

boreho. qmpr and snitary wvib) as peentes of their . for rao broadcat to general pubic per thousd of popuatn;dve populations. In n urbu am a pubc fountain or sador excludes un-cad rivers i countrie and i yes when

oausbeon wthinranable ai o at house. In y - stnl of rdio ea w as effmt dat for roaent you my_ Yowibk aor woud imply tat te housewife -mmbrs of the

bourdbold do not have to *pmd a dbpmportiou pan ofdieday TVhaiuep (Pr ndue civau for broadcasthoufethion to sena sro o pt , d n pubbc per thousand popuin; ecIudes unlcnsd TVAin to the r4mi (wa ud.f receivers in omrris and in yena whn registration of TV se waand nsnnl-Number of people (totaL urbn. and mral) srved byexcrta disposal as pecetage of their respective populaons A pr Ca (lw dp Sb t aExcmeu dposl may include the collection and disposaL with or age cimulation of 'daiy gene int newwspperW defind as awithout treatment, of human excret and waste-waer by water- Pewdia pubicaon devoted pnnarilyto w roing Fend nborne systems or the ue of pit privies and similar installations. It is co red to bhe 'ddy" if it appea at km four t_e a wee.fPi.lae per Ph -IF PpultaDon divided by number of prac- Cat Am_ AahndLwe p Capita Fe Yea_-BRsd on thetising physicians qualified from a medical shool at university level. number of tckets sold durng the yr. incduding admiso tohgwiatie. per Abrdft Pew-Pbpulation divided by nuber of drivin cinems and mobile nite.pctng mle and feomle graduate nurms. assistnt nurses.pracl naure and nursig auxiliari. L FORCEPrpuai pff Hospil Br-40al men ed Va--Po N TW Laior Awce (_hoummis)-Economiucally acive persos. in-(rota urban, and rural dvided by their respective number o clududig armed forc and unemployed but excluding houswives.(wta urbii.and mO dvidd byther repwtie iumbc of sutdents. etc.. covering populatiom of ail ages Definitions; inhospiul beds avaiable in public and privae general and speialrved counts et com e. pon0. 1 ata.hospitab and rehabilitation erntem Hospitals are establishments anous countries arc not compabk 1960.1970 and 1983 datapermanetly staled by at kast one physiciatn. Esablishments prov- Fain (p rCaUi-'Female labor fore as percentage of totl laboriding principally castodial care are not included. Rural hospitals. force.however. indude health and mdcal centers not permanendy stffed Ap rcuitw (perceat)-Labor fore in frmg foresty. hutingby a physician (but by a medical asssnL nursec midwife. etc) and fishing as percentage of total labor fom 1960. 1970 and 1980which offer in-ptiet accommodation and provide a limited range data.of medical facilitesmlustry (premtr-Labor force in miing. constuc manunu-Adm'dssi. par Hospie/ Be-Total nwnber of admissions to or facturing and elctricity. water and gs as pecntge of total labordischargs from hospitals divided by the number of beds. force; 1960. 1970 and 1980 data.

Pwridpa*a at (pes )-4orA maie, .nhsiele-PartiipationHOUSIN or acvity rtes are computed as totaL male, and fmae lbor forceA. : Siz: ef Hof eom d (prsu pn honseoML)-rotal mimi as pcntage of totl, male ad female population of all agoAd,wai-A household consists of a group of individuals wno share respetively; 1960. 1970. and 1983 data. These are based on ILO'sliving quarters and thir main meals. A boarder or lodger may or partipaton rates rdiect age-ser structure ofthe population andmay not be induded in the housdiold for statscal purpoms. long time trend. A few esnmates are from national soursAver Naa,er of Persof per Ro,,t-4eal arbam. and rural- Ecunoic Dev,ndey Ratio-Ratio of population under 15. andAverage number of persons per room in all urban. and rural 65 and over. lo the working age population (those aged t5-643.occupied conventional dwellings. respecively. Dwellings exdudenon-permanent structures and unoccupied parts. LNCOME DMSTRIBUTIO4Percentage of Dweings witk Elewticis-roe, mham. ad rwrL-- Pereataew of Total Dispmsle Income (both in csh .d Aibd)-Conventional dwellings with eectricity in living quarters as percen- Acruni.; ti percenile groups of households ranked by total house-tage of total. urban. and rural dwelings respectively, hold income.

