June 2007 Embassy of Sweden Jakarta, Department for asia, middle east and north africa. Sida Country Report Indonesia

Transcription

1 June 2007 Embassy of Sweden Jakarta, Department for asia, middle east and north africa Sida Country Report 2006 Indonesia

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3 Contents 1. Summary Poverty Reduction, Political and Economic Development Poverty Reduction The Environment and Sustainable use of Natural Resources Political Development Economic Development Swedish Development Cooperation Overall Assessment of the Country Programme General Assessment Human Rights Democracy and Good Governance Environmentally Sustainable Development Results and Deviations Disbursement Specific Country Programme Overview of the Swedish Development Cooperation Reconstruction and Peace Monitoring in Aceh Human Rights Democracy and Good Governance Environmentally Sustainable Development Contract-Financed Technical Cooperation New Areas of Cooperation Reviews and Evaluations Cooperation with the Government Cooperation Between HQ and the Field Office and Administrative Issues Annex 1 Fact Sheet Annex 2 Current Planning Overview... 20

4 Published by Sida 2007 Department for Asia, Middle East and North Africa Author: Embassy of Sweden, Jakarta and Department for Asia, Middle East and North Africa Printed by Edita Communication AB, 2007 Art. no.: SIDA37315en This publication can be downloaded/ordered from

5 1. Summary The poverty rate in Indonesia increased during 2006, despite a growth rate of 5,5 percent. This negative turn is largely attributed to increased rice prices. Income poverty is exacerbated by other dimensions of poverty such as human rights violations and lack of access to justice. In the progress towards the Millennium Development Goals, Indonesia is characterised as a country that risks falling further behind. Natural disasters pose a special challenge to the government. During 2006 Indonesia was hardest hit by disasters in the world with 7,511 people being killed and severe destruction of homes and infrastructure. An initially rapid democratisation process has slowed down and the implementation of political reforms was slower than expected during the year. A positive step was taken in Aceh when the first local elections were held in December as a result of the peace agreement. The Swedish development co-operation with Indonesia is increasing in accordance with the new Strategy for Development co-operation with Parts of South-East Asia During 2006 the amount for development co-operation reached 104 million SEK, of which sum a large part was support to the reconstruction after the tsunami disaster. Contributions are focused on democracy and human rights, and on environmentally sustainable development. 3

6 2. Poverty Reduction, Political and Economic Development 2.1 Poverty Reduction Increasing poverty rate despite growth Despite a growth rate of 5,5 percent, the poverty rate in Indonesia increased during 2006 in contrast to the positive development in other countries in the region. The percentage of poor people increased from about 16 percent during 2005 to 17,75 percent in 2006, which means that approximately 3 million more people fell below the national poverty line of PPP 1 1,55 USD per day. 2 This reversal of the positive poverty reduction during previous years, is mainly attributed to high increases in rice prices. Between February 2005 and March 2006 rice prices increased by 33 per cent due to lower output of the crop and a Government ban on importing rice. Late rains and drought in several parts of the country was also negative for rice crops and led to a further increase in rice prices of 8 percent in December This led the Government to take the decision to allow rice imports at the end of the year. 3 Another expected cause of poverty, the abolishment of Government subsidies for fuel was counteracted by the unconditional cash transfer (UCT) program. UCT provided cash transfers to some 19 million poor and near-poor households and is expected to have more than compensated for the fuel price increase among the poorest 20 per cent. While the UCT program was being completed, rice prices were continuing to rise at the end of the year, this means that there is a high risk of a continued increase in the number of poor. 4 This negative development also shows the vulnerability of many Indonesians where 49 percent of the population live on less than 2 USD per day 5. In the long term perspective, the main causes of poverty that are highlighted in assessments are; low agricultural output, the need to increase non-farm productivity, low access to infrastructure and high vulnerability to external shocks. 6 1 Income measured as Purchasing Power Parity. 2 Making the New Indonesia Work for the Poor, The World Bank, November Ibid and Asian Development Outlook 2007, ADB The poor spend about one quarter of their expenditure on rice, which gives the price of rice a strong influence on the economy of the poor. Indonesia: Economic and Social Update, The World Bank, April Income measured as Purchasing Power Parity. 6 From Poverty to Prosperity: A Country Poverty Analysis for Indonesia, ADB June

