UNIDO-INDONESIA COUNTRY PROGRAMME - 2016-2020 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION REPUBLIC OF INDONESIA May 2016
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION
UNIDO-INDONESIA COUNTRY PROGRAMME
2016-2020
May 2016
REPUBLIC OF INDONESIA
JAKARTA
UNIDO
Indonesia Field Office
Menara Thamrin Kav 3. Jakarta 10250, Indonesia
UNIDO‐Indonesia CP 2016‐2020
COUNTRY PROGRAMMING FRAMEWORK
FOR INCLUSIVE AND SUSTAINABLE INDUSTRIAL DEVELOPMENT
TIMEFRAME 2016∙2020
This Indonesia Country Programming framework (CP) is designed to enhance UNIDO's support to the
Government of the Republic of Indonesia to implement a road map towards Inclusive and Sustainable Industrial
Development (ISID) as stated in the Lima Declaration adopted on December 2, 2013 during the 15th session of
General Conference of UNIDO. In doing this, UNIDO has aligned the priorities of the Republic of Indonesia
identified on its Rencana Pembangunan Jangka Panjang 2005-2025 (Indonesia’s long-term development plan,
RPJMP), building on the achievements of past projects and programmes. UNIDO has assessed the country
industrial development potential and constraints. The programme interventions are focusing on the following
areas based on UNIDO's ISID framework and its Technical Cooperation service modules: 1. Poverty reduction,
2. Energy for all, 3. Environment and clean production, 4. Partnership and Sustainable development. As
industrialization is a long-term endeavor involving many stakeholders, efforts will be made to strengthen
synergies and minimize duplication by collaborating with development cooperation partners, state and non-
state actors, including the private sector in the country. As a framework based on established national priorities,
it will be a useful guide for UNIDO's interventions in The Republic of Indonesia over the next 5 years.
For the Government of Indonesia: For the United Nations Industrial
Development Organization:
____________________________________ _________________________________
H.E. Mr. Saleh Hussein Mr. LI Yong
Minister of Industry Director General
Date: 16 May 2016 Date: 16 May 2016
Place: Jakarta, Indonesia Place: Jakarta, Indonesia
iiUNIDO‐Indonesia CP 2016‐2020
LIST OF ABBREVIATIONS
ADB Asian Development Bank MW Mega Watt
ASEAN Association of South East Asian Nations NGO Non-Government Organization
BAPPENAS National Planning Agency NIP National Implementation Plan
BAT Best Available Technology ODA Official Development Assistance
BEP Best Environmental Practices ODS Ozone Depleting Substances
CAS Country Assistance Strategy OECD Organization for Economic
CP Country Programme Cooperation and Development
CSF Country Service Framework PA Preparatory Assistance
CSF Common Service Facilities PCB Polychlorinated biphenyls
DG Director General POPs Persistent Organic Pollutants
EC European Commission PPP Purchasing Power Parity
EIU Economist Intelligence Unit RPJMN Rencana Pembangunan Jangka
ESEA East and South East Asia Menengah Nasional
FAO Food and Agriculture Organization SEA Strategic Environment Assessment
FDI Foreign Direct Investment SMEs Small and Medium Enterprises
FTA Free Trade Area TC Technical Cooperation
FY Fiscal Year TCB Trade Capacity Building
GC General Conference TSP Trade Support Programme
GDP Gross Domestic Product UN United Nations
GEF Global Environment Facility UNCT United Nations Country Team
GHG Green House Gas UNDAF United Nations Development
GOI Government of Indonesia Assistance Framework
HCFC Hydro-chloro Fluoro Carbons UNDP United Nations Development
HQ Headquarter Programme
ICT Information and Communications UNDESA United Nations Department of
Technologies Economic and Social Affairs
IDR Indonesian Rupiah UNESCO United Nations Educational,
ILO International Labour Organization Scientific and Cultural Organization
IMF International Monetary Fund UNFCC United Nations Framework for
ISO International Standard Organization Climate Change
KW Kilo Watt UNFPA United Nations Population Fund
LNG Liquid Natural Gas UNICEF United Nations Children’s Fund
MCE Marine Current Energy for Electricity UNIDO United Nations Industrial
MDGs Millennium Development Goals Development Organization
MEMR Ministry of Energy and Mineral UNMLF United Nations Multilateral Funds
Resources UNOCHA United Nations Office for the
MHP Micro Hydro Power Coordination of Humanitarian Affairs
MOA Ministry of Agriculture UNORCID United Nations Office For Redd +
MAFM Marine Affairs and Fisheries Ministry Coordination In Indonesia
MOE Ministry of Environment UR UNIDO Representative
MOF Ministry of Finance USA United States of America
MOI Ministry of Industry USAID United States Agency for
MOT Ministry of Trade International Development
MP Montreal Protocol WB World Bank
MSMEs Micro-Small and Medium Enterprises WEF World Economic Forum
WFP World Food Programme
WHO World Health Organization
iiiUNIDO‐Indonesia CP 2016‐2020
TABLE OF CONTENTS
Short Executive Summary 1
1.0 Country situation analysis 2
1.1 National context 2
1.2 Challenges to be addressed 3
2.0 UN coordination framework 5
3.0 Past Cooperation and Lessons Learned 6
4.0 Country Programme Components 6
4.1 Component 1: Poverty Reduction 7
4.2 Component 2: Energy for All 8
4.3 Component 3: Environment and Clean Production 8
4.4 Component 4: Partnership and Sustainable Development 9
4.5 Programme Design 10
5.0 Management framework 17
5.1 Responsibility and accountability: internal division of labor in the preparation process 17
5.2 Programme implementation 17
5.3 Coordination 17
5.4 Monitoring and Evaluation 18
5.5 Risks and mitigation measures 18
5.6 The legal Context 18
6.0 Indicative budget and funding strategy 19
7.0 Funds Mobilization Strategy 20
ANNEX I. RESULTS FRAMEWORK FOR THE COUNTRY PROGRAMME 21
ANNEX II.TOR of management Unit of the CP 26
MAP OF THE REPUBLIC OF INDONESIA
ivUNIDO‐Indonesia CP 2016‐2020
Short Executive Summary
As a road map towards Inclusive and Sustainable Industrial Development (ISID), UNIDO-Indonesia Country Programme
Framework (CP) is designed to enhance UNIDO’s support to the Government of Indonesia and implement activities that
support industrial development in the country. The CP 2016-2020 consists of 4 outcomes/components as follows:
Component 1: Poverty Reduction, with the following three (3) projects:
i. Increasing trade capacities of selected value chains within the fisheries sector in Indonesia.
ii. Livelihood Enhancement of Rural Community in Coastal Area through Seaweed Value Chain Improvement in
Sumenep District, East Java Province.
iii. Up-grading the Small Scale Tempe Industry for Improving Nutrition for Poor Families in Marginally Nourished
Areas in Indonesia, joint UNIDO/FAO/IAEA Project.
