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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank STAFF APPRAISAL REPORT INDONESIA LAND ADMINISTRATION PROJECT AUGUST 16, 1994 Report No IND Agriculture Operations Division Country Department III East Asia and Pacific Region

2 CURRENCY Currency Unit = Rupiah (Rp) (As of December 1993) USS1.00 = Rp 2,105 Rp 1,000 = US$0.475 FISCAL YEAR April 1 - March 31 ABBREVIATIONS AIDAB - Australian International Development Assistance Bureau AMDAL - analysis of environment impacts BAKOSURTANAL - National Coordinating Agency for Surveys and Mapping BAPPENAS - National Development Planning Agency BKTRN - Coordinating Board for National Spatial Planning BPKP - Central Audit Bureau BPN - National Land Agency CRS - customer relations and services GPS - global positioning system GOI - Government of Indonesia IBRD - International Bank for Reconstruction and Development ICB - international competitive bidding Kab. - kabupaten (regency) Kanwil - provincial offices (of BPN) Kepres - Presidential Decree Kod. - kotamadya (municipality) KPI - key progress indicator LAP - Land Administration Project LCB - local competitive bidding MOHA - Ministry of Home Affairs MSUK - Management Support Unit at Kanwil (BPN's provincial offices) MSUP - Management Support Unit at Pusat (BPN's headquarters) PBB - land and property tax PCC - Project Coordination Committee PMC - Project Management Committee PMC-K - Provincial Project Management Committee PP No. 10/ government regulation on land registration PRONA - land registration program for low-income households PUOD - Directorate General of Public Administration and Regional Autonomy (of MOHA) PUSDIKLAT - Center for Education and Training (of BPN) SOE - statements of expenditure STPN - National Land Institute (of BPN) TA - technical assistance TOR - terms of reference UUPA - Basic Agrarian Law

3 INDONESIA LAND ADMINISTRATION PROJECT LOAN AND PROJECr SUMMARY Borrower: Amount: Prqject Objectives and Description: The Republic of Indonesia US$80.0 million equivalent The main objective of the project is to foster efficient and equitable land markets and alleviate social conflicts over land, through acceleration of land registration in support of the initial phase of GOI's long-term land registration program to register all non-forest parcels, and through improvement of the institutional framework for land administration needed to sustain the program. The second main objective is to support GOI's efforts to develop long-term land management policies. The main components of the project are: (a) (b) (c) (d) systematic registration of 1.2 million parcels in ten districts in Java, relying on special systematic adjudication teams capitalizing on economies of scale, cadastral surveying by private firms, utilization of new technology such as GPS, and dissemination of information to the public; development of a database of land laws and regulations, and assistance to GOI's program for reviewing and drafting land laws and regulations; long-term development of BPN's institutional capacity for land administration, mostly through support to BPN's training and education units, training, scholarships and studies on ways to improve tenure security for customary (adat) land rights; and an integrated program of studies, seminars and workshops on selected topic areas in land management while improving inter-agency coordination and drawing on international experience. Benefits and Risks: The project would foster more efficient and equitable land markets in terms of: more efficient and transparent land transactions; less risk in land-related investment; mobilization of financial resources through use of land as collateral; and provision of incentives for longer-term investment towards more sustainable land use. About 4 million people in Java would

4 benefit directly by having their land registered systematically, including about 100,000 families estimated to be below the low income threshold. The project would also build the institutional, human resource, technical, financial and regulatory foundations needed to sustain GOI's long-term land registration program. The development of long-term land management policies would contribute to improvements in such key areas as land acquisition. The progress to be achieved under the project would be instrumental to development in various sectors and encourage foreign investment. The major risks are overstretching BPN's implementation capabilities, as well as the land owners' lack of confidence in the registration system and their lack of understanding of the need for land registration. The first risk would be addressed by utilizing the private sector for certain tasks, and by providing technical assistance for project implementation. The second risk would be addressed by systematic adjudication which is an open, transparent process involving the affected people, and by disseminating relevant information widely. Estimated Cost: La Local Foreign Total (US$ million) A. Acceleration of Land Titling and Registration B. Improvement of the Institutional Framework for Land Administration C. Development of Land Management Policies Total Base Costs Physical Contingencies Price Contingencies Total Project Costs Financing Plan: Local Foreign Total (US$ million) GOI La AIDAB Grant Proposed Loan Total Financing Required La Includes taxes and duties estimated at US$11.3 million.

5 - iii - Estimated IBRD Disbursements: Bank FY (US$ million) Annual Cumulative Economic Rate of Return: Poverty Category: Not applicable. Not applicable. Maps: Nos. IBRD and 25612

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7 - iv - INDONESIA LAND ADMINISTRATION PROJECT TABLE OF CONTENTS Page No. 1 BACKGROUND... 1 A. Land Resource and Land Use... 2 B. Status of Land Rights and Land Registration... 2 C. Policy Framework for Land Management and Administration... 4 D. Legal Framework for Land Management and Administration E. Institutional Framework for Land Management and Administration BANK EXPERIENCE, STRATEGY AND RATIONALE FOR BANK INVOLVEMENT... A. Bank Experience B. Bank Strategy and Rationale for Bank Involvement THE PROJECT.. 10 A. Project Objectives B. Project Description C. Project Area PROJECT COST AND FINANCING A. Project Cost B. Financing Plan C. Procurement D. Disbursement E. Accounts and Audits ORGANIZATION, MANAGEMENT AND IMPLEMENTATION A. Project Management and Implementation B. Human Resource Development and Management C. Monitoring and Evaluation This report is based on the findings of a joint Bank-AIDAB appraisal mission which visited Indonesia in November/December 1993, comprising Messrs./Mss. Akihiko Nishio (Economist, Task Manager), Lilla Hendry (AIDAB), Carlos Escudero (Senior Counsel), Colleen de Freitas (Administrative Assistant), Lynn Holstein, Pieter Evers and Frank Hijmans (Consultants). Peer Reviewers were Messrs. Gershon Feder (AGRAP), Yves Wong (EAlAN) and Bernard Veuthey (MN1IN). Mrs. Marianne Haug, Director, EA3, and Mr. Jon Hitchings, Acting Chief, EA3AG, have endorsed the project.

8 Page No. 6 BENEFITS AND RISKS A. Beneficiaries and Benefits B. Environmental Impact C. Social Impact D. Gender Issues E. Sustainability F. Risks AGREEMENTS REACHED AND RECOMMENDATIONS Tables in the Main Text Table 1.1 Land Use in Main Islands as Percentage of the Islands' Land Table 1.2 Change in Total Land Use for Indonesia According to GOI Statistics, to Table 1.3 Relationship Between Tenure and Land Price per Square Meter in Jakarta, Table 4.1 Project Cost Summary Table 4.2 Project Financing Plan Table 4.3 Procurement Arrangements ANNEXES Annex 1: Project Background 1.1 Estimate of Unregistered Parcels by Province Detailed Information on Districts Supported for Systematic and Sporadic Registration Annex 2: Costs, Financing and Disbursement 2.1 Expenditure Accounts by Component Expenditure Accounts by Financiers Disbursement Rates and Loan Allocation by Category Estimated Disbursement Schedule Annex 3: Project Implementation 3.1 Control Points Densification, Aerial Photography and Base Mapping to be Carried out under the Project Graphical Index Maps to be Compiled under the Project Systematic Registration Program to be Financed under the Project Sporadic Registration Program to be Financed under the Project Civil Works to be Financed under the Project Topic Areas to be Examined under Part C.47

9 - vi Vehicles to be Provided by GOI by Subcomponent and Project Year List of Contracts Project Implementation Schedule BPN Staffing Needs by Year BPN Staff to be Transferred to Systematic Adjudication Parties by Province and Year Key Progress Indicators Bank Supervision Schedule Annex 4: Technical Assistance and Training 4.1 Technical Assistance Summary Advisers Financed by AIDAB Grant Scholarships, Overseas Short Courses and Overseas Tours Short Term Training Courses in Indonesia Annex 5: Selected Documents Available in the Project File CHARTS Chart 1: Organization of BPN Chart 2: Project Management Structure Chart 3: Systematic Adjudication Team Structure Map6: IBRD Summary Map of Project Areas IBRD JABOTABEK Area

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11 1 BACKGROUND A. LAND RESOURCE AD LAND USE 1.1 Indonesia's land resources are abundant at 1.9 million square kilometers (190 million ha), which is the third largest in Asia and larger than the four American states of Texas, California, New Mexico and Arizona combined. The land is scattered over some 13,000 islands, with Kalimantan accounting for 28 percent of the total, Sumatra 25 percent, Irian Jaya 22 percent, Sulawesi 10 percent and Java 7 percent. Much of the outer islands are covered with forests, which amount to about 60 percent of total land and rank as the largest in Asia (amounting to nearly 60 percent of all tropical forest in Asia). 1.2 Population, economic activity and intensive land use are heavily concenerated in Java. More than 60 percent of Indonesia's total population of 186 million live in Java, where population density is more than 800 people per square kilometer, one of the highest in the world. Java contributes about 60 percent of Indonesia's GDP, which far out distances the second-placed Sumatra with about 30 percent. The most intensive land use is also found in Java, with more than 70 percent of the area under such use, much higher than the second-ranked Sumatra with about 20 percent (Table 1.1). Table 1.1: LAND USE IN MAiN ISLANS AS PERCENTAGE OF THE ISLANDS' LAND Land Usw Kalinmntan Sumatr Irian Jaya Sulaweai Java Indonesia Forest Intensive Use Extensive Use (shifting cultivation, grmaland) Other Total Source: Regional Physical Planning Program for Tranamigration (RePPProT), With GDP growing at the robust rate of over 6 percent per annum on average in the last 25 years, ranking among the 10 fastest growing economies during the period, land use patterns are changing rapidly. Data on land use is difficult to compile and the areas under respective uses vary significantly between different estimates (especially forest land). According to GOI's official statistics, total areas covered by plantations increased by 3.9 million ha, upland paddy fields by 3.2 million ha and human settlements

12 by 1.6 million ha during , mostly at the expense of forest land and the "other' category (Table 1.2). The total of these areas converted during the period amounts to about 5 percent of Indonesia's total land, or roughly the size of the American state of Indiana. Rapid changes in land use patterns are expected to continue: one major source of change is the urban population growth of about 5 percent per year, more than twice the total population growth. Table 1.2: CHANGE IN TOTAL LAND USE FOR INDONESI ACCORDING TO GOI STATISTICS, TO 1992 La Average Annual Land Use Type Change lb Area % Area 9 % (mln ha) (mln ha) Human settlements Irrigated paddy fields Upland paddy fields Plantations Miscellaneous plantations Fish ponds, etc n.a. Grasslands Forest L Other Total La Data compiled by the Directorate General of Agrarian Affairs ( ) and BPN (1992). ib Average annual rate of change during the period & It should be noted that some million ha are estimated by various sources to be "closed canopy' forest. B. STATUS OF LAND RIGHTS AND LAND REGIsrRATioN 1.4 Efficient and equitable land markets are an important basis for modem economic development, since they would quickly and flexibly accommodate changes in land use, allow fair land transactions, and mobilize financial resources through collateral arrangements. A comprehensive, accurate and efficient land registration system is a sine qua non in developing such land markets, since it enables land to be freely traded, by reducing or eliminating the risk perceived by purchasers and vendors of land. However, land registration in Indonesia has not yet reached that stage. 1.5 In Indonesia, only about 12 million of the nation's estimated 54 million land parcels (22 percent) have been registered in the 33 years since land registration began.

13 - 3 - If the current pace continues and the number of parcels remains static, it would take more than 90 years to register all the parcels. More realistically, land registration will never catch up with the total number of parcels, since the number of parcels is estimated to be growing now by more than 1 million per year. Since forest land is excluded from the land cadastre, as in many countries with substantial forest land, the total land area currently registered would amount to merely 7 percent of all land. Over 75 percent of the unregistered parcels are estimated to be in Java, where only 19 percent of the parcels are registered (Annex 1.1). The province of West Java has the lowest coverage of land registration, with only 13 percent. The main reasons for such low coverage in Java are the large number of parcels, rapid increase in the number of parcels due to economic and population growth, and the large number of informally occupied parcels. 1.6 The scarcity of registered land and the relative security of tenure offered by land registration are translated by the market into higher prices. According to a study (Dowall and Leaf, 1990), the premium placed on registered parcels over unregistered parcels was more than 50 percent in Jakarta's central business district (CBD) in 1989, and land values were positively correlated with security of tenure (Table 1.3). Table 1.3: RELATioNswU" BETWEEN TENURE AND LAND PRICE PER SQUARE METER IN JAKARTA, 1989 High level of infrastructure Low level of infrastructure Distance (Rupiah) (Rupiah) from CBD Registered Weak Percent Registered Weak Percent (kim) Title Claim Difference Title Claim Difference 0 to 5 514, , , , to , , , , to 15 98,660 79, , , Over 15 48,070 41, ,031 18, Overall 199, , ,642 92, Other issues in the land registration system are: (a) it is not responsive to the beneficiaries' needs, for instance in the amount of time needed to process title deeds; (b) it is difficult to obtain legally reliable information; and (c) lack of legal provisions to protect customary (adat) rights and rights of long-time, locally accepted occupants, which often hinders land provision for investment. These problems have often led to social conflicts, inhibited land transactions and discouraged private investment. The low percentage of parcels registered and other issues demonstrate that there is an urgent need to accelerate land titling and registration,1/ by addressing the institutional, technical and human resource constraints of the National Land Agency (BPN), the GOI agency 1/ In Indonesia, 'land titling" is used to describe the process of granting private rights to state land. Within BPN, land registration is the responsibility of Deputy IV, while land titling is handled by Deputy III. In this report, the term 'land registration' includes land titling in the Indonesian context, except where the differences need to be empbasized.