7 Unemployment and underemployment are also persistent aspects of poverty. During the last few years there has been a slow increase in unemployment from 9% in 2001 to 10,3% in According to recent figures the number of unemployed reaches 10,5 million and the number of underemployed nearly 40 million. The workforce increases by 2,5 million yearly. 7 A prerequisite to reach higher economic growth is to restart domestic and increase international investment in Indonesia. Income poverty is exacerbated by other dimensions of poverty which are an even more serious problem in Indonesia. Lack of respect of human rights is displayed in human rights violations and in lack of access to justice, where the poor are especially vulnerable. Insufficient fulfilment of human rights is also apparent in lack of access to education and health services for the poorest in society. Other important features of poverty in Indonesia are the considerable regional differences. For example the poverty rate in Java/Bali is 15.7% while it is 38.7% in Papua. These differences are also further reinforced by the situation for human rights and social services Achievement of Millennium Development Goals In the records of progress towards the Millennium Development Goals, Indonesia is characterised as a country of concern with risk of falling further behind 9. Progress can be noted in enrolment in primary education and in gender equality in primary and secondary school, basic health care coverage (especially birth attendance and immunization) and reductions in child mortality. Slow or negative development is, however, recorded for several MDGrelated indicators. This negative development concerns malnutrition rates where one quarter of children under five years are malnourished. Maternal health is also considerably worse than in comparable countries in the region, the 307 deaths in 100,000 births is three times higher than in Vietnam and six times higher than in China. Education outcomes are also weak with low transition rates from primary to secondary school among the poor. Access to safe water is low, especially among the poor (only 48% of the poorest quintile in rural and 78% in urban areas have access to safe water). Sanitation is an even more crucial issue where 80% of the rural poor and 59% of the urban poor do not have access to septic tanks and less then 1% of Indonesians have access to piped sewerage services. 10 It can also be noted that the HIV/AIDS prevalence, which is having a devastating effect on poverty in many development countries, still is relatively low in Indonesia, although an increase to approximately 1% of the general population in Papua clearly shows that a more proactive approach is needed Government investments Financial experts have underlined the importance of increased government investments in social services, human development and infrastructure to achieve growth that will improve the situation of the poor. 7 Asian Development Outlook 2007, ADB Making the New Indonesia Work for the Poor, The World Bank, November The Millenium Development Goals: Progress in Asia and the Pacific 2006, UNESCAP, UNDP, ADB. August Making the New Indonesia Work for the Poor, The World Bank, November

8 In the Government budget for 2007 an increase of government investment by 8% is planned, with a special focus on infrastructure and rural development. The government also promises to increase investment in education and health with 18% and 11% respectively. This would mean that 10% of the total budget would be allocated for education. However, according to the constitution, Indonesia should allocate at least 20% of the government budget to the education sector. The government s failure to fulfil their investments plans in the past is seen as a fundamental limiting factor to economic growth. Present investments are not sufficient to create the additional jobs needed for the countrys growing number of under/unemployed. A new conditional cash transfer program will be introduced in seven pilot provinces during 2007, with conditions that the families fulfil relevant health and education conditions The Environment and Sustainable use of Natural Resources High population growth and urbanisation have led to the rapid expansion of Indonesia s cities and the growth of large slum areas. Access to clean water is rare and sanitation and waste disposal services are limited. Population growth is putting increased pressure on arable land, coastal areas and marine resources, and above all, on forest resources. Logging by large timber companies and extensive illegal logging activities are making it increasingly difficult for poor people to gain access to forest products. Deforestation has led to soil erosion and land degradation, both of which have a negative impact on agricultural and hydroelectric power production, contribute to contamination of water resources and threaten biological diversity and increase risks for disasters such as landslides Natural disasters During 2006, Indonesia was hardest hit by disasters in the world with 7,511 people being killed. The largest death toll was caused by an earthquake in Central Java in May 2006 that killed 5,578 people and caused severe destruction of infrastructure with some 300,000 houses being destroyed or damaged beyond repair. Volcanic eruptions and mud slides also caused severe damage during The economic impact of the disasters during the year are estimated at USD 3,390 million. 12 The tsunami and earthquakes that hit Aceh and Nias in 2004 caused widespread destruction and human suffering in Aceh, but did not have any major effect on the economy in the country as a whole. The international humanitarian and reconstruction support to Aceh and Nias was, however, unprecedented, and later disasters have not received the same generous level of international funding thus posing a pressure on the economy. Environmental degradation and lack of concern for environmental protection may also contribute to increase the negative effects of natural disasters which are often especially devastating for the poor. 11 Indonesia: Economic and Social Update, The World Bank, April Disaster Data: A Balanced Perspective. Cred Crunch, Issue No 8, March