Component 2: Energy for all, with the following three (3) projects:
i. Promoting Industrial Energy Efficiency through System Optimization and Energy Management Standards in
Indonesia.
ii. Promoting Energy Efficiency in Small and Medium Industries in Indonesia
iii. Renewable Energy (possibilities of different renewable energy including marine current)
Component 3: Environment and Clean Production, with the following five (5) projects:
i. Introduction of an Environmentally Sound Management and Disposal System for PCB Wastes and PCB
Contaminated Equipment in Indonesia.
ii. National Network for Implementation of Resource Efficient and Cleaner Production in Indonesia
iii. Introduction of BAT and BEP in the Thermal Processes in Metallurgical Industry in Indonesia
iv. Support to the Government of Indonesia to fulfil its obligations on the Minamata Convention on Mercury
v. Phase-out of HBCD-based flame retardant in the EPS and XPS
Component 4: Partnership and Sustainable Development, with the following two (2) projects:
i. Public Private Development Partnership – Volvo – USAID – YDBA – MOI Vocational Training for Youth and
Women.
ii. Partnering to Promote Cooperation between Industrial Zones.
The country programme for Indonesia covering the period 2016 – 2020 is the fourth generation of UNIDO country
programmes in the country. The previous being CSF-I (2003 – 2004), CSF-II (2005 – 2007) and CP (2009-2013).
Between 2005 and 2007, the country has successfully been able to come out of its economic crisis with significant
improvement in its GDP. Owing to Democracy and good governance, exports have steadily been increasing resulting in
a positive balance of trade amounting to a surplus of USD 50 billion as of 31 October 2008. Against the background of a
growing economy, a good manufacturing base and a growing population, the country needs to become more productive.
Indonesia is one of the largest economies in the region (South East Asia) and has recently ratified the ASEAN Charter.
Indonesia also faces stiff competition from other ASEAN member countries. There are 10 ASEAN member countries,
further compounded with FTA agreements with India, Japan and Australia with New Zealand likely to enter soon.
Indonesia as a middle-income country and a member of G20 is expected to do more especially within the approved set of
Post 2015 Development Agenda (the SDGs)/Agenda 2030. Esteemed efforts have been put by the UNIDO Field Office
in Jakarta for the development of the new UNIDO CP 2016 -2020. UNIDO’s work has been based on the plans and
priorities of GOI and in line with Indonesia’s long-term development plan (2005-2025), which is segmented into 5-year
medium-term plans, each with different development priorities. The National Medium Term Development Plan (RPJMN,
2015‐2019) is the third phase of implementation of Indonesia’s National Long Term development Plan (RPJPN 2005-
2025) promulgated through Law 17/2007. UNIDO CP 2016-2020 is aligned with RPJMN 2015-2019 as well as the
Indonesia UNPDF 2016-2020, especially outcomes 1&3, , namely (1) Poverty Reduction, Equitable Sustainable
Development, Livelihoods and Decent Work and (3) Environmental Sustainability and Enhanced Resilience to Shocks.
With the UN moving to delivering as one, collaboration with multiple partners is UNIDO’s key strategy. As a process,
UNCT worked collaboratively in developing the UNPDF with UNCT members, including UNIDO, provided their inputs
based on in-depth discussions with their respective line ministries/counterparts. UNIDO UR participated in UNCT
meetings and UNCT retreats in Indonesia, based on which, the UR provided inputs for the UNPDF process. The UNIDO
CP document was thus drafted and presented to local Indonesian authorities through the established steering committee
on industry, formulated by the government of Indonesia. The projects have been discussed with the local counterparts
and the list of the CP projects has been accepted.
The proposed country programme envisages a total indicative budget of US$ 40,033,660.00 of which, US$ 17,480,380.00
have already been mobilized (from the ongoing CP 2009-2015). The total budget includes allocation for programme
management of USD 50,000.00 per year for the duration of the CP. Details of the proposed interventions are outlined in
Table 2. The proposed CP has a duration of 5 years starting from date of signature of the CP on 2016. During the course
of 2016-2020, initiatives will be under taken jointly by UNIDO and national stakeholders with the donor partners to
mobilize the balance funds of USD 22,553,280.00.
Go to ToC
Page 5 of 32UNIDO‐Indonesia CP 2016‐2020
1. Country situation analysis Table 1: Main Indicators
BASIC KEY INDICATORS
1.1 The National Context (none exhaustive list)
Population as of 2014:
50% population is
Overview of the country under 29 years,
252.8 million
Indonesia is endowed with abundant natural resources. The 60% population is under
country spread across a chain of approximately 17,000 islands 39 years
between two continents (Asia and Australia) and two oceans 52% population live in
(Indian Ocean and Pacific Ocean). Indonesia is the largest urban areas
archipelago in the world with a total area of 9.8 million square GDP per Capita (US$),
$3,500
2013
kilometers (7.9 million Km2 Sea and 1.9 million km2 Land).