14 - 4 - responsible for land registration (see para. 1.15). The proposed project would help GOI address these constraints. C. POUCY FRMEWORK FOR LAND MANAGEMENT AND ADMINITRATION 1.8 Recognizing that the lack of efficient and equitable land markets has been a major impediment to investment growth and contributed to land disputes, GOI has intensified its efforts to accelerate land registration since about Further, since about 1992, GOI has taken strong initiatives to improve land policy, of which the most important ones are: (a) (b) (c) (d) (e) announcement by BPN in February 1992 of a 25-year program to title and register all non-forest land parcels in Indonesia (hereafter referred to as 'GOI's long-term land registration program"); passing in the parliament of the Law concerning Population Development and the Development of Happy and Prosperous Families (Law No.10/1992), which places a higher priority on traditional land rights than modern development rights; passing in the parliament of the Law for Spatial Development (Law no.24/1992), which includes clear provisions for local participation, decentralization and information dissemination; issuance of the Presidential Decree (Kepres) No. 55/1993, which inter alia requires land acquisition for public interests to be conducted on the basis of clear agreement (negotiation) between the parties concerned; and establishment in August 1993 of the Coordinating Board for National Spatial Planning (BKTRN), coordinated by the State Minister of National Development Planning/Chairman of the National Development Planning Agency (BAPPENAS) and represented by GOI agencies with major roles in land matters. These agencies are the Ministries of Home Affairs, Defense and Security, Public Works, and Environment, as well as the State Secretariat and BPN. 1.9 The above laws and decree need to be followed up with implementing regulations. Furthermore, several policy issues need to be addressed, such as the possible negative impacts of the location permit (izin lokasi) issued by GOI to facilitate land purchase, the need to clarify boundaries between "forest land" and "non-forest land," and the need to devise efficient and equitable land assembly techniques. The project would assist GOI in reviewing these and other policy issues. D. IEGAL FRAmEwORK FOR LAND MANAGEMENT AND ADMrSIRATION 1.10 GOI has also acknowledged that there are issues in the legal framework, which need to be addressed to improve land administration and further to develop efficient

15 and equitable land markets. The most important of these issues, described below, would be addressed under the project Implementation of the Basic Agrarian Law. Formally, all current land law in Indonesia is based on Law No. 5/1960, the Basic Agrarian Law (UUPA). The UUPA abolished the pre-1960 system of land rights, whereby land was categorized as either "westernm land (subject to the provisions of the Dutch Civil Code) or as 'Indonesian' land (subject to the provisions of unwritten customary law). The UUPA also established that Indonesian land law will be based on customary (adat) law. However, most of the implementing laws and regulations prescribed by the UUPA, needed to clearly define the land rights specified in the UUPA, have not yet been enacted Security of Private Land Ownership. Based on the Constitution, ultimate control of all land, water and airspace is vested with the state. For example, due to the "social function" of land, the state can theoretically revoke private ownership of land if the owner fails to make use of the land within a certain period of time. A legal framework establishing private land rights is needed to improve security of private land ownership Registration of Land Rights. Under Indonesian law, there are three distinct categories of land rights to be registered: (a) the three real property rights specified in the UUPA, i.e., ownership right (hak milik), the right to build (hak guna bangunan) and the right of exploitation (hak guna usaha); (b) the pre-1960 land rights on former 'western" and 'Indonesian" land that have been 'converted" to one of the three UUPA rights mentioned above;z/ and (c) three additional types of land rights introduced after enactment of the UUPA, i.e., the right of use on state land (hak pakai atas tanah negara), the 'development right" (hak pengelolaan)j/ and the strata title (hak miuk satuan rwnah susun). However, there are issues related to the legal framework which hinder the registration of the above land rights, of which the major ones are the following: (a) (b) a large number of land-related laws and regulations, which make land transactions and land registration more complex and less transparent than needed. About 2,000 land laws and regulations have been identified already, through the compilation and documentation work carried out as part of the project preparation by BPN, with assistance from the Legal Documentation Center of the University of Indonesia; stringent evidence requirements: documentary evidence of a land right dating back to 1960 (the year the UUPA was promulgated) or earlier is required for land registration. This frequently poses problems, since such documentary evidence is no longer available in many cases. If satisfactory evidence is unavailable, the land in question can be considered state land, in which case the land may be granted to the occupants at a fee. While in / This 'conversion" in principle took place automatically on the basis of guidelines provided in the UUPA. However, the status of much of these pre-1960 rights need to be clarified further. I/ "Hak pengelolaan' is the right given to government agencies to develop areas of state land, e.g., housing projects, industrial estates, agricultural estates.

16 - 6 - many countries similar problems are addressed by a statute of limitations or prescription rights, which would formalize rights of long-term and locally accepted land occupants, such provisions do not exist in Indonesia; (c) (d) lack of mechanisms to improve security of customary communal land rights: although the UUPA explicitly recognizes customary communal land rights (hak ulayat), only individually held land rights are registered. While hak ulayat is no longer common and the extent to which it exists is not totally clear, there are still some distinctively traditional communities, for instance in West Sumatra, where much of the land is owned communally without protection from squatters, fraudulent transactions and other risks, and lacking secure bargaining position vis-a-vis land purchasers; and undear boundaries between "forest land" and "non-forest land": forest land is considered state land, administered by the Ministry of Forestry. In areas where boundaries between "forest" and "non-forest" land are not clear, registration of private land rights therefore is difficult. The difficulty in determining boundaries between the state forest land and hak ulayai land is also a problem In order to address the above problems, the following actions would be needed: (a) a systematic review of the legal framework aimed in particular at rationalizing the multitude of lower level legislation (in particular to improve the security of private land rights); (b) a revision of the existing government regulation on land registration, PP No. 10/1961, to make the land registration process more efficient; and (c) development of options to strengthen tenure security of customary (adat) communal land rights. GOI has already started on the first two actions, and all three would be supported under the proposed project. E. ITlVmroNAL FRAMzwoRK FOR LAND MANAGEMENT AND ADmINSRATION 1.15 National Land Agency (BPN). BPN is the only government agency responsible for land registration. In 1988, the Directorate General of Agrarian Affairs in the Ministry of Home Affairs (MOHA) was transformed into BPN, an agency reporting directly to the President of the Republic. BPN's responsibilities include: formulation of policies and planning for land reform and ownership; administration of survey, mapping and registration of land; and granting of land rights to state land. In terms of BPN's revenues and expenditures, the last two are particularly important. Provision to BPN of the status of the State Ministry of Agrarian Affairs in March 1993 underlined GOI's recognition of the importance of BPN's mandate BPN is a large agency with about 26,000 staff, 27 offices at the provincial level, and 293 at the district (municipality/regency) level which are called land offices (see Chart 1). Approxnimately 6 percent of the staff are assigned at headquarters, 26 percent at the provincial level and 68 percent at the land office level. Land registration is performed only at the land offices. Granting of titles to state land accounts for more than

17 90 percent of BPN's total revenue. While BPN collects various fees, almost all of them are transferred to the State Budget BPN is faced with formidable human resource, institutional and technical constraints in carrying out its responsibilities. The large number of offices and the wide range of tasks aggravate the absence of a strong human resource base. With their land registration work, the technologies currently being used for land registration, especially in mapping, cadastral surveying and land records management, are costly and timeconsuming. While some of these technical constraints can be circumvented by contracting out work to the private sector, this has been done only on a pilot basis. These constraints would start to be addressed under the project Other Agencies Involved in Land Management. At least seven government agencies are directly involved in land use planning (the Ministries of Forestry, Public Works, Agriculture, Home Affairs and Housing, in addition to BPN and the National Investment Coordination Board or BKPM), as well as regional governments at all levels. Other agencies with involvement in other aspects of land management include BAPPENAS, as well as the Ministries of Finance, Environment and Justice. However, division of responsibility in land use matters is often not clear, and coordination among them needs to be improved. The project would support GOI's efforts to improve coordination among government agencies concerned with land management.

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19 -8-2 BANK EXPERIENCE, STRATEGY AND RATIONALE FOR BANK INVOLVEMENT A. BANK EXPERIENCE 2.1 Perhaps the most successful illustration of the Bank's involvement in land administration is the two land titling projects in Thailand cofinanced with the Australian International Development Assistance Bureau (AIDAB), one just completed (Loan No. 2440) and the other started in 1990 (Loan No. 3254). The first project concentrated on nine rural provinces and mapping in the Bangkok Metropolitan Area, while the second went into 30 other provinces. Under these projects, the average annual output of title deeds increased ten-fold, conflicts over land declined substantially, and cost recovery improved significantly over the last decade. A third project is expected to start implementation later this calendar year. With the increase in land values and access to credit as the major incentives, there has been a strong interest for land owners to have their land titled. The major lessons are the successful roles played by: specially formed and trained systematic adjudication teams which involved the communities concerned and capitalized on economies of scale; new technologies (e.g., with mapping, land records management); and a graduated increase in cost recovery, where initial titling was encouraged by low fees and costs were recovered from administrative fees charged on subsequent registration of title deeds. 2.2 The Bank conducted a sector study on Indonesia's land management and land use planning in 1991, which basically recommended the use of market mechanisms based on appropriate pricing, and the acceleration of land registration. As for its lending operations, the Bank has been addressing land-related issues mainly through projects in the sectors of agriculture and infrastructure. The National Resource Survey and Mapping Project (Loan No. 1197) successfully strengthened the institutional capacity of the National Coordinating Agency for Surveying and Mapping (BAKOSURTANAL). The Urban Sector Development Project (Loan No. 2816) supported a productive sector dialogue, and also financed a pilot project for collecting the land and property tax (PBB), which provided the basis for the highly successful ongoing GOI program aimed at raising PBB revenue. The Fourth Urban Development Project (Loan No. 1972) produced large-scale photomaps for 100 cities, aimed at supporting land registration, physical planning and property taxation: many of these maps would be used for land registration under the proposed project. The Fifth Transmigration Project (Loan No. 2578) supported a national mapping program in the outer islands, which successully transferred mapping technology to the local industry. The Irrigation Subsector Projects (Loan Nos and 3392) have

20 - 9 - supported the introduction of PBB into project areas, notably by implementing a new land reclassification and valuation system. Such experience has provided, inter alia, the following lessons: (a) contracting out work to private firms has been effective in generating land information (e.g., maps); (b) expected project outputs should be identified carefully and monitored during implementation; (c) production of land-related information needs to be demand rather than supply driven; and (d) land-related information should be used more effectively, by disseminating it widely to potential users along with training. These lessons have been taken into account in designing the proposed project. B. BANK STRATEGY AND RATIONALE FOR BANK INVOLVEMENT 2.3 Bank Strategy. The Bank's Country Assistance Strategy for Indonesia presented to the World Bank's Board of Executive Directors in April 1994 proposed five major objectives: continuing growth with macroeconomic stability, supporting private sector developmnent and conpetitiveness, fostering poverty reduction, improving public sector management, and supporting environmental management. Accelerated land registration, the major thrust of the project, would contribute significantly to the private sector development objective, by: (a) providing the basis for efficient and equitable land markets; (b) encouraging private investment by reducing investment risk; (c) mobilizing more financial resources by allowing land to be used as collateral; and (d) providing opportunities for growth to related industries, especially surveying and mapping. Land registration would also contribute to the poverty reduction objective, by providing many poor families with opportunities to have their land registered, which would increase land value, enable land to be sold at fair prices and improve their access to credit. In the long term, land registration is expected to contribute to the environmental management objective, by encouraging long-term investment in land for sustainable use. 2.4 The Bank's strategy for improving land administration and management in Indonesia has generally been to support specific interventions such as mapping, surveying and improved tax collection, through individual projects in particular areas. As landrelated issues have become more pervasive, the need has emerged for a more coordinated and comprehensive approach to address land-related issues directly at all administrative levels of the government, building on the gains already made. The project would provide the basis for such a new strategy, by directly supporting accelerated land registration and by providing a forum and technical inputs to formulate land management policies. The Bank's strategy would also draw heavily on the sector and macroeconomic dialogue, which has recently focussed on the policy implications and possible negative impacts of the location permit (izin lokasi) and the concept of land banking.

21 THE PROJECT A. PROJECT OBJECTIVES 3.1 The main objective of the project is to foster efficient and equitable land markets and alleviate social conflicts over land, through acceleration of land registration as the initial phase of GOI's long-term land registration program (part A), and improvement of the institutional framework for land administration which is needed to sustain the program (part B). The second main objective of the project (part C) is to support GOI's efforts to develop land management policies. Related objectives of the accelerated registration are to support poverty alleviation through increased tenure security and collateral opportunities to land owners, and to provide incentives for long-term investment and sustainable land use. B. PROJECT DESCRITON 3.2 The proposed project comprises three major "parts," as described below. 3.3 Part A: acceleration of land registration. This is the main thrust of the project, accounting for about 87 percent of the project cost. The accelerated registration would take place in 18 districts, called kotamadya (municipality) in urban areas and kabupaten (regency) in rural areas, of which ten in Java would be supported for systenatic registration and the remaining eight in Java and Sumatra for sporadic registration.4/ The emphasis during the first two years would be on building the institutional, technical, human resource and regulatory foundations of systematic registration, which would be the main engine of GOI's long-term land registration program. Between project years 3 and 6, 1.2 million parcels are expected to be registered and have certificates issued through systematic registration, of which 68 percent would be in West Java (see para. 3.12). 3.4 The hub of Part A is the actual implementation of systematic adjudication, with special BPN teams (Systematic Adjudication Teams) going from door to door to adjudicate parcels in the selected districts. This approach capitalizes on economies of scale, and is much less costly and faster than sporadic adjudication. It is also more 4/ Systematic registration refers to registration, village by village, of land titles of all eligible parcels in a contiguous area and carried out simultaneously for such area. Sporadic registration is registration of land titles as landowners apply individually for their respective parcels.

22 transparent and involves the communities more, which leads to greater support from the potential beneficiaries. Due to these reasons, the approach has been highly successful in Thailand (see para.2. 1). These Teams would stay in a designated area for one field season (ten months) per year, producing 500 certificates per month. Each Team would comprise sixteen BPN staff, five representatives of local village heads, and private surveying firms. By project year five, there would be 122 Teams in operation. There would be two trials of the systematic adjudication: one in project years one/two in Kab. Bogor (2,500 parcels) and the other in project years two/three in Kab. Karawang (5,000 parcels), to refine the approach and procedures used. There are two ongoing land registration programs with systematic aspects (the special registration program for low-income households or PRONA, and the special village-by-village registration program based on PP No.10/1961 or the PP1O program): to prevent confusion and inefficiency in carrying out similar yet different programs, an assurance was obtained from GOI during negotiations that, if the PRONA and PP10 programs are implemented in the project areas, they will be closely coordinated with the proposed project through BPN's project implementation units (MSUP and MSUK, see paras. 5.2 and 5.3), especially by using the procedures developed under the proposed project. An understanding was also reached with GOI during negotiations that the PRONA and PP10 programs will not be carried out in villages where systematic adjudication is implemented under the project. The project also aims at improving the efficiency of sporadic registration, mainly to: (a) make the land registration system more responsive to public demand (e.g., shorter turnaround times for services), (b) increase the reliability of the land cadastre (e.g., by reducing fraudulent certificates through the use of graphical indices); and (c) prepare certain land offices (e.g., the two in Sumatra) for systematic registration in the next phase. 3.5 Part A comprises four components. Thefirst is controlpoints densification, base mapping, and graphical index compilation.si The actual scope of control points densification and base mapping to be carried out under the project is summarized in Annex 3. 1, and the graphical index program is described in Annex 3.2 Base mapping would be carried out by private firms, as with most of the control points densification which would be based on the Global Positioning System (GPS). During negotiations, an assurance was obtained from GOI that the flying and mapping plans under the project will be incorporated into BPN's annual flying and mapping program by December 31 each year. The second is systematic registration, including systematic adjudication, cadastral surveying, provision of land office facilities and equipment; and information dissemination to and consultation with the public and the regional governments on the procedures, fees and benefits of land registration (called customer relations and services or CRS activities). Cadastral surveying would be conducted by private firms, which would be trained on GOI requirements for land registration purposes. The systematic and sporadic registration programs are described in detail in Annexes 3.3 and 3.4 respectively, and the civil works to be supported under the project are summarized in Annex 3.5. The third is sporadic registration, witi provision of facilities and equipment to the land offices supported. The fourth is the institutional supportfor land registraton, comprising implementation support I/ Control points denaification is a major survey of land to increase the density of control points for base mapping and cadastral mapping pwposes. Graphical indices are maps of existing certified parcels of land, often called graphical index maps.

