RESPONSE TO US EFFORTS ON WATER AND SANITATION

UNCLAS JAKARTA 011149 SIPDIS DEPT FOR OES/PCI FOR SALZBERG AND BLAINE DEPT ALSO FOR EAP/MTS DEPT PASS USAID: MILLER AND DEELY SENSITIVE SIPDIS E.O. 12958: N/A TAGS: SENV ID SUBJECT: RESPONSE TO US EFFORTS ON WATER AND SANITATION REF: STATE 128229 ¶1. (U) Response was prepared jointly with USAID Jakarta Mission Staff. ¶2. (U) SUMMARY: Post is actively engaged with Government of Indonesia (GOI) officials on water and sanitation issues under the auspices of a Strategic Objective Grant Agreement between the USG and the GOI to support higher quality basic human services in Indonesia. The Agreement was signed in August 2004 between USAID and the Coordinating Ministry for People's Welfare (Menkokesra). As part of this ongoing bilateral cooperation, USAID regularly engages officials from the Ministry of Public Works, Ministry of Forestry, Ministry of Environment, and Ministry of Health regarding USG support to increase access to water, sanitation health and nutrition services for impoverished Indonesians. Such engagement covers issues cited in reftel and also includes discussions of annual program work plans, presentations of annual program progress, joint identification of leveraging opportunities and discussion of technical and policy issues. End Summary. Needs, Priorities and Commitment -------------- ¶3. (U) Access to clean water and sanitation are significant problems in Indonesia. Less than half of Indonesia's estimated 225,000,000 people have access to clean piped water (World Health Organization/United Nations Children's Fund (UNICEF)). Many urban dwellers rely on contaminated shallow wells for water; as of 2004, only 53 percent of Indonesia's population obtained its water from sources further than 10 meters from excreta disposal sites - a universal standard for water safety (UNICEF). Instead wastewater seepage tanks commonly are only 2-3 meters from wells. The problem is even more pronounced in rural areas, where only eight percent of the population has access to clean piped water. These condition force large sections of the population to either boil their water before consumption, or pay exorbitant rates per liter for clean drinking water from vendors. ¶4. (U) While approximately 70 percent of urban dwellers have access to latrines and some type of septic system, only two percent of the population living in or near urban centers has access to a centralized sewage collection and treatment system. Secondary and tertiary treatment of wastewater is almost nonexistent, except for a few 'on-site' packaged systems at malls and major office buildings. Many residential septic tanks regularly overflow into the drainage system, further polluting urban waterways. In addition, virtually no "gray" water is treated before reaching the drainage system. ¶5. (SBU) The GOI's failure to aggressively promote improved hygiene practices, particularly among low-income families and slum dwellers, limited public willingness to pay for sewerage services, and dense living conditions in inner city slums have exacerbated Indonesia's water and sanitation problems. Moreover, many local water authorities (PDAMs) are bankrupt, due to their inability to increase tariffs to cover existing heavy debt burdens. The current regulatory environment offers little clarity on how PDAMs can overcome this debt burden or attract private sector investment. Failure to reduce the scale of the water and sanitation problems in Indonesia has led to high rates of diarrhea, skin disease, intestinal and other waterborne disease in low- income communities, particularly among children. ¶6. (U) Joint coordinated efforts between the Indonesian government, multi-lateral donors, bilateral donors, and a growing group of local environmental non-governmental organizations (NGOs) are required to effectively tackle the massive and complex nature of environmental health problems in Indonesia. In addition to implementing projects in a coordinated manner, USAID has identified technical assistance, training, advisory services, and public outreach on health and hygiene, rather than large scale infrastructure projects, as priorities in their strategy for improving Indonesia's water and sanitation conditions. ¶7. (SBU) The central GOI generally understands the scope of the nation's water and sanitation issues and is committed to solving these problems. However, poor cooperation and internal acrimony among ministries has hampered progress in tackling these issues in the past. Indonesia's decentralization program also contributes to inertia on these problems due to the more limited technical understanding of the issues as well as resource constraints at the municipal government level. Opportunities to Strengthen US Engagement -------------- ¶8. (U) The USAID/Indonesia Environmental Services Program (ESP) is a proven platform on which to strengthen US engagement in water and sanitation issues. ESP was conceived and established as a large, multi-sectoral, integrated program to address the complex interrelationships of the above-described problems. The problems in Indonesia are on a massive scale and there is no other program (by GOI, World Bank, Asian Development Bank, or others) similarly positioned to address these problems, particularly at the local and community level. ¶9. (U) Spread over nine of Indonesia's 33 provinces (representing 70 percent of Indonesia's population),the ESP is making significant and noticeable impact, but even greater effect could be achieved by increased engagement with community groups, local governments and NGOs to roll out this work in the seven provinces involved in the project. Additionally, USG could expand USAID activities to include a number of additional provinces, particularly those in South Sumatra, Kalimantan and Sulawesi. ¶10. (U) USG could strengthen engagement in ESP and other donor water and sanitation projects in relation to governance, mobilization of domestic resources, infrastructure investment, protection of public health, science and technology cooperation, and humanitarian assistance, in the following ways: ¶11. (SBU) Governance: -- Work closely with the USAID Local Government Support Program. -- Work closely with the World Bank's Indonesian Sanitation Sector Development Program to implement GOI policy. USAID involvement can ensure a pro-poor and participatory approach to sanitation infrastructure investments in major cities in Indonesia. -- Systematize private sector participation with step-by- step, project life cycle type procedures, requiring good feasibility studies, and transparent and competitive bidding practices. -- Work with GOI to create an `investor friendly environment' and create one public-private partnership unit rather than allowing each ministry to maintain its own unit. -- Work more closely with technical ministries to understand and promote change. ¶12. (SBU) Mobilizing domestic resources: -- Add support to current program of improving the technical, operational and financial management of water companies. (Note: Younger, more forward-looking managers, mayors, and Bupatis (district