Income group MIC, lower
Being the fourth longest coastline country in the world,
Indonesia could potentially benefit from marine current and Economic growth in %,
4.72%
fisheries sector. Indonesia is the largest producer of fishery first 3 month 2015 (BPS)
products in South East Asia with 7% growth per annum1. Origin of GDP (%): Agriculture: 14.4%
Industry: 47%
Located along the Pacific Ring of Fire, Indonesia is gifted
Services: 38.6%
with fertile soil, but remains prone to natural disaster
Main natural resources Mining, oil and gas,
including earthquake and tsunami. fisheries and agriculture
Main production Petroleum and natural gas,
Indonesia is the fourth most populous nation in the world after textiles, apparel, footwear,
China, India and United States. Based on the National Survey mining, cement, chemical
on Population in 2010, the population in Indonesia is 237 fertilizer, machinery,
million people of which 49.79% reside in urban areas and electronic, hardware and
50.21% in rural areas. The population growth is 1.49% per software, plywood, rubber.
annum. World Bank projected that the population will grow Competitiveness index Indonesia ranked 34, GCI
to 282 million people by 2025. Trade Exports: Coal Briquettes
(12%), Petroleum Gas
The poverty ratio has decreased, however Indonesia failed to (9.3%), Palm Oil (8.3%),
reach some Millennium Development Goals (MDG) targets Crude Petroleum (5.9%),
reflected in the poor achievements of health and infrastructure and Rubber (4.1%)
Imports: Refined
related indicators. Based on World Bank data, Indonesia
Petroleum (15%), Crude
continues to post significant economic growth. Petroleum (5.5%), Planes,
Helicopters, and/or
As a newly industrialized country, Indonesia's industrial Spacecraft (2.4%), Vehicle
sector must develop the following characteristics: Parts (1.8%), Cars (1.5%)
1) Increased contribution to GDP and economic activity, 2) Main trading partners: Japan (15%),
SME development with a focus on Large Industry, 3) Strong China (12%),
industrial structure, 4) Advanced technology for development Singapore (9.1%), United
and market creation, 5) strengthened industry sector to States (8.4%), and South
achieve international competitiveness and 6)Ability to face Korea (7.2%)
full liberalization within APEC countries. SDG-1: 1.4 &1.b
SDGs/2030 Agenda SDG-5: 5.5 & 5.c
It is expected that by the year 2020, the contribution of non- indicators SDG-7:
oil and gas industry to the GDP will reach 30%. This is to be SDG-9: 9.1, 9.2, 9.3 & 9.b
achieved by contributions from small industry (IK)1, medium industry (IM) and large industries (IB) During the
period of 2010- 2020, the industry should grow at a growth average of 9.43% with IK, IM, and IB respectively
contributing a minimum of 10.00%, 17.47%, and 6.34%.
The government of Indonesia has identified three main targets to achieve in its Industry Roadmap 2010. Those goals
are (i) to help maintain the country’s economic growth at above 7%; (ii) improve the attractiveness of investment
and domestic competitiveness; and (iii) create employment and reduce the number of people living below the
poverty line. In this regard, a number of incentives are being offered to businesses, while some laws are being
revised to encourage economic development. Improvements of all aspects of the country’s infrastructure are being
planned, including modernizing and restructuring various industries. In order to realize these targets, the Ministry
of Industry has announced two approaches in order to build competitiveness of national industry and synergized
integrated relation between central and local governments. First, through a top- down approach for the development
of 35 priority industrial clusters which are planned by the Central Government and followed by local/regional
participation. The selection is based on international competitiveness and potential of the economy. Second, through
a bottom-up approach for the determination of core competencies of local industries that become hallmarks of
Go to ToC
1 IK, IM, IB are the Indonesian appreviations for Small-Scale industries, Medium Industries and Large Industries.
Page 6 of 32UNIDO‐Indonesia CP 2016‐2020
regional industries. In this framework, central government helps to build related development centers.
The Road Map of the 35 Priority Industrial Cluster Development are identified by sector, as indicated below:
1. Agro Industry, consist of: (1) palm oil processing industry, (2) Manufacture of rubber and rubber goods,
(3) cocoa industry, (4) coconut processing industry, (5) the coffee processing industry, (6) sugar industry;
(7) Tobacco processing Industry; (8) fruit processing industry; (9) furniture industry; (10) fish processing
industry; (11) paper industry; (12) Milk processing industry.
2. Transportation equipment industry, including: (13) automotive industry; (14) shipping industry; (15)
aerospace industry; (16) train industry.
3. Electronics and ICT Industry: (17) electronics industry; (18) telecommunications industry; (19) computer
and its equipment Industry
4. Manufacturing Based Industry, include:
Basic Materials Industry: (20) iron and steel industry; (21) cement Industry; (22) petrochemical
Industry; (23) ceramic Industry
Machinery Industry: (24) electrical equipment and electrical machinery Industry; (25) machinery and
general equipment Industry.
Labor-Intensive Manufacturing Industry: (26) textiles and textile products industry; (27) footwear
industry;
5. Supporting Industries of Creatives and Specific Creative Industries: (28) software and multimedia content
industry; (29) fashion industry; (30) craft and art industry.
6. Specific Small and Medium Industry: (31) precious stones and jewelry industry; (32) public salt industry;
(33) Pottery and decorative ceramics industry; (34) essential oils industry; (35) food industry.
In the years 2005 and 2007, the country has successfully been able to come out of its economic crisis with significant
improvement in its GDP. Owing to democracy and good governance, exports have steadily been increasing resulting
in a positive balance of trade amounting to a surplus of USD 50 billion as of 31 October 2008. Based on UNIDO
Industrial Statistics Book 2016 Indonesia has jumped to the top 10 manufacturing countries of the world.
Against the background of a growing economy, a good manufacturing base and a growing population, the country
needs to become more productive. Indonesia is one of the largest economies in the region (South East Asia) and has
recently ratified ASEAN Charter. The country faces stiff competition from other ASEAN member countries. Ten
(10) members of ASEAN are further compounded with FTA agreements, with India, Japan and Australia, with New
Zealand likely to enter soon. Indonesia as a middle-income country and a member of G20 is expected to do more
especially within the approved set of Post 2015 Development Agenda (the SDGs)/Agenda 2030.
