Grant Assistance

JFPR: INO 39180

Proposed Grant Assistance to the Republic of Indonesia for Seismically Upgraded Housing in Nanggroe Aceh Darussalam and North Sumatera (Financed by the Japan Fund for Poverty Reduction) August 2005

CURRENCY EQUIVALENTS (as of 13 August 2005)

Currency Unit - rupiah (Rp)

Rp1.00 = $0.000102 $1.00 = Rp9,760

ABBREVIATIONS

ADB – Asian Development Bank BAPPENAS – Badan Perencanaan Pembangunan Nasional (National

Development Planning Agency) BRI – Bank Rakyat Indonesia (People’s Bank of Indonesia) BPR – Bank Perkreditan Rakyat (People’s Credit Bank) EA – executing agency ETESP – Earthquake and Tsunami Emergency Support Program IA – implementing agency IAI – Ikatan Arsitek Indonesia (Indonesian Institute of Architects) JBIC – Japan Bank for International Cooperation JFPR – Japan Fund for Poverty Reduction JICA – Japan International Cooperation Agency MPW – Ministry of Public Works NGO – nongovernement organization NUP – neighborhood upgrading plan NUSSP – Neighborhood Upgrading and Shelter Sector Project OCO – Office of Cofinancing Operations PNM – Permodalan Nasional Madani (National Fund for Social

Investment SERD – Southeast Asia Department SESS – Social Sectors Division of the Southeast Asia Department SUHA – Seismically Upgraded Housing in Nanggroe Aceh Darussalam

and North Sumatera UN – United Nations

TECHNICAL ASSISTANCE CLASSIFICATION Targeting Classification – Targeted intervention Sector – Industry and trade Subsector – Housing construction Themes – Sustainable economic growth, environmental sustainability Subtheme – Developing rural/urban areas, fostering physical infrastructure

development

NOTES

(i) The fiscal year of the Government of Indonesia ends on 31 December. (ii) In this report, “$” refers to US dollars.

National Capital

Provincial Capital

District Capital

City Government

Sub-district Capital

National Road

Provincial Road

Railway

Port

International/Domestic Airport

River

District Boundary

Provincial Boundary

International Boundary

Boundaries are not necessarily authoritative.

ST

RA

IT O

F ME

LA

KA

RIAU

WEST SUMATRA

NANGGROE ACEH DARUSSALAM

N O R T H S U M A T R A

SULAWESIKALIMANTANSUMATRA

SERAM

HALMAHERA

SUMBA

BALI

SUMBAWAJ A V A

BANGKA

BELITUNG

FLORES

TIMOR

IRIAN

05-2565 RM

I N D O N E S I A

SEISMICALLY UPGRADED HOUSING INNANGGROE ACEH DARUSSALAM AND

NORTH SUMATERA

6 00'N 6 00'N

96 00'E

96 00'E

100 00'E

100 00'E

3 00'N 3 00'N

0 0

o o

o

o

o

o

o o

o o

10 00'So

130 00'Eo110 00'Eo

10 00'No

10 00'No

130 00'Eo110 00'Eo

0o0o

10 00'So

TANJUNGPURA

LUBUK PAKAMKUTACANE

TAKENGON

MEULABOH

BIREUEN

SIGLI

JANTHO

LHOK SEUMAWE

LANGSA

TAPAKTUAN

SINABANG

SINGKIL

PEMATANG RAYA

PEMATANG SIANTAR TANJUNGBALAI

LABUHANBATU

BALIGE

SIDIKALANG

KABANJAHE

TARUTUNG

KOTAPANDAN

GUNUNGSITOLI

SIBOLGA

PANYABUNGAN

MEDAN

Banda Aceh

RANTAUPRAPAT

BINJAI

TEBINGTINGGI

KISARAN

PADANGSIDEMPUAN

Kampung AirLanuhan Bajau

Ulee Lhee Krueng Raya

BateeIndrapuree

Seulimeum

Pankalansusu

PangkalanbrandanBesitang

Gebang

Tanjung SelatanBelawan

LabuhandeliGenting

Pancurbatu

DelituaSibolangit Tanjungmorawa

MardindingBarastagi

SeribudolokKotabuluh

Tigares

Silalahi

Panjaitan

Pangururan

Prapat

HarianbohoKutarame

Banjara

Hutanabolon

Nainggolan

Siborong-borongTuka

Barus

SipoholoHuta Tinggi

LumutSipirok

Onannasang

Lumbangaraga

Aekumbang Garoga

Parsoburan

Silaen

Bandarpulau

Perdagangan

Tanjungtiram

Teluk Nibung

Tanjungmengedar

Labuhanbilik

Sungaitampan

Merbau

Perbuangan

Kotapinang

Hutagodang

Langgapayung

Binanga

GunungtuaBatangtoru

Batumundan

SingkuangSiabu

Pasarsibuhuan

Tanahbatu

Muarasoma

Tapus

Natal

Tabuyung

TuhemberuaSifahandra

DimaAfulu

Hiligeo

Lahewa

LolowauSirombu

Hiliotaluwa

Onolimbu

Telukdalam

Laweueng

Padang Tiji

BeureuneunLeupung

Lhoknga

Peukan Bada

Lhoong

Lamno

Keudeunga

Lhok Kruet

Tangse

KeumalaMeureudu

Samalanga

Jounieb

Keudemane

Matangkul

Krueng Geukuh

Cot Girek

Panjon Labu

Lhok Sukon Simpang Ulim

Kota Binjai

Idi Cut

Idi RayekPeureulak

Alur PinangAlue Dua

Samar Kilang

PenaronKuala Langsa

Tuatang Cut

Kidala Simpang

Benua Raja

JernihLokop

Rikit Gaib

Tanah Merah

Babusalam Kula Lang

Lawe Sigala-Gala

Kota Fajar

Pay PapuKandang

Bakongan

Trumon

Kala Kepen

Rundeng

Sibige

Nasrehe

Panji

Subulus Salam

Binjohara

Lipat Kajang

Samadua

SawangKota Baru

Labuhan Haji

Manggeng

Tangan Tangan

Blang PidieSusoh

Kuta Bahagia

LamainongKuta Nidong

Seumanyam

Tadok

Kuala Tuha

JeuramPungki

Suwaktimah

PasiTeunom

Tutut

Beutong

AngkopAtu Lintiang

Pegasing

Isaq

Uwaq

Trangon

Calang

Lageuen

RigaihGeumpang

Lampahan

Simpang BaliqTeritit Simpang Tiga

Pondok BaruBuntul Kemumu

Rimba RayaRonga Ronge

Bintang

Lumut

SABANG

Aceh Besar

West Aceh

PidieNorth Aceh

Central Aceh

South Aceh

Southeast Aceh

Simeuleu

East Aceh

Bireuen

Aceh Singkil

Pini

Telo

Sigata

Tanahmasa

Wunga

Mursala

Tuangku

Bangkaru

Banyak

Beureueh

Simeuleu

Nias

Lasia

Babi

Tapah

Lekon Siumat

Bago

Keureuse

0 20 40 60 80 100

Kilometers

N

JAKARTAJ a v a S e a

I N D I A N O C E A N

PACIFIC OCEAN

South China Sea

TIMOR-LESTE

MALAYSIA

BRUNEIDARUSSALAM

I N D O N E S I A

PROJECTAREA

JAPAN FUND FOR POVERTY REDUCTION (JFPR)