EDUCATION POVERTY TARGET GROUPSA4sud E e Rarigs The following estimates are very approximate msures of povertyPl*uvy sd,ool - totl. ak and femde-r totaL male and levls. and should be interpreted with considerable cauiofemale enrollment of aD ages at the primary kvel as percentages of Esnmied Abselt* Thuery Liwa Lewd (USS per cqpraj-wharespective primary school-age populations. While mny countries d rraf-Absolute poverty income level is that income klvdconsider prmuary school age to be 6-11 years. others do not. The below which a minimal nutritioally adequate diet plus essentialdiffernces in country pracices in the ages and duration of school non-food requirements is not affordable.are reflected in the raos given For some countries with universal Es_thed RelAti Plove mewo Levd (USg pr pitae)-'waeducation. gross enrolment may ceed 100 percent since some mod rwal-Rural relative poverty income levd is one-third ofpupils are below or above the country's standard primary-school averge per capita personal income of the country. Urban levd isage- derived From the rural level with adjustment for higher cost ofSeconday school - totl. mal and feale-Computed as above; living in urban areas.secondary educaion requires at ka four years of approved pri- E&m ed Poprdm. elw A srolu verp lucer Leve (par-mary nstruiorn provies general. vocatioaL or teacher training cej-arm ad - rcenr of population (urban and ruralinstructions for pupils usually of 12 to 17 years of agc correspond- who are -absolute poor.-ence courses are g ray excluded.VKaiona/ Enrollamni (percent of second2pyj-Vocational institu- Comparative Analysis and Data Divisiontions include technical, industriaL or other programs which operate Economic Analysis and Projections Departmentindependenty or as deparments of secondary institutions. June 1985

-31 - A Page 5 of 6 pages

Population s 155.6 million (mid-1983)GlN per Caplta: US$560 (1983 estimte)

INDONESIA - ECONONIC INDICAORS

Aomt(million U$ at Annual zrortb rate CZ) lbcurrent pric") ActtuaJ ro1cted

Indicator 1983 195U 1951 LSBZ 19583 i,WS.a 13Y5 15gg 155 1555 5-

NACIONAL ACCOUNTSEroms do_tSc product /c 78,344 9.9 7.9 -0.2 4.7 6.5 2.9 4.6 5.1 4.7 4.1 4.3

Agriculture 20.651 5.2 4.9 2.1 4.8 5.0 3.7 3.7 3.7 3.7 3.7 3.7Industry 29,896 12.5 6.5 -6.4 5.0 9.8 0.9 4.5 5.5 4.6 3.0 3.5Services 27,797 11.8 9.8 5.5 4.3 4.0 4.5 5.5 5.5 5.5 5.5 5.5

Cpsmtioe 62,731 12.4 15.8 3.0 0.7 7.2 3.1 3.1 4.2 4.2 4.2 4.2Grwen ives t /d 18,908 18.9 11.1 8.5 -7.0 -9.0 5.1 5.1 5.3 5.5 5.7 5.5Exports of GNVS 19,508 -5.6 -2.4 -12.6 14.2 3.5 1.4 6.4 5.2 3.9 1.4 3.0Imorts of GCFS 22,803 15.1 27.1 3.2 -8.6 -7.5 3.6 1.5 2.4 2.6 2.6 3.4

Groma natiol sins 12.273 33.2 -20.0 -11.3 3.7 18.4 -3.3 6.9 8.0 6.9 5.3 5.2

nRICZSCDP-eflator (1961 - 100) 91 100 113 131 142 154 168 183 199 217 237

Zhang rate (Bp per US$) 627 632 661 909 1,026

3ure of GDP at mrket price (Z).-at current prScro) Aver ge 0anual increa (Z) lb

15O 1S70 1975 19W0 1985 1550 15W-U 1570thS lYO-5 190W5u 1,uaSo

Gross domestic product 100 100 100 100 100 100 3.9 8.4 7.4 4.3 4.6Agriculture 54 47 32 25 26 25 2.7 4.1 3.3 4.1 3.7Industry 14 16 34 43 38 38 5.2 12.0 9.8 3.4 4.2Services 32 35 35 32 36 37 4.8 9.7 9.5 5.6 5.5