Field level consultations were organized by the UNIDO Field Office in Jakarta for the development of the new
UNIDO CP 2016-2020. UNIDO’s work has been based on the plans and priorities of GOI and in line with
Indonesia’s long-term development plan (2005-2025), which is segmented into 5-year medium-term plans, each
with different development priorities. The National Medium Term Development Plan (RPJMN, 2015‐2019) is the
third phase of implementation of Indonesia’s National Long Term development Plan (RPJPN 2005-2025)
promulgated through Law 17/2007. UNIDO CP 2016-2020 is aligned with RPJMN 2015-2019 as well as the
Indonesia UNPDF, especially outcomes 1&3.
1.2. Challenges to be addressed
Government Capacity & Human Resources
The quality of human resources is a big challenge for Indonesia. Currently only about 50 percent of workers in
Indonesia have enjoyed primary school education, and only eight percent have a formal diploma. Quality of human
resources is affected by access to quality education and health facilities, as well as access to basic infrastructure.
Supply of Raw Materials and Taxation
One of the biggest challenges facing Indonesian food manufacturers is the supply of raw materials, the quality of
which cannot be consistently guaranteed. To counter this problem, many of the larger companies are now operating
their own plantations. Another major challenge facing the industry is the high tax on products, which is being
addressed by the government with incentives such as the expansion of exemptions from luxury goods sales, tax on
electronic goods, assisting companies making electronic products in Indonesia by reducing taxes and allowing them
a five-year amortization period and using more local content in finished products. One of the government’s targets
for the country is to improve its capacity to produce raw materials and components needed in the electronics
industry. At present about 60% are imported, which greatly reduces the export profitability of the finished products.
Go to ToC
Page 7 of 32UNIDO‐Indonesia CP 2016‐2020
Implications for industrial development & key Issues
Indonesia contains huge reserves of coal, geothermal energy, and water, which are used to support Indonesia’s prime
industries such as, textiles, shipyards, transportation, as well as food and beverages. A number of challenges must
be overcome in order to realize sustainable development. Indonesia’s current economic structure is primarily
focused on agriculture and industries, which, extract and harvest natural resources. There are only limited industries,
which focus on products with benefit. In addition to this, there is a development gap between the western and eastern
parts of Indonesia.
Infrastructure
Another challenge for a huge archipelago like Indonesia is the provision of infrastructure to support economic
activities. Infrastructure itself has a very broad spectrum. Connectivity between regions should be developed to
accelerate and expand economic development. Provision of infrastructure, which encourages connectivity, will
reduce the costs of transportation and logistics, which will improve product competitiveness and accelerate
economic growth. Included in the country's infrastructure development is the construction of transportation routes,
information and communication technology (ICT), and all regulations associated with them.
Indonesia is also facing rapid urbanization. In 2010, 53 percent of Indonesia’s population lived in urban areas. It is
predicted that by 2025, the population in urban areas will reach 65 percent. The direct implications that must be
anticipated are the increase in movement patterns and the changing patterns of consumption and production
structures. These will affect the employment structure, increase land-use conflicts, and increase the need for reliable
infrastructure to support the distribution of goods and services.
Development challenges – strengths and weaknesses of the existing national system
Looking at identified development challenges in further detail makes it possible to identify the strengths and
weaknesses that can inform a development response that best positions the UN’s partnership activity for efficient
and equitable results and provides further insights into the development challenges presented by government
through the RJPMN and the MDG Report.
Inequality is rising in Indonesia and many households are highly vulnerable to shocks that can push them back
below the poverty line. Many Indonesians therefore move in and out of poverty regularly. The gap between the
poor and non-poor is also widening with the Gini coefficient having increased from 0.32 in 1999 to approximately
0.41 in 2011.
Gender aspects
The gender equality index ranks Indonesia 106 out of 148 countries in 2012. For example only 18 percent of women
hold seats in parliament, 36.2 percent attain secondary or higher education compared to 48 percent in men. Gender
stereotyping and traditional views of women’s roles continue to disadvantage girls and women in Indonesia, making
it difficult for women to be full and equal participants in social, economic, and political life. Surprisingly, the female
participation in the labour market is according to World Bank figures 51 percent compared to 49 percent for men.
However, while Indonesian women are active in many aspects of public life and face no legal barriers, most
professional areas continue to be dominated by men.2 Women experience poor results against indicators of
vulnerability, wages and labour force participation. For 100,000 live births, 220 women die from pregnancy related
causes.
The complexities of rural life and the economic systems coupled with the multiple roles played by women in
Indonesia’s society today requires much thought in terms of focus for strategic and planning, resource allocation
and decision making for rural development within the overall development framework in addressing women’s
empowerment and gender equality. Women own 35 percent of Indonesia’s SMEs. The women’s SMEs businesses
that drive the country’s economic growth.3 Many woman entrepreneurs, however, have limited knowledge about
access to financial institutions and still register their businesses in their husbands’ names. This UNIDO Country
Programme for Indonesia aims to advance gender responsive and pro-poor policies and to empower women’s
participation in SMEs development and respond to the needs of women and the poor.
Education is the biggest sectoral outlay in the Indonesia national budget. Targets have been met in universal
primary education and gender parity; however, challenges remain in the quality of education due to the quality of
teachers, retention from primary to junior school, attendance by children from the poorest households and increased
early childhood education drop.
Go to ToC
2 http://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS; Accessed on 9 March 2016
3 https://asiafoundation.org/resources/pdfs/IDgender.pdf
Page 8 of 32UNIDO‐Indonesia CP 2016‐2020
Rule of law for sustainable development is recognized widely by the UN. In the RPJMN 2010-2014 the
Government of Indonesia identifies eight objectives for long term sustainable development three of which are:
‘realizing a democratic society based on the rule of law’; ‘realizing an Indonesia that is secure, peaceful and united’;
and ‘realizing an Indonesia that is balanced and sustainable’. In line with the ASEAN Political and Security
Community (APSC), the RPJMN also recognizes the emerging challenges of Transnational Organized Crime
(TOC) and corruption. It is important that the challenges of corruption and TOC be addressed at the same time as
rapid economic growth and regional integration to continue to create opportunities for Indonesia.
