Do=2At 4f

The World Bank

FOR OMCAL USE ONLY

MICROFICHE COPY Repdort o 10163

Report No. 10163-IND Type: (PCR)NAWAZ, T / X31680 / T9032/ OEDDi

PROJECT COMPLETION REPORT

INDONESIA

NUCLEUS ESIATE AND SMALLHOLDERS V PROJECT(LOAN 2007-IND)

DECEMBER 13, 1991

Agriculture Operations DivisionCountry Department VAsia Regional Office

This document has a restricted distribution and maY be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World fBank authorization.

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CURRENCY EQUIVALENTS

Name of Currency: Rupiah

Rates of Exchange:

Appraisal Year US$1.00 = Rp. 625Nov. 16, 1978 - Mar. 30, 1983 US$1.00 Rp. 625-900Mar. 31, 1983 - Sept. 11, 1986 US$1.00 = Rp. 909-1100Sept. 12, 1986 - Present US$1.00 = Rp. 1640-19OC

FISCAL 'EAR OF THE BORROWER

GOI: April 1 - March 31PTP: January 1 - December 1

ABBREVIATIONS

BPKP - Government Auditing AgencyBPN - Government Land AgencyBRI - Bank Rakyat IndonesiaDGE - Directorate General of EstatesERR - Economic Rate of ReturnFFB - Fresh Fruit BunchesFRR - Financial Rate of ReturnGOI - Government of IndonesiaLPP - Estates Training InstituteNES - Nucleus Estate and Smallholders ProjectPCC - Provincial Coordinating CommitteePTP - Public Sector Estate CompanySAR - Staff Appraisal ReportTeam Khusus - Special Team in DGE for Nucleus Estate and

Smallholders Projects

FOR OMCILu USE ONLYTHE WORLD BANK

Washington. D.C 20433U.S.A

Off,e of Dtrectn-CGe"eralOpeiatmon Evakuttugn

December 13, 1991

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Indonesia - Nucleus Estateand Smallholders V Prolect (Loan 2007-IND)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on Indonesia - Nucleus Estate and Smallholders V Project (Loan2007-IND)" prepared by the Asia Regional Office with Part II of the reportcontributed by the Borrower. No audit of this project has been made by theOperations Evaluation Department at this time.

Attachment

This documnent has a restricted distribution and may be used by recipients only in the perrormanceof their offcial dities. Its contents may not otherwise be disclosed without World Bank authorization.

FOR OFFICIAL USE ONLY

PROJECT COMPLETION REPORT

INDONESIA

NUCLEfUS ESTATE AND SHALLHOLDERS V PROJECT(LOAN 2007-INM)

TABLE OF CONTENTS

Page No.

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iEvaluation Summary . . . . . . . . . . . . . . . . . . . . . . . .iii

I. PROJECT RSVIEW FROM BANK'S PERSPECTIVE . . . . . . . . . . . 1Project Identity . . . . . . . . . . . . . . . . . . . 1Background . . . . . . . . . . . . . . . . . . . . . . 1Objectives and Description . . . . . . . . . . . . . . 1Design and Organization . . . . . . . . . . . . . . . . 2Implementation . . . . . . . . . . . . . . . . . . . . 4Results . . . . . . . . . . . . . . . . . . . . . . . . 5Sustainability . . . . . . . . . . . . . . . . . . . . 11Bank Performance . . . . . . . . . . . . . . . . . . . 11Borrower Performance ......... .. ... .. . 12Project Relationships . . . . 12Project Documentation and Data . . . . . 13Conclusions and Lessons Learned . . . . . . . . . . . . 13

II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVEIntroduction . . . . . . . . . . . . . . . . . . . . . 15Bank Performance ............. ..... . 15Borrower's Performance . . . . . . . . . . . . . . . . 16Borrower and Bank Relations . . . . . . . . . . . . . . 17Lessons Learned ................. .. . 18

