Report finds 70% of ADB projects in RI unsustainable

Report finds 70% of ADB projects in RI unsustainable

Tony Hotland, Jakarta

At least 70 percent of Asian Development Bank (ADB) projects
in Indonesia are not likely to produce lasting economic or social
benefits, a report distributed on Tuesday by a group of non-
governmental organizations claims.

The Manila-based bank has channeled a total of US$16 billion
into Indonesia to finance 260 projects here since 1968.

"The ADB's operations evaluation office found that half of all
audited projects rated successful by the bank were of
questionable sustainability. There's a considerable likelihood
that more than 70 percent of Indonesia's ADB projects will fail
to produce lasting economic and social benefits to the country,"
the report by Stephanie Fried of the Environmental Defense
organization in Hawaii says.

According to the United States' Congressional International
Financial Institution Advisory Commission, the report said, a
lack of project sustainability is synonymous with project
failure, and sustainability is a much more important indicator of
success or failure than what the ADB calls "general success" or
what the World Bank calls "successful outcomes".

The ADB rates the projects it supports under the categories of
"generally successful", "partially successful", and
"unsuccessful".

The report says that if the ADB projects that are rated
generally successful were really successful and if this was
extrapolated to the $16 billion debt owed by Indonesia to the
bank, "this would mean that close to $5.9 billion of Indonesia's
debt load was generated from largely unsuccessful, wasteful or
harmful projects."

Furthermore, projects in Indonesia appraised as generally
successful by the bank involve unmonitored resettlement
components, projects where record-keeping seems to have been
abandoned, projects that are patently unsustainable, and projects
that are so poorly structured that rapid deterioration of project
infrastructure is inevitable, the report said.

The report was distributed here by a number of local non-
governmental organizations, including Infid and DebtWatch
Indonesia, in response to the ADB's 37th annual meeting in Jeju,
South Korea, which ended on Monday.

Selected projects funded by ADB

1. Nusa Tenggara agricultural development: This US$137 million
irrigation project was started in 1992 and completed in 1996. The
project, aimed at draining a total area of 1,440 hectares in
Kambaniru, Sumba Timur, was judged by the ADB as "generally
successful". The project led to the relocation of more than 1,000
families and the loss of fertile lands.

2. Food crop sector program: The $250 million project was aimed
at boosting the growth of the country's food crop sector. It was
rated by the ADB as only being "partially successful" in a 1997
evaluation as some of the funds were used to buy raw materials
for the textile industry.

3. Health and education project: A $38.4 million project aimed at
improving health services in four provinces, it was judged to be
"partially successful" in a 1997 evaluation as it was carried out
based on the mistaken assumption that physical changes in health
centers -- such as the repainting of walls and procurement of
kitchen and laundry equipment -- would improve service quality.

4. Agroindustry project: This $29.5 million project was aimed at
developing the agricultural sector. The project was judged by the
ADB as being unsuccessful in a 1996 evaluation as 90 percent of
borrowers defaulted on their loans, which had been channeled
through the now-defunct Bank Bumi Daya.