Demography
The number of young people in Indonesia is growing and the country now has the largest proportion of 15–24 year
old in history. The National Census of 2010 recorded 65 million young people in Indonesia, representing 28 percent
of the total population of 238 million. By 2035, the population of youth is projected to increase to 70 million and
to represent 23 percent of Indonesia’s total population4. There is the need to invest in young people through health,
education and employment generation to use the ‘bonus demography’.
Climate change
Indonesia also faces the challenge of global climate change. Several indicators significantly affecting human life
are: rising sealevels, rising air temperatures, changes in rainfall period, and extreme climate change. The climate
change has the potential to slow Indonesia’s progress in poverty alleviation and universal accessibility of services
and increase demand for Disaster Management (DM) and Disaster Risk Reduction (DRR). With one of the world’s
largest populations, and a dependence on agriculture and fisheries, Indonesia is vulnerable to climate impacts
derived from change in rainfall patterns and a rise in sea levels5. Changes in Indonesia’s population will have
impacts on the country’s adaptation to climate change. Future challenges will include the ability to respond to the
growing youth cohort who will seek greater stewardship of the environment from the government and private sector,
and increased urbanization that may increase carbon emissions, cause greater stress on resources and increase
vulnerability of urban populations to climate disaster. The success of the REDD+ programme has the potential to
support a broadening and mainstreaming of response to climate change to address these identified challenges.
Indonesia’s environmental sustainability needs are high given that the country is one of 17 ‘Mega Diverse
Countries’ and spans 5 bio-geographic regions. It is globally important as a center for agro-biodiversity and contains
the single largest and most diverse area of mangroves in the Asia-Pacific. The status of biodiversity is one of
‘extreme danger’ due to forest destruction and degradation of coral reefs and pollution of water ecosystems.
Conventional land management policies work against sustainable local practices and local beliefs. Indonesia has
committed to protect biodiversity through ratification of the UN Convention on Biodiversity. As well, a framework
entitled Indonesia Biodiversity Strategy and Action Plan 2003-2020 exists but is not meeting its objectives due to a
lack of trained human resources6.
Trade policies and infrastructure investment have boosted labour productivity. Youth in urban areas appear to be
effective in accessing jobs in the formal economy positively with almost half of all employed youth on employee
contracts. The potential strengthened youth engagement in the changing economy positively counterbalances the
overall need to improve the quality and quantity of youth employment opportunities in Indonesia7.
2. UN Coordination Framework
The United Nations Partnership for Development Framework (UNPDF) 2016–2020 provides the framework
for partnership with the Government of Indonesia, with a focus on four key priority outcomes:
1) Poverty reduction, equitable sustainable development, livelihoods and decent work,
2) Equitable access to social services and social protection,
3) Environmental sustainability and enhanced resilience to shocks and
4) Improved governance and equitable access to justice for all.
Each of the outcome areas responds to Indonesia’s development context and the RPJMN. Five crosscutting areas
have been prioritized as follows:
1. Human rights,
2. Gender equality,
3. HIV/AIDS,
Go to ToC
4
UNFPA Indonesia Monograph Series: No. 2 Youth in Indonesia 2014
5
The future we want, the Rio+20 National Environmental Summary for Indonesia, UNEP, UNESCO
6
The future we want, the Rio+20 National Environmental Summary for Indonesia, UNEP, UNESCO
7
Labour and Social Trends in Indonesia 2013, ILO
Page 9 of 32UNIDO‐Indonesia CP 2016‐2020
4. Young people, and
5. Statistics and data management. These crosscutting areas inform and guide outcome level joint
programming and results monitoring.
Central of the partnership is the collaboration through three main working modalities of policy advocacy and advice,
capacity building and knowledge sharing. This partnership supports the government in its work on innovation,
South-South and Triangular cooperation and consolidation of United Nations-Government co-investment and co-
sharing opportunities.
UNPDF 2016-2020 was officially launched on 26 November 2015. UNIDO CP activities are in line with outcomes
one and three of the UNPDF, namely: (1) Poverty reduction, equitable sustainable development, livelihood and
decent work and (3) Environmental sustainability and enhanced resilience to shocks.
With the UN moving to delivering as one, collaboration with multiple partners is UNIDO’s key strategy. In the past,
UNCT worked collaboratively in developing the UNPDF and UNCT members, including UNIDO, provided their
inputs based on in-depth discussions with respective ministries/counterparts. UNIDO Field Office in Jakarta
participated in UNCT meetings and UNCT retreats in Indonesia, based on which, the UNIDO Field Office provided
inputs for the UNPDF process. The UNIDO CP document was thus drafted and presented to local Indonesian
authorities through the established steering committee on industry, formulated by the government of Indonesia. The
projects have been discussed with the local counterparts and the list of the CP projects has been accepted.
3. Past Cooperation and Lessons Learned
UNIDO has a long history of cooperation with Indonesia. The latest UNIDO’s present cooperation with Indonesia
is the Indonesia Country Programme 2009-2013. The Country Programme (CP) had a budget of USD 27 million
and has been 104 per cent funded. The largest portfolio is energy and environment with total projects fund of USD
18 million. The largest share of on-going and planned interventions is financed by GEF. Two areas of the CP did
not attract any funding; South/South Centre and Human Development at Belu district.
As per the recently concluded independent evaluation of the country programme, the relevance of the CP was found
to be high and there is seen to be a strong national ownership for many projects. It is confirmed that the CP is
aligned to national strategies, policies, needs and priorities. The high level of funding for the CP is an indication
that the Country Programme as developed was relevant to national development priorities and matched the priorities
of the donor partners.
The evaluation report finds that the projects relating to Environment and Energy have produced many outputs that
provide a measure of sustainability. For example, the development of policy frameworks, the drafting and
promulgation of laws, standards and guidelines as well as experiences shared will go a long way to ensure some
measure of sustainability of regional forum activities in the participating countries. Sustainability is also assured
through the involvement of PCB equipment owners and private companies providing services for the collection,
transport, interim storage and final disposal under the control of responsible governmental institutions within the
framework of the relevant legislation.
As stated on the independent evaluation report (the final draft with GOI for their inputs), “There is a good level of
cooperation with most public and private actors. UNIDO is a member of the United Nations Country Team but its
role within the larger UN system could be further strengthened. The Field Office contributes to project management
and implementation and could do more monitoring and follow-upon ongoing and past projects”.