C* . etlen 91 89 79 71 78 76 4.1 8.4 9.2 6.0 4.0Gros Invent /d 8 14 20 21 18 19 4.8 18.3 12.2 2.6 5.4Exports of GQFS 13 13 23 31 25 24 3.6 9.2 2.9 -1.1 4.01i_orts of GQlS -13 -16 -22 -22 -21 -19 3.2 22.1 14.0 2.6 2.5

Gross national savings 8 9 17 26 19 21 6.1 23.1 14.2 -0._ 6.8

An X of GDP1950 1L 75 T5 15-

PUBLIC FIANCE Irrent r 11.7 10.1 17.4 22.5 21.5

Oarrent expenditures 14.0 8.4 9.9 12.8 13.3Surplus (+) or deficit C-) -2.3 +1.6 +7.5 +9.7 +8.2Capital expenditure n.-. 5.0 11.3 13.0 10.0Foreign 'Inacing 0.2 3.5 3.7 3.3 1.6

1960-70 1970-75 1975-60 1980-65 1985-90

OTHER I DDICATORSAnuaz c1r growth rate (2) 4.5 7.6 7.1 4.1 4.7Annual GUP per capita growth rate CZ) 2.4 5.1 4.7 2.0 2.5Annual energr coomption growtb race (Z) 2.2 11.2 11.0 1.4 4.6

ICOR 2.2 2.2 3.3 4.8 4.0Marginal sawinp rate 0.30 0.48 0.28 -0.01 0.29Import elasticity 1.2 2.6 0.64 0.57 0.53

/a Etimates.7F At constant 1973 prices for 1960-81 *and 1981 prlcea for 1962-90.7F At ma_ket prices.7W ixed investent; stock cbanges are Included In conuaptios.7e Central Covernmt only, on an April-to-4kreb fiscal year basis.

lat Alsa and Paciflc legioniky 31, 1965

Population : 155.8 milllon (mid-1983) - 32 - AINIe 1GNP per Capita: US$560 (1983 estimate) Pae 6 of 6 paep

INDONESIA - BALANCE OF PAYHZNTS AND LXTEINAL CAPITAL AND DEBT- Jlllone Us$ at currenF prrces) sT -

Actual Proi-ctedY19W 1981 LSUZ 1v98 1Yf4a /1835 198b 1Y87l lS9

BALANCE OF PAYMZTS/b1. aisports 22,885 22,994 18,672 19,817 20,243 20,769 22,868 26,170 36,235

(a) Oil and LNG (gross) 17,297 18,824 14,744 14,449 14,341 14,253 15,512 17,821 23,848(b) Nonoll 5,588 4.170 3,928 5,368 5,902 6,516 7,356 8,349 12,387

2. I ports (including net NFS) -17,589 -22,570 -22,339 -19,655 -17,611 -19,066 -20,783 -23,026 -31,586(a) Oil sectar -4,050 -5,^07 -4,802 -3,839 -3,135 -3,801 -4.113 -3.619 -6,540(b) Nonoll lo,rts -11,837 -14,561 -15,824 -14,246 -12,805 -13,616 -14,599 -16,462 -22,438(c) NRS (net) -1,702 -2,602 -1,713 -1,570 -1,611 -1,649 -1,771 -1,945 -2,608

3. Resource balance 5,296 424 -3,667 162 -2,632 1,701 2,085 3,144 2,8004. Factor services -3,165 -3.210 -3,573 -4,476 -4,596 -4,528 -4,994 -5,708 -7,2B7

(a) Interest public debt -823 -994 -1,145 -1,256 -1,620 -1,598 -1,851 -2,132 -4,487(b) Other (net) -2,342 -2,216 -2.428 -3,220 -2,976 -2,930 -3,143 -3,576 -4,487

5. Capital grants 76 67 105 95 100 112 119 125 1506. Balnce on current account 2,207 -2,719 -7,135 -4,219 -1,864 -2,715 -2,790 -2,439 -2,4887. Direct foreign investment 140 142 311 193 250 250 275 300 3758. Public K A LT loans

