World Bank helps E. Java urban development

JAKARTA (JP): The World Bank has approved a US$142.7 million loan for the improvement of urban infrastructure and services in East Java through the Second East Java Urban Development Project.

The loan will be made at the bank's standard variable interest rate, currently 6.98 percent, for 20 years, including a five-year grace period.

According to a statement issued by the bank and made available here yesterday, the project will cost $244.2 million, with the balance coming from the government, water enterprises, provincial administrations and local communities.

The project is expected to provide the urban infrastructure needs of cities and towns which are not addressed under the on- going East Java-Bali Urban Development Project, which began in March, 1991. In the long run, it is also expected to boost the productivity of East Java's industrial sector.

East Java is Indonesia's second most populous province and has the highest number of poor residents.

Indonesia's urban population exceeds 55 million and is growing at more than five percent a year, more than twice the national population's growth rate.

Nationwide, only a quarter of urban households have direct access to piped water, another 15 percent buy drinking water from vendors or shops and the rest rely on shallow wells or surface water courses, most of which are polluted by inadequately-treated waste-water.

Meanwhile, only about 40 percent of urban households have access to adequate sanitation facilities and in larger cities there are serious industrial water supply and waste disposal problems.

East Java has the largest industrial complex in Indonesia in terms of employment and establishments, and contributes at least 21 percent of the national value-added manufacturing products.

It also produces the highest non-oil gross domestic product of all Indonesian provinces.

Inadequate infrastructure investments, however, make production and distribution inefficient. In 1994 several hundred approved foreign investment applications failed to materialize due in part to deficiencies in water supply, transport and waste disposal. (pwn)