III. STATISTICAL INFORMATIONTable 1: Related Bank Loans . . . . . . . . . . . . . 20Table 2: Project Timetable . . . . . . . . . . . . . . 21Table 3: Loan Disbursements . . . . . . . . . . . . . 22Table 4: Project Implementation . . . . . . . . . . . 23Table 5: Project Costs and Financing

A: Project Costs .............. 26B: Project Finan.ing . . . . . . . . . . . . . . 26

Table 6: Economic and Financial Analysis . . . . . . . 27Table 7: Status of Loan Covenants . . . . . . . . . . 28Table 8S Use of Bank Resources

A: Staff Inputs . . . . . . . . . . . . . . . . 29B: Missions.. ............. 29C: Costs . . . . . . . . . . . . . . . . . . . . 29

Table 9: Tree Crop Yield EstimatesRubber and Coconut - . . . . . . . . . . . . 30

Table 10: Tree Crop Yield Estimates - Oil PalmNgbang . . . . . . . . . . . . . . . . . . . 31

Table 11: Tree Crop Yield Estimates - Oil PalmSouth Banten . . . . . . . . . . . . . . . . 32

IBRD No. 15633IBRD No. 15634IBRD No. 15635

This document has a restricted distribution and may be used by recipients only in the perfori nceof their official duties. Its contents may not otherwise be disclosed without World Bank authox,zation.

PROJECT COMPLETION REPORT

INDONESTA

NUCLEUS ESTATE AND SHALLHOLDERS V PROJECT(LOAN 2007-IND)

PREFACE

This is the Project Completion Report (PCR) for the Nucleus Estateand Smallholders V (NES V) Project in Indonesia, for which Loan 2007-IND inthe amount of US$161.0 millior, was approved on May 28, 1981. The loan wasclosed on December 31, 1990, 2-1/2 years behind schedule. Due tc the scalingdown of original project targets, together with loan savings fromdevaluations, only 582 of the Bank loan amount was utilized, US$58.1 millionwas canceled during the project implementation period and the undisbursedbalance of US$8.8 million was canceled upon closing of the Loan Account onJune 7, 1991.

The PCR was prepared jointly by the Asia Region staff in theAgriculture Division of the Technical Department and Country Department V(Preface, Evaluation Summary, Parts I and III) and the Borrower (Part II).Preparation of this PCR is based, inter alia, on the findings of a missionwhich visited Indonesia in March 1991, on the Staff Appraisal Report, the LoanAgreement, Supervision Reports, correspondence between the Bank the Borrower,and internal Bank memoranda.

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PROJECT COMPLETION REPORT

INDONESIANUCLEUS ESTATE AND SMALLHOLDERS V PROJECT

(LOAN 2007-IND)

EVz-LUATION SUMMARY

Objectives

1. The Nucleus Estate and Smallholders V Projects (NES V) was thefifth of a series of Bank-financed projects supporting the Government ofIndonesia's (GOI's) Nucleus Estate and Smallholders tree crop developmentprograms. The Project's main objectives were to: (a) resettle 19,800 familiesin West Java and West Kalimantan Provinces and to improve their livelihoodthrough tree crops and food crop development; (b) promote non-oil exportsthrough the establishment of 26,500 ha of oil palm, 8,700 ha of rubber and10,400 ha of coconuts for smallholders and estates; (c) promote institutionaldevelopment in the estates sector through techaical assistance and upgradingof the Estates Training Institute (LPP). Four public sector estate companies(PTPs) were to implement the tree crop components of the Project, which waslaunched at a time when the Government of Indonesia (GOI) and the Bankconsidered that the initial NES projects had demonstrated that use of publicsector estate companies (PTPs) was a successful and replicable model. At thetime, with ample oil revenues, GOI was keen to move ahead vigorously, withprograms in various sectors to ensure the oil windfall benefitted poorerpeople in all regions of the country. As part of this policy, the Governmentwould shortly commence a parallel NES program wholly financed domestically.