(a) Disbursement 2,551 2,673 4,192 4,965 3,828 4,988 5,428 6,068 6,892(b) Amortizatlon -936 -1,053 -1,102 -1,295 -1,628 -1,980 -2,137 -2,545 -4,603Cc) Net disbursemnts 1,615 1,620 3,090 3,670 2,220 3,008 3,291 3,523 2,289

9. Other capital (net) -1,U48 -31 455 1,975 287 -143 -104 -418 13310. aunge iln reserves (- Increase) -2,736 988 3.350 -1.619 -873 -400 -672 -966 -30911. Net official reserves 7,342 6,354 3,004 4,623 5,496 5,896 6,588 7,534 9,384

Reserves In monthe of nonoll imports+ 8rs 6.5 4.4 2.1 3.5 4.6 4.6 4.7 4.9 4.5

Mmworandun ItemNet toreign assets of the banking

system/c 10,787 10,622 6,322 8,395 9,930 10,331 11,003 11,969 13,819Total reserves in months of nonollimports + NFS 9.6 7.4 4.3 6.4 8.2 8.1 7.9 7.8 6.6

EXIRAL CAPITAL AND DEBT/dGross Disbursements 2 551 2 673 4 192 4 965 3 828Cnessia7ns. LoasW n : ew 'EW

Bilateral TN 717 63T 3^T Z 7KIDA 42 69 78 60 54Other 6 7 8 8 19

Nonconcessional Loans 1892 1880 3,503 4,357 3,277Bil-ateralIBRD 331 314 505 489 772Other multilateral 52 85 126 160 163Private-source 1,421 1,310 2.356 3,219 1,938

External DebtDebt outsIandAing and disbursed le 14 971 15 870 18 515 21 686 22 863

Official-source -- zRJS 'U3r M3E'Z lor T7-rPrlvate-source 5,465 5,812 7,403 9,649 10,042

Undisbursed debt 9,481 11,387 12,870 13,778 13,973

Debt Servicetota-s-er-Fce payments 1,759 2,047 2,247 2,551 3,248

Interest 823 994 1,145 1,256 1,620Payments as Z of exports/f 7.7 8.9 12.0 12.9 16.0

Aversle Intere t Rate on New Loans (2) 8.1 8.7 9.2 8.8 9.1cnhicisl-aource 5.4 7.8 8.8 8.7 8.6Private-source 12.4 9.4 9.5 8.8 9.8

Average Maturity of New Loans (Years) 18.8 15.5 15.2 15.1 15.9tlc±s±cl-source 24.4 20.5 20.6 22.3 20.9

Private-source 9.8 11.1 11.1 10.3 9.2

As 2 of debt outstanding at end of 1984Maturity structure of debt outstanding

Maturities due within 5 years 34Maturities due within 10 years 65

Interest structure of debt outstandingInterest due within flrst year 7.0

la Estimates.7W On an April-to-March fiscal year basis.7qr Includes foreign assets of deposlt money banks in addition to official reserves.7 Z Excludes prlvate nonguaranteed loans.7r At end of period. East Asia and Pacific Region7r Oil exports treated on gross basis. May 31, 1985

33 - ANNEX IIPage 1 of 4 pages

THE STATUS OF BANK GROUP OPERATIONS IN NDONESIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of March 31, 1986) /a

Loan/ Amount (US$ million)Credit Fiscal (less cancellations)number year Purpose Bank IDA Undisbursed

