Report No. 1119b-IND FILE COPY Appraisal of a Transmigration and Rural Development Project Indonesia June 10, 1976 Projects Department East Asia and Pacific Region FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disc losed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit Rupiah (Rp) US$1 Rp 415 Rp 1 US$0.002 Rp 1,000,000 = US$2,410 WEIGHTS AND MEASURES 1 kilogram (kg) = 1,000 grams (gm) = 2.205 pounds 1 metric ton = 1,000 kg = 2,205 pounds = 0.98 long ton 1 hectare (ha) = 10,000 square meters (m2) = 2.47 acres GLOSSARY OF INDONESIAN TERMS Adat - Body of traditional law Agraria - Directorate General of Agrarian Affairs Alang-alang - A coarse grass, establishing itself after the slash and burn cycle Bidan - Nurse/midwife Bina Marga - Directorate General of Highways Bupati - District Chief Executive Dana Kesehatan Desa - Village Health Insurance Scheme Departemen Kesehatan - Department of Health Desa - Village Dokabu - District Health Officer Dukuh - Sub-village grouping of 25-30 houses Dukun - Traditional midwife Gabah - Unthreshed rice Gotong-royong - Community Self-Help Project Hak Pakai - Individual's right of use or exploitation of assigned land Hak Pengelolaan - right to exploit land issued to Government Agencies Hak Penguasaan - controlling right, on assigned land, issue to GOI Agency Hak Milik - freehold title Kabupaten - Rural District Government Kecamatan - Sub-district Marga - Community grouping under Adat Law Mantri - Male Nurse Puskesmas - Community Health Center Promokesa - Village Health Promoter GOI Fiscal Year April 1 - March 31 - 2 - FOR OFFICIAL USE ONLY ABBREVIATIONS ADB - Asian Development Bank AES - Agro Economic Survey of Indonesia ARD - Agency for (Agriculture) Research and Development BAKOSURTANAL - National Coordinating Agency of Survey and Mapping BAL - Basic Agrarian Law BAPPEDAS - Provincial Development Planning Agency BAPPENAS - National Development Planning Agency BIMAS - Mass Guidance Program for Self-sufficiency in Rice and Upland Crops BRI - Bank Rakyat Indonesia BUUD - Village level Business Enterprise CP - Cooperative Program CRIA - Central Research Institute for Agriculture CRSR - Center for Rural Sociology Research (Bogor) DGFD - Directorate General for Food Crop Development DGLS - Directorate General of Livestock Services DGT - Directorate General of Transmigration DIP - Project Budget Document (Daftar Isian Projek) DOA - Department of Agriculture drc - Dry rubber content FAO - Food and Agriculture Organization GOI - Government of Indonesia IKES - Provincial Health Administration INPRES - GOI Program for funding Provincial and Kabupaten labor-intensive public works projects IPEDA - Local Land Tax on Agricultural Production JANTOP - Topographic Mapping Service of the Army KIK - Credit Program for fixed assets for small enterprise KMKP - Credit program for permanent working capital for small enterprise KUD - Village level Co-operative LPT - Soils Research Institute of Agricultural University, Bogor MCH - Maternal and Child Health Mil. - Million Msl. - Minimum subsistence level NIPP - Nutrition Intervention Pilot Program NECT - National Expansion Committee for Transmigration PELITA I - First Five Year Plan (1969/70-1973/74) PELITA II - Second Five Year Plan.(1974/75-1979/80) PKK - Primary Health Care Nurse PMU - Project Management Unit PNP - State-owned Estate Enterprise PT - State-owned Corporation Operating under the Commercial Code with limited liability UNICEF - United Nations Childrens' Fund USAID .- United States Agency for International Development WHO - World Health Organization This document has a restricted distribution and may be used by recipients only in the performance 1 of their official duties. Its contents may not otherwise be disclosed without World Bank authorization ERRATA Page # Para # Line # 7 2.16 2 "...project which was presented.." 11 3.09 1 "... block-planted rubber .." 11 3.10 14 "... agencies.." 13 3.15 6 "... throughout the area.." 15 4.01(b)(i) 2 "... 50 km of village roads.." 23 5.07 17 "... road construction.." 31 6.16 1 "... under contract.." 37 7.01 9 "... cropping patterns.." 44 8.15 17 "... safety against.." 48 9.04 2 "... a term of 25 years, including.." Annex 17 1(a) 1 "... all export taxes.." INDONESIA APPRAISAL OF THE TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONSNU.. ..........e... i-v I. INTRODUCTION ................ ....*. ..... o ... . ..... I II. BACKGROUND ... .o. ...... . ... ... 3 A. General Economy .................. ..*............... 3 B. History of Transmigration ............................ 4 C. Recent Experience .............................*..... 5 D. Agricultural Considerations .......................... 6 III. PROJECT FORMULATION ....... ....... ....... ............. 8 A. General Considerations . ..... . .... ..... .... ....... 8 B. General Standards ... ............ .. ........... ....... 9 C. The Project Area ..................... 0 ............. 12 D. Environment Impact . ......... ...6............... 13 IV. THE PROJECT .......................................*...... 15 A. Summary ............................................. 15 B. Detailed Features ................................... 16 V. PROJECT COSTS AND FINANCING ..- .................... 21 A. Project Cost Estimates ............................ 21 B. Project Financing ................................... 22 C. Budgeting ......oo........o..............b............. 22 D. Procurement ....o.....o........ ............... 23 E. Disbursement .......................... ......... 25 F. Quality and Cost Controls .................... 26 G. Accounting and uditing ............ ............ 27 H. Cost Recovery .......... ........................... 27 VI. ORGANIZATION AND MANAGEMENT ...............o.............. 28 A. Legal Framework ............................. . 28 B. The Directorate General of Transmigration 28 C. The Project Management Unit ......... ........... 29 D. Project Implementation 31 E. Agricultural Supporting Services .... 33 F. Implementation Schedule 35 -2- Page No. VII. PRODUCTION, MARKETING AND FARM INCOMES .................... 37 A. Introduction .. .........0............. ............ 37 B. Farm Models ................ .... ..... ............ 37 C. Yield Projections ...................... . ..... . ..... 37 D. Marketing and Storage ........... .................... 39 E. Prices .. . . . . . . . . . . . . . . . . . . . . . . 39 F. Farm Incomes ......................................... 40 VIII. BENEFITS AND JUSTIFICATIONS ............................... 41 A. Development Objectives .................... ..... 41 B. Project Objectives .... ,.......................... 41 C. Project Evaluation .. .............................. 41 D. Conclusion ...................... 44 IX. AGREEMENTS REACHED AND RECOMMENDATIONS .................... 46 ANNEXES 1/ 1. Population, Migration and Rural Development 2. History of Transmigration in Indonesia 3. Agricultural Basis for the Future Transmigration Program 4. Support for Forward Transmigration Program * Attachment 1: Terms of Reference 5. Project Area Agricultural Development 6. Livestock Development * Attachment 1: Terms of Reference - Livestock Adviser 7. Project Rubber Development and PNP X * Attachment 1: Draft Terms of Reference - Rubber Inspection Services 8. Village Infrastructure Attachment 1: Transmigration Low-Cost Housing 9. Health 10. Roads and Transport 1/ On summary cost tables are presented: all detailed cost table are in the project file and are available on request. * Retained in project file - available on request. - 3 - 11. Organization and Management * Attachment 1: Technical Assistance - Terms of Reference 12. Project Monitoring and Evaluation Attachment 1: Draft Terms of Reference - Settlement Monitoring and Evaluation Studies Attachment 2: Draft Terms of Reference - Health Monitoring and Evaluation Attachment 3: Draft Terms of Reference - Short-Term Monitoring and Evaluation System 13. *Micro-Urban Study: Terms of Reference 14. Disbursement Schedule 15. Costs and Implementation Schedules 1/ 16. Marketing, Processing, Prices and Farmer Incomes 17. Economic Analysis CHARTS 9346 (3R) Transmigration Bodies Created in Presidential Decree #29, 1974 9423 (2R) Organization Chart of Directorate General of Transmigration 15546 (R) Organization Chart of Provincial Directorate of Transmigration - Receiving and Settlement Areas 15547 (R) Organization Chart of Typical Area of Origin Provincial Office for Transmigration 15548 (2R) Organization Chart - IBRD Project Managemnt Unit 15741 Organization of Provincial and District Medical Services 15742 Organization of Ministry of Health - National Level FIGURES 9509 Village Plan Alternatives 9510 (R) Hierachy of Village Groups 15675 (R) Dukuh Principle and Dukuh Form 15676 (R) Transmigrant Low-Cost House Plan - First Stage MAPS 11316 (R) Location of Project Area 11317 (R) Way Abung Area 1/ Only summary cost tables are presented: all detailed cost tables are in the project file and are available on request. * Retained in project file - available on request. INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. The most striking feature of Indonesia's economic and social geo- graphy is that about 65% of its population of 130 million are concentrated on the 'Inner Islands' of Java, Bali, Madura and Lombok which account for no more than 7% of Indonesia's total land resources. At the same time that land use in the Inner Islands is reaching, and in many areas exceeding the ecologically safe limits, cultivable land resources in the 'Outer Islands' (Sumatera, Kali- mantan, Sulawesi and Irian Jaya) amounting to as much as 40 million hectares (20% of Indonesia's total land area) have remained underutilized. Current economic planning recognizes that Indonesia's future agricultural development will increasingly have to rely on the exploitation of the as yet underutilized agricultural resources of the Outer Islands. In this context the Government of Indonesia (GOI) views transmigration, the process of moving people from the Inner Islands to the Outer Islands, as a means of providing the landless and other rural poor of the 'Inner Islands' with land grants which, over time, offer them the opportunity of full employment and increasing income. Simultaneously, it initiates or reinforces regional development in the Outer Islands. ii. GOI has requested the Bank to assist with the formulation and imple- mentation of its ongoing transmigration program. GOI desires to increase the quantity and the quality of settlement achieved by this program and has increased the budget of the Directorate of Transmigration (DGT). The involve- ment of the Bank in this program has been designed to assist GOI to overcome a number of constraints which presently limit the scale and impact of the program. Recognizing that detailed formulation and implementation of an accelerated transmigration program in line with GOI objectives require an opportunity for testing of program costs, benefits and organizational arrangements, the pro- ject would extend financial and technical assistance for the closely monitored execution of two test schemes in upland areas of Southern Sumatera; i.e., a representative 22,500 ha new settlement scheme benefitting 4,500 Javanese settler families; and the upgrading of a typical ongoing scheme involving a 30,000 ha area and 12,000 families. In parallel with the implementation of these two test schemes, the project would assist program formulation by funding technical studies of future settlement sites, by research into problems of sustained annual cropping on upland soils of moderate fertility typical of most potential transmigration areas of Sumatera, and by the preparation of additional settlement schemes based on planning and implementation experience in the two test schemes. This would be the 12th Bank Group assisted project in support of agricultural development in the Outer Islands of Indonesia. iii. Government is aware, on the basis of recent experience, that the planning and implementation of a greatly expanded settlement program requires a capacity not presently available within DGT. The formulation of the project would therefore test the alternative approach of DGT acting as a client body - ii - to and coordinator-director of a number of specialist contractors for all phases of the settlement program. These contractors would be other GOI agencies, public sector enterprises, local enterprises as well as foreign contractors and consultants. The institution building would thus be mainly aimed at developing within DGT the management expertise required for planning, directing and coordinating the activities of a number of expert contractors in all stages of settlement planning and implementation. iv. The new settlement at Baturaja was formulated to test an approach to upland development which would enable Government to move families from poverty situations on Java to upland areas in the Outer Islands where they would be settled on land holdings which, after the initial years of farm establishment, provide opportunities for substantial income growth through settler effort and inputs, and immediate income and living standards at least comparable with those which they now experience or prospectively would expe- rience in their area of origin. Faced with the option of increasing the initial investment on each farm to provide sufficient income to allow for cost recovery, or to utilize the currently available resources to benefit a larger number of settlers through a lower investment per family that would place on the settler greater responsibility for initiative and activity in the clearing and planting of his land grant, GOI has in its transmigration program chosen to forego future GOI revenues from cost recovery in favor of wider distribu- tion of its investment resources in the short-term. The nature of the avail- able soils and the limited agricultural knowledge about the feasibility of sustained annual cropping on these soils require that each of the 5 ha farms include an assured income base in the form of 1 ha of block-planted rubber. The self-help aspect of the design requires that each family be given suf- ficient additional land (4 ha) to grow food crops with the choice to convert some of that land to rubber, or other tree crops, at a later date. v. The formulation of the project component to upgrade the already existing Way Abung settlement addresses problems which this area has in common with many other ongoing transmigration projects. Past settlements were estab- lished on 2 ha plots, following the general farm model which had been developed for settlements which were to benefit from irrigation development. Because of past lack of GOI funds or the questionable technical and economic feasibility of irrigation development in some of the settlements, sizeable areas have been left to dry land farming and are now economically depressed, as soil fertility has declined drastically. The original investment in roads has deteriorated and often the level of social services, especially schools and health facili- ties, do not meet local provincial standards. A number of approaches to up- grading these areas, which may comprise as much as 100,000 ha, are feasible viz: (a) upgrade existing physical infrastructure especially with a view to effecting marketing improvements; (b) upgrade and expand social services to meet provincial standards; (c) conduct irrigation feasibility studies and, where feasible, build the necessary infrastructure; and (d) introduce an agri- cultural cropping system suitable to the soils. All the above options will be pursued under the project with major emphasis on option (d). - iii - vi. The major components of the proposed project are: - construction of 10 village centers with about 4,500 settler houses; - equipping and staffing of health and school facilities; - construction or upgrading of about 65 km of all-weather roads, 200 km of village roads, and about 280 km of farm tracks; - block-planting and maintenance of 7,000 ha of rubber; - distribution of about 9,500 head of draft cattle, and farm input supplies for food crop production; - technical assistance in project implementation; - provisions for detailed project monitoring; and - technical support for the detailed formulation of future transmigration projects covering about 200,000 ha designed to benefit about 40,000 families. vii. The project would be executed over a ten-year period. The Bank loan would assist with the financing required over a five-year period. Total cost for full implementatin of the project over ten years is estimated at about US$70 million. The Bank would finance an amount equivalent to the foreign exchange costs for the first five years of project implementation, estimated at US$30 million. Through annual budget appropriations, GOI would fund all local costs during the first five years (US$26 million). As the implementa- tion of the test schemes would not be completed until the tenth year, the total remaining costs, estimated at US$14 million, would be appropriated annually by GOI until the project is completed. viii. Civil works for roads (US$9.2 million), villages and housing (US$6.6 million), and agricultural support facilities (US$0.7 million) would be awarded on the basis of local competitive bidding to prequalified con- tractors in accordance with GOI procedures which are acceptable to the Bank. Civil works contracts would generally be let on a village by village basis as soon as specifications for each village and its associated roads are completed. As the cost per village (US$1.0 million) is small, international contractors are not expected to show any interest. There is adequate com- petition among local contractors and foreign firms can participate. However, because insufficient contractor's response or performance could endanger completion of access roads which are essential for timely village con- struction ahead of settler arrival, disbursement under the project would, within limits, also allow for construction of roads on force account. ix. Block planting of 7,000 ha of rubber and its maintenance (US$10.7 million) would be carried out on the basis of a negotiated contract between DGT and a qualified Government estate company (PNP X) since it involves the execution of a specialized, integrated service which cannot be procured - iv - through a competitive bidding process. Monitoring and quality controls established for PNP X's rubber plantings financed under IDA Credit 319-IND have provided unit cost information on which contract negotiations will be based. Supplies required for the execution of the contract would be procured in accordance with current GOI regulations which are satisfactory to the Bank. Fertilizers and chemicals (US$1.0 million) as well as vehicles and equipment (US$1.5 million) would be procured by PNP X on the basis of international compe- titive bidding in accordance with the Bank Group's guidelines for procurement. x. Livestock (US$1.9 million) would be procured locally mainly in Java and Madura. General purchasing guidelines developed by DGT for use by local purchasing agents were reviewed during negotiations. Depending upon local supply conditions, DGT may find it necessary to import cattle in order to meet project requirements. In this case procurement would take place on the basis of at least three price quotations from suppliers of livestock in countries free from foot and mouth diseases. Vehiles and equipment (US$3.7 million) would be procured by international competitive bidding in accordance with Bank Group guidelines. Consultants and technical services (US$6.4 mil- lion) would be engaged in accordance with the Bank's Guidelines on the Uses of Consultants on terms and conditions approved by the Bank. Consultants' services have been costed at US$60,000 per man-year (including housing allow- ances, international travel and local transportation) on the basis of past experience in Indonesia with similar consulting assignments. Contingencies would amount to US$15.8 million, of which US$10.5 million would be for ex- pected price increases during the five-year period. xi. GOI has requested retroactive financing in the total amount of about US$1.0 million equivalent for surveys, vehicles and equipment and for civil works in connection with the establishment of the first village in Baturaja for which contracts have been awarded on the basis of local competitive bidding. xii. The project would be executed by a Project Management Unit (PMU) headed by a project director, responsible directly to the Director General of Transmigration. Two site managers, for Baturaja and Way Abung respectively, have been appointed, DGT would make arrangements satisfactory to the Bank to retain a qualified consulting firm to assist the PMU in the detailed planning and implementation of the project. xiii. Since marginal land of the type which is to be developed in the Baturaja and Way Abung project areas is representative of a major part of Indonesia's as yet undeveloped land resources, the search for a cost effective transmigration program which Indonesia could afford has to focus on the type of upland development which is to be tested under this project. On the basis of present knowledge the US$5,000 per family settlement package to be tested in Baturaja constitutes the least cost approach relative to GOI's program objectives. However, subject to the lessons to be learned through closely monitored project implementation, cost reductions in future replication of such upland settlements may turn out to be possible, especially if sustained food cropping on these marginal lands is proven feasible. - v - xiv. The economic rate of return is estimated at about 11% for the pro- posed new upland settlement of Baturaja and at about 19% for settlement up- grading at Way Abung; this latter rate of return reflects the level of sunk investment in farm establishment and physical infrastructure. The non-quanti- fiable benefits include improved health and nutritional status of the settlers, and the multiplier effects on the regional economy of local capital formation and increased levels of consumption expenditure. It has not been possible to estimate the Government expenditures which would have to be made to maintain and improve standards of rural welfare in the area of settler origin in the absence of resettlement and which represent avoided costs. Likewise it has not been possible to quantify the benefits which accrue in the area of origin due to the alleviation of population pressure on scarce resources including land. Studies to be executed under this project would allow a closer examination of these transmigration benefits in the evaluation of future schemes and programs. xv. The project would benefit the economy of Indonesia directly in terms of employment and income creation, increased food production and rubber exports, and benefits to the areas of settler origin in Java. It would also add to the infrastructure base for regional development of Southern Sumatera. The benefits of the project would accrue to transmigrants whose present and expected future incomes in the area of origin would be clearly below the relative, if not absolute poverty line. The distributional impact of the project is therefore clearly favorable. xvi. Subject to the assurances and conditions of loan effectiveness detailed in Chapter IX below, the proposed project is suitable for a loan of US$30 million, for a term of 25-years including a six year grace period. The borrower would be the Republic of Indonesia. INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Government of Indonesia (GOI) has requested the Bank to assist with the formulation and implementation of its ongoing transmigration pro- gram. 1.02 GOI desires to increase the quantity and the quality of settlement achieved by this program and has increased the budget of the Directorate General of Transmigration (DGT). It has also sought technical assistance for project preparation and for general program administration from UNDP. 1.03 The involvement of the Bank in this program has been designed to assist GOI to overcome a number of constraints which presently limit the scale and impact of the program. Recognizing that detailed formulation and imple- mentation of an accelerated transmigration program in line with the objectives set in Pelita II require an opportunity for testing of program costs, benefits and organizational arrangements, the project would extend financial and tech- nical assistance for the closely monitored implementation of two test schemes in Southern Sumatera; i.e., a representative 22,500 ha settlement scheme bene- fitting 4,500 Javanese settler families; and the upgrading of a typical on- going scheme involving a 30,000 ha area and 12,000 families. In parallel with the implementation of these two test schemes, the project would assist the longer-term program formulation by funding technical studies of future settle- ment sites, by research into problems of sustained annual cropping on upland soils of moderate fertility typical of the potential transmigration areas of Sumatera, and by the preparation of additional settlement schemes based on planning and implementation experience in the two test schemes. Together with GOI's ongoing effort to formulate, with assistance from UNDP/FAO, IBRD and bilateral sources, a settlement program for tidal lands in Sumatera and Kali- mantan, this project would provide GOI with the technical and organizational base to utilize external capital aid in support of its ambitious programs of settlement in the Outer Islands. GOI will rely upon the recently approved National Mapping Project (Ln. 1197-IND) to carry out the urgently needed inventory and broad, comparative evaluation of land resources still available for settlement. 1.04 The project is based on a feasibility study prepared by GOI, with assistance from the IBRD/FAO Cooperative program and the UNDP during 1973 and 1974. A mission comprising Messrs. Lesueur, Berman, Friedlander, Panton, Van Dijck (Bank), Macartney and Pineu (FAO/CP) and Patten (Consultant) com- menced field appraisal of the project in November 1974. However further pro- ject preparation was found to be required and was carried out by consultants retained by DGT with financing to be retroactively provided under the project. Appraisal was completed in September 1975 by a mission comprising Messrs. Lesueur, Storrar, Berman, Hewson, Koch-Weser, Van Dijck (Bank), and Nicholson (Consultant). - 2 - 1.05 This would be the 12th Bank Group assisted project in support of agricultural development in the Outer-Islands of Indonesia. Three of these projects concentrated mainly on the rehabilitation of government rubber and oil palm estates in Sumatera and one (Cr. 358 - North Sumatera Smallholder Development) was designed to test alternative approaches to improvement of smallholder rubber production. Other Bank assisted projects with major impact on agricultural development activities in the Outer Islands are: - Beef Cattle Development Project (Cr. 335) in South Sulawesi and Sumba; - Agricultural Research and Extension Project (Ln. 1179) with Rubber Research located in Sumatera; - Irrigation Projects (Cr. 127 and 220) for irrigation develop- ment in Lampung and South Sulawesi; - Fisheries Projects (Cr. 211 and Cr. 480) for fisheries develop- ment in North Sulawesi and Ambon; - National Resource Survey and Mapping Project (Ln. 1197) which among others would inventory and evaluate the Outer Island land resources still available for agriculture and settlement. Highway and shipping improvements financed through Bank Group loans and credits have also been supportive of the development of the rural economy in the outer-islands. - 3 - II. BACKGROUND A. General Economy 2.01 The most striking feature of Indonesia's economic and social geo- graphy is that about 65% of its population of 130 million are concentrated on the 'Inner Islands' of Java, Bali, Madura and Lombok which account for no more than 7% of Indonesia's total land resources. With an average of 9 to 10 persons per cultivated hectare, the rural economy of the Inner Islands taxes the carrying capacity of the land to its limits. At the same time that land use in the'Inner Islands is being extended in many areas well beyond the eco- logically safe limits, cultivable land resources in the 'Outer Islands' (Sumatera, Kalimantan, Sulawesi and Irian Jaya) amounting to as much as 40 million hectares (20% of Indonesia's total land area) have remained underuti- lized. Current economic planning recognizes that in parallel with the further intensification of production on the more suitable lands in the Inner Islands, Indonesia's future agricultural development will increasingly have to rely on the exploitation of the as yet underutilized agricultural resources of the Outer Islands. 2.02 The GOI views transmigration, the process of moving people from the Inner Islands to the Outer Islands, as a means of providing the landless and other rural poor of the "Inner Islands" with land grants which, over time, offer them the opportunity of full employment and increasing income. Simul- taneously it initiates or reinforces agricultural development in the Outer Islands. GOI desires to step up the transmigration program to maximize its contribution to the alleviation of problems of over-population and rural poverty on the islands of Java, Madura and Bali where the population is growing by 2 to 3 million people annually. Additional strategies for rural employment creation on Java, and the impact of current trends in population, migration and on-farm labor opportunities on the projected levels of under- employment have been examined in Annex 1. A full, separate report is under preparation. 2.03 Indonesia's per capita GNP is estimated at $130 in 1973, and the current plan aims to double this over the next ten to fifteen years. It is estimated that some two-thirds of the populaton, about 75 million people live at or close to absolute poverty level (as measured by an adequate daily caloric and protein intake). 2.04 An economic report on Indonesia, "Indonesia - Development Aspects and Needs," of April 15, 1975 (708-IND), described and analyzed the structure of production and incomes, the changes in the availability of resources and the medium- and longer-term outlook for the Indonesian economy. A more re- cent report is entitled "Public Sector Investment and Financial Resources in Indonesia" dated May 24, 1976 (1187-IND). The main findings of that report are summarized in the accompanying President's Report. 4- B. History of Transmigration 2.05 Organized migration of people from Java to Sumatera began in 1905 (Annex 2). The program, which was based on developing irrigation schemes for transmigrants, had limited success due to limited suitability of the soil for food crop production, disease (malaria and dysentery), competition from plantations for labor, and difficulties of providing adequate agricultural inputs to these remote areas. 2.06 Transmigration gained momentum in the 1930's and reached a level of about 10,000 families in 1940. Each settler received 3/4 ha of land suitable for irrigated rice and 1/4 ha house plot; little better than sub- sistence levels of income were achieved. This, together with the tendency for settlers to be socially isolated, the lack of maintenance of irrigation works, and problems of the Second World War, caused serious setbacks to the program which did not resume until the early 1950's. 2.07 Since World War II three distinct forms of migration from Java to the Outer Islands have been recognized: (a) Government-sponsored migrants - GOI meets transportation costs to a GOI planned settlement scheme; (b) Government-assisted migrants - who meet their own transportation costs to a GOI planned settlement scheme; and (c) Other migrants - who move in pursuit of employment on estates and on construction projects and who, upon expiration of their contracts, settle at their own cost outside GOI settlement schemes. The social composition of these categories of transmigrants does not differ significantly; by far the majority are subsistence farmers or landless laborers from Java. 2.08 Reliable figures for transmigration are not available especially for unassisted migrants who may exceed GOI sponsored or assisted migrants by two to four times. Official figures show that for the period 1950-73 about 100,000 families were settled either as sponsored or assisted migrants or an average of about 4,000 families per year. 2.09 In the absence of any monitoring or evaluation of the ongoing pro- gram, the success of the transmigration program, expressed in terms of an increase in the settler families' net income is difficult to measure. However, observations in a large number of schemes in which the initially envisaged development of irrigation infrastructure has been delayed, or did not prove technically or economically feasible, indicate only modest improvement in settler incomes over those in the areas of origin. Without irrigation dev- elopment the rainfed cultivation of the often marginal land which has been allocated in 2 ha holdings poses difficult problems in settlement upgrading. - 5 - C. Recent Experience 2.10 In the 1974-79 Five-Year Plan (Pelita II), GOI is emphasizing the importance of the transmigration program to its agricultural production, and regional development strategies. The plan requires that settlers should ac- hieve incomes higher than would be possible in the settlers' areas of origin. GOI initially proposed to re-settle 250,000 families during Pelita II, rising from 30,000 families in 1974 to 70,000 families per year by 1979. Recent experience has indicated that it will be difficult to reach this target; seven thousand families were settled in 1974/75, and the target for 1975/76 has been reduced to 8,000. The overall target has recently been reduced to 87,000 families. As the land available for transmigration increasingly requires the more difficult establishment of the settlements on uplands or tidal lands Government has come to recognize the limited capability to plan and execute such schemes as one of the most serious limiting factor in the execution of a larger transmigration program commensurate in size with Indonesia's rural and regional development needs. 2.11 Settler Supply: GOI reports long waiting lists of applicants for resettlement, and the steady stream of non-assisted or 'spontaneous' migrants into the Southern Sumatera provinces is further evidence that the supply of transmigrants is not a limiting factor to the program. In addition, reservoir development in Java is estimated to require the resettlement of 10,000 to 15,000 families over the course of the next decade. Volcanic eruptions on Java and Bali have also in the past made it necessary to move entire villages from the densely populated danger zones on the fertile slopes of the volcanic cones to settlements in the Outer Islands. Given the high risk of renewed volcanic activity on the densely populated islands of Java and Bali, the transmigration program must also be viewed as a standby against this contingency. Settler selection criteria are outlined in Annex 2. 2.12 Supply of Land: Transmigrants are being settled on land alienated to GOI from the community lands of the indigenous populations. On the basis of Adat law, 1/ land rights are vested in the marga 2/ and individual members of the community do not exercise any individual ownership. The Basic Agrarian Law (BAL), enacted in 1960, recognizes the marga's right of disposal, but sti- pulates that the exercise of ths right must "conform with the national interest of the State based on national unity." In practice, alienation for transmigra- tion schemes takes place after negotiations between GOI and the marga leaders. As these leaders often tend to be more knowledgeable of the quality of their lands than the negotiating GOI officials, the best land is generally not secured for transmigrants. This system of settlement area "selection" tends to accentuate the agricultural constraints noted below. 1/ Adat is a system of traditional legal and religious laws, deeply embedded in Indonesian society, but differing from region to region. 2/ The traditional community grouping as recognized under Adat Law. - 6 - D. Agricultural Considerations 2.13 Government plans to expand the size of the transmigration program will have to take account of a number of agricultural constraints which are briefly set out below: 2.14 Upland Development: In Sumatera and Sulawesi most fertile and readily accessible lands suitable for irrigated or rainfed annual cropping have now been taken up. Areas which constitute the few known exceptions, e.g., areas in Jambi Province, are already the subject of detailed study and project preparation. In Kalimantan, development is hindered by poor access and rather infertile soils (Annex 3). The remaining upland areas available for transmigrants are those which have been bypassed or abandoned by local cultivators after a period of slash and burn cultivation. They usually ex- hibit some technical constraints which limit the ease with which, or the extent to which, they can be brought into sustained food crop production. On the basis of present knowledge, only tree crops, such as rubber and oil palm, are suitable for continuous utilization of these upland soils. 2.15 Within the predominating red/yellow podsolic soil group, the available upland sites have wide variations in land capability. On most, sustained production of rice, maize, and legumes such as beans and groundnuts, depends heavily upon maintaining or increasing soil fertility and improving soil physical condition. Technical inputs to achieve this are known though untested on anything but small-scale under tropical conditions. Composting, green manuring, crop rotation and the use of fertilizer and animal manures could be used for soil amelioration. However, the technical and economic feasibility of sustained annual cropping on these soils remains yet to be established. By contrast, high yielding technology for the cultivation of perennials such as rubber and oil palm is readily available. Nevertheless, Government considers it of utmost importance that the formulation of settle- ment projects for upland areas include provision for mixed farming. Government argues correctly that a solution to the technical problems of sustained food cropping on the low fertility upland soils needs to be found to meet the sub- sistence requirements of settlements based on slow-maturing tree crops during the initial years of settlement, to avoid the establishment of a regional rural economy which is dependent on the monoculture of an export crop subject to wide price fluctuations and to formulate a transmigration program which Indonesia can afford. Accordingly, the development of food cropping systems suitable for transmigrants to the upland areas is given highest priority and will be addressed under the proposed project. 2.16 Swamp and Tidal Land Development: In the tidal and swamp areas of the outer islands some success is being achieved with rice cultivation through provision of some drainage and with tidal irrigation on selected sites. Existing schemes on the better delta soils produce one rainfed rice crop each year, and although initial yields are high, even without fertilizers and other inputs, there are likely to be problems in sustaining yields. Other -7- sites with peat and acid sulphate soils will be more difficult and costly to develop. The seventh Bank-financed irrigation project which is to be presented to the Board in May 1976 includes funds for feasibility studies of tidal land reclamation for paddy production by smallholder settlers in the Provinces of Jambi and South Sumatera. - 8 - III. PROGRAM FORMULATION A. General Considerations 3.01 Against the background described above, the Bank has been requested by GOI to assist in redesigning and expanding the transmigration program through the financing of a Transmigration and Rural Development Project. The project components (Chapter IV) have been formulated to alleviate the program constraints outlined above. The nature of the constraints requires that the proposed test schemes be of a scale which allows a realistic examination of the agricultural and administrative constraints without recourse to intensive forms of on-farm investment and project management which could not be replicated in the implementation of a larger program. Three major components have been for- mulated as full-scale tests: (i) planning and implementation of a new settle- ment for 4,500 families on 22,500 ha near Baturaja; (ii) upgrading of an exist- ing settlement area of 30,000 ha at Way Abung, containing 12,000 families; and (iii) technical support for the detailed formulation of a future program covering about 200,000 ha and designed to benefit about 40,000 families. 3.02 To ensure replicability, new settlement design, upgrading, and imple- mentation must rely on normal GOI services and agencies, at standards prevail- ing at the present and adaptable to improvements planned for these services in the future. Initially, higher levels of these services would be concentrated in "central places" in each settlement (Annex 8, Chart I and Figure 9510) to achieve economies in the delivery systems. Major access roads would be de- signed to general Bina Marga standards, while standards for village access roads have been adapted for local traffic conditions; school facilities, both in number and standard, would reflect the target levels of service set by Pelita II. Health services would be designed to test the village health delivery system which Government envisages as suitable for broader replica- tion under Pelita III. Other social service buildings, e.g., Mosque, Com- munity Center, etc., would be built to allow for a maximum of future gotong- royong 1/ improvements. Similarly, initial on-farm investments by Govern- ment have been limited to the minimum levels required to assist the settler in initial farm establishment. However, the size of the land grant (5 ha) and the agricultural supporting services to be provided will ensure that the settler, through his own investments and effort, can improve and enlarge his income earning base. 3.03 The planning, coordination and implementation of a greatly expanded settlement program require a capacity not presently available in DGT. The future program would outstrip DGT's ability to find and train the necessary manpower. The formulation of the project would therefore test the alterna- tive approach of DGT acting as a client body to and coordinator-director of a number of specialist contractors for all phases of the settlement program. These contractors would be other GOI agencies, public sector enterprises, 1/ Gotong-royong: voluntary community self-help. local enterprises as well as foreign contractors or consultants. The insti- tution building within DGT would mainly be aimed at developing with DGT the management expertise required for planning, processing, directing and coordinating the activities of a number of expert contractors in all stages of settlement planning and implementation. B. General Standards 3.04 Settlement Design Standards: In order to reduce initial settlement costs, settlement design for Baturaja sub-project places great reliance on gotong-royong for subsequent improvements to minor roads and buildings for social services in the village centers. Low-cost settler housing has been designed on a core-shell concept (Figure 15676) to provide adequate shelter with allowance for self-constructed expansion. Gotong-royong activity requires a sense of community, which in a new settlement situation must be deliberately fostered. Village design would do this through the use of the traditional cluster of houses, or dukuh, of 25-30 families (Figure 15675), which would form the basic social units of the village. The basic scheme envisages that village layout would be linear, 1/ on a linked set of dukuhs, thereby allowing each settler to live in a dukuh on his 0.2 ha house plot, with land used for annual crops close by, and with separate rubber land, no more than 1.5 km from the house. The dispersed or nuclear plan alternatives would require excessive walking distances either between the house lot and the farm lands, or the house lot and village center: by contrast, the linear village with walking distances planned to average about 2.5 km would encourage community services and market development at the village center. 3.05 Health Services: Attitude surveys in settlement areas have shown that one of the major concerns of new settlers is adequate health care. The health care delivery systems in the transmigration areas have been designed to encourage maximum community participation through the development of village health committees, with volunteers to be trained as village health promoters (Promokesa), and possibly the development of Village Health Insurance Schemes (Dana Kesehatan Desa). This community participation would contribute directly to maintaining a low-cost delivery system, allowing the available budget re- sources to be allocated to skilled staff, drugs and specialized equipment. 3.06 However, the health delivery system being introduced into the settle- ment areas is a more extensively community-based system than has previously been introduced elsewhere by the Department of Health, and would act as a test for future low-cost community-based health systems for larger scale replica- tion. The level of service provided, therefore, in the transmigration areas, would be subject to a monitoring and evaluation study to determine the succes- ses and weaknesses in its design. 1/ Figure 9509 and Annex 8 show the village layout plan alternatives; dispersed, nucleated or linear. - 10 - 3.07 On-Farm Development: The size of the land grant, the proposed farm plan, the level of grant aid provided to each settler family for farm estab- lishment, and the agricultural support services program to be established under the project was guided by the following major considerations: (a) the land grant should afford the settler family the oppor- tunity for self-sustained growth of per capita income roughly in line with the projected growth of Indonesia's agricultural sector; (b) in line with the GOI decision that there should be no cost recovery from transmigrants, the grant aid provided to the settler should be kept to the minimum, with reliance on appropriate term lending and support services programs for subsequent on-farm development, especially of tree crops; (c) the settlement project as a whole should be economically viable and, with appropriate shadow pricing and allowance for subsequent, loan-supported on-farm development, the rate of return to the investment should not be less than 10%; (d) the farm unit should be viable even if the expectation that food cropping can contribute one-fourth to one-third of family income should be proven wrong. 3.08 Based on these considerations, the Baturaja project would provide each settler family with a land grant of 5 ha. In addition to the establish- ment of a small (0.2 ha) intensively cultivated house garden, the basic farm plan envisages that each family practices a relatively extensive form of annual food cropping. This would involve an input-intensive adaptation of the traditional slash and burn rotation system, annually utilizing about 0.5 ha of land in a total area of 2 to 3 ha. Cattle would have to be introduced into this rotation farming system to provide draft power and to maintain soil fertility through use of cattle manure and composting, in addition to inor- ganic fertilizers. The 1.5 ha to 2.5 ha annually under fallow would be planted to a legume fodder crop, both to improve soil fertility of the land under fallow and to produce cattle feed. This proposed food cropping system has been subject to small-scale intensive management experiments but has not yet been tested on the scale now proposed. Research to be funded under this project, together with extension advice and annual input supplies available under the project, would support these large-scale tests of the food cropping system. Monitoring of the project's annual development would give indications of any intervention or change in design that might be necessary. 