JFPR Grant Proposal Format for Tsunami Disaster Projects

I. Basic Data Name of Proposed Activity Seismically Upgraded Housing in Nanggroe Aceh

Darussalam and North Sumatera (SUHA)

Country Indonesia

Grant Amount Requested $2,000,000

Project Duration 2.0 years

Regional Grant Yes / No

Grant Type Project / Capacity building II. Grant Development Objectives and Expected Key Performance Indicators Grant Development Objectives: SUHA will develop prototypes of affordable, seismically resistant housing (able to withstand at least 7.0 seismic events as measured by the Richter scale), which utilize readily available materials and can be assembled rapidly in modular fashion with minimal assistance from building professionals. Prototypes will be disseminated through selected companies and nongovernment organizations (NGO), and promoted as grants made available via banks and other microfinance institutions such as Bank Rakyat Indonesia (BRI), Bank Perkreditan Rakyat (BPR), Permodalan Nasional Madani (National Fund for Social Investment [PNM]). The development objective of SUHA is to demonstrate the appropriate technology for replacement of destroyed housing stock with affordable and seismically enhanced structures, and lay the groundwork for a sustainable system of promotion of such housing through banks and microfinance institutions. The selected banks and other microfinance institutions are expected to develop a housing credit line that promotes earthquake-resistant housing to a wider clientele. Expected Key Performance Indicators: 1. At least three prototype designs of seismically enhanced, single-family housing structures of 36 square

meters (m2) approved, and up to 34 prototypes built in various communities. 2. One company and/or NGO selected to produce detailed information kits. 3. Not less than 10 financial institutions selected and trained to channel promotional housing grants, and

to prepare a credit line for housing loans whose eligibility is linked to utilization of earthquake-resistant technology and design.

4. Approximately 300 seismically enhanced single-family homes constructed using approved design. 5. Undisputed land ownership is a condition for approval of grant-funded housing.

III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures

Category Grant Allocated ($)

Percentage of Expenditures

1.1 Civil Works (including development of prototypes, construction of prototypes, seed capital)

1,312,000 65.6

1.2 Equipment and Supplies 78,000 3.9 1.3 Training, Workshops, and Seminars (of

companies, NGOs, provincial/local officials) 48,000

2.4 1.4 Consulting Services (information kits, and

preparatory and implementation activities) 227,500 11.4

1.5 Grant Management 268,000 13.4 1.6 Other Inputs 16,000 0.8 1.7 Contingency 50,500 2.5 Total 2,000,000 100 Incremental Cost 50,000 4

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JAPAN FUND FOR POVERTY REDUCTION

JFPR Grant Proposal Format for Tsunami Disaster Projects

Background Information A. Other Data Date of Submission of Application

6 May 2005

Project Officer Florian Steinberg, Housing and Urban Development Specialist Project Officer’s Division, E-mail, Phone

Social Sectors Division (SESS), South-east Asia Department (SERD), fsteinberg@adb.org, 632-5581

Other Staff Who Will Need Access to Edit/Review the Report

Mike Lindfield, Social Sectors Division (SESS), South-east Asia Department (SERD), mlindfield@adb.org, 632-5832

Sector Social Sectors, Housing Theme Earthquake Resistent Housing Construction Was JFPR Seed Money used to prepare this grant proposal?

Yes [ ] No [x]

Have Staff Review Committee comments been reflected in the proposal?

Yes [x] No [ ]

Name of Associated Asian Development Bank (ADB)-Financed Operations

- Earthquake and Tsunami Emergency Support Program (ETESP) - Neighborhood and Urban Shelter Upgrading Project (NUSSP)

Executing Agency

Ministry of Public Works (MPW), Directorate General of Housing and Settlements

Grant Implementing Agency

Indonesian Institute of Architecture (Ikatan Arsitek Indonesia [IAI]) Jakarta Design Centre, 7th floor, Jl. Gatot Subroto Kav. 53, Jakarta 10260, Indonesia Tel. +62-21-5304722, Fax +62-21-5304722, e-mail: webmaster@iai.or.id

B. Details of the Proposed Grant 1. Description of the Components, Monitorable Deliverables/Outcomes, and Implementation Timetable Component A Component Name Development and Construction of Prototypes Cost $222,000 Component Description (i) The implementing agency (IA), with participation of the executing

agency (EA), will conduct a rapid open design competition among domestic practitioners and institutions, which will lead to the selection of proposals for prototypes. Participants will research anti-seismic designs and suitably adapt these to the conditions of Nanggroe Aceh Darussalam (Aceh) and North Sumatera provinces. These prototypes will be built in 1:1 (or scale models) and be tested in the Building Materials Research Institute (Puslitbangkim) of MPW in Bandung (or be assessed by any other similar institution, to be decided). The earthquake-resistant units shall be able to withstand earthquake events of at least 7.0 as measure by the Richter scale. As much as possible, the units shall take into account safety and

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environmental health aspects, and use locally available construction materials and skills/knowledge of the construction industry, as well as the common home builder. After the structural engineering testing of the proposed prototypes, Puslitbangkim will recommend to MPW at least three performing prototypes. MPW will approve and recommend these prototypes for adaptation and dissemination in Aceh and North Sumatera. (ii) The architecture of the proposed prototypes shall take into account the needs of the coastal population of the provinces of Aceh and North Sumatera (including Simeulue and Nias islands), which will be among the primary beneficiaries. Thus, design specifications need to be culturally acceptable. Since coastal people in Simeulue and Nias islands are considered indigenous peoples under ADB's Policy on Indigenous Peoples, the dimension of cultural acceptability is considered important. (iii) The IA will construct at least three selected and recommended prototypes as “demonstration” units in various locations (to be decided) of the earthquake-tsunami affected areas, and will invite expressions of interest and tenders from companies or NGOs to produce the demonstration units. The companies or NGOs are expected to liaise with the local communities and obtain feed-back on the prototypes. (iv) The IA is expected to guide active community participation during the design and construction of prototypes, and to involve community representatives adequately during the dissemination and training activities.

Monitorable Deliverables/Outputs • Results of architectural-engineering competition—selection of proposals for prototypes.

• Prototypes tested. • At least three approved and recommended prototypes of

earthquake-resistant housing. • At least three prototypes of recommended housing units

constructed in six affected locations for the purpose of demonstration.

Implementation of Major Activities: Number of months for grant activities

• 2 months of competition. • 1 month of testing of prototypes. • 0.5 month of processing of official MPW recommendations. • 2–3 months for construction of prototypes in six locations.

