FOR OFFICIAL USE ONLY - World...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 4188

PROJECT COMPLETION REPORT

INDONESIA

FOURTH AGRICULTURAL ESTATE PROJECT (CREDIT 319-IND)

November 8, 1982

FILE COPYProjects DepartmentEast Asia and Pacific Regional Office

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

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Currency Equivalents

Currency Unit - Indonesian Rupiah

US$1.00 = Rp 415 from 1973 through 1978= Rp 625 from 1979

Weights and Measures

Metric System

1 ton = 1 metric ton = 1,000 kg = 2,200 pounds

1 kilogram (kg) = 1,000 gram (-me) = 2.2 pounds1 hectare (ha) = 10,000 square meters = 2.5 acres

Abbreviations

DGE - Directorate General of EstatesFFB - Fresh Fruit Bunches

NES - Nucleus Estates

PNP - Perusahaan Negara PerkebunanPTP - Perseroan Terbatas PerusahaanTEAM KHUSUS - Team to assist DGE in externally financed projects

FOR OFFICIAL USE ONLY

INDONESIA

THE FOURTH AGRICULTURAI ESTATE PROJECT (CREDIT 319-IND)


Table of Contents

Page No.

PREFTACE .......XX-**-e-6---X--@@*v***

BASIC DATA SHEET * ........................................... ii

HIGHLIGHTS ......................... *e.*e.e.*...*..*...e..s iii

1. Summary ...................................1

2. Project Implementation ........ . ..... ........ 2

3. Operating Performance ....... ....... 4

4. Institutional Performance .............................. 5

5. Economic Benefits and Conclusions ...................... 6

ANNEXES

I. Key Indicators

II. Project Costs and .Financing

III. PTP X Balance Sheets 1972-June 1981

FIGURE

I. Disbursement Profiles

II. Map

This dcumnent has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorizatiotn

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INDONESIA : THE FOURTH AGRICULTURAL ESTATE PROJECT(Credit 319-IND)

PREFACE

This is a project completion report of the Fourth AgriculturalEstate Project, for which Credit 319-IND was approved in June 1972 in thesum of US$11.0 million and closed, fully disbursed, in June 1981.

The project completion report was prepared by the East Asia andPacific Regional Office on the basis of a country visit in December 1981.This report is based on information from Bank Group files in Washington andJakarta, a consultant survey of PNP X of October 1971, Appraisal ReportNo. PA-138 and the President's Report (No. 1099) of June 9, 1972, the projectcompletion report of September 1981 prepared by the executing agency,discussions with SBPN, the Borrower's implementing agencies, estate officialsand management.

A copy of the PCR was sent to the Borrower on July 13, 1982 forcomments but none were received.

In addition to summarizing the objectives and results of the project,the PCR expands upon specific relevant issues such as the project's impact onmanagement, institutional structure, the project's technological impact andlessons for future development because of their relevance to this as well asto other tree crop development projects.

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BASIC DATA SHEET

KEY PROJECT DATA Actual or Actual as %Appraisal revised of appraisalestimate estimate estimate

Project costs (US$ million) 21.9 36.3 166Credit amount (US$ million) 11.0 10.97 100Date Board approval 06/09/72 06/09/72Date of Effectiveness 11/02/72 01/31/73Date physical components completed 12/31/80 12/07/81

* Closing Date 06/30/81 06/30/81 100Economic rate of return (%)

Rubber 28 38 135Palm oil 13 20 154

Number of direct beneficiaries 2,500 4,000 160

CUMULATIVE DISBURSEMENTS FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 FY81

Appraisal estimate(US$ million) 0.7 1.9 3.5 5.2 6.6 7.6 8.1 9.7 11.0

Actual (US$ million) 0.5 1.6 3.6 4.8 5.6 9.0 9.2 9.9 11.0Actual as % of estimate 71 84 103 92 85 118 114 103 100Date of final disbursement: 09/81