23 to BPN (including advisers on various aspects of land registration); training of BPN staff for accelerated land registration; support for BPN's technology development related to land registration; technical assistance to BPN for project progress monitoring; and a socioeconomic baseline study for systematically registered areas (see para. 6.8). During negotiations an assurance was obtained from GOI that the training will be implemented according to the agreed schedule (Annex 4.4) and a program satisfactory to the Bank. 3.6 The Bank's loan would finance: control points densification (about 90 percent to be carried out by the private sector and the rest by BPN itself),6/ mapping and cadastral surveying by private firms; civil works for renovation and expansion of BPN's offices; the implementation costs of land registration;7/ equipment for the field teams and the supported BPN offices; training of BPN staff; and some technical assistance (to BPN for the monitoring of project progress, a socioeconomic baseline study, and advisers in customary land tenure and sociology/anthropology called the "Customary Land Tenure Team" which would assist BPN with, inter alia, CRS activities). An AIDAB grant would finance a team of advisers in various areas of expertise (440 international and 241 national person-months, see Annex 4.2 for breakdown), which would assist BPN in implementing Part A, as well as the operating costs for the technical assistance. 3.7 Part B: improvement of the institutional framework for land administration. It is made up of two components. The first is the improvement of the legal framework for land administration, by developing a database for land laws and regulations, and assisting BPN with its efforts to systematically review and draft land laws and regulations. The latter would include finalization of the new government regulation revising PP No.10/1961, and drafting of a new Land Rights Act which would set forth private rights on land. The revision of PP No. 10/1961, to introduce more practical and efficient procedures for land registration, could significantly improve the land registration process, in terms of providing more tenure security to more people more quickly. During negotiations, an assurance was obtained from GOI that GOI will carry out the revision on the basis of the timetable agreed at appraisal, so that a final BPN draft of the new government regulation revising PP No. 10/1961 (ready for approval by the State Secretariat) can be furnished to the Bank for comments by November 30, 1994 and take all measures necessary to enact the regulation by August 31, The second is the long-term development of land administration, through: a study on BPN's overall fee structure; studies on ways to improve tenure security for customary (adat) land rights; and BPN's institutional development through training, scholarships and masters degree courses both in Indonesia and abroad on such longer-term themes as information science, as well as support to PUSDIKLAT (the Center for Training and Education), STPN (the National Land Institute in Yogyakarta which provides university level degree courses for BPN staff) 6/ Of the 8,122 control points to be established in the project areas, 835 points (all of Kod. Jakarta Selatan, Kod. Jakarta Barat and Kod. Jakarta Timur, as well as 100 in Kab. Bogor and 200 in Kab. Bandung) would be established by BPN's special teams. 7/ Implementing costs for land registration are defined here as one-time (not recurrent) inputs for use by BPN tearm carrying out control points densification, graphical index compilation and systematic adjudication, covering such items as travel allowance for BPN staff, their deployment costs and supplies. They are investment costs needed to establish a land cadastre, which is a social capital.

24 and the geodetic faculties of the University of Gadjah Mada in Yogyakarta and the Institute of Technology in Bandung. 3.8 The Bank's loan would finance: training in Indonesia (Annex 4.4); dormitories and equipment for PUSDIKLAT and STPN; scholarships in Indonesia; and part of the technical assistance (adat land rights studies; a team of law specialists which would assist BPN in the review and drafting of land laws and regulations called "the Land Law Resource Group"; and computer-based compilation of land laws and regulations). See para. 6.7 for details on the adat land-rights studies. AIDAB would finance a team of advisers on land law, human resource development and overseas training (totalling 90 international and 60 national person months for Part B alone), as well as overseas scholarships on selected long-term topics and some overseas short-term training including those in Thailand to learn from the Land Titling Projects (Annex 4.3). 3.9 Part C: development of land management policies, with provision of Bank-financed technical assistance to a core team of GOI agencies working under BKTRN. Part C is an integrated program of studies, seminars and workshops on selected topic areas in land management aiming at supporting policy formulation and inter-agency coordination, while drawing heavily on international experience, to be coordinated by BAPPENAS as the chairing agency for BKTRN. The origin of Part C was the recognition that quick solutions for land-related issues cannot and should not be sought, given the magnitude of vested interests and the multitude of the players involved, and that a process-oriented approach is needed to sensitize the players involved and facilitate an inter-active formulation of solutions. Through Part C activities, the nature of the problems would be analyzed, options for improving existing policies identified, policy guidelines developed, and action plans formulated. Part C would be inter-actively linked with parts A and B, by addressing specific issues in land administration which cannot be resolved by BPN itself, such as the issue of forest/non-forest boundary areas mentioned in subpara (d) The following have been identified with GOI as the topic areas which should be examined under Part C: (a) institutional roles of government agencies involved with land management; (b) different approaches to land acquisition (including the location permit or izin lokasi); (c) displacement and resettlement of people; (d) options for land assembly (including land banking); (e) spatial development planning; (f) issues in land rights; (g) forest-non forest boundary issues; and (h) land management policies aimed at sustainable development. It has already been agreed with GOI that items (a) and (b) above would be taken up starting the first year of the project, as the highest priority issues. During negotiations, an assurance would be sought from GOI that the topic areas to be examined under Part C will be selected from the above agreed list (detailed in Annex 3.6), or such other topic areas as may be agreed with the Bank. C. PROJCwr AREA 3.11 Accelerated land registration would be implemented in the following areas:

25 systematic registration areas: West Java province: Kod. Bandung, Kab. Bekasi, Kab. Bogor, Kab. Karawang, Kod. Tangerang, Kab. Tangerang DKI Jakarta province: Kod. Jakarta Selatan (South) Central Java province: Kod. Semarang DI Yogyakarta province: Kab. Sleman East Java province: Kod. Malang sporadic registration areas: West Java province: DKI Jakarta province: Central Java province: East Java province: North Sumatra province: Kod. Medan South Sumatra province: Kod. Palembang Kab. Bandung Kod. Jakarta Barat (West), Kod. Jakarta Timur (East) Kab. Klaten, Kab. Wonogiri Kod. Surabaya 3.12 The above areas were chosen on the basis of the following criteria: strong economic growth; no confirmed cases of customary communal land rights (hak ulayat); small percentage of forest land; high percentage of uncertified land; high percentage of land covered with existing maps; strong increase in the number of parcels in recent years; and the capacity and interest of the BPN offices concerned. The details of the chosen districts are provided in Annex 1.2. The systematic program is limited only to Java, to avoid logistical problems in introducing new technologies, mobilizing a large number of staff, and coordinating closely with the regional governments. Sixty-eight percent of the parcels to be titled by the systematic program are concentrated in the West Java province, due to the large number of unregistered parcels (24 percent of the estimated total for Indonesia, see Annex 1.1), and proximity to BPN's headquarters. All eligible parcels in six districts are expected to be systematically registered under the project: those in Kod. Bandung, Kab. Bekasi, Kab. Karawang, Kod. Jakarta Selatan, Kod. Semarang and Kod. Malang. In the province of DKI Jakarta, systematic registration would be implemented in only one of the five municipalities (Kod. Jakarta Selatan), because systematic registration would generally be difficult in Jakarta due to the large number of informal occupants, lack of documentary evidence, etc., especially at the initial stage of the program when procedures are still being refined. Two other municipalities, Barat and Timur, would be supported for sporadic registration. The ratio of "rural" to "urban" parcels in the systematic registration areas, according to GOI's classification, is estimated at about 65 percent versus 35 percent, with many of the rural parcels found in peri-urban areas where land use is changing dynamically Those areas chosen for the sporadic program basically fulfilled the above criteria, but were judged not to be ready for systematic registration for various reasons (e.g., scattered uncertified parcels, local BPN land office not yet ready, distance from other project areas). Some of these areas may be supported for systematic registration under the second phase of GOI's long-term land registration program.

26

27 PROJECT COST AND FINANCING A. PRojECr CosT 4.1 The project cost, including physical and price contingencies, is estimated at Rp billion (US$140.1 million) over six years. The foreign exchange portion accounts for Rp 87.1 billion (US$41.4 million) or about 30 percent of the project cost, and Rp 23.8 billion (US$11.3 million) would be duties and taxes. Eighty-seven percent of the total base cost is allocated to Part A, with Parts B and C accounting for 9 and 4 percent, respectively. Physical contingencies of 10 percent have been used for civil works, and 5 percent for service contracts, reproduction of maps, technical assistance, and implementing costs for land registration. Price contingencies of 5.5 percent per year have been used for local currency costs and 2.8 percent per year for foreign currency costs. Project cost estimates are summarized in Table 4.1 and detailed in Annex 2. B. FINANCNG PLAN 4.2 The proposed Bank loan of US$80.0 million equivalent would finance 65 percent of the total project cost, excluding taxes (US$11.3 million) and procurement of vehicles which GOI wishes to finance (US$6.5 million). About 32 percent of the total project cost (US$44.9 million) would be financed by GOI, and the balance of 11 percent (US$15.2 million equivalent) by a grant provided by AIDAB. 4.3 The project financing plan is summarized in Table 4.2. C. PROCUREMENT 4.4 Overview. At BPN, there will be three types of institutional arrangements for procurement under the project: BPN headquarters would be responsible for procurement of such items as equipment and furniture to be used at headquarters, base mapping, control points densification, civil works other than land offices, vehicles and imported equipment; BPN's provincial offices for such items as cadastral surveying and civil works for land offices, as well as small furniture for the Systematic Adjudication Teams; and BPN's special teams carrying out control points densification, graphical index compilation and systematic adjudication for supplies and services to be purchased locally

28 Table 4.1: PRoJEcr COST SUMMARY % % total Ruoiah (billion) US (million) foreign bass Local Foreign Totwl Local Poreign Tot i exchange cods A. Acederation of Land Ti.i and Registrtion 1. Control Points Densificauon, Bae Mapping, and Graphical Index Compilation Control points densification Base mapping for sytematic registration Base mapping for sporadic regisration Graphical index compilation Subtotal Systematic LAnd Titling and Regisrtion Sysematic adjudication/surveying Land office development Customer relations and ervices Subtotal Sporadic land Titling and Registrtion Inatitutionsi Support for Land Titling nd Regitration Inmplementation support for BPN Training for accelerated land titling and regisration Technology development in land registrtion Monitoring of project progres Socioeconomic baeline study Subtotal Subtotal Part A S B. Inproveniot of the Instit1tional Framework for Land Administration 1. Improvement of Legal Framework Legislation databae Sysematic review of land laws/regulations I Subtot Long-term Development of LAnd Adminitration Study on BPN's overall fee tructure Adat land right studies Long-term institutional development of BPN Subtotal Subtotal Part B C. Developmmt of Lnd Manmt Pci Total Baeine Costs L Physical contingencies Price contingencies Total Project Cods m 2o /L Includes taxes and duties of USSI 1.3 million equivalent. in their respective areas of operation. Selection of consultants under Part C would be carried out by BAPPENAS. The procurement arrangements are summarized in Table 4.3. Items Financed under the Loan 4.5 Civil Works (US$15.6 million) comprise: construction of new office buildings, renovation of existing buildings and addition of archives for land offices; an

29 Table 4.2: PROJECr FINANCING PLAN Funding Source Local Cost Foreign Cost Total Cost Percentage (US$ million) Bank L& AIDAB GOI Total La Sixty-five percent of the total project cost, net of duties, taxes and procurement of vehicles. addition of one floor at BPN's headquarters building to accommodate project staff and consultants; a dormitory at BPN's PUSDIKLAT; and a dormitory and lecturer accommodation at STPN (see para. 3.7). As these civil works are small, scattered geographically over five provinces and not complex, they are unlikely to attract foreign competition, and hence would be procured in accordance with LCB procedures acceptable to the Bank. A summary of civil works to be financed under the project is attached as Annex Service Contacts (US$35.1 million) consist of control points densification (US$2.2 million); mapping including aerial photography, aerial triangulation and enlargement (US$12.5 million); cadastral surveying including establishment of boundary marks (US$19.8 million); and media publicity on systematic registration (US$0.6 million). About 90 percent of the control points densification would be carried out on the basis of contracts, and the rest by BPN itself under "implementing costs for land registration" (see page 12, footnote 7 for details). During negotiations, an understanding was reached with GOI that control points densification, aerial photography and base mapping will be packaged together in a given area to be undertaken by the same contractor, due to the requirement for close coordination between these activities. There would be about 19 of these packages, ranging in value from US$100,000 to US$2.1 million, to cover 18 districts in seven provinces over six years (see Annex 3.1). Since these contracts are unlikely to attract foreign contractors, and because such base mapping in Indonesia was supported under at least six Bank projects all through LCB with satisfactory results, these packages would be tendered through LCB procedures acceptable to the Bank and open to interested foreign bidders. Cadastral surveying would in principle be contracted through LCB at least to two different firms for each district, to encourage competition between them in the longer term: this is because landowners may wish to have subdivision work or general boundary definition carried out in the future, and the use of at least two firms will reduce the possibility of one company monopolizing all such future work in one area. However, this is a general principle, and in the case of smaller districts, only one company may be contracted on the grounds of efficiency. Since the cadastral surveying would not start fully until project year three, the detailed packaging arrangements will be finalized after the first systematic adjudication trial at the end of project year one/beginning of project year two. The cadastral surveying contracts would include two-week training to be provided by qualified surveyors whose names would be listed by BPN prior to bidding. Most

30 Table 4.3: PROCuREmENT ARRANGEMENTS La (US$ million) Procurement method Int'l Local Other lb N.B.F./c Total Competitive Competitive Item Bidding Bidding Civil Works (14.0) (14.0) Service Contracts (31.0) (0.5) (31.5) Equipment and Fumniture (2.2) (1.4) (0.4) (4.0) Map Reproduction (0.5) (0.5) Vehicles Consulting Services Implementation support (1.3) (1.3) Capacity building (1.7) (1.7) Policy advice/studies (3.7) (3.7) Training (1.6) (1.6) Implementing Costs for Land Registration (0.8) (20.9) (21.7) Recurrent Costs Total 2L 14U (2.) (4-7.2) (30--9) -m ".) /a Figures in parentheses are the respective amounts financed by the Bank's loan. /b Includes local shopping, selection of consultants following Bank guidelines, direct contracting and direct execution by BPN itself. /c Not Bank-financed, which includes: furniture all of which is to be financed by GOI; GOI's procurement of vehicles; GOI's engagement of consultants for planning, management and supervision of civil works; and items financed under the AIDAB grant.