4. 2016-2020 Country Programme Components
Indonesia today has risen to a middle-income country and a member of the G20 Group of the world leading
economies. Based on UNIDO Industrial Statistics Book 2016 Indonesia has jumped to the top 10 manufacturing
nations of the world. Indonesia has a good manufacturing base and moderately sound export base. The trade quality
structure needs to be strengthened. Besides, it is also one of the major polluting countries.
In full cognition of above scenario and given the fact that Indonesia today is a middle income country with a
relatively good private sector driven manufacturing base, and in line with UNIDO-ISID initiative, the UNIDO
country programme in Indonesia consists of 13 projects based on demand, with national and donor priorities
matched according to UNIDO’s thematic priorities. Some of the projects are ongoing projects and others are new
already formulated or in an advance, stage of development given the positive feedback received from the donors’
community.
Concerning gender: a particular gender aspect such as lower level of women employment and entrepreneurship is
Go to ToC Page 10 of 32UNIDO‐Indonesia CP 2016‐2020
given due consideration in this Country Programme. Through the proposed project interventions in the components
listed below, the Programme also aims to address the gender gap by promoting the participation of women in
entrepreneurial activities and facilitating training for their overall economic empowerment.
The CP 2016-2020 consists of 4 outcomes/components as follows:
Component 1: Poverty Reduction
Component 2: Energy for All
Component 3: Environment and Clean Production
Component 4: Partnership and Sustainable Development
Component 1: Poverty Reduction:
Objective: To provide support to the GOI on their efforts to eradicate poverty.
As a response to this challenge and other development challenges, UNIDO is promoting inclusive and sustainable
industrial development (ISID)8 to harness the full potential of industry’s contribution to the achievement of
sustainable development, and lasting prosperity for all. Economic growth is driven by entrepreneurship, continuous
economic diversification, growing trade relations, industrial upgrading and technological innovation. Already, the
share of manufacturing value-added created in developing countries has almost doubled in the past 20 years, from
18 percent in 1992 to 35 percent in 2012. The structural transformation that occurs when economies move from a
high reliance on agriculture and natural resource extraction to activities that foster local value-addition and related
services has a dramatic development impact. It unleashes dynamic and competitive economic forces that generate
employment and income, facilitate international trade, and use resources more efficiently. However, to improve the
living standards of all women and men, the benefits of growth have to be shared more equitably. Considering
gender disparity, projects in this area could focus on increasing employment opportunities for women. This would
contribute to reducing the gender gap in economic opportunities.
Since this component will focus on the value chains of Fisheries, Seaweed and Tempe, the projects have the
potential to raise the employment opportunities of women and empower their participation throughout the value
chain as a response to the existing gender disparity.
Reduction in gender disparity can be achieved when decent employment opportunities are available for all segments
of the labour force. Manufacturing industries and their related services sectors can absorb large numbers of workers,
provide them with stable jobs and good benefits, and increase the prosperity of their families and communities. An
efficient agro-industry, combined with increased investment in agriculture, enhances economic stability for rural
households, increases food security and promotes innovation throughout industrial value chains.
As explained on UNIDO ISID documents, poverty is a complex phenomenon with many dimensions that go far
beyond low-income levels. Finding the right responses in each context thus requires concerted efforts across the
spectrum of development cooperation to achieve better livelihoods for the poor. This is what the new sustainable
development agenda (SDGs), already adopted by member states on September 2015; to succeed the UN Millennium
Development Goals (MDGs) has to live up to. Is about a clear roadmap for eradicating poverty in its full
multidimensional context of economic deprivation, social inequality and environmental degradation. Clearly, future
strategies for poverty reduction need to be economically empowered. This is the only way to generate the income
needed to enable individuals, households, and governments to pursue their own development priorities and to
support their path to self- reliance. This must be the ultimate goal of our efforts to achieve sustainable development
in all its dimensions.
It is essential to better integrate women and youth in the process of creating an industrial workforce. This not only
yields positive multiplier effects for households and communities but also contributes to greater social cohesion.
Increased participation in international trade also helps to improve local working conditions through the need to
comply with international standards and greater access to modern technologies and best practices. Industry
therefore is an important source of decent employment, accounting for almost 500 million jobs worldwide – or
about a fifth of the world’s workforce.
Multi-stakeholder partnerships are crucial for effectively managing the transformation towards Inclusive and
Sustainable Industrial Development (ISID). Sustaining poverty reduction efforts and implementing sustainable
development strategies require adequate financing. For Indonesia as a middle-income country, it is expected that
country self-financing could be a good source for funding crucial activities for their economic development under
Go to ToC
8
UNIDO-Lima Declaration December 2013: Inclusive and Sustainable Industrial Development (ISID) is approved by Member States as an
important part for the long-term development agenda, beyond 2015.
Page 11 of 32UNIDO‐Indonesia CP 2016‐2020
UNPDF 2016-2020. To achieve sustainable development and to fight poverty, it will be essential to include all
related stakeholders: The private sector, civil society, academia, governmental institutions, and the international
development organizations.
Institutions capable of designing, implementing and monitoring industrial development policies that promote and
encourage private sector development is a key for effectively bringing about the structural changes that lie at the
core of sustainable development.
How much impact industry has on poverty eradication, environmental sustainability and food security is ultimately
defined by the pattern of industrialization a country chooses to follow. Hence, a long-term strategy is required that
puts in place a framework of stable economic, legal, and political conditions, and creates policy incentives to invest
in the necessary education, infrastructure, product quality, agri-business solutions, innovation, and entrepreneurial
skills. Through this CP, UNIDO will implement three (3) projects in support to the GOI’s efforts to eradicate
poverty (stated above). These projects are:
1. Increasing trade capacities of selected value chains within the fisheries sector in Indonesia,
2. Livelihood Enhancement of Rural Community in Coastal Area through Seaweed Value Chain
Improvement in Sumenep District, East Java Province, and
3. Up-grading the Small Scale Tempe Industry for Improving Nutrition for Poor Families in Marginally
Nourished Areas in Indonesia, joint UNIDO/FAO/IAEA Project.