3.09 Under the Baturaja project, 1 ha of each settler's 5 ha allocation would be planted to rubber on project account. Rubber would provide regular income and employment thereby lowering the risk to the farmer of losses from failure in annual cropping. Depending upon the productivity of the food cropping system to be introduced under the project settlers may move towards the loan-financed establishment of additional tree crops on their holdings as - 11 - the block-painted rubber comes into tapping and improves their credit- worthiness. Consequently, the first six years of planting, fertilizing and maintenance are crucial to ensuring that the rubber yields finally attained do provide a sufficient economic base for subsequent on-farm development. The rubber development would therefore be contracted to a dependable contrac- tor who would be required to supply planting material and supervise and train the settlers in all aspects of rubber planting, maintenance, fertilizer re- quirements, tapping and production. The use of such a contractor would have the additional advantage of creating wage employment for the settlers during the period when there would be no income-from rubber and the limited food production from annual cropping would have to be supplemented by off-farm employment to meet the family's minimum needs. 3.10 Agricultural Support Services: Food cropping in new settlement areas would require the agricultural support services normally developed by GOI in rural areas, viz: agricultural extension, agricultural credit, the BIMAS program (para. 4.11) and agricultural cooperatives for input supplies, product processing and marketing. The increased level of these services throughout Indonesia during Pelita II would complement the expanded Trans- migration program, making it unnecessary in the long term for DGT to utilize its own limited staff or resources to provide these services. However, be- cause of the crucial importance of these services for settler welfare and long-term viability of the scheme, it will be necessary for DGT to supplement the services available in the settlement areas until the relevant agencies can reach an adequate staffing level to replace DGT staff. Because of the test aspects of the new settlement to be funded under this project, DGT would initially staff some of these services in the area, and the normal GOI agenies would take over the administration of these services after the final nature and levels of these services have been determined through the monitoring and evaluation studies and adjusted appropriately. 3.11 Upgrading Existing Settlement Areas: In Lampung province, past settlements were established on 2 ha plots, following the general farm model which had been developed for settlements which were to benefit from irrig- ation development. Because of past lack of GOI funds or the physical infeasi- bility of some sites, sizeable areas have remained as dry land farms and are now economically depressed, as soil fertility had declined drastically. The original investment in roads has deteriorated and often the level of social services, especially schools and health facilities, do not meet local provin- cial standards. A number of approaches to upgrading these areas, of which there may be as much as 100,000 ha, are feasible viz: (i) upgrade existing physical infrastructure especially with a view to effecting marketing improve- ments; (ii) upgrade and expand social services to meet provincial standards; (iii) conduct irrigation feasibility studies and, where feasible, build the necessary infrastructure; and (iv) introduce an agricultural cropping system suitable to the soils. All the above options could be undertaken by DGT in the proposed upgrading of the Way Abung settlement with major emphasis on option (iv). Depending upon the outcome of a detailed land capability and cadastral survey to be carried out under the project, Government may also consider the allocation of additional land to the Way Abung settlers. - 12 - Monitoring and Evaluation 3.12 As both project components involving settlement areas are designed as test schemes, the project would support monitoring and evaluation studies to signal timely ameliorative action, if certain parts of the project should prove less feasible than expected at appraisal, to assess the outcome of the test schemes and to indicate the changes required in future settlement area design. Program Assistance 3.13 Basic to the design of any new settlement area are sound topo- graphical, soil, hydrological and agricultural assessments of each area's potential. For about 200,000 ha of future settlement the project would assist with the development of this technical data and with its analysis and trans- lation idto settlement design. C. The Project Area New Settlement - Baturaja 3.14 A gross area of about 60,000 ha bordering on the trans-Sumatera highway between Baturaja and Martapura (Map 11316), in the Province of South Sumatera will serve as the test area for new upland settlement. The area is typical of the underutilized land available for future transmigration; the low to moderate fertility red/yellow podsolic soils are in many places exhausted and eroded through many years of slash and burn cultivation and are now covered with alang-alang 1/ and some forest regrowth. The topography is undulating to rolling, with gently rounded hill tops. The area is deeply dissected by nar- row, small ravines which carry seasonal streams. A reconaissance soil survey indicates that slopes on the valley sides vary from 8-15%. The climate, simi- lar to the rest of Southern Sumatera, averages an annual total rainfall of 2,800 mm with a dry season of about four months from July to October when rainfall still averages about 150 mm per month. Temperatures average about 25 0C. Prospects for shallow groundwater are not good except in the valley bottoms; deeper boreholes may yield a reliable water supply and a drilling program is currently ongoing. Alternatively, small earth dams on the streams in the project area could be used to augment the village water supply which, in the first instance, will be obtained by rainwater collection off the roof of the settler's house (Figure 15676). Settlement Upgrading - Way Abung 3.15 About 12,000 families have been settled on 2 ha plots in a 30,000 ha area at Way Abung, near Kota Bumi, on the trans-Sumatera highway in Lampung 1/ A coarse grass (Imperata cylindrica) which follows slash and burn cultivation. - 13 - Province (Map 11317). The soils are deep red/yellow podsolic. They are less erodable and more friable and easily worked than in Baturaja, but with similar low natural fertility. Climatic and rainfall conditions are similar to Batu- raja. The topography is relatively flat to gently undulating with slopes rarely more than 8%. Surface water is plentiful with perennial streams; groundwater is found throughout the a area at a maximum depth of about 6 meters. Stands of secondary forest and alang-alang cover the areas not under cultivation. 3.16 This settlement area has been developed in stages over the last eight years and was initially intended as an irrigated farming area. The limited development of irrigation which has so far taken place reflects both past lack of funds as well as the questionable technical and economic feasibility of large-scale irrigation development in this settlement area. The roads are almost impassable in the wet season, and some physical facilities - schools, health services and agricultural services have not been developed to the planned levels. On average, the settlers have so far managed to clear and crop only about half of their 2 ha holdings. Because of inadequate fertilizer use, the initially poor soils are now further degraded, and settlers are ex- periencing severely declining yields after a few years of continuous annual cropping. Even in villages where BIMAS fertilizer is available, little yield improvement has been realized and repayment of production credit is poor. Seed Farm and Nursery 3.17 A two hundred hectare area would be set aside in the Baturaja area for production of seeds and planting materials for food crops and house gardens. An area of 100 ha typical of the project area and of future settle- ment areas to the northwest of Baturaja would be developed nearby for use by The Agency for (Agricultural) Research and Development (ARD), 1/ through its Central Research Institute for Agriculture (CRIA), for trial/demonstration purposes. D. Environmental Impact 3.18 The introduction of rubber which would be planted on the more strongly sloping areas would arrest erosion. Trials will also be undertaken with forestry species suitable for firewood where rubber cannot be planted owing to adverse soil or slope conditions. During the establishment of rubber, before the trees have developed a protective canopy, erosion would be reduced through the planting of a legume cover crop. This cover crop would have the secondary benefit of competing with the alang-alang. However, weeding prac- tices would have to be observed to maintain control over the alang-alang. On the steeper slopes rubber would be planted on terraces. The settlers would be trained in soil conservation practices during their period of employment on rubber maintenance. In the physical planning of the settlements a 15 meter 1/ Supported through the Indonesia Agricultural Research and Extension Project (Ln-1179 IND). - 14 - wide strip along rivers and larger streams will be retained under natural vegetation. 3.19 Malaria is endemic in the settlement areas. A malaria control program currently in operation in the provinces would be expanded and im- proved. Village sanitation would be safeguarded through the provision of pit latrines. The staff of the Health Service would include Village Health Promoters, to provide health extension in the fields of environmental sani- tation, water treatment, and general hygiene. - 15 - IV. THE PROJECT A. Summary 4.01 The Bank would assist the transmigration program with a project consisting of: I. Implementation of two test schemes: (a) New Settlement at Baturaja (i) construction of 10 village centers with about 4,500 settler houses; (ii) equipping and staffing health and school facil- ities in each village; (iii) construction of approximately 15 km of all-weather roads, 110 km of village roads, and about 280 km of farm tracks; (iv) block-planting 4,500 ha of rubber and maintenance for six years; (v) distribution of about 4,500 head of cattle, fertilizer inputs and seeds to support food crop production on about 2,250 ha (1/2 ha per farm); (vi) provision of water supply and sanitation facilities; (vii) establishment and staffing of agricultural credit, extension and cooperative services; and (viii) distribution of food and other essential commodities during the first year of settlement in accordance with DGT's existing distribution programs. (b) Settlement Upgrading at Way Abung (i) construction of approximately 50 km of all weather road, and 50 km of vilage roads, with upgrading of a further 50 km of roads; (ii) block planting of about 2,500 ha of rubber with six years of maintenance, to benefit about 5,000 settlers with holdings of uplands clearly unsuited for future irrigation development; - 16 - (iii) distribution of about 5,000 head of cattle to those settlers who have not yet participated in the DGT cattle scheme; (iv) expansion of agricultural credit, extension and cooperative facilities in 20 villages; (v) construction of 4 secondary schools; (vi) health facilities and staff for 22 villages; and (vii) feasibility studies and preparation of detailed engineering plans for irrigation facilities. (c) Technical assistance in the implementation of the two test schemes. II. Settlement Area Studies (a) Monitoring and Evaluation Studies to determine the success of the new settlement plans, the agricultural techniques, and the health delivery system employed in these test schemes. (b) Project Studies of alternative farm management systems, especially as regards annual cropping patterns, the role of livestock and the potential role of different forms of mechanization; Social and Regional Studies to determine the impact of transmigration schemes on regional development in the settlement area and on rural development in areas of settler origin. III. Program Support: (a) Expansion of DGT's planning capability through technical assistance for identification, survey and initial preparation of 200,000 ha for future settlements; (b) Research and testing of viable food cropping patterns for the red/yellow podzolic soils; and (c) Holding areas for cattle, established and operated in strategic locations to serve a distribution program for future settlement areas. B. Detailed Features 1/ 4.02 The detailed features of the proposed project are presented below for the major components. 1/ Project costs in Part B are quoted in constant 1976 prices and exclude physical contingencies. - 17 - Physical Development 4.03 Village Centers (total cost $1.2 million); Ten villages would be built in Baturaja to accommodate 4,500 settler families. The village centers would include a primary school, health post, mosque, community center, market, offices for BRI and KUD's civil and project administration and staff housing. Higher levels of these basic services would be distributed among the village centers to create a rational hierarchy based on location and proxioity to the main access roads (Annex 8). 4.04 In Way Abung, the village infrastructure is already in place, or is currently being expanded or improved through on-going GOI programs (Annex 8). The project would improve the health facilities (para 4.06) and build four additional secondary schools (0.05 million). 4.05 Settler Housing ($2.6 million): In Baturaja 4,500 simple houses would be provided for the settlers - each costing approximately $500. A basic timber frame and walls, a tile roof and compacted earth floor has been designed utilizing local materials of standard dimensions. Experience from previous settlements indicate that transmigrants will expand on existing structures using their own resources, and this self-help would be facilitated as the house is designed for easy lateral expansion (Annex 8, Figure 15676). As is the practice in both existing and new settlements, the clay tile roof would allow for clean rainwater collection into storage drums (para 4.07). 4.06 Health ($1.1 million): The Project's low-cost, community based health system would consist of primary medical care, malaria control and immunization, environmental sanitation, nutrition and family planning pro- grams as well as support for staff training, general supplies and admin- istration. One Health Center and 10 Village Health Posts would be constructed in Baturaja, and 2 Health Centers and 22 Village Health Posts in Way Abung. Motorcycles and 4-wheel drive vehicles would be provided for the staff at each Health Center. Equipment for each center and post would be purchased through UNICEF (Annex 9). Assurances were obtained that the health facili- ties would be introduced into both project areas at levels of service and on a timetable satisfactory to the Bank. 4.07 Water Supply and Sanitation ($1.6 million): In Baturaja present hydrological information indicates that adequate groundwater supplies would not be available from wells. Rainwater collection would therefore be one of the primary sources of water supply (para 4.05). DGT is currently study- ing the feasibility of constructing small earth dams in the area to secure an additional source of supply. In Way Abung, groundwater is available and 2,000 wells would be dug and handpumps supplied. Pit latrines would be dug for each family in Baturaja, and a further 5,000 would be required in Way Abung (Annex 9). 4.08 Roads ($7.2 million): The objectives of the project's road com- ponent is to establish a low-cost system of road and tracks in the settlement areas to: - 18 - - link the areas by means of all-weather main access roads to the national and provincial road and transportation networks; - provide all-weather village roads between the village centers and the main access roads; and - provide farm tracks to facilitate access from the village centers to the dukuhs. In the Baturaja area 15 km of main access road, about 110 km of village roads and about 280 km of farm tracks would be built. Simple wooden bridges and culverts would be provided, as well as a 15 m permanent bridge across the Gilas River (Map 11316). In Way Abung the project would complete 50 km of main access road, 50 km of village roads, and betterment works on 50 km of existing village roads (Annex 10). Agricultural Development 4.09 The agricultural development (Annexes 3 through 7) comprises the following activities: 4.10 Rubber Block Planting ($9.2 million): Out of its total land allo- cation of 5 ha each settler family in Baturaja would receive a I ha block of rubber: a total of 4,500 ha would be planted, in blocks of at least 100 ha. In Way Abung, 5,000 selected settlers with farms clearly outside of the command area of any future irrigation development (para 3.11) would each allocate a 0.5 ha plot of their present 2 ha holding to form contiguous blocks for rubber planting, totalling 2,500 ha. In both areas a specialized contractor would clear the land, supply polybag planting material and fertilizer and employ and train the settlers for planting, maintenance, fertilizing and weeding for six years after planting (Annexes 5 and 7). 4.11 Inputs and Food Aid for Farm Establishment ($1.5 million): In line with existing policies, DGT will provide each new settler family during the first year of settlement with the following grant aid: (a) food aid (1,950 calories per capita per day) valued at $220 equivalent for an average of 9 months; (b) inputs for food crop production and house garden establishment (fertilizer, seed, seedlings, etc.) valued at $32 equivalent; and (c) farm implement and clothing valued at $85 equivalent. In subsequent years, inputs for food crop production will be supplied under the National BIMAS Program. I/ Assurances were obtained during negotiations 1/ An ongoing national scheme for the supply of current inputs and pro- duction credit to farmers. - 19 - that the arrangement necessary to extend coverage of the BIMAS program to the settlers in Baturaja and to strengthen the operations of the BIMAS program in Way Abung will be made within one year after loan signing. It is estimated that an additional US$3.5 million would have to be allocated by BRI to its BIMAS revolving fund, to fund the additional credit requirements. These resources are available within BRI, and from the BIMAS secretariat. Assurances were obtained that up to year six after settlement when the rubber comes into tapping, input grants would be supplied by the project whenever food crop production and off-farm employment (in infrastructure construction and rubber planting and maintenance) are insufficient to meet the minimum family subsistence requirements. DGT has prepared a policy statement setting out an operational definition of "minimum subsistence requirements" to be used in project monitoring and to be applied in the administration of grant programs in the project area: this definition was reviewed and agreed upon during negotiations. 4.12 Cattle ($3.6 million): One draft animal would be distributed to each of the 4,500 settler families in Baturaja, and to 5,000 families in Way Abung. Cost of the cattle supply will be recovered through the return of the first calf to the DGT scheme. The project would support the pro- curement, transportation and distribution infrastructure for 8,000 head of cattle from Java or from abroad to the settlement areas during the five year project period (Annex 6). A village bull program will be oper- ated by the Directorate General of Livestock Services (DGLS). 4.13 Agricultural Services: A seed production farm and nursery ($1.0 million) would be established in the Baturaja area as a source of seed and planting material for both annual crops and fruit trees. It would also act as a demonstration area for agricultural extension and a rubber tapping school would be established on 100 ha adjoining the area. These facilities have been sited to service the regional transmigration program. Extension staff would be provided in the DGT Village management (para 6.30) and village level Cooperatives (KUD's) would be established in the area during the project. In Way Abung, the current credit facilities (BRI village units) would be expanded, together with the agricultural extension staff, and existing KUDs would be reorganized (Annex 5). Project Management Unit ($2.4 million) 4.14 The project would provide for the establishment of a Project Manage- ment Unit (PMU) which would implement the project with the assistance of internationally recruited consultants (paras 5.12, 6.09 to 6.12). Technical assistance totalling 233 man-months would be provided under the project to strengthen the PMU (Annex 11). Project Studies ($2.0 million) 4.15 Settlement Monitoring (Annex 12) would be conducted at both Baturaja and Way Abung to follow the socio-economic development of the settlement areas and to identify project alternatives conducive to enhancing the participation - 20 - of the settlers in the establishment of viable farming communities. Properly evaluated, the results of the monitoring would be used to modify the planning of future transmigration settlement areas (para 3.08, 8.04). 4.16 The Health Delivery System would be monitored and evaluated for its degree of community participation, patient case load, and environmental sanitation impact. These results would be used by the Ministry of Health in planning of their future rural health programs (Annex 12). 4.17 Project Studies: For transmigration to act as the catalyst for regional development, it is necessary to gain a better understanding of the impact of the settlements upon the adjacent micro-urban centers and indigenous farming community. Studies will be funded under the project to enable DGT to gain a better understanding of the regional development aspects of its on- going and planned transmigration program. The studies will also focus on the links which settler communities maintain with their area of origin and which may open opportunities for more effective settler recruitment. A program of studies will be agreed upon annually between DGT and the Bank. Program Support 4.18 Expanding DGT Planning Capacity ($3.4 million): The project would include planning of 200,000 ha of land for future settlement through aerial photography, semi-detailed soil and topographical surveys, land capability appraisal and site planning (Annex 4). The project would also supply the Soils Institute at Bogor(LPT) with additional field and laboratory equipment necessary to meet their increased volume of work for DGT, and fund 61 man- months of a technical assistance effort, begun by FAO/UNDP, to increase and improve the institute's survey capability (Annex 4). 4.19 The project would make funds available for 203 man-months of con- sultancy assistance for future settlement planning and preparation, together with vehicles, equipment and facilities for establishing a project preparation unit (Annex 4). The utilization of these consulting funds would be based on work programs to be agreed between DGT and the Bank. 4.20 Food Cropping Trials ($0.5 million): There is presently little research being conducted on the upland soils of the outer islands. CRIA has begun some multiple cropping trials in Lampung, and this project would assist in the expansion of this work to Way Abung, Baturaja and adjacent settlement areas set aside for settlement in the next few years. The project would finance consultant services (36 man months), vehicles, equipment and field offices for CRIA (Annex 4). - 21 - V. PROJECT COSTS AND FINANCE A. Project Cost Estimates 5.01 The project would be fully implemented over a ten year period. The Bank loan would assist with the financing over-a five-year period. The table below summarizes the costs of the project over the first five years of implementation. Total cost for full implementation of the project over ten years is estimated at about $70 million. Details of the project costs are presented in Annex 15 and are summarized below: Project Cost Sumary Rupiah Million US$ Million % Foreign % of Local Foreign Total Local For*ig n Total Exchanie base Cost A. INVESTMENT COST New Settlement - Baturaja - Roads, Villages & Housing 1706 1490 3196 4.11 3.59 7.70 46 19 - Health Setvices 125 58 183 0.30 0.14 0.44 S2 1 - Rubber Development 1116 1291 2407 2.69 3.11 5.80 54 14 - Cattle Distribution 170 195 365 0.41 0.47 0.88 53 2 - Seed Farm 71 1 162 0.17 0.22 0.39 56 1 Settlement Upgrading - Way Abung - Roads & Schools 651 1046 1697 1.57 2.52 4.09 62 10 - Health Services 199 116 315 0.48 0.28 0.76 37 2 - Rubber Development 593 818 1411 1.43 1.97 3.40 58 8 - Cattle Distribution 220 220 440 0.53 0.53 1.06 50 3 Project Management Unit: - Vehicles 12 46 58 0.03 0.11 0.14 75 - Revolving Fund - Short Term Credit 436 1017 1451 1.05 2.45 3.50 70 9 Cattle Distribution - Central Facilittes 183 178 361 0.44 0.43 0.87 49 2 Sub-total 5482 6565 12047 13.21 15.82 29.03 54 71 B. OPERATING COSTS New Settlement - Baturaja Village Management 137 - 137 0.33 - 0.33 - I - Health Services and Training 62 33 95 0.15 0.08 0.23 35 1 Cattle Distribution 54 33 87 0.13 0.08 0.21 38 - - Seed farm 112 120 232 0.27 0.29 0.56 52 1 - Subsistance Grant , 278 560 838 0.67 1.35 2.02 67 5 Settlement Upgrading - Way Abung - Village Management 29 - 29 0.07 - 0.07 - - Health Services and Training 79 95 174 0.19 0.23 0.42 55 1 - Cattle Distribution 42 4 46 0.10 0.01 0.11 9 - Project Management Unit - Local Staff 149 - 149 0.36 - 0.-36 - 1 - Consultants & Techniaal Services 145 349 494 0.35 0.84 1.19 71 3 Cattle Distribution - Central Facilities 158 50 208 0.38 0.12 0.50 24 1 Sub-total 1245 1245 2490 3.00 3.00 6.00 50 14 C. STUDIES Future Project Preparation 743 888 1631 1.79 2.14 3.93 54 10 Monitoring & Evaluation 527 195 722 1.27 0.47 1.74 27 4 Regional Impact Study 37 87 124 0.09 0.21 0.30 70 1 Sub-total 1307 1170 2477 3.15 2.82 5.97 47 15 BASE COST 8034 8981 17015 19.36 21.64 41.00 53 100 Physical Contingency 892 1423 2315 2.15 3.43 5.58 61 13 Price Contingency 2204 2046 4250 5.31 4.93 10.24 48 25 TOTAL COST 11130 12450 23580 26.82 30.00 56.82 53 138 - 22 - 5.02 The costs are based on mid-1975 estimates updated by the appraisal mission to January 1976 prices. All operating costs are incremental. Phy- sical contingencies of 15% have been applied to all civil works and 5% to all other costs. A physical contingency factor of 30% has been applied to village roads and farm tracks in view of the possibility that the location of villages near suitable food crop land may entail deviations from the schematic village layout used in the derivation of village road cost estimates. Likewise, a con- tingency factor of 30% has been applied to the allowance for subsistence grants in the basic cost estimate. This recognizes the possible need for supple- mentary grant aid beyond year one in the event of food crop failure. In addi- tion a physical contingency of $1.0 million has been included to cover the eventuality that chemical or mechanical means may have to be employed on pro- ject account to assist the settlers in eradicating the alang-alang grass in their food crop areas. The provisions for expected price increases, have been computed based on the following projections: Annual Inflation Rate 1976 1977 1978 1979 1980 Civil Works 14 12 12 12 10 Equipment and Services 10 8 8 8 7 Agrochemicals 2 -7 -7 0 0 B. Project Financing 5.03 The Bank would finance an amount equivalent to the foreign exchange costs for the first five years of project implementation, estimated at $30 million (53% of total cost). Through annual budget appropriations, GOI would fund all local costs during the first five years ($26 million). As the imple- mentation of the test schemes would not be completed until the tenth year, the total remaining costs, estimated at $14 million, would also be appropriated annually by GOI until the project is completed. 5.04 The Bank loan of $30 million would have a term of 25 years, with a grace period of 6 years. C. Budgeting 5.05 As a number of GOI agencies are involved in the implementation of this project, the Government has adopted a single, integrated project budget, administered by the Minister of Manpower Transmigration and Cooperatives, as Chairman of the National Expansion Committee for Transmigration (NECT) (para. 6.01). - 23 - 5.06 For project activities which would be administered by a GOI agency other than DGT, (e.g. CRIA, Bina Marga, etc.) the annual budgets for these agencies would be developed jointly by DGT, PMU and each agency. Annual work programs for all agencies participating in the implementation of the project as well as a consolidated budget would be agreed upon by the NECT. This budget would then be submitted to Bappenas in its consolidated form by the NECT, and in its constituent parts of each implementing agency. Assur- ances have been obtained from GOI that any modification in the consolidated budget system which has been adopted for the project for fiscal year 1976-77 would be introduced only in consultation with the Bank. D. Procurement 1/ 5.07 Contracts for Civil Works for roads ($9.2 million), villages and housing ($6.6 million), and agricultural support facilities ($0.7 million) would be awarded after local competitive bidding (LCB) among prequalified contractors in accordance with GOT procedures which are acceptable to the Bank. Because engineering and design of the successive villages and asso- ciated roads in Baturaja would proceed in stages, with construction of the first villages starting while village and road design for the interior of the project area is only just commencing, civil works contracts would generally be let on a village by village basis as soon as the specifications for each vil- lage and its associated.roads are completed. As the cost per village ($1.0 million) is small, international contractors are not expected to show any interest. There is potentially adequate competition and foreign firms can participate. Following current practices which have ensured reasonable res- ponses from local contractors, each village would be offered for tender either as one village or as three parcels - roads ($0.40 million), settler housing ($0.03 million), and the village center ($0.57 million). However, DGT considers that some road constructrion may have to be carried out on force account if contractors' response or performance endanger timely completion of urgently needed access roads for village construction in time for settler arrival. Accordingly, DGT has requested that procurement and disbursement under the project allow for construction roads on force account. Assurances were obtained that road construction on force account would not exceed 30% of the total cost of road construction. 5.08 As most local contractors are undercapitalized, GOI would continue its present practice whereby tender documents provide for advances to contrac- tors of up to 20% of the contract value for purchase of equipment and building materials. Prior Bank approval of bid documents and awards are required for contracts over the equivalent of $100,000. I/ Project costs in Part D are quoted in current prices excluding physical contingencies. - 24 - 5.09 Rubber Development ($10.7 million). Block planting of 7,000 ha of rubber and its maintenance for up to six years would be carried out on the basis of a negotiated contract between DGT and PNP X, 1/ since it involves the execution of a specialized, integrated service which cannot be procured through a competitive bidding process. With its estate operations in Lampung and South Sumatera provinces, PNP X is well placed to carry out such a contract in a cost-effective manner. Monitoring and quality controls establ- ished for PNP X's rubber plantings financed under IDA Credit 319-IND have provided unit cost information on which contract negotiations will be based. Supplies required for the execution of the contract would be procured in accordance with current GOI procedures which are satisfactory to the Bank. Fertilizers and chemicals ($1.0 million) as well as vehicles and equipment ($1.5 million) would be procured by PNP X on the basis of international com- petitive bidding in accordance with the Bank Group's guidelines on procure- ment. Procurement on the basis of competitive bidding advertised locally shall not exceed a total of $100,000 equivalent in any one fiscal year. DGT, in consultation with the Bank, is negotiating a final draft of the rubber planting and maintenance contract with PNP X. The draft contract has been reviewed with the Bank during negotiations; its signing would be a condition of loan effectiveness. 5.10 Vehicles and Equipment ($3.7 million) would be procured through international competitive bidding (ICB) in accordance with Bank Group guide- lines. A preference limited to 15% of the cif price of the imported goods or the customs duty, whichever is lower, would be extended to the local manufac- turers in the evaluation of bids. However, procurement under contracts of less than $50,000 would be locally through prudent shopping involving the solicitation of at least three quotations. The total procured in this manner would be limited to the equivalent of $300,000. An assurance has been ob- tained during negotiations that vehicles imported under the proposed project would be exempt from existing import restrictions. 5.11 Livestock ($1.9 million). Cattle would be procured locally mainly in Java and Madura. General purchasing guidelines developed by DGT for use by local purchasing agents have been reviewed during negotiations, and final- ization of these guidelines, as part of the Memorandum of Agreement between DGT and DGLS, is a condition of effectiveness. Depending upon local supply conditions, DGT may find it necessary to import cattle in order to meet project requirements. In this case procurement would take place on the basis of at least three price quotations from suppliers of livestock in countries free from foot and mouth disease. 5.12 Consultants and Technical Services ($6.4 million). Consultants would be engaged in accordance with the Bank's Guidelines on the Uses of Consultants on terms and conditions approved by the Bank. The following table summarizes the consultants' and technical services which would be financed under the project: 1/ A public sector enterprise with rubber and oil palm estate operations located in Lampung and South Sumatera, and supported under Cr. 319-IND - The Fourth Agricultural Estates Project. - 25 - Project implementation: 233 man-months (para. 4.14) Project monitoring: 120 man-months (Annex 12) Program preparation: 300 man-months (paras. 4.18, 4.19 and 4.20) Technical services: US$1.7 million equivalent (paras. 6.27 and 6.28) Internationally recruited consultants have been costed at US$60,000 per man- year (including housing allowances, international travel and local trans- portation) on the basis of past experience in Indonesia. Retroactive Financing 5.13 GOI has requested retroactive financing in the total amount of about US$1.0 million equivalent for surveys, vehicles and equipment and for civil works in connection with the establishment of the first village in Baturaja for which contracts have been awarded on the basis of local competitive bidding. A schedule of project expenditures in support of its retroactive financing request was presented by GO at negotiations. Resident Staff in Indonesia is reviewing the procurement procedures followed by GOI for all items for which retroactive financing has been requested. E. Disbursement 5.14 Disbursements would be made as follows: (a) against civil works 1/ at the rate of 50% of the total cost on the basis of certified monthly contractor's progress pay- ments. Disbursements for force account works would be against a certificate of expenditures, the documentation for which would not be submitted to the Bank for review but would be retained by the borrower and made available for inspection by the Bank's supervision missions; (b) at the rates of 100% against the foreign exchange cost of directly imported vehicles and equipment, 95% of the ex- factory price of equipment manufactured locally and 65% for imported farm equipment procured locally on the basis of contracts awarded after international competitive bidding. Disbursements for the cost of vehicles procured locally on the basis of prudent shopping (para 5.10) would be at the rate of 40%; (c) against agrochemicals at the rate of 100% of the delivered cost; 1/ Excluding schools, health buildings and water supply facilities in Baturaja which are to be reimbursed through disbursements under (g). - 26 - (d) against cattle purchases at the rate of 100% of foreign expenditures in the case of imported cattle on the basis of bills of sale submitted to the Bank, and at the rate of 50% for locally procured cattle on the basis of certi- ficates of expenditures, the documentation for which would not be submitted to the Bank for review but would be retained by the borrower and made available for inspection by the Bank's supervision missions; (e) against rubber development expenditures (other than agro- chemicals or vehicles and equipment procured by PNP X under its contract with DGT) at the rate of 30% against certified quarterly contractor's progress payments; (f) against the cost of consultants' services and surveys at the rate of 100% for both foreign and local consultants to encourage the use of qualified local consultants; (g) at the rate equivalent to US$1,000 per family settled, against a certified statement of completion of village construction, and establishment of village management and social and agricultural service staffs, and on the basis of statements of actual costs incurred for specified items not included in the preceeding disbursement categories (Annex 14). Supporting evidence that such expenditures have been incurred would be retained by DGT, and would be available for inspection during project supervision and to the auditors. Experience has shown that during the first years of project implementation new GOI borrowing agencies find it very difficult to coordinate IBRD dis- bursements with the release of budget funds. The 100% disbursement rate proposed under (c), (d) and (f) above is to eliminate this source of imple- mentation delays for three vital project items. The disbursement arrangement under (g) are proposed to establish a Bank involvement with the settler subsistence grant and with the provision of essential agricultural, health and social services. The estimated schedule of expenditures on the project and the disbursement schedule are presented in Annexes 14 and 15. It is expected that disbursements would be completed within six years from loan effectiveness. F. Quality and Cost Controls 5.15 Three major project components, the civil works, the rubber plant- ing and the livestock procurement, would require quality and cost control on a regular basis. For the civil works and livestock, this function would be carried out by the PMU assisted by Consultants. Under the conditions of Credit - 27 - 319-IND, PNP X's rubber plantings are subject to quality inspection by an in- dependent consulting organization representing the DG Estates. Similar in- spection arrangements will be made through the periodic inspection and satis- factory certification of each block of rubber by consultants employed by the PMU. Inspection and certification that thee established rubber meets pre- determined criteria would be a condition for closing payments at the end of the maintenance period. The PMU would retain the services of two interna- tionally recruited rubber inspectors for a total of 20 man-months over a five- year period. Assurances were obtained from GOI that these quality and cost controls would be established and enforced. G. Accounting and Auditing 5.16 DGT, as well as each contracting Government agency or State owned enterprise would be required to keep separate accounts for the project. The project accounting unit would be responsible for an annual consolidation of the DGT and other implementing agency accounts for presentation to the Bank. These accounts, both separately and consolidated, would be subject to an annual audit by independent auditors satisfactory to the Bank. The separate and consolidated audited accounts would be submitted to the Bank within six months of the close of each fiscal year. 5.17 To develop adequate cost data for future project planning the PMU, in consultation with the Bank, will introduce a cost accounting system which is being developed by DGT with UNDP assistance. Details of the accounting arrangements are outlined in Annex 11. H. Cost Recovery 5.18 While there would be no direct cost recovery from the project bene- ficiaries, GOI would receive revenues from project beneficiaries from IPEDA land taxes, and the Rubber Export Tax. At full development in years 1985- 1995 these taxes would amount to $240 per annum and $60 per annum per family in Baturaja and Way Abung respectively. Over the life of the block planted rubber, the present value (discounted at 12%) of these taxes would be $500 and $200 respectively, which is equivalent to 12% and 20% respectively of the total GOI on-farm investment per family. - 28 - VI. ORGANIZATION AND MANAGEMENT A. Legal Framework 6.01 Two Presidential Decrees prescribe the framework within which the Indonesia transmigration program operates (Annex 11). Presidential Decree 29 of 1974 created three major coordinating committees referred to as Expansion, Guidance and Implementation Committees at the national, provincial and district levels respectively. These committees comprise representatives of all major GOI agencies which participate in the imple- mentation of the program (Chart 9346). 6.02 While responsibility for the execution of GOI's transmigration program rests with the Ministry of Manpower, Transmigration and Cooperatives and its Director General for Transmigration, GOI relies to a very large degree on the provincial and district governments for detailed program implementation. 6.03 The Director General for Transmigration, whose Head Office is in Jakarta, is represented in each Province by a Provincial Director for Trans- migration, who is functionally responsible to the Director General but administratively to the Provincial Governor. 6.04 At the district level, DGT is represented by a district represen- tative, who is functionally responsible to DGT but who is required to coordi- nate all local transmigration activities with the district administration through the local Implementation Committee chaired by the District Chief (Bupati). Ongoing settlement administration is the responsibility of district level DGT staff. Under existing law DGT is required to administer settlement schemes for up to five years before transfer of administration to normal, local government. B. The Directorate General of Transmigration 6.05 Presidential Decree 44 of 1974 created the administrative and secretariat functions of DGT, and four operational directorates as follows: (a) Planning and Programming; (b) Project Preparation and Implementation; (c) Settler Recruitment and Placement; and (d) Development and Guidance. The detailed duties of these directorates are outlined in Annex 11, and the organizational structure is presented in Chart 9423. - 29 - Current Technical Assistance 6.06 To strengthen DGT at the national headquarter's level, both admin- istratively and technically, a UNDP project, with FAO as executing agency, is providing technical assistance for program development. Ten expatriate specialists had been assigned to work within the four operating directorates and the secretariat, and funds for an additional 100 man months of unspecified expert assistance and fellowships for overseas training of DGT staff had been allocated. Due to recent overall cutbacks in the UNDP program, this assist- ance has been reduced to 7 specialists and 50 man months of as yet unspecified assistance: all fellowship funds have been deleted. GOI may decide in the course of implementation to utilize technical assistance funds provided by the project to strengthen this reduced program. C. The Project Management Unit 6.07 Because a number of multilateral and bilateral agencies are begin- ning to support specific projects within DGTs program, the Director General has decided to create a number of project management units (PMU). These units will have the responsibility for coordinating the inputs for the bilateral or multilateral projects under their management from DGTs opera- tional directorates and other responsible GO agencies, at the national, and provincial levels. At the district level, the site manager for the project, who is responsible for day-to-day implementation activities, would be responsible directly to the PMU. DGTs district representative 1/ would act on behalf of the project as the local coordinator with the district admi- nistration (through the Implementation Committee - para 6.04) (Chart 15548). 6.08 For the proposed project, the PMU would be headed by a project director, responsible directly to the Director General. At headquarters, the project director would be assisted by an agriculturalist, civil engineer, land settlement specialist and general administrator. Two site managers would be appointed for Baturaja and Way Abung respectively. Each of these managers would have four assistants, performing the corresponding tasks of the four assistants at headquarters. A small self-contained DGT Engineering Section consisting of Provincial Bina Marga staff on fixed-term secondment to DGT's site management units would be established in the project area. Present DGT salary levels make it difficult to field an adequate calibre of professional staff for site management. To overcome this problem GOI agreed during nego- tiations to apply the compensation scales established for the North Sumatera Smallholder Development Project (Cr. 358-IND) to the staff of the PMU. DGT has finalized the formal establishment of the PMU and has provided the Bank at negotiations with copies of the documents which (a) formalized the appointment of the Project Director and (b) recorded the formal establishment and structure of the PMU. Progress in the staffing of the PMU was reviewed during negotia- tions and the appointment of the core PMU staff would be a condition of loan effectiveness. I/ Responsible to the Provincial Director for Transmigration. - 30 - 6.09 DGT would make arrangements satisfactory to the Bank to retain a qualified consulting firm to field and supervise a team of experts who would assist the PMU in the detailed planning and implementation of the project. This consultants' team would consist of: (a) 1 Land Development Expert/Team Leader for up to three years; (b) 2 Land Development Experts for up to three years (including at least one expert specialized in food crop development); (c) 1 Civil Engineer for up to 18 months with experience in rural works and quantity surveying; (d) 1 Livestock Adviser for up to 2 years to assist in cattle procurement and distribution; (e) 1 Hydro-Geologist for a total of 12 man-months over the course of 2 years to assist in planning and implementation of the village water supply; and (f) approximately 15 man-months of short term expert assistance in fields to be identified in the course of project imple- mentation. A number of qualified consulting firms, acceptable to the Bank, have been invited by DGT to submit staffing proposals for the above positions in res- ponse to Terms of Reference which were prepared in consultation with the Bank. Appointment of the consulting firm would be a condition of loan effectiveness. 