9 2.3 Political Development Difficult steps towards increased democracy The democratisation process in Indonesia has made major progress since the fall of the Suharto regime in Indonesia is regarded as the third largest democratic country in the world. It is also seen as a country that has been able to successfully combine democracy and Islam in a country with the world s largest Muslim population. Despite progress, however, a culture of authoritarianism and violence persists and wide-spread corruption is increasing. Parts of the legacy of the oppressive Suharto regime that remain are: a powerful and to some extent unaccountable military; a corrupt legal and judicial system which does not provide equitable, predictable or transparent justice. The political system does not facilitate the development of new political movements but relies on coalition and compromise among existing political forces. Within the current system political parties cannot be created on basis of local or regional support. To participate in elections, also at the local and regional level, a party must be established as a national party with members and representative offices in several regions and several districts within these regions. During 2006 there were significant positive steps in the development in Aceh with a peace process followed by local elections, which is described in section For other parts of Indonesia, however, there was no direct change in the authoritarian culture which will require a long term process to change. A significant array of legal and regulatory acts have been adopted, but the process of institutionalisation and implementation lags behind. In September 2006, Indonesia ratified the International Convention on Civil and Political Rights (ICCPR) and the International Convention on Economic, Social and Cultural Rights (ICESCR) and is expected to report on the implementation of these Conventions in May Slow implementation of reforms The parliamentary and presidential elections in 2004 were important steps in Indonesia s continued process of democratisation. In the first presidential elections ever, Susilo Bambang Yudhoyono was then elected President, with overwhelming majority, on a bill which emphasised security and the fight against corruption. The implementation of reforms has, however, been slower than anticipated. The current reform agenda of the Government includes establishing the rule of law, tackling endemic corruption, reforming the security sector, and improving local as well as national governments accountability and capability to deliver priority services. There are reform-oriented individuals in the legislative, executive and judiciary, as well as in the private sector and the civil society, who continue to push for legislation and policies that support better governance but the prevailing situation is not conducive to rapid transformation. The administration is complex and planned reforms on tax, investments and labour laws were stalled in parliament during There are important opportunities in decentralisation for which there is a political demand. But the hurried way in which decentralisation was introduced left local governments ill prepared to assume the task put upon them. Public service remains weak and powerful groups with 13 Asian Development Outlook 2007, ADB

10 vested interests are still able to block progress. There are signs that the decentralisation has contributed to increased corruption at the local level. It is now more visible and affecting the every-day-life of the population at large. While the Government has increased budget transfers to the regional level, the lack of capacity at the local level has impeded the use of funds for delivery of services. In November 2006, it is estimated that the regions were holding the equivalent of USD 10 billion (3.1% of GDP) in cash deposits. The Government is planning to start a communitydesigned development program that could become a vehicle for stimulating spending by local governments Human Rights Situation There has been significant progress in the respect for human rights since the fall of the Suharto-regime in Human rights is now relatively well respected in the constitution and legislation. The implementation, however, continues to be flawed. 15 The continued progress towards improving the human rights situation is very slow and there are several disturbing aspects in the situation for human rights. The justice system is considered to be one of the most corrupt in the world and access to justice is still very limited, especially for the poor. During 2006, the application of the death penalty ended a three-year de facto moratorium. Another issue to attract widespread notice is impunity for human rights violations. This is especially obvious in light of the crimes committed in Timor-Leste before independence but also continually in new cases. During 2006 the High Court changed the prison sentence from 14 to two years 16 for the killing of the human rights activist Munir who was poisoned during a flight to Europe. At present, the human rights situation is particularly serious in areas such as Papua, where independence movements are active. Military and the police continue to fight the opposition with violent means and torture is widespread in prisons. 17 Overall, the situation has improved substantially since the fall of the Suharto-regime. During 2005 and 2006 there was a great improvement of the situation for human rights in Aceh due to the peace process. However, in other parts of Indonesia, there was no visible decrease in the number of reported human rights violations during the last year. Freedom of expression, the right to information and the right of association for all exist in practice. Despite the freedom to conduct open political debates, pressure, threats and violence aimed at the media and civil society are not uncommon. Although the media is reasonably free, restrictions may be imposed even here if those in power feel their authority is being encroached upon. Access for journalists to Papua is restricted. The military still wields considerable power. Political influence is now exercised through groups or individuals with economic power and through personal contacts. Approximately a third of Indonesia s defence costs are financed through the central government budget. The remaining revenue is generated by various forms of private enterprise, which include illegal economic activities. 14 Asian Development Outlook 2007, ADB Mänskliga rättigheter i Indonesien Utrikesdepartementet The criminal charges were changed from murder to falsification of documents. In spite of extensive evidence material the police has chosen not to investigate the alleged involvement of the Indonesian Security Forces in the murder. 17 Ibid.