Component 2: Energy for All:
Objective: To enhance access to modern and reliable energy with energy efficiency on industry.
Enhancing access to modern and reliable energy supplies is widely regarded as a prerequisite for the economic
development in the developing countries as well as in the countries with economies in transition. For such
development to be sustainable, the energy must be used to promote productive uses that create jobs and more
income-generation opportunities for local communities. UNIDO therefore helps countries increase access to modern
energy supplies, especially based on renewable energy, in order to support the development of productive capacities
in rural and urban areas.
Given the growing gap between energy supply and demand, renewable energy has assumed a critical role in meeting
the rising demand for energy, especially by industry in developing countries. Several renewable energy technologies
have emerged as economically viable and environmentally friendly options, which if suitably adopted, can meet
growing energy needs of industry, and particularly of small and medium-sized enterprises (SMEs).
UNIDO promotes industrial applications of renewable energy in energy-intensive manufacturing SMEs, which have
requirements for motive power and process heat for low or high temperature applications. Currently, SMEs/SMIs
satisfy the great majority of these requirements through electricity derived from fossil fuels or from the direct
combustion of such fuels, in the form of furnace oil, kerosene or coal. In view of the rapidly rising cost of these
fuels, enhanced use of renewable energy technologies would not only improve the local environment, but also
increase the productivity and competitiveness of the SMEs/SMIs. It also offsets unreliable energy supplies from
national grids.
UNIDO advises national and regional planners and decision makers in elaborating strategies for their industrial
energy mix, considering all available technologies, with a focus on renewable sources of energy. Further, UNIDO
promotes national and regional production as well as renewable energy technologies and adequate support
structures, including innovative financial schemes. Through this CP, UNIDO implements these for (4) projects:
1. Promoting Industrial Energy Efficiency through System Optimization and Energy Management Standards
in Indonesia,
2. Promoting Energy Efficiency in Small and Medium Industries in Indonesia,
3. Renewable Energy (possibilities of different renewable energy including marine current)
Component 3: Environment and Clean Production:
Objective: To provide support for clean industrial production, efficient energy and resources management and
sound management and disposal system for PCB.
Any progress on poverty eradication will be short-lived if we do not succeed in achieving the necessary economic
growth within an environmentally sustainable framework. The importance for promoting cleaner and resource
efficient pathways to production, and the de-coupling of economic growth from environmental degradation, cannot
be emphasized strongly enough. It cannot be denied that one side effect of industrialization is its considerable
environmental footprint. There is no country yet fully resolved the issues of waste management, water purification
Go to ToC
Page 12 of 32UNIDO‐Indonesia CP 2016‐2020
and pollution. However, experience shows that environmentally sound interventions in manufacturing industries
can be highly effective and significantly reduce environmental degradation. In this context, the drive for innovation
and process optimization, the core of any industrial upgrading effort, is an important means to develop the necessary
solutions to realize cleaner production, efficient resource management and reductions in waste and pollution.
UNIDO, through its cleaner production programmes, is responding to these challenges. Today, the technological
capabilities for cleaner industrial production do exist. “Green industry” can be promoted to deliver environmental
goods and services. These industries by themselves are sustainable source for further structural diversification, jobs,
income and prosperity. There is also an imperative to increase energy efficiency in industrial production. Since
energy inputs represent an important cost of production for industries, clean energy and energy efficiency have
progressively become core determinants of economic competitiveness and sustained growth. Demanding to choose
between industrial growth and sustainability is therefore the wrong approach. The transformation in production
processes and business models, going hand-in-hand with the right choice of technologies that will present the
solutions to the daunting environmental challenges of our times. This UNIDO CP facilitates Indonesia on issues
related to environment through the following five (5) projects:
1. Introduction of an Environmentally Sound Management and Disposal System for PCB Wastes and PCB
Contaminated Equipment in Indonesia,
2. National Network for Implementation of Resource Efficient and Cleaner Production in Indonesia (RECP),
3. Introduction of BAT and BEP in the Thermal Processes in Metallurgical Industry in Indonesia,
4. Support to the Government of Indonesia to fulfill its obligations to the Minamata Convention on Mercury,
and
5. Phase-out of HBCD-based flame retardant in the EPS and XPS.
Indonesia has committed to reducing greenhouse gas emissions and has issued Presidential Regulation (61/2011)
concerning the National Action Plan for Reduction of Emissions of Greenhouse Gasses and Presidential Regulation
71/2011 concerning the Implementation of the National Greenhouse Gases Inventory. The UNREDD + partnership
sets the most aggressive effort to slash greenhouse gas emissions through protection of forests9. The Government
of Indonesia’s Climate Change Trust Fund is a key financial mechanism that demonstrates responsibility for
addressing climate change.
Component 4: Partnership and Sustainable Development
Objective: To provide support to the establishment of business linkages between industrial parks managements,
enterprises and other relevant supporting organizations as well enhance public-private sector partnerships.
Partnerships can take many forms. Below are the three partnership categories UNIDO has adopted for strategically
engaging with companies and foundations.
Core Business and Value Chain Partnerships: harness the core strengths of the private sector and/or aim
for changing the way businesses operate to be more in line with social, environmental and development
goals.
Social Investment and Philanthropy Partnerships: provide the UN system with different types of support,
including traditional philanthropy, social venture funds, hybrid or blended-value financing mechanisms,
employee volunteers or contribute core business expertise, products or services to the public cause.
Multi-stakeholder and Transformational Partnerships: enable dynamic processes for issue-focused
consultation and scalable operations among numerous private and public parties, as well as including
private sector representatives in their governance structures.
UNIDO recognizes that stakeholder engagement and building solid partnerships are necessary to achieve
development results. UNIDO’s convening role brings Member States, the private sector, civil society and other
partners together in major outcome-oriented events that serve to exchange and disseminate knowledge and
information, facilitate partnerships, and forge common positions and plans of action for inclusive and sustainable
industrial development.
