WASHINGTON D.C., June 11, 2019 – The World Bank’s Board of Executive Directors approved a $49.6 million loan today. The loan will finance a Government of Indonesia’s project to improve the capacity of cities to formulate and analyze infrastructure investments to achieve sustainable urban development through better integrated planning and city management.
Indonesia is among the largest contributors to urbanization globally. According to the United Nations’ estimates, Indonesia’s urban population increased by nearly 59 million people from 2010 to 2018, behind only China and India. At present, 137 million people live in Indonesia’s cities or 54 percent of the population. The share of urban residents is expected to grow to 68 percent of the population by 2025. Because of persistent gaps in infrastructure and inadequate attention to spatial prioritization of infrastructure investments, Indonesia has not fully benefitted from the positive effects of urbanization.
The new National Urban Development Project (NUDP) will help cities integrate sectoral plans and strategies including master plans for transportation, housing, economic strategies and environment. In addition, the link between a medium-term capital investment, infrastructure prioritization, and financing needs will be strengthened.
The project financed by this loan will benefit an estimated 12.5 million people living in 13 cities. Municipal agencies will also benefit from improved capacity for evidence driven urban planning and financial management as well as better integration of spatial and socio-economic development planning.
“Helping municipal governments integrate spatial planning with capital investment planning will help cities become drivers of prosperity for the country’s fast-growing urban population,” said Rudy Prawiradinata, Deputy for Regional Development, National Development Planning Agency (Badan Perencanaan Pengembangan Nasional – BAPPENAS).
NUDP will also support the development of higher-quality data and studies for urban planning, help city governments’ make better capital investments across sectors, and enhances their ability to access alternative sources of financing.
“This project will cause more effective financing of infrastructure to make cities more livable and productive,” said Rodrigo A. Chaves, World Bank Country Director for Indonesia and Timor-Leste. “Indonesia is vulnerable to the adverse impacts of climate change. This project will improve links between urban planning and infrastructure development to make the investments more efficient and reduce the vulnerability to climate-related hazards by directing development towards lower risk areas.”
The World Bank’s support for infrastructure and delivery of local services is an important component of the World Bank Group’s Country Partnership Framework for Indonesia, which focuses on government priorities that have potentially transformational impact.