MISSION DATA Man- Speciali- TypesNo. of days zations Perfor- ofper- in repre- mance prob-

Mission Date sons field sented /a rating /b Trend /c lems /d

Preparation 11/71 3 25 A(2) EAppraisal 12/71 4 23 A(2) FA E

Supervision 1 02/73 2 20 A FASupervision 2 12/73 2 20 A FA 2 1 F TSupervision 3 06/74 3 63 A FA(2) 2 1 M TSupervision 4 11/74 1 10 A 2 1 T PSupervision 5 05/75 3 12 A(2) FA 2 1 PSupervision 6 03/76 2 10 A FA 1 2 F TSupervision 7 03/77 2 8 A FA 1 2 F TSupervision 8 11/77 1 5 A 1 2 F TSupervision 9 06/78 4 40 A(2) FA E 2 2 F TSupervision 10 03/79 3 15 A FA E 2 2 M TSupervision 11 10/79 2 8 A FA 2 2 M TSupervision 12 06/80 2 6 A E 2 2 M T

Subtotal 34 265

Footnotes: see page iii.

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Other Project Data

Borrower : Government of IndonesiaExecuting agency : P.T. Perkebunan XFiscal year : April 1 - March 31

Name of currency (abbreviation): Rupiah (Rp)

Currency Exchange RateAppraisal year average : 1971 US$1.00 = Rp 415Intervening years average : 1972-81 US$1.00 = Rp 510Completion year average : 1981 US$1.00 = Rp 625

Followon ProjectName : Nucleus Estate and Smallholders ILoan number : 1499-INDLoan amount : US$65 million of which US$20 million used for

PTP X

Date Board approval : 11/15/77

/a A = agriculturalist, FA financial analyst, E = engineer.

/b 1 = problem free or minor problems, 2 = moderate problems, 3 = majorproblems.

/c 1 = improving, 2 = stationary, 3 = deteriorating.

/d F = financial, M = managerial, T = technical, P = political.

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INDONESIA

THE FOURTH AGRICULTURAL ESTATE PROJECT (CREDIT 319-IND)


HIGHLIGHTS

The project, one of a series aimed at improving the agriculturaland financial performance of the government-owned plantations (PNPs), wasdesigned to rehabilitate rubber and oil palm estates in the PNP X area inSouth Sumatra.

The project as appraised was to: rehabilitate 2,000 ha of oilpalm and 9,700 ha of rubber; plant 7,400 ha of additional oil palm and4,000 ha of rubber; rehabilitate existing factories and install new processingcapacity; and provide the estate with buildings, vehicles and technicalassistance. An important project feature was the appointment in PNP X of athree-man expatriate team with executive responsibilities and the introductionof expatriate team with executive responsibilities and the introduction ofexpatriate inspection services to strengthen the management and improve theoperations of PNP X. As a consequence of joint effort between advisers andmanagement, productivity of the plantations improved and, in the earlyyears particularly, yields substantially exceeded the appraisal forecasts.Palm oil production, despite a reduction in the planting program, wasalmost 21,000 tons in 1981, against an appraisal estimate of 23,000 tons,while rubber production was over 15,000 tons, as compared with an appraisalforecast of 13,000 tons. Factory development was delayed by uncertainty asto the capacity required and the best location for both the palm oil andrubber plants due to an increase in the rubber planting program from 4,000 hato 64,00 ha, and a reduction in the oil palm program from 7,400 ha to4,500 ha.

Financial results have largely exceeded expectations. An overallcost increase of $14.2 million, was more than offset by higher prices andincreased production. Net income (1981 prices) from rubber rose from a lossof Rp 333 million in 1971 to an estimated Rp 3,023 million in 1982, and netincome from palm oil increased from a loss of Rp 51 million in 1971 toRp 1,851 million in 1982. local contractors in collaboration with foreigncontractors successfully carried out construction of the rubber plants,labor housing and estate civil works.