31 (US$200,000) of the media announcement contracts would be procured through local shopping, due to their small amounts: some would be procured through direct contracting, in geographical areas where there is only one newspaper or one television channel. 4.7 Equipment to be financed under the loan (US$5.6 million) would be suitably packaged and procured by BPN's headquarters and provincial offices. (All furniture required for the project totalling US$3.0 million would be financed fully by GOI.) Equipment such as electronic distance measurement (EDM) devices, GPS equipment, analytical plotters and theodolites would be procured through ICB, as well as most of the computers. In bid comparison and evaluation under ICB, domestic manufacturers may be granted a margin of preference of 15 percent or the prevailing import duty, whichever is lower. Other contracts would be packaged into contracts each amounting to less than US$200,000 equivalent and up to the aggregate amount of US$2.1 million, and procured through LCB procedures acceptable to the Bank. Contracts not exceeding US$20,000 (up to an aggregate value of US$610,000), for such equipment to be used by BPN's provincial and land offices as telephones and photocopiers, would be procured through local shopping procedures acceptable to the Bank. Library books for STPN (US$18,000) would be procured through direct contracting. 4.8 Map Reproduction (US$0.5 million). Maps currently being used by the Directorate of the Land and Property Tax (PBB) at the Ministry of Finance and the National Coordinating Agency for Surveys and Mapping (BAKOSURTANAL) will be reproduced for use under the project. About half of the maps (US$270,000) would be reproduced by contractors selected through local shopping procedures acceptable to the Bank; the rest would be reproduced by BPN itself using its own equipment. 4.9 Consulting Services to be financed under the loan (US$7.4 million) will be hired under the Bank Guidelines for the Use of Consultants, after inviting proposals from firms short-listed by GOI and acceptable to the Bank. This would include: (a) Part C consultancy (US$4.2 million); (b) adat land rights studies (US$0.7 million); (c) supervision and quality checking of control points densification, aerial photography and base mapping (US$0.6 million); (d) the Land Law Resource Group (US$0.6 million); (e) the Customary Land Tenure Team (US$0.6 million); (f) assistance for the monitoring of project progress (US$0.4 million); (g) the socioeconomic baseline study (US$0.3 million); and (h) the computer-based compilation of land laws and regulations (US$0.1 million). All of the contracts would use the Bank's standard forms of contract. The final draft TOR, short list and letters of invitation acceptable to the Bank for all the consultancies above, except (c), were brought by GOI to negotiations for agreement with the Bank. During negotiations, an understanding was reached with GOI that the final draft TOR, short list and letter of invitation for (c) above will be provided to the Bank by March 31, Training (US$2.7 million) to be financed under the loan would be carried out by using local and governmental procedures acceptable to the Bank. Private institutions would be selected and hired for short-term training on human resource development and desk-top publishing, using governmental administrative procedures Implementing Costs for Land Registration (US$28.9 million) consist of two categories of items. One is the inputs for systematic adjudication, graphical index

32 compilation and control points densification, to be carried out by BPN's special teams (US$27.9 million). This includes travel allowance (US$15.2 million) for these BPN teams and miscellaneous supplies such as stationery and computer consumables. The other category is materials to be procured in large amounts totalling US$1.0 million, namely drafting films and forms other than certificate forms, which would be packaged and procured through LCB procedures acceptable to the Bank, for use by the special BPN teams. The certificate forms would be printed by GOI according to its regulations, and its costs would be fully borne by GOI. The definition of the term 'implementing costs for land registration" is provided in footnote 7, page 12. Items Financed by GOI and the AIDAB Grant 4.12 Vehides and Furniture. GOI will provide the required vehicles for the project under their own procedures, in accordance with the schedule agreed with the Bank (Annex 3.7). An assurance to this effect was obtained from GOI during negotiations. All furniture required for the project would also be financed fully by GOI Items Financed by the AIDAB Grant. Items financed by the AIDAB grant would be procured in accordance with AIDAB's procedures. They consist of: a team of advisers to assist BPN with the implementation of Parts A and B (Annex 4.2); vehicles for their own use (nine standard four-wheel vehicles and one microbus); their office costs including support staff and vehicle operation; scholarships in Australia including predeparture English training; short-term training courses and study tours overseas (Annex 4.3) and equipment (US$0. 1 million) for geodetic faculties of two universities (para. 3.7). The signing of the Project Arrangement by GOI with the Government of Australia, and the completion of accreditation for at least the seven AIDAB-financed consultants needed at the project start-up,8/ have been completed as a Board condition. Review of Procurement 4.14 The Bank would conduct a prior review of all documents concerning the tendering and award of: (a) all ICB contracts (namely for imported equipment and equipment packaged into contracts exceeding US$200,000); (b) the civil works and service contracts to be prepared first and the subsequent ones exceeding US$750,000 equivalent; and (c) all consultancy contracts financed by the Bank which exceed US$100,000 for firms and US$50,000 for individuals. The above prior review thresholds would result in the prior review of about 70 percent of the total value of contracts financed under the loan, which can be justified by the use of standard bidding documents, BPN's prior experience with some Bank projects, and the relatively large number of simple contracts of a repetitive nature. The other contracts would be retained by BPN's headquarters and provincial offices, and reviewed by the Bank on a post award sample basis. The Bank's standard bidding documents will be used for ICB. For LCB, standard bidding documents, a draft of which was brought to negotiations by GOI for agreement with the Bank, will be used. During negotiations, an understanding was reached with GOI that GOI will provide 8/ The seven consultants are the team leader, and the international advisers for project administration, geodesy, mapping, systematic registration, human resource development and land law.

33 the Bank with the draft bidding documents for control points densification, aerial photography and base mapping by September 30, 1994, and the draft bidding documents for cadastral surveying by January 31, 1995 (both based on the above standard bidding documents for LCB). For consultant services to be financed by the Bank, the prior review would include TOR, short list, letter of invitation, recommendation for award and the final contract. D. DISBURSEMEN 4.15 Disbursements under the Bank loan will be completed by September 30, 2000, about six years after loan effectiveness. The estimated schedule of disbursement is given in Annex 2.4. The schedule differs substantially from the disbursement profile of agricultural projects in Indonesia, which extends over eight and a half years. The main reason is the advanced state of project preparation (para. 5.9) Loan Allocation. The proposed allocation of the loan and percentage of expenditures to be financed by the Bank would be as follows: (a) (b) (c) (d) (e) (f) (g) 90 percent of expenditures on civil works; 90 percent of expenditures on service contracts, including mapping, control points densification and cadastral surveying; 100 percent of foreign expenditures (CIF) for directly imported equipment, 100 percent of local expenditures (ex-factory) for locally manufactured equipment, and 65 percent of total expenditures for other items procured locally; 90 percent of map reproduction; 100 percent of consulting services financed by the loan; 60 percent of expenditures on training; and 75 percent of implementation costs for land registration Disbursements would be made against Statements of Expenditure (SOE) for contracts of civil works and service contracts valued less than US$750,000 equivalent, equipment valued less than US$200,000 equivalent, implementation costs for land registration, training, map reproduction and consultancy contracts with amounts not exceeding US$100,000 for firms and US$50,000 for individuals. Contracts disbursed under SOEs would be based on standard bid documents approved by the Bank and disbursement for all other expenditures would be on the basis of full documentation. Documentation for SOE expenditures would not be submitted for review, but would be retained by BPN's headquarters and provincial offices, and made available for inspection by the Bank during project supervision.

34 Special Accounts. To enable BPN to implement the project effectively and to make prompt payments to contractors and consultants, a Special Account of US$2.5 million would be established in Bank Indonesia or a commercial bank satisfactory to the Bank. This account should be maintained by the Director General of Budget (DG Budget) in the Ministry of Finance. The Special Account would be used for all eligible local and foreign expenditures under the project. This account would be replenished on a monthly basis, or when 20 percent of the initial deposit has been used, whichever occurs first. A monthly statement on the Special Account would be submitted by DG Budget to the Bank. E. AccouNTs AND AuDrrs 4.19 Accounts and Audits. It has been agreed that: (a) separate accounts would be set up at BPN's headquarters and the five BPN provincial offices supported under the project (and the relevant office at BAPPENAS for Part C); (b) BPN's provincial office would be responsible for filing a monthly report on the project's accounts to the Provincial Project Management Committee (see para. 5.3); (c) every quarter the accounts would be compiled into one consolidated account report by BPN's headquarters; and (d) BPN, as the lead agency for the project, should include in the above consolidated report the accounts for Part C. A report on the consolidated account will be provided to the Bank by BPN, by December 31 every year, or less than nine months after the close of GOI's fiscal year. These accounts, as well as the SOE, will be audited by GOI's Central Audit Bureau (BPKP) in accordance with GOI's standard procedures Technical Audits. Because of the significant number of small purchases, the substantial amount of procurement expected to be carried out through SOE procedures and the relatively large scale of training in Indonesia supported under the project, GOI would carry out technical audits of the activities carried out under the project, with special emphasis on contracts not subject to prior review by the Bank. The technical audit would focus on the whole or part of the contract approval and execution process, include postreview of the documentation for completed contracts, and cover both technical and financial aspects. During negotiations, an assurance was obtained from GOI that: (a) GOI will provide the Bank with TOR and proposed organizational arrangements for the technical audits of Parts A and B of the project, by June 1, 1995; (b) GOI will carry out the technical audits annually during project implementation, commencing not later than April 1, 1996; and (c) GOI will provide the Bank with copies of these audit reports for review and comments starting not later than October 1, 1996.

35 ORGANIZATION, MANAGEMENT AND IMPLEMENTATION A. PROJECT MANAGEMENT AND IMLEMENTATION 5.1 There are two separate arrangements for project management and implementation: one for Parts A and B, and the other for Part C. For Parts A and B, the project has adopted a decentralized approach in developing BPN's implementation capacity, by emphasizing capacity development at the provincial level. This is necessary due to the large geographical coverage, the important role to be played by BPN's provincial offices, and the large number of staff to be trained. The details are explained below and illustrated in Chart 1. Parts A and B 5.2 At BPN's headquarters, a Project Management Committee (PMC), which is responsible for overall supervision as well as policy-level decisions, would be formed. It would be chaired by Deputy IV (Surveying and Land Registration), vice-chaired by Deputy I (General Affairs) and consisting of other BPN Deputies, as well as the Director General of Public Administration and Regional Autonomy (PUOD) at MOHA, Director General of Taxes at the Ministry of Finance, and Deputy I (Base Mapping) of BAKOSURTANAL. Other GOI agencies, such as BAPPENAS, the Ministry of Justice and the State Secretariat, would be invited as necessary. The Project Director would be its secretary, and the Project Manager (Pimpro) and the heads of BPN's provincial offices supported under the project would also be invited as needed. Below the PMC, a Project Technical Committee (PTC) would be established to supervise and coordinate the operations, to be chaired by the Project Director and comprising the other BPN directors concerned as well as the Director of PBB at the Ministry of Finance and the Director of Government Affairs at MOHA. The full-time Project Manager, reporting to the Project Director and operating as the secretary of the PTC, would be responsible for the day-today implementation and management. To support project implementation at BPN headquarters (Pusat), a full-time Management Support Unit at Pusat (MSUP) would be established. The PMC and MSUP would be supported by full-time advisers financed by AIDAB (hereafter called "the TA Team"). BPN's Center for Research and Development would manage the adat land rights studies, with assistance from the Customary Land Tenure Team. 5.3 The project implementation and management structure at the provincial level mirrors the structure at BPN's headquarters. At each of the five provinces where

36 systematic adjudication would be carried out, a Provincial Project Management Committee (PMC-K) would be established to supervise and coordinate the systematic program, and a Management Support Unit at BPN's provincial office (MSUK) would be set up, to be chaired by one (not multiple) provincial subproject manager (PiniBagPro), to implement project activities at the provincial level. PMC-K would have as members representatives of the local governments concerned, BPN's provincial office head (as the vicechairperson), and the appointed Project Manager (BPN staff assigned by the provincial head). MSUK would assist PMC-K in implementing the project at the provincial level. The PMC-K and MSUK would be supported by advisers of the TA Team who are positioned at the provincial offices. 5.4 At the district level, a Land Office Project Coordinator would be appointed in each land office supported for systematic registration to liaise with the Systematic Adjudication Teams, especially to: facilitate the Teams' access to information stored in the land offices; coordinate with other district-level government agencies with the support of BPN's Customer Relations and Services (CRS) staff assigned to the land offices; and facilitate the land offices' acceptance of documents produced by these Teams. 5.5 The Systematic Adjudication Teams would report administratively to BPN's provincial offices. However, they would report legally, operationally and technically to the land offices in the districts they are assigned to. The provincial offices can therefore deploy and re-deploy the Teams to other districts quickly, on completion of their tasks in one district. On the completion of their tasks in the province, up to three years in duration, they would be deployed into adjacent or nearby provinces by the PMC in Jakarta, coordinated by MSUP. The implementation of control points densification, base mapping, graphical index compilation and systematic adjudication would be managed by the Project Director, under coordination by MSUP. Part C 5.6 The Coordinating Board for National Spatial Planning (BKTRN) would provide overall policy guidance to Part C, especially through its secretary who is Deputy V (Regional Development Affairs) of BAPPENAS. 5.7 The Expert Advisor on Spatial Planning and Land to the State Minister for National Development Planning, as the Project Director for Part C, would provide operational guidance and supervision to Part C. To help manage and execute the work of Part C, the Part C consultancy would include the services of a Land Policy Support Team, including one senior international land policy expert, two national experts, and a small core of support staff. The Project Manager (Pimpro) for Part C and the Land Policy Support Team would coordinate and implement Part C on a day-to-day basis. Overall Project Coordination 5.8 A Project Coordination Committee (PCC), consisting of the Secretary of BKTRN (Deputy V, BAPPENAS), the Chairperson of the PMC and the two Project Directors, would coordinate between Parts A/B and Part C. Given the need to implement the whole project in the context of spatial management activities carried out by different