11 The important role of civil society as a watchdog over all public sector activities and respect for human rights cannot be sufficiently emphasised. The actions of the military as relief efforts were being mounted after the tsunami disaster in Aceh has shown that civil society needs to be strengthened. Several districts started applying sharia laws during A total of 22 of 450 districts now apply sharia law in the country, in many cases in contradiction to the Constitution. Sharia law, and sometimes also other types of local by-laws, have had a negative impact on human rights, especially issues related to gender equality. The Government officially does not approve of sharia law and states that it intends to nullify laws that contradict the Constitution, but so far no action has been taken on this sensitive issue Internal Conflicts Internal conflicts are a challenge to the democratic development in Indonesia and for the respect of human rights. The development in recent years is markedly different in the conflict areas: Aceh has seen a positive development, with a relatively stable peace process after 30 years of conflict which killed people. On December 11th, 2006, the first free elections of governor and local representatives were held in Aceh. The implementation of the peace agreement between the government and GAM has so far developed beyond expectation. The successful peace process has led to a great improvement in the respect for human rights. So far, the peace process seems to continue to progress towards a normalisation of the situation. In Papua, a separatist movement has been active since the 1960 s. The demands for autonomy has in recent years been met with increasingly harder resistance from police and military. The law on special autonomy for Papua adopted in 2001 has not fully been implemented and during the period of 2005/2006 a series of violent incidents between civilians and police/army has occurred. Violence with ethnic/religious linkages has resulted in a large number of casualties in central Sulawesi. A peace agreement was reached 2002 but the unrest has not ceased and there are suspicions that the city of Poso has become a new centre for the terrorist network of Jemaah Islamiyah. In the Malukus conflicts between Muslims and protestants since January 1999 has resulted in over 4000 deaths, hundreds of refugees and destruction. The situation has improved during recent years, but remains tense. The different conflicts have resulted in widespread violations of human rights. 2.4 Economic Development The growth rate of 5,5% during 2006 is expected to increase and reach 6% during The macro-economic situation is stable with inflation eased from above 17 percent in January 2006 to around 7 percent by the end of the year. 18 New investments and exports play an increasingly important part for growth. Merchandise exports increased by 18 per cent while merchandise imports increased by a moderate 5 percent leading to a trade surplus of 30 billion USD. The ratio of external debt also fell from 46,1 percent in 2005 to just under 34 per cent in Asian Development Outlook 2007, ADB Asian Development Outlook 2007, ADB 2007.

12 The Indonesian economy from the 1960 s to 1997 was characterised by low inflation and rapid growth. The Asia crisis in 1997 hit the country hard; inflation increased, the rate of the rupiah sank and unemployment and poverty rose drastically. The factors behind the crisis were growing short term loans in the private sector which lacked financial security. Severe structural problems and flagrant corruption also contributed to the rapid erosion of the economy. Indonesia has today recovered from the economic crisis. The new Indonesian government under the leadership of President Yudhoyono has prioritised anti corruption activities and economic growth. Investment and growth have increased in general. Social sectors (education and health) as well as infrastructure are still lagging behind and the Government is considered to be underspending in these important sectors. 20 Underemployment and unemployment are also serious problems. The widespread problem of corruption is likely to take many years to tackle. Corruption, the unpredictable justice system and terrorist attacks aimed at westerners have also further contributed to the slow arrival of needed foreign investments. During 2005 the economy underwent a period of temporary instability caused by high price of oil. Indonesia, since a few years back, is a net importer of oil, but still has major fuel subsidies in place. In 2005, two long awaited decisions on the decrease of fuel subsidies, were implemented which resulted in increased inflation. The reshuffling of the government in December 2005 in order to create a stronger financial team has increased the market s trust for the government s capacity to pursue a more forceful economic policy. The inflation decreased substantially during 2006 and might continue in 2007 according to financial analysts. Taxes account for approximately 70% of the government budget in 2007 which is a slight increase compared to previous years. The remaining need for funds is expected to come from export of natural resources. This years deficit is expected to be 0,9% of GDP. A new tax regulation is planned to be launched in 2007 aimed at creating a better investment climate and an increase of tax income by 20% through increased tax payer base. At present, approximately 1,5 million of the country s 220 million people are active tax payers. 20 Indonesia Public Expenditure Review The World Bank,