Forty Loans and forty-four Credits fullydisbursed 1,971.86 777.89 -

1578 1978 Tenth Irrigation 109.00 - 22.961604 1978 Nucleus Estate and Smallholders II 50.50 - 10.401653 1979 Third Urban Development 53.60 - 9.141707 1979 Transmigration II 90.00 - 75.491708 1979 Eighth Power 175.00 - 37.341709 1979 Second Water Supply 35.49 - 4.87946 1980 Yogyakarta Rural Development - 12.00 5.501751 1980 Nucleus Estate and Smallholders III 92.00 - 23.85995 1980 Fifteenth Irrigation - 37.60 5.53996 1980 National Agriculture Extension II - 39.00 19.261811 1980 Fourteenth Irrigation 116.100 - 36.551835 1980 Nucleus Estate and Smallholders IV 30.90 - 15.691840 1980 National Agricultural Research 35.00 - 35.001014 1980 National Agricultural Research - 30.00 0.561872 1980 Ninth Power 253.00 - 65.461898 1981 Smallholder Coconut Development 25.00 - 10.511904 1981 University Development 45.00 - 31.261950 1981 Tenth Power 250.00 - 10.971958 1981 Swamp Reclamation 22.00 - 11.701972 1981 Fourth Urban Development 43.00 - 19.662007 1981 Nucleus Estate and Smallholders V 134.00 - 80.692049 1982 Jakarta-Cikampek Highway 85.00 - 66.602056 1982 Eleventh Power 170.00 - 39.422066 1982 Second Seeds 15.00 - 9.34

/a The status of the projects listed in Part A is described in a separate report onall Bank/IDA financial projects in execution, which is updated twice yearly andcirculated to the Executive Directors on April 30 and October 31.

- 34 -ANME IIPage 2 of 4 pages

Loanl Amount (Us$ million)Credit Fiscal (less cancellations)number year Purpose Bank IDA Undisbursed

2079 1982 Bukit Asas Coal Mining Development andTransport 185.00 - 65.84

2083 1982 Rural Roads Development 85.00 - 32.272101 1982 Second Teacher Training 79.59 - 64.192102 1982 Second Textbook 25.00 - 21.222118 1982 Sixteenth Irrigation 37.00 - 15.662119 1982 Seventeenth Irrigation (East Ja":a 70.00 - 36.31

Province)2120 1982 National Fertilizer Distribution 66.00 - 31.352126 1982 Nucleus Estate and Smallholders VI 55.50 - 43.772153 1982 Coal Ezploration Engineering 25.00 - 14.562199 1982 Central Java Pulp and Paper Engineering 5.50 - 4.032214 1983 Twelfth Power 300.00 - 223.082232 1983 Nucleus Estate and Smallholders VII 138.90 - 136.432235 1983 Provincial Health 27.00 - 23.25223u 1983 Jakarta Sewerage and Sanitation 22.40 - 19.222248 1983 Transmigration III 101.00 - 54.162258 1983 Public Works Manpower Development 30.00 - 24.742275 1983 East Java Water Supply 30.60 - 17.352277 1983 Fifth BAPINDO 208.90 - 131.242288 1983 Transmigration IV 63.50 - 59.142290 1983 Second Polytechnic 107.40 - 105.472300 1983 Thirteenth Power 279.00 - 171.842341 1984 Third Agricultural Training 63.30 - 52.432344 1984 Nucleus Estate and S.allholder Sugar 79.20 - 47.842355 1984 Second on-Formal Education 43.00 - 34.892375 1984 Second Provincial Irrigation Dev. 89.00 - 60.312404 1984 Highway Betterment 240.00 - 185.232408 1984 Fifth Urban Development 39.25 - 35.452430 1984 Third Small Enterprise Development 204.65 - 96.732431 1984 Second Swamp Reclamation 65.00 - 62.732443 1984 Fourteenth Power 210.00 - 196.071950-1 1985 Supplemental Loan for Tenth Power

(1950-lID) 50.00 - 19.752472 1985 Secondary Educ.Ltion and Management

Training 78.00 - 73.58

- 35 - AM= 1

Page 3 2f 4 pages

Loan/ Amount (US$ million)Credit Fiscal (less cancellations)number year Purpose Bank IDA Undisbursed

2474 1985 Upland Agriculttire and Conservation 11.30 - 11.272494 1985 Smallholder Rubber Development II 131.00 - 131.002529 1985 Fourth Population 46.00 - 46.002542 1985 Second Health (Kanpower Development) 39.00 - 39.002543 1985 Kedung Ohbo Multipurpose Dam and