37 GOI agencies, the Secretary of BKTRN would chair the PCC. The Land Policy Support Team would serve as its secretariat. Status of Project Preparation 5.9 The project was prepared by GOI with TA provided under the Population and Human Resource Development grant of the Government of Japan. BPN established a special task force for this purpose. The PMC and MSUP have been formally established, and the Project Managers for both Parts A/B and Part C have been officially appointed, which were conditions of board presentation. The budget for project year one has been allocated. The Project Directors for Parts A and B have been appointed. The detailed staffing plans for the Systematic Adjudication Teams to be mobilized in the first year of systematic adjudication have been largely completed. The TOR for the AIDABfinanced TA Team, accounting for 54 percent of the total value of TA provided under the project, have been completed and a consultant firm has been selected. A letter from the Directorate of Land and Property Tax (PBB) on map availability and a letter from the National Coordinating Agency for Surveys and Mapping (BAKOSURTANAL) on the availability of aerial photographs have been provided to the Bank. A schedule of training has been agreed upon (Annex 4.4). The final draft TOR for five consultancies financed by the Bank were provided by GOI at negotiations, for agreement with the Bank. The list of contracts to be financed under the loan and the project implementation schedule are attached as Annexes 3.8 and 3.9, respectively. B. HUMAN REsouRcE DEVELOPMENT AND MANAGEMENT 5.10 To successfully implement the accelerated land titling and registration, sufficient implementation capacity needs to be built up in a timely manner. According to the staffing plan, BPN would re-assign about 2,300 staff (about 9 percent of its existing work force) to project-related tasks (about 2,000 of them to the Systematic Adjudication Teams) and hire about 1,000 new staff to replace some of the re-assigned staff (see Annexes 3.10 and 3.11). Both financial and career development incentives would be given to members of the Teams, as they would have to spend extended periods away from their homes. BPN has already requested the Ministry of Finance formally to raise the level of financial incentives. Career development incentives are also important: while members of these Teams would not return to the jobs they previously held in the land offices, they would have the same opportunities as other staff for participation in BPN's training programs required for promotion. During negotiations, an assurance was obtained from GOI that BPN's teams for systematic adjudication, control points densification and graphical index compilation, as well as MSUP, shall be maintained until completion of the project with qualified staff in adequate numbers With a view to rationalizing the use of its human resources, BPN would replace only half of the staff to be assigned to systematic registration with newly recruited staff, who can only be assigned to positions when BPN's mandatory training is completed nearly two years after recruitment. Costs for the mandatory training (including costs to train staff recruited in project years 4 and 5, who would become operational in the next phase), have been incorporated in the project's incremental cost. Since such costs, to be

38 financed by GOI, are significant (more than US$7 million over the project period), the TA Team would assist BPN in streamlining these training programs The project also supports human resource development in the private sector, in particular training of cadastral surveyors selected to participate in systematic adjudication, aimed at enabling them to carry out their task in strict adherence to the regulations concerned. In Indonesia, cadastral surveying for land registration has been done by the private sector in only a few pilot schemes. The training is thus not provided to help realize their private gains, but to maximize the public gains from the project. The training would also induce private surveyors to start taking an active role in land registration: in the later phases of the long-term land registration program, such training may no longer be necessary. The project also supports the geodetic faculties of two universities in Indonesia (see para. 3.7). Key Progress Indicators C. MoNrORING AND EVALUATION 5.13 The progress and performance of Parts A and B would be measured and monitored closely against the key progress indicators (KPI) agreed between GOI and the Bank (Annex 3.12). The introduction of KPI as a management tool would help BPN in achieving improved performance, planning, monitoring of project progress, problem solving and budgeting: such indicators have been effectively used, for example, in the land offices in the United Kingdom. The three following types of key progress indicators (KPI) would be monitored for the project: (a) (b) (c) output indicators, which are straightforward indicators of the project's various outputs, grouped into four broad categories: (i) systematic registration outputs; (ii) sporadic registration outputs; (iii) outputs related to land office up-grading; and (iv) outputs concerning institutional development (e.g., training courses, seminars, studies); financial indicators, which indicate BPN's improvements in financial yields and efficiency. They comprise: (i) revenues from land registration; (ii) expenditures for a land office; and (iii) unit costs for parcel surveys, adjudication and certificate production; and efficiency indicators, which indicate the efficiency gains made in the land registration system. They include: total office transactions (i.e., number of sales, mortgages, discharges of mortgages, subdivisions) per employee; percentage of sales registrations handled within a fixed period of time (e.g., 30 days); percentage of subdivisions completed within a fixed period of time (e.g., 60 days); and incidence of disputes. BPN (mainly MSUP, MSUK and the land offices) is responsible for the preparation and monitoring of KPI. For each KPI, targets would be set annually, refined over time, and reviewed during supervision missions.

39 Progress Monitoring Consultancy 5.14 Of the above three types of KPI, BPN is expected to encounter difficulty initially in monitoring the financial and efficiency indicators, as these indicators involve concepts mostly foreign to BPN at present. Technical assistance by project monitoring specialists would therefore be provided from project year two, to enable BPN to conduct the monitoring fully by project year five. During negotiations, an assurance was obtained from GOI that the consultants will be employed by April 1, Reporting Requirements 5.15 For Parts A and B, MSUP would compile quarterly reports for submission to the two Project Directors, the Bank and AIDAB, with the KPI from the previous quarter. For Part C, the Project Manager assisted by the Land Policy Support Team would provide quarterly reports to the two Project Directors, the Bank and AIDAB. Supervision Missions and Mid-Term Review 5.16 Project supervision would be conducted in principle on a semi-annual basis jointly by the Bank and AIDAB. There would be a mid-term review after project year two (currently scheduled for September 1996), after completion of the two systematic adjudication trials, to review the progress made (e.g., the purchase of vehicles), examine the need to adjust design, etc. The expected mission timing and expertise requirements for these missions are described in Annex Annual Work Program Review 5.17 Project implementation would be reviewed annually, so that findings can be reflected in GOI's budgetary process and adjustments can be made in the implementation schedule. The review would take place concurrently with the Bank's regular supervision missions, and the first review would take place around September 1995 to review progress of the project's start-up activities and discuss a draft work program for the following year. During negotiations an assurance was obtained from GOI that GOI will provide to the Bank for its review and comments: (a) a coordinated work program, together with budget estimates, for the following fiscal year by September 30 each year, commencing November 30, 1994; and (b) the budget proposals for the following fiscal year by December 31 each year, commencing December 31, 1994.

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41 BENEFITS AND RISKS A. BENEFICRES ND BENEFIm 6.1 Beneficiaries. With the output target of 1.2 million parcels, the systematic land titling and registration program is expected to provide direct benefits to households residing in these parcels, in the form of registered land and certificates of title. Based on the methodology used during project preparation, the above would amount to about 4 million people:2/ they currently have little protection against unfair land acquisition (e.g., "land-grabbing," low compensation), no access to formal credit based on land as collateral, and difficulty in selling their land at fair prices. Many of them are expected to be below the low-income threshold (about 14 percent of the population according to incidence of poverty in Java), especially since the affluent tend to have their parcels registered early. The project would build the basis for GOI's long-term land registration program, which would realize benefits to much larger groups of people when other geographical areas are reached during later stages. Part C would benefit a significant number of people through improved land management policy, especially in such areas as land acquisition. 6.2 Benefits. Direct project benefits to the beneficiaries of systematic registration include: improved tenure security against unfair land acquisition; the possibility to sell their land at fair prices; the ability to use land as collateral; and reduction in conflicts over land rights. The project would also build the foundations of GOI's longterm land registration program, which would foster more efficient and equitable land markets in Indonesia, in terms of: more efficient and transparent land transactions; less risk in land-related investment; mobilization of financial resources through use of land as collateral; and provision of incentives for longer-term investment towards more sustainable land use. Finally, the development of land management policies through Part C would contribute to improvements in some key land policy areas. B. ENVIRONMENTAL IMPAcT 6.3 The project's impact on the physical environment would be neutral in the short- and medium-term. Experience in the Bank-supported Land Titling Project in Thailand and the Northeast Region Land Tenure Improvement Project in Brazil do not 2/ This is estimated by first inflating the number of legal parcels by 25 percento derive the number of tax parcels, then applying the estimate of 2.65 persons to each tax parcel.

42 indicate, as reported in their Project Completion Reports (Nos and 10710, respectively), any significant impact on the environment. A socioeconomic study for the Thailand project also did not show any significant environmental impacts. 6.4 In the long term, land registration could have positive impacts on the environment in two respects: it would provide incentives to invest for long-term land use (e.g., soil conservation in rural areas, and investments in environmental infrastructure such as kitchens and bathrooms in urban areas); and provide information which could be useful in environmental management. The latter may be particularly important: the project would provide information (e.g., land rights information, photomaps, aerial photographs) which can be used by the government authorities concerned, especially the local governments, to monitor and address environmental impacts through building permits, investment licenses, hindrance permits and other regulatory mechanisms. If impacts are significant, the government would make such projects subject to the analysis of environmental impacts (AMDAL). This division of organizational responsibilities is similar to those of many OECD countries, where the land registration functions are conducted by agencies independent from those which conduct subdivisions, development approval and environmental assessment. 6.5 Institutional arrangements and policies to help GOI protect environmentally sensitive areas, including ways with which land registration can be coordinated with strategic structural plans developed by provincial and local governments, would be explored under Part C, given the cross-agency nature of the issue. C. SOCIL EMPACT 6.6 The accelerated land titling and registration is expected to result in a reduction of disputes over land rights in the project areas, which would represent a significantly positive social impact. This is indeed what has happened with the Thailand project, as shown in its socioeconomic impact study. Sociological inputs have been provided during the project preparation. 6.7 Not very many cases of customary communal land rights (hak ulayat) are now confirmed in Indonesia, and still less in areas where land registration is possible (i.e., non-forest areas). However, care will be taken so as not to affect these rights adversely through land registration. A strategy to prevent such negative impacts, agreed with GOI, would: (a) exclude areas with confirmed cases of hak ulayat (e.g., West Sumatra) from areas for systematic registration under the project; (b) not register systematically any hak ulayat land under the project if such rights are found in the project area; (c) examine the feasibility, desirability and methodology of registering hak ulayat in three selected areas through the ada: land rights studies, to prepare for the later stages of GOI's long-term land registration program; and (d) identify issues related to such rights and formulate a strategy for addressing these issues under Part C. With regard to (c) above, an assurance was obtained from GOI during negotiations that the results from the first phase (detailed work program design, work definition of hak ulayat, etc.) of the adat land rights studies will be completed and furnished to the Bank for comments by September 30, 1995, and that the results from the third phase (actual implementation of studies in three selected areas) will

43 be completed and an action plan to implement the recommendations endorsed by GOI and the Bank will be furnished to the Bank for comments by March 31, In consideration of the strong linkages that land has with the local traditions, customs and societies, the Customary Land Tenure Team would be financed under the loan to support BPN, particularly in carrying out its CRS tasks (see paras. 3.5 and 3.6), and the adat land rights studies. The socioeconomic baseline study would enable monitoring of social impacts on the systematically-registered areas over time: during negotiations an assurance was obtained from GOI that the study will be completed and its results will be furnished to the Bank for comments by March 31, It is envisaged that an imnpact study will be carried out at least five years after the baseline study, under a possible follow-on project. 6.9 A major objective of the project itself is to legalize and register land rights of long-term occupants, through: (a) systematic registration; (b) the ongoing revision of PP No.10/1961, particularly in terms of reducing emphasis on documentary evidence requirements to enable such occupants to obtain titles; and (c) monitoring of indicators concerning the actual delivery of titles to such occupants (e.g., the types of titles issued) assisted by the project monitoring TA and the Customary Land Tenure Team. Such measures would minimize the potential for displacement of long-term occupants as an indirect result of clarification of land rights. The impact on long-term occupants would be examined closely during the two systematic adjudication trials. D. GENDER ISSUES 6.10 The main potential negative impact of land registration on women's rights to land would be the possible strengthening of traditional, customary land tenure systems which are patrilineal, i.e., those systems where land can only be inherited through the male line (e.g., Batak societies in North Sumatra). On the other hand, there are matrilineal systems (e.g., Minangkabau in West Sumatra) which also might be strengthened by land registration. The general features of these traditional tenure systems were examined under the sociological analysis carried out during project preparation: while these tenure systems are no longer very common, especially in non-forest areas where land registration is possible, joint ownership of land by husband and wife is unknown in such societies. The project would not carry out systematic adjudication in the geographical areas where these systems exist. As these systems are an integral part of the culture of these traditional peoples, the feasibility and desirability of registering patrilineal and matrilineal land rights, as well as its implications on gender issues, would be looked at carefully under the adat land rights studies Outside of the patrilineal and matrilineal systems, men and women are equally entitled to hold and register land titles. The Marriage Law (Law No. 1/1974) specifies that any property acquired during marriage is regarded as joint property. Any transaction of such joint property requires the approval of both spouses, even where the spouse is not formally registered as a joint title holder. This requirement is strictly upheld by the courts. Land registered in the name of a woman prior to her marriage remains her individual property, and is not included in the joint property acquired during marriage.

44 As a consequence, the woman retains full rights to such individual property in case of annulment of the marriage. Registration of land titles is expected to, therefore, strengthen the legal position of married women, as such registration would include data as to when the property was acquired and from whom. Such information would also confirm whether the land in question is: (a) joint property of both spouses; (b) individual property of the husband; or (c) individual property of the wife. While the impact of on women is thus likely to be positive, this type of impact would be given particular attention during the project progress monitoring, with assistance from the Customary Land Tenure Team. The socioeconomic baseline study would provide the basis for assessing the impact on women in the longer term In Indonesia, most notaries and land deed officials (PPAT) are women. They are expected to benefit from the increased business caused by the large number of certificates produced under the project. About 16 percent of BPN employees are female, and one senior position, the Director of PUSDIKLAT, is occupied by a female officer. E. SusTNABxILrry 6.13 There has been strong GOI commitment to improve land management and administration, as described in para Further, the project would focus on building the institutional, human resource, technical, financial and regulatory foundations needed to sustain GOI's long-term land registration program, especially during the first two years of the project. The strategy of graduated increase in cost recovery (see para. 2.1) would be pursued under the project, with support from a study on BPN's overall fee structure. During negotiations, an assurance was obtained from GOI that BPN will complete the service fee structure study by April 30, 1996, and furnish to the Bank an action plan to implement the recommendations endorsed by GOI and the Bank by June 30, To prevent BPN from being overburdened, an assurance was obtained from GOI that GOI will provide the Bank with an assessment of the impact, on the proposed project, of any proposed large project to be carried out by BPN. A mid-term review would be held after project year two, to ensure that mechanisms are in place to launch the accelerated program The sustainability of GOI's long-term land registration program would depend to a large extent on how much the private sector can be involved, since it is clear that no public agency can undertake the program by itself. The project would develop the related private industries, by contracting out work, training cadastral surveyors, and supporting two university programs (see para. 3.7). Active participation by the public, supported under the project with the Customer Relations and Services (CRS) activities, would also be vital to the sustained success of the program. An assurance was obtained from GOI during negotiations that a national information dissemination campaign, clearly describing the procedures, fees and benefits of land registration, will be started by June 30, 1995, and that land information to be produced under the project, and included in the land books, will be made readily available to the public.

