The Islamic Development Bank (IDB) and the Government of Indonesia (GoI) have launched projects in the areas of higher education, urban development and energy. The IDB announced the approval of USD 836 million in project financing for Indonesia, today, during the IDB Group 41^st Annual Meeting. The IDB President, Ahmad Mohamed Ali, signed the agreement on higher education and urban development projects with the Director General of Budget Financing and Risk Management, Ministry of Finance GoI, Dr. Robert Pakpahan and announced the approval of financing for a new power project titled “Power Grid Enhancement Project” by PT Perusahaan Listrik Negara (PLN) Persero.

The IDB Country Director, Mr. Ibrahim Ali Shoukry, state that “The three new project are part of the annual work program to operationalize the MCPS, which has an indicative envelope of around USD 5.2 billion worth of technical and financial support from the IDB Group to Indonesia over the period 2016 to 2020.” The intervention areas of the project are strongly aligned with both, the RPJMN (2015-2019) and the 10-year Strategy IDB Group.

The Development of Four Higher Education Institutions Project (under the Improving Access, Quality, Relevance, and Competitiveness of Higher Education Program)

The project will specifically improve the learning environment, quality, relevance and competitiveness of four higher education institutions through expanding, equipping of existing and new facilities, curricula and staff development, strengthening research capacity, and incentivizing commercialization of innovation. This education and skills development project is part of the support to physical and social infrastructure pillar of the IDB Group Member Country Partnership Strategy (MCPS) for Indonesia 2016-2020.

The IDB Country Director, Mr. Ibrahim Ali Shoukry, said, “The IDB will provide financial support worth USD 176.5 million in this project, aiming at supporting the National Medium-Term Plan (RPJMN) 2015-2019 and the Ministry of Research, Technology and Higher Education Strategy for improving national competitiveness through innovation in higher education”.

The beneficiaries of the project include four universities across Indonesia namely University of Sultan Ageng Tirtayasa in Banten, University of Malang and University of Jember in East Java and the University of Mulawarman in East Kalimantan. The support will include the construction of 30 new buildings, as well as the provision of supporting infrastructure and equipment. Curricula development and accreditation of academic programs, training programs for staff development, research and teaching grants and the formation of research consortia are also key components of the new project. The strategy is to develop the beneficiary universities as Centers of Excellence in the fields of biotechnology in agriculture and health, learning innovation, tropical studies, and food security.

This project builds on the strong partnership that the IDB has with the Republic of Indonesia in higher education, whereby the IDB Group has supported in the development and enhancement of over 30 national and Islamic higher education institutions over the last 40 years.

National Slum Upgrading Project

The IDB will provide financial support worth USD 329.76 million for this urban development project, which aims to improve the people’s well-being in urban areas through slum upgrading and prevention by way of community driven development and local government participation.

The National Slum Upgrading Program (NSUP) of the Government of Indonesia (GOI) directly responds to the RPJMN (2015-2019). It has been designed in keeping with the principles to empower the community and to strengthen local government roles for acceleration of the '100-0-100' movement (100% connection to water supply, 0% Slums and 100% access to Sanitation facilities) in order to alleviate and prevent slums in urban and peri-urban areas through infrastructure improvement and sustainable livelihood. It will fall under the newly launched KOta TAnpa KUmuh (Kotaku or City without Slums) national program of the GOI.

Mr. Ibrahim Ali Shoukry, Resident Representative of the IDB Group Country Gateway Office Indonesia said, “This Urban Development and Slum Upgrading project is part of the support to physical and social infrastructure pillar of the IDB Group Member Country Partnership Strategy (MCPS) for Indonesia 2016-2020”.

Ms. Ir. Rina Farida, Director of Settlement Development, Directorate General of Human Settlement said, “The project will be implemented across 15 provinces across Western Jawa, Sumatra, and Kalimantan, covering a total of 4923 Kelurahan in 116 cities/regencies”. The project would specifically work to improve community access to appropriate infrastructure in order to alleviate slums based on the 7 plus 1 slum indicators, promote greater collaboration with stakeholders through empowerment of local governments, and improve community welfare by promoting sustainable livelihoods, she said.

This project is a continuation of the strong partnership and success that has been built with the Ministry of Public Works and Housing through IDB’s program to support PNPM-Mandiri which spanned three phases with financing of nearly USD 500 million since 2007.

Power Grid Enhancement Project

IDB will be financing USD 330 million of the USD 965.3 million project, which aims to support the enhancement of the electricity grid in connection with the 35,000 MW new power generation capacity set by the Government of Indonesia under the National Medium-Term Plan (RPJMN) 2015-2019.

Resident Representative of the IDB Group Country Gateway Office Indonesia, Mr. Ibrahim Ali Shoukry, said, “The Power Grid Enhancement Project is the first proposed financing of the IDB to support the power sector in Indonesia under the newly formulated IDB Group Member Country Partnership Strategy (MCPS). And infrastructure development has been identified as a key pillar for IDB’s proposed intervention areas in Indonesia under the new Member Country Partnership Strategy (2016-2020) which has set an indicative financing-envelope of US$ 1 billion for development of the country’s power sector.” Several potential initiatives had also been identified for future collaboration, including the development of transmission infrastructure, establishment of power generation facilities, and development of the distribution infrastructure, stated Mr. Ibrahim Shoukry.

The main objective of the project is to expand the capacity of power transmission infrastructure in Java-Bali, Sumatra, Kalimantan and Sulawesi to enable reliable and efficient supply of additional power generation capacity being installed in the project area. Upon completion, the project will facilitate transmission of an additional 10,135 MVA, contributing to the government’s overall goal of strengthening the power transmission grid capacity to supply 332 TWh (by 2020) from 228 TWh (in 2015) and increasing the electrification rate in the country to 97% from the current 84.3%.