6.10 The PMU would have responsibility for preparing the annual budgets for the project, and for expenditures from those budgets (para 5.05, 5.06). The primary task of coordinating would be achieved through this control of budgetary resources. The PMU would draw up the TORs for consultants to be hired through this project. Acting on behalf of the Director General for Transmigration, the project director would provide for coordination between the PMU and the operational directorates of DGT, as well as between DGT and the GOI agencies responsible for various aspects of planning and implementa- tion of this project. To allow a review of the budget procedures as they apply to the project in fiscal year 1976/77 (April 1, 1976 - March 31, 1977) DGT brought to negotiations the 1976/77 project budget (DIP) 1/ and a state- ment of the procedures for budgeting of Bank loan funds under this project. As part of the Government's regular progress reports to the Bank this inform- ation would be provided annually not later than April 30 of each year. 6.11 Village management personnel would be responsible to the PMU (Chart 15548). The PMU would be directly responsible for coordinating all activities with the District Representatives of DGT. In Way Abung, village management 1/ Daftar Isian Proyek - project budget document. - 31 - structures exist and the Lampung Provincial Directorate of DGT has had a site management team operating in the area for a number of years. DGT has chosen to use this management team as the site team of the PMU. 6.12 Financial Management: A project accounting unit would be formed in the PMU (Chart 15548) with accounting site teams in both project areas. Details of staffing are shown in Annex 11. Because of the cost accounting requirements of this project, an internationally recruited Accounting Advisor would be appointed under the project for a period of up to two years, to develop the accounting systems for the PMU in cooperation with the Head of the Finance Section in the Secretariat, to be compatible with GOI accounting requirements as well as the revised system being implemented by the FAO/UNDP Financial Planner. 6.13 The appointment of the head of the accountant unit at headquarters would be a condition of loan effectiveness. Assurances have been obtained that the Accounting Adviser would be appointed within six months after loan signing. 6.14 To familiarize DGT with the Bank's Procurement Guidelines, and to activate loan disbursement with a minimum delay, the Public Works Department (Bina Marga) has seconded a member of their staff, well acquainted with the Bank's requirements, for a period of up to 6 months, to train members of DGT staff and assist in establishing the necessary internal procedures. D. Project Execution 6.15 In project execution it is DGT policy to enlist, to the maximum extent possible, the support of other competent, specialized GOI agencies or contractors in the execution of specific tasks. The components of the project, the corresponding executing agency or contractor and their management relation- ship with DGT and the PMU are described below. Implementation of New Settlement and Settlement Upgrading 6.16 Infrastructure: would be implemented by the PMU under contracct with allowance for force account construction of roads by Bina Marga. 6.17 Rubber Development: The management of land clearing, rubber plant- ing and maintenance and supply and application of fertilizer for six years after planting would be undertaken by PNP X through a contract with DGT. Under its contract PNPX would also operate a tapper training scheme. Assur- ances have been obtained from GOI that BUUDs/ KUDs would be established by the sixth year in the settlement areas so as to take over the fertilizer and inputs supply, and rubber development and marketing functions. Government has also undertaken to carry out a study of long-term credit requirements for smallholder tree-crop development with a view to formulating an implementation program which would be reviewed with the Bank in July 1977. - 32 - 6.18 Cattle Supply: In the implementation of its cattle supply scheme DGT would obtain the assistance of the Directorate General of Livestock Ser- vices (DGLS) in the Department of Agriculture under a Memorandum of Agreement setting out the detailed arrangements for the cooperation of the two Govern- ment agencies. 6.19 Agricultural Support Facilities: Seed Farm, Nurseries and demon- stration areas would be developed by the PMU under a Memorandum of Agreement with the Department of Agriculture (DOA). The Agency for Research and Dev- elopment (ARD) in DOA would conduct cropping trials under a Memorandum of Agreement with DGT in Baturaja and in other agreed locations. 6.20 During negotiations agreement was reached on revisions required to the draft Memoranda of Agreement between DGT and DOA/DGFD, DGT and DOA/ARD, DGT and DOA/DGLS as well as DGT and Bina Marga. Finalization, in agreement with the Bank, and signing of these Memoranda of Agreement would be a con- dition of loan effectiveness. 6.21 Land Title: The issue of Hak Pakai (right of exploitation) certi- ficates to the settlers has devolved upon the Provincial Director for Trans- migration. Assurances were obtained that each settler would receive certifi- cates for his house lot within three months, and for his food crop area within one year of settlement. Hak Milik (full ownership title) rights for house lot and food crop area would be issued to the settlers at the end of the fifth year of settlement to enable the settler to have collateral for term credit which he may need for on-farm improvements on his own account. Full owner- ship title for the block-planted rubber area would be conferred in the course of the sixth year after settlement. The issue of Hak Milik requires a de- tailed plot survey which is the responsibility of the Provincial and District Offices of Agraria. Prior to the issue of Hak Milik GOI would review settler performance and take appropriate action in the case of settlers who are found to be negligent in the husbandry of their land grant. DGT, in consultation with Agraria, has prepared an implementation program for conveyance of land titles to the transmigrants; this program was reviewed with the Bank during negotiations. Project Studies 6.22 Monitoring and Evaluation Study - Settlement: The DGT monitoring and evaluation study would be contracted to the Center for Rural Sociology Research (CRSR) at the Agricultural University at Bogor. The results of the surveys and studies would be conveyed both to DGT and the Bank. In parallel with these socio-economic surveys, the PMU would implement a direct monitoring system of settlement progress (Annex 12, Attachment 3). 6.23 Monitoring and Evaluation Study - Health: The monitoring and evalua- tion of the health services component of this project would be carried out by the Institute of Health Research and Development in the Ministry of Health, in coordination with DGT and CRSR. - 33 - 6.24 GOI and the Bank have agreed on the TORs of these studies at negotia- tions. Assurances were obtained that project monitoring and surveys would commence within six months of loan signing and would be conducted in both Baturaja and Way Abung for at least five years. 6.25 Other Project Studies (para 4.17) will be carried out by qualified consultants including Indonesia's national universities under contract to the PMU. Program Planning and Preparation 6.26 A program of technical surveys would provide direct operational input to the Directorate of Planning and Programming of DGT. In developing the annual work plan for the various survey agencies of GOI, this Directorate would present its requirements to the Director General of DGT. As the PMU would have control over the project's budget, it would be the Director General's responsibility to assign project funds for the survey programs of the Directorate of Planning and Programming. 6.27 Technical Surveys: Aerial photography would be contracted through BAKOSURTANAL 1/; the services from this agency would include administration of the flying contracts, photo-interpretation by broad land use classifica- tions and topographic mapping (Annex 4). 6.28 Similarly for soil surveys, the Soils Research Institute (LPT) would be the primary contractor to DGT. Where LPT is restricted by capacity and staffing constraints, it would be responsible for any subcontracting. 6.29 Settlement Area Planning: The project would provide funds for 155 man-months of technical assistance to be utilized in both agricultural and physical planning of future areas. It would be the responsibility of the DGT Directorate of Planning and Programming to prepare in consultation with the PMU terms of reference for the short-term consultant required for this activ- ity. The planning consultants would be responsible to the Directorate of Planning and Programming. E. Agricultural Supporting Services 6.30 Agricultural Extension: These services are the responsibility of DGT during the period of their administration of a project area (para 6.04). Currently in Way Abung agriculturalists on DGT's staff do not act as exten- sion agents, but as implementation agents for DGT's programs in the settle- ment area. Assurances have been sought that DGT, acting in close cooperation with DGFD in DOA, would within six months of the loan signing, appoint an agriculturalist to each village manager's staff in both Way Abung and Baturaja 1/ This agency is supported by the National Resource Survey and Mapping Project (Ln - 1197) recently approved by the Bank. - 34 - to act as extension agent. To ensure, in the transition of administration to the local authorities, that the extension services are maintained in the area, Rural Extension Centers would be set up in both areas. These centers would be staffed by the DOA, in accordance with their national plan for expanding agricultural extension services; the establishment of Rural Extension Centers in Baturaja would be assisted by a recent Bank loan. 1/ 6.31 Veterinary Services: The Directorate General of Livestock Services (DGLS) in DOA would supply veterinary services for the cattle procured in Java for supply to project participants (para. 6.18) and for the village bull units. DGLS has provincial and district officers in Southern Sumatera. 6.32 Agricultural Credit: It is DGT's policy that as far as possible BRI village units should be established in the transmigration areas during the first year of settlement to extend the coverage of the national BIMAS program to the food crop production of the settlers. This has not been carried out in Way Abung where only two village units have so far been set up. Assurances have been obtained from GOI that an adequate number of BRI village units would be established in Way Abung within one year of loan signing and in Baturaja within one year of the establishment of each village (para. 4.11). 6.33 Term loans for on-farm development are currently not offered by any banking institutions in Indonesia. GOI has requested Bank financial and technical assistance for BRI with the objective of developing BRI's term lending capability. A project which responds to this request is scheduled for appraisal in September 1976. Further, as smallholder rubber and other tree crop development will play an important role in the further development of the settler farms in the project, assurances have been obtained that GOI would study the term-lending requirements for these crops, and discuss an implementation schedule for such a credit program with the Bank by July 1977 (para 6.17). 1/ The National Food Crops Extension Project which was recently approved by the Board. - 35 - F. Implementation Schedule 6.34 The basic components of the project are scheduled as follows: 1976 1977 1978 1979 1980 Total Baturaja Village centers developed 2 2 3 3 10 # families settled 500 1,000 1,500 1,500 - 4,500 ha rubber developed - 500 1,000 1,500 2,000 4,500 cattle issued - - 500 1,000 1,500 3,000 Way Abung ha rubber developed 500 500 500 500 500 2,500 cattle issued 1,000 1,000 1,000 1,000 1,000 5,000 6.35 Scheduling all the components of this project will require close coordination with a number of implementing agencies and private contractors. The PMU would coordinate planning and site activities for physical infra- structure. Coordination in social and economic infrastructure implementation while also the direct responsibility of the PMU, will depend crucially upon the coordinating functions of the Implementation, Guidance and Expansion Committees (para. 6.01). While most of these services would not be on the critical path, the lack of such inputs would have serious consequences for settler welfare. 6.36 To ready the project for rapid implementation the following steps have already been taken in close consultation with the Bank: - The Minister of Transmigration has appointed the project director, and the core staff of the PMU have been designated by DGT; - A consolidated project budget for FY76-77 has been approved; - DGT has entered into negotiations with PNP X regarding rubber development; a draft contract has been reviewed with the Bank. In turn, PNP X has pre-financed the establishment of nurseries which are ready to supply the planting material for the first year planting program; - The field survey and layout of Village I in Baturaja has been completed, reviewed by Resident Staff, and construction has commenced; - Bina Marga has prepared detailed designs for the major access roads in Way Abung and Baturaja; - 36 - - DGT has procured start-up equipment; - DGT, in cooperation with DOA, has started field trials for leguminous crops in the Baturaja area during the 1975/76 wet season; - Final drafts of the Memoranda of Agreement between DGT and Bina Marga, DOA/DGFD, DOA/ARD and DOA/DGLS respectively are in hand; and - A Draft Ministerial Decree establishing the Project Management Unit has been reviewed by the Bank. - 37 - VII. PRODUCTION, MARKETING AND FARM INCOMES A. Introduction 7.01 As the new settlement and the area upgrading are both large test schemes, the projected on-farm production patterns, other than rubber, can be expected to be modified either through the trial-and-error processes of the settlers, or in response to extension advise to be developed through the project on the basis of adaptive research and close monitoring of settler behavior. The farm models, yields, production data and incomes presented in this section are therefore only indicative of the type of development expected were no modifications to take place. As regards food crop develop- ment all yield estimates, the cropping patters and input requirements are, at this stage, largely a matter of judgment, as there is no large-scale direct experience of these farming systems and the proposed technology packages. B. Farm Models 7.02 Baturaja: In addition to the 1 ha of block-planted rubber, dev- eloped under the project in the second and third years of settlement, it is expected that the farmer will eventually plant an additional rubber or other tree crops utilizing term credit (para, 6.33). His cash flow would allow him to plant rubber, at the earliest, in 0.5 ha blocks in the sixth, seventh, eleventh and twelfth years. The farm model (Table 5.2) indicates this de- velopment pattern. 7.03 Way Abung: Participating farmers would develop 0.5 ha of rubber under the project, and as in Baturaja, if the farmer wishes to plant addi- tional land to rubber, this could be done utilizing credit. However, ac- cording to present farm plans the remaining land will be needed for food crop production under a rotational system. As noted in para. 3.11, GOI may consider the allocation of additional land to the Way Abung settlers pending the outcome of a detailed land capability and cadastral survey to be carried out under the project. However, at this stage, the projections of farm income presented for Way Abung (para. 7.16 and Annex 16) assume only a better utilization of the existing 2 ha holdings. C. Yield Projections 7.04 Food Crops: In Baturaja the garden area (0.2 ha) would be con- tinously and intensively cropped using inorganic fertilizers, compost and animal manures: 50% of the area would be in cassava and 50% in rice or beans at any one time. On this small area yields have been projected to increase from an initial 8 tons/ha of cassava and 1.2 tons/ha of padi to - 38 - 12 tons/ha of cassava and 2.0 tons/ha of padi within five years. These yield improvements are presently being obtained on small farms in the Catholic settlement area adjacent to the project. On the farm area set aside for the much less intensive cropping with fallow rotation (0.5 ha per year out of 1.5 ha), yields have been projected to increase by about 5% per year, reaching a sustainable maximum in about 13 years. 7.05 In Way Abung yields are very low, already reflecting the exhaustion of the natural soil fertility. Unsupervised fertilizer applications (supplied through BIMAS) so far have achieved little yield improvements. However, it is expected that the rotational cropping/leguminous fallow system to be introduced under the project would improve yields on the newly opened land. Padi yields would increase from 1.4 tons/ha to 2.0 tons/ha, groundnuts from 0.7 to 1.2 tons/ha, and cassava from 12.0 to 15 tons/ha; this compares with present yields of 0.7 tons/ha for rice, 0.5 tons/ha for groundnuts and 6.0 tons/ha for cassava. These yield improvements would be attained using mode- rate applications of inorganic fertilizers (100 kg/ha urea and 50 kg/ha triple super-phosphate) plus manure/compost from the draft animal. While higher yields have been obtained in a small trial area adjacent to Way Abung and on similar soils, this was in a closely supervised program. Transfer of this technology to a wider program would be tested in this project through a CRIA program of crop rotation trials. 7.06 The indicative farm models (Annex 5) show that both project areas would essentially only supply the food crop subsistence needs, unless the research program financed under the project develops a feasible technology for sustained annual cropping of these soils. A small marketable surplus in cassava and groundnuts would be generated. 7.07 Rubber: Each settler is expected to bring his block-planted rubber into tapping in the sixth year after planting. It is projected that on average a peak yield of 1.2 tons/ha of dry rubber content will be at- tained by the twelfth year. This yield level is projected to be about 33% below the yields attained for estate managed rubber on PNP X estates. These lower yields for project rubber assume that the smallholder will on average not attain the standards of upkeep and tapping which are attainable under central estate management. For farmer-planted rubber (para. 6.33) the yield is also projected to peak at 1.2 tons/ha in the twelfth year. Again, this estimate reflects the more uncertain standards of rubber upkeep, especially during the period of immaturity, which by contrast to the block-planted rubber, will be dependent on settler skill and initiative as well as the quality of agricultural support services which have yet to be organized. - 39 - D. Marketing and Storage 7.08 Baturaja: Local market places, rice and fertilizer storage facili- ties would be constructed under the project. DGT village management would include staff to manage these facilities. 7.09 Way Abung: This area is already served reasonably well by the exist- ing marketing system. However, poor road conditions and the attendant high transport cost have resulted in rather unfavorable terms of trade for the settler population. The road improvements to be financed under this project will help improve this situation. Adequate rice and fertilizer storage facili- ties have already been built in the area. E. Prices 7.10 Rubber: The Bank's price projection for rubber has been extended to 1995. The conversion to farmgate price has assumed that international freight rates and local processing costs would remain constant. Export taxes have been maintained at the current level of 5% of the international price (Annex 16). 7.11 Rice: Rice is presently bought and sold by Bulog at a subsidized price below the world market price. It is GOI's intention to slowly decrease the level of the subsidy so as to eliminate it by 1985. The international price for 5% unbroken rice is projected to fall from the 1975 level of $395/ ton (Rp 164/kg per ton) to $324/ton (Rp 134/kg) in 1985. This latter price is equivalent to a farmgate price of Rp 85/kg for padi, which is also the present Bulog subsidized price. 7.12 Cassava, Groundnuts and Garden Crops: The current farmgate prices in the area have been assumed to remain constant over the life of the project. The cassava price of Rp 8/kg for wet root is based on the current price of US$125/ton cif Germany for cassava pellets. Agents for the German livestock- feed processors are actively encouraging cassava production in the area. 7.13 Fertilizer: For urea and TSP, applied to food crops, the subsidized BIMAS price of Rp 80/kg has been assumed to remain constant throughout the project life. It has been assumed that the projected decline in fertilizer prices (in constant terms) will eliminate the present subsidy. For fertilizers required for rubber, the projected declining constant prices have been con- verted into farmgate prices (Annex 16), and applied in the farm models. How- ever, for evaluation of the contract price for rubber establishment (para. 5.09) the fertilizer price was maintained at the 1976 level, and the price decline accounted for in the price contingency (para. 5.02). - 40 - F. Farm Incomes 7.15 Baturaja: Based on the farm model described above, and in Annex 16, the following table summarizes the settler income obtained from food crops, rubber and off-farm employment. ---------------Year----------------- 2 10 15 20 25 ----------(Constant 1976 $)----------- Net value of: food production 152 464 386 523 461 rubber from 1 ha - 397 628 628 340 Total on-farm income 152 861 1,014 801 off-farm income 340 - - - - Net income 492 861 1,014 1,151 801 Value of 2nd and 3rd ha rubber - - 426 910 1,255 Total Income 492 861 1,440 2,061 2,056 /a after IPEDA taxes. The relatively rapid increase in net income from $492 to $860 over nine years, and the more gradual increase to $1,014 by year 15, and the leveling off at $1,150 reflects the income potential of the GOI grant aid limited to 1 ha of block-planted rubber. After 20 years of tree life rubber yields decline, giving an income of $801 by year 25: trees should be replanted at this time thereby lowering the farm income significantly between then and the 35th year. The 2nd and 3rd ha of rubber, planted by the farmer under long-term credit or self-financed, would give the farmer an additional income, which would assist in bridging the replanting period. The cattle component would produce one saleable animal every two years valued at $120. 7.16 For year 1, it is GOI policy to issue food aid to the settlers to meet their minimum nutrition requirements (para. 4.11). In subsequent years off-farm employment, i.e., wages given to settlers for work on block-planted rubber, would supplement food production. 7.17 Way Abung: The project will improve incomes of the selected 5,000 farm units from $406 to $970 p.a. at full development. Given the type of soils, the at best limited irrigation opportunities and the pre- sent state of food crop technology,.further income growth is severely limited by the 2 ha farm size. - 41 - VIII. BENEFITS AND JUSTIFICATIONS A. Development Objectives 8.01 The land resources of the Outer Islands of the Indonesia archipelago are underutilized. These regions are underpopulated relative to the resource potential, and organized land development by transmigrants is to make a major contribution to their development. 8.02 Transmigration benefits Java in as much as the concentrated removal of population from critical regions would reduce land pressure, and under- employment in the areas of settler origin. However, for a transmigration program of the presently feasible size to have an impact on rural development in Java, recruitment of settlers would have to be concentrated in areas with high man/land ratios. Rural development in Java will increasingly be depend- ent upon programs of non-agricultural employment creation; but an enlarged program of transmigration is viewed by the Government as an important part of its overall strategy to overcome rural poverty on the Inner Islands. B. Project Objectives 8.03 The primary objective of this project is to test new approaches to upland settlement and to explore ways and means to upgrade ongoing settle- ment schemes. Thus, in its general approach the project has been formulated with an overriding concern for replicability. The planning and implementa- tion methodology adopted for the test settlement areas would be institution- alized in DGT, with a view to strengthening its implementation capacity. Re- search into the problems of sustained annual cropping on upland soils would contribute to the technical and economic feasibility of the future settlement program. C. Project Evaluation New Settlement - Baturaja 8.04 GOI investment costs per family have been computed as follows: 7 4 2 Program Costs: Constant 1976 $ Recruitment and Transport 300 Local Site Management 70 Village and Road Infrastructure 1,310 Sub-Total 1,680 Farm Development Cost: Settler House 500 Rubber Development (1 ha) 1,865 Cow 290 Subsistence Package 340 Sub-Total 2,990 TOTAL 4,670 On the basis of present knowledge this US$5,000 per family settlement package which is to be tested in Baturaja constitutes the least-cost approach relative to GOI's program objectives. However, subject to the lessons to be learned through closely monitored project execution, cost reductions in future repli- cation of such upland settlements may turn out to be possible, especially if sustained food cropping on these marginal uplands is proven feasible. 8.05 Per smallholding, 1.5 permanent jobs would be created under this project. This would increase to 2.5 through further, loan-financed, on-farm development. On the basis of cost per individual job the initial employment creation through transmigration compares as follows with other forms of employment creation: 1/ Average Small-Scale Industry 5,800 Average Medium and Large-Scale Industry 15,500 Land Settlement/Transmigration 3,400 Transmigration is the lower cost approach to employment creation even if the cost per job is taken to include infrastructure development which might be legitimately charged to regional development. 8.06 The economic rate of return is dependent on assumptions regarding the shadow wage rate and the scarcity price of foreign exchange. Farm labor was shadow priced at the minimum wage rate (Rp 210/day). 2/ Foreign exchange was priced 25% above the official exchange rate. Charging all infrastructure 1/ Source: Indonesia Basic Economic Report, 1975, Industrial Sector Annex. 2/ Based on the legislated minimum daily rate for casual labor. At full employment. With 1.5 labor unit per family, annual family income at this rate, would provide 50% of the minimum subsistance requirements. - 43 - cost against the settlement project. The resulting rate of return lies be- tween 11% and 12%. This return is moderately sensitive to changes in infra- structure cost, and the level of rubber yields and prices. A 25% increase in infrastructure costs coupled with a 20% reduction in net income from rubber would reduce the rate of return to 9% (Annex 17). 8.07 The non-quantifiable benefits include improved health and nutritional status of the settlers, and the multiplier effects on the regional economy of local capital formation and increased levels of consumption expenditure. It has not been possible to estimate the Government expenditures which would have to be made to maintain and improve standards of rural welfare in the area of settler origin in the absence of resettlement and which represent avoided costs. Likewise it has not been possible to quantify the benefits which accrue in the area of origin due to the alleviation of population pressure on scarce resources including land. Studies to be executed under this project would allow a closer examination of these transmigration benefits in the evaluation of future schemes and programs. Settlement Rehabilitation - Way Abung 8.08 Road rehabilitation in Way Abung would serve to reduce the cost of transportation of market goods for the entire project area. In the case of cassava alone - the primary "export" from the area the price received by the farmer is expected to increase by 15%. However cassava is a product for which transportation is a significant proportion of the cost; this level of benefit could not be extrapolated to other products. Lack of data prevents a separate economic evaluation of the road component. However, the proposed rubber development in the project area demands roads of the quality being introduced by the project, and the economic evaluation of the rubber invest- ment includes the benefits to be derived from normal market accessibility for the output. 8.09 Investment cost in rubber, cattle and road in Way Abung, on a per family basis is as follows: Constant 1976 $ Rubber development 930 Cow 290 1,220 Roads 300 1,520 8.10 Approximately one additional job per farm family would be created by the proposed improvements of the already existing smallholdings. - 44 - 8.11 The economic return to the proposed settlement upgrading computed using the same shadow price assumptions as in Baturaja is about 19%. A 25% increase in infrastructure costs coupled with a 20% reduction in food crop yields would reduce the rate of return to 14% (Annex 17). The high rate of return compared to the economic return to new settlement reflects the level of sunk investment in farm establishment and physical infrastructure. D. Conclusions 8.12 The project would benefit the economy of Indonesia directly in terms of employment and income creation, increased food production and rubber exports, and benefits to the areas of settler origin in Java. It would also add to the infrastructure base for regional development of Southern Sumatera. 8.13 The institution building aspects of the project and the closely monitored testing of settlement designs and agricultural production systems would have long run benefits in ensuring a sounder base for future trans- migration programs. Monitoring and evaluation of the test projects should have the direct benefit of identifying aspects in the design where future cost reductions could be obtained or cost effectiveness increased. 8.14 The benefits of the project would accrue to transmigrants whose present and expected future incomes in the area of origin would clearly be below the relative, if not absolute line of poverty. The distributional impact of the project is therefore clearly favorable. 8.15 In proposing this project, GOI and Bank staff recognize that several technical, organizational and budgetary approaches to be employed in this project are of necessity innovative and, therefore, untested. In particular, the farm plans to be implemented in the new settlement at Baturaja hold the risk that the yields attained in annual rainfed cropping may turn out to be, on average, lower than projected due to the as yet unknown interaction between the proposed farming system, the environment and the adaptability of the settlers to these factors. Similarly, the rubber yields might turn out to be lower than projected if the smallholders do not follow the prescribed fertil- izer regime and yield to the temptation of overtapping in order to supplement their near-term incomes. Our protracted analysis of alternative formulations of upland settlement projects in Indonesia has led us to conclude that there are clearly numerous ways to balance considerations of settler welfare, economic feasibility, replicability and the above mentioned risks. Careful consideration has been given to alternative formulations of this project which, through a greater initial Government investment for the establishment of a larger tree-crop area, would provide a greater margin of safety againt shortfalls in settler income and the economic rate of return. However, high level discussions in the Government have confirmed an overriding concern with Indonesia's overall resource constraints and with the future replicability of this test scheme on the scale which Government considers desirable for its transmigration program. The attendant risks of the proposed test scheme have - 45 - been carefully analyzed and discussed with Government during appraisal and it has been concluded that timely provision of extension and other agricultural support services can significantly reduce these risks. Most importantly, however, the Government's decision to proceed with a test scheme which, at this stage, poses, of necessity, risks to the participating settlers is matched by a commitment [para. 9.02 (c)] to take, if it should be required, timely ameliorative action. On the Bank's side, the decision to participate in the financing of these test schemes will in turn be matched by a commitment to provide for intensive supervision of this project. This will probably require a total of 40 man-weeks of staff time in the first year. 8.16 Government recognizes that the following conditions will be crucial for the success of the project: - a mode of operation of the PMU which enlists the fullest cooperation of the regular line departments of DGT and their Government agencies; - an active role of the major transmigration coordinating committees at the national, provincial and district levels in planning and monitoring of the project; - the fullest commitment of the participating Government agencies to the role outlined in their respective Memoranda of Agreement with DGT; - the continued use of consolidated budget documents; - earliest possible implementation of the project monitoring arrangements; - earliest establishment or strengthening of the extension services and BIMAS program organization in the project areas; - earliest possible formulation and implementation of a term lending program for smallholder tree-crop development; and - earliest establishment of the health services with particular emphasis on the malaria control program. With the assurances obtained from GOI as set out in Chapter IX, the proposed arrangements for project implementation are suitable to reach these objectives. - 46 - IX. AGREEMENTS REACHED AND RECOMMENDATIONS 9.01 Agreement was reached with GOI on the following: (a) an operational definition of "minimum subsistence requirements" to be used in project monitoring and to be applied in the administration of food aid and other labor intensive programs in the project area (para. 4.11); (b) final draft rubber planting and maintenance contract between DGT and PNP X (para. 5.09); (c) draft Memoranda of Agreement between: (i) DGT and DOA/DGFD (paras. 6.20 and 6.30) (ii) DGT and DOA/ARD (para. 6.19) (iii) DGT and DOA/DGLS (para. 5.11) (iv) DGT and Bina Marga (para. 6.20) (d) implementation program for conveyance of land titles to the transmigrants, prepared by DGT in consultation with Agraria (para. 6.22); (e) draft terms of reference and implementation program of the project monitoring system as proposed in Annex 12 (paras. 6.22 to 6.24). 9.02 The following assurances were obtained during negotiations: (a) that a study of credit requirements necessary to support tree crop development, would be conducted and the implement- ation program reviewed with the Bank by July 1, 1977 (para 6.17); (b) that the arrangements necessary to extend the BIMAS program coverage to the settlers in Baturaja and to strengthen the operations of the BIMAS program in Way Abung will be made within one year after loan signing (para. 4.11); (c) that up to year six after settlement when the rubber comes into tapping, whenever food crop production and off-farm employment (in infrastructure construction and rubber planting and maintenance) are insufficient to meet the minimum family subsistence requirements GOI would introduce input grants and other suitable programs in the Baturaja project area to supplement family incomes to this minimum level (para 4.11); (d) that modifications in the consolidated budget system which has been adopted for the project for fiscal year 1976-77 will only be introduced in consultation with the Bank (para. 5.06); - 47 - (e) that road construction on force account would not exceed 30% of the total cost of road construction under the project (para. 5.07); (f) that vehicles imported under the proposed project would be exempt from existing import restrictions (para. 5.10); (g) that quality and cost controls would be established and enforced (para. 5.15); (h) that the Accounting Adviser would be appointed within six months after loan signing (para. 6.13); (i) that BUUDs/KUDs would be established by the sixth year in the settlement areas so as to take over the fertilizer and inputs supply, and rubber development and marketing functions (para 6.17); (j) that each settler would receive Hak Pakai (right of exploita- tion) certificate for his house lot within three months and to his food crop area within one year of settlement (para. 6.21); (k) that project monitoring and surveys would commence within six months of loan signing and would be conducted in both Baturaja and Way Abung for at least five years (para. 6.24); (1) that an adequate number of BRI village units would be established in Way Abung within one year of loan signing and in Baturaja within one year of the establishment of each village (para. 6.32); (m) that in cooperation with DOA an agriculturalist would be appointed to each village manager's staff in both Baturaja and Way Abung within six months after loan signing to act as extension agent (para. 6.30). (n) that health facilities would be introduced into both project areas at levels of service and on a timetable satisfactory to the Bank (para 4.06). 9.03 The following would be conditions of loan effectiveness: (a) appointment of the project director, the two site managers and the head of the PMU accounting unit (paras. 6.08 and 6.13); (b) appointment of a consulting firm, acceptable to the Bank, to assist the PMU in the detailed planning and implementation of the project (para. 6.09); - 48 - (c) signing of the rubber planting and maintenance contract between DGT and PNP X (para. 5.09); and (d) signing of Memoranda of Agreement between DGT and DOA/DGFD, DOA/ARD, DOA/DGLS and Bina Marga respectively (para. 9.01 [c]). 9.04 The proposed project would be suitable for a Bank loan of US$30 million, for a term of 25-year term, including a grace period of 6 years. The Borrower would be the Republic of Indonesia. ANNEX 1 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Population , Migration and Rural Employment 1/ A. An Overview 1. The problem of development in rural Java can be best described in terms of its overall abundance of labor force, scarcity of land and low levels of productivity. During 1961-71 the population of Indonesia grew at an average annual rate of 2.1 percent. Over the next 20 years survival rates are expected to continue to improve, while fertility-rates will decline. Assuming a slow decline in fertility and an improvement in survival rates, Indonesia's population is projected to increase by nearly 2.5 percent per annum between 1971-86 and at the rate of 2.4 percent from 1986 to 1991.2/ This will lead to an increase in the labor force of 2.4 percent per annum, averaging roughly one million a year. 2. The majority of Indonesia's population (about 64 percent) lives on Java which has less than 7 percent of total land area; the resulting density of over 600 per square km is one of the highest among the agricultural coun- tries in the world. Nearly 83 percent of the Java population lives in rural areas. 3/ Java's population is expected to increase at the rate of 2.3 percent between 1971-86 and by 2.25 percent per annum between 1986-91. 4/ This will 1/ This annex is based on a preliminary report on Agro-Industrial Centers in Java, prepared by a reconnaisance mission that visited Indonesia in November and December of 1975, consisting of Messrs. 0. Nijhawan and B. Abadian (Bank) and G. Temple (Consultant). 2/ The rate of decline in fertility does not make much difference to the likely size of population in the first 10 to 20 years, though the dif- ference cumulates over time. 3/ All municipalities, regency capitals and other towns with a population of not less than 30,000 inhabitants, are considered urban areas. 4/ Fertility rates of 5.1 percent on Java in 1971 were already lower than on the outer islands. Between 1971-91 fertility rates decline from 5.1 to 4.2 and life expectancy of males increases from 46.4 to 55.1 and those of females from 46.4 to 57.5. For details see 'Population Trends and Prospects in Indonesia' - a draft annex to Bank Report 780-IND, Chapter 1. ANNEX 1 Page 2 result in an increase in labor force of 2.3 percent per annum between 1971-76, 2.4 percent from 1976-81 and 2.2 percent between 1981-91.1/ Even an accelerated decline in fertility will not affect the expected large increases in the labor force over the next 15 to 20 years. 3. Indonesia, particularly Java, is thus faced with the problem of creating adequate employment to absorb this rapid expansion of labor force as well as for those currently unemployed. 2/ With the increasing supply of excess labor force, people take whatever work they can find even for miserable wages. 3/ 4. Since 1968 considerable progress has been made in raising crop pro- duction (over 4 percent per annum) through introduction of HYV's, development of irrigation and considerable use of fertilizers. Because of population growth in an economy where 70 percent of the labor force still find its livelihood by working tiny plots 4/ or by working as laborers per worker productivity is extremely low. 5. In 1972 5/ output per worker in agriculture in the provinces of Java varied between Rp 39,000 and Rp 62,000 thousand. There were, however, 1/ Participation rates in ages 20-59 are assumed to remain unchanged. For ages 10-14, rates would decline at a linear rate to zero by 2001; for ages 15-19 and 65+ rates would decline at a constant-rate of 1 percent per annum; for ages 60-64 rates decline at a constant rate of 0.5 percent p.a. 2/ According to the C Series of the 1971 census, incidence of unemployment in Java was 2.3 percent, while E Series indicated an unemployment rate of 8.3 percent. No rural/urban split in unemployment is reported. However, these differences in unemployment rates seem to be caused by the procedures adopted in the compilation of C and E series. 3/ In Klaten Regency, in 1972 farm laborers made Rp 30-100 per day, other laborers Rp 50-125 per day and a peddler Rp 50-150 per day. In Lembah Juana area wages were as low as Rp 10-25 (without food) for half a day's work in planting and weeding activities, and Rp 25 (plus one meal) for half-a-day's hoeing. See 'Changes in Rice Farming in some Areas of Asia,' Satyawacana Christian University, Salatiga, 1972, p. 60 and Agro-Socio-Economic Survey in Jratunseluna Area, Satyawacana Christian University, Salatiga, May 1973, p. vi(a). 4/ 80% of all farms on Java are of less than I ha; 55% are of less than 0.5 ha. 5/ Latest available Regional income data. ANNEX 1 Page 3 considerable disparities in incomes, depending upon the size of farm, the quality of land and the distribution of ownership. 1/ 6. Though two-thirds of the rural familes operate "farms" of more than 0.1 hectare, the number of landless and near landless has been roughly esti- mated at one-third of the rural labor force. 2/ In addition great majority of the farmers cannot support themselves and their families by incomes earned only from their own farms. Various surveys show that almost two-thirds of families in some villages must rely on employment off their farms to meet basic needs; farming for the rural population of Java has become a part-time activity. In East Java only 59 percent of the household heads included in an Agro-Economic Survey rely on farming for their major source of income. The majority of those who depend on farm labor as their first source of income do not have a second source of income. 3/ 7. Families with very small plots and the landless survive by work- ing as laborers or doing odd jobs: tapping a few coconut trees for small amounts of sugar; fattening one or two borrowed calves by obtaining forage from remote and scattered areas; extracting small amounts of salt in bamboo piles. These activities mean considerable utilization of a great part of the existing labor force at extremely low levels of productivity: 7 percent of the rural labor force is employed in industry; 10 percent, in trade; 10 percent, is in services; and 3 percent is in other activities. Low productivity in the service sector (excluding government), petty trade and small handicrafts is also indicative of under utilization of existing labor force. 4/ Most low productivity activities have become overcrowded due to 1/ There are very few large farms of more than 5 hectare (less than 0.5 percent of the total number of farms), yet they represent nearly 6 percent of the total area. In some villages nearly 20 percent of Sawah land is used to provide income for village officials (Tanah Bengkok). See Penny and Singarimbun, Population and Poverty in Rural Java: Some Economic Arithematic from Sriharjo and Changes in Rice Farming in Sehebot areas of Asia, Satyawacana University, 1972. 2/ Agricultural Land Tenure Pattern in Villages of Java, unpublished Bappenas Document, May 1973, p. 9. 3/ Collier and Sajogyo "Village Employment, Sources of Income, Use of High Yielding Varieties and Farm Laborers in Major Rice Producing Regions of Indonesia" Agro-Economic Research Paper No. 11, June 1972. 4/ There are no data which cross-classify families in different consump- tion/income groups according to occupation, size of holding, extent of dependence on wages, self-employment and seasonality of work and number of days or hours worked. It is therefore, difficult to measure under- employment or establish any relationship between incomes and nature of productive activity. ANNEX 1 Page 4 to lack of more renumerative opportunities elsewhere. Incomes of those engaged in these marginal activities can increase only with increases in productivity and total output in commodity producing sectors. 8. The problem is thus not one of open unemployment, but one of under- employment and low productivity.1/ The problem of creating jobs for new entrants to the labor force is thus further complicated by the need to improve the levels productivity for the majority of those currently employed. B. Labor Force Projections, 1971-1991 9.. Given the general rate of population growth, the future size of Java's rural population and work force will depend upon the levels and trends assumed for out-migration from rural areas to the outer-islands and to urban areas of Java. Three alternative population projections are made for rural Java, representing a rapidly, moderately and slowly growing rate of migration to the outer-islands, while urbanization rates 2/ on Java remain the same in all projections. Migration Estimates 10. Migration rates depend, to a large extent, upon Government efforts towards successful sponsored transmigration and creation of productive employ- ment opportunities in the outer-islands in order to encourage spontaneous migrants. According to the 1971 census, net migration from Java to the outer- islands during 1961-71 was about 400,000. During 1966-71, however, gross migration to Java grew at a rate of approximately 5.6 percent, while gross migration from Java including an annual component of 19,000 transmigrants de- clined by nearly 3.2 percent per annum. Annual gross flows during this period have been estimated at 64,000 migrants to Java and 84,000 from Java. Based on past experience, net in-migration to Java in 1975 is estimated at nearly 6,000. The historical decline in net out-migration from Java has probably been due to the concentration of resource-based capital intensive investment in the outer 1/ There are no data which cross-classify families in different consump- tion/ income groups according to occupation, size of holding, extent of dependence on wages, self-employment and seasonality of work and number of days or hours worked. It is therefore, difficult to measure under- employment or establish any relationship between incomes and nature of productive activity. 