On the technical side, inadequacies in project preparation andappraisal resulted in conflicting views as to the best use of the availableland and necessitated substantial changes in project design during imple-mentation.

v

The project brought about organizational, technical and financialbenefits that accrued to the sector. The ERR for rubber is 38% (SAR 28%)and for oil palm 20% (SAR 13%) or 30% overall, 11% higher than at appraisal.

Project objectives were campatible with Borrower's economicpolicy, and legal covenants were relevant to ensuring effective implementa-tion.

The following points may be of particular interest:

- the project contributed to increased Indonesian rubber and palmoil production, and by strengthening PNP X it led the way tothe inclusion of smallholder components in Bank-financedprojects for this and other government-owned estates (para. 7).To date, six nucleus estates (NES) projects have been appraisedassisting about 57,000 families in cultivation of about66,000 ha of rubber, 27,000 ha of oil palm and 10,000 ha ofcoconut;

- the project contributed to a market improvement in rubberquality; the establishment in the executing agency of a soundorganizational based accompanied by improved confidence andcapability of staff at all levels; the transformation of theestate from one of the generally poorest of the 28 Governmenttree crop estates to one of the most successful (paras. 12, 23);and

- the following three major lessons were learned which may beimportant in designing future projects (para. 32):

(a) establishment of good management is a difficult but notimpossible task and should always be considered as apriority;

(b) consultants should be selected carefully, appointedearly and their performance monitored by a centralGovernment body; possibly Team Khusus (DGE); and

(c) sound and timely reporting procedures facilitate theindentification and solution of problems.

INDONESIA

THE FOURTH AGRICULTURAL ESTATE PROJECT (CREDIT 319-IND)


Summary

The Fourth Agricultural Estate Project approved by IDA in 1972 wasdesigned to: rehabilitate rubber and palm oil in the the PTP X estates areain South Sumatra, provide new processing facilities and strengthen estatesmanagement. The project-s objectives were achieved. Standards achieved inthe planting and maintenance of rubber and oil palm were better than SAR's

p estimates. A 20-ton FFB/hr palm oil processing plant (Bekri Phase I) wascommissioned in February 1979 and another 20-ton FFB/hr plant (Bekri PhaseII) in July 1981. For rubber, a 20-ton/day crumb rubber factory was commis-sioned in January 1982. Total project costs were US$36.3 million comparedto the SAR's estimate of US$21.9 million. PTP X is now based on a soundorganizational basis and has achieved satisfactory management performance.Financial results have largely exceeded expectations. Net income (1981prices) from rubber rose from a loss of Rp 333 million in 1971 to Rp 3,023million in 1981, and net income from palm oil increased from a loss of Rp 51million in 1971 to a profit of Rp 1,851 million in 1981. Due to its satis-factory profitability, cost overruns were entirely borne by PTP X. Procure-ment operations slow at the outset, improved substantially during projectimplementation due to the increased assistance of RSI to Government.Accounts were well kept and audited on time. Progress reports were producedregularly. The ERR for rubber is 38% (SAR 28%) and for oil palm 20% (SAR13%). The overall ERR is 30%, 11% higher than estimated at appraisal. Theprincipal weaknesses were: initial difficulties with procurement, and withestablishing effective communication between the inspection services and PTPX management. Three main lessons were learned: (a) establishment of goodmanagement is a difficult but not impossible task; (b) consultants should beselected carefully, appointed early and their performance monitored by acentral government body, possibly Team Khusus (DGE); and (c) sound andtimely reporting procedures facilitate the identification and solution ofproblems.

1. A full completion report was prepared by the implementing agencyPTP X in September 1981. This was supplemented by the findings of a BankPCR mission which visited the project area in December 1981. The presentdocument provides a summary of the information contained in the moredetailed reports available in the regional file.

2. The Fourth Agricultural Estate Project, approved by IDA inJune 1972, was designed to rehabilitate rubber and palm oil estates in thePNP X area in South Sumatra.