13 3. Swedish Development Cooperation Overall Assessment of the Country Programme 3.1 General Assessment Swedish development co-operation with Indonesia is increasing in recognition of the strategic significance that Indonesia plays for development and stability in the region. Reaching 111 million SEK during 2006, Sweden is still a small donor in the country. The total contribution of all development cooperation is also limited in the budget of the Goverment. Although the country is not among the poorest in the region, poverty is extensive in some areas. Swedish development co-operation can make important contributions to decrease poverty if development co-operation is strategically targeted to contribute to results for poor people. The Strategy for Development Co-operation with Parts of South-East Asia sets two objectives for co-operation with Indonesia: To promote the development of democratic governance and increased respect for human rights. To promote the sustainable use of natural resources and environmental protection from a poverty perspective These objectives continue to be highly relevant in light of the development in the country. The ongoing process of democratisation will be decisive for the country s future and motivates attention in development co-operation. Protection of the enviroment also continues to be a central issue for sustainable development. In addition to these objectives, Sweden has also contributed substantially to the reconstruction after the earthquakes and the tsunami in Aceh and Nias through contributing to the MDF, Multi Donor Fund for Aceh and Nias. This has led to very concrete results in community-based reconstruction of houses and support to infrastructure. Sida has also supported the victims of the Yogyakarta earthquake in May 2006 with SEK 31,2 million. Indonesias high frequency of natural disatsers is an issue that needs greater attention in Swedish development co-operation, especially intiatives for disaster prevention and disaster risk reduction including disaster management and preparedness motivate support. Until vulnerability, and consequently disaster risks, are reduced, Indonesia, as a country with high proportions of population in high risk areas are especially likely to incur repeated disaster-related losses and costs. 11

14 According to the Natural Disaster Hotspots report Indonesia was one of the countries with the highest relief costs during 1992 to During previous years, the relationship between Sweden and Indonesia has been tense due to the two countries different views concerning the leaders of GAM residing in Sweden and the accusation of the support to armed rebellion in Indonesia. The positive development in Aceh has resulted in a normalisation of the relations between Indonesia and Sweden. 3.2 Human Rights The human rights situation in the country remains complex. Although Indonesian human rights legislation is of a high standard, compliance is severely flawed. Still, significant advances have been made in recent years and efforts to further improve the situation continue. It is important to focus Swedish support on efforts that can contribute to improve implementation of human rights standards and lead to increased respect of human rights that benefit the poor. 3.3 Democracy and Good Governance Despite democratic progress, there are many remaining problems related to the transparency, performance and efficiency of state/regional/local institutions. At present many institutions are undergoing reform and decentralisation processes. The reform of the country s taxation system is one example of a far reaching reform process, which is actively being implemented by the Minister of Finance, Sri Mulyani. Corruption, one of Indonesia s greatest problems, is prevalent at all levels and in all sectors of society. Extensive legislation against corruption has been introduced and institutions have been established and strengthened. However, implementation remains ineffective and few are held accountable. Far-reaching decentralisation processes have sometimes had negative effects. For example, the decentralisation of the animal/veterinary services hampered national initiatives for combating avian influenza as the central body had limited power to control the regional/local institutions and these institutions also had low capacity and lack of funding. Several Swedish institutions are involved in long-term institutional cooperation with Indonesian institutions. Main areas of co-operation include tax administration, auditing of public funds, land administration, public service radio and fishing fleet management. 3.4 Environmentally Sustainable Development Indonesia records negative or slow development on most of the MDGindicators relating to the environment. 22 The country s environmental problems do not achieve sufficient priority by the government. With the decentralisation of political control, a large share of the responsibility for environment-related development cooperation has been devolved to local and provincial authorities. As a result, the question of whether conditions are suitable for support must be carefully weighed case by case. Support needs to be targeted both to capacity development and to contributions that will lead to concrete results for poor people. Indonesia s slow progress towards reaching MDGs on water and sanitation makes this an important sector 21 Natural Disaster Hotspots: A Global Risk Analysis, available at synthesisreport.pdf 22 The Millenium Development Goals: Progress in Asia and the Pacific 2006, UNESCAP, UNDP, ADB. August

