Viewing cable 06JAKARTA11149

06JAKARTA111492006-09-11 03:35:00 2011-08-30 01:44:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Jakarta

DE RUEHJA #1149/01 2540335
R 110335Z SEP 06 ZDK
E.O. 12958: N/A 
REF: STATE 128229 
¶1. (U) Response was prepared jointly with USAID Jakarta 
Mission Staff. 
¶2. (U) SUMMARY: Post is actively engaged with Government of 
Indonesia (GOI) officials on water and sanitation issues 
under the auspices of a Strategic Objective Grant Agreement 
between the USG and the GOI to support higher quality basic 
human services in Indonesia.  The Agreement was signed in 
August 2004 between USAID and the Coordinating Ministry for 
People's Welfare (Menkokesra).  As part of this ongoing 
bilateral cooperation, USAID regularly engages officials 
from the Ministry of Public Works, Ministry of Forestry, 
Ministry of Environment, and Ministry of Health regarding 
USG support to increase access to water, sanitation health 
and nutrition services for impoverished Indonesians.  Such 
engagement covers issues cited in reftel and also includes 
discussions of annual program work plans, presentations of 
annual program progress, joint identification of leveraging 
opportunities and discussion of technical and policy issues. 
End Summary. 
Needs, Priorities and Commitment 
¶3. (U) Access to clean water and sanitation are significant 
problems in Indonesia.  Less than half of Indonesia's 
estimated 225,000,000 people have access to clean piped 
water (World Health Organization/United Nations Children's 
Fund (UNICEF)).  Many urban dwellers rely on contaminated 
shallow wells for water; as of 2004, only 53 percent of 
Indonesia's population obtained its water from sources 
further than 10 meters from excreta disposal sites - a 
universal standard for water safety (UNICEF).  Instead 
wastewater seepage tanks commonly are only 2-3 meters from 
wells.  The problem is even more pronounced in rural areas, 
where only eight percent of the population has access to 
clean piped water.  These condition force large sections of 
the population to either boil their water before 
consumption, or pay exorbitant rates per liter for clean 
drinking water from vendors. 
¶4. (U) While approximately 70 percent of urban dwellers have 
access to latrines and some type of septic system, only two 
percent of the population living in or near urban centers 
has access to a centralized sewage collection and treatment 
system.  Secondary and tertiary treatment of wastewater is 
almost nonexistent, except for a few 'on-site' packaged 
systems at malls and major office buildings.  Many 
residential septic tanks regularly overflow into the 
drainage system, further polluting urban waterways. In 
addition, virtually no "gray" water is treated before 
reaching the drainage system. 
¶5. (SBU) The GOI's failure to aggressively promote improved 
hygiene practices, particularly among low-income families 
and slum dwellers, limited public willingness to pay for 
sewerage services, and dense living conditions in inner city 
slums have exacerbated Indonesia's water and sanitation 
problems.  Moreover, many local water authorities (PDAMs) 
are bankrupt, due to their inability to increase tariffs to 
cover existing heavy debt burdens.  The current regulatory 
environment offers little clarity on how PDAMs can overcome 
this debt burden or attract private sector investment. 
Failure to reduce the scale of the water and sanitation 
problems in Indonesia has led to high rates of diarrhea, 
skin disease, intestinal and other waterborne disease in low- 
income communities, particularly among children. 
¶6. (U) Joint coordinated efforts between the Indonesian 
government, multi-lateral donors, bilateral donors, and a 
growing group of local environmental non-governmental 
organizations (NGOs) are required to effectively tackle the 
massive and complex nature of environmental health problems 
in Indonesia.  In addition to implementing projects in a 
coordinated manner, USAID has identified technical 
assistance, training, advisory services, and public outreach 
on health and hygiene, rather than large scale 
infrastructure projects, as priorities in their strategy for 
improving Indonesia's water and sanitation conditions. 
¶7. (SBU) The central GOI generally understands the scope of 
the nation's water and sanitation issues and is committed to 
solving these problems.  However, poor cooperation and 
internal acrimony among ministries has hampered progress in 
tackling these issues in the past.  Indonesia's 
decentralization program also contributes to inertia on 
these problems due to the more limited technical 
understanding of the issues as well as resource constraints 
at the municipal government level. 