3. The project was identified by consultants, Guthrie InternationalPlantation Services (GIPS), of Kuala Lumpur in late 1971 and appraised byIDA in December 1971. Negotiations took place in May 1972 and BoardPresentation in late June 1972.

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4. Implementation. The project was designed to encompass the overallrehabilitation of PNP X,/1 by planting 7,400 ha of oil palm and 4,000 ha ofrubber, improving standards of husbandry for 2,000 ha of existing oil palmsand 9,700 ha of mature and immature rubber, constructing one palm oil milland two block rubber factories, and rehabilitating, expanding and replacingexisting processing facilities, estate transportation and buildings. Man-agement would be reorganized and strengthened and supported by engineeringand field advisory services. 'Technical assistance would also be providedfor marketing and crop diversification studies.

5. Soon after effectiveness, the consultant inspectors carried out adetailed analysis of the project area and, on the basis of soil and climaticdata, coupled with a re-assessment of relative price prospects for rubberand palm oil, recommended a substantially different planting program. Aftera number of consultations on the subject with PTP X management and RSI arevised program was agreed in June 1975. This program was changed again in1977 (para. 7). Some of these changes could have been avoided had the abovefactors been adequately assessed during project preparation.

6. Field Development. Planting progressed smoothly since projectinception and was always carried out ahead of schedule (see key indicatorsAnnex I). Standards of planting and maintenance were good.

7. Reassured by the satisfactory performance of PTP X under thisproject, and to further support GOI policy of a rapid expansion of tree cropdevelopment, the Bank agreed in 1976 to appraise the first Nucleus Estate andSmallholders project (NES I) to be partially carried out by PTP X in theproject area. The new project included a smallholder rubber and food cropcomponent for 5,730 families on about 11,250 ha. As NES I operationsstarted in 1977, to clearly separate costs under the two projects, theplanting program under Cr. 319-IND was completed by considering all 1976/77planting as having been done under the project and transferring all futureplanting to NES I. Thus, ultimately, 6,924 ha of rubber and 5,052 ha of oilpalm were attributed to the Fourth Estates project. In all, some 11,976 hawere planted compared to the appraisal target of 11,400 ha.

8. Processing facilities. The SAR anticipated that a 60 ton FFB/hrmill would be required at Kedaton, and a new 10 ton FFB/hr mill would bebuilt at Bekri in 1981. In 1974, based on higher oil palm yield projection,GOI and IDA agreed to proposals for the expansion of the new Bekri mill fromthe initial 20 ton/hr to 40 ton/hr. At the same time a reduction of oil

/1 At inception the estate had the juridical status of a PNP, a state-ownedenterprise. In 1980 its status was changed in a PTP a public corpora-tion with limited liability. All references in this P.C.R. will bePTP X.

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palm area around Kedaton eliminated the need for a new mill in that area.The contract for Bekri Phase I was signed in July 1975 and the plant wasexpected to be commissioned in July 1977. Due to delays in constructionthe mill was completed in July 1978 and was commissioned in February 1979.Thereafter, a number of technical problems developed which resulted infinancial losses estimated at about Rp 300 million in that year.

10. IDA recommended a series of corrective steps of which particularlyimportant was the strengthening PTP X engineering staff to ensure goodmanagement of facilities being installed under the project. This resultedin the establishment of a technical task force formed by experiencedengineers from other estates. The task force, set up in 1979, took overtechnical responsibilities and improved operating performance andaccelerated finishing and commissioning (July 1981) of Bekri Phase II. Oilextraction in the Bekri mill was increased from 12% to 20% but the kernelextraction although improved from 0.9 to 1.8% was still only 50% offorecast. The technical task force is expected to be merged soon with thetechnical department to avoid duplication of functions and strengthenplanning and engineering capabilities in PTP X.

11. For rubber, the construction of the Way Berulu 20 tons/day CrumRubber Factory started in July 1980 and was commissioned in early 1982.

12. Technological innovation in the new rubber factory resulted inimproved processing efficiency, belter quality control and modernization ofpackaging.