2/ Urbanization on Java is assumed to grow at the rates experienced during 1961-71 - 4.2 percent per annum, 2.2 percent was due to natural increase and 2 percent due to in-migration. In 1971, 18 percent of the population of Java lived in urban areas. The percentage is expected to increase to around by 1991. The age and sex structure of rural-urban population over projected period retains pecularities existing in the base year, 1971. ANNEX 1 Page 5 islands, insufficient efforts in transmigration and the labor intensive character of investment on Java. 11. With goals of stabiity and rehabilitation having been reasonably achieved during Peletia I, the Government is now emphasizing provision of employment opportunities in the outer-islands. Out-migration can there- fore be expected to grow as government programs are accelerated with inten- sification of efforts in building infrastructive on the outer-islands. Furthermore, creation of employment opportunities on the outer-island can also be expected to slow-down the flow of migrants to Java. 12. Taking into consideration historical trends, it is assumed that the growth rate of in-migration to Java remains constant until 1975, that the growth rate falls to 2.8 percent in 1976 and is zero in 1977; in-migra- tion is then assumed to decline at 0.5 percent in 1978, 1.0 percent in 1986 and 1.5 percent per annum until 1991. Out migration from Java is assumed to decline at 2.8 percent per annum to 1975, 1.6 percent per annum for 1976 and then to increase at 1.0 percent per annum until 1986 and 1.5 percent for the years up to 1991. 13. Gross population movements calculated on the above assumption (while include a constant annual rate of 19,000 for transmigration) have been adjusted to reflect officially reported levels of transmigration: 19,000 for 1971; 27,250 for 1972; 57,000 for 1973; 63,000 for 1974; 19,000 for 1975; and 55,000 for 1976. Furthermore, three alternative levels of growth in transmigration are assumed for the period 1976-91: a low estimate of 5 percent per annum; a moderate rate of 10 percent; and a high rate of 20 percent per annum until 1981, 15 percent until 1986, and 10 percent per annum until 1991. The results are shown below in Table I. TABLE I: Out-Migration Projections from Java (Persons in Thousands) Based on Accelerated Efforts Spontaneous/Based on Period Low Medium High Historical Trends 1971-75 185.3 185.3 185.3 298.9 (actual) 1976 55.0 55.0 55.0 53.5 (estimated) 1977-81 319.2 369.3 491.1 276.6 1982-86 407.3 594.9 1061.1 295.6 1987-91 519.3 958.0 1848.6 321.6 ANNEX 1 Page 6 Projection Results 14. In 1971 the total population of Java was estimated at 78 million of which 14.2 million were located in urban areas and 63.8 million in the rural areas. Under the various assumptions mentioned in the previous section, the rural population of Java in 1991 results in 89.4 million (slow growth in transmigration), 88.8 million (medium growth in transmigration) and 87.4 million (high growth in transmigration) respectively. This means that even under more optimistic assumptions of transmigration, new enterants to labor force in rural Java over the next 15 years (1976-91) will number nearly 7 million, only 12 percent less than that projected under an assumption of slow growth in transmigration. TABLE II: Demograhic Characteristics of Java: 1971-1991 Under Varying Levels of Transmigration (million persons) Changes in Rural Total Population Rural Population Rural Labor Force Labor Force Low Medium High Low Medium High Low Medium High Low Medium High 1971 78.1 78.1 78.1 63.9 63.9 63.9 24.8 24.8 24.8 1976 87.5 87.5 87.5 70.0 70.0 70.0 27.2 27.2 27.2 2.37 2.37 2.37 1981 97.8 97.8 97.7 76.4 76.3 76.2 29.7 29.7 29.7 2.48 2.48 2.43 1986 109.3 109.0 108.6 82.9 82.7 82.2 32.2 32.2 32.0 2.55 2.47 2.32 1991 121.7.121.0 119.6 89.4 88.8 87.4 34.8 34.5 34.0 2.53 2.36 2.01 15. The assumed high level of transmigration implies an out-migration of 484,000 during 1971-75, (as compared with the Repelita II target of 1.25 million transmigrants) 767,000 for 1977-81, 1.36 million for 1982-86 and 2.17 million for 1987-91. This is equivalent to creating over two million new work places for Javan migrants during 1976-91 on the outer-islands. This will be in addition to jobs required for the natural labor force growth of nearly 2.4 percent per annum on the outer-islands. 16. These projections also imply a tremendous increase in urbanization on Java--from 18 percent of the total population in 1971 to nearly 27 percent in 1991. Given the 1961-71 trend in urbanization, the urban population of Java will increase from 16.8 million of the total in 1975 to over 32.2 million in 1991 (assuming all migrants to Java are settled in urban areas); the urban population on Java will almost double between 1975-91. This means that urban employment must grow by over 4 percent per annum. 17. The rapid increase in Java's urban population will have significant implications for the socio-economic development of urban areas, particularly in the light of existing inadequacies in social infrastructure and the capital ANNEX 1 Page 7 intensive nature of past-development. So far, only a small proportion of the migrants from the rural areas have been able to find jobs in the modern sector, while majority must work in the traditional and informal sectors where productivity and wages are extremely low. The continued increased flow of population to the urban areas is likely to increase the share of labor force in low productivity sectors. Also, as Jakarta is now practi- cally closed to any significant flow of migration from rural areas, the development of 'secondary towns' on Java will assume considerable importance. This will require a determined effort at decentralization of industry, with generous incentives favoring labor-intensive development. TABLE III: Java: Urbanization 1971-91 (persons in thousands) In Migration Total Growth Natural Growth Total From Java From Outer-Island* 1971-76 3,247 1,600 1,647 1,271 376 1976-81 3,989 1,800 2,189 1,787 402 1981-86 4,901 2,100 2,801 2,418 383 1986-91 5,866 2,300 3,566 3,207 359 *Assuming all migrants to Java go to urban areas. 18. The implications of high growth in transmigration and urbanization in terms of opening up of new areas on the outer-islands and urban job creation are quite complex for planning and implementing urban and outer-island develop- ments; yet out-migration can at best solve only a fraction of the problem of population pressures in Java. 19. If the organizational, administrative, and financial resources become available for urban and outer-island development described above, seven million new jobs will need to be created in rural Java during 1976-91, in addition to concerted efforts at raising productivity of those who do not currently pro- duce enough to support themselves and their families at an acceptable minimum standard of living. The magnitude of the effort is formidable particularly since 70 percent of the existing labor force is already involved in agriculture on an island where no more new land can be exploited. On the other hand, a ANNEX 1 Page 8 failure to tackle the problem of rural Java would mean a still greater push towards the cities where the socio-economic costs of creating an equivalent number of jobs is far greater. 1/ TABLE IV: Distribution of Increase in Rural Population of Java (million persons) Net Increase in Total Increase To Java To Outer-Island Rural Population Without Migration Urban Low Medium High Low Medium High 1971-76 7.9 1.3 .5 .5 .5 6.1 6.1 6.1 1976-81 8.8 1.8 .6 .7 .8 6.4 6.3 6.2 1981-86 9.7 2.4 .7 .9 1.4 6.5 6.4 6.0 1986-91 10.6 3.2 .8 1.3 2.2 6.5 6.1 5.2 C. Employment Opportunities in Agriculture 20. Generally speaking the crucial question for most of the rural popu- lation is not one of jobs in the sense of wage employment, but it is the avail- ability of land and supporting services to farm it well and obtain reasonable incomes, but the supply of agricultural land on Java is scarce. Technology can improve the productivity of land and in some instances bring about small increases in supply by reclamation and increased cropping intensity, such instances on Java are also rather limited. The scarcity of land limits the labor absorptive capacity of agriculture. The spread of industrialization and urbanization might encroach further on agricultural land. 21. Out of a total surface area of 13.4 million hectare on Java, 8.8 million ha, or 66 percent, is already under crops (1 million ha under permanent crops and 7.8 million ha of surface area under cultivated crops, excluding home gardens and fruits.) Another nearly 3 million ha, or 22 percent, are 1/ Excluding cost of land, a minimum standard house has been estimated by Chipta-Karya to cost Rp 20-25 thousand per sq meter compared to Rp 10-15 thousand for rural areas. An average minimum standard house in urban areas will have 45 sq meter covered area, while rural demonstration house is built with 75 sq meters as covered area. Land development per unit housing in Jakarta costs twice that of the cost of the house. Labor content in urban housing is 20% of the cost, while for rural housing it is 33% (including cost of gotong royang). Also, rural housing uses far less imported material. ANNEX 1 Page 9 classified as forest reserves. I/ These estimates of surface area under crops may be somewhat on the high side as they leave only 1.5 million ha or 12 per- cent of the total surface area for house compounds, garden plots, fruit pro- duction and non-agricultural lands such as grassland, inland waters, roads and settlements. This means that in 1973 there were 8.5 persons per culti- vated hectare in rural areas of Java; by 1991 the number of persons per ha may increase to 11.5. Some land (about 240,000 ha) can be brought under new irrigation. this area will come from land not now cropped, upland crops and village irrigation, etc. Some increase in intensification can be accomplished through rehabilitation of irrigation systems (about 850,000 ha) 2/ which may increase the average cropping intensity from 1.33 to 1.4. Although adequate information is not available, there may be some possibility of increasing irrigation through the use of groundwater. Some intensification could also occur through the use of animal power 3/ and simple mechanization. There is also considerable scope for increasing production of secondary (rainfed) crops (Polowijo), fruits and vegetables and some livestock (particularly poultry and rabbits, etc.) by spreading BIMAS program for such activities and through intensive use of house plots. 22. Though these measures may permit an increase in agricultural produc- tion on Java at the rate of 4-5 percent per annum, the spread of mechanization may have adverse consequences on the already precarious employment situation in Javanese agriculture. According to the 1971 census nearly 70 percent of the economically active labor force (about 17 million) in rural Java was reported to be engaged in agriculture 4/. Labor intensive agriculture on Java and the impact of new technology in agriculture has induced many estimates of labor in rice production. 5/ The following estimates of labor coefficients in 1/ These figures were compiled by the Agricultural Consultant on the Basic Economic Mission in 1974 after surveying data from various sources; such as CBS, National Fertilizer Study, Department of Agriculture, the Agri- culture Sector Survey. 2/ IBRD Irrigation Program Survey, April 1975. 3/ Due to lack of fodder, animal power is inadequate. On the other hand, there is already evidence of use of some hand tractors. 4/ Thirty-six percent work on own account, 6 percent are employers, 31 percent employees and 27 percent unpaid family workers. In Jogjakarta and Central Java, the ratio of unpaid family workers is much higher than other provinces, partly reflecting the size distribution of land, and partly perhaps lack of off farm employment opportunities. 5/ Sayogyo and Collier's "Employment Opportunities created by HYV's in several areas of Java" 1972. Birowe's "Aspek Kesempatam Kerja dalam Pembargunam Pertanian di Pedisaan," in Prisma, 1973. Peter Van der Goot's "Employment in Food Production on Java." ANNEX 1 Page 10 principal crops were developed by a Bank Mission in 1974 from the data avail- able at that time. Labor Use in Principal Crops (man days per ha, 5 hours per day) Java & Bali Outer Islands Rice 325* 150 Maize 121 90 Cassava 200 180 Rubber 120 120 Oil Palm 75 75 Coconuts 50 50 *This compares with Sayogyo's estimtes of 293 for IR, 282 for National improved varieties and 232 for local varieties, and Birowe's estimates of 283 days/ha for L.V's, 352 for IR's and 290 days for P.B. Varieties. 23. Based on these rough labor coefficients, employment in agriculture on Java in 1973 may be estimated at about 17.2 million, consisting of 150 days per year working for 5 hours a day. If labor coefficients were to re- main the same for 1985 (the time when irrigation rehabilitation and new irrigation projects are expected to be completed), employment in agriculture would increase by about 2 million man years or 11 percent. 24. Labor use in rice production on Java is more than twice that in the outer islands. I/ Notwithstanding the additional labor needed on Java for irrigation, technological improvements, (the use of animal or mechanical power for land preparation and adoptation of sickles for harvesting) are likely to reduce future labor utilization on Java. The use of the 'Tebasan' 2/ system in harvesting and increasing commercialization of agriculture are furthermore likely to reduce employment in agriculture on Java. 25. Agriculture output on Java has shown impressive increases during 1968-75 due mainly to introductions of new technology (improved irrigation and introdcution of high yielding varieties, fertilizers and pesticides). But the impact of technology on employment and income distribution appear not to have been consistent with the objectives of Repelita II. Though these income and employment effects have not yet been quantified, new technology appears to have been accompanied by increased commercialization of peasant-agriculture on Java. The result is the gradual breaking down of the 'involuted' Javanese system of production which gave village resi- dents their right of participation in agricultural production and hence 1/ In the Philippines on an average 60-65 man days are used per ha of rice production. 2/ Selling rice crop before the harvest to a middle man. This system limits the number who can join the harvest and lowers total harvesting wage. But is profitable to the rice farmer. ANNEX 1 Page 11 income. The following are some of the indications which seem to be affect- ing incomes and employment adversely: (1) Increase in the incidence of 'Tebasan System' and the use of sickle are reducing labor requirements. 1/ Har- vesting as a supplementary income for small farmers and the landless is thus shrinking. Also, Ngepak-Nagedok (labor plants and weeds, but does not get paid - instead is allowed to harvest rice and gets a bigger share) is being used to limit the number of harvesters. (2) As mechanical threshers are being adopted by large farmers and rice huller operators, landless laborers are loosing one more source of income. (3) The Bimas intensification program has benefited those who have adequate sized farms. Perhaps ony 25 percent of the villagers have sufficient fields to benefit adequately from HYV's. 2/ (4) Some land tractors are already in use, such as in the Subang Kabupaten. For each 5 horse power tiller adopted and used at three-fourth capacity, 128 and 688 man days are lost per year for displacement of Kerban and manual methods respectively. 3/ (5) Between 1969-73 money wages increased substantially, though real wages, in terms of Kg of rice, showed a sub- stantial decline. 4/ (6) In some villages (due to technical problems or very uneconomic size of holdings) some agricultural land is being sold to bigger farmers or to absentee land- lords.5/ 1/ See Widya Utami and John Ihalaw "Some Consequences of Small Farm Size" BIES, Canberra, July 1973. Also Collier, Gunawan and Wiradi and Soentro, "Recent Changes in Rice Harvesting" Bulletin of Indonesian Economic Studies, July 1973. 2/ Sayogyo, Modernization Without Development in Rural Java, p. 23. 3/ Richard A. Morses. "The Potential Impact of Mechanical Land Preparation in Indonesian Small Holder Rice Production Sector, 1975, p. 101. 4/ See Mkali's "Upah Buruh Tani Pada Tanaman Padi Dikatkan Degan Kenaikar Produksi dan Harga Padi Selama Lima Tahur Di Dua Pulah Disa Sampel Intensifikasi Padi Sawah Di Jawa", 1974, p. 30. 5/ Sinaga and Collier, "Social and Regional Implications of Agricultural Development Policy," Nov., 1975. ANNEX 1 Page 12 26. Another area in which technical change has spread widely is rice processing. Motor powered rice hullers have replaced hand-pounding of rice, particularly affecting female labor. By 1973 roughly 60 percent of rice was milled in large and small rice mills, compared to 20 percent in 1968 1/. A shift in paddy processing of this magnitude for the 1973 gabah crop of 13.6 m tons on Java eliminated work equivalent to nearly 225 million people days. Rice mills would have required about 13.5 million people-days to process the same quantity of gabah at nearly one-eighth of the total wage bill. This means a considerable gain to farmers and owners of paddy from the reduced cost of processing and the increased recovery rate of rice (from 50 percent of gabah to 62 percent). The introduction of new technology in agriculture thus seems to have benefited those who already own land. 27. No studies have been made on other indirect effects of increased rice production on Java. Certainly some increase in employment has occured in the distribution and production of inputs, transportation, and manufacture of tools and equipment. With capital intensive production and heavy dependence on imports (rice hullers are imported), total indirect employment effect cannot have been significant. 28. The above indications of change in social relationships are only the logical consequence of introduction of new technology. New technology requires new relationships. In the short-run these trends can perhaps be softened, but in the long-run the social changes imposed by the use of new technology cannot be checked without significant loss of production. The issue is not one of reversing trends in agricultural technology for the sake of employment, but one of expanding production in other sectors so that alternative employment opportunities are created. 29. Given the present levels of productivity and land distribution those engaged in agriculture can not earn enough to support themselves and their families at acceptable standards of living. Only the small proportion of families who have enough land can depend solely on agriculture; those with small plots or lands of inferior quality must supplement their incomes from other sources. The landless can depend only on wage employment. 2/ As future increases in agricultural production on Java are expected to come mainly from higher yields, the employment effect is unlikely to be significant even though incomes of those who own land will increase. 30. The capacity of agriculture on Java to absorb more labor has reached its limit: the incomes of many of those now engaged in agriculture can only be raised by creating alternative employment opportunities. I/ Collier, Colturm, Sinarhadi and Shaw, "Choice of Techniques in Rice Milling: A Comment," March 1974, Bulletin of Indonesian Economic Studies, March 1974. 2/ Employment opportunities in agriculture for the landless are however dec- lining, particularly in harvesting due to increasing use of sickles and the Tabasen system. ANNEX 1 Page 13 D. Employment Through Rural Public Works 31. In addition to essentially production oriented agricultural programs, Kabupaten Programs (INPRES) are by far the most significant effort made by the GOI to create employment opportunities. I/ Allocations to Kabupaten are on a flat per capita basis, increasing from Rp 50 in 1970-71 to Rp 400 in 1975-76. In 1973-74 an incentive scheme was introduced; those Kabupaten which had reached their target on the collection of land taxes (IPEDA) became eligible for an additional allocation. 32. The main objective of these programs is to capitalize on the present abundance of labor in order to create productive infrastructure and wage employment. Employment provided, however, is neither full-time nor permanent. 33. INPES projects through 1972-73 rehabilitated infrastructure (market roads, irrigation systems, bridges, flood control embarkments, drainage systems, produce markets, fish landing stations bus stations as well as reforestation). A shift towards new projects started in 1973-74 when the program was expanded to include Primary School construction, Health Centers, and rural water supplies. Separate allocations were made for these programs which for the whole of Indonesia amounted to Rp 16 billion and Rp 4.5 billion respectively in 1974-75. For FY 1976-77 two more INPRES aids are to be added: a Market INPRES for Rp 5 billion and Reforestation INPRES for Rp 16 billion. 2/ 34. Though it is difficult to precisely measure the permanent income and employment effects of these projects, various studies 3/ indicate that 1/ INPRES - was started in 1970-71 under special instructions of the Pre- sident. There are also other minor programs, such as Provincial Sub- sidy (one third of the total subsidy is for maintenance of rural roads and irrigation); Padat Karya started as food for work program in 1963. Desa (village) subsidy though important in stimulating rural develop- ment is based on mutual help (gotong-royong) where no wages are paid. 2/ Budget Speech of the President, Jan. 7, 1976. Allocations are for the entire country. 3/ Official estimates of direct employment created by INPRES program during the first four years, 1970-74, are placed at nearly 149 million man- days, or about 500,000 jobs (300 working days a year). About 270,000 of these may be in rural Java. These employment estimates are essentially rough as they are based on planned expenditure figures. Actual employment creation may have been somewhat less or more. More important however, is the effectiveness of the program in reaching low income groups and in creating indirect employment and production. A Gadah Mada University study shows the backward linkage effect to be about one-third (34.5 percent) of the total labor used by the projects; the forward linkage amounted to less than 3 percent of the total labor used. Another study Padjadjaran University) shows that most of the beneficiaries of direct employment generation were from among the poorer groups. ANNEX 1 Page 14 INPRES projects have had substantial employment and output creation effects. INPRES programs are primarily oriented towards raising agricultural production. While they provide incomes to those employed in the programs, they permanently help those who own land. 35. While this gradually expanding program has made an impact in rural Java, it can be regarded as only a temporary solution to the rural employment problem. There is a need to intensify and diversify this program in a manner that it puts an equal emphasis on development of non-agricultural sectors. 36. While the INPRES program encourages wage employment, the Desa subsidy program revolves around 'gotong-royong' - traditional voluntary labor arrangements. The amount of subsidy given to each village increased from Rp 100,000 ($241) in 1970-71 to Rp 300,000 in 1975-76. The Central Government provides funds only for the purchase of materials not available in the village. Local materials and labor must be provided by the village itself for small village projects under the program. The rich provide materials the poor have only labor to provide. The assets created contribute little to the incomes of the poor. 37. There are also supplements to village subsidy - the harmony aid - based on the strength of 'gotong-royong' in a particular village or special aid (Keserasian) - a balancing program for selected poor villages. 38. These programs have helped Kabupaten and local governments to create planning and implementation capacity which is an extremely useful asset for future enhanced efforts at development. E. Conclusion 39. The GOI is aware of the severe employment problem in rural areas of Java and recognizes the insufficiency of the current efforts including the limited impact of the Transmigration program. Additional efforts are now underway in the context of regional planning to prepare programs which would generally aim at employment creation utilizing agro-industrial small enterprises. ANNEX 2 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT HISTORY OF TRANSMIGRATION IN INDONESIA A. Introduction 1. In its widest sense transmigration in Indonesia refers to the relo- cation of people, who in an effort to improve their economic situation, migrate from densely populated area with few employment opportunities to less populated areas, offering development prospects. Government has placed particular emphasis on an organized transmigration program since World War II, even though historically there have been both organized and spon- taneous outflows of people from Java to the outer islands since 1905. 2. The transmigration with which this project is concerned, refers only to migration of landless or near landless farm families from Java to the outer islands. The flow of transmigrants is organized by the Ministry of Manpower, Transmigration and Cooperatives. The Ministry, with the help of other GOT ministries and agencies, prepares and implements settlement schemes and recruits labor for private and public employers, with the ex- ception of estate labor, for which the Director-General of Estates in the Ministry of Agriculture is responsible. Universities, churches, and the Ministry of Defense have been involved in settlement schemes also. B. Overall Migration Between Java and the Outer Islands 3. Surveys of interinsular passenger traffic and shipping, official transmigration records and population censuses give indications of inter- insular migration even though comprehensive records are not available. One analysis 1/ of these various data sources, covering the period 1960-1964, estimated the annual flow out of Java at 112,000 migrants and the annual flow into Java at 59,000 (40% of which came to Jakarta, thus showing a net outflow of 53,000 persons. More than half of the gross outflow consisted of spontaneous migrants, the remainder being government financed civilian and ex-services settlers, and contracted estate workers. 4. In the period 1950-1973, almost 120,000 families, or roughly 550,000 persons, were resettled, without taking into consideration the unrecorded number of free transmigrants. It is estimated that in recent 1/ G. McNicoll, Net Migration between Java and the Outer Islands. Bulletin of Indonesia Economic Studies, March 1969. ANNEX 2 Page 2 years there has been a net outflow of population from Java to the outer islands of 35-50,000 people per year, mostly to Lampung and Sulawesi. This net outflow may partly account for the fact that population growth on Java during 1966-1971 has been slower than on the outer island - 1.9% per annum versus 2.4%. C. Transmigration Before World War II 5. Official transmigration dates back to 1905. The Dutch colonial administration attempted to alleviate the population pressure in parts of Java by colonization of the outer islands. For this purpose, they designed and implemented special irrigation projects. From the beginning the program met with enormous difficulties. The settlers suffered a high disease and death rate from malaria and dysentery, and many chose to return to Java. The experiment proved very expensive to Government, and until about 1929, it had to compete with the recruiting agencies of the plantation organizations in the outer islands, who tried to discredit the program for their own purposes. 6. After 25 years on continuous transmigration efforts, the movement finally gained momentum in the 1930's due in part to the years of severe economic depression which stimulated the supply of transmigrants, and in part to the well-organized recruiting campaigns in Java. The number of settlers increased gradually until it reached about 53,000 persons in the peak year of 1940. Farmers received about 3/4 ha of sawah land (irrigated rice) and 1/4 ha for a house plot. Most transmigrants timed their arrival to coincide with the main rice harvest so they could earn money and a fixed share of the produce by helping with the harvest. With their earnings and the help of the receiving families, they could settle on irrigated land. However, this so- called "bawon" system placed excessive reliance on already established settlers, and made it impossible to increase the rate of settlement. Addi- tional shortcomings of the settlement policy were clear. There was an over- emphasis on sawah, i.e. subsistence irrigated agriculture based on rice and the settlers were socially isolated both from the local inhabitants and from their relatives on Java. 7. Of the recipient areas, Lampung Province was the most important for these early transmigration projects, followed by schemes in Sumatera Salatan Province. Transmigration was also organized to special areas in Bengkulu, South and East Kalimantan, South and South-east Sulawesi, Jambi and West Sumatera Provinces; however these were small projects and had received not more than a few thousand Javanese settlers by 1941. D. Transmigration After World War II 8. The spontaneous movement persisted after the war, and even led to optimistic estimates of million-family transmigration programs that would stop Java's population growth or even decrease it. However, conditions in ANNEX 2 Page 3 the settlement areas of Lampung and Sumatera Selatan Provinces had deter- iorated. Maintenance of the irrigation systems had lapsed with severe consequences, and there had been no new irrigation construction. An in- creasingly pressing problem, accelerating in the 1950's was the denudation of the existing forests, soil erosion, and the conversion of large areas into unproducting alang-alang fields. The situation in the old settlement areas became more critical: under-employment, concentration of land into fewer hands, indebtedness, and similar social ills grew to unacceptable dimensions. 9. There were three distinct groups of migrants: (a) officially sponsored migrants -- Government paid their fares and they were settled on a Government settlement scheme. (b) Spontaneous migrants -- They paid their own fares, but were settled on a Government settlement scheme and received some assistance (food, building materials, etc.). (c) Free migrants -- They paid their own fares and settled whenever they found available land, outside of Government schemes. It is unlikely that the social composition of free or spontaneous trans- migrants differed significantly from sponsored settlers. By far the majority of all categories were originally small landowners or landless laborers. 10. Since 1969 the spontaneous element in transmigration has been incorporated in the official GOI program in order to minimize settlement cost and to allow Government to exercise some control over the free move- ment. Prospective settlers who are able and willing to pay their own transport to the new areas and other expenses, can apply to the Trans- migration Recruiting offices for resettlement in Government schemes. In the meantime, free transmigration is still continuing since the waiting time for official migrants is usually very long and because economic prospects for official transmigrants are not much better than for free settlers under the limit of two ha/family existing until and even into 1974. E. Recruitment 11. There is clearly no shortage of prospective settlers for the Government program. Applications far exceed the official vacancies pro- vided. In Central Java transmigration officers estimated this ratio at 10:1. There is an intricate interplay between incentives and dis- incentives. Poverty of individual families, exploitation by landlords, ANNEX 2 Page 4 social conflicts, small size of holdings and the desire to escape in- debtedness are all incentives for the potential transmigrant, together with the desire for economic security and, in particular, ownership of land. 12. Disincentives include the historical family and social ties of the village, and the influence exerted by village heads as landlords or leaders of rural industries who fear loss of power and influence. Lack of education and the narrowness of villages' mental horizons are also important disincentives. When the extremely poor person leaves his village, he is more likely to join the labor force of estate workers or to join the urban unemployed. Since 1950 about half the transmigrants came from Central Java (including the Special Region of Jogjakarta), a quarter from East Java, and the rest from West Java, Madura, Bali, and part of Lombok. These pro- portions reflect conditions in these areas: Central Java is an area of pronounced low income, low labor productivity, and a very high population density. 13. Though there are some general priorities with respect to areas having suffered natural calamities or areas where substantial resource degradation is occurring, recruiting is actually done by national target and quotas. The national target is split into provincial targets, and these into district targets. 14. Recruitment is essentially oriented towards family transmigration. Group settlement, in the sense of transmigration of many families from the same area at the same time, is mentioned in present transmigration policy, but in fact there is no evidence of sustained effort to follow this policy. In the receiving areas also group transmigration might accelerate social and economic development. There is evidence that villages built on cores of homogenous groups are more successful than if they consist of scattered migrants. These groups can also function as a nucleus to generate a sub- stantial flow of follow-on settlers. Group cohesion provides a sense of security that leads to necessary group action and community self-reliance, which is particularly important for adjusting in the early years of settle- ment. F. Selection and Placement 15. Settlers for the Government sponsored transmigration program are selected on the basis of the following criteria: - Indonesian citisenship - Married - Age 20 to 45 years, no family member older than 60 ANNEX 2 Page 5 - Agricultural experience and skill - Maximum family size of five - Non-pregnant wife - Good political record - Good police record - Agreement to follow transmigration regulations - Has never transmigrated before. The transmigration process goes through a number of stages during which the families are accommodated in transit camps. Upon arrival at their destina- tion, they are received in large lodging houses or temporary shelters until their individual houses have been constructed. Presently GOI policy is that permanent housing is completed prior to the arrival of settlers. 16. The costs of recruitment and placement show an average cost per fully financed transmigrant family of US$600 as against US$100 per spon- taneous settler family. A fully financed transmigrant receives: - Free food allowances for eight months, - A house or material for a house, - A two ha. plot of which one ha is field and 1/4 is cleared homeyard, - Agricultural roads and some equipment, - Medicine, seedlings, etc. The spontaneous migrants pay their own travel expenses and apart from some smaller items, only receive two ha. of land from Government to be cleared themselves. 17. The settlers receive use rights (Hak Pakal) to be converted into a title of full ownership (Hak Milik) in due course. Officially, the migrants should receive their Hak Milik titles after five years, but in practice this takes 10 to 15 years. For reasons of social and economic security, and to have collateral for credit transactions with official banks, AGRARIA is attempting to issue Hak Pakai title deeds some months after settlement, but they are many years behind in their work. Ownership rights are not subject to any clauses regarding inheritance, fragmentation, performance, etc. ANNEX 2 Page 6 G. Population and Transmigration in Lampung and Southern Sumatera Provinces 18. The total population in the Provinces of Lampung and Sumatera Selatan is about 6-1/2 million, with slightly more than half in Sumatra Selatan Province. The population growth rate in Lampung shows the remark- able average annual percentage of 5.2% over the 1950-1961 and 1961-1971 periods; this is more than two and a half times higher than the Indonesian 1961-1971 average rate of 2%. The population growth rate in Sumatera Selatan Province was 2.0% during the period 1930-1961 and 2.2% during 1961-71. The urban population (towns with more than 10,000 inhabitants) represents about 18% of Lampung Province, 47% of whom live in the provincial capital of Tanjung Karang/Telukbetung, and about 31% in Sumatera Selatan Province, of which more than half live in the capital city of Palembang. The high growth rates are reflected in the age distribution; in 1971, 48% of the total population in Lampung and 46% in Sumatera Selatan Province were less than 15 years of age. 19. There is a high rate of intra-provincial migration, i.e. heads of families born in other areas in the same province. In Lampung, where the number of internal migrants seems to be increasing, it is believed that part of this movement stems from the migration of Javanese from the over- populated zones in south and central Lampung. Other important regional movements in Lampung are the migration of local people around Menggala towards the two pepper belts around Kasui in the west and Sukadana in the south east. 20. The average immigrant family size at the time of arrival was calculated for 3.3 for Lampung and 2.9 in Sumatera Selatan Province and most were young married couples with the family head about 25-27 years old. These figures probably contain some underestimates and the family size is now believed to be about five. H. The Receiving Community 21. Transmigration does not take place into a vacumm, but functions as part of the development of a locality with an established social fabric. The impact of settlement is substantial on both the indigeneous population and the migrants because: - the local social and economic organization and culture pattern is different from that of the Javanese settlers; - integration in the socio-cultural sense, appears to be a highly complicated process. Migratory situations do not facilitate per se the assimilation of groups within an existing society. In reality, the new settlements try to keep together and to preserve their identity. ANNEX 2 Page 7 - land ownership and land tenure are the most crucial issues, both for transmigration and for the economic development of Sumatran people. I. The Pasirah-Marga System in Southern Sumatera Province 22. Of particular importance in the integration process as well as the process of alternating land for settlement are land ownership issues in receiving communities. Land in Sumatera Selatan Province is controlled by the marga, which is the traditional community grouping of the indigenous Sumatran people in a particular locality, headed by an elected or hereditary chief called the pasirah. The power of the pasirah and the marga stems from two sources: Namely, from customary or "adat" 1/ law, and from government regulations. The pasirah system functions as the lowest autonomous unit of Government; it has the right to govern the households both according to gov- ernment precepts and according to adat law. It has the right to levy certain taxes and has its own budget. 23. Historically, the marga-pasirah system developed during the early 19th century in the Sultanate of Palembang, a maritime kingdom, where the margas functioned as territorial-political units and paid tribute to the Sultan. Under Dutch colonial administration the pasirah was appointed by descent, although in the pre-colonial days he was elected. The pasirah functioned as head of the marga government and the marga council (legis- lative body) as well as head of adat and the adat court. His office col- lected large revenues through adat-prescribed taxes, auction of marga fish ponds and rivers, and auction of the right to collect a 10% rubber market tax. The pasirah earned a large personal income since in addition to a salary, he was entitled to 10% of the adat-prescribed taxes and payments. 24. After independence, government authorities refrained from inter- vention in the local pasirah's elections and strengthened his role as the head of the marga government. However, the marga-adat council was abolished and the pasirah could no longer be the head of the marga council, thus separating executive and legislative power. In addition, the higher admin- istrative levels of government have taken over some of the adat revenues. 25. The main reason for changing the system, relate to the power of the pasirah and in particular his access to revenue sources. However, many pasirahs stil come from traditional family lines and wield considerable influence on marga administrative affairs, as well as adat affairs, in spite of Government's efforts to reduce the feudalistic aspects of the pasirah system. The present nature of the system may have decisive consequences 1/ Adat is a system of traditional legal and religious laws, deeply embedded in Indonesian society. ANNEX 2 Page 8 for the socio-economic development of Sumatera Selatan Province, as well as an important effect on transmigration efforts. J. The Marga System in Lampung 26. The marga system in Lampung Province differs historically and functionally from that in Sumatera Selatan Province. Historically, there was no dominant sultanate in Lampung, and functionally, the marga was not a political unit, but rather an adat organization. The marga consisted of a loose federation of numerous villages (kampungs) which shared similar historical backgrounds and adat. In other words, the marga in Lampung was originally more a genealogical than a territorial unit. The Dutch admin- istration abolish the system in about 1900, but in 1928 attempted to revive it as an administrative territorial unit. The marga system never regained its strength and influence, and after independence government replaced it with a new administrative and territorial unit -- the negeri, a specific autonomous organization for Lampung Province and Bangka and Belitung islands. 27. Of late, the Negeri system is being phased out to make way for the "normal" organization of Kabupaten (district), kecamatan (sub-district) and villages. However, even though the marga has been dissolved as an admin- istrative unit, it continues to function as an adat unit. The kepala kampung (village chief) remains powerful as adat-head. K. Land Rights Under the Marga System 28. On the basis of adat law, land rights are vested in the marga. Members of the marga do not exercise any individual ownership and the pasirah and the marga council dispense rights of use. When a villager wants to move to other fields, he applies to the pasirah and the marga council, who decide his request, taking into account the rights of other claimants. Fields that have not been under cultivation for a certain num- ber of years (except for treecrops) automatically revert to the marga. Sawah fields and perennial treecrops, such as rubber, cloves, pepper and coffee, complicate the land use system. Although land under these crops can be abandoned - which frequently happens - it does not automatically revert to the marga and cannot be freely cleared and cultivated unless one comes to terms with original user and the pasirah. This partly explains the ex- istence of large stretches of "sleeping" rubber, practically or totally untended, and often barely distinguishable from surrounding rubber forest areas awaiting high market prices for exploitation by the owners. This process leads to more or less permanent plots with treecrops. ANNEX 2 Page 9 29. Outsiders are allowed to settle on and to use marga territory after agreement with the marga chief and payment of an agreed fee (uang ulajat). After agreement and payment of the fee, they acquire the right of use (without becoming members of the marga community), but the marga retains the right of disposal with respect to the land. L. Land Rights Under the Basic Agrarian Law 30. Until recently, two separate systems of law regarding land were in force: western law and adat law. In an attempt to abolish this dual law system, the Basic Agrarian Law (BAL) was enacted in 1960. The BAL explicitly recognizes the adat community's right of disposal, but stipulates that the right must be subjected "to conform with the national interest of the State based on national unity". Therefore, once Government plans to alienate land for transmigration schemes, the adat right of disposal would not be allowed to stand in the way. 31. In practice, alienation for transmigration schemes takes place after negotiations are held between the pasirah and his council, on one side, and the local administration and AGRARIA, on the other. Remuneration depends on the condition of the land, the bargaining position of the parties involved, and whether or not local people can be taken into the government settlement areas. Although these negotiations may take considerable time, the attitudes of most marga heads seem to be favorable towards transmigration. After completion of negotiations, compensation is paid to the pasirah, and land is officially transferred to the Government, thereby falling into the state's possession and consequently outside marga jurisdiction. 32. In many cases when implementation of a transmigration scheme is delayed, local people start cultivating officially transferred land because they believe that, according to adat principles, uncultivated lands should revert back to the marga. On the other hand, sometimes the authorities make a start with settlements before negotiations and local cultivators. M. Relations Between Transmigrants and the Local Population 33. The local people in general derive direct and indirect economic benefits from transmigration. Although the willingness to receive new-comers is apparent, the attitude is not free of ambivalence; the locals are wary of settlement intrusions, but on the other hand regard the settlement scheme as an opportunity for increased local public expenditure, the benefits of which can be shared by both indigenous people and new-comers. ANNEX 2 Page 10 34. The relationship of the local population with the transmigrants depends heavily on the land tenure relations, since the marga members con- sider themselves "sons of the soil" and particularly resent the uncontrolled and often devastating invasions of free transmigrants. During the 1950's and 1960's, when settlement in Lampung and Sumatera Selatan Province was particularly disorganized, much resentment arose with the local population. 