Opportunities to Strengthen US Engagement 
¶8. (U) The USAID/Indonesia Environmental Services Program 
(ESP) is a proven platform on which to strengthen US 
engagement in water and sanitation issues.  ESP was 
conceived and established as a large, multi-sectoral, 
integrated program to address the complex interrelationships 
of the above-described problems.  The problems in Indonesia 
are on a massive scale and there is no other program (by 
GOI, World Bank, Asian Development Bank, or others) 
similarly positioned to address these problems, particularly 
at the local and community level. 
¶9. (U) Spread over nine of Indonesia's 33 provinces 
(representing 70 percent of Indonesia's population), the ESP 
is making significant and noticeable impact, but even 
greater effect could be achieved by increased engagement 
with community groups, local governments and NGOs to roll 
out this work in the seven provinces involved in the 
project.  Additionally, USG could expand USAID activities to 
include a number of additional provinces, particularly those 
in South Sumatra, Kalimantan and Sulawesi. 
¶10. (U) USG could strengthen engagement in ESP and other 
donor water and sanitation projects in relation to 
governance, mobilization of domestic resources, 
infrastructure investment, protection of public health, 
science and technology cooperation, and humanitarian 
assistance, in the following ways: 
¶11. (SBU) Governance: 
--  Work closely with the USAID Local Government Support 
--  Work closely with the World Bank's Indonesian Sanitation 
Sector Development Program to implement GOI policy.  USAID 
involvement can ensure a pro-poor and participatory approach 
to sanitation infrastructure investments in major cities in 
--  Systematize private sector participation with step-by- 
step, project life cycle type procedures, requiring good 
feasibility studies, and transparent and competitive bidding 
--  Work with GOI to create an `investor friendly 
environment' and create one public-private partnership unit 
rather than allowing each ministry to maintain its own unit. 
--  Work more closely with technical ministries to 
understand and promote change. 
¶12. (SBU) Mobilizing domestic resources: 
--  Add support to current program of improving the 
technical, operational and financial management of water 
companies.  (Note:  Younger, more forward-looking managers, 
mayors, and Bupatis (district leaders) understand the need 
for these improvements, and also understand that improving 
public services may help them get re-elected. End Note.) 
--  Increase involvement with the World Bank Institute's 
work with the Indonesia Association of Water Utilities 
(PERPAMSI), PDAMs and ESP.  This will broaden USAID's 
ability to mobilize domestic resources for pro-poor piped 
water expansions. 
--  Develop model microcredit programs through local banks 
to mobilize necessary financial resources to make initial 
hook-up costs to piped water systems affordable to poor 
households and communities. 
--  Encourage corporatization of PDAMs at a minimum, leading 
to possible privatization of PDAMs. 
--  Assist city officials in developing wastewater and 
septic tank sludge collection and treatment methods, as well 
as creating a sound system for collecting fees to cover the 
costs of these methods. 
¶13. (U) Infrastructure investment: 
-- Work to improve public outreach and communication. Assure 
that municipalities, communities and users participate in 
the planning process, understand the need for 
infrastructure, the responsibilities that come with it, the 
need for efficient operation and maintenance, and the need 
to fully understand what they will be paying for and what 
kind of service they should expect. 
--  Enable conditions for infrastructure investment at all 
levels, municipal, provincial and national, through support 
of corporate planning, training and capacity building. 
--  Assist GOI in issuing general obligation and municipal 
bonds and in ensuring that the bond issuance process is well 
managed, is fully transparent, and maintains a system of 
¶14. (U) Protection of public health: 
--  Implement extensive, comprehensive programs for 
behavioral and attitude change. 
--  Expand community education campaigns at the household 
--  Conduct more formative research to better understand how 
to systematically tackle practical health issues, as well as 
hygiene and behavioral change needs. 
--  Work to improve Ministry of Health communications via 
multi-media campaigns, innovative best practices, and 
saturation techniques. 
--  Expand programs with schools and youth groups, to 
educate children on good hygiene practices and to stimulate 
discussions with elders at home. 