13. Panjang Bulking Installation. The SAR had also proposed theconstruction of a port storage and pumping installation at the port ofPanjang for 5,000 tons of palm oil for local and export sales. However,due to the reduction of the oil palm planting program and changes in themarket situation (all PTP X Lampung palm oil production is now consumedlocally) the construction was halted after completing one storage tank andthe related equipment.

14. Procurement. A number of problems encountered in initiating theproject were largely due to PTP X's inexperience with Bank ICB proceduresand the GOI's own cumbersome procurement procedures. However, as theproject progressed, GOI gained more direct experience on how to deal withprocurement of fertilizers and equipment under other NES bank-financedprojects. ICB procurement procedures generally followed Bank guidelines,although it took an average 400 days from the preparation of tenderdocuments to the delivery of material and equipment to the project site.

15. Project Costs. Total project costs (Annex II) were Rp 16,277million (US$36.3 million) as against the appraisal estimate of Rp 9,096million (US$21.9 million). Cost overruns were due to changes inplanting from oil palm to rubber and factory construction programs (27%) andinflation (73%).

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16. IDA Disbursements. The US$11 million credit was closed onJune 30, 1981, having committed all but US$30,776 which were cancelled.

17. Figure 1 indicates that the rate of disbursement paralleled theBankwide average for tree crop projects and the average for East Asia agri-cultural projects during the first three years of project implementation,lagged in years 5 and 6, but accelerated subsequently. The total disburse-ment period was in line with the overall average for tree crop lending, andEast Asia agricultural projects.

18. Operating Performance. Standards achieved in the planting andmaintenance of rubber and oil palm compare favorably with SAR's estimates.Calculation of a yield profile from 12,800 ha showed a rubber mean yield of1,218/kg/ha as against a SAR estimate of 1,200/kg/ha. Oil palm yields fromnew plantings averaged 14.8 tons of FFB/ha during the first four years asagainst a SAR forecast of 13.8 tons of FFB/ha but the improvement onrehabilitated areas was slightly below expectation.

19. All project oil palm plantings were made with DxP seed produced atthe Marihat Research Station. Development of the young palms has beenexcellent and early yields are above expectation. Since Marihat materialhad been condemned as unsatisfactory in the earlier Estate projects, thoseresults mark a significant step forward in Indonesia-s ability to meet herplanting material needs without recourse to foreign supplier.

20. With respect to other crops envisaged by the project, PTP X hassucceeded, with technical assistance from consultants, in establishing159 ha of excellent irrigated coconut seed gardens for the production ofdwarf x tall hybrid seed nuts. The production of hybrid seed which in 1981reached 2 million nuts, is expected to rise to 2.7 million nuts when thegardens reach maturity. There are also 46 ha of tall palms (the maleparents) including West African, Tahitian, Rennel and local varieties, and223 ha of trial plantings of hybrid and other material.

21. Financial Performance. PTP X was expected at appraisal to haveconsiderable initial cash generating and cash flow problems. However, PTPX-s financial performance, bolstered by high rubber prices has exceededexpectations. Its income rose from a net loss of Rp 157,000 in 1972 to apretax profit of about Rp 7 billion in 1981, or from a loss of about 17% ofthe sales revenue in 1972 to a profit before taxes of 43% in 1981. In termsof major crops, net income from rubber in real terms (1981 prices) increased X

from a loss of Rp 333 million in 1971 to an estimated profit of Rp 3,023million in 1981, and net income from palm oil rose from a loss of Rp 48million in 1971 to an estimated profit of Rp 1,851 million in 1981.