Irrigation 156.00 - 156.002547 1985 Second University Development 147.00 - 147.002560 1985 West Tarum Canal Improvement 43.40 - 43.402577 1985 National Ports Development 111.00 - 111.002578 1985 Transmigration V /a 160.00 - 160.002599 1986 Science and Technology Training 93.00 - 93.002628 1986 Smallholder Cattle Development /a 32.00 - 32.002632 1986 Second East Java Water Supply /a 43.30 - 43.302636 1986 Second Nutrition and Community Health 33.40 - 33.402638 1986 Nusa Tenggara Agriculture Support /a 33.00 - 33.002649 1986 Central and West Java Irrigation /a 166.00 - 166.00

Total Bank loans and IDA credits 8,149.54 896.49

Of which has been repaid -577.51 -23.38

Total nov outstanding 7,572.03 873.11

Amount sold to third party 28.24Amount repaid by third party -28.24 -

Total now held by Bank and IDA /b 7,572.03 873.11

Total undisbursed /c 4,053.25

/a Not yet effective.

/b Prior to exchange adjustment.

/c Includes loans not yet effective.

- 36 -ANNEX IrPage 4 of 4 pages

B. STATEMENT OF IFC INVESTMENTS (as of March 31, 1986)

Fiscal Loan Equity Totalyear Obligor Type of business - (US$ million) -

1971 P.T. Semen Cibinong Cement 10.6 2.5 13.11971 P.T. Unitex Textiles 2.5 0.8 3.31971 P.T. Primatexco Indonesia Teztiles 2.0 0.5 2.51971 P.T. Kabel Indonesia Cable 2.8 0.4 3.21972 P.T. Daralon Textile Mfg. Corp. Textiles 4.5 1.5 6.01973 P.T. Jakarta Int. Hotel Tourism 9.8 1.6 11.41973 P.T. Semen Cibinong Cement 5.4 0.7 6.11974 P.T. Primatexco Indonesia Textiles 2.0 0.3 2.31974 P.T. Monsanto Pan Electronics 0.9 - 0.91974 P.T. PDFCI Dev. fin. co. - 0.5 0.51974 P.T. Kamaltex Textiles 2.4 0.6 3.01976 P.T. Semen Cibinong Cement 5.0 1.5 6.51976 P.T. Semen Cibinong Cemer;. - 1.1 1.11977 P.T. Daralon Teztile Mfg. Corp. Te%tiles 0.4 - 0.41977 P.T. Kamaltex Textiles 1.3 0.2 1.51979 P.T. Daralon Textiles 0.9 - 0.91980 P.T. Papan Sejahtera Capital market 4.0 1.2 5.21980 P.T. Indo American Industries Glass dinnerware 11.1 0.9 12.01980 P.T. Semen Andalas Indonesia Cement and construc-

tion material 48.0 5.0 53.0198215 P.T. Saseka Celora Leasing Capital market 5.0 0.3 5.31984 P.T. Semen Cibinong Cement 25.0 - 25.0

Total gross commitments 143.6 19.6 163.2

Less: sold or repaid and cancelled 113.4 7.3 120.7

Total held by IFC 30.2 12.3 42.5

3 37 -ANNEX III

INDONESIA

MANPOWER DEVELOPMENT AND TRAINING PROJECT

Supplementary Project Data Sheet

Section I: Timetable of Key Events

(a) Time taken to prepare project: 24 months(b) Agency which prepared project: Ministry of Manpower (with

Bank/British Council/ILOassistance)

(c) First presentation to Bank: Oct. 1983(d) First mission to consider project: Oct. 1983(e) Departure of appraisal mission: July 1985(f) Completion of negotiations: April 1986(g) Planned date of effectiveness: September 1986

Section I: Special Bank Implementation Action

Project Preparation Advance of US$383,000 agreed in November 1983.

Section III: Special Conditions

The Government would:

(a) implement annual project plans and budgets and staff developmentprograms after consultation with the Bank (paras. 44 and 55);

(b) appoint staff to the agreed key posts in the Project Director's Office,as a condition for loan effectiveness (para. 54); and

Cc) select fellowships in accordance with criteria and proceduressatisfactory to the Bank (para. 56).

INDONESLA INDONESLA

MANPOWER DEVELOPMENT AND TRAIN PMENT AND TRAINING PROJECT

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