35. The cultural and social patterns of transmigrants and the in- digenous population differs considerably. There are also distinctions between the different local ethnic groups in Lampung and Sumatera Selatan Provinces, but these are only minor, and the groups seem in social and political harmony with each other. When there are a local people in trans- migration schemes, they tend to be "encircled" by transmigrants, rather than included. Conversely, the Javanese settlers show no need for social or cultural integration with the host communities, and the rate of inter- marriage is reported to be limited. 36. There is a lack of coordination between settlement schemes and with the kabupatens, reflected in the problems of coordinating general services in the transmigration areas. The transfer of settlement schemes to the local authorities in some cases has taken 10 to 15 years, which has seriously hampered the transmigration program. The present government and the pro- vincial governors are doing all they can to overcome these problems and con- tinual cooperation at national and Provincial level should overcome them. Present Practice and Procedures 37. Under the provisions of the Transmigration Act, transmigrants are entitled to obtain land rights in accordance with the prevailing laws. A few years ago, a limited number of transmigrants were given Hak Milik (full owner- ship - equivalent to freehold title) rights to land immediately upon settle- ment. However, the Department of Transmigration and Agrarian found that such settlers alienated the land very soon afterwards, thus defeating the letter and spirit of the transmigration laws in effect at that time. In practice settlers receive no documents of title upon arrival. 38. To ensure that transmigrants would remain for at least a certain minimum period of time, the Ministry of Transmigration decided that land rights would be given to transmigrants in two steps: (a) initially the transmigrants would receive Hak Pakai (right of use) rights and, (b) after proving that the land which they were occupying was developed and productive, they would be given Hak Milik rights. The initial issue of Hak Pakai with a view to later upgrading it to Hak Milik is stipulated in the clarification of Clause 7 of the Basic Stipulations for Transmigration, Statue 3 of 1972. In practice only a very few settlers have receive Hak Pakai certificates. The bulk of the certificates issued have not been formally registered by Agraria under Art. 19 of the Basic Agrarian Law, No. 5 of 1960. The reason given is usually that a fresh plan of each allotment must be pre- pared for registering the Hak Pakai decree. ANNEX 2 Page 11 39. The land rights in Transmigration Areas are obtained according to Clause 11 (2) of the Transmigration Act, i.e. Agraria frees the land from all rights and gives the Ministry of Transmigration the right to manage the land for transmigration purposes. The right of management obtained by the Ministry of Transmigration is in one of two forms: (a) Hak Pengelolaan (right to exploit which is granted to self-governing regions or government bodies), entitles the holder to use the land, or transfer Hak Pakai rights to other parties, or (b) Hak Penguasaan (controlling right) which entitles the holder to arrange and decide upon the purpose of the land in the area covered by this land right. 40. DGT receives Hak Pengelolaan rights for each settlement area, upon its transfer from Marga control. To transfer landrights from DGT to the local Provincial Directors of Transmigration, by a joint decree of the Minister for the Interior and the Minister for Transmigration. This author- ity allows the granting of certificates of Hak Pakai through the form of a decree, and contains the following provisions: (a) An actual survey must be carried out indicating precisely the area covered by the decree; (b) The right of Hak Pakai is granted for a period not exceeding five years and can be upgraded to Hak Milik rights if the holder complies with the conditions stipulated in the decree; and (c) The conditions stipulated in the decree are as follows: (i) land must be used by transmigrant himself; (ii) transmigrant and family must live on land; (iii) land or rights attached thereto cannot be transferred, mortgaged or leased; (iv) Hak Pakai rights transfer to heir at death of holder only if death of holder registered within six months thereof; (v) violation of (i) - (iv) above can result to withdrawal of Hak Pakai; and (vi) if Hak Pakai withdrawn, rights avert to provincial Director of Transmigration. The issue of the Hak Pakai decree is limited in its usefullness to DGT because an actual survey of the area is not usually available. ANNEX 2 Page 12 41. The right of Hak Pakai can be granted only for a period not exceeding five years. The decree is, therefore, not valid on the expiry of 5 years. If, in the meantime, the Hak Milik decree is not issued, the trans- migrant settler has no valid document of title. This is what generally happens because the Hak Milik decree and its registration are delayed be- cause of the requirement for a further survey. In some provinces, e.g., South East Sulawesi, this difficulty has been overcome by the issue of a provisional certificate pending the preparation of the plan (Sertipikat Sementara). Proposed Changes in Practice and Procedures 42. The principal difficulties with the current procedures relating to the issuance of Hak Pakai rights to transmigrants are as follows: (a) The decree requires that a detailed boundary survey be carried out by Agraria. This alone often means that the transmigrant receives no written evidence of his land rights before the first five years of settlement are completed; (b) The decree requires the Hak Pakai to be upgraded to a Hak Milik. There is no intermediate type of land right which can be granted. This means the Hak Milik rights must be registered in accordance with strict Government regulations; and (c) The decree is not signed by the transmigrant. Since the stipulated conditions in the decree are never affirmed in writing by the transmigrant himself, the transmigrant may object thereto, refuse to comply with the conditions and may even attempt to alienate the land. In practice, however, it appears that Hak Pakai decrees are being issued to transmigrant settlers without a formal map and without registration by Agraria. The permit has no legal force beyond being a recognition by the Transmigration authorities that the allottee named in the Hak Pakai decree has been permitted by the authorities to occupy the allotment. This would, in a way, be adequate security for thee transmigrant settler because, during the period of its validity, the Transmigration authorities hold the right of management (Hak Pengelolaan) of the whole Transmigration area. 43. It is proposed that a simplified procedure be followed. After a plan of any specific area has been prepared, rather than having Agraria undertake a detailed survey of each plot, a copy of the plan would be registered in the provincial Agrarian office, the Kabupaten Agraria office and in the office of the Ministry of Transmigration in the Transmigration Area. For each plot indicated in the plan, there would be recorded in the registry, including such data as the name of the transmigrant, date of ANNEX 2 Page 13 arrival, and family members. A detailed survey of the plot would not be required; the preliminary indication of plot area in the plan would be an acceptable basis for the issuance of the Hak Pakai certificate. This how- ever would require a change in the law. 44. The certificate of Hak Pakai right would be given to the trans- migrant by the provincial Director of Transmigration, immediately after the transmigrant arrives on the land. This certificate would refer to the plot number(s) on the plan and would be valid only if signed by the trans- migrant. 45. The registration of the Hak Milik right need not wait for the five years to elapse. Agraria have arranged to survey and register the Hak Milik rights prior to the fifth year in projects in South East Sulawesi. This practice should be extended to other transmigration areas. 46. Consideration should be given to a simplified process for issuing Hak Milik rights. As the volume of transmigration increases, the burden on local Agrarian offices cause long delays under current staffing levels and with the present procedures. ANNEX 3 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Agricultural Basis for the Future Transmigration Program A. Lands Available for Transmigration 1. In the major outer islands of Sumatera, Kalimantan and Sulawesi most reasonably fertile lands suitable for irrigated rice production and rainfed arable crops have already been taken up. The lands which remain for trans- migrants are those which have been bypassed in the development process. Be- cause of the technical constraints which limit their usefulness for sustained economic production, other than for tree crops such as rubber and oil palm many have been used and abandoned because of poor results. 2. Such lands fall into two broad classes: (a) swamps and tidal lands with peats and acid sulphate soils; and (b) uplands and free draining terrace lands with red and yellow podsolic soils of low natural fertility. It is estimated that of some 18 million ha of unused tidal and swamp lands about 2 million ha are acid sulphates of doubtful potential. Much of the estimated 30 million ha of red/yellow podsolic soils presently unused are covered with: (a) open alang alang 1/ vegetation resulting from shifting cultivation and fire, which has destroyed the original forest cover, or (b) secondary forest interspersed with seedling rubber planted on a shifting cultivation basis and abandoned. Primary forest persist only in the most sparsely settled and remote areas. B. Implications for Agricultural Development 3. One of the major tasks to be performed in the transmigration areas is development of cropping systems which could form the basis of sus- tained farm output. On selected sites in the tidal and swamp areas some successful rice cultivation is being achieved through drainage and con- trolled irrigation. Other sites in tidal areas may be more difficult and 1/ A stoloniferous weed grass (Imperata cylindrica) which seeds freely, is fire resistant, and is difficult to eradicate. ANNEX 3 Page 2 costly to develop. Existing transmigration schemes on the better delta soils produce one rainfed rice crop annually, and although initial yields are high even without fertilizers and other inputs, there are likely to be problems in sustaining yields. On red/yellow podsolic soils in the upland areas, there are wide variations in land capability. Sustained production of rice, maize, and legumes such as beans and groundnuts, is difficult with current agricultural techniques. Success with these and other annual crops depends on maintaining or improving the fertility and physical condition of the soil. This can be done on the more favorable sites on a small scale by composting, green manuring, crop rotation and applying fertilizer and animal manures. On the less favorable upland soils, perennials such as rubber and oil palm are ecologically better suited and are presently the only crops capable of being economically produced on a large scale. 4. In addition to these broad generalizations, each transmigration site has its own specific conditions and problems and will require its own agricultural development solution. Land capability (as determined by soil, slope, drainage, etc.), cost of development, market prospects and ease of access differ between sites. Inevitably the farming system on most of the available upland soils must rely on rubber or possibly oil palm as the major cash crop. Reliance on a single crop subjects the farmers to the vagaries of world markets and is clearly not an ideal solution. A farming system which includes both tree crops and annual crops would be preferred to pro- vide cash income and food production. Until more knowledge of sustained annual cropping systems is available, (the importance of expanding research into this cannot be overrated) transmigrant farm development must be based essentially on tree crops with a minimum sustainable subsistence food out- put. 5. The potential role of cattle should be considered in the develop- ment of farming systems for the upland areas. Cattle manure could be used to improve fertility and physical condition of the soil on the small areas needed for family food crops. It would be necessary to cut and carry folder and crop residues to tethered cattle. Cattle would also provide draft power, and the young stock could be sold for cash. It has yet to be demonstrated that ley farming (a successful system in many temperate zones) can succeed on such tropical soils. 6. Present government policy is to provide each transmigrant family 5 ha in upland rainfed areas. This farm size would be adequate to meet incomes parallel to the general growth of Indonesia's economy provided the farm family could cultivate about 1/2 ha of annual food crops together with about 3 ha of mature high yielding rubber. Until multiple cropping systems are developed, 2 ha would be needed for a simple rotational system of annual food crop production (1/2 ha/year) and for supplying cattle feed. On more favorable lands, intercropping immature rubber with food crops is sometimes possible, but most lands available for transmigrants are unsuited for this. ANNEX 3 Page 3 7. Transmigrants are normally young families with two or three children of early school age and in the first few years of settlement a family can offer at most 1-1/2 man/years labor equivalent, increasing to about 2 man/years or slightly higher by the 5th to 8th year after arrival. The average transmigrant family would not be able to establish a 3 ha rubber area and an annual food crop area without additional labor and mechanized cultivation. 8. Since a high yield rubber crop is not easy to establish and trans- migrants seldom have any acquaintance with the crop, they would require super- vision in planting and maintenance during the immature period. Furthermore, ploughing and disc harrowing supplemented by carefully controlled chemical spraying programs would be necessary to get rid of the heavy grasses. Pro- bably the most reliable approach would be to engage experienced contractors, such as Government estate enterprises, to clear and block plant at least part of a 3 ha rubber area, leaving the farmer to complete the rest as his labor availability permits and as he gains experience. 9. Developing and expanding a sound transmigration program in which settlers would be self sufficient in food production would involve a greatly expanded program of trial cropping systems. It involves also a careful assessment of land capability and physical planning for each specific location to take account of variations in soil, slope and drainage. Finally, it demands the active participation of all government agencies serving agri- cultural planning and development. C. The Project's Role in The Agricultural Aspects of the Transmigration Program 10. World Bank support through the project would focus on the keys to future expansion of the transmigration program as a whole. Project actions include support for: (a) Land capability appraisal and land development planning for future transmigration areas (Annex 4); (b) testing and demonstrating farming systems for rainfed uplands and tidal areas (Annex 4); (c) holding ground to service the distribution of cattle to future transmigration areas, and a cattle procure- ment and distribution program for the project areas (Annex 6); (d) establishment of a new settlement area in Baturaja, as a demonstration of the agriculture based development planning options (Annex 5); and (e) rehabilitation of an existing settlement area at Way Abung, using these same techniques (Annex 5). ANNEX 4 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Support For Forward Transmigration Program The Program 1. The Government target is to settle 80,000 sponsored and 170,000 spontaneous transmigrant families on about 1.2 million ha of land during Pelita II (1974-79). However, the program is behind schedule 1/, and it is unlikely that the target will be revised downward to total 86,000 for the plan period. During the next three years it is estimated that 40,000 families will be settled on Government sponsored projects. This will require aerial photography, semi-detailed soil survey and land capability appraisal of some 200,000 ha of land. The success of the program relies heavily on finding better farming systems for the different types of available land (Annex 3). A. Project Formulation Assistance Air Photography 2. Few transmigration sites have been covered by aerial photograph. What little is available mainly in Sumatera Selatan Province was photo- graphed at scales of 1:50,000 upwards before 1970. In 1975, however, about 250,000 ha was flown for transmigration projects on which preparation is to be initiated (Tulang Bawang and Lahat/Tebing Tinggi). When fully prepared these projects are likely to be proposed for Bank financing. 3. The National Coordinating Agency for Surveys and Mapping (BAKOSURTANAL) is responsible for coordinating mapping, survey and aerial photography for GOI agencies. Under the project, contracts would be placed through this agency for some 200,000 ha to be photographed at 1:20,000 scale, with two copies of prints, mosaics and a broad land use interpreta- tion from the mosaics; this would be sufficient to meet the needs of Gov- ernment sponsored schemes over the next three years. 4. Several Indonesian companies have built up their aerial photo- graphy capacity primarily to serve the oil industry. Together with the facilities of the Survey and Mapping Division (JANTOP) of the Department of Defense, there is adequate equipment to cover the aerial survey needs of the tansmigration program. 1/ Actual settlement 1974 - 6,000; 1975 - 8,000. ANNEX 4 Page 2 Soil Survey and Land Capability Appraisal 5. The Soils Research Institute (LPT) of the Department of Agricul- ture, located in Bogor, is responsible for soil surveys and mapping through- out the country. A five-year US$1.5 million FAO/UNDP project, initiated in 1973 is helping LPT to increase its technical capability in land development evaluation and planning by providing 400 man months of technical assistance lor soil survey, soil correlation, land classification, aerial photography Laterpretation, land capability appraisal, map production, agronomy and farm management economics. Due to the cut back in FAO/UNDP funds this team would have been withdrawn from LPT in June 1976. GOI has requested finance under this project for 61 m/m of consulting services and overhead expenses to maintain this technical assistance team in place until the end of the original 5-year period. 6. LPT's FY75 program called for surveying 600,000 ha at 1:50,000 scale, with only about 10% of this for the transmigration program (due to survey needs for sugar and irrigation development). However, they will not meet their target because of the lack of vehicles and survey equipment, the Lnadequacy of the laboratory equipment, and the shortage of technical ex- pertise. The FAO/UNDP assistance program is providing training for addi- tional staff, but it will be two or three years more before the full impact of this program will be realized. The present project would provide equip- ment and facilities to increase the overall capacity of LPT and would finance local or internationally recruited consulting services sufficient to cover 200,000 ha of soil and land use surveys and land capability assessment and mapping to fulfill the needs of the transmigration program. 7. Consultants would undertake physical planning of at least one transmigration site of about 50,000 ha to be prepared under the project. Their services would cover the basic soil and land use surveys and outline physical planning, including preliminary engineering of roads and infra- structure for the first year's implementation of the project. LPT or their consultants would produce land capability maps at a scale of 1:20,000 to allow at least semi-detailed agricultural planning, including the location of major crop areas, farms and settlers housing, village sites and main r,id :!griments. Past transmigration planning has suffered by taking an urban planning approach with agricultural aspects taking second place. A major objective of this project is to introduce a land development approach into physical planning. Project Preparation 9. The Division of Planning, Directorate General of Transmigration, wouid be responsible for project preparation studies and they would contract C1sultants or other government agencies to carry out detailed physical ")IannLng of infrastructure and preliminary engineering of roads based on LPT's maps. ANNEX 4 Page 3 10. The Directorate General of Transmigration has limited capability in project preparation and in assessing the technical, financial, economic and organizational aspects of proposed investments at different trans- migration sLtes. Such work has been done so far by outside consultants on an ad hoc basis. The FAO/IBRD Cooperative Program furnished physical planning consultants to assist in the preparation of this project. 11. An FAO/UNDP project (US$1.2 million) is providing some 400 man/ months of technical assistance and training to the Directorate General of Transmigration, aimed primarily at planning, policy guidance and institution building (Annex 11). This assistance will help in gradually raising the management capacity of -he Directorate, but does not answer an immediate need for project preparation experttse. 12. GO has requested Bank assistance to finance the services of a resident agriculturalist and an economist (48 m/m), and an additional 75 m/m of unspecified consultant technical assistance, all specialized in project preparation. The role of consultants will be to strengthen the Division of Planning, Directorate General of Transmigration, and to assist in: (a) identifying transmigration projects for which full feasibility studies should be performed; (b) preparing terms of reference for contract studies, assisting in the tendering process and in bid evaluation; (c) supervising specific feasibility studies and making inputs wherever necessary; (d) coordinating the involvement of different agencies involved in project planning and evaluation; (e) providing continuity between planning aspects and implementation; and (f) building up a specialized project preparation capacity within the Directorate General of Transmigration. 13. The proposed Bank project would provide the following additional inputs to develop a capacity for preparing two large (50,000 ha) projects a year, covering about 200,000 ha over three years: (a) 80 man/months of short-term consultant technical assistance; (b) vehicles and field survey equipment to support the project preparation activities being undertaken by GOI agencies themselves or with international or bilateral assistance; and ANNEX 4 Page 4 (c) office space, vehicles and facilities for the Division of Planning and their consultants. B. Cropping System Trials 14. The Indonesian Agency for Research and Development (ARD) is res- ponsible for agricultural research on a national basis. Recently, under Ln 1179-IND, the Bank financed a research and extension project to improve and expand at regional stations the research activities for the main crops in the project area: rubber, rice and secondary food crops. The useful results which will emanate from this project will supplement but not fulfill the need for immediate trials on sustained cropping systems for best utiliza- tion of upland and swamp areas in Sumatera. Upland Areas 15. There is little on-going work in the outer islands on upland areas. Small-scale trials program was initiated with FAO/UNDP assistance at Sembawa and Belitang under a project "Land and Water Resources Development, South East Sumatera". Unfortunately the assistance has now ended, and the project staff disbanded. A program of multiple cropping trials was started in 1974 at Guning Sugih in Lampung, as part of the multiple cropping systems trials program being conducted by the Central Research Institute for Agriculture (CRIA) of ARD. The present program is almost exclusively carried out on Java and is assisted by USAID and the International Development Research Council (IDRC), in turn supported by Canadian Aid (CIDA). 16. UNDP has discussed with GOI the possibility of assisting in the establishment of a much stronger research effort into cropping systems for the uplands of Sumatera. CRIA is anxious to provide a much greater input into such areas, and Baturaja has been suggested as a center for such re- search, but other additional resources required are not presently available. 17. The project would support an expanded program of cropping system trials through CRIA including: (a) expanding its program in Lampung and Sumatera Selatan to the Way Abung area, the Lahat/Tebing Tinggi area and the Baturaja area; (b) providing technical assistance (36 mm), vehicles, and equipment to help supervise the program in Sumatera; and (c) providing buildings, machinery, equipment and facilities for establishing trails/demonstration stations in the Baturaja project area and the Lahat/Tebing Tinggi area. ANNEX 4 Page 5 18. This Bank assistance would not only allow CRIA to establish an immediate trials program but would also provide CRIA with a better basis to absorb and use UNDP and bilateral assistance in the future. Tidal Areas 19. Small agronomic trials have been started in tidal areas in Sumatera Selatan (Delta Upang), Jambi (Delta Berbak) and Kalimantan (Delta Pulau Petak). Work is concerned mostly with rice cultivation and little is being done on water control, cropping systems, pest control, or on alternative crops. Various agencies are concerned under the guidance of the Tidal Swamp Reclamation Project (P4S) of the Department of Public Works. In Kalimantan, trials are conducted by the University of Gajah Mada, Surabaya, while those in Sumatera are conducted by provincially based Department of Agriculture staff and by P4S staff, assisted by the Institute of Technology, Bandung. 20. The Bank and FAO/IBRD are currently discussing with GOI how best to proceed with development in tidal areas. Assistance for feasibility studies, and for formulating a more specific program on cropping and water management trials is included in the proposed Fifth Irrigation Project now being appraised by the Bank. I NO Ei IA TRANSMIGRATION AND RURAL DEVELOPMENT PRuJEC1 Support for Foward Transmigration Program Cost Estimates (Constant 1976 $) COST PHASING COSTS Project Unit Cost Number of Local Foreign Total Foreign Year 1 2 3 4 5 US Units -------US$ thousands-------- Exchange % -------------------US$ thousands------------------- A. PROJECT PREPARATION ASSISTANCE (a) Soil and Land Capability Planning (Soils Research Institute, Agricultural Department) Refinance UNDP/FAO Team 1' 1.' 90.0 234.5 324.5 72 181.5 143.0 4 Wheel drive vehicles 6,600each 10 16.5 49.5 66.0 75 66.0 Field survey equipment misc 18.6 55.9 74.5) 74.5 Photointerpretation equipment -- 14.5 14.5) 14.5 Cartographic equipment " -- 4.0 4.0) 100 4.0 Laboratory equipment " -- 10.0 10.0) 10.0 Office equipment 2" -- 15.0 15.0) 15.0 Soil survey, land capability,-/ 5.0/ha 200,000ha 500.0 500.0 1 50 500.0 250.0 250.0 consultant services Sub-total 625.1 883.4 1,508.5 59 865.5 393.0 250.0 (b) Project Preparation (Division of Planning, Transmigration Department) Project Preparation Team 10,400/mm 48mm 150.0 350.0 500.0 70 125.0 250.0 125.0 Consultant services 5,000/mm 155mm 232.5 542.5 775.0 70 150.0 312.5 312.5 4 Wheel drive vehicles 6,600each 20 33.0 99.0 132.0 75 132.0 -- Field survey equipment misc - 50.0 50.0 100 50.0 -- -- Office facilities 50/a2/year 800m2 84.0 36.0 120.0 30 40.0 40.0 40.0 Counterpart staff 40C'm 150mn 60.0 -- 60.0 - 20.0 20.0 20.0 Incremental operating costs for 50,000/year 135.0 15.0 150.0 10 50.0 50.0 50.0 vehicles, local travel etc. Aerial photography 0.75/ha 2000,000ha 150.0 -- 150.0 - 50.0 50.0 50.0 Sub-total 844.5 1092.5 1937.0 57 617.0 722.5 597.5 (c) Cropping Systems Trials (Central Research Institute, Agricultural Department) Consultant services3/ 5,000/mm 36mm 54.0 126.0 180.0 70 60.0 60.0 60.0 4 wheel drive vehicles 6,600each 3 4.9 14.9 19.8 75 19.8 -- -- Counterpart staffs! 21,000/team 2teams 210.0 -- 210.0 - 42.0 42.0 42.0 42.0 42.0 Tractor and equipment 60/70 HP 10,000 2 5.0 15.0 20.0 75 20.0 Field equipment misc. 2.5 7.5 10.0 75 10.0 Fertilizers, materials, incre- ms 40.0 10.0 50.0 20 10.0 10.0 10.0 10.0 10.0 mental operating costs - - - Sub-total 316.4 173.4 498.8 35 161.8 112.0 112.0 52.0 52.0 TTLCSS1718 6.-0 2149.0 335-3 55 1644.3 1227.5 959.5 52.o 52.0 TOTAL COSTS------ 1/ See Table 4.2 2/ Soil survey and land capability @ US$3.00/ha, physical planning @ US$2.00/ha, 50% of work by local contractors. 3/ Supervises LP3 program Baturaja, Lahat/Tebing Tinggi and Guning Sugih trials. / Incremental staff - 1 team includes 1 agronomist, 1 economist, 1 coordinator + 5 field assignments. ANNEX 5 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Project Area Agriultural Development A. Introduction 1. The Baturaja area and the Way Abung area represent typical sites which GOI wishes to settle, or where settled already, to make improvements. Bearing in mind the problems facing the agricultural development of such areas (Annex 3), the project would support GOT activities in these two settlements. An agricultural development strategy for Baturaja, and a preliminary rehabilitation plan for Way Abung have been formulated and both have sufficient flexibility to incorporate any positive results of the multiple cropping trials on annual crops that will be carried out under the project (Annex 4). The agricultural development proposed do not claim to be a complete answer to the needs in either project area, particularly in Way Abung, where only a limited number of beneficiaries can participate in the time frame concerned. These development plans would start the farmer off on a better agricultural basis than were available in past schemes, and it would give the settlers the opportunity to further develop their farms according to their individual capabilities and future cropping options. B. The Baturaja Project Area The Project Area 2. The major towns and most lands along the rivers which border the project area have been settled for decades. The land which has been made available for the project is land which the local population does not use intensively because of: (a) low fertility and poor physical condition for hand cultivation; (b) the difficulties of controlling the alang-alang growth; and (c) lack of permanent domestic water supplies in the dry season. About 2,500 farm families live within the general area made available for the project. ANNEX 5 Page 2 3. During project preparation land use surveys 1/ were completed on 32,000 ha, of which roughly 28,000 are within the project site. Present use is: 10,000 ha already cultivated (Annual crops and low yielding rubber); 13,000 ha alang-alang; 7,000 ha secondary forest and scrub; 2,000 ha primary forest reserve and swamps The alang-alang is used on an extensive basis for grazing cattle and secondary forest/scrub areas for sporadic cultivation, mostly of upland rice and cassava. Secondary forest has regenerated in the Southwest of the area where soils are better and is interspersed with seedling rubber planted by local farmers during shifting cultivation. This rubber has very low pro- ductivity, and much of it is tapped only when prices rise to unusually high levels. Climate, Topography and Soils 4. Annual rainfall totals about 2,800 mm, with a dry season of about four months (July to October). Temperatures average about 250C (Table 1). 5. Topography is undulating to rolling, with gently rounded to flat topped ridges. Slopes in general are 8-15%, although steeper land is found in the southwestern portion. Contour planting and/or terracing would be necessary on the lower slopes. Proposed Farm Development 6. Families would arrive usually after the main rice harvest in their areas of origin, and just before the dry season starts in the project area. Each settler family would receive a total of 5 ha of land. In the first year settlers would concentrate on establishing their gardens and orchard areas (0.2 ha) and an area of food crops (0.3 ha). Upland rice and cassava would be the major crops. Permanent tree crops (such as bananas, jackfruit, kapok) and a wide variety of fruits and vegetables would be planted in the garden are, interspersed throughout the annual arable crop area, and along farm boundaries (para 34). Such crops contribute extensively to family food supplies. In the first year of a settlers arrival, DGT would provide food aid together with the planting materials and seeds for establishing such garden crops. 7. In the second year, the farm model (Table 2) assumes that a 1 ha area of rubber would be block planted, while each family would clear and 1/ Land use survey of the Baturaja area, LPT Bogor, September 1975. ANNEX 5 Page 3 cultivate another 0.5 ha for food crops. Because more labor is needed for rubber establishment than a family can provide and settlers would arrive faster than the rubber planting program, half the settlers would have their 2 ha rubber block planted in the third year. Labor needs have been calculated for planting both in years 2 and 3 (Tables 6 and 7); delaying the block planting has not significant adverse effect on farmers' incomes. 8. The rubber would be planted in blocks of at least 100 ha by PNP X (Annex 7). The land allocation fox each year's implementation (physical) plan would be agreed between the PMU and PNP X. A consultant familiar with land development planning and implementation would be employed to advise the project director on the first year's implementation plan, and the plan would be agreed with the Bank. PNP X would pay regular cash wages to the settlers for their labor. Land for block planting rubber would be cleared and cultivated by tractors and equipment, where limited by slope, hand labor would be used. Two ploughings and two disc harrowings, each inter- spaced by three weeks, would be effective for alang-alang control. This is less costly than using herbicides, and ploughing has significant positive effects on both rubber and cover crop establishment. A legume crop would be planted in the block planted rubber area. PNP X would handle maintenance of the block planted rubber until the end of the sixth year. In the sixth, seventh , twelfth and thirteenth years of settlement, participants would be expected to plant rubber on their own initiative, utilizing BRI term credit, in the 0.5 ha area on which food crops were grown in the preceding year. Family Labor Availability 9. Detailed analysis of labor calendars 1/ shows that this farm development plan is the maximum which could be handled by family labor in the early years, assuming that each family clears and grows 0.5 ha a year for food crops and that 45 mandays labor a month are available (Table 3-7). Additional labor (newly arrived settlers and, if necessary, local people) would be employed in the year of block planting, and the arrival of settlers has been phased to coincide with the labor needs for the rubber program (Tables 12 and 13). Taking into account the sparse data base for labor calculations and the difficulties of assessing averaging family performance, it does not seem reasonable to expect a family to tap and maintain more than 3 ha of high yielding rubber while growing enough food crops for subsistence. Crop Areas and Yields 10. The model assumes that the 0.2 ha garden area close to the house would be intensively cropped using inorganic fertilizers, compost and animal manures. It is assumed that 50% of the area would be in cassava and 50% in a rice/beans crop at any one time. On this small area initial yields of about 8 tons/ha cassava and 1.2 tons/ha padi should increase within 5 years to 1/ Labor requirements are based on PNP X experience, and on data recorded under the CRIA multiple cropping systems trials (Multiple Cropping in Indonesia, Syarituddin, Socharsono and McIntosh 1975). ANNEX 5 Page 4 12 tons/ha cassava and 2.0 tons/ha padi. These yields are being obtained on a small number of farms in the Catholic settlement area adjacent to the project. 11. Settlers would clear a total of 0.5 ha each year until all avail- able land has been used (year 8). The model assumes that during this period rice would be planted in November, followed by a bean (or groundnut) crop in March. Cassava would be established in October of the second year and normally harvested in the following dry season, a two-year cropping system commonly used by local farmers in the project area. After the cassava crop, however, farmers would establish a leguminous foddr crop. Yields with moderate fertilizer applications on newly opened land are slightly lower than the carefully tended house garden and are projected at 6 tons/ha cassava; 1.2 tons padi; and 0.6 tons beans throughout this period. 12. When all new land has been cleared and cropped, farmers would pro- gressively use the fodder crop for food crops area. The model assumes that such land would be used on a five-year rotational basis, planting 0.3 ha a year of the 1.5 ha fodder area in rice followed by beans. Farmers would grow cassava only on part of the house garden area, sufficient to supply food needs, since their dietary preference is rice. The leguminous fodder crop and annual fertilizer applications are expected to improve soil fertility, and yields would slowly increase over each cycle of cultivation. Yields are assumed to rise after 17 years to 2.1 tons/ha padi; 12 tons/ha cassava; and 1.0 tons/ha beans. There is no experience with this system in the area or under similar conditions in Indonesia, and the yield projections are based only on expert judgement. They are believed reasonable for the time scale involved, and would be the subject of an immediate trial program supported by the project (Annex 4). If yields do not reach expected levels, farmers would have sufficient income from their major crop, rubber, which can be further expanded if necessary, to purchase food needs. Cattle 13. Each settler family would receive either a cow or bull, in the third year after their arrival, on the basis of the return heifer system presently operated by DGT in other settlement areas. They would feed the animal by cutting and carrying fodder and crop residues (Annex 6). Manure and compost would be used on the house garden. Calves could be sold for additional income. Furthermore draft power would be available for transport and possibly land preparation. Some settlers would opt for planting more rubber when labor resources permit. Others may prefer to retain stock which can be fed, or even grazed, using the 1.8 ha not committed to rubber or the garden lot. Most farmers would probably place priority on meeting family food needs and are likely to maintain a pattern based on 3 ha rubber, a home garden lot of 0.2 ha, an additional area of 0.3 ha each year of food crops, with the balance of 1.5 ha in reserve and used for feeding one or two cattle. The farm model assumes this pattern. ANNEX 5 Page 5 Settlement details 14. Consultants have completed outline physical planning of the settle- ment layout, cost estimates for infrastructural works, and ground checking of the first two village sites and 31 km of roads prior to appraisal l/. The settlement area is confined in a first phase to about half of the available land. Southwest of the project, there are already heavily settled areas. Near this, but within the project area, there are about 3,500 ha with a hilly terrain and shallow soils, that will be used for cattle holding ground develop- ment, but is otherwise unsuited for settlement (Annex 6). Detailed ground checking of areas adjacent to large villages to the southeast and north seem certain to indicate that other parts of the project area will not be available for new settlement. 15. The exact number of present inhabitants, their location and the extent of their land claims are only now being determined with certainty. However, it is expected that there will be sufficient uncontested and suitable land to support the settlement of 4,500 families. Settlers would arrive in the project area as follows: 1976 - 500 families 1977 - 1,000 families 1978 - 1,500 families 1979 - 1,500 families Rubber Program 16. PNP X would commence rubber planting in 1976 with establishment of 100 ha for trials, demonstrations and training in tapping techniques. The first settlers would arrive in 1976 and would concentrate on establish- ing their house gardens and food crop areas the first year. Large scale planting of rubber would begin in 1977 when 500 would be established. The overall block planting program would be: 1/ Baturaja/Martapura Transmigration Project Structure Plan, Huszar Brammah and Associates, Jakarta, August 1975. ANNEX 5 Page 6 Total Allocated at I ha Each to 1976 Settlers 1977 Settlers 1978 Settlers 1979 Settlers 1977 - 500 ha 500 x 1 ha 1978 - 1,000 ha 1,000 x 1 ha 1979 - 1,500 ha 1,500 x 1 ha 1980 - 1,500 ha 1,500 x 1 ha 17. PNP X would plant about 550 trees/ha using 3 whorl plants in poly- bags. Such plants have shown a clear advantage under similar conditions in Lampung and South Sumatera, with fewer losses, a more flexible planting season, and coming much earlier into tapping. Earlier closing of the canopy through the use of advanced planting material and close spacing also leads to lower weeding costs. PNP X would produce budded stumpaon existing estates; the stumps would be put into polybags in nurseries at proj ect site. PNP X have sufficient plants for the first 100 ha planting and would establish sufficient seedlings in 1976 for budding in 1976 to serve the 1977 planting program. 18. Handing over responsibility to the settlers at the end of the third year (para 10) is justifiable because: (a) rubber planted as 3 whorl polybag material and properly fertilized under PNP X control would be well grown and the canopy almost closed; (b) the cover crop would be almost completely free of alang- alang; (c) settlers should have acquired sufficient knowledge of rubber cultivation under PNP X supervision to bring the rubber through to tapping; and (d) settlers would be trained in tapping techniques using project rubber specifically planted for training purposes. 19. However for the next three years the settlers would have to supple- ment their incomes with off-farm employment: as none is available in the area, they would continue to be employed on rubber maintenance until the end of the sixth year. 20. There is insufficient wood supply in the project area to contemplate smoked sheet as the main product, and buyers will buy sheet for transport to larger markets or to their processing facilities, and eithpr smoke or manufac- ture the sheet into crumb. ANNEX 5 Page 7 Seed Farm, Rubber Tapping School and Demonstration Area, and CRIA Farming Systems Trials Station 21. An area of about 200 ha would be cleared and planted to provide settlers with cassava stems, rice seed, banana shoots and other fruits, vegetable and cover crop planting materials. Development of the seed farm will commence in early 1976, and the Bank would permit retroactive financing for approved equipment. 22. On the same site an area of about 100 ha would be block planted with rubber by PNP X during 1976. This area would serve for fertilizer trials, upkeep demonstrations and for training settlers in correct tech- niques of tapping. In addition, an area of about 200 ha would be developed for multiple cropping systems trials and demonstrations to be conducted by CRIA. 23. The proposed project would provide the machinery, equipment, and buildings to serve the 500 ha unit, together with operating costs for the five year project development period (Table 15). Organization of Input Supplies 24. During the early years of settlement, rubber development would be the main agricultural activity, together with food cropping along tra- ditional lines for subsistence needs. Seeds and planting material for food crops would be supplied by the seed farm (para 23) and distributed by DGT area staff. For each village one agriculturalist would be responsible for assessing needs, arranging delivery, and offering whatever advice farmers need. PNP X would supply fertilizers procured at the same time as inputs for the rubber development under their control. 25. By the end of the first year in each village, the BIMAS fertilizer supply program would be introduced together with BRI credit facilities. This demands a sound village organization, local administration, and the existence of competent local traders for fertilizer supply and sufficient BRI staff throughout the area. 26. During the early period, food cropping techniques would be simple and there would be little need for extension advice. The project areas are not priority areas for extension service activity under the system proposed for Bank support in the National Extension Project. PNP X would give advice and training for rubber growing in the course of settlers' employment in rubber development and later by training in tapping techniques (para 24). DGT would assign to each village an agriculturalist who would report to the senior agriculturalist on the site manager's staff. When DGT leaves the area after the project development period, such staff would be absorbed into the local administrative structure under the guidance of the extension services. ANNEX 5 Page 8 C. The Way Abung Area Rehabilitation Agicultural Potential 27. The Way Abung project area is on a low lying plain bounded on the north by the Tulang Bawang river, on the west by the Ratem river, and on the east by the Terusan river and the Menggala/Gunungbatin road. Some 12,500 transmigrants, each with 2 ha farms, have been settled vithin this area in the last eight years. 28. Climatic conditions are similar to those in the Baturaja area with a four-month, and rather erratic, dry season (Table 1). 29. The settled areas are flat to gently undulating, with slopes rarely more than 8%, and at an elevation of about 100 m asl. Some depressions have permanent surface water, and there are numerous year round streams in the area. Groundwater lies normally at a maximum depth of about 6m. The area, prior to settlement was chiefly alang-alang covered, with some pockets of secondary forest and old rubber. 30. Soils are mostly deep yellowish/red podsolics derived from sandy tuffs. They are friable and easily worked, but have low natural fertility. Reddish brown latosols with higher clay contents occur on higher ground to the north of the proejct area, and grey hydromorphic soils are found in the depressions. 