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22. PTP X-s assets (Annex 3) increased from Rp 1 billion in 1972 toRp 50 billion in 1981, or to Rp 19.6 billion in constant 1972 prices, a20-fold increase in real terms in less than 10 years. Despite this expansion,PTP X capital structure is satisfactory with a 0.5:1 long-term debt to networth ratio and 1.3:1 current ratio. During project implementation PTP X-scapital was increased by a GOI injection of equity in 1978 and by thecountrywide revaluation of assets in 1979. However, in recent years when

* the estate's profitability was particularly high, PTP X should have beenallowed to retain earnings and capitalize them to increase its long-termleverage potential. Cost overruns were entirely borne by PNP X, an

f additional indication that the estate had substantially improved financiallyunder the project.

23. Management Performance. The project provided substantial tech-nical assistance services which resulted in a strengthening of PTP X'smanagement. Some ineffective managers were replaced, and selected technicalstaff were sent to Malaysia for training. Organizational achievements ofspecial relevance were: the establishment of a functional corporate struc-ture based on two operational departments, one for field and factory produc-tion and the other for financial administration and commercial activities;and the introduction of a planning and control Management Information System(MIS) that considerably improved internal auditing, field inventory control,record keeping and capital and short-term budgeting. This led to a morerealistic forecast of revenue, expenditures and operating cost savings.

24. Consultants' Performance. The performance of the principaltechnical advisers, was uneven. In the initial phase, they provided avaluable input in establishing the programs and budgets and in guidingestate operations. Their six-monthly visits provided a needed stimulus,and the performance of estate managers improved, as did the standard ofreporting but guidance on engineering and processing aspects was at timesinadequate. Technical agricultural advice was generally satisfactory butconservative; it should have been more up-to-date and more flexible.Eventually, PTP X called in new consultants, to advise on the rubberoperations.

25. Accounting, Auditing and Reporting. PTP X's record-keepingstandards have improved considerably during project implementation. Itsaccounts are now well kept and regularly audited by an independent CPA firm.The auditors' reports are supported by extensive and informative statementsand comply with IDA's standard requirements. Internal auditing carried outby a PTP X seven-man team systematically reviews accounts and checks onlabor force presence, work in progress and inventory control. Quarterlyprogress reporting, though often late, has been satisfactory.

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26. Economic Benefits. Costs and benefits for the revised economicrate of return are expressed in constant 1981 Rupiahs. International anddomestic price indices were used to adjust prices. The exchange rate usedwas, Rp 415 per US$ from 1973 through 1978, and Rp 625 thereafter. In orderto conform as far as possible with the methodology adopted at appraisal,labor was not shadow priced although, due to transmigration into the projectarea, labor of roughly the same skill would be abundantly available and theopportunity cost would probably not exceed 50% of the actual wage rate. )Fertilizer prices, which are subsidized, were brought in line with theinternational price. The project evaluation period was 30 years (1973-2002).Under the above assumptions, treating the project as a time-slice of PTP X'stotal operations with all investment prior to 1973 considered as sunk costs,the economic rate of return for rubber is 38% and for palm oil 20% comparedwith the SAR-s rubber ERR 28%, and oil palm ERR 13%. The overall ERR is 30%(SAR 19%).

27. Foreign exchange earnings, projected at appraisal to reach US$10million by 1985, reached US$17 million in 1980 and are projected to rise toUS$30 million by 1985. The project created about 4,000 new permanent jobs(SAR 2,500) housed about 3,500 estate workers families and had a beneficialimpact on the standard of living of transmigrants in the project area. Itis recognized that organizational, technical, and financial benefits arisingout of the project would not have been achieved without it.

28. The project contributed to increased Indonesian rubber and palmoil production, and by strengthening PTP X it led the way to the inclusionof smallholder components in Bank-financed projects for PTP X as well asother PNP/PTPs. To date, six nucleus estates projects have been appraisedassisting about 57,000 families to cultivate about 66,000 ha of rubber,27,000 ha of oil palm and 10,000 ha of coconut. The success of theseprojects and their agricultural, technical and financial impact is due inlarge part to the fact that they incorporate lessons learned from earlieragricultural estate projects of which 319-IND was one of the mostsignificant.

