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The feasibility of a new multi partner indonesian infrastructure


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The feasibility of a new multi partner indonesian infrastructure

  1. 1. On the feasibility of a new multi-partner Indonesian infrastructure institute... Some Early Findings Dr Chris Hale The University of Melbourne
  2. 2. Infrastructure Development Pathways • Reference ‘high quality’ infrastructure development pathways • East Asian mega-cities: Tokyo, Seoul, Taipei, major Chinese cities • Success stories among medium-sized cities: Munich, Washington DC, Singapore, Melbourne (?)
  3. 3. Conceptual precedent International Scan
  4. 4. Infrastructure Research Units • University units the main models, but others • Need exceptional and specialist research staff to be effective • Australian “co-operative research centres” combine university, industry and government in a collaborative, pool-funded model – reasonably successful • CRCs involve mix of cash, in-kind contribution • Grant funding awarded to best proposals
  5. 5. Professional Institutes • Networking & info exchange within profession • Some lobbying on member’s behalf • Focused on entry to professional status rather than career development • American Planning Association, Engineers Australia etc • Struggle to handle cross-disciplinary activity • No known institute focused on infrastructure
  6. 6. Industry Associations • • • • • Networking can be a strength Can be very active with events Some have broad membership base Membership fee structure may be relevant Better examples have research activity • Straddle into lobbying • Can lose sight of ‘public interest’, become narrow in approach
  7. 7. NGOs • Seem to be improving, becoming more prominent and professional • Often have strong environmental, social elements • Advocacy • Sometimes reaching a broader public, audience
  8. 8. Infrastructure in Government, internationally • Models of infrastructure delivery evolving rapidly • So is stance and expectations of government • Increasing demands for independence, expertise, even-handed assessment – but is this ultimately best placed coming from government...? • When government-owned is done right, it is brilliant (eg – HK MTR) • Best practice seems to be “a process” • Only build the best: “star” projects
  9. 9. Seamless infrastructure delivery – the new definition of ‘best practice’ • • • • • • • • • • • • 1) Strategies and plans 2) Project concept 3) Modelling, analysis 4) Basic concept design 5) Pre-feasibility assessment, comparison of alternatives 6) Refinement, more design work 7) Business case, BCR 8) Financing options 9) Assessment 10) Compare to other projects 11) Decide (including on implementation package) 12) Build
  10. 10. Organising an institute around meaningful themes • Balance specialisation & breadth • Common themes (procurement, finance) but widely differing technical context • Varied stakeholders • Project risk profiles very different (eg - rail v road v power supply) • Cross-cut from geographic/ regional/locational context
  11. 11. Stakeholder discussion during September SIG meetings – a summary
  12. 12. Integrated Metropolitan Infrastructure • patchy application of urban design guidelines • incorporation of effective transport infrastructure and options in new developments • Accountability • multi-modal integration • sheer scale of Jakarta as a mega-city • Jakarta’s mix of old and new urban development patterns • effectiveness from plans into implementation • incorporation of waste management facilities and operations into urban landscape
  13. 13. Policy, Procurement & Investment • land acquisition • problems in procurement model selection • mis-matches between government project priorities and willingness of private sector • impacts of major infrastructure projects not fully considered – including social impacts such as urban heritage • uncertainty and trust issues between public and private sectors • bid costs in PPP and other projects • legal complexity and uncertainty • sovereign risks • decentralization and its impacts • budget limitations, resourcing • problems with rate of project realization.
  14. 14. Commercial Transport • freight movement efficiency (including balance between use of small and large trucks) • utilization of rail for inter-city or inter-nodal freight • whether cost or price incentives appropriate to support mode shift from road to rail • ‘perverse incentives’ at play (incl low cost of heavy vehicle registration, fuel subsidy) • questions over structure of rail track access charging • broader pricing questions • fuel subsidy, as an ‘input based’ measure overwhelming ability to drive policy effectively via ‘output-based’ measures • ‘too many’ freight trips being made, due perhaps to low cost of driver labour • a ‘financing gap’ between freight and commercial transport plans and implementation.