31. With a high level of inputs and intensive cultivation techniques to raise organic matter and fertility levels, the soils are capable of sustain- ing annual crops. Farmers in the area have managed in general to become about self-sufficient in basic foods by intensively cultivating a 1/4 ha garden area using composts, crop residues, green manuring and organic manures. Attempts to grow cash crops are confined to cassava, and yields have declined to very low levels (6 tons/ha) through continuous cropping without fertilizers. Farm surveys indicate that the average settler produces about Rp 45,000 worth of fruit and vegetables each year (Annex 16, Table 16.5). Alang-alang control is a major problem and farmers have rarely brought more than 50% of their holdings into production. On average farmers spend upwards of 100 man days each year on off-farm employment to raise their incomes to subsistence level. Nevertheless, annual crop yields can be increased by fertilizer use and by introducing cattle manuring and maintaining a sequentially cropped leguminous forage crop area. There are good prospects for tree crops, especially rubber. Proposed Farm Development 32. Most farmers have 1.0 ha of uncleared land available at the rear of their holdings. This uncleared land is contiguous and could be block ploughed, cultivated and part planted with rubber. PNP X would plough and cultivate a 1.0 ha area for each participant and would block plant 0.5 ha of this with rubber. Farmers would be hired as labor by ANNEX 5 Page 9 PNP X and still have enough time to undertake the development proposed (Table 9). Initially the other half hectare would be cropped with rice in the rainy season, followed by beans or groundnuts. In the first year, farmers would establish a legume fodder/cover crop in the area then under cassava. Participants would receive a cow or bull in the second year (Annex 6) and the block planted rubber would be handed over to them at the end of the sixth year. 33. The farming pattern would stabilize on (a) a 0.5 ha rubber area and (b) an area growing food crops (0.6 ha) with an area of 0.9 ha under leguminous forage but otherwise out of cultivation (Table 8). The food crop area would rotate around this latter area of 1.5 ha. Each year there would be: (a) an area of forage crop land (0.3 ha), cultivated in upland rice in the rainy season, followed by beans or groundnuts in the dry season; (b) the previous year's 0.3 ha rice/bean land now planted with cassava; and (c) the previous year's cassava land re-established in a leguminous forage crop, which would remain for three years before the land is cultivated again. Farm development would provide full employment for at least the family head (Table 8, 9). 34. With this cropping and using a moderate application of fertil- izer (100 kgs urea: 50 kgs triple super phosphate/hectare), food crop yields are expected to rise markedly and to be sustained. Yields are assumed to rise to 2.0 tons/ha padi; 1.2 tons/ha beans and 15 tons/ha cassava after three years with proper inputs and on a rotational cropping/ leguminous fallow system. These yields have been attained using inorganic fertilizers alone in an area adjacent to Way Abung under similar soil conditions, in the multiple cropping program, and by BIMAS farmers. Should the trials on crop rotation systems to be carried out in the Way Abung area (Annex 7) prove successful, the 1.5 ha might be used for more intensive annual cropping by shortening the period that land is under leguminous forage. Alternatively, the farmers may wish to establish more rubber, provided their subsistence food needs can be assured. 35. Although a need exists for more widespread support in the Way Abung area, in the project period only about 5,000 of the settlers would be reached under the agricultural rehabilitation project. Participants would be located primarily in more recently settled areas, and in the higher areas with more difficult soils in northern part of the project area. Farmers willing to have their spare land cultivated and planted in blocks would be accepted. All settlers in the Way Abung area would benefit from road improvements and from health services to be provided ANNEX 5 Page 10 under the project. Participants would enter the agricultural support project at the rate of about 1,000 each year for five years. Rubber Program 36. PNP X would clear an area of about 1,000 ha annually using tractors and equipment for ploughing and harrowing to control alang- alang. As in the Baturaja area, 3 whorl polybag material would be planted at a density of 550/ha. PNP X would establish polybag nurseries in the area in early 1976 and they already have sufftient seedlings in the ground on existing estates to serve the first year's planting. The rubber will be established with a legume cover crop, which would be used for the forage crop also in the arable crop rotation. 37. Rubber yields are anticipated to be higher than in the Baturaja area because soils are more favorable and because each farmer has only a small area to upkeep. Tapping and upkeep standards should be positively influenced by the proximity of high yielding rubber estates. A peak yield of 1.2 tons/ha dry rubber has been assumed. There are many market outlets adjacent to the settlement area for air dried sheet, including PNP X pro- cessing facilities. Organization of Input Supplies 38. The BIMAS program already operates in the project area, but results have been disappointing because of insufficient knowledge on crop response and fertilizer needs under local conditions, and the use of BIMAS credit to support subsistence food production with no cash generated for repayment. The fertilizer and cropping systems trials to be carried out under the project should provide a better basis for extending the BIMAS program for food crops, and the introduction of rubber to supply a cash income would resolve the problem of using BIMAS fertilizer for subsistence food needs. 39. A rudimentary extension service system operates in the area and DGT staff also provide extension and marketing advice. Their efforts would be strengthened under the project to an extent dependent on the results of cropping systems trials as the needs arise. A flexible approach has to be maintained until a more definite sustainable cropping system is known. 40. PNP X would provide input supplies for rubber and would also train farmers in rubber planting maintenance and tapping. DGT would organize the purchase and shipping of cattle and DGT village administration staff would handle local distribution, the return heifer program, and the village bull units (Annex 6). ANNEX 6 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Livestock Development A. Introduction 1. Sustained production of food crops in the areas typified by Baturaja and Way Abung will require the incorporation of organic manures, crops residues, and fertilizers into soils of low natural fertility. In- troduction of cattle into the two project areas is important for crop pro- duction and would contribute to farm incomes, provide draft power, and progressively increase nutritional standards of the transmigrants' diet. 2. Under the project, cattle would be procured and distributed to settlers in Way Abung and Baturaja. In the settlement areas, village bull units would be established, as only heifers would be distributed to settlers. Holding grounds would be established at Baturaja and Menggala as the first stage of possible ranch development; for the present these facilities would service the cattle distribution program. B. Cattle Distribution Program Numbers to be Supplied 3. The project would supply to transmigrants a total of 9,500 head of cattle over a five year period: Way Abung Baturaja Total 1976 1,000 1,000 1977 1,000 - 1,000 1978 1,000 500 1,500 1979 1,000 1,000 2,000 1980 1,000 1,500 2,500 1981 - 1,500 1,500 5,000 4,500 9,500 Source of Cattle and Supply Details 4. Heifers would be procured initially in the southern part of Sumatera, Java, and later from Government owned ranches in Sumba and Sulawesi. Holding grounds in Surabaya, Waingapu and Parepare would be upgraded under the project to facilitate shipping the cattle. If a shortage of heifers is ANNEX 6 Page 2 experienced, cattle could be procured from abroad, provided the source is free of foot and mouth disease. 5. Ongole cattle or cross bred Brahman x Ongole would be purchased. There should be little difficulty in purchasing up to 2,500 head a year. Balinese cattle are smaller and less suitable for draft purposes; they are more delicate and are considered less suitable for transmigration in Sumatera. 6. Cattle would be purchased on contract or through prequalified buyers. and shipped to Panjang, the major port of Lampung adjacent to Tanjung Karang, and capable of berthing ships of 25,000 tons. Cattle would be off loaded into portable quayside pens and trucked to a holding/ quarantine area near to Tanjung Karang. PNPX would make available for this purpose about 400 ha of land at the Rejosari estate; this area would be fenced and pasture developed under the project. 7. Following a two-week quarantine period, the cattle would be trucked to small paddocks in the Way Abung area and distributed to farmers. In the Baturaja area, cattle transported from Tanjung Karang would be received on a 500 ha holding ground and distributed from there. Transmigrants would establish at least a 0.3 ha area of leguminous forage prior to the introduc- tion of the livestock to their farms. To assist DGT in introducing cattle into a future scheme in Tulang Bawang, a holding ground will be established at the river port of Menggala, adjacent to the new area. C. Heifer Return Program and Village Bull Units 8. DGT operates a heifer return program in lieu of a cash credit system in areas where cattle have been distributed to settlers. DGT proposes to con- tinue this system both in Way Abung (where it is ongoing) and in Baturaja. This scheme requires that DGT distribute mainly heifers to settlers and the project therefore would provide for the stocking of village bull units. 9. Each unit is planned to service a village with about 500 heifers, at about 3%, of 15-17 bulls. 10 ha of pasture would be established, together with dips. Each unit would be supervised by a livestock extension officer, initially appointed by DGT in conjunction with DGLS; this service would be absorbed by DGLs when DGT withdraws from the area. INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Cattle Distribution Program Cost Summary (constant 1976 Rp million) 1976 1977 1978 1979 1980TotalLForeign Source RX Total FX Total FX Total FX Total FX Total Local FX Total Exchange (TaLe_#j A. BATURAJA Investments Cattle Purchase - - - - 19.32 38.63 38.62 77.25 57.95 115.90 115.89 115.89 231.78 50 6.3 Holding Ground Development - - 61.49 94.60 5.95 6.20 - - - - 33.36 67.44 100.80 67 6.5 Bull Units - - - - 4.55 10.58 4.55 10.58 4.55 10.58 18.09 13.65 31.74 43 6.10 Operating Costs Holding Grounds - - 3.67 10.20 7.63 17.20 10.92 20.60 11.26 21.10 35.62 33.30 69.10 48 6.5 Bull Units - - - - 0.05 2.54 0.46 5.77 1.03 10.27 17.04 1.54 18,58 8 6.10 Sub-Total - - 65.16 104.80 37.50 75.15 54.55 114.20 74.79 157.85 220.00 231.82 451.82 51 B. WAY ABUNG Investment3 Cattle Purchase 38.63 77.25 38.62 77.25 38.62 77.25 38.62 77.25 38.62 77.25 193.15 193.10 386.25 50 6.3 Bull Units 4.55 10.58 4.55 10.58 4.55 10.58 4.55 10.58 4.55 10.58 30.15 22.75 52.90 43 6,10 Operating Costs Bull Units 0.05 2.55 0.49 5.78 0.91 9.02 1.33 12.24 1.76 15.47 40.50 4.55 45.05 10 6.10 Sub-Total 43.23 90.38 43.66 93.61 44.08 96.85 44.50 100.07 44.93 103.30 263.80 220.40 484,20 46 C. OVERHEAD Investments Procurement and Shipping 9.93 26.13 9.22 23.63 12.98 32.44 17.30 43.26 21.63 54.08 106.40 71.06 179.54 40 6.4 Tanjung Karang Office 16.17 59.88 - - - - - - - - 43.71 16.17 59.88 27 6.12 Rejosari Holding Ground 23.06 42.70 - - - - - - - - 19.64 23.06 42.70 54 6.12 Operating Costs Tanjung Karang Office 3.78 15.64 3.78 15.64 3.78 15.64 2.61 13.10 2.61 13.10 56.56 16.56 73.12 23 6.13 Rejosari Holding Ground 4.88 14.93 4.93 15.73 4.98 17.03 5.03 17.23 5.08 16.92 56.94 24.90 81.84 33 6.13 Sub-Total 5 159.28 17.93 55.00 21.74 65.11 24.94 73.59 29.32 84.10 285.33 151.75 437.08 35 TOTAL CATTLE PROGRAM COST 101.05 249.66 126.75 252.41 103.32 237.11 123.99 287.86 149.04 345.25 769.13 603.97 0 44 D. FUTURE PROGRAM Menggala Holding Ground Investment - - - - - - 61.49 94.6 5.95 6.20 33.36 67.44 100.80 67 6.5 Operating Costs - - - - - 3.67 10.2 7.63 17.20 16.10 11.30 27.40 41 6.5 Total 65.16 104.8 13.58 23.40 49.46 78.74 128.20 61 6.5 ANNEX 7 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Project Rubber Development & PNP X - A. Review of PNP X 1. PNP X consists of a scattered group of 14 estates situated in the Sumatera Selatan and Lampung Provinces. The estates grow primarily rubber and oil palm, with smaller areas of cloves, coconuts and coffee. These estates, totalling 36,000 ha, were taken over from their Dutch owners 18 years ago and handed over to PNP X, one of the Government-owned estate enterprises in 1965. Up until 1972 the estates showed little progress due to a lack of funds and expertise. 2. In 1972, IDA financed the rehabilitation of the estates under the Fourth Estates Project (Cr 319-IND). Excellent progress has been made and development is now ahead of the planned schedule. The estates are well managed by a first class general manager, ably assisted by two senior direc- tors, three expatriate advisers and fourteen managers. The estate employs 160 trained support staff (accountants, administrators) and a 6,000 permanent labor force supported by casual labor. B. Project Rubber Development 3. PNP X would be responsible for the clearing, the planting and three year supervision of project rubber (Annex 5). The combined planting program for the estates own development is estimated as follows: Estate Planting Proposed Transmigration Total (ha) (ha) 1973 1,500 1,500 1974 2,500 2,500 1975 3,000 - 3,000 1976 2,500 600 3,100 1977 2,700 1,500 4,200 1978 200 1,500 1,700 1979 200 2,500 2,700 1980 200 2,500 2,700 ANNEX 7 Page 2 With the exception of 1977, the estate would not be called upon to handle more clearing and planting than has already been completed in 1975, except by 600 ha in 1977. No problems are anticipated with the ability of PNP X to carry out the program, nor to expand this program if current proposals to expand the Tebenan estate and to participate in adjacent smallholder development near Palembang are implemented. These proposals are currently being appraised by the Bank. 4. PNP X would appoint a manage-r specifically for the transmigration project, advised part-time by a PNP X expatriate adviser who would monitor the quality of work being carried out. PNP X would provide the necessary additional managerial staff required for developing the rubber up to the end of year-6, and the labor required would be provided by project settlers who would be paid usual estate wages. 5. Funds for development would be provided by the Directorate General of Transmigration, against annual budgets drawn up by and agreed with PNP X, and approved by IBRD. These budgets would be drawn up six months in advance of requirements, and payments would be made to PNP X quarterly in advance. In the event of Government funds being delayed, PNP X would obtain bridging finance from the local banks and would pass on to the Directorate General of Transmigration any charges incurred therein. Separate accounts would be kept for expenditures by PNP X for the transmigration project, and adjustments would be made on the agreed differences in cost between the budget and the annual expenditures. As PNP X's operations are fully cost accounted under the same system used on other PNP's and are supervised by Bank staff there would be little difficulty in assessing the reasonable- ness of both the original budget and any amendments called for. The accounts would also be subject to audit by independent auditors. 6. PNP X would be paid on overhead fee (to be negotiated) to cover additional administration incurred at PNP X headquarters, and this would be paid as a fee on a per hectare developed basis. 7. Quality control would be exercised on behalf of the project by in- dependent consultants, such as those which presently carry out this function for the Directorate General of Estates on PNP X. Terms of reference 1/ for this work would be drawn up by the Directorate General of Transmigration and the Directorate General of Estates, and would be subject to IBRD agreement. 8. This is the first project of its kind in Indonesia, where a PNP is carrying out development work for a transmigration project. It will be ne- cessary to keep the above proposed procedures carefully under review. At the end of the second year of the project the arrangements would be fully reviewed by the Bank in conjunction with GOT and the management of PNP X. 1/ A draft of this TOR is shown in Attachment 1 to this Annex. INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Rubber Development - Project Cost Summary (Constant 1976 Rp Million) -----------1976-- 7 ------% --------1978------% -------1979-------% --------1980-------% -------1976-1980 --------------% Source Lucal Foreign FX Local Foreign FX Local Foreign TX Local Foreign FX Local Foreign FX Local Foreign Total FX (Table #) A. BATURAJA INVESTMENT COSTS Rubber Planting 14.4 14.4 50 75.5 78.5 51 165.8 179.7 52 269.0 303.4 53 308.4 377.0 55 833.1 953.0 1,786.1 53 7.4 Equipment Purchases 31.8 95.2 75 31.8 95.2 - 31.8 95.2 75 - - - - - - 95.4 283.6 381.0 75 7.8 Vehicle Purchase 1.6 48 75 1.8 5.3 75 0.2 0.5 75 0.2 0.7 75 2.7 8.1 75 6.5 19.4 25.9 75 7.8 Sub-Total 47.8 114.4 71 109.1 179.0 60 197.8 275.4 58 269.2 304.1 53 311.1 385.1 55 935.0 1,258.0 2,193.0 57 OPERATING COSTS Salaries 3.5 2.2 39 7.5 3.7 33 10.9 5.2 32 16.1 5.7 26 20.5 7.6 27 58.5 24.4 82.9 29 7.10 Vehicles 1.1 1.3 54 1.7 1.7 50 1.9 1.9 50 2.0 2,0 49 2.2 2.2 51 6.9 9.1 18.0 51 7.6 Indirect Overhead and Management Fees 8.5 - - 15.1 - - 24.7 - - 30.0 - - 36.4 - - 11A.7 - 114.7. - 7.2 Sub-Total 13.1 3.5 15 .24.3 5.4 19 37.5 7.1 14 4.1 7.7 13 59 _ 9.8 13 182.1 33.5 5215.6 1 Total 60.9 117.9 65 133.4 184.4 59 235.3 282.5 54 317.3 311.8 50 370.2 194,9 56 1J17.1 10291.5 2,408.6 54 B. WAY ABUNG INVESTMffT COSTS Rubber Planting 72.0 72.0 50 91.6 103.4 53 81.9 145.6 64 92.5 164.5 64 100.3 186.2 65 438.3 671.7 1,110.0 60 7.4 Equipment Purchases 31.7 95.0 75 - - - - - - - - - - - - 31.7 95.0 126.7 75 7.8 Vehicle Purchases 2.5 7.6 75 0.05 0.15 75 0.05 0.15 75 - - - 2.4 7.2 75 5.0 15.1 20.1 75 7.8 Sub-Total 106.2 174.6 62 91.7 103.5 53 81.9 145.8 64 22.6 164.5 64 102.7 193.4 64 475.0 781.8 1,5. 62 OPERATING COSTS Salaries 7.3 8.7 54 7.7 6.5 46 8.4 5.4 39 9.1 4.3 32 9.4 2.2 19 41.9 27.1 69.0 39 7.10 Vehicles 1.7 1.9 52 1.7 1.9 52 1.8 1.8 51 1.7 1.8 51 1.7 1.8 51 8.6 9.2 17.8 52 7.8 Indirect Overhead and Management Fees 15.0 - - 10.6 - - 12.3 - - 13.7 - - 15.6 - - - 67.2 - 7.2 Sub-Total 24.0 10.6 31 20.0 8.4 33 22.5 7.2 24 24,5 6.1 20 26.7 .0 13 117.7 3 154.0 24 Total 130.2 185.2 59 111.7 111.9 50 153.0 59 117.1 170.6 59 129.4 197.4 60 592 7 818.1 1,410.8 58 ANNEX 8 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Village Infrastructure A. Baturaja Settlement Area-Village Modules Introduction 1. The infrastructure planning for the Baturaja settlement area would ensure that the development of this area would fit in with the regional devel- opment of the provinces, and that convenient all weather road access would be available to the commercial and administrative centers of the region. The settlement area is large enough to warrant the development in due course of its own hierarchy of villages, and one of these would be provided with suffi- cient infrastructure to become in due course the Kecamatan (subdistrict) center for the settlement area. 2. The Department of Transmigration, assisted by consultants provided by FAO/UNDP, has developed a standardized settlement area module which would be adjusted to the particular needs and topography of each settlement area. The basic module is the village unit which would encompass a village and surrounding farmlands to service 500 families with all the required infra- structure. The Village Plan 3. The area of the standard village unit, containing 500 families, is based on the allocation to each family of five hectares of land, of which three are to be planted with rubber and two with food crops and fodder. 4. The more important criteria which have influenced the proposed village module are: (a) the need for each settler to live close to his 5 ha holding in order to guarantee the security of his crops and cattle, and to avoid the waste of energy in walking from his home to a distant separate holding. A distance of 1.5 kilometers is considered to be the maximum acceptable distance between the house and the rubber holding; (b) the need for each family to have reasonable access to the village center to ensure the full social and practical bene- fits of using the facilities provided. If the center is too ANNEX 8 Page 2 far from the dwelling, children will be less likely to attend school, visits to the market will be less frequent and strength of the village as social entity will be diminished. A distance of 3 kilometers between house and center could be regarded as a reasonable maximum; (c) recognition of the importance of the dukuh (a unit of 20-50 families within the village) which not only provides for the sharing of certain facilities but also allows for settlement, in groups of transmigrants from similar areas of origin (Figure 15675); (d) the need to reduce expensive road investment to the minimum level compatible with good access to all important facilities, particularly markets; and (e) the need to ensure that any future infrastructure networks (such as electricity, water mains or bus routes) can be provided without excessive costs. 5. Three possible ways of laying out the village area of approximately 2,500 ha are illustrated in figure 9509 and have been compared in terms of the criteria listed above. The more important observations are as follows: (a) the dispersed plan allows each family to live on its 5 ha holding, but over 30% of the families would be more than 3 kilometers from the village center. All roads would have the same function and would therefore be built to the same relatively high standard. Provision of future infrastructure would be expensive; (b) the nucleated plan has the social advantage of concentrating all dwellings close to the center but over 50% of the families would be more than 1.5 kilometers from their holding. The farm roads need not be a uniform high standard, but additional roads would be required in the residential areas to serve the quarter hectare house plots. Provision of future infra- structure would be relatively easy; and (c) the linear plan would allow each family to live on its 2 ha arable plot, thus guaranteeing the security of crops and cattle. The 3 ha rubber plot would be located separately but in no case more than 1.5 kilometers of the village center. Roads could be differentiated according to function and future infrastructure provision would be relatively easy since all dwellings would be close to the main feeder road. The plan would give distinct physical identity to a dukuh unit of 20-50 families on either side of the feeder road (Figure 15675). ANNEX 8 Page 3 6. The linear plan tends to combine the advantages of the dispersed and nucleated alternatives whilst avoiding their excessive walking distance to either farm plot or village center. This plan would be used on the Baturaja settlement area, adapted where necessary to fit in with local geographic features. The Hierarchy of Settlements 7. The hierarchy of centers within the transmigration area was arrived at by the rational grouping of social, eeenemic and administrative services, as tabulated in Table 8.3. A rational distribution of services among villages implies that a settlement which receives a higher level service, also receives lower level ones. Thus a settlement with Rank 1 services have all the services of Rank 2, 3 and 4, while one with Rank 2 services will receive those of Rank 3 and 4, and so on, as represented in Figure 9510. B. Way Abung Village Improvements 8. Most of the villages in Way Abung are adequately served with social services (except Health see Annex 9). Improvements are being undertaken in the primary schooling facilities through the Impres Skolar Desa program. Some secondary schools should be built by the Department of Transmigration, and four schools of six classrooms each have been included in this project (Table 8.9). Twenty two health posts and two health centers are also included under this project (Annex 9). C. Standby Water Supplies 9. Although provision is made for the construction of wells (Annex 9) alternate standby water supplies would be necessary in Baturaja for both human consumption and livestock. The project field engineer would determine on the spot where standby supplies might be needed and what the best solution would be. The construction of small dams would be the most likely solution but provision is also made for the boring of deep wells and piping from streams (Table 8.10). Implementation and Cost Estimates 10. A Development plan for each village, together with detailed design or prototype building types will be prepared by the PMU. Based on the level of services to be provided, cost estimates for each village center are shown in Tables 8.2-8.7. This project would settle 4,500 families 10 villages. The cost of clearing the 1/4 ha houseplot, and constructing the transmigrants houses (Figure 15676) are shown in Table 8.8. These costs are based on a ANNEX 8 Page 4 detailed study of low cost housing alternatives for transmigration, and are based on a traditional design, with provision for expansion on self-help basis. 11. All housing and village construction will be by contract, awarded on the basis of competitive bidding. It is the Department of Transmigra- tion's intention to have all the settlers' houses in a village completed prior to the settlement of that village. The contractors would be required to recruit labor for the construction of the first village center, thereafter transmigrant labor would be available from adjoining villages. ANNEX 8 Attachment 1 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Transmigrant Low-Cost Housing 1. The characteristics of the existing housing in this area, largely built by self-migrants are a simple timber framed house with timber clad ex- ternal walls, a double pitched roof covered with local clay tiles and a com- pacted earth floor. In the house plan, a large covered verandah is an import- ant element serving as the family gathering place and as a sheltered store for firewood, farm produce and implements. Notable in the transmigration areas is the self-help building potential demonstrated by migrants either as an individual or on a communal, gotong-royong, basis. 2. The housing proposed for the transmigration project has been designed to capitalize both on the local building traditions and the evident self-help capacity. 3. A minimal 'core' house is proposed, - see Figure 15676. The enclosed area is 30.25 m2 considered adequate for a family of five. A roofed verandah of 13.75 m2 is contiguous. No internal partitions will be provided by the contractor, these will be left to the transmigrants in order that they can re- flect their mode of living and family structure; they will probably be three- quarter height to permit cross ventilation. 4. The house has been designed to allow for linear expansion and it is anticipated that the transmigrants will undertake this on a self-help basis as their family needs change and their income increases. 5. As far as possible the houses will be oriented with the short sides East-West, in order to minimize solar heat build up. 6. Shortage of water is a critical problem in the Baturaja area; on this account gutters will be provided leading to a rain water collecting drum. Additionally wells will be dug on a self-help basis. 7. Sanitation will be accommodated by a simple pit latrine. This will be located on the side of the site opposite to that of the well. In order to maintain public health standards the location and construction of both wells and latrines will be strictly supervised. 8. To minimize costs local building materials will be specified; the migrants and local builders are accustomed to these materials. Dimensions ANNEX 8 Attachment 1 Page 2 of major timbers have been standardized. Doors and windows have been designed with standard size frames making them interchangeable and easily reusable when the house is enlarged and rearranged. To accelerate construction contractors will be encouraged to prefabricate items such as roof trusses, wall units, doors and window closures. 9. The minimal investment required for this house will provide maximum potential for replicability. It has been estimated that a construction team of four men will require about 45 days to prepare a site and construct one house. The cost has been estimated at $580 (Table 8.8); recent contracts in- dicate that costs of $500/house may be achievable. INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Village Infrastructure - Cost Summary (Constant 1976 Rp ;Iil) Total Cost Foreign Source 1975 1976 1977 1978 1979 1980 Foreign Total Exchange Table # BATURAJA - Village Centers - 238.0 84.8 87.9 87.9 149.6 498.6 30 8.2 - Settler Housing - 119.7 239.3 359.0 359.0 323.1 1077.0 30 8.2 - Roads and Bridges 15.0 578.0 194.0 276.0 201.0 36.0 806.0 1300.0 62 10.1 - Standby Water Supply - 64.1 64.1 96.1 96.1 - 211.5 320.4 66 8.10 otal 1.o 999.8 582.2 819.0 744.o 36.0 1490.2 3196.0 7 US$ Million 7-70 WAY ABUNG - Village Improvements - - 4.8 4.8 4.8 4.8 5.8 19.2 30 8.9 - Roads and Bridges 13.0 522.0 416.0 252.0 252.0 225.0 1,040.0 1,680.0 62 10.1 Total 13.0 522.0 420.8 256.8 256.8 229.8 1,045.8 1,699.2 62 US$ Million 2.52 4.09 ANNEX 9 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Health A. Introduction 1. The impact of health services and improvements in environmental sanitation are impossible to measure accurately. However, it is apparent that they are crucially important to the success of the proposed Trans- migration Project. Malaria is endemic in the resettlement areas of Sumatra and several other tropical diseases are highly prevalent. The new settlers are malnourished and debilitated and have not acquired natural immunity to many of the common diseases of the settlement area. Adequate health programs are thus essential if the project is to avoid high mortality and costly morbidity. In addition, improvements in health services are perceived by the settlers as priority needs and thus afford opportunities to integrate the community through participation in their development. This in turn is likely to facilitate acceptance of the directly productive components of the rural development package. 2. It is essential that the health components of the Project be cost- effective and replicable. This implies emphasis on low-cost, environmental and preventive services with heavy reliance on personnel resident in the community and wide, intensive coverage. Finally, in order to ensure effi- cient, continuous operation of services, the health component must be care- fully integrated into the regional and provincial health services and be consistent with national health sector policies. 3. The health component of the proposed Project (4 percent of total Project cost) would consist of: (i) water supply and sewage disposal works as the major sub- component (53 percent of the cost of the health component); (ii) basic health services (38 percent) with active community involvement in decision-making, delivery of services and financing health; and (iii) malaria control campaigns in existing and new settlement areas (9 percent). ANNEX 9 Page 2 B. The Rural Health Sector (1) Issues and Objectives of Rural Health Policy 4. According to the GOI/WHO Plan of Operation for Strengthening of National Health Services under the Second Five-Year Development Plan (PELITA II), rural health services under PELITA I suffered from: (i) lack of community participation in service delivery, resulting in vast under-utilization of services (and a strong, parallel traditional sector); (ii) manpower constraints due to lack of training budget and reluctancy of personnel to serve in rural areas; (iii) low coverage due to health care facilities being too widely spread and health teams neglecting outreach activities and community work; (iv) managerial and organizational problems due to lack of clearly defined roles and responsibilities of health center staff and absence of clear lines of responsibility for overall health center management at Department of Health and provincial levels; (v) poor logistics of drug supply due to lack of supplies, slow distribution and inadequate standard drug supply guide; and (vi) inadequate and un-coordinated financial management at all levels resulting in lack (particularly at Kabupaten level) and unpre- dictable availability of funds. 5. The objectives of PELITA I (1974-79) are inter alia: (i) increasing emphasis on community participation and outreach preventive services; (ii) developing at least one community health center (Puskesmas) in every District (Kecamatan), i.e. for about 30,000 people; (iii) transforming the existing 24 categories of nursing personnel into the one category of Primary Care Nurse (PKK) and providing a minimum staff of 6 auxiliaries in each health center; and (iv) improving management and coordination between different levels and agencies. ANNEX 9 Page 3 (II) Administration Organization and Financing of the Rural Health Sector 6. Over 80 percent of Indonesian health facilities are technically operated under the direct control of the Department of Health (Departemen Kesehatan). Chart 15742 gives the organizational structure. At the provincial level, the Inspector of Health (IKES) is administratively res- ponsible to the Provincial Governor but professionally responsible to the Central Department of Health. At the Regency (Kabupaten) level, there is a regency health officer (Dokabu) who is responsible for the health facilities in his administrative area. The selection of the Dokabu is the combined responsibility of the Bupati, the IKES, the Office of the Governor and the Central Department of Health. Chart 15741 gives the GOI health sector organization and the lateral linkages with the overall Indonesian admin- istrative organization. 7. In recent years the GOI has committed about 2.5-3.0 percent of its Development Budget and about 1.2-1.6 percent of its Routine Budget to the health and family planning sector. In FY 1973/74, the GOI per capita ex- penditure on health was some $0.50 for the Java and Bali population and $0.35-0.40 for the major outer islands. In Lampung, for example, 1973/74 per capita health expenditures amounted to $0.29 at the provincial level and $0.11 at the Kabupaten level. Under PELITA II allocations to the Department of Health are to be considerably increased. Furthermore, BAPPENAS is pro- viding an additional amount nearly equal to the Department of Health's Development Budget directly to the Kabupatens (INPRES Kesehatan Program) mainly for rural water supply and development of additional Puskesmas. How- ever, although channelling INPRES funds directly to Kabupatens was expected to greatly enhance health program effectiveness, initial absorption rates are very low and administrative procedures are still considered to be too complex. (III) Health Status and Existing Health Services in Transmigration Areas (a) Health Status and Disease Patterns 8. Malaria is the major health problem in the transmigration areas of Lampung and Sumatera Selatan Provinces. Malaria surveys indicate hyper- endemicity levels with parasite rates up to 70 percent in some villages, and Plasmodium falciparum, the most serious of human malarias, accounting for up to 90 percent of infections. In 1974, a malaria epidemic occurred in Lampung Province causing a reported number of 165 deaths, particularly among transmigrants who were highly susceptible due to low or non-existent immunity. According to a sample survey conducted in five transmigration villages of Way Abung in 1972/73, malaria was the second most prevalent disease (after skin diseases) with a rate of 16 per 1,000 population. According to records of the Puskesmas and Sub-Puskesmas visited in Way Abung (Tatakarya, Daya Murni and Pulung Kencana), malaria accounted for about 25 percent of cases attended in recent months. Death rates among infants are high. ANNEX 9 Page 4 9. Skin diseases (20 per 1,000 according to the survey), tuberculosis (11.8 per 1,000), respiratory infections (11.7 per 1,000), eye diseases (7.5 per 1,000), filariasis and gastro-enteric diseases are the other most prevalent health problems. Most of these communicable diseases are suscepti- ble to simple, low-cost interventions in the fields of environmental sani- tation and preventive medicine. 10. According to the Way Abung survey's anthropometric data (arm circumference), there was no severe malnutrition but 11.4 and 18.0 percent of the under-fives suffered from moderate and mild protein-calorie malnutrition, respectively. 1/ (b) Existing Health Services 11. At present, health services are provided only in the Way Abung sub-area of the Project. However, availability, utilization and quality of services are extremely poor. According to survey data, only some 20 percent of the sick went to the clinic for treatment while 60 percent of the house- holds knew about the existence of such facilities; about 14 percent claimed to rely on self-treatment, 2 percent to depend on self-referral to the physician or hospital and 64 percent to receive no treatment at all. No one admitted to having gone to the local healer or midwife (dukun) although there is a strong traditional sector. Almost all households used boiled water but 1/3 of the sample population found the quantity and physical quality of the water inadequate. More than 90 percent of households had their private pit latrine but some 2/3 followed bad food sanitation practices. 12. In Way Abung and adjacent areas, there are three health centers (Puskesmas) in Tatakarya, Daya Murni and Menggala. With the exception of the new center in Menggala, however, these facilities resemble poorly opera- ted village outposts rather than integral community health centers. The buildings need to be up-graded or reconstructed, staff is not supported by a physician and supplies (malaria drugs, vaccines) are lacking. Utilization is only about 15 visits per center per day or 0.10 annual contacts per person whereas required utilization rates in successful community health schemes (on Java) proved to be 0.5-1.0 consultations per person per annum 2/ (depend- ing on the intensity of outreach activities). Outreach services (home visits) and back-up support to the few small village health clinics are neglected. People depend on expensive self-referral to the Kabupaten hospital in Kotabumi or the provincial hospital in Tanjungkarang. 1/ Severe, moderate and mild malnutrition being defined as below 70 percent, 70-80 percent, 80-85 of Indonesian standard, which in turn is 85 per cent of Walamsky/Jeliffe international standard. 2/ This is much lower than standards for other countries, e.g. 2-1/2 annual visits per person given by Maurice King for East Africa. ANNEX 9 Page 5 13. There are small village health clinics (MCH clinics, Polyclinics and Sub-Puskesmas) in Bumi Restu, Panaragan Jaya, Pulung Kencana, Mulyoasri, Panaragan and Karta. They are staffed by auxiliaries, who are poorly super- vised. Coverage and utilization are low and there is no active community involvement in health services. There seems to exist a strong traditional sector, consisting primarily of local midwives (dukun). C. The Project 14. The Project's low-cost, community-based health system would consist of the services modules (i) environmental sanitation, (ii) malaria control and immunizations, (iii) primary medical care, (iv) community health education, (v) nutrition, and (vi) family planning, as well as the support modules, (vii) training, (viii) administration, and (ix) monitoring. 15. The Project would rely wherever possible on ongoing programs (e.g. INPRES Kesehatan) and would only supplement and extend these programs wher- ever deemed necessary for effective basic health services delivery, i.e. primarily at the grass-roots level. This approach ensures that Project- supported activities would later (i.e., after the phasing-in period) be taken over and adequately maintained by the regular, official health services sys- tem. The health component would be carefully monitored and evaluated, in order to develop and improve implementation criteria for rural health policy at the village level. (M) Target Groups and Community Participation 16. The system would have to cover about (i) 11,000 existing families plus 1,500 families to be resettled in Way Abung, and (ii) 2,000 existing families plus 4,500 families planned for Baturaja, i.e. some 17,500 families or 87,500 people. Existing villages typically comprise 2,000-4,000 people; the ten new villages in Baturaja are planned for 500 families each. The smallest unit of village organization is the traditional dukuh, consisting of about 20-50 families. 17. Active community involvement in decision-making, delivery of services and financing would be essential to ensure social acceptance, high utilization rates, preventive care emphasis, cost-effectiveness and increased self-sufficiency of the community health system. Experimental projects in Java show that the closely knit Indonesian communities with their strong tra- dition of mutual self-help (gotong royong) afford a promising basis for vil- lagers' participation in health services delivery. In the Project's new settlement areas, i.e. primarily Baturaja, community health promotion cannot be based on well established village structure and leadership patterns. Com- munities would have to be newly formed. However, given the transmigrants' mainly Javanese origin (and therefore strong gotong royong tradition) and ini- tially high dependence on community support, active involvement in health services is expected to be introduced in the first years of the Project. ANNEX 9 Page 6 18. Villagers' participation would consist of: (i) election of village health committees 1/ to organize and administer community cooperation in health (para. 30); (ii) selection of community members to be trained as Village Health Promoters (Promokesa) and to perform as part-time volunteers (para 24); (iii) establishment of and contribution to Village Health Insurance Schemes (Dana Kesehatan Desa) to finance grass-roots health services through prepayment, i.e. small monthly premiums of members, rather than fees-for-service (para. 37); and (iv) contribution of labor (and local materials) to construction and maintenance of simple health posts, hand-dugwells and pit latrines as well as health campaigns (e.g malaria control, supplementary feeding, health education) (paras 20-23). (II) Health Facilities 19. The Project would develop a two-tier health care system, i.e. small village health posts and second-tier health centers (Puskesmas). Serious cases would be referred to Kabupaten (Kotabumi, Baturaja) or provincial hospitals (Tanjungkarang, Palembang). 20. Village Health Posts. Health posts would cover some 2,000-4,000 people each and be typically located in villages of 500 families. The Pro- ject would thus support constructing, upgrading and equipping some: (i) 22 health posts in Way Abung; and (ii) 10 health posts in Baturaja. The buildings would comprise 1-2 rooms, i.e. about 20-25 m2 and possibly be attached to the community cent r or primary school. Unit cost of construction would be some US$2,400 ($100/m ); cost of equipment about US$500. Contribu- tion of local labor and materials through community self-help (gotong royong) would be required. 21. Health Centers. Coverage of a Puskesmas would be some 6,000 set- tler families or 30,000 population. The Project would support and supplement the INPRES Program construction and (UNICEF) equipping of: (i) 2 Puskesmas in Way Abung, in the villages Daya Murni and Panaragan Jaya; and (ii) 1 Puskesmas in a centrally located Baturaja village. 1/ As a part of the community development committees that are set-up in each village by DGT. ANNEX 9 Page 7 The standard building comprises 80 m2, but in the Project areas 3-4 materni y bed (inpatient facilities) would be added so that size would be about 120 m. The Project would also provide for the construction of 4 staff houses for the physician (80 m ) and 3 paraprofessionals 60 m each). 1/ Unit cost of construction would be around US$47,500 ($125/m ) and cost of equipment about US$5,000. Each center would be provided with two motorcycles ($850 each) and a four-wheel drive vehicle ($8,000) for supervision and referral activities as well as malaria control campaigns. 22. Water Supply. The Project would provide an average for one hand-dug well with hand pump per five families 2/. Given the extremely small scale of INPRES program activities in rural water supply (and latrines) 3/, the Project would not simply supplement (as in the case of Puskesmas) but substitute for this program and considerably expand construction. In Baturaja, however, given present lack of hydrological information, the provision of such wells cannot be guaranteed to be successful. Alternative means of collecting water, such as rain water collection from roofs in closed container, two boreholes per dukuh (20-50 families) and small reservoirs for both irrigation and drinking water, are therefore being explored. It is estimated that about: (i) 2,000 wells would constructed or upgraded (adding concrete covers and pumps) in Way Abung; and (ii) 600 wells or corresponding facilities constructed in Baturaja. Unit cost would be about $180 and community participation in construction would be required. 23. Latrines. The Project would provide for one pit latrine per family at a unit cost of about $36. Number of latrines to be constructed or up- graded is estimated to be about: (i) 5,000 in Way Abung; and (ii) 4,500 in Baturaja. The community would contribute to construction. I/ Differing from the INPRES Program's 3 staff houses, the Project would also provide a house for the sanitarian. 2/ If necessary, deepwells with handpumps would be provided to serve 10 families. 3/ In 1975/76, only 460 wells with hand pumps for all of Lampung Province and 10 pumps for Way Abung. ANNEX 9 Page 8 (III) Health Manpower 24. Village Health Promoters. Since delivery of primary health care at the small village (grass-roots) level constitutes an only recent addi- tion to national health policies and is still considered to be in the ex- perimental stage, the Project would allow for flexibility in staffing and task assignment patterns at the village health post level (learning-by- doing process). Health posts would be staffed by Village Promoters (Promo- kesa) who would be selected by the community and Puskesmas staff to perform on a part-time voluntary basis as community health workers. Allowing for a 20 percent drop-out rate, some 71 promoters, i.e. two per post, would be trained locally by the Puskesmas staff twice weekly for six months and attend annual refresher courses at the Puskesmas. In later years, addi- tional promoters would be trained to eventually achieve a ratio of 50 house- holds per part time voluntary health worker or about 10 volunteers per health post and village. I/ Training cost is estimated to be about $325 per person. They would be paid an annual honorarium of $145 during the initial 2 years by DGT, until income levels of transmigrants have been increased and community contribution to health care developed. Task assignments of health promoters would emphasize preventive services, such as MCH and immunization, and out- reach activities, such as home visits for health and nutrition education. 25. Health Center Personnel. In order to evaluate relative cost- effectiveness of alternative staffing patterns, health center personnel would comprise: (i) in one of the Way Abung Puskesmas, probably Daya Murni, the recommended staff of the INPRES Puskesmas Program, i.e. physician, mantri, bidan, sanitarian, laboratory technician, dental auxiliary, office clerk and 2-3 malaria spray men; in addition a primary care nurse (PKK or Perawat Kesehatan Keluarga; see para. 5) would be assigned to every fourth village health post for supervision of health promoters; and (ii) in the other Way Abung Puskesmas and in Baturaja, a physician, sanitarian, laboratory technician, dental auxiliary, office clerk, 2-3 spray men and 4 PKK; PKK would be assigned maternity inpatient care, outpatient care and back-up support of health posts. 