Component B Component Name Dissemination and Training Cost $227,500 Component Description (i) A selected company or NGO will prepare manuals and

information kits (brochures, posters, multimedia tools) containing design options, technical drawings and calculations, and detailed costing examples for production of the recommended units by small contractors, NGOs, or self-builders. The selected company or NGO will assist in establishing local government building centers and

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liaise with contractors and the local communities, to obtain feedback on contents and presentation style of the information kits. The selected company or NGO also will coordinate the printing of the materials and assure consistency of content and quality of the materials. The selection of the company or NGO shall be based on a set of criteria of professional experience and qualification, which shall ensure transparency and maintain the integrity of the Project. (ii) Local training courses in Aceh and North Sumatera provinces for companies/NGOs, provincial/local officials, and possibly representatives of local communities shall focus on design options, technical aspects of construction process, and detailed costing of the recommended units. Implementation of training will be coordinated by the IA with the support of outside training consultants. (iii) Financial institutions (public or private) will be selected to participate in training, which will prepare them for the administration of the SUHA grant funds for housing (and of non-SUHA housing loans). Staff of the selected banks and other microfinance institutions (for instance BRI, BPR, and PNM) will be familiarized with the important safeguards regarding earthquake-resistant housing, and how the utilization of this technology and the application of the prototypes can be leveraged. In the case of future non-SUHA loan funding for housing, the banking sector is expected to promote earthquake-resistant housing as the preferred choice, in accordance with national building regulations. Participants from the banking sector also will learn how their staff or bank-sponsored consultants need to field-check adherence to the proposed standards as part of the compliance protocol for obtaining the complete tranches of funding. Outside training consultants will support the training. (iv) The selection of banks or microfinance institutions shall be based on a set of criteria or professionalism and experience profile, which shall ensure transparency and maintain the integrity of the Project.

Monitorable Deliverables/Outputs • At least one well-illustrated information kit made available. • Information kit printed (30,000 copies). • Widespread circulation of information kits (30,000 copies). • At least 15 events of 2-day training for companies/NGOs,

provincial/local officials, and representatives of local communities conducted.

• Outreach to at least 300 participants from companies/NGOs, provincial/local officials, and representatives of local communities.

• At least 10 financial institutions participated with 15 persons in training on the subject of the loan package and its anti-seismic safeguards.

• Ongranting procedure under the SUHA project elaborated. • Non-SUHA lending procedures elaborated.

Implementation of Major Activities: • 2–3 months

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Number of months for grant activities

Component C Component Name Grant Funding for House Construction Cost $1,188,000 Component Description (i) Financial institutions (public or private) will be selected to handle

SUHA grant funds to support the construction of at least 300 earthquake-resistant housing units (core units). Average unit costs will be $3,500, which includes a handling fee of 4% for the financial institutions administering the grant.1 Beneficiaries may earn an income as construction workers during the construction of their own housing units (“cash for work” system). (ii) These housing funds will be allocated to beneficiary households as grants, in accordance with the subsidy policy of the Government of Indonesia (the Government) to provide all earthquake and tsunamivictims with a 36 m2 core house, irrespective of previous housing status. The Government has not established the procedures for selecting beneficiaries, but village chiefs and the local government administration are likely to handle that process. Local governments will consult with local stakeholders to establish the list of entitled households, which will receive housing grants. Selection shall follow criteria of land ownership and most urgent needs, and take into account the most vulnerable groups. The selection of beneficiaries will be gender neutral with equal opportunities for households headed by women and men. (iii) The banks and other financial institutions selected for SUHA implementation (for instance BRI, BPR, or PNM) are expected to handle the housing funds of the ADB-sponsored NUSSP and the microcredit facility for house expansions under ETESP. These loan funds are expected to become a “revolving fund”, which also will be available after the current rehabilitation-reconstruction efforts end. The financial institutions will try to mobilize additional resources for the revolving fund as well. (iv) The construction of approximately 300 core housing units might have some potential adverse impacts on the environment during construction. However, these seem to be very limited, and fairly easy to control and mitigate through on-site construction management measures. (v) The selection of beneficiaries will take into account the availability of land titles or proven pre-emergency tenure status. The procedure for assessing land ownership or tenure status will be based on local ownership-tenure mapping, which village chiefs, the local government, and ultimately the National Land Agency will supervise and verify. The choice of the relatively limited number of

1 The National Development Planning Agency (BAPPENAS) has issued as guideline for 36sqm core houses the

figure of Rp. 28,800,000, excluding on-site/off-site infrastructure connections. Due to market pressure, this figure is likely to increase, and either BAPPENAS or the Aceh and Nias Rehabilitation and Reconstruction Agency (BRR) may soon issue updates of these guidelines.

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beneficiaries will avoid cases of disputed land ownership or tenure status, and will not require land acquisition or resettlement. This process will protect land rights of affected people, and strive for a proper registration of their entitlement. While local governments are gearing up for this task, transparency and consultation need to be safeguarded.

Monitorable Deliverables/Outputs • At least 300 demonstration houses built in 16 affected districts of Aceh and North Sumatera.

Implementation of Major Activities: Number of months for grant activities

• 20 months

Component D Component Name Project Management Cost $362,500 Component Description (i) The IA will establish a technical team of four professionals,

which will work independently. However, the EA will provide technical guidance, and participate in particular in the development of prototypes (Component A).

(ii) The IA will develop a detailed work plan for the project implementation schedule (Table A3, Appendix 3).

(iii) The IA will provide technical assistance (TA) for SUHA implementation, and will work closely with the local governments of the 16 districts, as well as the banks and financial institutions selected.

(iv) The IA will hire an independent public auditor to review the project accounts after the closing of each fiscal year (i.e., three times during the Project).

Monitorable Deliverables/Outputs • Inception report with work plans.

• Quarterly progress reports. • Publication of results of housing design competition. • Final report.

Implementation of Major Activities: Number of months for grant activities

• 24 months

2. Financing Plan for Proposed Grant to be Supported by JFPR

Fund Source Amount ($) JFPR 2,000,000

Government 0.00

Other Sources (Please identify) ADB staff support

Total Note: Interest earned on JFPR imprest account can be used, subject to ADB’s approval, within the approved total amount of JFPR. Any unutilized interest shall be returned to JFPR accounts maintained at ADB upon the completion of the JFPR project and before closing of the JFPR account.