Implementation Experience

2. In retrospect, the Project appears to have suffered from somesetbacks due to its design, and the rapid expansion of the Bank-assisted andwholly Indonesian-financed tree crop development programs. As improvements tothe earlier organizational arrangements had only just been made, NES V was ina sense based on a design still to be proven, although this was not recognizedas a risk at the time. A complicated land ownership problem in West Java wasadequately described in the appraisal report, and considered to have beenresolved by formal alienation of the project land by the Governor. Howeverland disputes continued throughout the project life, causing delays andfragmentation of sites. Although participants were consulted during projectpreparation, in the event the NES settlement model proved not to be attractiveto many of the West Java participants. The very substantial expansion,without new equity, of the PTPs, especially PTP XI, to be financed wholly fromloans and retained earnings, proved to be an undue risk which led to severeliquidity problems.

3. With these problems and management difficulties, the smallholderplanting targets were scaled back from 32,400 ha to 18,280 ha, and the numberof smallholder families reduced from 19,800, with approximately 10,000effective beneficiaries (that is, those on rubber and oil palm plots) to about

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15,000 at Project Closing. Roads and track requirements had to be increased.Nucleus estate planting targets (13,200 ha) were achieved and at Closing NESplantings had reached 13,546 ha. With reductions in project targets anddevaluations, the loan size was reduced from US$161.0 million to US$102.9million. To permit completion, the original Loan Closing date of June 30,1988 was extended to December 31, 1990.

Results

4. The quality of rubber and oil palm is in general satisfactory, andyields are expected to be 90% and 78Z respectively, of appraisal estimates.However, much of the coconuts, which represent 31? of the smallholdercomponent and 5? of the nucleus component, are of poor quality. Coupled withthe fact that Staff Appraisal Report (SAR) yield assumptions for hybridcoconuts, a new crop for Indonesia, have proven to be over-optimistic, it isnow estimated that coconut yields for smallholders will only be some 30Z ofappraisal forecasts. Contributing factors include acceptance of marginal'ands into the Project in view of land shortages in West Java, a total lack ofprior experience in hybrid coconuts (a new crop) by PTPs XI and XIII, and lowcopra prices. Although some remedial actions might improve the situation, atthis time the coconut components are considered to have failed. TheGovernment is currently reviewing the experience. The Project's rubber andoil palm components have benefitted about 10,000 poor smallholder families andgenerate about 6,000 new jobs (equally for men and women) on the nucleusestates aud smallholdings. The economic rate of return for the Project as awhole, including coconuts, is estimated at 11? compared to the appraisalestimate of 16Z. The financial rate of return for the Project as a whole isestimated at 14? (financial rates of return were not estimated at appraisal).The LPP expanded its support to tree crops, ard technical assistance to DGEplayed a useful role.

Sustainabilit

5. No particular environmental issues arise. The projections offuture benefits from rubber and oil palm have assumed that maintenance bysmallholders, especially fertilizer usage, will continue at less than optimallevels. The projections have also allowed for yield reductions fromsubstandard plantings. With these assumptions, project rubber and oil palmbenefits as projected are considered sustainable, but they could be enhancedby further GOI support. Better and adequately maintained roads would increasethe value of farm output. Mature phase extension services could assistfarmers, individually or collectively, to follow good maintenance andharvesting procedures and produce better quality output. The situationconcerning coconuts at the West Java sites should be reviewed promptly todetermine whether remedial measures are still possible and warranted. Inorder to ensure that the benefits of past investments are realized, theGovernment is considering a project which would deal with the mature phaseneeds of all NES projects for possible assistance by the Bank.

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Findinas and Lessons

6. Despite the substantive implementation difficulties, the Projectdemonstrates the robustness of rubber and oil palm investments it. Indonesiaand the case for accepting risks in development for projects. Following arekey lessons learned in this and earlier NES projects: (a) risks involved inrapidly expanding a program should, moving into marginal areas and introducingnew crops, be more thoroughly discussed in appraisal reports in order to focusattention on ris'- management; (b) land for development should be secured atthe outset not just in legal terms, but in a sufficiently in-depth processinvolving the target participants and seeking their views on project design;(c) if a design involving multiple agencies cannot be avoided, a strongcentral unit with clearly defined responsibilities, authority and financing isneeded; (d) contingency funds to respond to defects, or pest or diseaseattacks should be provided, and (e) multi-year budgeting is necessary in treecrop projects.