29. Principal successes of the project were: the attainment of theproduction objectives which involved doubling rubber production andincreasing palm oil production 20-fold; establishment of a soundorganizational base, accompanied by improved confidence and capability ofstaff at all levels but especially in the technical department; andtransformation of PTP X from one of the poorest to one of the mostsuccessful of the 29 government tree crops estates.

30. Principal project weaknesses were: initially slow procurement andfailure to establish effective communication between the inspection servicesand PTP X-s management, which caused some delays and errors in the installa-tion of processing equipment.

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32. The main lessons learned were that: (a) the establishment of goodmanagement is a difficult but not impossible task; (b) technical assistanceand training of staff are vital to strengthening management; (c) consultantsshould be appointed early and their performance monitored by a central GOIbody, possibly Team Khusus (DGE); and (c) brief but appropriate and timelyreporting procedures facilitate the identification and solution of problems.The project also indicated that GOI should promote a policy of inter-estatetransfer of technical and financial assistance. On the technical side theproject suffered from inadequacies in preparation and appraisal, whichresulted in conflicting views as to the best use of the land available andnecessitated substantial changes in project design during implementation.There is a clear need for a program of adaptive research to provide reliabledata on fertilizer needs and to develop improved agronomic techniques forexploitation and maintenance.

I

INDONESIA



Key Indicators(Percentages)

AppraisalInitial appraisal/revised program 1973 1974 1975 1976 1977 1978 1979 1980 1981 target date

Rehabilitation 9,700 ha rubber N/A N/A N/A N/A 100 100 100 - - N/ARehabilitation 2,000 ha oil palm N/A N/A N/A N/A 100 100 100 - - N/AReplanting 6,924 ha uneconomic rubber /a 10 25 66 100 - - - - - 1977 m

Planting 5,052 ha oil palm /a 22 54 75 100 - - - - 1977

Construction of first phase Beku oil mill(20 tons/ha) /b 0 0 10 50 80 100 - - 1977

Procurement and installation of machineryfor second phase Beku mill /b 0 0 0 50 50 - 50 70 100 1980/81

Construction of 20 tons/day crumb rubberfactory (Kedaton) 0 30 100 - - - - - - 1973/74

Construction of 20 tons/day crumb rubberfactory (Way Berulu) 0 0 0 0 0 0 0 40 100 1973/74

Construction of Panjang palm oil bulkingfacilities /c 0 0 0 0 0 5 5 25 25 1976/77

Additions and replacement of agriculturalmachinery and vehicles 0 20 34 37 48 58 59 100 - N/A

Rehabilitation of processing facilitiesPalm oil 66 66 93 100 - - - - - N/ARubber 0 50 100 - - - - - - N/A

Construction of labor houses 18 38 47 66 100 - - - - N/AProvision of technical assistance 90 90 90 90 90 - - - - 1973

/a Based on revised planting program./b Consequent to revised planting program, factory capacity and location changes./c Bulking facilities no longer needed as palm oil production is sold in local market.

ANNEX II-9-

INDONESIA



Project Cost and Financing /a, /b(In US$'000)

X Appraisal estimate Actual /c % of actual totalComponents Local Foreign Total Local Foreign Total to appraisal total

X Rubber, ha 4,000 6,924 173Oil palm, ha 7,400 5,052 68

Land DevelopmentPlanting and upkeep of immatureareas:Wages 2,888 - 2,888 7,205 - 7,205 249Fertilizer 72 538 610 3,102 2,067 5,169 847Chemicals 85 629 714 859 2,574 3,433 480Other expenses 1,310 193 1,503 3,832 425 4,257 283Road 14 - 14 214 - 214 1,528

Subtotal 4,369 1,360 5,729 15,212 5,066 20,278 354

Factories, Buildings, Machinery, Etc.