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3. Genesis Within ADB, SESS/SERD initiated the Project in response to the massive housing damage, and large-scale housing rehabilitation and reconstruction needs, in Aceh and North Sumatera. SESS/SERD has been assisting MPW and Badan Perencanaan Pembangunan (National Development Planning Agency [BAPPENAS]), and actively participated in the Joint Damage and Needs Assessment and formulation of a draft strategy for recovery in January 2005. The earthquake and subsequent tsunami produced massive damage. Approximately $1.4 billion of housing structures, residential infrastructure, fittings and fixtures, and furniture were lost. Some 150,000–170,000 units needed rehabilitation (i.e., repairs), while about 115,000 new units needed to be built. The victims included a particularly high proportion of poor and vulnerable groups since, to a large extent, the poor lived closest to the sea. SESS researched the state of anti-seismic housing design. While MPW, Puslitbangkim, and various academic institutions appear to have developed knowledge of earthquake-resistant housing, this knowledge is not fully applied in practice. Field observations in Aceh and North Sumatera confirmed the tendency not to pay too much attention to earthquake resistence. Rather, the focus is on structural carrying capacity. While the chances of a similar tsunami with the same impact occurring within the near future are small, the region is extremely earthquake-prone and experiences earthquakes on a regular basis. This was demonstrated by the many aftershocks and fresh earthquakes after the major event on 26 December 2004. The challenge of rehabilitation and reconstruction will mean that a larger amount of housing assistance will be channeled to the affected region. Many aid agencies are expected to try to introduce their own standards and design ideas. This proposal tries to bridge the gap between the formal market and the informal home builders, and establish a couple of earthquake-resistant prototypes that can be replicated by the industry (contractors, craftsmen), as well as private home builders. While houses can be made more resistant to earthquakes, no tsunami proofing for construction exists. Any attempt to build such a house would not be feasible from a cost perspective. 4. Innovation Indonesia has experienced many earthquakes and several smaller tsunamis since the 1960s, including the natural disaster in Flores on 12 December 1992. At the time, MPW developed some earthquake-resistant housing using timber construction. However, these designs were not replicable to Aceh-North Sumatera for reasons related to the culture and building materials (i.e., the ban on logging). Many urban and rural houses on the west coast of Aceh and North Sumatera appear to have been damaged heavily by the earthquake, and then easily washed away by the subsequent tsunami waves. Field surveys concluded that knowledge of earthquake-resisent house construction is not very widespread, particularly among the poor and most vulnerable. Only some of the more modern (and more affluent) types of construction show earthquake-resistant concrete structures (utilizing concrete columns that support concrete ringbeams). Hence, concerted efforts seem necessary to reestablish the knowledge, and demonstrate locally suitable solutions.

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The innovative approach of this Project consists of (i) development of prototypes with a feedback mechanism that involves the affected community; (ii) preparation of a sufficient amount of information kits (brochures, posters, other materials) for widespread dissemination of proposed construction technologies and designs of prototypes to the construction industry and the community; (iii) utilization of the local banking system for dissemination of technology transfer, which will ensure that applicants for grants under SUHA or for non-SUHA loans (e.g., under ETESP, NUSSP, and other credit lines) will utilize the prototype construction technologies which will be supported by regional building centers; and (iv) training of the builders (companies and/or NGOs), staff of local/provincial government, and members of the community. The project is fully consistent with the orientation of the “Blue Print” (Master Plan) for Rehabilitation and Reconstruction of Aceh and North Sumatera. 5. Sustainability The Project provides grants to a small group of beneficiaries of model houses. The Project’s main technology product (i.e., earthquake-resistant housing) will become sustainable as its funding is rooted in the formal banking system. Dissemination and application of anti-seismic construction technology, and utilization of prototypes developed under the Project, are prerequisites for grants (under SUHA) and loan funding (through non-SUHA sources such as ETESP, NUSSP, and others). In the long run, sustainability is only achievable with the establishment of a proper functioning housing finance system. The Project is expected to carry the ground rules of anti-seismic housing through the banking sector, which funds housing. ADB support under ETESP and NUSSP, as well as funding from other sources, is expected to strengthen the formal housing finance sector and make more formal banking operations in support of housing construction. Thus, the “exit strategy” is built into the design of the Project, which gives a crucial role to the local banking sector. The long-term impacts of training and dissemination of knowledge about earthquake-resistant construction through local government building centers to various actors (construction companies, NGOs, local/provincial government staff, and members of the community) also will contribute to the sustainability of project impacts. The Project is expected to stimulate the private building industry and small-scale construction sector. 6. Participatory Approach

Community participation is considered an important element. In addition to being the intended beneficiary of the Project, the community can contribute local knowledge to the development of the technical aspects of the Project. The IA is expected to guide community participation during the design process, and to involve community representatives adequately during dissemination and training. The community also is expected to participate actively in the selection of beneficiaries, which will take into account the availability of land titles or proven pre-emergency tenure status. The procedure for assessing land ownership or tenure status will be based on participatory ownership-tenure mapping supervised and verified by village chiefs, the local government, and ultimately the National Land Aegncy. Beneficiaries will be chosen from a relatively limited number. This process should avoid cases of disputed land ownership or questionable tenure status, and will not require land acquisition or resettlement.

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Primary beneficiaries and other affected

groups with relevant descriptions Other key stakeholders and brief description

Primary beneficiaries are the coastal populations in the provinces of Aceh and North Sumatera (Nias island). The Project will be directed at inhabitants whose housing was destroyed. They can be found in Simeulue (15%), South Aceh (10%), East Aceh (5%), West Aceh (15%), Aceh Besar (15%), Pidie (10%), Bireuen (10%), North Aceh (10%), Southwest Aceh (5%), Nagan Raya (10%), Aceh Jaya (20%), Kota Banda Aceh (67%), Kota Sabang (20%), Kota Langsa (15%), Kota Lhokseumawe (10%), and the coastal villages of Nias (10%). The heaviest destruction was in Kota Banda Aceh. Beneficiaries who request a prototype of earthquake-resistant housing will have to show tenure status of the land where he or she wants to build.

• Executing Agency: MPW and its Directorate General of Housing and Settlements are responsible for policy, oversight, and evaluation of reconstruction.

• Implementing Agency: Many IAI members are interested in (low-cost) housing. IAI has undertaken an initial study of housing designs for reconstruction areas in Aceh and North Sumatera.

• Many local and national NGOs, as well as international NGOs, have shown interest in the rehabilitation-reconstruction, and have offered technical support for implementation or coordination of reconstruction.

7. Coordination ADB: ADB will supervise the implementation of the Project, monitor its performance and quality, and report back to JFPR. MPW and its Directorate General of Housing and Settlements: As the EA, MPW will coordinate with, and guide, the IA. The EA will coordinate the implementation of the project with the Aceh Rehabilitation and Reconstruction Agency (BRR) which will represent the voice of the people of Aceh in the rehabilitation and reconstruction process. IAI: As the IA, IAI will establish a team of competent professionals under the direction of a technical director, which will implement the Project. The provincial offices of MPW will represent the interest of the EA, and help with monitoring and supervision of the project activities. Banks and Other Microcredit Institutions: BRI, BPR, PNM, or others (to be determined) will manage the SUHA grant funds on behalf of the Project in accordance with guidelines provided by the Project. Private sector construction firms and/or NGOs (to be determined) will implement activities in the field with the participation of local communities (e.g., cash for work opportunities). Detailed implementation arrangements between ADB, MPW, and IAI will be laid down in a memorandum of understanding, which will clarify project safeguards (involuntary resettlement, environment, and indigenous people). Appendixes 2 and 3 illustrate the proposed fund flow and implementation arrangements. 8. Detailed Cost Table Detailed cost estimates are in Appendix 1.

