Conclusion Opportunity of the Application of BTL

Dear readers, E ntering the second semester this year, we hope that our activities will run well according to plans with expected HJOPL]LTLU[Z;OPZZLTLZ[LYLOH]LPTWSLTLU[LKHU\TILYVMPU[LYUH[PVUHSJV\YZLZ[VM\SÄSSV\YJVTTP[TLU[PU sharing our capacities and best practices with other developing countries, especially for our neighbor countries in 7HJPÄJ0ZSHUKZHUK;PTVY3LZ[L,HZ[;PTVYLZPKLZLPSSHSZVJVUK\J[ZL]LYHS[OPYKJV\U[Y`[YHPUPUNWYVNYHTZ TCTP in the scheme of a triangular cooperation with development partners. We have captured these activities in this edition to you. ;OPZ`LHYPZ[OL[O`LHYJVTTLTVYH[PVUVM[OL0UKPHU6JLHU;Z\UHTP[OH[KLZ[Y\J[LKJLO7YV]PUJLHUKPUÅPJ[PUN more than 100,000 people casualties. The Tsunami that devastated Aceh was the biggest catastrophe in history and awakened the international community concerning the shifting of disaster management paradigm including mitigation. Based on our experience in handling Aceh’s Tsunami emergency relief, disaster recovery and mitigation, we have formulated an international course with lessons learned and share experiences from ‘ground zero’ of the TLNH[Z\UHTPZJLUL[VV[OLYKL]LSVWPUNJV\U[YPLZ;OLSLZZVUZHUK[OLL_WLYPLUJLZHYLVќLYLKPUHZ[Y\J[\YLK training that will comprehensively be shared to eager participants. We have presented this activity course in this newsletter. We also discussed various topics in this edition, such as: Reverse Linkage Program in Cooperation with IDB, In- frastructure on Road and Bridge Sector for Timor Leste Phase II, 44 th Colombo Plan Consultative Meeting CCM in Kathmandu, Third Country Training Program for Women Empowerment, Progress on Capacity Development CADEV project, and others topics. We expect this newsletter, which is published twice in a year, will give you some background and information on the development of Indonesia’ South-South and triangular Cooperation. I would like to congratulate all of you who will be celebrating Christmas and the New Year of 2015. God bless you all. ZHÄUHSVYK0V\SKSPRL[VJVU]L`V\YZPUJLYL[OHURZ[VHSSJVU[YPI\[VYZ Please enjoy this newsletter. Rika Kiswardani NEWSLETTER I2014 2 could be taken as a lesson learned for Indonesia in this matter. With a good preparation and willingness from the government to develop a good regulatory framework to secure the govern- ment and public interest in this BTL mechanism. The other constraints is that in BTL PPP method, the demand risk is borne by the government, so there will be unwillingness from the government to take such risks. The government should build a proper mechanism to conduct a feasibility test like South Korea has in term of this problem. The role of government is very crucial here, in order to further stimulate integrated approach to private investment project development in social infrastructure, a systematic cooperation among diverse government ministries and local government need to be reinforced.

5. Conclusion

Both developed and developing countries are increasingly concerned with developing better strategies to improve invest- ment on economic and social infrastructure for the purpose VMNYV[OHUKWV]LY[`YLK\J[PVU;OLYLJLU[NSVIHSÄZJHSYPZPZ has heightened concerns around how to increase investment on economic and social infrastructure. In order to achieve that goal, every country in the world has developed their own strat- egyto attract private sector investment in those area, so called Public Private Investment. PPP mechanism for social infrastructure has not been imple- mented yet in Indonesia, but this is a good opportunity for the government to expand the PPP mechanism not only for eco- nomic infrastructure but also social infrastructure. Until now, Indonesia is still struggling to provide public social infrastruc- [\YL ILJH\ZL VM [OL SHJR VM ÄUHUJPUN JHWHJP[` 0U [OL M\[\YL Indonesia could develop BTL method for social infrastructure I` HKHW[PUN [OL :V\[O 2VYLH»Z ;3 TLJOHUPZT \NL LќVY[ from the government is needed to gather the basic information for the prelimenary feasibility study for BTL implementation in Indonesia. If it’s possible, then the government should begin develop a good regulatory and institutional framework for the implementation of BTL mechanism in Indonesia. This will not happen in near future, but the application of BTL method could IYPUNILULÄ[MVY[OLWLVWSLVM0UKVULZPHPUHJOPL]PUN[OLKL]LS- opment goals. VM NEWSLETTER I2014 35