The scope of such events ranges from organizing regional forums, conferences, technical working groups or expert
meetings, to presenting UNIDO publications and findings or participating in conferences hosted by organizations
in the United Nations system or partner institutions. Activities in this area are viewed as having informational,
advocatory and normative functions and to be conducive to knowledge management. The convening function serves
as an important and cost-effective tool to share knowledge and discuss best practices with a large audience. Such
events can in turn also lead to the elaboration of new norms and standards, and can serve as the starting point for
new avenues of research and technical cooperation. Working closely with the private sector, UNIDO builds
Go to ToC
9
Indonesia: The ICPD+20 and the Unfinished Agenda. A Review of Indonesia’s Progress on the International Conference on Population and
Development’s Programme of Action 2014 UNPFA and BKKBN
Page 13 of 32UNIDO‐Indonesia CP 2016‐2020
partnerships that advance inclusive and sustainable industrial development while simultaneously driving business
value. Networks are an important means for developing countries to exchange knowledge and step up their
economic development. UNIDO thus assists Member States to uncover and share knowledge for industrial
development through the use of knowledge networks.
This UNIDO CP facilitates Indonesia on issues related to industrial partnership through the following two (2)
projects:
1. Public Private Development Partnership – Volvo – USAID – YDBA – MOI Vocational Training for Youth
and Women.
2. Partnering to Promote Cooperation between Industrial Zones.
The components and projects of UNIDO-Indonesia CP are summarized in table 2:
CP (2016-2020) Programme design:
The design of the UNIDO Country Programme 2016-2020 (CP) is alignment with the country UNPDF 2016-2020
and responding to the mid-term country plan 2015–2019 (RPJMN).
The CP 2016-2020 consists of 4 main outcomes/components as follows plus M&E related activities:
Component 1: Poverty Reduction
Component 2: Energy for All
Component 3: Environment and Clean Production
Component 4: Partnership and Sustainable Development
Fact sheets of the 13 projects are summarized below:
Component 1: Poverty Reduction
Project 1: Sustainable Market Access through Responsible Trading of Fish (SMART-Fish) in Indonesia
(2014-2019 – from CP 2009-2013).
Project budget: US$ 4,500,000
Donor: SECO – Switzerland
Project Duration: 2014 – 2019
Project Objective:
To increase the export capacity of the fisheries sector in Indonesia through the development of higher value-added
fisheries exports, which are compliant with the international market requirements, and to improve the export quality
infrastructure to remove supply side constrains.
The project will include a trade related analysis of the fisheries sector, and the design of a supporting technical
assistance programme for the strengthening of the export quality infrastructure and compliance services. It will also
create an innovative public-private sector partnership to develop a trade corridor and to contribute to the
development of a national trade development strategy.
Since this project will focus on the value chains within the fisheries sector in Indonesia it has the potential to rise
the employment opportunities of women and contribute to reduce the gender gap in terms of income leading to
economic and social empowerment.
Project 2: Livelihood Enhancement of Rural Community in Coastal Area through Seaweed Value Chain
Improvement in Sumenep District, East Java Province
Project budget: US$ 2,978,000
Donor: (new project, SURAMADU Development Agency approved 30% of total budget to be
funded by them, needs fund raising activities to find donor for 70% of total budget)
Project Duration: 3 years
Project Objective:
Overall Development Objective: Contribute to the effort of National Government to support development of
seaweed industry in Sumenep District, East Java Province.
The project will aim on focusing on the Seaweed value chain in Indonesia and contribute in enhancing the rise of
employment opportunities of women in this area.
Go to ToC
Page 14 of 32UNIDO‐Indonesia CP 2016‐2020
Project 3: Up-grading the Small Scale Tempe Industry for Improving Nutrition for Poor Families in
Marginally Nourished Areas in Indonesia, joint UNIDO/FAO/IAEA Project.
Project budget: US$ 5,035,280
Donor: GOI showed interest for partial funding. It is foreseen that other donors can fund the
balance.
.Project Duration: 3 years
Project Objective:
The objectives of the project implementation are:
1. To improve the livelihood of male and female soybean farmers and tempe producers in the above
mentioned provinces by organizing them collectively, and engaging them in sustainable tempe and tempe
flour production; This will especially have an impact on women’s empowerment in this area by improving
their marketing businesses,
2. To improve the regulatory and institutional framework that are conducive for the tempe industrial sector,
its value chain and its stakeholders which could contribute towards Indonesia’s entry into the global
production system and trading regime; and
3. To improve nutrition for poor families and schoolchildren through production of tempe-fortified biscuits
in the targeted locations.
Component 2: Energy for All
Project 4: Promoting Industrial Energy Efficiency through System Optimization and Energy
Management Standards in Indonesia.
Project budget: US$ 2,180,380.
Donor: GEF, MEMR, BSN, MOI and Financial Institution.
Project Duration: 2012-2017
Project Objective:
To enhance energy efficiency through system optimization.
The project is designed to offer 1) System optimization approach to the industrial enterprises to maximize energy
savings at the system level and 2) capacity building to adopt the ISO Energy management standards for industrial
enterprises to integrate energy efficiency as part of the management cycle for realization of continuous energy
savings year after year.
Project 5: Promoting Energy Efficiency in Small and Medium Industries in Indonesia
Project budget: US$ 4,109,580.00
Donor: GEF (New project)
Project duration: 5 years.
Project Objective:
The project will develop and stimulate support functions (i.e. market development, financing and technical
assistance) for the introduction of energy efficient technologies in selected energy-intensive Small and Medium
Industries (SMI) in Indonesia.
Project 6: Renewable Energy (possibilities of different renewable energy including marine current)
Project budget: US$ 300,000.00
Donor: UNIDO
Project duration: 3 years
Project Objective:
To embrace a low carbon pathway powered by innovative, smart and locally relevant energy solutions with
renewable energy’s great potential that helps Indonesia become less dependent on energy imports, create jobs and
mitigate climate change while contributing to prosperity.
Component 3: Environment and Clean Production
Project 7: Introduction of an Environmentally Sound Management and Disposal System for PCB Wastes
and PCB Contained Equipment in Indonesia.
Project budget: US$ 6,000,000.
Donor: GEF
Project Duration: 2013-2018
Go to ToC
Page 15 of 32You can also read