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C. Link to ADB Strategy and ADB-Financed Operations 1. Link to ADB Earthquake and Tsunami Emergency Support Project The JFPR Project is related to ADB’s ETESP, which will include a housing component. The proposed Project will enrich ETESP by piloting earthquake-resistant housing prototypes, and marketing them through the formal banking system. Through grants, ETESP is supporting the rehabilitation (i.e., repair of some 10,000 units) and reconstruction (i.e., building some 14,000 new units, though the exact number has not been determined). ETESP contains a microcredit facility for households that would like to borrow for expansion and improvement of their housing.

The Project also links to ADB’s NUSSP, which will support the formal banking sector and establish credit lines for microcredit.

The SUHA project is expected to complement ADB efforts in the housing field under ETESP and NUSSP.

Document Document Number

Date of Last Discussion

Objective(s)

ADB. 2005. Report and Recommendation of the President to the Board of Directors on Proposed Grants to the Republic of Indonesia for the Earthquake and Tsunami Emergency Support Project and Contribution to the Multidonor Trust Fund (Grant 0002-INO. Manila.

INO 39127 ADB Board Approval 7 April 2005

The overall goal of the ETESP is to help rebuild the affected regions and support their economic revival to meet the Millenium Development Goals. Its purpose is to (i) facilitate economic revival in the affected regions by restoring livelihoods; and (ii) alleviate constraints due to the lack of adequate public goods and facilities by restoring essential public services and rebuilding infrastructure.

2. Link to Specific ADB-Financed Operation See C.1. Project Name Earthquake and Tsunami Emergency Support Project

Project Number INO 39127

Date of Board Approval 7 April 2005

Loan Amount ($ million) 300 (in form of grant) Project Name Neighborhood Upgrading and Shelter Sector Project

Project Number Loan 2072/73 (SF)-INO

Date of Board Approval 19 December 2003

Loan Amount ($ million) 88.6 (68.6 ordinary capital resources [OCR], 20.0 Asian Development Fund [ADF])

11

3. Development Objective of the Associated ADB-Financed Operation: ETESP as whole is guided by the principles of (i) community-wide integrated development, (ii) participatory mechanisms in design and implementation, (iii) capacity building in public administration, (iv) sound spatial planning and environmental management, (v) facilitation of private sectorparticipation, and (vi) enhancement of fiduciary governance, and includes the sectors of agriculture, fisheries, micro and small enterprise support, health, education and skills development, rural water supply and sanitation, housing, irrigation, spatial planning and environmental management, roads and bridges, and power. ETESP’s housing component covers the rehabilitation of the housing stock through repair and reconstruction of housing that was destroyed. ADB support will embody the following principles: (i) the rehabilitation and reconstruction program will be people-centered, community-based, and participative with central roles for civil society and NGOs 2 ; (ii) housing rehabilitation and reconstruction can become a lead intervention for reconstruction of lives, and can be integrated with other sector strategies by linking housing with employment/human resource and economy/business development; and (iii) fostering coordination between and within ministries and levels of government is vital.

The ETESP housing component covers about 25% of all housing investment requirements in earthquake- and tsunami-affected areas in Aceh and North Sumatera, with priority given to urban or peri-urban areas. The housing component will provide core housing, which is expandable (through self-help or low-skilled labor). This will involve some anti-seismic capacity and safeguards for anti-seismic behavior during later house expansions; and the use of environmentally friendly, preferably locally available and renewable, building materials. An additional component, the water and sanitation component, will be implemented in conjunction with the housing component, and will use appropriate low-cost, decentralized water and sanitation technologies, which can be manufactured on-site and are easy to operate and maintain. It also will identify off-site infrastructure requirements, connectors and mains, and bulk water supply and treatment systems. ETESP will utilize only sites with assured land titles (and for which certificates have been issued). The selection of beneficiaries will take into account the availability of land titles or proven pre-emergency tenure status. The procedure for assessing land ownership or tenure status will be based on local ownership-tenure mapping, which village chiefs, the local government, and ultimately the National Land Agency will supervise and verify. The implementation of SUHA will not require land acquisition or resettlement. The ETESP housing component also will offer a microcredit facility for households that would like to borrow for expansion and improvement of their housing. NUSSP aims to help improve living conditions of the urban poor, who will participate in, and benefit from, improved shelter development, management, and financing processes that increase their assets and improve their well-being. The purpose of the Project is to upgrade slums, improve housing, and provide new housing for the urban poor project participants. The Project will improve local shelter planning and provision systems, and the national organizations servicing them; and will enable financing systems to respond efficiently and sustainably to the needs of the urban poor. The Project is a sector project, and will be available to all qualifying local governments. Sixty-five local governments have requested to participate in the Project, which was prepared using detailed pilot studies.

2 BAPPENAS and The International Donor Community, eds. 2005. Indonesia: Notes on Reconstruction—The

December 26, 2004 Natural Disaster. Jakarta.

12

4. The Main Components of the Associated ADB-Financed Operation:

Table A4.1: Earthquake and Tsunami Emergency Support Project

No. Component Name Brief Description 1. Community development work 1.1 Mobilization (and training) of community facilitators

1.2 Formation of community groups 2. Site preparations, site planning,

land readjustment

Preparation of construction works

2.1 Finalization of debris removal 2.2 Participatory microplanning for residential communities 2.3 Arrangements for replotting and land readjustments 2.4 Establishment of building materials depots

3. Rehabilitation (i.e., repair) of partially (50%) damaged housing

3.1 Provision of construction materials subsidy 3.2 Provision of construction labor assistance 3.3 Provision of on-site and off-site water connections

4. Reconstruction (i.e., new housing construction) of core housing units as replacement of 100% damaged housing

4.1 Provision of construction materials subsidy 4.2 Provision of construction labor assistance 4.3 Provision of on-site and off-site water connections

5. Microcredit for house expansions 5.1 Establishment of microcredit line within local public sector banks (BRI or others)

5.2 Establishment of lending and appraisal guidelines BRI = Bank Rakyat Indonesia.

Table A4.2: Neighborhood Upgrading and Shelter Sector Project

No. Component Name Brief Description 1. Improved planning and

management systems to upgrade sites, and establish new ones for the urban poor

1.1 Develop systems for pro-poor shelter within the housing component of the local spatial planning and shelter strategy

1.2 Encourage political commitment to these systems 1.3 Provide outreach to undertake participatory planning with

poor communities 1.4 Strengthen coordination with the National Land Agency

and other agencies relevant to shelter provision for the poor

2. Improved access to shelter finance by the poor through central financial institutions and local institutions or their branches

2.1 Raise awareness and mobilize communities and households to participate

2.2 Form community savings-and-loan groups linked to local financing institutions

2.3 Provide, administer, and monitor loans that can be guaranteed through group solidarity mechanisms

3. Upgrading of poor neighborhoods, and development of new sites for the poor

3.1 Fostering of NUPs in priority poor areas 3.2 Agreements with local governments and communities,

and cost-sharing for investments 3.3 Provision of funding for investments 3.4 Monitoring of investments and maintenance

4. Strengthened sector institutions to deliver the program

4.1 Strengthen local government systems and train officers and representatives, civil society representatives, and the ministry to formulate pro-poor strategies

13

No. Component Name Brief Description 4.2 Strengthen central and local financial institutions, local

governments, ministry systems; and train officers and civil society representatives to finance shelter for the poor