  15. 15. Water Supply & Sanitation • • • • • • • • • • • • complex interactions between capital and operational financing financing packages loan terms and duration for water supply or wastewater projects land acquisition accountability and transparency predictability and certainty for investors “politics” jurisdictional issues, including the fact that many projects cross administrative boundaries commitments from local governments to long term arrangements; general standards of sanitation across Indonesia and the idea that a major sanitation investment effort is needed sectoral laws and regulations effectiveness of vertical and horizontal integration within sector
  16. 16. • providing ‘best practice’ clusters in smaller cities and regional locations • having geographic foci • progressing into activity in smaller cities over time • having a segmentation strategy (according to locations and city scale) • providing services and support through a ‘needsbased’ approach • including at least some less-developed regions • acting to drive policy • supporting funding applications made by smaller government actors
  17. 17. Energy Supply • • • • • • tariff setting Maintenance Efficiency new supply sources (such as solar) economic viability of generation project financing, guarantees, lender responses, and uncertainty • progress toward coverage or ‘electrification’ goals (ie from 75% to 95%).
  18. 18. Regional & Rural • dilution of impacts and understanding for policies developed at the centre • availability of decent, appropriate reference cases for cities other than Jakarta • less money and fewer resources for delivering quality infrastructure • generally under-developed infrastructure of all kinds • ineffective regional politics • different priorities to central government • different and diverse systems of government • diversity and non-uniformity across the archipelago • the level of inclusion or exclusion from the centre of various locations • the large number of smaller cities in Indonesia • questions around boundaries and regionalization per se • land reform • ‘extractive’ practices in regional and rural areas • labour conditions • the issue of ‘grid scale’ and market scale for infrastructure systems in rural areas • different/alternative systems or technologies may be more appropriate for infrastructure solutions in rural areas (particularly in energy and water).
  19. 19. Suggested Functions & Operations • a focus on open communication • providing recommendations for implementation co-ordination • providing practice reviews and explanation • undertaking new research (with government buyin) • a new project or policy evaluation capability • independent policy analysis and/or advocacy • Publishing • Providing ‘context’ for policy development
  20. 20. • organizing and delivering events and fora for high-level discussion • provision of expert knowledge • interaction and exchange • dissemination and communication • skills development • a source of impartial public interest advice • adding value (within the sector) • delivering case studies • an independent assessment capability
  21. 21. • providing broader independence within the sector • sustaining a public interest focus • informing professionals about standards of better practice and conduct • open discussion of options and issues • balancing different stakeholders (both public and private) as active members • having potential status as a statutory body • and/or potentially being associated with a university.
  22. 22. • • • • • • • • • • • • • • knowledge exchange critical analysis being a “think tank” providing background studies providing peer review (for policies, plans, projects) actively considering social, economic and environmental perspectives providing a destination for formal stakeholder engagement programs related to government activities being multi-partner in terms of involved stakeholders could also undertake some commercial activity could be quasi-public should enhance government policy-making tracking of statistics - sectoral, and sub-sectoral performance generating new evidence and knowledge supporting improved transparency and accountability.
  23. 23. Synthesis of core functions New research & studies Professional skills development Integrating & supporting diverse stakeholders – Jakarta & beyond Knowledge exchange, communication & dissemination Independent analysis & peer review of plans, policies
  24. 24. Potential Structure Board & executive staff *strategy & governance *operations & budget *membership & publicity *events, training, knowledge exchange & dissemination *research contracts other SIG SIG integrated metropolitan infrastructure (example only) SIG SIG policy & investment commercial transport (example only) (example only) other SIG
  25. 25. Resourcing at Mature Phases (indicative only) Item Annual $USD at 2014 Commissioned original research $400,000 Independent professional board members $156,000 (4 at 0.2 FTE) Executive staffing (one CEO, one admin) $260,000 General operating $80,000 Total Cash $896,000 Office space In-kind Board members – major funding partners (4-8) In-kind Data and access to information In-kind Staff time from partners - supporting research activity, events In-kind
  26. 26. Early Recommendations • Should be a vehicle for supporting broadbased infrastructure-led economic development • “Separate but close” to government • Core focus – “value adding” through enhanced sectoral skills and capabilities • Membership base – strength in diversity
  27. 27. • New commissioned research – the focus of exchange, information, ideas and capabilities • The ‘public interest’ as shared driver • Topics and themes – broad coverage across infrastructure