15 to continue to support. Institutional co-operation may also be effective for capacity development. There is a need for improved coordination between the relevant authorities and government ministries, reform and enforcement of environmental legislation, and efforts to strengthen technological capacity at regional level. Efforts should be made to encourage greater public and private sector investment in environmental programmes and projects as well as cost-effective solutions aimed at improving both the environment and central government finances. 3.5 Results and Deviations The implementation of the Strategy for development co-operation with Indonesia became effective in 2005 and has implied that the volume of development co-operation with Indonesia substantially increases 23. During 2006 a number of new contributions were identified and while some assessments were finalised others continue in early Some of the previously ongoing contributions are also being phased out as a result of the new Strategy, while others may be slightly adapted to the Strategy and the Swedish Governments new Policy for Global Development with its stronger poverty focus. Even after a sizable boost in support volumes, Sweden s development cooperation is small in comparison with that of many other donors. Staff resources in Jakarta are also very limited. Efforts have therefore been focused on a small number of areas where reform processes need supporting. Support is mainly channelled through multilateral organisations and through technical co-operation, although a limited number of initiatives in civil society are also supported. 3.6 Disbursement In 2005 Sida disbursed 120 MSEK and in MSEK. For the next coming years an annual disbursement of approximately 100 MSEK is expected. The seemingly decrease in funding after 2005 is explained by the large volumes of assistance for tsunami reconstruction in Aceh and Nias and to the Aceh Monitoring Mission during 2005 and Swedish Development Co-operation with Indonesia amounted to 41MSEK during 2004 and 14 MSEK during

16 4. Specific Country Programme Overview of the Swedish Development Cooperation 4.1 Reconstruction and Peace Monitoring in Aceh In addition to the humanitarian support after the tsunami, Sweden has also provided substantial support for the reconstruction in Aceh and Nias after the tsunami, in total 150 million SEK channelled through the MDF, Multi Donor Fund for Aceh and Nias. The focus of the MDF was widened during 2006 to allow support also for conflict-affected areas in order to not create new lines of division between victims of the tsunami and victims of the conflict. A new strategy was also taken for replenishment of the Fund which led to contributions from Sweden and three other donors. Almost all of the projects of the MDF are progressing well, but the extremely slow distribution of documentation for land titles continues to be an issue of concern that complicates the reconstruction process. 24 Within the framework of EU, ASEAN and the Aceh Monitoring Mission (AMM), Sweden provided logistical support through the Swedish Rescue Services Agency. 4.2 Human Rights Swedish support to increase the respect for human rights and to raise the status of women in society is mainly being implemented by the Raoul Wallenberg Institute of Human Rights and Humanitarian Law (RWI) and is focused on building capacity within government institutions and universities. The support is targeted to the Ministry of Law and Human Rights, to the Directorate of Corrections (responsible for prisons), the National Commission on Violence against Women (Komnas Perempuan) and to Universities. Part of the support has also been directed to create six human rights libraries. The RWI programme was evaluated during 2006 with mainly positive results. The evaluation concludes that the programme has considerable possibilities to contribute to promote human rights in Indonesia. It is assess as having contributed to increased knowledge and awareness of human rights among individuals that have participated in activities through the programme. It is also concluded that RWI needs to develop its work with indicators in order to be able to measure results. There also need to be a stronger link to the perspectives of the poor months Multi Donor Fund for Aceh and Nias. Focus on Implementing Projects. February

17 Another area that has received more attention during the last years is the issue of Access to Justice, the activities related to this area are carried out by Tifa and UNDP. The activities by Tifa are supporting local legal offices in 18 provinces that provide counselling and representation of individuals. The LEAD programme has not yet been started and is still under consideration by Sida. The aim of the programme is to increase access to groups in the Maluku and Sulawesi through the activities of locally based NGOs. According to a large study carried out in Indonesia Access to Justice people in Indonesia tend to prefer traditional processes of justice rather than to involve the police or formal courts. The benefits of the informal systems are that they are accessible, easy to understand and that the processes can be done at a low cost. According to the study they are also often perceived as more just than formal processes. There are however major drawbacks some of them serious. The informal processes tend to function less well when there is an imbalance of power between the two parties and women tend to lose out compared to men. 4.3 Democracy and Good Governance Swedish support to Good Governance is mainly channelled through the UNDP and the Partnership for Governance Reform (PGR) as well as several ongoing technical cooperation programmes (see also below 4.5), for example in the areas of Taxation, Land registration, Fisheries, Public Radio, Airport Planning. Together with other donors, Sweden has moved the process of democratisation and decentralisation forward, primarily through support for locally based initiatives such as the Partnership for Governance Reform and the programmes supporting access to justice at local level. Anticorruption has been targeted directly through Swedish funded programme components of the Partnership for Governance Reform programme which contributed to raise the issue of corruption on the national agenda. The PGR programme has gradually become more independent from UNDP which supported the programme technically for the first years. The Swedish funding is still channelled though UNDP but many other donors are now funding the PGR directly. The funding provided by Sweden was non-earmarked but was later allocated by UNDP/PGR to three specific components related to direct anti-corruption activities. Assistance to the area of Democratisation is also channelled through DEMOS which during the first phase of the programme carried out an action research programme to provide a model on how to measure democratisation. The recent phase is aimed at using the research results and the model to follow-up the development of the democratisation process. The programme is co-funded by Norway, which has assumed the role as lead agency. 4.4 Environmentally Sustainable Development The urban environment in particular water and sanitation is a priority area for Swedish environmental cooperation and the funding is currently channelled through WSP for the programme Sustainable Urban Sanitation in South East Asia (SuSEA). The programme has national components in Indonesia and the Philippines as well as a regional umbrella for joint regional activities. In Indonesia Swedish support is incorporated in a larger Dutch supported Sanitation Strategy Programme which is ongoing. Swedish funds are 15

