ADB claims most local projects successful

The Asian Development Bank (ADB), a major lender to Indonesia, has provided a total of US$19.35 billion loans to finance 269 projects since 1968. However, last week, several local non- governmental organizations (NGO) released a report that said 70 percent of the projects funded by the Bank were "unsuccessful". The Bank's country director in Indonesia David Green responded on Monday to the criticism in an interview with selected journalists including The Jakarta Post's reporter Tony Hotland.

Question: What are your comments over the NGOs' statement that 70 percent of your projects in Indonesia were "unsuccessful"? Answer: The evaluation of the activities we finance does not show that the projects are unsuccessful. The work suggests that there are problems. Our evaluation done by an independent office within the ADB, which is what the NGO was using, say there are problems and some projects are not successful, but the majority of the projects are successful. The NGO says that 70 percent of our projects are not effective, not sustainable. We don't feel that it's true. They have not given a good balance. Why?

The NGOs say that the sustainability is very important. It is true, it is one of our five criteria. But sustainability must also be weighed against the other things. Even in projects where we have concerns about sustainability, most of these projects are rated successful because the benefits are large enough.

Even if they are not being sustained as well as we hoped, their benefits are large enough to far outweigh the cost. It is clear that sustainability is important, it is only one of a number of equally important aspects that must be considered when you consider a project. What are all the criteria?

We take five different criteria. First, relevance. Does the project really aim for goals that meet the government's priorities for development? Second is efficacy. It relates to whether or not you met your objectives. Third, efficiency. How well you met the goal with your resources. Did we pay too much? We look at the cost of the projects related especially to the benefits that we get out of it.

Fourth, sustainability. You are looking at a project at one point in time, but any project has benefits that come over time and costs that come over time.

Fifth, are we transferring knowledge? ADB does not want to be forever providing assistance to its partner countries. We want to provide capacity building so at some point everything is done by the country.

At the end of the project, we do a project completion report. It tries to look at how the project looks at the very end of the disbursement of our funds. But then we wait three years, and then we come back and do an evaluation. It is conducted by an independent office. These people don't report to us, the management -- only to the board of directors. Indonesia sits on the board. Why has sustainability become an issue now?

The reason that the NGO reports talk about sustainability a lot is because in the period of time of these projects, Indonesia has had a very difficult set of problems. In the mid 1980s, there was the oil price collapse. In the late 1990s, there was the economic crisis. In both periods of time, the government budget shrank much more than anyone thought.

It is, unfortunately, extremely normal that the government often cuts back on maintenance and operation expenses. This worries us because this reduces the benefits for development investment. So, you admit there is a sustainability problem in ADB projects in Indonesia?

Yes, it seems that maintenance and operation expenditures are not being met by the government. For instance, road or irrigation facility rehabilitation and school (maintenance). There is an immediate return if you make some changes, some investment, (if you) rebuild the schools, keep them from leaking, get new books, put some computers in the classrooms.

But if you don't repair the school building, at some point, in a few years, those benefits disappear. The project may still be worthwhile, it still may provide more benefits than cost. But a little money each year to maintain it might make the benefits even greater and more worthwhile. What do you expect the government to do?

Over the last four years since the financial crisis, it's been difficult for the government to maintain the kind of expenditures that it would want to for the investment that has been made. We expect that it will improve. We're walking away from the crisis. You are stronger and you should increasingly be able to do the kinds of things that provide sustainability.