7. Finally, there is need to review the status of mature phasemanagement of smallholdings, as with restricted budgets, DGE has only beenable, through Team Khusus, to provide limited leadershiip to smallholders tohelp ensure the sustained development of the holdings. There is a high pay-off to maintaining extension services in the mature phase, to help ensure thatthe benefits of the sunk investments are achieved.

PROJECT COMPLETION REPORT

INDONESIA

NUCLEUS ESTATE AND SMALLHOLDERS V PROJECT(LCAN 2007-IND)

I. PROJECT REVIEW FROM BANK'S PERSPECTIVE

Proiect Identity

Name : Nucleus Estate and Smallholders V ProjectLoan Number : 2007-INDRVP Unit : AsiaCountry : IndonesiaSector : AgricultureSub-sector : Tree Crops

Background

1.01 The Nucleus Estate and Smallholders V (NES V) Project was thefifth in a series of Bank-financed projects undertaken to support theGovernment of Indonesia's (GOI's) strategy to reduce poverty in the ruralareas through the development of tree crops (rubber, coconut and oil palm) toprovide poor farmers with improved and sustainable incomes. The Project madeuse of the technical and management expertise of the government-owned estatecompanies (PTPs) to plant blocks of tree crops and maintain them up tomaturity for sub-division to participating farmers. The PTPs also providedprocessing and marketing services and developed villages and social facilitiesfor the intended settlers.

1.02 The NES V Project was initiated at the request of the Governmentto support its objectives in the agricultural sector to: (a) createproductive employment to raise the incomes of the rural poor; (b) increasedomestic food supply to keep pace with rising demand; (c) expand agriculturalexports, particularly of smallholder tree crops; and (d) ensure productiveand sustainable use of Indonesia's land, water and other natural resources.As with the preceding Bank-assisted NES projects, the NES V project focused onthe development of tree crops on a sustainable and large enough scale tocreate a positive impact on employment opportunities, poverty alleviation anddevelopment of non-oil exports.

Obiectives and Description

1.03 In line with the Government's agricultural sector objectives, theProject's main objectives were to: (a) resettle some 19,800 local families inWest Java and West Kalimantan, with the intention of improving theirlivelihoods through tree crops, food crops and home garden development;(b) undertake estate development in Bengkulu which would permit smallholder

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participation in subsequent projects; (c) increase domestic production ofrubber, oil palm and coconuts, with a view to export expansion/importsubstitution; and (d) promote institutional development in the estate sectorthrough staff training and technical assistance. ,he Project would be locatedin three provinces encompassing seven sites with a total gross area of about79,000 ha: West Java (5 sites with about 42,500 ha); West Kalimantan (1 siteof 30,000 ha); and Bengkulu (1 site of 6,300 ha). The Project would have thefollowing major components:

(a) Smallholder Development: Planting of 3,700 ha of rubber, 6,700 haof coconuts, and 8,000 ha of oil palm in West Java bv PTP XI;3,000 ha of coconuts in West Java by PTP XIII; and 11,000 ha ofoil palm in West Kalimantan by PTP VII, together with thedevelopment of food crops, house gardens, roads, housing, andvillage infrastructure for 19,800 families;

(b) Nucleus Estate Development: (a) establishment of 4,000 ha oilpalm and a 180 ha seed garden for coconuts by PTF XI (West Java),700 ha coconut area by PTP XIII (West Java), and 3,500 ha oil palmarea by PTP VII (West Kalimantan); and 5,000 ha rubber by PTPXXIII (Bengkulu) to serve as a nucleus for future projects; and(b) related infrastructure including estate housing, buildings,roads, and processing facilities;

(c) Technical Assistance and Program Sup2ort: (i) consultants'services tc assist the various estates; (ii) consultants'services and training for a special team in the DirectorateGeneral of Estates for Nucleus Estate and Smallholders Projects(Team Khusus) to ?trengthen its capacity to implement th3s andfuture projects, and identify/prepare future projects;(iii) expansion of the Estates Training Institute (LPP) atYogyakarta in Java; the establislment of an LPP campus at Medan inNorth Sumatra, and LPP sub-centers at various PTP offices in Javaand Slmatra to train field staff; and (iv) provision for start-upactivities for fature Bank-assisted NES projects.