18 used for approaching sanitation from a systemic view that helps making the sanitation strategies more sustainable and pro-poor. 4.5 Contract-Financed Technical Cooperation At present, Swedish institutions are involved in technical cooperation within the areas of Taxation, Land registration, Fisheries, Public Radio and Airport Planning. These different projects are all aimed at strengthening the capacity of the Indonesian counterpart and to provide access to Swedish expertise within the respective areas. The programme for Public Radio as well as the Airport Planning are both entering their third phase. The cooperation with Radio Republik Indonesia (RRI) has seen a lot of radical developments, especially in the last year with major restructuring and modernization, during which the support from the Swedish Radio has played an important role. The cooperation on airport planning has been successful and funding for the actual implementation of the plans developed within the cooperation is now forthcoming. At present, training activities related to airport safety and environmental issues are also being carried out by Swedavia. 4.6 New Areas of Cooperation New areas of cooperation for 2007, include the following: Technical cooperation to the Indonesian Agency for Land Registration, Technical cooperation to Indonesian Ministry for Fisheries, Technical cooperation to the Directorate General of Taxation (under consideration) Legal Empowerment for Disadvantaged groups through UNDP (under consideration) Water and Sanitation (two proposals under consideration). Media support in Aceh (under consideration) 4.7 Reviews and Evaluations During 2006 an evaluation of the Raoul Wallenberg Institute Programme was carried out by external consultants (see 4.1). The Tsunami Evaluation Coalition also presented the results of their regional evaluation on the humanitarian response after the tsunami during the first year after the disaster. This evaluation also included recommendations regarding the link between humanitarian and reconstruction support in Indonesia. 25 During 2006 Sida/Jakarta also participated in the MOPAN (Multilateral Organisations Performance Assessment Network) evaluation of Unicef, ILO and ADB. Early spring 2007 Sida (trough external consultants) will participate in a review of the Water and Sanitation Programme. 4.8 Cooperation with the Government A recent presidential decree requires the approval of the Ministry of Finance for development cooperation projects with a local budget component. This adds an additional process to the previous coordination processes with the respective ministry involved and the national Planning Agency BAPPENAS. It is likely that this change will cause some delay to the initiation of projects, especially projects related to technical cooperation. 25 The Tsunami Evaluation Coalition, Synthesis Report and Thematic Evaluations, July

19 Discussions between Indonesia and Sweden on the possibilities of a bilateral Human Rights Dialogue are ongoing. If such a dialogue is to be initiated, it is likely to start by the end of 2007 or beginning of Cooperation Between HQ and the Field The field office normally prepares the initial assessment memo for specific areas of cooperation or specific applications from organisations, as agreed between field office and HQ. The area and the need for specific expertise will determine the level of involvement from the field office in the following in-depth assessment process. 17

20 5. Office and Administrative Issues The development section at the Embassy in Jakarta consists of one Swedish programme officer (Sida) and approximately ¼ of a national assistant position. The programme officer covers all Swedish development co-operation with Indonesia, including technical cooperation programmes and the reconstruction support to Aceh through the Multi Donor Fund. To some extent the programme officer also provides input for decisions on humanitarian assistance, for example the earthquake in Yogyakarta and the recent floods in Jakarta. 18