leaders) understand the need for these improvements, and also understand that improving public services may help them get re-elected. End Note.) -- Increase involvement with the World Bank Institute's work with the Indonesia Association of Water Utilities (PERPAMSI),PDAMs and ESP. This will broaden USAID's ability to mobilize domestic resources for pro-poor piped water expansions. -- Develop model microcredit programs through local banks to mobilize necessary financial resources to make initial hook-up costs to piped water systems affordable to poor households and communities. -- Encourage corporatization of PDAMs at a minimum, leading to possible privatization of PDAMs. -- Assist city officials in developing wastewater and septic tank sludge collection and treatment methods, as well as creating a sound system for collecting fees to cover the costs of these methods. ¶13. (U) Infrastructure investment: -- Work to improve public outreach and communication. Assure that municipalities, communities and users participate in the planning process, understand the need for infrastructure, the responsibilities that come with it, the need for efficient operation and maintenance, and the need to fully understand what they will be paying for and what kind of service they should expect. -- Enable conditions for infrastructure investment at all levels, municipal, provincial and national, through support of corporate planning, training and capacity building. -- Assist GOI in issuing general obligation and municipal bonds and in ensuring that the bond issuance process is well managed, is fully transparent, and maintains a system of accountability. ¶14. (U) Protection of public health: -- Implement extensive, comprehensive programs for behavioral and attitude change. -- Expand community education campaigns at the household level. -- Conduct more formative research to better understand how to systematically tackle practical health issues, as well as hygiene and behavioral change needs. -- Work to improve Ministry of Health communications via multi-media campaigns, innovative best practices, and saturation techniques. -- Expand programs with schools and youth groups, to educate children on good hygiene practices and to stimulate discussions with elders at home. (Note: USAID is doing a great deal of the above protection of public health work routinely in each of the provinces in which it is engaged under ESP; however, the current program cannot keep up with current demand for these interventions, signaling a need for additional spending in these areas. End Note.) ¶15. (U) Science and technology cooperation: -- Increase the number of exchanges, study tours, and observation tours related to water and sanitation technology. -- Fund universities to develop programs on appropriate designs for sanitation, minimum design standards and building codes, wastewater treatment methods, waste reduction and disposal techniques, and energy efficiency. -- Encourage water treatment equipment manufacturers to establish plants in Indonesia for domestic consumption as well as competitive exports, possibly using export processing zones with investor incentives. -- Set up regional learning centers based in Indonesia, in English language, to attract regional students, similar to the Asian Institute of Technology in Bangkok. ¶16. (U) Humanitarian assistance: -- Help the government to coordinate and synergize relief and donor agency efforts for both short and long term goals. -- Create experienced, knowledgeable, in-country rapid response Water and Sanitation teams to respond to emergencies, rather than bringing in teams from overseas who face a steep learning curve. ¶17. (U) Agricultural and industrial pollution of streams, rivers and ground water is an important area of concern that the ESP and other agencies have not addressed. This issue warrants a much larger and broader program, and could include the concept of a "river basin commission" to maintain responsibility for monitoring the entire length of affected waterways. ¶18. (U) USAID also is supporting Aman Tirta, a program implemented through Johns Hopkins University that is designed to facilitate increased access to safe water through the introduction of a point-of-use water treatment method. The point-of-use treatment method safely and affordably chlorinates water at the household level to prevent recontamination. The program will develop a commercial model of a non-subsidized sustainable point-of- use water treatment product through a public-private partnership. The program runs from February 2005 - February 2007 and operates in the pilot provinces of North Sumatra, Banten, West, Central and East Java, and DKI Jakarta. Opportunities for Leveraging Projects in Other Sectors -------------- -------------- ¶19. (U) ESP cooperates with other USAID programs such as the Health Services Program, the Safe Water Systems Program, the Local Government Support Program, the Food Security and Nutrition partners, and, importantly, the Decentralized Basic Education program. However, additional funding would strengthen these linkages. USG could leverage these projects by creating joint education modules for schools, training of the trainers programs, and multi-media campaigns to support large scale behavioral change in the areas of handing washing, water treatment, and improved sanitation. Together these programs reach 1000+ communities and schools. ¶20. (U) USG also could link water and sanitation programs with the new Avian Influenza program, especially in areas with large chicken slaughter industries that would benefit from improved sanitation, solid waste management, drainage disposal, better initial planning, and licensing by health inspectors. Specific Opportunities to Support Mission Efforts -------------- -------------- ¶21. (SBU) Washington programs can provide expertise, resources, and, very importantly, high profile publicity to current mission programs that are successful at the local level, assisting Indonesia in raising the impact of these programs to the national stage. Mission objectives would benefit particularly from: -- Adding resources to the Safe Water System program would benefit numerous every-day households as well as the inevitable disaster response efforts. -- Dramatically expanding the small Aman Tirta program would significantly increase its impact. -- Increased collaboration with Japan Bank for International Cooperation (JBIC) to develop public-private partnerships that leverage commercial finance, JBIC loan funds and credit enhancements to lower financing costs of municipal water and sanitation infrastructure projects. -- Assisting USAID's Development Credit Authority to be more aggressive in understanding local conditions, risk management, and mitigation of these risks in order to increase the opportunity to facilitate more credit guarantees. -- Assistance from Washington to improve the political will of the GOI to see bond and private sector programs through with a high level of transparency, competition and good practice to increase investor confidence would also be highly useful. PASCOE