Design and Organization

1.04 Project design followed the concept of the preceding four NESprojects, and continued the organizational arrangements as modified under NESIII and NES IV. Smallholder beneficiaries were to be settled from theprovince concerned, rather than other provinces as was the case under earlierprojects, although the reason for this narrower focus was not st8ted. TheStaff Appraisal Report (SAR) mentioned the existence of 500 indigenous (Dayak)families in the West Kalimantan area, who had given up land to the Project andwere to be eligible as project participants. The project documents did notdiscuss in any detail the beneficiary target group or environmental matters.

1.05 The Project relied upon the technical and managerial resources ofPTPs to establish tree crops, food crops and physical infrastructure for thesettlement of smallholders around the PTPs' own nucleus estates. PTPs YI andXIII would undertake smallholder developirent at five sites in West Java

described as abandoned forestry reserve land in the final project brief, andPTP VII at one site described as government land in West Kalimantan. PTPXXIII was to focus only on nucleus estate development at Seluma in BengkuluProvince. At maturity of plantings, smallholder families in West Java wereeach to receive 1.5 ha tree crops while those in West Kalimantan would receive2 ha. In addition each family in West Java would be allocated 0.5 ha for ahouse, garden and food crops, and in West Kalimantan 1.0 ha for thesepurposes. The PTPs would employ, on the project site until maturity ofsmallholder plantings, one member from each household selected to participatein the Project. Bank Rakyat Indonesia (BRI) would administer, as"chaninelling agent", the credit that Government would provide to thesmallholders, and would be responsible for the collection of smnallholder loanrepayments on behalf of the Government.

1.06 The provincial authorities of West Java and West Kalimantan wereexpected to provide health, education, social and food crops extensionservices to the smallholders, including the construction of health andeduL_-.:on facilities through the Government's public works programs. In eachprovince, a Provincial Coordinating Committee (PCC), whose members were toinclude the Bupati (district head), the head of the local tree crop extensionservice, the project manager (that is, the President Director of the concernedPTP), the site managers, the provincial head of BRI, and representatives ofother relevant provincial agencies, would coordinate activities and assist insettler selection.

1.07 The staff appraisal report, and more particularly the finalproject brief for the Project, reflect the view that the initial NES prcjectsstarting in 1977 had sufficiently demonstrated that the use of the PTPs forsmallholder development, in an environment of scarce technical and managerialskills was a successful and replicable model for the tree crop sector. It wasnoted in the final project brief that the Government was seeking to rapidlyexpand the number of PTPs undertaking smallholder tree crops. At the time oilprices were high, and the Government was keen to expeditiously implementprograms in several areas, including irrigation and credit, to ensure that thebenefits of high oil revenues reached poorer segments of the population in allregions of the country. Shortly after NES V, the Government commenced aparallel NES program, wholly financed domestically, which placed additionaldemands upon the PTPs. The SAR noted that the Project would assist the DGE toconsiderably expand its future NES operations, and assume larger responsibi-lities in identifying, formulating, preparing, appraising and supervisingfuture projects. The first three NES projects were seen to be sufficientlyadvanced to assess their effectiveness. For these projects, plantings werereported to be on schedule and field development was good, but theconstruction of smailholder infrastructure was less satisfactory and themovement of smallholders to the project areas was behind schedule, causinglabor shortages for construction and maintenance. NES III and NES IV hadinitiated changes in design and organization, giving nucleus estates greaterautonomy, establishing Team Khusus to coordinate and oversee implementing, andfunding key start-up activities. The main risks discussed were that inprevious projects there was too great a diffusion of managementresponsibility, seen to be corrected, and that smallholders might not selltheir production to the nucleus estates.