4.3. Strengthen local government systems and train officers and civil society representatives to facilitate, upgrade, and develop sites for the poor

4.4 Enable local communities to help upgrade shelter, and to establish self-help groups

NUP = neighborhood upgrading projects. 5. Rationale for Grant Funding Versus ADB Lending Many donors decided to provide grant support to the victims, because the livelihoods of a large portion of the effected population were almost wiped out. The proposed Project represents an add-on to ETESP, which will cover only about 15% of the emergency investment needs. Due to the sheer size of the investments required, any additional funding source is welcomed. D. Implementation of the Proposed Grant 1. Name of the Implementing Agency Indonesian Institute of Architects (IAI)

The mission of the IAI is to promote the transfer of knowledge and professionalism in the fields of architecture and planning, with special attention to providing TA to demonstration projects for the urban and rural poor. As a frontrunner in the profession, IAI has a well-known track record, and has demonstrated its social concern and a capacity to project out to critical issues of urban problems and human settlements development. Its program of regular activities includes the organization of exhibitions, conferences and seminars, and study tours. IAI also holds architectural competitions for certain issues, such as for the reconstruction of housing (conducted in February 2005 for Aceh-North Sumatera). It is financed through membership fees and sponsorship from the construction industry. IAI’s financial probity is unscathed and known to be immaculate. All procurements under the JFPR grant will be conducted in accordance with ADB’s Guidelines for Procurement. The grant implementation unit will contract local NGOs and consultants in accordance with ADB’s Guidelines on the Use of Consultants.

As illustrated in Appendixes 2 and 3, the proposed memorandum of understanding between ADB, EA, and IA calls for the funds for the SUHA grant to be channeled to a special SUHA-JFPR account in a commercial bank. The funds for construction of houses (component C) will be passed on to the selected banks or microcredit institutions. 2. Risks Affecting Grant Implementation

Type of Risk Brief Description Measure to Mitigate the Risk Governance Slow administrative

procedures. EA and IA might encounter difficulties with outreach to local

Include administrative governance and strict financial control in the project guidelines. Direct IA to establish fund flow from ADB to JFPR-SUHA bank account.

14

Type of Risk Brief Description Measure to Mitigate the Risk governments. Involve local governments in project implementation from

the start of the Project. Corruption The the lack of

transparency is one of the causes of corruption and poor governance.

Transparency and audits are ways to mitigate these risks. The Project will adopt the following measures: (i) Special and random performance checks/audits to ensure that the funds have been used properly. (ii) Spot audits of the construction of infrastructure by external performance auditors, and the provision of services, should be conducted early and regularly to ensure appropriate use of proceeds, and limit delays. Community participation can go a long way in assisting such external auditors. Project design and costs should provide for such audits and community participation. (iii) Annual audits (after the end of each fiscal year). (iv) Special post-completion audit to address governance, financial accountability, and transparency. (v) Disclosure of information to the public to maintain transparency, and minimize risk of siphoning off funds. (vi) ADB or the EA should use “e-aceh” Web site relating to the administration of funds. The Web site would provide the public with information to ensure that the funds are used properly for the intended beneficiaries. Among others, procurement and contract awards will be published. For each contract, the Web site might include information on, among others, the list of participating bidders, name of the winning bidder, basic details on bidding procedures, amount of contract awarded, the list of goods and/or services purchased, and their intended and actual utilization. This will enable such communities or other civil service organizations to independently monitor whether such assistance has reached such people/communities.

Banking infrastructure

Poor physical conditions of bank outlets can hamper the implementation of the Project.

Public and private sector banks are expected to get back to fairly normal operations during the first half of 2005.

Security Militant actions might occur.

Peace talks between the Government and Free Aceh Movement seem to be progressing well, and a peace agreement might be possible in the near future. Usual safety provision for project personnel, as per UN guidelines, will be observed.

15

3. Incremental ADB Costs

Component Incremental Bank Cost

Amount requested $50,000

Justification

Supervision costs. ADB staff from Manila will need to be involved in joint EA–ADB project supervision activities.

Type of work to be rendered by ADB Supervision of the main elements of the Project, i.e., development and construction of prototypes, selection of companies/NGOs, training, and administration of seed capital. ADB to conduct half-annual monitoring and evaluation (M&E) visits to sites in Aceh and North Sumatera.

4. Monitoring and Evaluation Key Performance Indicator Reporting Mechanism Plan and Timetable for M&E

At least three prototype designs of seismically enhanced, single-family housing structures approved, and up to 34 prototypes built in various communities.

Progress reports, field reports by IA Community feedback

- Months I–II: competition - Month III: prototypes tested - Month IV: ministry

recommendations of prototypes

One company and/or NGO selected to produce detailed information kits.

Progress reports by IA Community feedback

- Months III–IV: selection and production of information kit

Ten financial institutions selected to channel SUHA grants to beneficiaries, and to design and open a non-SUHA housing credit line (utilizing ETESP, NUSSP, and other sources).

Progress reports - Months III–IV: selection and training

At least 300 seismically enhanced, single-family homes constructed.

Progress reports - Months IV–XXIV

IA = implementing agency; NGO = nongovernment organization. 5. Estimated Disbursement Schedule

Fiscal Year (FY) Amount ($) FY2005 500,000

FY2006 1,000,000

FY2007 500,000

Total Disbursements 2,000,000

16

Appendixes

1. Project Budget and Detailed Cost Estimates 2. Fund Flow Arrangement 3. Implementation Arrangements

Appendix 1 17

Project Budget and Detailed Cost Estimates Table A1.1: Summary Costs Table

($)

Component A Development and Construction of

Prototypes

Component B Dissemination and

Training

Component C Grant funding for

house construction

Component D Project

Management

Total (Input) Percent

1. Civil Works 124,000 0 1,188,000 0 1,312,000 71.0

2. Equipment and Supplies 0 64,000 14,000 78,000 4.0

3. Training, Workshops, Seminars, Public Campaign 0 48,000 0 48,000 2.4

4. Consulting Services 98,000 115,500 14,000 227,500 6.4

5. Grant Management See component D See component D See component D 268,000 268,000 13.5

6. Other Inputs 0 0 16,000 16,000 0.1

7. Contingencies (0-10% of total estimated grant fund): Use of Contingencies requires prior approval from ADB. 0 0 50,500 50,500 2.6

Subtotal JFPR grant financed 222,000 227,500 1,188,000 362,500 2,000,000 100.0

Government contribution In kind In kind In kind In kind In kind 0.0

Other Donor(s) Contributions (e.g. from NGOs, 0 0 0 0 0.0multi-and bilateral aid agencies):

Community's Contributions In kind In kind In kind In kind 0.0

Total Estimated Costs 222,000 227,500 1,188,000 362,500 2,000,000 100.0

JFPR = Japan Fund for Poverty Reduction.Source: Asian Development Bank

Inputs / Expenditure category

Grant Components

18 Appendix 1

Table A1.2: Detailed Cost Estimates ($)