45 F. RISKS 6.15 Risks. Major risks could include: (a) over-stretching BPN's implementation capabilities; (b) the land owners' lack of confidence in the registration system and their lack of understanding of the need for land registration; (c) hesitancy within BPN staff to change the modus operandi of land registration; and (d) opposition from government agencies and the private sector to changes in land management policies which would be proposed by part C. These risks would be handled, respectively, by: (i) keeping the project design as simple as possible, utilizing the private sector to carry out certain tasks, and providing technical assistance for project implementation; (ii) carrying out an open, transparent process involving the beneficiaries, including CRS activities aimed specifically at informing the public of the benefits, costs and procedures for land registration; (iii) monitoring KPI to enable BPN managemento track progress made and problems occurred during implementation; and (iv) involving the government agencies concerned directly in identifying possible solutions under Part C.

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47 AGREEMENTS REACHED AND RECOMMENDATION 7.1 At negotiations, the following documents were obtained from GOI for agreement with the Bank: (a) the final draft TOR, short list and letter of invitation acceptable to the Bank, for: (i) the adat land rights studies; (ii) the Land Law Resource Group; (iii) the Customary Land Tenure Team; (iv) the progress monitoring consultants; and (v) the Part C consultancy (para. 4.9); and (b) draft standard bidding documents to be used for LCB (para. 4.14). 7.2 At negotiations, the following understandings were reached with GOI: (a) (b) (c) (d) (e) to carry out the PP10 and PRONA programs in villages other than those where systematic adjudication is carried out under the project, if these programs need to be carried out in the project area (para. 3.4); to package together control points densification, aerial photography and base mapping in a given area to be undertaken by the same contractor (para. 4.6); to provide the Bank with the final draft TOR, short list and letter of invitation for the consultancy regarding supervision and quality checking of control points densification, aerial photography and base mapping, by March 31, 1995 (para. 4.9); to provide the Bank with draft bidding documents for control points densification, aerial photography and base mapping (based on the standard documents) by September 30, 1994 (para. 4.14); and to provide the Bank with draft bidding documents for cadastral surveying (based on the standard LCB documents), by January 31, 1995 (para. 4.14). 7.3 At negotiations, the following assurances were obtained from GOI: (a) to closely coordinate the PP10 and PRONA programs to be implemented in the project areas with the proposed project, through MSUP and MSUK, and

48 especially by making use of the new land registration procedures developed under the proposed project (para. 3.4); (b) (c) (d) (e) (f) (g) (h) to incorporate the flying and mapping plans under the project into BPN's annual flying and mapping program by December 31 each year (para. 3.5); to implement the training financed under the loan according to the agreed schedule (Annex 4.4) and a program satisfactory to the Bank (para. 3.5); to provide the Bank with a final BPN draft of the new government regulation on land registration, revising the existing regulation PP No. 10/1961, for comments by November 30, 1994, and to take all measures necessary to enact such regulation by August 31, 1995 (para. 3.7); to select the topic areas to be examined under Part C from the agreed list (Annex 3.6), or such other topic areas as may be agreed with the Bank (para. 3.10); to provide the required vehicles for the project in accordance with the schedule attached as Annex 3.7 (para. 4.12); to provide the Bank with TOR and proposed organizational arrangements for the technical audits of Parts A and B of the project by June 1, 1995, to carry out the technical audits annually during project implementation, commencing not later than April 1, 1996, and to provide copies of these audit reports to the Bank for review and comments starting not later than October 1, 1996, (para. 4.20); to maintain until completion of the project BPN's teams for systematic adjudication, control points densification and graphical index compilation, as well as MSUP, with qualified staff in adequate numbers (para. 5.10); (i) to employ the progress monitoring consultants by April 1, 1995 (para. 5.14); (j) (k) to provide to the Bank for its review and comments a coordinated work program, together with budget estimates, for the following fiscal year by September 30 each year, commencing November 30, 1994, and the budget proposals for the following fiscal year by December 31 each year, commencing December 31, 1994 (para. 5.17); to complete the first phase of the adat land rights studies and furnish the results to the Bank for comments by September 30, 1995, and to complete the third phase of the adat land rights studies and furnish to the Bank for comments an action plan to implement the recommendations endorsed by GOI and the Bank by March 31, 1997 (para. 6.7);

49 (1) to complete the socioeconomic baseline study and furnish its results to the Bank for comments by March 31, 1996 (para. 6.8); (m) (n) (o) (p) to complete the BPN service fee structure study by April 30, 1996, and furnish to the Bank an action plan to implement the recommendations endorsed by GOI and the Bank by June 30, 1996 (para. 6.13); to provide the Bank with an assessment of the impact, on the proposed project, of any proposed large project to be carried out by BPN (para. 6.13); to start a national information dissemination campaign on land registration procedures, fees and benefits by June 30, 1995 (para. 6.14); and to make the land information produced under the project, and included in the land books, readily available to the public (para. 6.14). 7.4 The following conditions of board presentation have been met: (a) (b) the signing of the Project Arrangement with the Government of Australia on the AIDAB grant, and the completion of accreditation of the seven AIDAB-financed consultants needed at the project start-up (para. 4.13); and the establishment of the PMC and MSUP, as well as the official appointment of the Project Managers for Parts A/B and Part C (para. 5.9). 7.5 Subject to the above agreements, the project is suitable for a Bank loan of US$80.0 million equivalent to the Republic of Indonesia for 20 years, including 5 years of grace, at the Bank's standard variable interest rate. The Borrower would be the Republic of Indonesia.

50

51 ANNEX 1.1 INDONESIA LAND ADMINISTRATION PROJECT Estimate of Undocumented Parcels By Province Province Total PBB Estimate of Urban/Rural Tax Population/ Tax Total BPN Undocu- Percent Parcels Parcels Certificates /1 mented/2 Parcels Certified Dl Aceh 973, , , Sumatera Utara 1,873, ,624 1,237, Sumatera Barat 1,375, , , Riau 608, , , Jambi 373, ,839 71, Sumatera Selatan 1,420, , , Bengkulu 296, ,992 91, Lampung 1,868, ,603 1,105, TOTAL SUMATRA 8,789, ,842,049 5,189, DKI Jakarta 1,173, , , Jawa Barat 14,649, ,547,340 10,172, Jawa Tengah 14,677, ,636,319 8,106, Dl Yogyakarta 1,812, ,739 1,238, Jawa Timur 17,117, ,849,860 11,844, TOTAL J A V A 49,429, ,587,715 31,906, Kalimantan Baret 509, , , Kalimantan Tengah 251, ,270 71, Kalimantan Selatan 633, , , Kalimantan Timur 229, ,966 14, TOTAL KALIMANTAN 1,623, , , Sulawesi Utara 697, , , Sulawesi Tengah 308, ,312 42, Sulawesi Selatan 3,327, ,317 2,218, Sulawesi Tenggara 669, , , TOTAL SULAWESI 4,892, ,610 2,946, Bali 911, , , Nusa Tenggara Barat 833, , , Nusa Tenggara Timur 756, , , Timor Timur 24, ,288 8, Maluku 228, , , Irian Jaya/3 66, ,584 (28,500) OTHER 2,810, ,511 1,462, TOTAL INDONESIA 67,545, ,978,294 42,067, /1 Source: BPN data as of April / PBS tax urban and rural tax parcels, deflated by a factor of 0.8, lass the number of BPN registered parcels. /3 Incomplete data.

52 INDONESIA LAND ADMINISTRATION Detailed Information on Districts (Kabupaten/Kotamadya) Supported for Systematic and Sporadic Registration Age of Forest PN Cortf. % No. of No. of Total Estfmd Cortift. Populaton Ate No. Cl ty Kabupetv Provkwo Kabupatw Ae _ %o f Mapped Uran Rural Tax Totl helued (19901 Mapped Kotwnidys Kotamdya Lgal Tax Tax Tax Parcel Leeal As of March by bpni SyatrT.at A /hal thai Parcae Parcels Parcels Parela 1993 (hal 1 andun Kod. andung Jaws Beret % 53.80% 319, , , Bekei Kab. Beke Jews Beret , % 6.25% 181, , ,a23 416, ,785 2,104, ogeor Kab. Bogot Jews Beret , % 1.08% 115, , , ,736, Karawang Kab. Kara wng Jaws Beart , % 0.07% , s Tangerang KabKot. Tengeren Jewa Beret e55, % 0.91% 63, , , , ,902 2,765, Jakarta Selatan WI. Jakarts Seatan D.K.1. Jakara 13, % 99.68% 203, , ,234 1,905, Samrng Kod. Smwng JewsTergah % 27.41% , ,249, L 8Slemn Kab. Samen D.K. Yogyakart 57,482 1, % 2.61% 34, , , ,500 58, ,300 1,500 9 Malang Kod. MLana Jwa Timur 11, % 52.43% 138, , o000 56, ,100 e.000 Syaradc S Total , % 1, ,157 3,705, ,000 1, ,78a.200 6e500 Spwadic R. 1 Madan Kod. Madn Surnatta Utara 32, % 30.93% 209, , , &/ Palambang Kod. Pakwnban Summits Saaten 2e % 38.02% 148, , , a/ 1,144,000 10,000 3 Sndung Kab. Bandrmg Jews s-rat 376,776 70, % 1.19% 109,290 1,489,251 1,598,541 1,279, ,201, Jakart Beret WIl. Jakana Beret D.K.I. Jakarta 12, a 56.43% % 209,14B 0 209, a/ 1,820, S JakartnTimur WI. Jakarta Trnur.K.I. Jakarta , % 99.96% 222, , , a/ 2,084,500 17,800 6 Wonogdri Kab. Wongirl Jews Tangeh % 1.65% 8, , ,000 7 Ksten Kab. Kisten Jews Tangh 65.5s % 2.29% 14, , , ,086, Surabayv Kod. Surabava Jaw.Trnmur % 98.52% , , ,000 27, Spo K.A SubTotal , ,138 2,425,742 3,310,890 2, ,734 11e of Aseofe r Total 3,547, ,878 3, , , e , ,

53 MIDONESIA LAND ADMENISTRATION PROJECT EXPENDrTuRE AccouNs By CoMPoNENT (US$ million) Al. Control Points Densification, A4. Institutional B1. B2. Long Term C. Development Bae Mapping A2. Systmatic A3. Sporadic Support for Improvement Development of Land & Graphical Land Titling Land Titling Land Titling of Legal of Land Management Index Compilation & Registrtion & Registration & Registration Framework Administrtion Policies Total I. Investment Costs A. Civil Works B. ContrmetServioes C. Fumiture& Equipment D. ReproductionofMaps E. Vehicks F. Consuking Services G. Training H. Implementing Costs for Land Registrtion II. Recurrent Costs I TOWl Projet Cost Taxes Foreign Exchange Note: Amounts include pre and phycl contngencies.

54 INDONESIA LAND ADMINISTRATION PROJECT ExPENDTU ACCOUNTS BY FINANCIERS (US$ million) Local Duties The Government World Bank AIDAB Total For. (excl. and Amount % Amount % Amount % Amount % exch. taxes taxes I. Inveshnent Casts A. Civil works B. Service contracts C. Furniture and equipment D. Map reproduction E. Vehicles F. Consulting services G. Training H. Implementing costs for land registration a Total Investnent Costs II. Recurrent Costs A. Incremental salaries for BPN staff B. Travel expense C. Office rent or lease D. Office supplies E. Other admin. costs (incl. honorania) Total Recurrent Costs Total Expenditures Note: Amounts are totals including contingencies.

55 ANNEX 2.3 INDONESIA LAND ADMINISTRATION PROJECT DISBuRSEMET RATES AND LOAN ALLOCATION BY CATEGORY Category Amount Disbursement Rate La (US$ million) Civil works % Service Contracts % Equipment Lb %;100%; 65% La Map Reproduction % Consulting Services % Training % Implementing Costs for Land Registration % Unallocated 4.4 Total 80.0 La Of approved expenditures. b2 Excluding vehicles, which would be financed by GOI. Lg 100% of eligible foreign expenditure for directly imported equipment, excluding duties and taxes; 100% of other equipment (ex-factory prices); and 65% of locally procured items.

56 ANNEX 2.4 INDONESIA LAND ADMINISTRATION PROJECT ESTIMATE DISBURSEMENT SCHEDULE IBRD Fiscal Project Year and Semester Semester Cumulative Cumulative Profile /a (US$ million) IUS$ million) (%) st nd % 3% st % 6% nd % 10% st % 18% nd % 30% st % 38% nd % 46% st % 50% nd % 58% st % 66% nd % 74% a/ Standard disbursement profile for agriculture projects in Indonesia.

57 INDONESLA LAND ADMINISTRATION PROJECT Control Points Deusifon, Aerial Photography and Base Mapping to be Caried out under the Project Contrac Contract Procurement Aea Photography No. Reproductlon Pacement of Padap No. Implmentatcm Method of Rural Or oor Urban Map of Exulg Gridon fpolect rund (ha) urban (ha) Control Mapping Lim maps Enlarpgaents Maps Maps Y.4 1: :6,000 Points (h) IIaJ go (shoots) (sheet) SYSTEMAtIC LAND REGSTRATION AREAS (10 DISTRiCTS) BandungKod. Al/I PY1/2 LCB BkasiK ab A1/2 PY1/2/3 LCB 30, , S BogorKabPilt Al/3/ PYI BPN Bogr Kab #1 Al/3/t PY2/3 LCB 0 12, p Bogor Kab 02 A1i3/2 PYY/4/S LCB p * 0 Kwrawang Kab AI/4 PY2/3 LCB 25,000 10, , ,000 l10 10 Tangwrang Kod4Kab *1 AlISM PY2/3 LCB , , ,000 1., Tangermng KodflKab #2 A1/512 PY3/4 LCB , Tangerang KodlKab 03 Al/513 PY4/S LCB 70, , , Jkarts Selsan Kod Al/8 PY2 BPN Sermarng Kod Al/ PY2t3 LCB Slma, Kab Al/S PY2/3 LCB , , Malang Kod Al/ PY2/3 LCB 0 5, , SPORADIC LAND REGSTRATION AREAS (U DISTRICTS) Meda nkod Al/1O PY4/S/S LCB 0 22, , Palambang Kod Al/Il PY4/5/0 LCB 0 16, BandungKab #1 A1/12/1 PY3/4 LCB 50,000 10, ,000 0 id,ooo 0 0 Bandung Kab #2 AI/12/2 PY4/S LCB 150,000 10, , BandungKab 2A A1/12/2A PY4 BPN Bandung Kab #3 Al/12/S PYS LCB 70, , J.kwtaBa,ra Kod Al/13 PYS BPNI Jkarta TlmurKod AI/14 PY3/4 BPN Wonoghi Kab Al/1S PYS/415 LCB 166,000 5, , Klisn Kab Al/1 PY3/4/5 LCB 64,000 3, , e0 so SurabayaKod A1/17 PY4/5/8 LCB ,0S0 1,0S0 TOTALS S , ,836,_, _, -,,_,._ Foobotes: * Contol points densieoatlon to be eanted out by BPN 1O1O1 (no contract nwolved). To purchase 200,000 had photographstrom BAKOSURTANAL. X

58 ANNEX 3.2 INDONESU LAND ADMINITRATION PROJECT Graphical Index Maps to be Compiled under the Project SYSTEMATIC REGISTRATION PROGRAM 10 offices supported for graphical index compilation Certificate Issued as Indicative Land Office March 93 PY 1 PY 2 PY 3 PY 4 PY 5 TotaL Team responsibility Bandung Kod 153,761 30,500 60,500 60,500 2, ,800 Team #1 Bekasi Kab 134, ,600 60,500 17, ,700 Team #3 Bogor Kab 153,590 30, ,500 60,500 2, ,800 Team #2 Karawang Kab 56, , ,600 Team #2 Tangerang Kod I Tangerang Kab ] 198, ,000 60,500 60,500 23, ,900 Team #5 Jakarta Selatan 89, ,500 28, ,300 Team #4 Semarang Kod 129, ,000 60,500 15, ,900 Team #6 SLeman Kab 58, , ,000 Team #7 Malang Kod 56, , ,055 Team #8 Sub-totaL: Systematic 61, , , ,155 26,200 1,032,055 SPORADIC REGISTRATION PROGRAM 6 offices supported for graphical index compilation PY 1 PY 2 PY 3 PY 4 PY 5 TotaL Indicative Team responsibility Medan Kod 68,853 * PaLembang Kod 59,794 * Bandung Kab 118, ,000 60, ,500 Team#1&5 Jakarta Barat Kod 94, ,000 52,520 94,520 Team#2&3 Jakarta Timur Kod 67, ,500 36,330 67,830 Team #4 Wonogiri Kab 223, ,000 60, ,500 Team #6 Klaten Kab 276, ,500 60, ,000 Team #7 Surabaya Kod 127,810 60,500 60,500 Team #8 Sub-total: Sporadic , , ,850 Grand total 61, , , , ,050 1,598,905 *: As of end-1991.