1.08 In retrospect, the Project appears to have suffered some setbacksdue to its design, and the rapid expansion of the Bank-assisted and whollyIndonesian-financed tree crop development programs. In theory the design ofNES V was based on experience gained from prior NES projects. To cope withthe multiplicity of agencies involved in project execution, the projectmanagers (the concerned PTP President Directors) hal been given moreauthority, and the supervision and monitoring capability of DGE had beenstrengthened. However, it is questionable whether at the time of appraisalthese changes had been in place long enough to be considered well-tested. Inthat sense, NES V was based on an unproven rather than proven design. Thediffusion of responsibility caused by the multiplicity of agencies continuedto plague the Project and indeed the NES program during implementation. Theland ownership situation in West Java gave rise to difficulties which it hadbeen thought resolved during a post-appraisal mission, focussed on landissues. The SAR made it clear that much of the land at the West Java siteswas government land under cultivation by farmers who had eicher receivedpermission for use from village chiefs, or were using the land withoutpermission. By post-appraisal, the Governor had alienated all the areasproposed for development and the implication in the SAR was that the situationwas resolved. In any event, land disputes continued throughout projectimplementation, causing delays and necessitating changes of project sites insome cases to areas with poor access. In retrospect too, it would appearthat despite the attention to land ownership problems during preparation, theattitude of the authoritib_s at the time was that the program, centrallyconceived, was obviously in the interests of participants. The task was toexplain the Project and clear the way for its implementation, rather thanseeking participants' views on project design. The NES model - appropriatefor new settlement - was not modified to mreet the circumstances in West Java,where many participants were already established in the project sites and didnot wish to be resettled, and have their agriculture directed to the extentinherent in the NES project design. For example, at PTP XI's sites in WestJava, more than 700 families left their allotted homes to return to theirformer villages. Some warning of these problems may have been available toDGE at the time from experience with a component for local farmers in the NESII Project.

Implementatioa

1.09 Because of difficulties with land acquisition in West Java, poormanagement by PTP VII, and difficulties in recruiting settlers from within theprovince in West Kalimantan, the smallholder planting targets were scaled backfrom 32,400 ha to 28,280 ha, and associated settler recruitment and housingtargets were to cover 15,127 families rather than 19,800. It was necessary toincrease the targets for construction of roads and tracks, as requirementswere found to be much greater than anticipated at appraisal. Nucleus estateplanting targets (13,200 ha) were achieved, except at Seluma where targetswere reduced from 5,000 ha to 4,650 due to shortage of land. Implementationwas constrained by many factors, some project-specific, and some common to theNES program as a whole (para. 1.22). These constraints adversely affected thequality of tree crop establishment, and necessitated a 2-1/2 year delay inLoan Closing.

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1.10 As with all NES projects, this Project was designed to bedeveloped and managed as block-r,'anting units in which the PTPs wereexperienced. This arrangement met with setbacks and disruptions duringproject implementation, and much of the land previously demarcated sites forthe Project was either not acquired or was found to be tc.pographicallyunsuitable. Project management was compelled to identify and locate new sitesfurther away from the nucleus estates. Particularly in West Java, whereshortages of suitable land were more acute, the tree crop development becamevery fragmented as compared to the proposed compact design.

1.11 Pro ect Costs and Disbursements: Utilization of the Bank Loan wasmuch lower than anticipated largely due to devaluations of the rupiah duringthe implementation period, but also because the physical targets were scaleddown. Out of the Bank loan of US$161.0 million, oi.ly US$94.1 million or 58Zwas disbursed. A total of US$58.1 million was canceled during loanimplementation. The original clos:ing date was June 30, 1988; but the Loan wasclosed only on December 31, 1990, after three extensions. Disbursementsagainst commitments were made until June 7, 1991, and the outstanding finalbalance of US$8.8 million was then canceled. Tables 3 and 5 in Part IIIpresent details of loan disbursements and project costs. At appraisal, theBank was to finance the foreign exchange costs of the Project, estimated at50Z; the actual results were that the Bank Loan coveved 522 of project costs.