Code Supplies and Services Rendered Unit Quantity Cost TotalUnits Per Unit $

Amount

Method of

Procure-ment

all components Subtotal: 2,000,000 2,000,000 0 0 0

1.1 Civil Works1.1.1 Development of prototypes 120,000 120,000 DP 0 0 0

Conduct of architectural-engineering competition (IAI, MPW, consultants) Lump sum 1 30,000 30,000

Professional fees for jury (IAI, MPW, individual Lump sum 1 15,000 15,000Awards for selected designs Lump sum 1 35,000 35,000Construction of prototypes - version A 1 2 4,000 8,000Construction of prototypes - version B 1 2 4,000 8,000Construction of prototypes - version C 1 2 4,000 8,000Construction of prototypes - version D 1 2 4,000 8,000Construction of prototypes - version E 1 2 4,000 8,000

1.1.2 Construction of prototypes 102,000 102,000 DP 0 0 0Professional fees for architects/engineers 1 6 3,000 18,000Construction of prototypes - version A 1 4 3,500 14,000Construction of prototypes - version B 1 4 3,500 14,000Construction of prototypes - version C 1 4 3,500 14,000Construction of prototypes - version D 1 4 3,500 14,000Construction of prototypes - version E 1 4 3,500 14,000Construction of prototypes - version F 1 4 3,500 14,000

1.1.3 Grant funding for earthquake resistent housing unit (36 sqm/unit), including 4% administration fee 1,188,000 1,188,000 DP 0 0 0

Construction of housing units in District 1 1 22 3,500 77,000Construction of housing units in District 2 1 22 3,500 77,000Construction of housing units in District 3 1 22 3,500 77,000Construction of housing units in District 4 1 22 3,500 77,000Construction of housing units in District 5 1 21 3,500 73,500Construction of housing units in District 6 1 21 3,500 73,500Construction of housing units in District 7 1 21 3,500 73,500Construction of housing units in District 8 1 21 3,500 73,500Construction of housing units in District 9 1 21 3,500 73,500Construction of housing units in District 10 1 21 3,500 73,500

Costs Contributions

CommunitiesGovernment Other DonorsJFPR

Appendix 1

19

Code Supplies and Services Rendered Unit Quantity Cost TotalUnits Per Unit $

Amount

Method of

Procure-ment

Costs Contributions

CommunitiesGovernment Other DonorsJFPR

Construction of housing units in District 11 1 21 3,500 73,500Construction of housing units in District 12 1 21 3,500 73,500Construction of housing units in District 13 1 21 3,500 73,500Construction of housing units in District 14 1 21 3,500 73,500Construction of housing units in District 15 1 21 3,500 73,500Construction of housing units in District 16 1 21 3,500 73,500

1.2 Equipment and Supplies 01.2.1 0 0 0 0 0 0 0 01.2.2 0

1.3 Training, Workshops, Seminars 01.3.1 Training in anti-seismic standards for companies/NGOs, 37,000 37,000 DP 0 0 0

provincial/local officialsPreparation of training materials Lump sum 1 2,000 2,000Remuneration of professional trainers 1 20 250 5,000Event costs (room rent, materials reproduction) 1 30 100 3,000Travel costs of participants 1 300 40 12,000Accommodation and per diems of participants 1 300 50 15,000

1.3.2 Training in loan promotion/underwriting for financial institutions 22,500 22,500 DP 0 0 0

Preparation of training materials Lump sum 1 2,000 2,000Remuneration of professional trainers 1 5 500 2,500Event costs (room rent, materials reproduction) 1 30 100 3,000Travel costs of participants 1 150 50 7,500Accommodation and per diems of participants 1 150 50 7,500

20 Appendix 1

Code Supplies and Services Rendered Unit Quantity Cost TotalUnits Per Unit $

Amount

Method of

Procure-ment

Costs Contributions

CommunitiesGovernment Other DonorsJFPR

1.4 Consulting Services 01.4.1 Production of information kits 168,000 168,000 DP 0 0 0

Selection of company/NGO Lump sum 1 2,000 2,000Drafting/editing of information kits Lump sum 1 3,000 3,000Graphical design of information kits Lump sum 1 3,000 3,000Printing of information kits 1 30,000 1 30,000Circulation of information kits 1 30,000 1 30,000Support to building centers months 25 4,000 100,000

1.5 Management and Coordination 312,000 312,000 DP1.5.1 Staff 1 - Team Leader - architect 1 24 4,000 96,000 DP

Staff 2 - Team Member - architect/engineer (senior) 1 24 3,000 72,000 DPStaff 3- Team Member - architect/engineer (junior) 1 24 2,000 48,000 DPStaff 4 - Team Member - architect/engineer (junior) 1 24 2,000 48,000 DPAudit Consultant 1 4 3,500 14,000 DPSecretary (part-time) 1 12 300 3,600 DP

1.5.2 Travel and Per diem 1 40 400 16,0001.5.3 Operational Costs 1 24 600 14,400

1.6 Other Project Inputs (Specify: e.g. costs for NGOs, microfinance)Component A Subtotal: 1,949,500 1,949,500Contingency (Maximum 10% of total JFPR Contribution) 50,500 50,500

Total Grant Costs Total: 2,000,000 2,000,000 0 0 0

Incremental Costs 50,000 50,000

Total Incremental Costs 50,000 50,000ADB = Asian Development Bank; DP = direct procurement; IAI = Indonesian Institute of Architects; JFPR = Japan Fund for Poverty Reduction; MPW = Ministry of Public

Source: Asian Development Bank.NGO = nongovernment organization.

Appendix 2 21

FUND FLOW ARRANGEMENT

1. A Japan Fund for Poverty Reduction (JFPR) special account will be opened in a commercial bank, endorsed by the executing agency (EA) and acceptable to the Asian Development Bank (ADB). The implementing agency (IA) will operate the special account applying statement of expenditures procedures established by the EA. The special account will be established, managed, replenished, and liquidated in accordance with the provisions set forth in ADB’s Loan Disbursement Handbook. The IA will prepare budget requirements based on the proposed project activities and forward these to the EA for review and approval. Upon approval, the IA will send to ADB a formal request to release the funds. The approved budget will be released to the IA. The initial funds will be based on the estimated expenditures for 1 year, but will not exceed 50% of the Project costs. Future replenishments of the special JFPR account will be based on progress of disbursement. The fund flow and disbursement arrangement is shown in Figure A2. 2. The interest earned on the JFPR account can be used, subject to ADB’s approval within the approved total amount of the JFPR grant, and any unutilized interest should be returned to JFPR accounts maintained in ADB upon completion of the Project and before closing the JFPR accounts with the IA. 3. Given the urgent housing needs, procurement of goods, services and works will be consistent with the simplified and expedient procedures provided for in ADB’s Disaster and Emergency Assistance Policy and ADB’s Guidelines for Procurement. Community participation shall be encouraged in procurement, and local goods and services will be given priority to encourage economic revival in the affected regions. Under ADB’s Disaster and Emergency Assistance Policy, ADB Guidelines for Procurement may be flexibly interpreted, including relaxation of international competitive bidding (ICB) requirement, to expedite rehabilitation assistance. For small contracts of up to $30,000 community-based procurement may be allowed where appropriate, following procedures set out in ADB’s Guide on Community Participation in Procurement. 4. Consultants will be hired in accordance with ADB’s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB on the engagement of domestic consultants. 5. All procurements under the JFPR grant will be conducted in accordance with ADB’s Guidelines for Procurement. The IA will contract local nongovernment organizations and consultants in accordance with ADB’s Guidelines on the Use of Consultants.