59 ANNEX 3.3 INDONFSIA LAND ADMNISTRATION PROJECT Sytematic Regishtrton Program to be Tianced under the Project Mumber of Parcels by District Land Office PY I PY 2 PY 3 PY 4 PY 5 Total Program Progress at the End of Project Bandung Kod 30,000 35,000 36, ,500 Complete in PYS Bekasi Kab 60,000 90, , ,700 Conplete in PY5 Bogor Kab 2,500 15,000 25,000 40,000 82,500 After PY5 38X complete Karawang Kab 5,000 55,000 90, , ,750 CompLete in PY5 Tangerang Kab/Kod (combined) 10,000 80, , ,000 After PY5 75X complete Jakarta Selatan 10,000 63,500 73,500 Complete in PY5 Semarang Kod 25,000 25,000 26,500 76,500 Complete in PY5 SLeman Kab 45,000 50,000 95,000 After PYS 40X complete Malang Cod 55,000 55,000 Complete in PY5 Total No. of Parcels 2,500 5, , , ,950 1,212,450 Number of Systematic Adjudication Teams by Province ~~~~~~~~~~~~~~~~~~~~ Province PY 1 PY 2 PY 3 PY 4 PY 5 Output Systematic Ad] X Of total no. of parcels Teams (total) of which: West Java X Of total no. of parcels DKI Jakarta X Of total no. of parcels Central Java (incl Yogyakarta) X Of total no. of parcels East Java X Of total no. of parcels

60 ANNEX 3.4 INDONESIA LAND ADMIISTRATION PROJECT Sporadic Registration Program to be Fmanced under the Project AeriaL Graphical Civil Works Land Office Photography GPS mapping Index Naps (Offices, Archives) Medan Kod PY4 PY4 PYS Next phare Next phase Palembang Kod PY4 PY4 PY5 Next phase Next phase Bandung Kab PY2/3/4 PY3/4 PY3/4/5 PY4/5 PY1 Jakarta Barat Existing PY4/5 Integrate PY4/5 PY3 Jakarta Timur Existing PY3 Integrate PY4/S PY4 Wonogiri Kab PY3 PY3 PY4 PY4/5 PY3 KLaten Kab PY4 PY4 PY4/5 PY4/5 PY3 Surabaya Kod PY3 PY4 PYS PY5 PY Integrate * plot CPS grid on existing maps Existing * e existing maps and photography

61 I. LAW OFFICES INDONESIA LAND ADMINITRATION PROJECT Civil Works to be Flnanced Under the Project Estimnted Civil Works Nheber of Planned under LAP No. of Legal Parcels Building Plan: (including Planned Staff in the District New, Add Archive archive) Building Batch March 1993 as of 1993 or Renovate Sq. Meters (.2) Year Numer\c...~~~ A. Syte metic Registration Program (10 offices, of ihich 9 will be supported for civil works) Bwndun Kod ,500 Add Archive 500 PY1 Onr Bekasi Kab ,500 New 3,500 P11 One Bogor Kab ,000 New 3,500 PY3 Two Karaueng akb ,500 No Civil Works under LAP N.A. N.A. N.A. Tangerana Kod\a N.A. N.A. Renovate PY3 Two Tangerang KCb 197 \b 513,000 \b New 3,500 PY3 Two Jakarta Selatan ,000 New 3,000 PY2 One Semrang Kod ,500 Add Archive 500 P12 One Slemn Cab ,500 New 3,000 PY1 One salwng Kod ,000 New 2,500 PY3 Two B. Sporadic Registration Program (8 offices, of which 6 will be supported for civil works) Medan Kod ,500 No Civil Works under LAP N.A. N.A. N.A. Pale bang Kod ,500 No Civil Works under LAP N.A. N.A. N.A. Bandkun Kab 187 1,279,000 New 3,000 PY1 One Jakarta Barat Kod U2 167,500 New 3,000 PY3/4 Two Jakarta Timw Cod ,000 Now 3,000 PY3 One Uonogiri Cab ,500 New/Renovate 3,200 PY3 One Claten Kab ,500 New/Renovate 2,000 PY3 One Surabaym Cod ,000 New 3,000 PY4 Two 11. OTHER CIVIL WORKS A. Additional floor at BPNIs NQ New 2,100 PY1 One B. Puadiklat's dormitory New 2,000 P1l One C. STPIIs dormitory New 6,150 PY2 One D. Renovate IPI's photogrametry building Renovate 2,800 PY2 Two E. Refurbish Legal Bureau at BPNi's HQ Renovate 208 PY2 One FOOTNOTES: \a Kod. Tangerang was created in 1994; its BPN office wilt move into the old office of Kab. Tangerang, to be renovated. \b Total for Cod, and Kab. Tangerng, before their separation in \c *Batch one t refers to civil works Ihere availability of titled land was confirmeduring appraisal. For batch two items, availability of titled land needs to be confirmeduring supervision missions.

62 ANNEX 3.6 Page 1 of 2 INDONESIA LAND ADMINSTRATION PROJECT Topic Areas to be Examined under Part C The topic areas examined under Part C will be selected from the topic areas listed below, or such other topic areas as may be agreed with the Bank. 1. INSTITUTIONAL ROLES IN LAND MANAGEMENT, INCLUDING: models from other countries; multiplicity of organizations; dispersion and duplication of effort; decentralization; lack of "fit" between institutions and functions; conflicts of interest within an agency; uncoordinated regulations; the need to define private and public roles and interface; ways to improve public participation and access to information; effect on land markets; etc. 2. REFORM AND SIMPLIFICATION OF THE LAND DEVELOPMENT PROCESS (ESPECIALLY THE LAND ACQUISITION AND DEVELOPMENT PERMIT SYSTEMS), INCLUDING: requirements for smoothly functioning markets; unbalanced access to information; monopsony powers given to purchasers/developers; lack of transparency and accountability; cumbersome bureaucratic procedures; lack of competition and equity; difficulties in legal framework; relationship to land use planning; time and expense of regulations; the implications of the October 1993 package (Pakto); etc. 3. SUSTAINABLE DEVELOPMENT, ENVIRONMENTAL IMPACTS, AND THE LAND DEVELOPMENT PROCESS, INCLUDING: sustainable development and the planning system; economic and social sustainability; effects of the land development process on the environment; coordination between land registration and strategic structural plans; difficulty of integrating and enforcing environmental regulations; incorporating environmental factors into the land market; the potential for economic incentives; lack of access to information; need for greater openness and transparency in land dealings; etc. 4. OPTIONS FOR LAND ASSEMBLY, INCLUDING: the concept of "land banking", its advantages/disadvantages and experience in other countries; experiences with land readjustment and land consolidation techniques; purposes and problems of largescale public land assembly and development; land assembly and the land market; financial, economic and efficiency costs; the myth and the reality of "speculation"; non-market interventions, loss of competition, and inefficiency; etc.

63 ANNEX 3. 6 Page 2 of 2 5. DISPLACEMENT OF PEOPLE AND RESETTLEMENT, INCLUDING: a strategy to implement Keppres No. 55/1993; the issue of inadequate compensation; ways to deal with long-term occupancy rights; approaches to consult the affected people and disseminate information; ways to restore livelihood of the affected; options for strengthening inter-agency cooperation; etc. 6. SPATIAL DEVELOPMENT PLANNING, LAND USE PLANNING, AND THE LAND DEVELOPMENT PROCESS, INCLUDING: Law No. 24/1992 and the role of spatial planning; the multiplicity of plans and planning activities; practical problems in implement the strategic structural plans and ways to address them; duplication and overlap; ineffectiveness of detailed planning; confused relationship of planning to the land acquisition and development permit process; planning and the development of more efficient land markets; information, consultation and participation; centralized versus decentralized planning; strategic planning and economic efficiency; etc. 7. ISSUES IN LAND "RIGHTS" AND RELATED PROBLEMS OF LAND REGISTRATION AND MANAGEMENT, INCLUDING: ambiguity of legal position for various classes of "traditional" land rights; communal versus individual rights; problems of "conversion" of traditional rights; "prescriptive" (de facto) rights and other means to protect land rights of long-term occupants; ways to better define and implement passing of titles to improve land administration; the need for effective timelimitation on use rights and development permits; continuing confusion and/or incompatibility of mapping systems and surveying techniques; relation to broader process of legal review and reform in Indonesia; dispersion of institutional responsibilities; etc. 8. FOREST/NON-FOREST LAND ISSUES, INCLUDING: forest/non-forest boundaries: concept and measurement problems; difficulty in registering parcels in boundary areas; confusion of institutional responsibilities; private and public roles; legal questions of conversion from forest land; problems of conflicting uses; concessions and "modern" uses versus "traditional" uses; scope for community management; difficulty of access to information and maps; lack of participation and consultation; etc.

64 INDONESIA LAND ADMTRATION PROJECT Vehiles to be Provided by GOI by Sub-Component and Project Year Unit per Graosp Total Vehictes YEAR WHEN REQUIRED SUB-COPOENT 4 iwhel votor- 4 wheel motor- PYl PY2 PY3 PY4 PY5 veh. cycles veh. cycles 4W MC 4W NC 4w MC 4W NC 4W NC 1. Syst_ntic Adjuication Tess (122 team) 2. Graphical Index Compilation (a teem) 3. Photogr phinspection Team (2 teams) 4. SPN's Provincial a Offices (five offices total with 3 in West Java) 5. BPIIs Land Offices (18 offices total) 6. BPN's GPS Team (3 teasm + leader) 7. Customer Relations and Services BPN Headqarters Provincial Offices Land Offices Supported for Systestic Registration (10 offices) 8. Project ngement BPI Headquarters Provincial Offices Distribution nd Trafer of Certificates (10 offices) Requirements by Year

65 ANNEX 3.8 Page 1 of 2 INDONFSIA LAND ADMINITRATION PROJECT List of Contracts Contract No. Description Year No. of Procure- Rp. Contracts ment Area million Method (incl conti.) PART A - ACCELERATION OF LAND TITLING AND REGISTRATION Civil Works A2.2/I/A Land offices (systematic prog.) PY1;2;3 9 LCB 5 provinces 12,794.0 A3.1/1/A Land offices (sporadic prog.) PYI;3;4 6 LCB 4 provinces 11,964.0 A4.1/1/H1 Add new floor to BPNMs Hg PY1/2 2 LCB BPN HQ 2,330.0 A4.3/1/A1 Renovation of Photog. Building Service Contracts 1. A1/1/2/4 GPS/aerial photo/mapping PY1 3 LCB Bandung Kod 5, /8 contracts Karawang Kab Semerang Kod Sleman Kab Bekasi Kab 2. A1/3/1 OPS/aerial photo/mapping PY2;3 2 LCB Tang. Kab #1 4,626.9 A1/5/1 contracts PY3;4 Bogor Kab#1 A1/9 MaLang Kod 3. Al/3/2;A1/5/2 GPS/aeriaL photo/mapping PY3; PY4 3 LCD Bandung #1 10,499.1 A1/12/1;Al/15 contracts Bogor#2 A1/16 KLaten Kab 4. Al/5/1; A1/10 GPS/aerial photo/mapping PY4; PY5 3 LCB Medan Kod 8,513.5 Al/11; A1/12/2 contracts Palembang Kod Tangerang #3 5. A1/17 GPS/aerial photo/mapping PY5; PY6 2 LC8 Surabuya Kod 1,985.1 Bandung #3 6. A2.1/i/A2 Boundary survey contracts PY2 1 LCB 1 province A2.1/1/A3 Boundary survey contracts PY3/4/5 14 LCB 2 provinces 29,108.0 A4;A5;A6;A7; A9 8. A2.1/I/A8:A9 Boundary survey contracts PY4 4 LCB 2 province 5, A2.1/1/A11 Boundary survey contracts PY5 2 LCB 1 province 1,

66 ANNEX 3.8 Page 2 of Equipment A1.1/I/Al&F1 Equipment - GPS & EDN PY1 1 ICB BPM HQ A1.1/I/D1&F2 Equipment - GPS & EDM PY3/4 1 IUC BPM HO A2.1/I/E1&E2 Equipment - TheodoLites (25) PY1/2 1 ICB BPN HO A2.2/I/C Equipment -- Land offices PYI to 4 6 LUC 5 prov. 1,461.0 A2.2/I/E Photocopiers--Land offices PY1 1 LCB BPI HQ A3.1/l/ C Equipment for Land Offices PY1/3/4 3 LCB 4 provinces 1,491.0 A4.3/I/B1 Stereo-plotters end PY2 1 IUC BPM HQ 1,121.0 Auto Drefting Teble PY2 A4.3/I/C CAD systems + plotters PY1 1 LCB BPM HQ, West J A4.3/I/D Microfilm quipment PY2 1 LCB BPM HQ A4.3/I/E1 Imaging systm PY2 1 ICS BPM HQ Land office computers PY2/3 A2.1/l/Hl/H2 Computers (various) PY2 1 IUC SPM HQ /H3 & printers PY3 n (for systematic adj. teams) PY4 " other PY5 u A1.4/1/Al Computers PY/2/3 ' ICB BPM HQ 31.0 Furniture\1 A2.1/I/G PortabLe desks/tables PY1/2/3 1 LCB BPM HQ AZ.2/I/B Furniture for Land off. (sys) PY1/2/3 6 LCB 5 provinces 1,493.0 A3.1/I/B Furniture for Land off. (spor) PY1/3/4 3 LCB 4 provinces 1,511.0 A4.1/I/H2 Furniture, equip. for HQ PYI I LCB BPN HO Other A.4/I/A Dyetine mach./photocopiers PY1/2/3 8 LCB BP3 HQ A2.1/I/D2 Printing title forms etc PY1/3 2 LCB BPM HQ 3,941.0 PART B: IMPROVEMENT OF THE INSTITUTIONAL FRAMEWORK FOR LAND ADMINISTRATION Civil Works B1.1/1.2/C&E Renovation BPh's legal bureau PYI 1 LCS BPM HQ B2.3/I/El Pusdiklat Bogor dormitory PY1 1 LCB BPM HO 1,209.1 B2.3/I/F1 STPN dormitory PY2 1 LCB BPM HO 4,263.4 Furniture & equipment 1.1/1B2.3 Furniture & equipment PY1;2 4 LCB BPM HQ/Yogya 1,422.0 B1.1/I/C & D Equip., furn for LegaL bureau PYI 1 LCB BPM HQ 90.7 Bl1l/I/El Scanner & computer - LegaL data PY2 1 LCB BPM HQ 56.4 B2.1/I/F Furniture & equipment PYI 1 LCB BPM HQ B2.3/I/F/2.1 Desks & Chairs PY2/3 1 LCB Yogya B2.3/I/E1B Equip & furn for Pusdiklat PY1 1 LCB BPM HQ B2.3/I/FIB Equip & furn for STPI dorm PY2 1 LCD Yogya B2.3/I/F2.3 TheodoLites (20) for STPM PY1 1 ICB Yogya (with A2.1/I/E1&E2 above) B2.3/I/F2/5&6 Photo & carto equip PY2 1 LCD Yogys B2.3/I/F2/7 Computers & printers PY2&PY3 1 ICB BPN HQ (with A2.1/I/H1 above) \1 Furniture will be financed fully by G01.