(Note:  USAID is doing a great deal of the above protection 
of public health work routinely in each of the provinces in 
which it is engaged under ESP; however, the current program 
cannot keep up with current demand for these interventions, 
signaling a need for additional spending in these areas. 
End Note.) 
¶15. (U) Science and technology cooperation: 
--  Increase the number of exchanges, study tours, and 
observation tours related to water and sanitation 
--  Fund universities to develop programs on appropriate 
designs for sanitation, minimum design standards and 
building codes, wastewater treatment methods, waste 
reduction and disposal techniques, and energy efficiency. 
--  Encourage water treatment equipment manufacturers to 
establish plants in Indonesia for domestic consumption as 
well as competitive exports, possibly using export 
processing zones with investor incentives. 
--  Set up regional learning centers based in Indonesia, in 
English language, to attract regional students, similar to 
the Asian Institute of Technology in Bangkok. 
¶16. (U) Humanitarian assistance: 
--  Help the government to coordinate and synergize relief 
and donor agency efforts for both short and long term goals. 
--  Create experienced, knowledgeable, in-country rapid 
response Water and Sanitation teams to respond to 
emergencies, rather than bringing in teams from overseas who 
face a steep learning curve. 
¶17. (U) Agricultural and industrial pollution of streams, 
rivers and ground water is an important area of concern that 
the ESP and other agencies have not addressed.  This issue 
warrants a much larger and broader program, and could 
include the concept of a "river basin commission" to 
maintain responsibility for monitoring the entire length of 
affected waterways. 
¶18. (U) USAID also is supporting Aman Tirta, a program 
implemented through Johns Hopkins University that is 
designed to facilitate increased access to safe water 
through the introduction of a point-of-use water treatment 
method.  The point-of-use treatment method safely and 
affordably chlorinates water at the household level to 
prevent recontamination.  The program will develop a 
commercial model of a non-subsidized sustainable point-of- 
use water treatment product through a public-private 
partnership.  The program runs from February 2005 - February 
2007 and operates in the pilot provinces of North Sumatra, 
Banten, West, Central and East Java, and DKI Jakarta. 
Opportunities for Leveraging Projects in Other Sectors 
--------------------------------------------- ------------ 
¶19. (U) ESP cooperates with other USAID programs such as the 
Health Services Program, the Safe Water Systems Program, the 
Local Government Support Program, the Food Security and 
Nutrition partners, and, importantly, the Decentralized 
Basic Education program.  However, additional funding would 
strengthen these linkages.  USG could leverage these 
projects by creating joint education modules for schools, 
training of the trainers programs, and multi-media campaigns 
to support large scale behavioral change in the areas of 
handing washing, water treatment, and improved sanitation. 
Together these programs reach 1000+ communities and schools. 
¶20. (U) USG also could link water and sanitation programs 
with the new Avian Influenza program, especially in areas 
with large chicken slaughter industries that would benefit 
from improved sanitation, solid waste management, drainage 
disposal, better initial planning, and licensing by health 
Specific Opportunities to Support Mission Efforts 
--------------------------------------------- ---- 
¶21. (SBU) Washington programs can provide expertise, 
resources, and, very importantly, high profile publicity to 
current mission programs that are successful at the local 
level, assisting Indonesia in raising the impact of these 
programs to the national stage.  Mission objectives would 
benefit particularly from: 
--  Adding resources to the Safe Water System program would 
benefit numerous every-day households as well as the 
inevitable disaster response efforts. 
--  Dramatically expanding the small Aman Tirta program 
would significantly increase its impact. 
--  Increased collaboration with Japan Bank for 
International Cooperation (JBIC) to develop public-private 
partnerships that leverage commercial finance, JBIC loan 
funds and credit enhancements to lower financing costs of 
municipal water and sanitation infrastructure projects. 
--  Assisting USAID's Development Credit Authority to be 
more aggressive in understanding local conditions, risk 
management, and mitigation of these risks in order to 
increase the opportunity to facilitate more credit 
--  Assistance from Washington to improve the political 
will of the GOI to see bond and private sector programs 
through with a high level of transparency, competition and 
good practice to increase investor confidence would also be 
highly useful.