26. In order to provide continuous support and supervision to village health promoters, at least one weekly visit to every health post would have to be programmed. To avoid detrimental impact on community health activi- ties, the physician should not supervise health posts and never be point of first contact. Supervision should be performed by paraprofessionals (PKK, sanitarian) only. 1/ Successful community health schemes in Solo/Java show a ratio of as few as 10 households per voluntary health worker. ANNEX 9 Page 9 27. Allowing for a 20 percent drop-out rate, some 19 PKK would be trained under the Project by sending existing, qualified assistant nurse- midwives of Way Abung or selected from new transmigrants for a one year upgrading course to the PKK school in Yogjakarta at a cost of $4,400 per person. In later years, transmigrants with junior high school could re- ceive a three years training at the PKK school in Lampung, which will be established next year. The Project would also train 6 sanitarians in Tanjungkarang at a cost of $2,650. 28. Salaries and incentives of Puskesmas staff would be: (i) $120 per month for the physician during his three years of bonding; but since transmigrants will not have suffi- cient income to support private practice, the salary thereafter would probably have to be some $360 in order to retain the physician in the rural area; (ii) $60 per month for the PKK, mantri and bidan; and (iii) $20-$40 per month for other Puskesmas personnel; spray men are paid $0.18 per house, i.e. about $1.80 per day. 29. Assurances would be sought from GOI that Puskesmas would be fully staffed as well as adequately supervised and supported by Kabupaten (Dokabu) and provincial (IKES) health administrations. (IV) Health Activities 30. Task Assignments. Regular activities of village health promoters would include: (i) promotion of community participation in organizing and delivering services as well as financing of operating cost through the Dana Kesehatan Desa prepayment scheme; (ii) health education through regular home visits and courses in elementary schools; (iii) hygiene and sanitation by promoting community contribution to construction and upgrading of wells and latrines and advising on proper use and maintenance of facilities; (iv) communicable disease control through immunizations and epidemiological surveillance, particularly malaria case detection and administration of chloroquine tablets; (v) mother and child care, including nutrition and family planning as well as supervision and guidance of traditional midwives (dukuns); and ANNEX 9 Page 10 (vi) primary medical care by providing simple curative services and referring serious cases to the Puskesmas. 31. Food Supplementation Program. Given the malnourished and debili- tated status of arriving settlers as well as initial food deficit and low income levels, the Project would entail a food aid component which is des- cribed elsewhere. Under the health component, however, a three-year food supplementation program would be introduced for under-fives and lactating women.1/ About 25 percent of under-fives and 50 percent of lactating women are expected to be initially identified as being in need and would recelve a daily food supplementation of two parts corn and one part soy bean; children would receive 60g and mothers 120g for an average of 80 days. Cost of the corn/soy bean mixture is estimated to be about $0.35 per kg. Distri- bution of food supplements would be through the network of village health posts. 2/ 32. Malaria Control. In view of malaria endemicity and the suscepti- bility of non-immune settlers, the Project would provide for malaria con- trol campaigns, i.e. supplies of DDT and chloroquine, house-spraying before arrival of settlers and malariometric surveys. Passive case detection and suppressive treatment would be administered through village health posts (para. 30). Preventive drug treatment (600 mg chloroquine every two weeks or at least monthly) would be administered in transit centers before arrival of settlers in the Project area. Annual cost of preventive and suppressive drug treatment is estimated to be about $0.55 per family over two years. Houses would be sprayed with DDT before settlers are moved to the area and then be carried out twice a year over two years at a cost of about $1.90 per farmily per year, i.e. $1.50 for DDT and $0.40 for spraying. The exist- ing Way Abung settlement would also be covered. The annual cost of pre- ceding malariometric surveys is estimated to be $0.85 per family over two years. 33. Assurances would be sought during negotiations that: (i) transmigration areas would receive first priority in DDT spraying; (ii) logistics of DDT and chloroquine supplies would be improved by national and provincial Communicable Disease Control Units of the health administration; 1/ This program has been coordinated with and follows the approach of the Nutrition Intervention Pilot Program (NIPP) of the Bank's forth- coming nutrition project in Indonesia. 2/ This causes the unit cost of food supplementation to be lower than estimates for the nutrition project. ANNEX 9 Page 11 (iii) sufficient number of spray teams, spraying equipment and vehicles would be available for initial spraying; and (iv) coordination between Department of Transmigration and the provincial health administration would be improved to ensure drug administration to settlers before arrival in the Project area. (V) Monitoring and Evaluation 34. The Project's innovative community-based approach to delivery of health services would require careful monitoring and evaluation (management information system) of disease prevalence levels, social acceptance and utilization rates, and cost-effectiveness of interventions. The Project would finance a monitoring and evaluation program to be developed by the Institute of Health Research and Development of the Ministry of Health. The program would be integrated into overall Project monitoring and coor- dinated with similar AID-funded activities of the Institute. Careful evaluation could produce criteria for designing cost-effective health components of future transmigration projects. (VI) Cost Estimates 35. Table 9.1 summarizes investment, training and annual operating costs of the Project's environmental sanitation and health services components. Estimates represent total cost of the program and therefore include items which would not have to be financed under the Project (para. 37), i.e. which are provided through ongoing programs (mainly INPRES Kesehatan). (VII) Financing, Organization and Management 36. Financing. Table 9.2 gives the financing of investment training and operating cost by different sources. The Project would provide for all training cost and most of the construction and equipment cost. The INPRES Kesehatan Program would finance about 55% of the cost of the three health centers. In existing settlement areas (Way Abung), villagers would be re- quired to provide labor for construction or upgrading of wells, latrines and village health posts. They would be paid, however, through a Food for Work Program or in cash. 37. The Project would pay a small honorarium to village health pro- moters during the first two years; they would then be supported by their communities. The Project would also finance 80% of the incremental cost of medicines and materials during three initial years, until Dana Kese- hatan Desa (Village Health Insurance) schemes would have been established. 38. Further, the Project would bear the full cost of the initial malaria control and food supplementation programs and of vehicle main- tenance. Finally, it would supplement salaries of Puskesmas staff over ANNEX 9 Page 12 five years. Total Project cost would be $1.46 million of which about 70% are construction and training costs, 24% operating costs and 6% cost of monitoring and evaluation. 39. Assurances would be sought from GOI that: (a) INPRES funds for the three Puskesmas would be allocated; (b) the full Puskesmas staff would be adequately paid; and (c) sufficient supplies of medicines and materials would be provided. 40. Organization and Management. The Directorate of Transmigration as Project authority would coordinate, supervise and finance implementation of the health services system. A Steering Committee on Development of the Health Sector in the Transmigration Project would be formed in the Department of Health in order to provide policy and technical guidance. It would be chaired by a representative of the Department's Institute for Health Research and Development and include members of the Directorates of Community Health Services, Communicable Disease Control and Sanitation. It would report directly to the Minister of Health and to the Transmigration Council. 41. The Department of Health, through its INPRES Kesehatan program, the provincial health administration (IKES) and the Dokabu would be res- ponsible for technical implementation and operation of the system. Physical construction would be throujgh contractors. The Institute for Health Research and Development would monitor and evaluate the cost-effectiveness of the health care delivery system. A.NNEX 9 Table 9.1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Baturaia and Way Abung Village Infrastructure - Health Services -------- Total------- % ---------------Year------------- -- Rp Foreign Units Unit Cost 1 2 3 4 5 Million j000 Exchange A. 1ATURAJA ---------------------Rp million--------------------- Investment and Training Cost Handpump wells 900: 75 7.5 15.0 22.5 22.5 - 67.5 162.6 50 Latrines 4,500k' 15 7.5 15.0 22.5 22.5 - 67.5 162.6 5 Village health posts Construction 10 1,200 2.4 2.4 3.6 3.6 - 12.0 29.9 30 Equipment 10 210 0.4 0.4 0.6 8.6 - 2.0 4.8 100 Health center and staff hossing- Construction 1 . 23,640 23.6 - - - - 23.6 56.9 30 Equipment 1 2,100 2.1 - - - - 2.1 5.1 100 Vehicles Motorcycles 2 360 0.7 - - - - 0.7 1.7 75 Four-wheel drive 1 5,200 5.2 - - - - 5.2 12.5 75 Village health promoter 241 135 0.7 0.7 0.9 0.9 - 3.2 7.7 - Primary care nurse (PIK) 10g 1,8251/ 9.1 - 9.1 - - 18.2 43.9 - Sanitarian 3 1,100 2.2 - 1.1 - - 3.3 8.0 - Sub-total 61.4 33.5 60.3 50.1 - 205.3 494.7 30 Annual Operation Cost Salaries and honorariums Village health promoter 20 60 0.3 0.6 0.6 0.8 0.4 2.8 6,7 - Primary care nurse (PKK), mantri, bidan 6 300 - 1.8 1.8 1.8 1.8 7.2 17.3 - Sanitarian 1 300 h/ - 0.3 0.3 0.3 0.3 1.2 2.9 - Physician 1 600-1,00 - 0.6 0.6 0.6 1.8 3.6 8.7 - Other health center staff 9 1451 - 0.9 0.9 1.3 1.3 4.4 10.6 - Maintenance of vehicles 1 1,660 1.7 1.7 1.7 1.7 1.7 8.5 20.5 30 Medicines and materials 6,0003/ 1.0 1.0 1.5 2.5 6.0 6.0 17.0 41.0 100 Food supplementation (under gives and lact. mothers) 2,1001/ 1.2m 0.4 0.6 1.1 2.5 2.5 7.1 17.1 100 Malaria control Malariometric surveys 6 000' 0.35 0.4 0.5 2.1 2.1 0.5 3.6 13.5 - DDr spraying 6sooo/ 0.80 0.8 1.2 2.4 2.4 1.2 8.0 19.3 100 Monitoring and Evaluation 1.9 1.5 1.5 1.5 L.9 8.3 20.0 - TOTAL - BATURAJA 67.9 44 7 75.8 71.1 19.4 279.0 672.3 34 B. WAY ABUNG investment and Training Cost Handpump wells 2,000Y 75 15.0 37.5 37.5 37.5 22.5 150.0 361.5 50 Latrines 5,0oo/ 15 7.5 19.5 19.5 19.5 9.0 75.0 180.7 5 Village health posts Construction 22 1,200 7.2 9.6 9.6 - - 26.4 63.6 30 Equipment 22 210 1.3 1.7 1.7 - - 4.7 11.3 100 Health center and staff housing / Construction 2 23,640 23.6 23.6 - - - 47.2 113.7 30 Equipment 2 2,100 2.1 2.1 - - - 4.2 10.0 100 Vehicles Motorcycles 4 360 1.4 - - - - 1.4 3.5 75 Four-wheel drive 2 5,200 5.2 5.2 - - - 10.4 25.0 75 Village health promoter 54_ 135 2.0 2.7 2.6 - - 7.3 17.6 - Primary care nurse 94/ 1,825 16.4 - - - - 16.4 39.6 - Sanitarian 3 1,100 3.3 - - - - 3.3 7.9 - Sub-total 85.0 101.9 70.9 57.0 31.5 346.3 834.5 35 Annual Operating Cost Salaries and honorariums Village health promoter 44 6OA/ 0.9 2.1 2.3 1.1 - 6.4 15.4 - Primary care nurse (PKK), mantri, bidan 9 3008 - 2.7 2.7 2.7 2.7 10.8 26.0 - Sanitarian 2 300 - 0.3 0.6 0.6 0.6 2.1 5.1 - Physician 2 600-1, 00 - 0.6 1.2 1.2 2.4 5.4 13.0 Other health center staff 12 1451' - 0.9 1.8 1.8 1.8 6.3 15.2 - Maintenance of vehicles 2. 1,660 3.3 3.3 3.3 3.3 3.3 16.5 39.8 30 Medicines and materials 12,5004/ 1.0 11.0 11.5 12.0 12.5 12.5 59.5 143.4 100 Food supplementation (under fives and lact. mothers) 3,5001/ 1.24/ 4.2 4.2 4.2 - - 12.6 30.4 100 Malaria control Malariometric surveys 12,500-i 0.35 3.9 4.0 0.2 0.2 - 8.3 20.0 - DDT spraying 12,500i/ 0.80 8.8 9.2 0.4 0.4 - 18.8 45.3 100 Monitoring and Evaluation - - 8.2 4.2 4.2 4.2 8.2 29.0 70.0 - TOTAL - WAY ABUNG 125.3 143.0 103.8 85.0 63.0 520 1.253.3 41 a/ Constant 1976 prices. h/ Construction or upgrading (concrete cover). c/ Including 4 staff houses. 7/ Two sides per post and assuming 20% drop-out rate. e/ Assuming 20% drop-out rate. T/ One year upgrading course for existing, qualified assistant nurse midwives at Rp 5,000 per person/day. &! Honorarium of Rp 5,000 per month during initial 2 years. h' Rp 50,000/month during three years bonding and Rp 150,000/month thereafter. / Average salary of Rp 12,000/month. 1/ Family units. k/ Total cost of Rp 500 per person/years; i.e. Rp 2,000 per family/year; but incremental cost under the project assumed to be 50%; i.e. Rp 1,000 per family/year. 1, Assuming 40 per 1,000 lactating mothers and 200 per 1,000 under-fives of which 50% of mothers and 25% of under-fives would be in need. m Rp 15 per day for 80 days. ANNEX 10 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Roads and Transport A. Existing Systems 1. The main features of the transportation infrastructures in the provinces of South Sumatra and Lampung are: - the ports of Palembang and of Panjang near Telekbetung/ Tanjungkarang; - airports of which Palembang and Telukbetung can received medium size aircraft; - the railway lines connecting Palembang with Lubuklinggau and Palembang with Tanjungkarang; - the national highways connecting the same cities in virtually the same corridors; - the provincial roads connecting Kecamatan 1/ centers to the main road system; - the feeder roads, often insufficient in number and quality; and - the rivers descending from the Bukit Barisan mountains and which are navigable for small river craft, at least part of the year. 2. The port of Palembang is situated 86 km up the Musi River and can accommodates 5,000 ton ships. Oil and fertilizers are the main goods exported, but it is also the shipping point for rubber, coffee and forest products. The port at Panjang is situated on the southern tip of Sumatera, approximately 30 km from Telukbetung, and it is linked by ferry service, soon to be improved, to Merak on West Java. A port Master Plan Study is at present being carried out with ADB financing. I/ sub districts. ANNEX 10 Page 2 3. The South Sumatera railway system connects the port of Palembang with the hinterland centers of Prabumulih, Kotaraja, Kotabumi, and the commercial center of Telukbetung/Tanjungkarang and its port, Panjang. From Prabumulih there is also a connection through Muara Euim (Bukit Assam coal mines) and Tebingtinggi to Lubuklinggau. The railway carries only modest tonnages, and is in a reasonable operational condition. Improvements are underway, supported by the Bank's First Railway Project. 4. The Trans-Sumaetra road which connects Telukbetung/Tanjungkarang with Lubuklinggau, Padang and Medan, is the main road in the area. It passes by the railway and administrative centers of Kotabumi, Martapura, Baturaja, Muara Enim and Tebingtinggi. 5. There are only a limited number of provincial roads. In the province of Lampung the road Terbanggi Basar - Gunung Batin - Menggala forms the eastern border of the Way Abung settlement area. In the province of Sumatera, two provincial roads are important for the Baturaja Settlement area: Kayu-Agung-Martapura (improved with Pertamina financing) and Prabamulih-Baturaja. 6. The feederroad system is not well developed, and is of poor quality. Logging tracks are made where necessary and are not part of the government road system. 7. The basic infrastructure for the two provinces can be considered to be sufficient, and provided that the current plans for rehabilitation and betterment of the road, railway and port system are implemented would form suitable basis for the increased level of utilization resulting from the transmigration program. B. Proposed Project Development Objective 8. The objective of the Project's road component is to establish a low-cost feeder road system in the transmigration area to: - link the project areas by means of all-weather main access roads to the national and provincial road network, to the railways and the ports of Palembang and Panjang, and to the Kabupaten capitals of Kotabumi, and Baturaja as well as the regional centers of Menggala, and Martapura. - provide all-weather village roads between the village centers in the settlement areas and the main access roads; and ANNEX 10 Page 3 - provide dry-weather dukuh tracks to facilitate access from the village centers to the dukuhs; trails in the rubber area would be constructed in the course of rubber development by PNPX. Baturaja Area 9. The Baturaja settlement area receives its access from the national road Baturaja-Martapura. A 15 km long main access road with a light ashpal- tic pavement would lead to the main village, and lower standard village roads would connect the main access road to the different villages. Dukuh tracks would connect the housing blocks with the village roads. Simple trails would be made in the rubber areas by PNPX. 10. Consultants assisted the Transmigration Department with the preparation of the structural plan and preliminary proposals for the road system of the settlement area. The road alignments have been designed, wherever possible, to follow the crests of the ridges. The advantage of this practice is that the ridge tops are well drained, and relatively level, thus reducing earthworks and limiting the number of stream crossings to a minimum. 11. The main access roads would have an embankment width of eight meters, with three meters of penetration macadam asphaltic pavement and hard shoulders of one meter on each side. The village road would have the same embankment width with a pavement width of three meters with 15 cm (average) crushed stone or gravel varying from 20 cm for most travelled portion, to 10 cm on roads serving only 1 village. The dukuh tracks would have a five meter embankment with some provision for lateritic soil or crushed gravel on sections where required. Bridges will be 3.5 m wide between the curbs and will be constructed in wood except for a 15 m bridge over the Gilas river where a permanent bridge will be constructed. Way Abung Area 12. The basic road formation has already been provided, but has no pavement structure and insufficient drainage. The present roads are hardly passible in the dry season and traffic comes to a halt in the rainy season. 13. The project would provide for the completion of the main east-west road Bandar Agung-Gunung Batin (30 km) and the main north-south road (20 km) through the main village of the Way Abung II area. These two roads would be completed to the standards of a main access road as described above with a light asphaltic pavement. A further 50 km would be completed to the stand- ards of village roads. In addition, the project would provide for light betterment works (up to 50 km) on existing roads which are in an unsatis- factory condition, such as Kotabumi-Bandar Agung and the east-west road on the south side of the Tulang Bawang river leading to Menggala. ANNEX 10 Page 4 Cost Estimates 14. Cost estimates were prepared by the consultants and amended by the appraisal mission. Unit costs are estimated as follows: Baturaja Way Abung ----Rp Million/km------ Main access road 14 12 Village roads 5 8 Dukuh track 0.4 - Road betterment - 8 15. The physical plan for Baturaja provides the length of the roads, although during the implementation stage amendments will have to be made. A special contingency of 15%, on village roads, dukuh roads and farm trails, above the quantity contingency, has been provided in the event that the topographical variation demands dukus spread further apart than the current schematic plan has allowed. The foreign exchange component is estimated at about 65%. Engineering and supervision costs normally would amount to about 5% each of construction costs. Provision is made in the Technical Assistance item financed under the project to provide expatriate experts if and when required. Detailed cost estimates are shown in Table 10.1. Planning and Execution of Highway Works 16. The central Government through the Directorate General of Highways (Bina Marga) is responsible for the national highways; Bina Marga is part of the Department of Public Works and Power, which includes also the Direc- torate General of Water Resources Development (water supply, irrigation, etc.) and the Directorate General of Cipta Karga (urban and rural development, buildings, etc.). The Provincial Administration, through the Bina Marga section of the provincial Public Works Departments, are responsible for pro- vincial roads, and district administration (Kabupatens) for district roads. However, the center of responsibility changes with the sources of finance; project with foreign finance assistance usually come under the Central Government. 17. At present 30 km of main access road and village roads in the Baturaja area have been surveyed and designed, as well as the 30 km man east-west access road in the Way Abungg area. Preparation of final design and contract documents for all road works and bridges will be undertaken by the PMU (or through Bina Marga). Contractors would be pre-qualified, and selected through local competitive bidding. Construction scheduling, site supervision and cost control would be the responsibility of the PMU (or Bina Marga), utilizing the professional skills available through con- sultants to the PMU, or Bina Marga. INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Road Costs and Implementation Schedule (Constant 1976 Rp Millions) Unit Cost/km Total Cost Foreign (Rp Mil) Total Km 27 196 127 1978 12 1980 Rp Mil. $_ Echange BATURAJA Main Access Roads 1T 15 - 210 - - - - 210 0.51 ) Village Roads 5 107 - 107 107 160 161 - 535 1.29 ) 65 Farm Roads 0.4 286 - 23 23 34 34 - 114 0.27 Sub-Total - Roads - 340 130 194 195 35 894 2.07 ) Bridges - Culverts and Fords - 215 57 72 - - 344 0.83 ) Sub-Total - 555 187 266 195 35 1238 2.98 ) Engineering and Supervision 5% 15 23 7 10 6 1 62 0.16 - Tot4l Baturaja 15 578 194 276 201 36 1300 3.13 62 WAY ABUNG Main Access Roads 12 50 - 430 170 - - - 600 1.45 ) Village Roads 8 50 - - 100 100 100 100 400 0.96 ) Improvements to Existing ) Roads 8 50 - - 100 100 100 100 4o0 0.96 ) 65 Sub-Total - Roads - 430 370 200 200 200 1,400 3.37 ) B r i d g e s a n d C u l v e r t s - 7 0 3 0 4 0 4 0 2 0 2 0 0 o . 4 8 ) Sub-Total - 500 400 240 240 220 1,600 3.85 ) Engineering and Supervision 5% 13 22 16 12 12 5 80 0.19 - Total Way Abung 13 522 416 252 252 225 1,680 4.04 62 OO * ANNEX 11 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Organization and Management A. Legal Framework and National Coordination 1. The transmigration program is governed by a series of laws, decrees and regulations. The most pertinent of these currently is Statute No. 3, 1972 concerning the Basic Stipulations for Transmigration. In addition two Presidential Decrees prescribe the framework within which the general transmigration program operates. These are: Presidential Decree No. 29, 1974, which creates the three major transmigration policy bodies and Presidential Decree No. 44, 1974, which specifies the organi- zational structure of government departments, including the Directorate General of Transmigration (DGT). 2. Presidential Decree No. 29 created three coordination levels for the transmigration program as follows: National Provincial Disctrict Expansion Body Guidance Body Implementation Body Chairman: Minister for Manpower, Governor District Chief 1/ Transmigration and Cooperatives Members: Representing other Departments - See Chart 9346 Executive: Director General Provincial District Represen- for Transmigration Director for tative of Depart- Transmigration ment of Transmigra- tion or alternative Duties: Coordinating, planning, Formulation of Coordination and execution, control provincial administration of and supervision of policies and local operations development in trans- priorities and project migration areas at implementation both national and regional levels 1/ Bupati. ANNEX 11 Page 2 3. It is evident that while responsibility for the execution of GOI's transmigration program rests with the Ministry of Manpower, Transmigration and Cooperatives and its Director General of Transmigration, the GOI relies to a very large degree on the provincial and district governments for both policy and implementation. 4. The Director General for Transmigration, whose Head Office is in Jakarta, is represented in each province by a Provincial Director for Trans- migration responsible functionally to the Director GenerT but administra- tively to the Governor, who is locally the senior representative of central government, and hence, in this case, the Expansion Body. 5. At the district level DGT is represented by a district represent- ative, who is functionally responsible to DGT, but who is required to coor- dinate all local transmigration activities with the district administration through the local implementation body. B. The Department of Transmigration 6. The Directorate General of Transmigration (DGT) is in the Ministry of Manpower, Transmigration and Cooperatives; Presidential Decree 45 of 1974 created the administrative and secretariat functions of DGT and four opera- tional directorates 1/ as follows (Chart 9423): Directorate Duties Planning and Programming: Long-term planning, settlement area identifi- cation acquisition, preliminary area design, budgeting, liaison with other Ministries. Project Preparation and (a) Detailed preparation of projects, including Implementation : agricultural development, physical planning, road and building design, and (b) implementa- tion of projects. Settler Recruitment and Recruitment of transmigrants and their movement Placement : to, and placement in, the settlement areas. Development and Guidance: Development of leadership and community ser- vices, village administration, continuing services (e.g., agricultural extension, edu- cation, health) of the settlements after transmigrants and social infrastructure is in place. 1/ In addition to these directorates there is a Training Research and Evalua- tion Directorate which will be allocated to the office of the Minister and will provide services to DGT. ANNEX 11 Page 3 7. These four directorates and the staff assigned to them have over- all responsibility for planning and supervising all transmigration projects in Indonesia, but the actual implementation has usually been carried out by the local provincial and district staff, assisted where necessary by head- quarters and specialist staff from other government departments. Each of the provincial directorates duplicates the headquarters structure; those in the outer islands with implementation responsibility have larger staffs in planning, preparation and development directorates, while those in the inner islands concentrate on recruitment and placement. The structure of the district level offices reflects even further their task-orientation: typical area of origin, and area of settlement district offices are shown in Charts 15546 and 15547. 8. Past transmigration projects have generally been of a very simple nature, due to minimum planning and limited funds. Follow-up development in these areas has been poor and untimely due to poor coordination with other GOI departments and local authorities. GOI is aware of these problems and has increased DGT's budget and instituted the three-tiered coordinating or- ganization (para 1-5). However, DGT faces both a recognized change in the technical complexity of planning of new settlement areas and a lack of ade- quately trained manpower to deal both with these complexities and the in- creased volume of settlement required by the Pelita II targets. 9. To strengthen DGT at the National headquarter's level, both admin- istratively and technically, a UNDP Technical Assistance project has been introduced, at the request of GOI, to improve the quality of general policy development, as well as specific project design. Ten expatriate specialists had been planned for, to work within the four operating directorates and the secretariat, an additional 100 man months of unspecified assistance and fellowships funds for overseas training of DGT staff had been allocated. The recent reduction in UNDP funds has resulted in a cutback in this assist- ance to seven specialists, and 50 man months of unspecified assistance. All the fellowship funds have been cut. DGT is presently considering if it wishes to refinance parts of this program with funds from this project. Table: UNDP Technical Assistance man/months man/months Project Manager 64 Topographer - Surveyor 36* Agricultural Economist 48 Agronomist - Food Crops 24 Financial Planner 24 Agronomist - Tree Crops 24* Land Use Planner 36 Extension/Training Officer 24 Farn Production Economist 36* Land Tenure Expert 18 Unspecified 100* * Not appointed prior to cut-back: could be refinanced in part under this project. ANNEX 11 Page 4 10. UNDP intends to finance a feasibility study for a 100,000 ha settlement and rehabilitation project in S.E. Sulawesi, with ADB as the exe- cuting agency providing Technical Assistance. Further Technical Assistance (144 man months) is being provided by USAID for a project in S. Sulawesi and by the British Government (270 man months) for a 400,000 ha. land use/land capability survey astride the Trans-Sumatera Highway. Dutch Technical Assist- ance for the survey and planning of 200,000 ha in Southern Sumaterb is also under consideration. C. The Project Management Units 11. Because a number of multilateral and bilateral agencies are pre- sently supporting various aspects of DGT's program, the Director General has created a number of project management units (PMU). These units will have the responsibility for coordinating the inputs and activities of DGT's opera- tional directorates, at the national and provincial levels. However, at the district level, the site manager for the project, who is ultimately respon- sible for day-to-day implementation activities other than civil works, would be responsible directly to the PMU, while DGT's district manager would act as the local coordinator with the district administrator (through the implementation (para 1-5), on behalf of the PMU (Chart 15548). 12. The Bank has advised DGT that for large projects, and especially those that constitute DGT's only activities in a province or district, this structure might become unmanageable. However, as these PMU's have just been instituted, a period of trial has been recommended to enable a review to be based on actual problems encountered. The Bank would review the functioning of the PMU charged with implementation of its project during periodic super- vision, and would conduct an extensive review with GOI at the end of the second year of implementation. Assurances would be sought from GOI, that this review would be acceptable, and that organizational changes, if neces- sary, would be implemented on a timetable established during that review. 13. The PMU for this project would be headed by a project director; DGT had filled this position at the time of final appraisal. At headquarters, the project director would be assisted by an agriculturalist, civil engineer, land settlement specialist, a general administrator. A project accounting team, would be assigned to the PMU. Two site managers would be appointed for Baturaja and Way Abung respectively. Each of these managers would have four assistants, filling the corresponding tasks of the four assistants at head- quarters and an accounting team directly responsible to the Head of the Project Accounting Unit. 14. The PMU would have responsibility for preparing the annual bud- gets for the project, and for expenditures from those budgets. The primary task of coordinating would be achieved through this control of budgetary resources. The assistants would act as professional liaison/counterparts to the various contractors to DGT (para 16), and would draw up the TOR's for ANNEX 11 Page 5 consultants to be hired through this project. The project manager would be responsible for coordination between the PMU and the operational directorates of DGT; he, with the counterpart directors, would be responsible for coordi- nation between DGT and other GOI ministries responsible for various aspects of project planning and implementation. D. Project Staff, Technical Assistance and Consultants Staff 15. DGT has a total staff of 3,400 of whom about 350 are professionally trained and in senior positions, 1,600 middle level technicians and 1,500 low-level employees. It is proposed under the Pelita II program that this staff level should be increased to over 8,000, and of these 2,000 would be professionally trained and over 4,000 technically trained. In the Provinces of Sumatera Salatan and Lampung DGT has 200 and 750 employees respectively, but as the emphasis for transmigration will shift from Lampung to Sumatera Salatan, the staff in the former is expected to increase to 250. As DGT has administrative responsibility for transmigration areas for only the first five years after settlement, DOT staff is continuously being released from completed areas for reassignment to new areas. 16. For this project, additional DGT staffing requirements would be limited to those areas where the settlement process would not be different from the past, e.g., Recruitment & Placement and Guidance and Development. 17. DGT would make arrangements satisfactory to the Bank to retain a qualified consulting firm to field and supervise a team of experts who would assist the PMU in the detailed planning and implementation of the project. This consultants' team would consist of: (a) 1 Land Development Expert for up to three years, as Team Leader; (b) 2 Land Development Experts for up to three years (including at least one expert specialized in food crop development); (c) 1 Civil Engineer for up to 18 months with experience in rural works and quantity surveying; (d) 1 Livestock Adviser for up to 2 years to assist in cattle procurement and distribution; (e) 1 Hydro-Geologist for a total of 12 man-months over the course of two years to assist in planning and implementation of the village water supply; and (f) approximately 15 man-months of short term expert assist- ance in fields to be identified in the course of project implementation. ANNEX 11 Page 6 Prequalified consulting firms, acceptable to the Bank, have been invited by DGT to submit staffing proposals and work programs in response to Terms of Reference which were prepared in consultation with the Bank. Signing of the contract between DGT and the selected consulting firm would be a condition of loan effectiveness. Technical Assistance and Consultants 18. In addition the PMU would have funds available for 80 man/months of unspecified consultancy time, for short-term assistance either in future project area identification and planning, or in detailed area preparation. 19. The Directorate of Planning would appoint an Agriculturalist (24 m/m), an Agricultural Economist (24 m/m), and utilize an additional 75 man-months of unspecified technical assistance, for general project preparation or to make up the shortfall in UNDP/FAO technical assistance. 20. Technical assistance to other GOI agencies and implementation contractors are described in the relevant annexes and are summarized below: Agency Specialist Duration CRIA Annual Crops Specialist 36 man months PNP X Rubber Advisor 5 years - part-time (equivalent 30 man months) University of Bogor Socio-economic Survey Rural Sociology Specialist Department 70 man months E. Village Management and Administration 21. While project area development will continue under the supervision of the PMU for a number of years after the settlers arrive, the day-to-day adminis- tration of the village and the concommitant community development would be the responsibility of the Directorate of Development and Guidance, working through the District Representative of DGT. 22. Table 2 outlines the DGT staff that each village would require to the handing over of the completed area to the Kabupaten administration. Staff for health services, schools, agricultural extension, credit, etc. would be supplied by relevant GOI agencies from village inception. ANNEX 11 Page 7 F. Project Accounting Team Present Situation 23. Currently the Secretariat functions at the National, Province and District levels each have finance and logistics (procurement) sections. Annual budget preparation is the task of the Planning & Programming Direc- torate at each of these levels. In an attempt to measure actual quarterly performance against the approved budget, a consultants report, 1/ recently submitted to the Director General of Transmigration, has recommended a project-based accounting system with a standard expenditure coding system. This system would be compatible with the present GOI DUP/DIP budgeting system, but has the advantages of allowing for a physical quarterly measure- ment of progress and actual expenditures against budget for discrete pro- jects as well as by basic management units (e.g., districts and provinces, or directorates and subdirectorates), and developing standard costs for the various regions of Indonesia. To assist in the implementation of this report a Financial Planner has been appointed under the FAO/UNDP Technical Assistance Program. Bank Project Requirements 24. As separate accounting is required for the Bank financed portions of this project, and the project will be operated under the Bank's Procure- ment Guidelines as well as GOT procurement requirements, a Accounting Advisor would be financed under this loan. The PMU would appoint the Head of the Project Accounting Unit, who would operate from Jakarta. An ac- countant of relative seniority and experience would be appointed to manage the accounting requirements at site level. Over the duration of the project, a maximum of about twenty junior accountant/bookkeepers will also be appointed. The accounting system will be designed by the Financial Assistant in co-opera- tion with the Head of the Finance Section in the Secretariate to be compatible with GOI accounting requiremens as well as revised system being implemented by the FAO/UNDP Financial Planner. Further, the accounting system will allow supervision missions to establish standard cost accounting data, and trace the source and application of Bank funds. 25. To enable the Department to operate within the Bank's procurement Guidelines, and to activate loan disbursement with a minimum delay, the Public Works Department (Bina 11arga) has seconded a member of their staff, well acquainted with the Bank's requirements, for a period of between 6 and 18 months, to train members of DGT staff and establish the necessary internal procedures. 1/ Project Budgeting (FAO/UNDP INS/72/005), July 1975, prepared by P.T. Djasidas Management Consultancy Services. ANNEX 11 Attachment 2 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Draft Request for Proposal for Consulting Services It is assumed that the RFP will be addressed to a limited number of firms known to GOI and the Bank and already prequalified by the former. A notice of invitation along the following lines is suggested:- Transmigration & Rural Development Project, Southern Sumatera The GOI is inviting proposals from suitably qualified firms to provide a multi-disciplinary professional team to develop this project. Interested firms are required to submit a detailed proposal indicating their analysis of the tasks disciplines and time requirements. A brief curriculum vitae describing the experience of teach team member should be enclosed. In a separate envelope should be placed a quotation of the professional fee re- quired and secondary costs such as travel, subsistence, printing and local costs. The Baturaja project extends over an area of about 30,000 ha in South Sumatera. Ten villages are proposed each of 500 houses together with infrastructures such as schools, health clinics, market buildings, etc. Roads of varying standard, bridges and culverts will be required. It is anticipated that design and construction will last about three years. A preliminary dev- evelopment plan has been made by uszar Brammah and Associates. This includes a tentative road system, a prototypical village plan and house design. At Way Abung, nearby, the work includes planning of roads, four schools, twenty-two health clinics and staff housing. The initial task of the Consulting Team will be to refine Huszar Brammah's proposals and prepare a Development Plan; after approval of this by GOI and IBRD, contract documents will be prepared for the construction work. The Team will be required to the bidding procedures and adjudication and site supervision during the construction period. A copy of Huszar Brammah's Report together with a preliminary analysis of the tasks and disciplines required for the Planning Team is available at the offices both of the Department of Transmigration and of the World Bank in Jakarta. It must be stressed that this analysis is tentative only and in no way binding upon respondents. (Final clause stating time allowed for submissions and to whom they must be addressed together with statement regarding GOI and IBRD regulations). INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Proiect Management - Cost Sunmary (Constant 1976 Rp Million) TOTAL COST Source 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1975-1980 1975-1985 Table # A: PROJECT MANAGEMENT UNIT Technical Assistance - 95.45 182.60 136.95 62.25 8.30 - - - - - 485.55 485.55 11.2 Counterpart Staff - 14.94 29.88 24.90 - - - - - - - 69.72 69.72 11.2 Local Staff - HQ 4.20 14.30 15.80 15.80 15.80 12.80 11.30 10.80 10.30 10.30 - 78.70 121.40 11.3 Sub-total 4.20 124.69 228.28 177.65 78.05 21.10 11.30 10.80 10.30 10.30 - 633.97 676.67 Local Staff-Baturaja 3.05 12.70 14.50 14.50 14.50 12.70 10.90 10.30 9.70 9.70 - 71.95 112.55 11.3 Local Staff-Way Abung 1.95 6.10 6.10 6.10 4.90 4.90 4.90 4.90 4.90 4.90 - 30.05 49.65 11.3 Village Management - Baturaja - 3.64 7.28 18.2 18.2 18.2 16.16 14.12 9 46 4.80 2.40 65.52 112.46 Sub-total - Staff 9.20 147.13 256.16 216.45 115,65 56.90 43.26 40.12 34.36 29.70 2.40 801.49 951.33 B: VEHICLE - PURCHASES PMU - HQ - 16.60 - - - - - - - - - 16.60 16.60 Baturaja - 4.98 10.38 5.40 - - - - - - - 20.76 20.76 Way Abung - 10.38 10.38 - - - - - - - 20.76 20.76 Sub-total - 31.96 20.76 5.40 - - - - - - 58.12 58.12 TOTAL 9.20 179.09 276.92 221.85 115.65 56.90 43.26 40.12 34.36 29.70 2.40 859.61 1009.45 ANNEX 12 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Project Monitoring and Evaluation 1. Monitoring and Evaluation Studies are required during the implement- ation of this project to measure the effectiveness of the project design and management. Two major information needs must be fulfilled by these studies: (a) long-term socio-economic data to measure the development of the settlement areas into a commmunity, and indicate broad areas of project design requiring modification; and (b) short-term information on project problems requiring immediate project design modifications. 2. The first requirement would be met by two long term socio-economic studies on settlement and the associated health delivery system to be conduc- ted by GOI research institutions, but independent of DGT, as outline in Attachment 1 and 2 to this annex. 3. The short-term information needs would be met through the intro- duction of a low cost data collection system operated and interpreted by project management personnel. This monitoring system, an essential part of the operation of the PMU, is outlined in Attachment 3 to this annex, and would be designed through technical assistance to the PMU under the project. It would focus on the settlement's short-term agricultural and community development: development of physical infrastructure would be monitored through the functions of the Consulting team (Annex 11). ANNEX 12 Attachment 1 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT Draft Terms of Reference: Settlement Monitoring and Evaluation Studies Objective 1. The monitoring and evaluation studies of the Baturaja and Way Abung Settlement areas would be directed at providing GOI with regular information on the socio-economic aspects of development and progress of the settlers and the settlement area. The studies would enable DGI to identify problem areas early on and take remedial action. Further, data from this study would be used to adjust the design of future settlement areas. Scope 2. The study would cover four major topics, (a) a base line survey (conducted in the area of settlement); (b) an agricultural adaptation survey; (c) a market place survey; and (c) a social adaptation and leadership development survey. The topics are grouped in this way to focus the surveys on areas of information that are of urgent importance for the testing and adjustment of the settlement pattern presently in use. Staffing 3. It is expected that these studies would be contracted by the Min- istry of Manpower, Transmigration and Cooperatives, through the Directorate of Research, Training and Evaluation, to the Center for Rural Sociological Research at Bogor Agricultural University (CRSR). Research Advisory Board 4. As the detailed design of each of these studies remains to be developed by CRSR, a Research Advisory Board is recommended to assist DGT in its task of directing this study toward project specific problem identification, as well as the development of general planning parameters for future projects. This Board would consist of: ANNEX 12 Attachment 1 Page 2 Member Alternate (a) Representatives of GOI: - Minister of Manpower, Director for Research, Training Transmigration and and Evaluation Cooperatives - Director General of Director for Planning and Transmigration Programming - Director General for (as designated) Regional Planning - Minister of Finance BAPPEDAS - Governor of Sumatera BAPPEDAS Selatan Province - Governor of Lampung BAPPEDAS Province (b) Representatives of the Profession: - Agro Economic Survey of Indonesia - Political and Social Science Faculty - University of Gajahmada (Jogjakarta) - Institute of Social Science Research - Satya Wacana University (Central Java) - University of Sriwijaya (Palambang, Sumatera Salatan) - University of Lampung - Center for Rural Sociological Research - Bogor Agricultural University - Institute of Health Research & Development of the Ministry of Health - World Bank (c) Ex-officio: - The Study Director as Secretary of the Board - The Project Director, Project Management Unit - DGT ANNEX 12 Attachment 1 Page 3 5. The powers and constitution of the Board are still to be finalized by GOI. Cost 6. Table 12.1 shows the cost estimate for this survey for the period of this loan, which totals $1.5 million, of which $350,000 would be for tech- nical assistance. The loan would finance 50% of the annual budget. The remainder would be financed by GOI. Detailed Components of the Studies 7. The four major studies would be compiled from data covering the following principal topics: Demographic. Community institutions and gotong-royong projects. Mutual assistance, including gifts, communal labor and loans. Marriages, divorces. Family contacts and visits. Housing. Settlers aspirations and frustrations. Recreation. Incomes. Consumption. Savings. Investments. Land allocation and certification. The farm, area cleared, crops cultivated, etc. Food aid and assistance. Processing, marketing, and markets. Credit facilities. Leadership and administration. Social services and infrastructure. Kecamatan ' and Kabupaten Services. These are the broad topics which would later be refined as a result of Pilot Studies. 