67 INDONESIA - LAND ADMINISTRATION PROJECT Project Imnplmentation Schedule ID Name Starl Finish Q41QIQ2lQ3lQ41Q lq2lq3iq4 QIIQ2[Q3IQ41QI Q2 Q3 Q41QI Q2lQ3lQ41QIIQ2 Q3 Q4 QIlQ2lQ3 Q4 I LAND ADMINISTRATION PROJECT 11/19/93 9/29/00 2 Bank Project Processing 11/ /1/94 3 Appraisal 11/19/93 12/16/93 I 4 Negotiations 5/23/94 5/27/94 5 m S1~~~~~~~~~~82/94 8/2/94 - F 5 Board Presentation8294 /24 6 Loan Effectiveness 9/1/94 9/1/94 7 GOl Project Start-Up Activities 5/7/94 8/1/95 ' 8 Establish PMC, MSUP 6/30/94 6/30/94 9 Establish PMC-K, MSUK 7/6/94 7/6/4t 10 Planning for Launch Workshop 7/1/94 8/30/94 I I Revision of PP IO 5/7/94 8/1/95 16 A. Accelerated Land Titling & Registration 6/29/94 9/27/00 17 Al GPS, Base Mapping. and Graphical Index 7/1/94 9/27/00 T -L _ I8 Al 1, AI.2, and A3 Aerial Photography, GPS and Mapping 7/1/94 9/27/ A 1.4 Graphical Index Compilation I/l/95 6/30/ A2 & A3 Systematic and Sporadic Land Titling & Registration 6/29/94 3/31/00 _ 143 A2 I Systematic Adjudication & Surveying 1/1/95 3/31/ A2 2 and A3 I Land Office Dcvclopment 6/29/94 4/29/99 * v 220 A2.3 Customer Relations/Services 9/1/94 3/31/97 V 225 A4. Institutionial Support for litling 7/i,94 6/30/ A4. 1 Implementation Support for BPN 7/1/94 6/30/ A4.2 Training for Accelerated Land Titling 7/1/94 3/31/99, F 236 A4.3 Support for BPNs Tech. Dcv. 7/1/94 3/31/99, 246 A4.4 NlonitoringofProjeiL Progress 11/1/94 3/31/98 v 250 A4.5 Baseline Study 5/1/95 3/28/96,w 255 B Improvement of Institutional Framework for Land Adminustration 6/1/94 4/6/ Bl. Improvement oflegal Framework 7/8/94 4/6/99 Project: Indonesia - Land Administra Critical Progress Summary 'v Manager: Akihiko Nishio Noncritical - 77\ \71 Milestone * Rolled Up 6/29/94 1

68 INDONESIA - LAND ADMINISTRATION PROJECT Project lmpjdmmtatio Scbedule ID Nane Start Finish Q4 QIQ21Q31Q4 QIIQ2lQ3lQ4 QIIQ2 Q3 Q41QI Q2 Q3lQ41QIIQ2lQ3iQ41QIIQ2 Q3lQ4]QIIQ2IQ3lQ4 257 Bl.I LegislationDatabse&hLegalMnual 7/15/94 8/14/ Bl.2 SymanticReviewofLaws&Regulations 7/8194 4/6/99. * m-m 288 B2. Long Tern Developmnt of IAnd Admninistration 6/1/94 3/31/99 m mi 289 B2.I StudyofBPN'sOveall FeeStructure 8/1/95 6/28/ Adat Land Right Studies 6/30/94 1/14/99 I m B2.3 Long Term Development for BPN 6/1/ /99. i m l 326 C. Suppo 1 tforlt.devt.oflandmanagemnntpolicy 6/15/94 1/31/00 u u m u m! 327 Preparation 6/15/94 I/2/95 +t Land Policy Inues for PYI 2/1/95 1/31/97 * 334 Land Policy Issues for PY2 211/96 1/30/92. mi- 337 Land Policy Issues for PY3 2/3/97 1/29/99 _ hh _ 340 land Policy Issues for PY4 2/2/98 1/31/00 * I I 343 Supervision and Repoxing 9/15/95 9/29/ Annual Review 9/ /15/99. - I - I 350 Mid-term Review 9/15/96 9/30/ Project Corpletion 3/31/00 3/33/ Loan Closure 9/29/00 9/29/ Proje Cornpletion Reportin&g /31/00 Project: Indonesia - Land Administra Critical Progress Summary Manager: Akihiko Nishio Noncritical Milestone * Rolled Up <> 6/29/94 2

69 ANNEX 3.10 INDONESIA LAND ADMINISTRATION PROJECT BPN Staffing Needs by Year FY FY FY FY FY 94/95 95/96 96/97 97/98 98/99 TOTAL GPS Graphicat indices Cadastral map production 4 4 Customer relations and services Certificates transfer, filing, distribution Systematic registration trainers Land office computerization 3 3 Documentation and review of Legislation Project management NSUP Project management NSUK West Java 8 8 Project Management NSUK - CentraL Java DKI Jakarta East Java 5 5 Sub-TotaL Systematic Registration Teams TOTAL:

70 INDONESIA ANNEX 3.11 LAND ADMINISTRATION PROJECT BPN Staff to be Transferred to Systematic Adjudication Teams by Province and Year NEW STAFF IN YEAR 3 Nbr. of so PPT PHT PGT PT TU TotaL Offices* West Java Centrat Java t Dl Yogyakarta Total: NEW STAFF IN YEAR 4 Nbr. of so PPT PHT PGT PT TU Total Offices* West Java Central Java DI Yogyakarta East Java South Sumatra Bali Total: NEW STAFF IN YEAR 5 Nbr. of so PPT PHT PGT PT TU Total Offices* West Java Central Java DI Yogyakarta East Java BaLi Lampung Totat: TOTAL IN THE PERIOD YEAR 3 TO YEAR 5 so PPT PHT PGT PT TU Total West Java % Central Java X DI Yogyakarta % East Java South Sumatra % Bali % Lampung % Total: * Land Offices and Kanwit Offices SO Graduate from APN PPT Land Reform Division (Deputy II) PHT Land Titling Division (Deputy III) PGT Land Use Division (Deputy 11) PT Land Registration and Surveying Division (Deputy IV) TU Adninistrative Affairs Division

71 INDONESIA ANNEX 3.12 Page 1 of 2 LAND ADMIISTRATION PROJECT Key Progress Indicators Unit PY 1 PT 2 PT 3 PY 4 Py 5 PY 6 TotaL I. WOTPUT INDICATORS Kotamadya completed jurisdiction 4 4 Kabupaten completed jurisdiction A. SYSTEMATIC REGISTRATION GROUP Graphical index compiled parcel 61, , , ,155 26,200 1,032,055 Parcels surveyed parcel 2,500 5, , , ,950 1,212,450 Parcels adjudicated parcel 2,300 4, , , ,000 1,092,600 consisting of: conversions of adat rights parcels 1,150 2,400 87, , , ,300 granting state Land parcels 1,150 2,400 87, , , ,300 average area of parcels hectare Certificates distributed 1,800 4, , , , ,000 1,092,600 Certificate backlog (bi-annual) Supporting Actions Number of control points points 1,718 2, ,797 Aerial photography hectare 132, , , ,500 Mapping rural 1:2,500 hectare 0 146, , ,000 70, ,000 urban 1:1,000 hectare 0 46,000 37, ,000 93,500 B. SPORADIC REGISTRATION GROUP (Targets to be set annually - they are also a tool for montoring land market activities) Aplications for survey received parcel Parcels surveyed parcel Applications for cert. received number Parcels certified from sporadic number 700, , , , ,000 3,870,000 X of Hak milik; 0 HGB; and HGU 0 consisting of:- 0 conversions of adat lands parcels 0 granting state land parcels 0 splitting parcels 0 other parcels 0 Other transactions transfers parcel 0 hipotik parcel 0 * Survey backlog (bi-annual) parcels 0 * Certificate backlog parcels 0 Supporting Actions Graphical index compiled parcel , , ,850 Control Points points 0 0 1,130 2, ,315 Aerial Photography hectare 0 60, , , ,600 Mapping Rural 1:2,500 hectares , , , ,000 Urban 1:1,000 hectares ,000 15,000 41,600 66,600 * They are also efficiency indicators (see III below)

72 ANNEX 3.12 Page 2 of 2 C. LAND OFFICE DEVELOPMENT Unit PY 1 PY 2 PY 3 PY 4 PY 5 PY 6 Total New Land offices unit Archive only unit Land offices to be renovated unit I 1 Additional floor at SPN's NO unit 1 1 New dormitories unit Renovate photogrammetry buildingunit 1 1 Equip./furniture for bidgs amount D. INSTITUTIONAL DEVELOPMENT/ LAND MANAGEMENT POLICY DEVELOPMENT New staff recruited w/ project staff no Staff re-assigned w/ project staff no. Training Short Term courses participants Long Term courses participants InternationaL training trainees InternationaL education students Study tours participants Studies studies Part C reports reports Part C seminars seminar Part C workshops workshops 11. FINANCIAL INDICATORS Revenues TitLing (Deputy III) Registration (Deputy IV) Other Development Expenditures Unit Costs (annually) to issue a certificate, etc EFFICIENCY INDICATORS (To be compiled for offices supported by the project and those which are not, for comparison) Days to comptete sale registratix in 30 days Days to complete subdivision X in 60 days Parcels certified per employee Other transactions per employee Revenues/employe (each office) Expenditures/employee (each office) Survey backlogs Application backlogs Incidence of disputes

73 INDONESIA ANNEX 3.13 LAND ADMINISTRATION PROJECT BANK SUPERVISION SCHEDULE DATE ACIVITrY - MAJOR FOCUS SKLLS STAFF (ronthtyear) NEEDED INPUT Proiectyvear (saff-weeks) duration 09/1994 Start-up workshop; procurenent; first year contracts especially civil works; PS; LS; LR; 9 weeks I project managemnert arrangement and coordination; consultant briefing; GO EF; HR PYI (2 wka) consultant appointments; law reviaion review. 04/1995 Pilot project arrngements; Part C consultant briefing; training; nupping HR; LP; LR; 8 weeks 2 procuremnet; Bandung visit incl management, graphical indices and GPS; PS; EF; LS; SA PY2 (2 wks) customer reltionsand services (CRS) activity review; adat start-up; financial reporting; and law revision review. 09/1995 Training review; Field visits - GPS/ graphical indices (Bandung & Bekasi) and HR; CS; LP; 7 weeks 3 mapping review; adat study (detailed design) review; civil works review; LS; SA; PS PY2 ( wks) progres monitoring consultancy review; Part C review 04/1996 KPI review; Provincial project management review at Bandung; field visit to CS; LS; EF 6 weeks 4 Karawang - pilot project; Baseline study review; law revision review. PY3 2 wks) 09/1996 Mid term review of project - technical procedures; project management; LR; HR; IS; 10 weeks 5 funding; training; civil works; legal and pilot project reviews. Confirm work LS; LP; EF PY3 (2.5 wks) plan for PY3. Progres in program of studies including adat and monitoring; financial review. Part C review. 04/1997 Land records mranagment and digital mapping review; cadastral review; adat CS; EF; LS; 7 weeks 6 phase studies implementation review; financial study (cost recovery) review. SA; Land PY4 ( wks) Field visita to Bandung, Bekasi, Karawang focusing on adjudication, quality records checking, monitoring and CRS; and a law revision review. 09/1997 Monitoring (CPI) review; computerized land registration review. Field visit to HR; EF; CS; 7 weeks 7 Semnrang; Tangerang; Training review; East Java visit - prep for Malang, and LR; LP PY4 (2 wks) Phase U East Java strategy; financial review; Part C studies review. 04/1998 PY4 review and PY5 work plan review. Human resources review; field visits EF; HR; LS; 7 weeks S to Jakarta SeLatan and Sleman: adjudication process management. Possible LR PY5 (2 wks) preparation of a follow-up project. Law revision review. 09/1993 Field visit to Malang and Surmbuyc: overview of adjudication shortcomings. IS; EF; LR; 9 weeks 9 Review consultant's organization and munagement study. Possible apprisal of HR; LP; LS PYS (3 wks) a follow-on project. Part C studies review. 04/1999 Review PY5 progre. Trnsition arrangements between Phase I and a possible LS; EF; CS 6 weehk 10 follow-on project. Project completion arrangements. LAw revision review. PYS (2wks) 09/1999 Project closing review mission. Possible follow-on project supervision. First HR; LR; EF 6 weeks I 1 (2 wks) mission of project completion repot fact finding. 04/2000 Project completion mission. Possible follow-on project supervision. EF; LR; 6 weeks 12 (2 wks) SS weeks (12 misuiona/5.5 yean) PY - project year (matching the fiscal year of Indonesia). CS - cadarl survey specialist; E - economist/financial analyst; HR - hunman resources; IS = institutional peciat; LP - land policy specialist; Li - land registration specialist; LS - land law pialist; PS - procurement specialist; SA - sociologist/anthropologist