21 Annex 1 Fact sheet Country report: Indonesia Official Name: Republic of Indonesia Capital: Jakarta Area: Approx 17,000 islands, of which 6,000 are, inhabited 1,919,440 km² Population: 225 Million (2006), 330 ethnic groups Population growth: 1,41 % (2006) Language: Bahasa Indonesia and 300 local languages and dialects Religion: Muslim 88%, protestant 5%, catholic 3%, hindu 2%, buddhist 1%, others 1% President Susilo Bambang Yudhoyono Minister for Foreign Affairs Hassan Wirajuda Latest general election: April 5, 2004 Next General election 2009 Latest election of President 20 September 2004 Currency: Rupiah Rate : 1 USD = 9085 rupiah (february 2007) GDP (total): 2006: 311 billion USD GDP/capita: 2006: USD GDP growth: 2005: 5,5%, 2006: 5,5% Inflation (KPI): 2005: 17,11%, 2006: 6,6, 2007:6,5% (prognosis) Unemployment: 2006: 12,5% (estimated), approx. 42 million people work less than 35 h/week and are therefore regarded as underemployed. Natural resources: Oil, gas, mining industry Financial balance: 2005: -0,5%, 2006: -1,2% Foreign currency reserve 2005: 34 billion USD 2006: 40 billion USD Foreign Debt: 2005: 47% of GDP, 2006: 38% of GDP Trade balance: 2005: 27 billion USD 2006: 33 billion USD Export: 2005: 85, billion USD 2006: 98 billion USD Export growth: 2005: 19,5% Exported products: Oil, gas, textiles, electrics and furniture Import: 2005: 58 billion USD 2006: 65 billion USD Import growth: 2005: 24% Imported products: Oil and gas (27%), machinery, food Trade (Main countries) Japan, Kina, Singapore, USA, Malaysia, Korea, Thailand Swedish Export to Indonesia 2005: 3,3 billion SEK 2006 (January November) : 4,5 billion SEK Swedish Import from Indonesia: 2005: 1,4 billion SEK 2006 (January November) : 1,3 billion SEK 19

22 Annex 2 Current Planning Overview Country report - Indonesia Outcome and forecast in TSEK Responsible Unit (All) Allocation Frame (All) Delimitation: Status: I, P, A and C (agr end > or Outcome <> 0) Region/Country: Indonesia Other: Data Allocation Account Main Sector Status Outcome 2005 Outcome 2006 Forecast 2006 Forecast Indonesia 04 HR & Democratic governance Indicative Planned Agreed Completed HR & Democratic governance Total Conflict, peace & security Agreed Conflict, peace & security Total Infrastructure Planned Agreed Completed Infrastructure Total Trade, business & fin. syst Completed Trade, business & fin. syst Total Natural resources&environm. Agreed Completed Natural resources&environm. Total Other Indicative Agreed Completed Other Total No sector stated Indicative No sector stated Total Indonesia Total

23 Global Dev. Programs, DESO 04 HR & Democratic governance Completed HR & Democratic governance Total Global Dev. Programs, DESO Total Nongovernmental organisations 01 Health Agreed Completed Health Total Education Agreed Completed Education Total HR & Democratic governance Agreed Completed HR & Democratic governance Total Conflict, peace & security Agreed Completed Conflict, peace & security Total Infrastructure Agreed Completed Infrastructure Total Trade, business & fin. syst Agreed Completed Trade, business & fin. syst Total Natural resources&environm. Agreed Completed Natural resources&environm. Total Other Agreed Completed Other Total Non-governmental organisations Total Humanitarian assistance 06 Humanitarian assistance Agreed Completed Humanitarian assistance Total No sector stated Indicative No sector stated Total Humanitarian assistance Total Settlement, MfFA Aceh 05 Conflict, peace & security Agreed Conflict, peace & security Total Settlement, MfFA Aceh Total Grand Total

24 Country report - Indonesia Outcome and forecast in TSEK Delimitation: Status: I, P, A and C (agr end > or Outcome <> 0) Region/Country: Indonesia Other: Responsible Unit (All) Data Allocation Frame Allocation Account Main Sector Outcome 2005 Outcome 2006 Forecast 2006 Forecast 2007 Inside country allocation Indonesia 04 HR & Democratic governance Conflict, peace & security Infrastructure Trade, business & fin. syst Natural resources&environm Other No sector stated Indonesia Total Inside country allocation Total Outside country allocation Global Dev. Programs, DESO 04 HR & Democratic governance Global Dev. Programs, DESO Total Nongovernmental organisations 01 Health Education HR & Democratic governance Conflict, peace & security Infrastructure Trade, business & fin. syst Natural resources&environm Other Non-governmental organisations Total Humanitarian assistance 06 Humanitarian assistance No sector stated Humanitarian assistance Total Settlement, MfFA Aceh 05 Conflict, peace & security Settlement, MfFA Aceh Total Outside country allocation Total Grand Total

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26 Halving poverty by 2015 is one of the greatest challenges of our time, requiring cooperation and sustainability. The partner countries are responsible for their own development. Sida provides resources and develops knowledge and expertise, making the world a richer place. SWEDISH INTERNATIONAL DEVELOPMENT COOPERATION AGENCY SE Stockholm Sweden Phone: +46 (0) Fax: +46 (0) sida@sida.se,