8. The Base Line Study would indicate the economic status of the settlers prior to transmigration. Sociological parameters such as kinship association, status in village of origin would also be included, together with measures of expectation levels. The study should indicate possible barriers to transmigration, weaknesses in the recruitment and selection process, and the effectiveness of the information program being conducted by DGT in Java. ANNEX 12 Attachment 1 Page 4 9. The Agricultural Adaptation Study would include most of the com- ponents of a farm management and income survey, and would be designed to identify barriers to the adaptations the farmers must make from their wet land farming experience to a dry land farming system. It would measure on- farm investment (capital and labor) and mutual assistance patterns, and include the use of institutional and non-instituional credit. 10. The Marketing Survey would include the monitoring of development of local markets, a classification of major participants (local traders, local farmers, etc.), the range of goods bought and sold. It would extend beyond the project area by identifying market participants who are not resident in the area, and the level of purchases by area residents from neighbouring markets and from the markets and shops in nearby micro-urban areas. The development of cooperatives as processing and marketing agents for outputs and purchasers of inputs would also be measured. The market survey would also serve to back up the agriculture adaptation survey in determining food and non-food purchasing patterns. The impact of grant aid fertilizers and food as inhabitors (or promoters) of local markets should also be included. For DGT the market study would serve to indicate the level of sustained growth achieved in the area, and what DGT management intervention in the marketing and supply channel had done to inhibit or promote the economic exchange function within the area, and between the area and neighboring communities. 11. The Leadership Study would include a study of existing local insti- tutions, the development of new institutions unique to a settlement environ- ment, and the tranfer of institutions and hierarchys from the areas of origin. All these institutions would be examined for their potential to encourage or discourage adaptation and growth in a new environment. For DGT, the study should indicate what management functions and services had promoted or inhibited the development of local leadership and institutions. This study is of particular importance, as maximum leadership development should be encouraged in the settlement areas prior to the are being trans- ferred to local administration. 12. Feedback into Project Design. It is expected that each study would identify strengths and weaknesses in the present design and implement- ation of the settlements at Baturaja and Way Abung. Through the periodic reports expected from the study team to both the Research Advisory Board, and the National Expansion Body for Transmigration, the changes in project design can be agreed upon and incorporated into future project design. ANNEX 12 Attachment 2 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT Health Monitoring and Evaluation Objective and Scope 1. The Project's innovative community-based approach to delivery of health services would require careful monitoring and evaluation of disease prevalence levels, social acceptance and utilization rates, and cost-effec- tiveness of alternative interventions. Short-term information needs for immediate corrective action would be met through regular recording and re- porting of routine health service statistics. Long-term information for assessing Project performance and outcome and for developing criteria of social acceptance and cost-effectiveness of rural health interventions would be provided by special studies. Methodology 2. Management Information System. Recording and reporting of rou- tine health service statistics would be part of the tasks assigned to health staff. Recording systems have been developed based on (i) cards to be kept by patients (e.g., under-fives cards, maternity cards), (ii) cards to be kept in health facilities (e.g., treatment cards for in- patient and outpatient departments, school children cards), (iii) regis- ters for recording of activities (e.g., maternity care, outreach activi- ties, laboratory), and (iv) registers for recording of resources (e.g., supplies, finance). Data would be consolidated by Puskesmas staff and every three months be sent to the Institute of Health Research and Devel- opment of the Ministry of Health for evaluation of effects and efficiency. On a monthly basis, a performance report on a limited number of key indi- cators would be sent to the Dokabu and Project management. 3. Regular reporting and continuous monitoring of program effects would cover indicators on changes in (i) mortality by age and by cause, (ii) morbidity, including malnutrition, (iii) fertility by age and parity and by intervals between pregnancies, as well as (iv) attitude and behav- ior of the community and degree of satisfaction with the services (e.g., measured through rates of enrollment in village prepayment schemes and utilization of services). 4. Monitoring of program efficiency would cover indicators of utili- zation (e.g., number of contacts, acceptors, steady users and home visits per sub-program), cost of services and staff performance. ANNEX 12 Attachment 2 Page 2 5. Special Studies. A number of special studies would complement con- tinuous monitoring of interventions in providing data for long-term evalua- tion of the health component. Studies on the following broad topics have been tentatively identified but would be refined and elaborated on during the course of Project implementation: (a) Longitudinal study on disease prevalence and incidence, with particular emphasis on malaria; (b) Study on community attitudes and behavior towards dif- ferent and alternative health services, with emphasis on degree of satisfaction with the new concept of the village health promoter and acceptance of village health insurance schemes; (c) Study on manpower activities and staff performance, with emphasis on efficiency and effectiveness of tasks per- formed by the village health promoter and of alternative supervision schemes; (d) Study on health impact of the low-cost rural water supply schemes and pit latrines; (e) Study on the impact of the nutrition interventions on health and nutrition status; and (f) Study on feasibility of a "clearing house" for new settlers; i.e., a transit center providing -- in addi- tion to the Project's preventive drug treatment against malaria -- immunizations, necessary treatment, and in- formation/education on nutrition in the new environ- ment, personal hygiene, family planning and availa- bility of health services. Staffing and Organization 6. Village health promoters and health center personnel (PKK) would be trained in the administration of the recording and reporting system as part of their training under the Project. Higher level health managers (Puskesmas physician, Kabupaten administrators) would receive training in monitoring health services through the Project's overall monitoring and evaluation system. 7. The Institute of Health Research and Development in the Ministry of Health, in coordination with DGT, AES and CRSR, would be responsible for monitoring and evaluation of health services. The Institute would carry out the special studies and would evaluate Project performance and outcome with a view to developing criteria for the design of health components of future transmigration projects. ANNEX 12 Attachment 2 Page 3 Cost 8. The Project provides for US$90,000, which is the estimated cost of monitoring and evaluation of health services for the period of this loan and excludes cost of recording and reporting as a part of regular health ser- vice activities. ANNEX 12 Attachment 3 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Draft Term of Reference: Short-term Monitoring and Evaluation System Objective 1. The monthly development of the settlement and the problems the settlers encounter, may require design modification in that village, and in those villages still in planning. As short lead times are essential in identifying and analyzing problems instituting the corrective action, a low-cost simple monitoring system operated by the site management per- sonnel is required. Methodology 2. The staff, at site and village level, would continuously monitor the on-farm development, community/social development, supplies of inputs, the marketing system through measurement of a selected number of key in- dicators, and regular meetings with farmers at the dukuh level. 3. Where key indicators show potential problems, spot surveys would be conducted by the project staff on a sample of settlers using specific- ally designed diagnostic questionnaires. 4. To determine the key indicators, broad data collection would be undertaken initially on the first two villages to be settled. This would have the additional advantage as a training exercise for project management personnel (including teachers, health workers and extension agents) who would later move to newly established villages. The first two villages would therefore act as the pilot scheme for testing the data collection system, and determining the minimum amount of data pertinent to the moni- toring of project. The pilot scheme approach for the first two villages would also serve to identify the non-quantifiable indicators that should be included. 5. The development and refinement of the data collection instrument, the training of project staff as data collectors and data interpreters would be the function of technical assistance to be provided under the project. 6. After the initial survey design has been developed for broad based application in the project area, the management of the survey would become the responsibility of the PMU. The technical assistance group would then be required to conduct a quarterly supervision of the monitoring system ANNEX 12 Attachment 3 Page 2 in the first year of PMU management, and thereafter at regular intervals of not more than four months apart for the following two years, and not more than six months apart for the next two years. 7. The technical assistance team would be required to coordinate with the Monitoring and Evaluation team conducting the long-term survey to avoid duplicate data collection. The PMU in turn would be required to report regularly to the Study Board (Attachment 1) on changes in project design resulting from the short-term monitoring effort. Staffing 8. All the agriculturalists and social service management personnel for the project would initially be trained in the first two villages in the administration of the monitoring system and the interpretation of eval- uation data. The headquarters staff of the PMU, and the site staff would also receive this training. 9. The technical assistance personnel are estimated to be required for the following time: Year Task Man Months 1: questionnaire design and testing 8 staff training 12 2: supervision 5 training 5 3: supervision 5 training 5 4: training 4 5: training 4 50 ANNEX 12 Table 12.1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Monitoring and Evaluation Study Costs (Cost in 1976 US$ Million) A: Socio Economic Monitoring Local Foreign Total % FX Staff - Local 0.50 - 0.50 - - Technical Assist1/ 0.10 0.25 0.35 70 Field Surveys 0.20 - 0.20 - Transport - Purchase- 0.01 0.04 0.05 75 - Local Operations 0.02 - 0.02 - Computing Costs 0.15 - 0.15 University Overhead 0.13 - 0.13 - Sub-Total 1.11 0.29 1.40 21 Study Board 0.10 - 0.10 - Total A: 1.21 0.29 1.50 19 B: Health Monitoring 3 0.10 - 0.10 C: Low-Cost Monitoring (Technical Assist.)- 0.07 0.18 0.25 70 TOTAL 1.38 0.47 1.85 25 70 mm 2/ 7x4 wheel drive 3/ - See Table 9.1 50 mm INDONESIA TRANSMIGRATION AND RURAL DEVELOPET PROJECT Allocation of Loan Proceeds (Current $ Million) --Project Cost ----------------------------------Disbursement----------------------------- % Foreign Foreign Total Exchange Amount _ Conditions I. Civil Works 7.43 14.97 49 7.50 50 - 50% of total expenditures II. Vehicles & Equipment 2.78 3.67 76 2.80 75 -100% of foreign expenditures of directly import goods. - 95% of local expenditures (ex-factory) for contracts awarded after ICB. - 40% of local expenditures on vehicles if procured through prudent shopping. - 65% of local expenditures on farm equipment. III. Agrochemicals .99 1.17 93 1.20 100 -100% of delivered cost. IV. Rubber Development 3.94 8.89 44 2.70 30 - 30% of local expenditures. V. Cattle 0.94 1.87 50 1.40 75 -100% of foreign expenditures. VI. Consultants & Technical Services 3.95 6.39 60 6.40 100 -100% of local and foreign expenditures. VII. All Other E/ 5.00 13.63 37 4.50 - - $10003/ per family in Baturaja upon village completion. VIII. Unallocated 4.97 6.23 80 3.50 - - Total 30.00 56.82 53 30.00 1/ See Table 15.3. 2/ Schools, health and water for Baturaja excluded from civil works. 3/ Equivalent to 100% of specified project items - see Table 14.3. ANNE-x ih Tabl1'e.2 INDOINSIA TRALNSMT1Rt,TIEO AND RUJLU DEVELOFLi4T PROJECT Estimated Disbursement Schedule Quarter Quarterly Cumulative 5 of Total Year Endin: Dibursement Disbursement Loan -------- U¯$ million-------- w6 September - .. December 1.00 1.00 3 1977 March 1.00 2.00 6 J.ne 1.50 3.50 12 September 1.00 65o 15 December 2.00 6.50 22 1978 March 2.50 9.00 30 June 2.00 11.00 37 September 2.50 13.50 45 December 2.50 16.00 53 1979 March 3.00 19.00 63 June 1.50 20.50 68 S.ptember 2,00 22.50 75 December 0.50 23.00 77 1980 March 1.00 24.00 80 June 2.50 26.50 88 September 0.50 27.0 90 Deceiber 1.50 28.50 95 1981 March 0.50 29.007 June 1.00 30.00 100 ANNEX 14 Table 1.3 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Village Completion Payments Project Items 100% Disbursement Current $ Million! Foreign Exchange % Schools in Baturaja Project 0.14 30 Health Facilities in Baturaja Project 0.52 30 Water Supplies in Baturaja Project 0.91 62 Subsistence Package for Baturaja Settlers 1.90 73 Staff Salaries (2 years) - Baturaja Village Management 0.10 - - Baturaja Health Service Staff 0.03 Malaria Program in Baturaja Area 0.04 - Agricultural Credit for Baturaja 7O Settlers (2 years) 2 70 Say $4.5 million 1/ Excluding physical contingencies INDONESIA TRANSMIGRATION AND RURAL DEVELOBWENT PROJECT Implementation Schedule (Current $ million) Consultants Civil Equipment Agro- Rubber & Technical All Sub- Works & Vehicles Chemicals Development Cattle Services Other Total Unallocated Total 1975 - Local 0.07 0.02 - - - 0.02 0.11 - Foreign - 0.11 - - - - 0.11 - Total 0.07 0.13 - - - - 0.02 0.22 1976 - Local 2.19 0.45 0.01 0.33 0.09 0.26 1.18 4.51 - Foreign 2.36 1.26 0.07 0.22 0.10 0.61 0.84 5.56 - Total 4.55 1.81 0.08 0.55 0.19 0.87 2.02 10.07 1977 - Local 1.68 0.14 0.02 0.59 0.10 0.91 1.37 4.81 - Foreign 1.59 0.45 0.11 0.42 0.10 1.5 0.99 5.21 - Total 3.27 0.59 0.13 1.01 0.20 2.46 2.36 10.02 1978 - Local 1.95 0.16 0.03 0.92 0.17 0.69 1.67 5.59 - Foreign 1.78 0.49 0.19 0.77 0.17 1.13 1.02 5.5 - Total 3.73 0.65 0.22 1.69 0.34 1.82 2.69 10.14 1979 - Local 2.01 0.10 0.05 1.42 0.24 0.44 1.86 6.12 - Foreign 1.72 0.32 0.26 1.13 0.24 0.50 1.16 5.33 - Total 3.73 0.42 0.31 2.55 0.48 0.94 3.02 11.45 1980 - Local 0.45 0.02 0.07 1.69 0.33 0.14 1.72 4.142 - Foreign 0.74 0.05 0.36 1.40 0.33 0.16 0.23 3.27 - Total 1.19 0.07 0.43 3.09 0.66 0.30 1.95 7.63 Total Cost - Local 8.35 0.89 0.18 4.95 0.93 2.44 6.80 24.54 2.28 26.82 - Foreign 8.19 2.78 0.99 3.94 0.94 3.95 5.26 26.05 3.95 30.00 - Total 16.54 3.67 1.17 8.89 1.87 6.39 12.06 50.59 6.23 2 ANNEX 16 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT Markets, Processing, Prices and Farmer Incomes A. Markets Way Abung 1. Local market places exist in most villages in Way Abung, each with at least two market days a week. These markets serve itinerant traders bringing in both food and consumer products; the local farmers consume most of their farm production and offer only cassava for sale to recognized agents of the processors in Tanjung Karang. 2. The condition of the roads in Way Abung result in high prices for consumer goods, and low prices for products bought from the farmers. How- ever, once the roads have been improved through the project, and some local cooperative processing units established through BRI financing of the KUD's, the market price structure will become more representative of local supply and demand levels, rather than transportation costs, and general market transparencies. Baturaja 3. As the settlers will receive both food and cash payments for work during rubber planting, the markets are expected to become estab- lished fairly rapidly. The price differential problems encountered in Way Abung will be avoided because of the standard of road construction in the project area, and the proximity of a major market at Baturaja. 4. Marketable food surpluses will be very low. If the KUD's can arrange bulk sales to traders, especially of processed, or cubed cassava, the low volume price disadvantage could be offset to the farmers' advan- tage. BRI is expected to participate in financing both capital equipment and working capital for local KUD's. B. Processing 5. Besides the already mentioned small-scale cassava processing and rice milling to be undertaken at the village-KUD level, the major need in both project areas will be for rubber processing. The rubber market in ANNEX 16 Page 2 both Lampung and South Sumatera has been characterized by its transparency, 1/ and by the poor quality of block rubber produced in the traditional small- holder sector. 6. To enable the project beneficiaries to receive the highest possi- ble price for rubber, group coagulation centers at the duku level is envi- saged. Marketing of the sheet rubber produced from these GCC's would be marketed in bulk through the village cooperative. This cooperative/GCC structure will require credit from BRI and the KIK/KMKP programs for both the capital equipment and sufficient working capital to allow for inventory build-up during low rubber price periods. 7. This rubber processing complex will require both capital inputs and an extension service. Assurances will be sought from GOI that a plan for the coordinated development of rubber processing in the project areas will be developed and presented to the Bank by 1980. C. Rubber 8. The Demand Outlook for Natural Rubber. Between 1973 and 1980, con- sumption of natural rubber is forecast 2/ to grow at an average rate of 4.9% per annum in developed countries, where natural rubber is expected to gain from the shift to radial tires. According to the forecast natural rubber would maintain about 32% of the world market for all elastomers outside the centrally planned countries. For the world as a whole, the market share of natural rubber would marginally decline from 32.3% in 1973 to 31.0% in 1980. World net exports of natural rubber would grow during this period at 4.8% per annum, an increase of 1 percentage point per annum over the average rate of expansion experienced in the sixties. 9. Beyond 1980 the demand prospects for natural rubber still appear to be quite favorable. World demand for all rubbers is projected to grow at 5.6% per annum between 1980 and 1985. Potential supply of natural rub- ber, with existing acreage and available production technology is, however, projected to grow during this period at a much slower rate than in the seventies - at 3.6% per annum. This implies that by 1985 the market share of natural rubber outside the centrally planned countries would decrease to 30% because of insufficient supplies. 3/ To maintain 32% of this market - a feasible objective in terms of the technical and economic potential of 1/ Sumatra Regional Planning Study Lampung and South Sumatra Provinces, - Rural Marketing System, Bonn University, March 1974. 2/ Based on IBRD Commodities Report, July 1975. 3/ The centrally planned countries are assumed to continue to pursue a self-sufficiency policy in rubbers. Their utilization of natural rub- bers is forecast to grow only marginally between 1980 and 1985. ANNEX 16 Page 3 natural rubber - producers would have to increase their output at about 5.0% per annum between 1980 and 1985. The likely shortfall in natural rubber availabilities in the 1980's points to the need for additional plantings beyond that envisaged by the existing expansion plans. 10. The Price Outlook for Natural Rubber. Over the long run the prices of natural rubber are constrained by those of synthetic rubbers. The price of natural rubber has to be such that it competes effectively with the avail- able synthetic substitutes, although in the short-run it may diverge from this trend. Natural rubber producers, with a projected 32% of the total market for elastomers, are essentially price takers. The long-term price of natural rubber is, therefore, forecast on the basis of the expected future trends in the cost/price of SBR 1/ which is taken to be the floor below which natural rubber prices cannot fall for any protracted period of time. 11. Beyond 1980, despite the relatively good demand outlook, the price prospects of natural rubber appear to be favorable if one assumes that crude oil prices will remain constant - and that no major shift in the location of the petrochemical industry away from developed countries and in the direction of the basic raw material source - oil - will take place in the 1980's. A drop in the price of oil would again make the synthetic rubber feedstocks cheaper and increase the relative competitiveness of general purpose syn- thetic rubbers. Similarly, a large, uncoordinated expansion of production capacity for petrochemicals in oil producing countries would increase the supply of these products and - other things being equal - depress their prices to the advantage of synthetic rubber manufactures. 12. For the 1985-1990 period lower prices are projected, based on a further decline in world demand and lower chemical feed stock prices for synthetic rubbers. Table 16.1 indicates the project c.i.f. rubber prices and Table 16.2 converted to the farmgate. D. Farm-Gate 13. Rice: Rice is presently bought and sold by Bulog at a subsidized level in relation to the world market price. It is GOI's intention to slowly decrease the level of the subsidy so that by 1985 no subsidy is expected. The international price for 5% unbroken rice is projected to fall from the 1975 level of $395/ton (Rp 164/kg) to $324 per ton (Rp 134/kg) in 1985. This is equivalent to the present subsidized farm gate price of Rp 115/kg for 10-20% broken milled which would be the unsubsidized level in 1985. 14. Cassava. As no international projects are available for cassava the current price of Rp 8/kg wet being offered in Way Abung, and based on the current $125/ton c.i.f. Germany, is assumed constant over the life of the project. This is a conservative assumption as the cassava price in Way 1/ Synthetic rubber: Styrene - butadene rubber. ANNEX 16 Page 4 Abung is presently low. However, Lampung and South Sumatera are increasing the volume of commercially produced cassava, and a balance position border- ing on the oversupply is predicted for the long run, therefore maintaining this presently "depressed" price as the projected long range price. 15. Other Crops. As Indonesia does not participate in international trade in these commodities and most are consumed by settlers themselves or sold in local village markets, current market prices have been used (Table 16.5). 16. Fertilizer. For Urea and TSP, applied to food crops, the present subsidized BIMAS price of Rp 80/kg has been assumed to remain constant, throughout the project life, as the GOI will gradually reduce the subsidy level as the future international price of fertilizer declines. 1/ For fer- tilizers applied to rubber trees, Table 16.6 indicates the conversion of the projected international prices to local farmgate prices. Fertilizer applied to rubber during the development phase (Annex 7) has been costed in 1976 prices, and the projected price decline accounted for in the price contin- gency. E. Farm Incomes 17. Farm income projections are presented in Tables 16.3 and 16.4 for Baturaja and Way Abung. 1/ IBRD, Price Forecasts of Major Primary Commodities, Annex IV, p. 19. ANNEX 16 Table 16.1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT NATURAL RUBBER PRICES: RSS 1, c.i.f. New York. ( / lb.) Current $ 1975 $ /1 (Constant) 1967 19.90 40.45 ) 1968 19.84 40.80 ) 1969 26.19 51.76 ) 1970 20.98 38.71 ) 1971 18.10 31.37 Actual 1972 19.24 29.09 ) 1973 35.66 48.12 ) 1974 39.26 43.52 ) 1975 31.00 31.00 ) 1976 36.70 33.70 ) 1977 42.80 36.40 ) 1978 47.70 37.75 ) 1979 53.10 39.10 ) 1980 56.90 39.10 ) Forecast 1981 63.00 40.45 ) 1982 67.40 40.45 ) 1983 69.70 39.10 ) 1984 74.60 39.10 ) 1985 79.80 39.10 ) 1986 85.40 39.10 ) 1987 88.20 37.75 ) Extended 1988 94.40 37.75 ) Forecast 1989 97.40 36.40 ) 1990 104.00 36.40 ) /1 1975 $ forecast prices are not rounded. Source: IBRD Commodities Division otant 1976 Rp/k ro) 1977 1978 1979-80 1981-82 1983-86 1987-88 1989 gward CIF Nm Tork 362.74 376.19 389.65 403.10 389.65 376.19 362.74 Les: Trangportation & Imurance 56.28 56.28 56.28 56.28 56.28 56.28 56.28 y05 Price 306.h6 319.91 333.37 346.82 333.37 319.91 306.46 Lem: ~xport Tax (5 0B) 15.32 16.00 16.67 17.34 16.67 16.00 15.32 Net Sales Prio 291.14 303.91 316.70 329.48 316.70 303.91 291.14 Les Bank Charges, Storage & Marketing 2.70 2.70 2.70 2.70 2.70 2.70 2.70 Net Pio. Received by C-op 288.44 301.21 314.00 326.78 314.00 301.21 288.u4 Le: Prooesing & aok±ng 18.50 18.50 18.50 18.50 18.50 18.50 18.50 Transport to Marbor 10.80 10.80 10.80 10.80 10.80 10.80 10.80 Pkag - 5.50 5.50 5.50 5.50 5.50 5.50 5.50 Co-op/GOC Naagement 2.20 2.20 2.20 2.20 2.20 2.20 2.20 Frarrs Tarpgate ~eceipt 251.44 26h.21 277.00 289.78 277.00 264.21 251.44 1/ Mased om Table 16.1 for MS 1. INDONESIA TRANSMIGRATION AND RURAL DEVELDPMENT PROJECT Farm Incomo Statemeont - Baturala (Constat 1976 Rp '000) 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1980 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Salue of Production -__ Gardan 1/ - 21.3 25.8 30.8 38.8 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 Ri. @ Rp 85/kg padi - 34.0 61.2 63.8 68.3 68.0 68.0 55.3 55.3 55.3 55.3 55.3 62.9 62.9 62.9 62.9 62.9 70.5 70.5 70.5 70.5 70.5 70.5 70.5 70.5 70.5 Groundmmts @ Rp 120/kg u«ehelled - 21.6 43.2 43.2 43.2 48.0 48.0 44.4 44.4 44.4 44.4 44.4 44.4 55.2 55.2 55.2 55.2 55.2 55.2 55.2 55.2 55.2 55.2 55.2 55.2 55.2 CaOssava @ RP 81kg wet - 12.8 20.8 20.8 22.4 24.0 24.0 24.0 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 Rubbe - - - - - 55.4 13.5 193.9 277.0 290.6 31.1 301. 7 30.7 301.7 301.7 301.7 301.7 301.7 301.7 276.6 251.4 226.3 201.2 176.0 Total Value - 89.7 151.0 158.6 170.7 185.0 185.0 224.1 292.8 348.2 431.3 444.9 479.0 474.4 474.4 474.4 474.4 482,0 482.0 482.0 482.0 456.9 431.7 406.6 381.5 356.3 Cmat af Production 2/ RLc @ gp 18,750/ha 7.5 11.3 11.3 11.3 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.15 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Grondnuto @ Rp 45,000/ha - 18.0 27.0 27.0 27.0 27.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 Cassva @ Rp 8,000/ha - 3.2 4.8 4.8 4.8 4.8 4.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Robber @ Rp 20,500/ha - - - - - - - 20.3 20.4 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 Small tool replacement 3- - 0 3.0 3.0 3.0 60 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 1 10.0 10.0 10.0 10.0 100 Total Cost 7.5 32.5 43.1 43.1 39.3 39.3 33.3 49.6 49.7 49.8 54.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 Net Value of Production (7.5) 47.2 107.9 115.5 131.4 145.7 151.7 174.5 243.1 298.4 376.5 388.1 422.2 417.6 417.6 417.6 417.6 425.2 425.2 425.2 425.2 400.1 374.9 349.8 324.7 294.5 Conatant 1976 $ (18) 114 260 278 317 351 365 420 586 719 907 935 1017 1006 1006 1006 1006 1025 1025 1025 1025 964 903 843 782 722 Other Inc~m Off farm enployment 3/ - 141.0 70.5 40.0 32.9 28.2 22.1 - - - - - - - - - - - . . .. Sal tof young eattle - - - - - - - 50.0 - 50.0 - 50.0 - 50.0 - 50.0 - 50.0 - 50.0 - 50.0 - 50.0 - 50.0 Poultry/eggg 8.0 16.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24,0 24.0 24.0 24.0 24.0 24.0 24.0 Lea: Ipeda Taxes 7/ - - - - - 7.3 7.6 0.7 12.2 14.9 18.8 19.4 21.1 20.9 20.9 20.9 20.9 21.3 21.3 21.3 21.3 20.0 18.7 17.5 16.2 15.0 Not Inaome 0.5 204.2 131.9 179.5 188.3 190.6 190.2 239.8 254.9 357.3 381.7 442.7 425.1 470.7 420.7 470.7 420.7 477.9 427.9 477.9 427.9 454.1 380.2 406.3 332.5 358.5 Constant 1976 $ 1 492 318 433 454 459 458 578 614 861 920 1067 1024 1134 1014 1134 1014 1152 1031 1151 1031 1094 916 979 801 864 Lese Subsitence 120 4/ 160 5/ 180 180 180 180 180 200 6/ 200 200 200 200 250 250 250 250 250 250 250 250 250 250 250 250 250 250 Cash Equivalent (119.5) 44.2 (48.1) (0.5) 8.3 10.6 10.2 39.8 54.9 157.3 181.7 242.7 175.1 220.7 170.7 220.7 170.7 227.9 177.9 227.9 177.9 204.1 130 2 156.3 82.5 108.5 Constant 1976 9 (288) 107 (116) (1) 20 26 25 96 132 379 438 585 422 532 411 532 41] 549 429 549 429 492 314 377 199 261 1/ See Tab1e 16.5 2/ Table 5.11 / nrubr lntn adiniteace-7er. 2 5 4 5 6 7 2/ O- r rl t sl d- y: 300 150 85 70 60 47 4/ Por avrage of otoe moth. 5/ teluding omn-food ite~s. W/ Inrea reflects dietary shift to hetter calorie/protein balance. / 5% of Nat V.ue f Ptroduction. zитиssц АlIIaBX 16 '1'RAN5MIG1iATION АНО AUBAL ПЕУЕц1РМЕNТ PROJECT 7аЫе 16.4 Way АЬипg Faim Iпt те SCa[ement (COnscent 1976 Rp '000) Ргевеп[ 1977 1978 1979 1980 19В1 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 199Э 1994 1995 1996 1997 1998 1999 2000 2001 Va1ue of Productlon 1! Gerdert ' 25,8 30,8 Э8,8 45.0 45,0 45.0 45,0 45.0 45.0 45.0 45.0 45,0 45.0 45.0 45.0 45.0 45,0 45.0 45.0 45,0 45.0 45.0 45.0 45.0 45.0 45.0 А1се @ Rp 85/kg рвдl 29.8 29.8 59.5 43.4 51,0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 Groundnu[a @ Ар 120/kg urtahelled ЭО.О ЭО,О 42.0 36,0 43,2 43.2 43,2 43.2 43.2 43.2 4Э.2 43.2 43.2 43,2 43.2 43.2 43,2 43.2 43.2 43.2 43.2 43.2 4Э,2 43.2 4Э.2 4Э.2 Ceeeava @ Ар 8/kg че[ 24.0 24,0 24.0 28.8 36.0 ЗЬ.О ЭЬ,О ЭЬ.О 36,0 ЭЬ.О ЭЬ.О 36,0 36.0 ЗЬ.О 36.0 ЗЬ.О 36.0 ЭЬ.О ЭЬ.О 36,0 36.0 ЗЬ.О 36.0 ЭЬ,О ЭЬ,О ЭЬ.О Auhбer = _ __ , _ �� 29,0 69,3 97.0 138.5 152,4 158,5 158 5 150,9 ц0.9 150.9 150,9 ]50.9 150.9 150.9 1�5`-.9 135.8 122.2 110.0 99.0 89.1 - То[а1 Va1ue 109.6 114,6 164,3 153.2 275,2 175,2 г04,2 244,5 27'2.2 31Э,7 327.6 333.7 333,7 326.1 326,1 "5Z6.1 326,1 32Ь,1 326,1 Э26,1 326.1 311.0 297 4 2В5,2 274.2 264,3 2_/ СоеТ о£ Prnductlaa А1ее @ Ар 18,750/ha 1.8 9.4 5.6 5.6 5.6 5.6 5,6 5.6 5.6 5.6 5.6 5,6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.Ь 5.6 5.6 5.6 5.6 5.6 5.6 Groundou[e @ Ар 45,000/ha 14.0 22,5 1Э,5 13.5 13.5 13.5 1Э.5 13.5 13.5 13.5 13.5 13.5 13.5 13.5 1Э.5 13.5 L3.5 13.5 13.5 1Э.5 1Э.5 13.5 1Э.5 13.5 1З.5 13.5 Садвеvа @ Ар 8,000/ha - 4.0 2,4 2.4 2,4 2,4 2,4 2.4 2.4 2,4 2,4 2.4 2,4 2.4 2.4 2.4 2,4 2.4 2.4 2,4 2,4 2.4 2.4 2,4 2.4 2.4 АиЬЪаг @ Вр 20,500/ha - - - - - - - 10,Э 10.3 10.Э 10.3 10.3 10.Э 10,3 10.Э 10.3 10,3 10,3 10,3 10.3 10.Э 10,3 10.3 10,3 10.3 10.3 5тв11 Сло1 replacement __ З.О З.О 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Э.О 8,0 8_0 8.0 8.0 8.0 8.0 8.0 8.0 B.G 8.0 8.0 8_0 8,0 8.0 В.О То[а1 Coet 15.8 38,9 24,5 24.5 24.5 24.5 24.5 Э4,8 34.В 34.8 34.8 39.8 39.8 39.В 39.8 39.8 39.8 39.8 Э9.8 Э9.8 39,8 39.8 39.В Э9.В Э9.8 39.8 Ка[ Va1ue оЕ Productlon 9Э.8 75.7 139,8 128,7 150,7 150,7 17Ч.7 2VЧ.7 2Э7.4 278,9 292.8 293,9 29Э.9 286,3 286.Э 286.3 28Ь,3 286.3 286.3 286.з 286.3 271,2 257 Ь 245.4 2Э4,4 224.5 Other Iпслтв 3/ 0£Е-£агт етрlоутепt 55.4 55.4 55.4 55.4 55,4 55.4 55.4 55.4 55.4 55.4 55.4 55,4 55,4 55.4 55.4 55.4 55.4 55.4 55.4 55.4 55.4 55.4 55.4 55.4 55.4 55.4 Sa1a л£ egge 24.0 24.0 24.0 24.0 г4,0 24.0 24.0 24.0 24.0 24.0 24.0 24,0 24,0 24.0 24.0 24,0 24.0 24.0 24,0 24.0 24.0 24.0 24,0 24,0 24.0 24.0 5а1е о£ ы пед cattle - - - _ - - SC,V - 50,0 50,0 50,^ 50,0 50,0 - 50,0 - 50,0 - 50,0 - 50,0 - Lевв: IPBOq Тахее 4/ 4.7 3,8 7,0 6.4 7.5 7,5 9,0 10,5 11,9 1Э.9 14,6 14.7 14.7 14.3 14.3 14.3 14,3 14,3 14.3 14.1 14.3 1Э,6 12.9 12.3 11•7 11-2 , Тоtв1 Income 1Ьg,5 151.3 212,2 201.7 222.6 222,6 300.1 278.6 754.9 344,4 407,6 35В,б 408.6 Э51.4 401.4 з51.4 401.4 351.4 401,4 351•4 401.4 337.0 374,1 312.5 352,1 292.7 Conetent 1976 $ 406 365 5I1 486 536 536 72Э 671 855 830 982 864 985 847 9Ь7 847 967 847 967 847 967 812 901 753 848 705 5иЬвlвсепсе 180 180 180 180 180 180 180 180 20о5/ 200 2и0 200 200 250?/ 250 250 250 250 Z50 250 250 250 ц0 250 250 250 Сввh Equlvalent/(Deflclt) (11.5) (28.7) 32.2 21.7 42.6 42.6 120,1 98,6 154.9 144.4 207,6 158,6 208.6 101.4 151.4 101.4 151.4 101.4 151.4 101.ч 151.4 87.0 1и.1 62.5 102,I 42.7 слпвипг 1976 5 (г7.7} (69,а} 7е s2 1о3 10з ге9 г38 э7з э48 500 эег sоз гЧ4 зьs 24Ч зЬS г44 зб5 г44 Эь5 z1o 299 151 иь гОз 1/ 9ее ТаЫе 16,5 Р (� 2/ таЫе 5.11 Э/ Аееитее рге ent 1eve1 of off-fetm етрlоутеп[ would Ье таlпСвlпвд Chrough perClclpatlon 1п гиЪЬ¢т developmenC, lnfraettucture сопеггисtlоп о[her off-echeme oppor[un1[iea: +` valued а[ Вр420/двр. 4/ At 5% of net value о£ ртодиссlоп. 5/ iпстеаве со reflecc inproved саlогiеlртогеlп Ьвlапсе. ANNEX 16 Table 16.5 INDONE3IA TRAN, aGRATION AM RURAL DEVELOPM&T PROJSCT Garden Production and Value Value Value/ at Full Unit Year 2 Year 3 Year 4 Year 5 Ye ar 6 Production tRP) A. GARDEN Fruits Bananas (bunches) 110 25 25 25 25 25 2,75o Papaya 25 200 208 2o8 208 208 5,200 Pineapple 35 - 30 30 30 30 1,050 Jackfruit 80 - - - - .50 4,000 Rambutan (bunches) 100 - - 30 30 3,000 Citrus 15 - - 75 150 150 2 250 Vegetables 18,250 Cassava leaves (bnchs) 15 36o 360 36o 360 360 5,4oo Sweet potatoes (kg) 5 30 30 30 30 03 450 Sweet potato leaves (bunches) 15 150 150 150 150 15D 750 Green beans (kg) 130 20 20 20 20 20 2,600 Long beans (bunches) 10 15 15 15 15 15 150 Long beans leaves (bunches) 5 50 .50 50 50 50 250 ,;esame (kg) 50 5 5 5 5 5 300 Sweet corn (cobs) 5 200 200 200 200 200 25D Soybeans (kg) 60 5 5 5 5 5 1,000 11,150 Other Coffee (kg dry) 35D 10 10 10 10 3,5oo Coconuts (nuts) 15 - - - 150 2,250 Cloves (kg) 1,100 - - 7 7 7 7,700 Chili peppers, tomatoes, markise, sourson, etc. (Rp)2,150 2,150 2,150 2,150 2,150 2,150 2,150 TOTAL VALUE (Rp) 21,300 25 )0 38,800 45.LOOO 45000 B. POULTRY Eggs 20 850 850 850 850 850 17,000 Chickens 500 14 14 14 14 14 7,000 TOTAL VALUE (Rp) 24,000 24,000 .24,ooo 24,ooo 24,ooo 24,ooo ANNEX 17 Page 1 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Economic Analysis A. Rate of Return - Baturaja 1. For the economic evaluation of this model the following assumptions were made: (a) Taxes: all export for rubber were added to the net value of the farm output (Table 16.2); Ipeda taxes were added back to the value of production; (b) Off-farm employment wages from paid labor in the development of the rubber were excluded from the benefit stream; (c) Cattle income was included, and the value of the animal returned to DGT under the heifer return scheme was valued at Rp 50,000. The animal received from DGT was costed at Rp 120,000 to include an allocation of the cattle infrastructure/village bull unit costs; (d) Charges against benefit stream are: - settler selection & transportation costs (Table 17.6) - the subsistence grant package, including housing (Table 17.5) - PMU Site Management for six years and Village Management for the life of the project (Table 11.2) - Maintenance of roads and buildings charged from year five, on the basis of materials. (Labor would be through gotong-royong evaluated in the shadow wage rate.) 2. Shadow Foreign Exchange: as a measure of resource scarcity the for- eign exchange portions of the cost and benefit streams were valued at 125% of the official exchange rate. ANNEX 17 Page 2 3. Shadow Wage Rate i. The Impact of Out-Migration. Removal of families from Java, and therefore from the labor force, would, because of the underemploy- ment situation, not cause a decline in agricultural output in Java, i.e. the labor force would become marginally more productive on a per capita basis, the limit to total productivity being determined by land/capital constraints, rather than labor constraints. ii. Observation in Java indicates that underemployment is disguised through labor intensive activities of marginal value (e.g. basket weaving, tapping a few coconut trees for small amounts of sugar etc.). A decrease in underemployment as a result of Transmigra- tion may reduce the output of these marginal goods. However within a family context, additional "entries" into the labor market by wife or children to continue these activities for supplemental income is equally probable. This would argue on the grounds of "output foregone" that the shadow rate is zero. iii. Disutility of Labor. The transfer from one marginal activity to a less marginal activity as a result of the decline in under- employment, would not increase the amount of time spent at labor (i.e. will not decrease leisure). However the nature of the activity may require additional expenditure of effort, which could be considered as a cost on two possible grounds: - (a) increased food consumption to fuel the effort; (b) disutility of effort. iv. Within the strict interpretation of an economic rate of return the "cost" of increased consumption is a transfer payment and should not be included. However it has been proposed as a proxy for measuring the disutility of effort (in the absence of any market determined rate, or as the shadow evaluation of this parameter). v. The marginal wage rate of Rp 210/day paid, in accordance with minimum wage laws paid by para-statal estates, could be con- sidered at the reservation wage 1/, or the measure of disutility of labor. As non-agricultural employment (marginal employment) is estimated to occupy 50% of the target groups annual labor contribution, withdrawal from Java to a full employment situa- tion on Sumatera would imply an incremental 150 mandays of labor, for the man, and 75 days for his wife, priced at the 1/ That wage below which no labor would be offered because of the personal preference for leisure. ANNEX 17 Page 3 shadow rate. This would total Rp 47,250/annum in relation to the minimum subsistence considerations used in the green cover of $180,000/annum, this is a shadow rate of 26% of msl. 4. Road, Village and Social Infrastructure was charged against the project at 100% of cost. 5. Sensitivity testing: Table 1 indicates the impact on the ROR of declines in rubber price, estimated yields, partial failure of the food crops. B. Rate of Return - Way Abung 6. Similar assumptions to those used to determined the ROR for Baturaja, were employed for evaluating the investment in Way Abung. 7. The output from the farms is expected to decline without the project, but the present situation has been used as a proxy for the "without" project, as the most conservative assumption. ANNEX 17 INDONESIA Table 1 TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Rate of Return Sensitivity Tests: % Variation Base -20 -10 +10 +20 BATURATA Base Cae! 11.5 Rubber Price/Yields 9.9 10.8 12.1 12.9 Food Crop Yields 10.6 11.1 12.0 12.4 INFRASTRUCTURE COST CHANGE +25% - 10.7 -Rubber Price/Yields 9.1 10.0 11.4 12.1 -Food Crop Yields 9.9 10.3 11.2 11.6 -25% -Rubber Price/Yields 12.4 -Food Crop Yields 10.8 11.6 13.1 13.8 11.5 11.9 12.9 14.6 WAY ABUNG RAuqp c,p V 19.1 -Rubber Price/Yields 17.2 18.2 20.0 20.8 Food Crop Yields 14.6 16.8 21.6 24.2 INFRASTRUCTURE COST CHANGE +25% 18.2 -Rubber Price/Yield 16.3 17.3 19.1 19.9 -Food Crop Yiels 13.9 16.0 20.5 22.9 -25% 20.2 -Rubber Price/Yield 18.2 19.2 21.1 21.9 -Food Crop Yield 15.3 17.7 22.8 25.6 1/. Base case shadow pricing - Foreign Exchange 125% - Labor at Rp 210/day INDONESIA TRANSMIGRATION & RURAL DEVELOPMENT PROJECT TRANSMIGRATION BODIES CREATED IN PRESIDENTIAL DECREE #29, 1974 NATIONAL LEVEL PROVINCIAL LEVEL DISTRICT LEVEL GUIDANCE BODY__ _ _ _ _ _ _ IMPLEMENTATION BODY Chief Minister Transmigration Chief Provincial Governor Chief Bupati Departments Public Works & Power Members : Local Officers of: Members : Local Officers of concerned Agencies Communications - Public Works & Power Executive : Kabupaten representative of Dept. of Agriculture Communications Transmigration or alternate Interior - Agriculture Health - Health Education & Culture - Education & Culture Finance - BAPPENAS Defense & Security - BRI information - Others nominated by Governor Research Executive Director General for Transmigration BAPPENAS BRI Secretary : Director General for Transmigration 1! Duties : Coordination, Planning, execution, controlling Duties: Deciding on prnv'vial policies and Duties: Coordination and administration of local and supervision of development iw Transmigration priorities operations and project and implemtation areas at both national and regional levels I -e Chart 94231 R) Organization of Department of Transmigration World Bank-9346(3R) INDONEslA TR^NSM&GRAㄲON AND RURAL DEVELOPMENT PROJECT 컥， INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT ORGANIZATION CHART OF PROVINCIAL DIRECTORATE FOR TRANSMIGRATION IN RECEIVING AND SETTLEMENT AREAS PROVINCIAL DIRECTOR FOR TRANSMIGRATION SECRETARIAT/ ADMINISTRATION PREPARATION DEVELOPMENT PLANNING & & SETTLER& PROGRAMMING IMPLEMENTATION PLACEMENT GUIDANCE DISTRICT REPRESENTATIVES PLANNING & PREPARATION DEVELOPMENT PROGRAMMING & IMPLEMENTATION GUIDANCE VILLAGE MANAGEMENT World Bank-15546(R) INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT ORGANIZATION CHART OF PROVINCIAL DIRECTORATE FOR TRANSMIGRATION IN AREAS OF ORIGIN PROVINCIAL DIRECTOR FOR TRANSMIGRATION PLANNING RECRUITMENT & TRANSPORTATION PROGRAMMING SELECTION DISTRICT REPRESENTATIVE INFORMATION RECRUITMENT TRANSPORTATION World Bank-15547(R) INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT IBRD PROJECT MANAGEMENT UNIT DIRECTOR GENERAL FOR TRANSMIGRATION FINANCE PROVINCIAL PROJECT DIRECTOR DIRECTOR FOR TRANSMIGRATO PROCUREPRESENTATIVE ASSISTANTACC. JNTING UI SIT AGRICULTURAL ADMINISTRATIVE LAND ETTL ASSISTANTS ASSISTANTS VILLAGEDEVELOPMENT SMTAMNAGRSESTRSTAIV S 2UIDANCE ATAS funded AhSoSTNh ASchSITcA AsAtSnSe World Bank-15548(2R) INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT Organization of Provincial and District Medical Services PRESIDENI H.I. uj Lu MINISTER OF HEALTH MINISTER OF INTERNAL AFFAIHS Z 0 r COMMUNICABLE MEDICAL DISEASE DRUG AND CARE CONTROL FOOD CONTROL PROVINCIAL HEALTH INSPECTOR (KES) **..**********O*V*******NO** GOVERNOR OF THE PROVINCE MEDICAL CARE 0> COMMUNICABLE DISEASE CONTROL DRUG AND FOOD CONTROL DISTRICT HEALTH OFFICER mouu.DISTRICT ADMINISTRATIVE OFFICER (DOKABU) (BUPATII -J > MEDICAL CARE COMMUNICABLE DISEASE CONTROL I-L .. DRG ANDFOOD CONTROL -- DISTRICT-HOSPITAL KECAMATAN OFFICER PUSKESAMAS (CAMAT) SUB KELURAHAN OFFICER - j CLINICS (LURAN) VILLAGE CHIEF MOTHER & CHILD VILLAGE (KEPALA KAMPUNG) HEALTH CLINICS HEALTH POSTS L- - IWorld Bank 15741 1NDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT Organization of Ministry of Health National Leve1� � M1NISTEH OF HEALTH 1Пгресlл1.11е �iene1.11 $ег:гегаlу Gггпеlаl $есlеl,пl;п 1п5tпиlг: r�1 Health Hev: alrh дпд �Р.ЧР.Iл�)1Г1f:П1 Р1.имтц Center (ог , Senewnat Educanon Сепгег for Pelsonnei апд Тгоlтпq Reseerch оп С�исе1 апд Finance Н.1д i г)1 ог1У Рс1 snnncl Loylstкs hидт:и апд Мдге11а1 Le9i51гLan & РиЬЬс HeWnonS Centei 1ni Рhи1 т�сеи OPe1.nlun General Aflaus vг.�д Не5с.11�.11 Сепгеl to� Nигпцип Resealcil епд Oevr• Dnectorate lортепг Uuгrwl,nc Secret.ulat Secreгauat Sесгеьапаг Dиесгогаге Secretanaг Gencl�d uf Dьectolatc General of 16o4ui 1 Generdl of CommunlcaUle General и( Cummm�fty D1u4 апд Н1�а1гh Медк.д С.ие. Dlsease Food Сопlьоl lпяпше uf Control Hr,.1hh Sгi 1.е ог�Ч1. lортепl 1LKN1 Un 1•сгиl�ие D11 ег 1иг�иг; D1reclorate Dnecгorate (Sui �Ь.1у.,1 и1 Health и1 о( Сопггоl5 о( Огиц Едисаllоп Hospn.ilл о1 Атта1 Cnntтol Сеп[еi (о� Вогпе Dlseases Ecolo9ical Duectulale Duectorale Directnraгe Srudle5 ыпд uf Family n1 Нел1[h о1 FооП Health М.ы Рlдппт4 LoDuratory Drrectorate Слп[1и1 maqemcnr Sегисыs of Control Resealch о( Direcг Сопtасг Сот- Dпectorate Оиеиоl.пе Dиесгоьаге типreаЫе Сепге� ги� r�t Nигппоп of Сочтегlг B1nmr,dlc,�1 nf DeNл1 Drseuses Сопггоl Hedhh Hese•игh опесгта[е Dvectoraгe of Dиесгоlиге uf Нгдlгh Duectorate Epldeminlogy of Tradr Сепгеls of Мепгаl апд Ouarantule nonal D1ug Неаlгh Control Dпесгогасе Dlrectomte of Сотти- рпесгога[е of Hyqiene nny Неаlгh Неаlгh апд Sanna- 5егисеs 1 nstallahons [1оп � Th1s ог9апаугат 1г 1п гhе sгаге oi hnalizaгion Ьу the Mmistry of Health апд wi11 Ье presented iлг approval tл 1he Presldent. Woilгl Вапk 15742 INDONESIA TRANSMIGRATION & RURAL DEVELOPMENT PROJECT VILLAGE PLAN ALTERNATIVES Scale 1:1000 DISPERSED PLAN DETAIL OF PLOTS Scale 1:100 500 X 100 NUCLEATED PLAN DETAIL OF PLOTS 100 X 25 500X9 LINEAR PLAN DETAIL OF PLOTS 500 X 60 RUBBER 500 X 40 ARABLE BOUNDARY LINES FARM ROADS FEEDER ROAD * HOUSE VILLAGE CENTER RUBBER HOLDINGS World Bank 9509 '77'ARABLE HOLDINGS INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT HIERACHY OF VILLAGE GROUPS - - - - - - - - - - - - I I I I - - - - - - - - - - - -- -* - - - - - - - - - - - - - - - - - - - - -- I I I E *I I I I I I I I I. t VILLAGE 0 VILLAGE CENTER (TYPE I) VILLAGE CENTER (TYPE 11) ENLARGED MARKETPLACE DIAGRAM SHOWING HIERACHY OF VILLAGE GROUPS Q HEALTH CENTER A JUNIOR HIGH SCHOOL FEEDER ROADS World Bank-9510(R) INDONESIA TRANSMIGRATION & RURAL DEVELOPMENT PROJECT DUKUH PRINCIPLE Minor Ridge Farm Track Vilage Main Ridge 15K- Ra Farm Road Village 1.5 Km. Centet Tributary or Minor Stream DUKUH'S DUKUH GROUPING (25-30 Families) Village Center 2 km approximately k 4. 2 ha. plots fronting onto farm road 0 farm road 0 3 ha rubber plots 0.25 ha house plot 1.75 annual crops land SUBDIVISION OF LAND WITHIN Village Center DUKUH FORM World Bank 15675(R) INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT SETTLER LOW COST HOUSING - FIRST STAGE FRONT ELEVATION CROSS SECTION gutter =ra i n w a t eran te collector roof overhang - secton direction of expansion E partitioning of shell by transmigrants gable ventilation verandah main fiame post 3m 25m 0 d Door wv Window PLAN Wotid Bank--15676(R) � . � \ 1 6 . 2 ' / �\ � / ' 2 r� � �. � �� ,---`�'�• / � '�' _ _ F � � - � � � � ������ � г , • , ':� ':-.' ` ,; ::. . 3 у _ г �� � � .,5�,�.-��::�. . . . _ - ,п ,?� а � _ 1 � ''�': _ . l >': ° - , I`I i I � � � ' iг . . l\ � .� , . �� -i 1 I ��1 � 1Г. i � `�� � � У- D . i �� � 1 . �\ /'-.�.: g � ^ -- � � У_ � - - - - ' • � / '. �-:гi�:�-`�-::��"l � � ° _ __ . __ - . � �. .� г г • . . � - . � j ... - <:�-: ' D D ' " _ - - -----, r � �._. � � и�:.. � -,��. , г � - � � ,_ �',�,._. � n' -- � �l b С � _ - _ - . ��' „ г ;° � Т, Z .Z7 � _ _ - J D п _ Г и - ` n v' �' о о �� � �rn rг � � - , п С ,а т i Do � _ п Г > п � � - ' D D 3 1 1 rn � � � Г о г г !_ D т ° � т а � й � � 3 �, о = , _ _,а,, r' z � � � ,�; i г �� в � � п � " i� 1 `т � т � v (.i 1 1 Э -� я � ' __" 1 „ ,.''� ` � 6 . . ��' ��_� ��� �__'-��г ,��/„ . �..���:,.�;� � . . 3�' � � { i _ _ ,�, � ��к j , , � . _ � . ., , � ��� у, - � , � �. ..�-_`-, mPi � � _- - ' � � 1� ' j�, ' , � 9 о � !l. • - , _' -' � _ _ � � '` ы�о. �'Г� . . . - � '-; � ��.` � '�� С ",и . • . ,� � . ,- � . . � � . о. I {. �::: � о Q � _ . � � z ///f , �i�. \ � "" � v. - 3 i ,_а � о . � , ;,' �r �-b'о � о , _ и' � � � ' ,�� 1�1` � т _ . `,. � Q � . ..� -� .��� , . _ . О � 'д � _ � � t6 ' � � О п, _ � а ' . У�О � _ 'fl � , . � .�� ��� . , � _ �� � �� � ,� � 'r� -- ._ ,� _ � ,:� , � f� �.., � , � - �.�� -_ _ .� - - 1r- ° 1 ' -. : � - i . _ - - _ _ 'jJ � , i � , у - - _ • . j - , - __ ' _ _ '� F = i - �. _ : 3о IBRD 11317R FEBRUARY 1976 INDONESIA TRANSMIGRATION AND RURAL DEVELOPMENT PROJECT WAYABUNG AREA REHABILITATION Panaragan NATIONAL HIGHWAY DISTRICT ROADS VILLAGE ROADS Gedungratu RAILWAYS RIVERS Gunungkatun Paaaa aaTirta Kencana 0 5 10 Tulung KILOMETERS Kagungan Ratu Mulya Kencana Pulung Kencana /Marga Kencana Chandra Kencana Daya Murni Mulyoasri DayaaktiGunungbatin DayaaktiMargo Mulyo an .-.P Tatakarya lerangiuBsa Kagu Btage TO TELUKBETUNG