22 Appendix 2

Figure A2: Fund Flow Arrangement

Executing Agency Implementing Agency

Targeted Communities in

16 Districts in Aceh and NorthSumatera

Asian Development Bank

Special SUHA – JFPR account/ commercial bank

Legend:

Direst administrative and technical communication

Approval of funds

Flow of funds

Reporting

Implementation activities

Construction Firms

and/or NGOs

Capital contribution forconstruction of houses

Processing of grant entitlements

Beneficiaries contract services/ Contribute labor (“cash for work”)

Prototypes,Training, Project Management

Payments

JFPR = Japan Fund for Poverty Reduction; NGO = nongovernment organization; SUHA = Seismically Upgraded Housing for Aceh and North Sumatera.

Source: Asian Development Bank.

JFPR

Bank or other microcredit institutions:

Bank Rakyat Indonesia Permodalan Nasional

Madani or others

Appendix 3

23

IMPLEMENTATION ARRANGEMENTS A. Executing and Implementing Agencies 1. The Asian Development Bank (ADB) will supervise the implementation of the program, monitor its performance and quality, and report back to the Japan Fund for Poverty Reduction (JFPR). The Ministry of Public Works (MPW) and its Directorate General of Housing and Settlements will be the Executing Agency (EA). The EA will coordinate the implementation of the project with the Aceh Rehabilitation and Reconstruction Agency (BRR) which will represent the voice of the people of Aceh in the rehabilitation and reconstruction process. The EA will coordinate with and guide the Implementing Agency (IA), the Indonesian Institute of Architects (IAI). The IA will provide services for implementation, management, and progress monitoring of the JFPR grant. The IA will establish a team of competent professionals, who will implement the Project under the direction of a team leader. The provincial offices of the MPW will represent the interest of the EA, and help with monitoring and supervision of the Project. Banks and other microcredit institutions will manage the Seismically Upgraded Housing for Nanggroe Aceh Darusallam and North Sumatera grant funds on behalf of the Project in accordance with guidelines provided by the Project. These institutions could include Bank Rakyat Indonesia, Bank Perkreditan Rakyat, Permodalan Nasional Madani (National Fund for Social Investment), or others (to be determined). Private sector construction firms and/or nongovernment organizations will implement activities in the field, and with the participation of local communities (e.g., “cash for work” opportunities). The project organization is in Figure A3. 2. The implementation of the Project will not involve any involuntary resettlement, environmental damage, or negative impact on indigenous people. 3. The implementation of the Project will be coordinated with other donors which operate in the field of housing and see to it that there are no overlaps. The Japanese Embassy in Jakarta will be informed about the delivery of equipment or establishment of demonstration sites, and be invited to attend key events of the project. B. Procurement and Consulting Services 4. All procurement under the Project will be conducted in accordance with ADB’s Guidelines for Procurement. Goods and services below $100,000 will be procured using ADB’s direct purchase procedure. Goods and services above $100,000 will be procured using ADB’s international shopping procedure. For civil works, ADB’s direct negotiation/single tender or local competitive bidding procedure will be applied. No international bidding is envisaged under the Project. C. Reporting and Project Monitoring 5. The IA will provide quarterly progress reports to the EA, ADB, and other relevant provincial or local government agencies. The quarterly reports will include descriptions and evaluations of project activities implemented during the reporting period. They also should include issues that need to be addressed to streamline implementation, as well as possible solutions to remedy or improve implementation problems. The IA shall prepare a project completion report, which will be submitted to the EA, relevant government agencies, and ADB within 3 months after the Project has ended.

24 Appendix 3

6. The IA will engage an independent public auditor to conduct yearly financial audits of project implementation. These annual audits will be undertaken after the closing of a financial year. The audit reports shall include a separate audit opinion on the use of the special JFPR account and statement of expenditure procedures. 7. Within ADB, a project officer responsible for the supervision of the implementation of the Project will be assigned to administer the Project, monitor progress reports, and undertake project supervision missions. The overall administration of the Project and project status reports will be the responsibility of the Social Sectors Division of the Southeast Asia Department. D. Implementation Schedule 8. The Project will be implemented over 2 years, starting in September 2005 and ending in August 2007. The dates are tentative date, pending final approval of the Project. The Project implementation schedule is shown in Table A3.

Appendix 3

25

Figure A3: Project Organization

Executing Agency Implementing Agency

Asian Development Bank

Direst administrative and technical communication

Consultation

Reporting

Implementation activities

Local Govern - ments (Cities/

Districts)

Banks or other microcredit institutions: Bank Rakyat

Indonesia Permodlan Nasional Madani

or others

Construction Firmsand/or NGOs

Selection of beneficiaries

Payments

Beneficiaries contract services/Contribute labor (‘cash for work’)

IA supports beneficiaries In quality control

Processing of grant entitlements

Confirmation of beneficiaries

Legend:

NGO = nongovernment organization.

Source: Asian Development Bank.

Targeted Communities in 16 Districts in Aceh and North

Sumatera

26 Appendix 3

Table A3: Project Implementation Schedule

Project Activities1 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Preparatory ActivitiesSigning of MOU with EA and IAPreparation/briefing of project teamPreparation of detailed work plan

A. Development of Prototypes Preparation of competition, announcement Rapid open design competition Review of proposal Selection of winning entries/award to selected entries Construction of 1:1 prototypes Testing of prototypes Official MPW recommendation of selected prototypes

B. Construction of Prototypes Selection and contracting of contractor Construction of prototypes in five selected districts Community feedback on prototypes Corrections in designs/construction technology

C. Information Kits for Contractors and Self-Builders Selection of companies and/or NGOs to produce information kits (brochures, posters, multimedia tools) Drafting/editing of information kits Graphical design of information kits Printing of information kits Circulation of information kits

D. Training for Companies and/or NGOs, Government Officials Selection of training consultants, trainees Preparation of training materials Implementation of events

E. Training for Staff of Financial Institutions Selection of training consultants, trainees Preparation of training materials Implementation of events

F. Construction of Houses Identification of beneficiaries of housing grants Operational agreements with financing agencies (BRI, BPR, PNM) about grant handling Community consultations Contracting of construction works in 16 districts Construction work Quality control of construction works

G. Project Management Establishment of project organization Progress monitoring Progress reporting

understanding; MPW = Ministry of Public Works; NGO = nongovernment organization; PNM = Permodalan Nasional Madani.Note: less intensive activityintensive activitySource: Asian Development Bank.

BRI = Bank Rakyat Indonesia; BPR = Bank Perkreditan Rakyat; EA - executing agency; IA - implementing agency; MOU = memorandum of

Prep. Year 1 Year 2