3. Opportunity of the Application of BTL

Method in Indonesia Indonesia as the 16 th biggest economy in the world has grown rapidly in past decades. Indonesia’s economy continued to growth at a steady pace in the 2013, wth GDP growth of . The 2013 GDP growth was solid, which was primarily based on WYP]H[LJVUZ\TW[PVUHUKHIL[[LYWLYMVYTHUJLPUÄ_LKJHWP[HS investment. In the other hand, Indonesia’s infrastructure development lagged the economic growth. To date, Indonesia’s infrastruc- ture investment as a share of total output at around 3 per cent, YLTHPUZ ILSV P[Z WYLZPHU ÄUHUJPHS JYPZPZ SL]LSZ VM HYV\UK 7 per cent Lundine et.al, 2013.Thus, the Government has encouraged private sector to invest in infrastructure through PPP mechanism. Since then, the Government has taken ma- QVY Z[LWZ [V YLÄUL [OL 777 WVSPJ` HUK YLN\SH[VY` MYHTLVYR to improve the attractiveness and competitiveness of the PPP projects in Indonesia. The development of PPP in Indonesia was supported by the government with the adoption of best practices of PPP on the international level through the Presidential Regulation No. 67 Year 2005 on Public Private Partnership in Infrastructure Devel- opment. The regulation served as a asis for all PPP frameworks until its revision in 2010 through the Presidential Regulation No. LHY ;OL NV]LYUTLU[ LќVY[Z [V KL]LSVW 777 JHU also be seen in the establishment of a government institution to support the PPP policy. PPP in economic infrastructure in Indonesia has grown quite fast with the implementation of sounds regulations. In 2013, there were 21 projects undegoing public procurement, such as: Central Java Coal Fired Power Plant, Umbulan Water Sup- ply, East Java, PurukCahu-Bangkuang Coal Railway, Bandar ampung Water Supply, etc. In the other hand, Indonesia has not implemented the PPP TLJOHUPZTMVYZVJPHSPUMYHZ[Y\J[\YL`L[OPJOPSSIYPUNILULÄ[ for the society. As we already mentioned in the previous chap- ter, BTL methods has succed in building the social infrastruc- ture such as schools, hospitals, sewage, etc, for people in the South Korea. As Indonesia is still struggling to reach develop- ment goals stated in the Millenium Development Goals MDGs, this BTL method could be a complimentary component for the government in reaching the development goals. Indonesia’s progress in achieving MDGs has been remarkedly successful in some areas, but still have long way to achieve the inclusive results. For example, Indonesia’s achievement in MDG2, Achieving Universal Primary Education, has been go- ing well which the net enrollment rates for primary education are increasing and are on track to achieve the target of 100 per cent by 2015 Lundine et.al, 2013. But this picture can’t describe the quality of education, starts from school building facility, teacher’s quality, and the education curicullum itself. Even in some remote areas in Indonesia, they don’t have prop- er school building and facilities to support the education. The government has allocated 20 per cent of the government bud- get for education, but it seems that number is not enough in providing facilities for education especially in the remote areas in Indonesia. In the MDG 4, Reduce Child Mortality has also made signifcant stride, where the child mortality rate has fallen nationally. But this progress is not successfully followed in the MDG 5, Im- WYV]L4H[LYUHSLHS[O0UKVULZPHPZVќ[YHJRVUYLK\JPUN[OL maternal mortality rate from 390 maternal deaths per 100,000 live births in 1991 to its goal of 102 by 2015 Lundine et.al, 2013. The main reason for this result is Indonesia still strug- gling with the health care facilities where most of people in the remote areas do not have an equal access to health care facil- ities. This due to the low health care infrastructure and lack of road infrastructure. In some eastern provinces where the health care infrastructure is not developed well yet, child and maternal mortality are still two or three times higher than the national average. Other challenge ahead for Indonesia is in term of providing the water sanitation for its people. Despite recommendable prog- ress in reducing extreme poverty and overall poverty rates, In- KVULZPH JVU[PU\LZ [V MHJL ZPNUPÄJHU[ JOHSSLUNLZ PU WYV]PKPUN adequate water and sanitation. The geographic challenges of 0UKVULZPHJHUUV[ILV]LYZ[H[LKJVTIPULKP[OPUZ\ѝJPLU[PU- frastructure and frequent natural disaster, not all areas have regular access to water and sanitation. These challenges in meeting development goals should be conquered by investing in social infrastructue, but the govern- TLU[M\UKPUNJHWHJP[`PZPUZ\ѝJPLU[[VI\PSK[OLZLPUMYHZ[Y\J- ture. The lack of funding should become an opportunity for the government to invite the private sector to invest in the social infrastructure like South Korea did in 2005. It will need a proper holistic research from the government to include the private sector in providing the social infrastructure for the society. The lesson learned could be took from South Korean’s experience in implementing BTL Methods in building the social infrastruc- ture. The application of BTL method in Indonesia could be done for some areas such as education facilities schools etc, health care facilities hospital etc and water sanitation facilities. But ÄYZ[ VM HSS [V PTWSLTLU[ ;3 TL[OVK PU 0UKVULZPH [OL NV]- ernment should make the regulatory framework to guide the application of BTL method. It will take time to form the good regulatory framework, but it will be very useful to expand the PPP mechanism in Indonesia.

4. Constraints of The Implementation of BTL