Palm oil processing facilities 2,026 3,957 5,983 3,435 2,690 6,125 102Rubber processing facilities 528 1,030 1,558 782 1,735 2,517 161Palm oil bulking installation 817 683 1,500 112 112 224 15Field machinery and equipment 72 537 609 130 1,255 1,385 227Vehicles 43 314 357 185 316 501 140Laboratory and office equipment 11 23 34 65 65 130 382Housing 1,827 269 2,096 583 1,360 1,943 93

Subtotal 5,324 6,813 12,137 5,292 7,533 12,825 106

Technical Assistance 884 1,865 2,749 801 1,281 2,082 76

Special Rehabilitation 340 962 1,302 229 859 1,088 83

Total 10,917 11,000 21,917 21,534 14,739 36,273 165

Financing:IDA - 11,000 11,000 - 10,970 10,970 30GOI 10,903 - 10,903 10,903 - 10,903 30PNP X 14 - 14 10,631 3,769 14,400 40

Total 10,917 11,000 21,917 21,534 14,739 36,273 100

/a Exchange rates used: 1978 and earlier: Rp 415 to US$11979-81 : Rp 625 to US$1

/b Appraisal contingencies were prorated among components.

/c Cost increases due to overruns and increased rubber output whose production costs are higher.

- 10 - ANNEX III

INDONESIA



PTP X Summarized Balance Sheets, 1972-June 1981(Rp million)

1972 1973 1974 1975 1976 1977 1978 1979/a 1980 06/30/81

AssetsCurrent Assets

Cash and banks 76 117 243 276 225 255 1,092 355 735 264Receivables 46 69 84 127 173 172 123 1,372 1,561 2,001Stocks of produce 77 167 345 235 256 333 730 933 1,368 1,735Stocks of materials 110 289 420 821 808 574 876 1,524 3,855 3,110Prepaid items & pension funds 20 25 62 95 300 421 336 602 121 243

Total 329 667 1,154 1,554 1,762 1,755 3,157 4,786 7,640 7,089

Fixed AssetsPlantations 177 583 1,364 2,783 4,490 6,631 9,211 32,296 37,277 39,027Buildings 88 99 244 471 1,030 1,313 1,725 3,676 4,223 4,489Plant, equipment & machinery 308 414 631 976 1,195 1,436 1,641 2,401 2,941 2,780Others (incl. work in progress) 213 197 326 721 563 1,475 2,105 3,351 3,544 4,788

Total 786 1,293 2,5C5 4,942 7,278 10,855 14,682 41,724 47,985 51,084

Less: Accumulated depreciation 143 211 355 547 824 1,176 1,646 8,462 10,063 11,219

Net Fixed Assets 643 1,082 2,210 4,395 6,454 9,679 13,036 33,262 37,922 39,865

Other Assets 51 183 399 336 1,069 707 2,336 2,979 936 3,792

Total Assets 1,023 1,932 3,763 6,285 9,285 12,141 18,529 41,028 46,493 50,746

Liabilities, Reserves & EquityCurrent liabilities 249 831 514 610 930 1,392 756 2,161 5,746 8,511Other liabilities 57 - 8 12 8 53 586 - 156 -

Long-term debtsGovernment - 675 1,819 3,366 4,456 4,526 4,526 4,526 4,526 4,526IDA/IBRD - 328 943 1,749 2,840 3,134 6,132 6,893 6,790 8,796Pension funds 40 - - - - 127 171 171 482 490

Banks/others 469 - 6 - - 300 - - 819 -

Equity (paid-in capital) 104 104 104 104 104 1,078 4,087 4,087 24,800/b 24,800Reserves 261 221 221 302 122 381 927 1,879 - 1,137Assets revaluation surplus - - - - - - - 15,898 - -

Profit (losses) for the year (157) (70) 375 122 825 1,150 1,344 5,413 3,179 2,486Losses carryover - (157) (227) (20) - - - - - -

Total Liabilities & Equity 1,023 1,932 3,763 6,285 9,285 12,141 18,529 41,028 46,498 50,746

/a After assets revaluation at January 1, 1979.

/b Stockholders' equity.

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