WB loan to improve Indonesia's IT

JAKARTA (JP): The World Bank will give a US$34.5 million loan to Indonesia for the country's Information Infrastructure Development Project, the bank reported yesterday.

The loan, signed Tuesday, will be used to enhance private sector participation in the provision of information technology (IT), and postal and tourist services.

According to the bank, the project will help dismantle barriers into IT services -- by strengthening institutional capacity and improving the currently weak legal and regulatory framework under which governmental organizations responsible for IT and intellectual property rights (IPR) can operate.

The project will also provide staff training and advisory services; assist with developing IPR-related laws and regulations; and conduct policy studies on IPR, electronic commerce and software competitiveness.

Inadequate intellectual property protection -- particularly for software, data and integrated circuits -- is a major deterrent to direct foreign investment in Indonesia by major IT firms.

This problem, combined with the scarcity of trained IT professionals and limited IT services, had a negative effect on Indonesia's overall competitiveness and social development, the bank said.

A second component of the project addresses the limitation in IT technology networks by expanding Indonesia's science and technology network and giving the science and technology community more cost-effective access to research and development opportunities.

Postal and tourist industries will also receive assistance in expanding their communications and information networks.

In the postal sector, the legal and regulatory framework will be strengthened to promote private sector participation and facilitate new entrants into the sector.

According to the World Bank, tourist information services will be extended to regions through the development of a business model and pilot projects for an electronic tourist information system.

The total cost of the project cost is estimated at $53.2 million. Some 65 percent will be financed by the World Bank loan, 19 percent by the government, and the remaining 16 percent by the private sector.

About 28 percent ($14.7 million) of the total project cost will be devoted to improving the legal and regulatory framework, 34 percent to expand the science and technology network, 4 percent to expand communications and information networks of the postal and tourist sectors, 29 percent to provide technical assistance and 5 percent ($2.7 million) for project management assistance. (08)