1.12 Procurement: The main implementation issue concerningprocurement centered around the construction of housing, roads and tracks, andother infrastructure, contracts for which were to be awarded according tolocal competitive bidding procedures or by force account, as these small andscattered activities were unlikely to attract international bidders. Lucalgovernments were keen for contractors from their provinces to participate inthe Project, but suitable contractors from the local area were not alwaysavailable, givir.g rise to delays during the qualification assessment. PTPsdid not always adequately supervise the quality of contractors' performance,and some work, especially settler housing, was poorly executed.

Results

1.13 Smallholder Development: The physical targets achieved as aresult of the Project are presented in Part III, Table 4. The revisedphysical objectives of the Project, other than food crop development, wereachieved but only after considerable delay, however much of the coconutplantings and lesser areas of rubber are of substandard quality. In addition,SAR hybrid coconut yield assumptions for NES V, and the Smallholder CoconutDevelopment Project (Loan 1898-IND) commenced shortly before have proven to besubstantially over-optimistic, being based on experience with hybrid coconutsin other countries. In view of this, and uncertainty concerning thesmallholder future compliance with recommended fertilizer use, the PCR missionhas assumed that yields will be considerably lower than those forecast atappraisal, as detailed in Part III, Tables 10,11 and 12. The PCR estimatesare that rubber, oil palm and coconut yields will be about 90?, 72?, and only302 respectively of the appraisal estimates. The problems of coconutdevelopment are discussed in the following paragraph. For rubber and oilpalm, the Project has directly benefitted about 10,000 families (51? of the

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appraisal targets) and has generated about 6,000 new jobs on the nucleusestate and smallholdings. The number of project beneficiaries and employmentgeneration are lower than appraisal estimates as a result of the scaling down,during implementation, of project targets due to land problems. About one-half of the jobs created under the Project were or are currently held bywomen.

1.14 Smallholder coconut development comprised 9,300 ha or 31Z of thetotal smallholder plantings of rubber, oil palm and coconuts. Nucleus estatecoconuts account for 700 ha or 52 of the total nucleus estate plantings. Therecalculated coconut ERRs range from 0X at Cimerak to 62 at Bantar Jaya-Ciemasand although some remedial actions might improve the returns, at this time thecoconut components are considered to have failed. Contributing factorsinclude: (a) acceptance of difficult sites in West Java, where landconstraints dictated use of less than ideal sites - for example at Ciemas theelevated, windy, and steep site proved unsuitable for cultivation; (b) theland ownership problems and lack of analysis of participant interest, forexample at Cimerak; (c) a lack of prior experience in hybrid coconuts by PTPsXI and XIII (a new crop to the PTPs altogether), which contributed toinadequate management leading to poor establishment and inadequate fertilizingand upkeep of the trees; and (d) low copra prices compounded by delays inestablishing processing facilities in the area, and the exclusion of privatetraders. The failure of the hybrid coconuts appears to be project- ratherthan crop-specific. The PCR for the Smallholder Coconut Development Project(SCDP) (Report No. 8135) which was implemented at the same time as NES V, butnot through the NES approach, reported success in the introduction of hybridcoconuts once farmers were convinced of the advantages over "tall" coconutsand they had received training in the new technology. Palms already in fruithad potential yields, allowing for the 182 substandard plantings, wereconsidered to be 2.77 t/ha, or 71% of the SAR estimate of 3.9 t/ha. Therevised ERR was 12.6Z. The draft Project Performance Audit Report (PPAR) forSCDP has expressed concern as to whether yields would be sustained in theabsence of extension workers explaining the incremental benefits of continuedfertilizer usage. Withotit such advice the PPAR considers yields couldpossibly drop to 2.3 tlha. The Government is currently reviewing the NES Vhybrid coconut performance.

1.15 The distribution of land for food crops was completed but issuanceof titles was delayed due to slow progress in surveying. Overall thedevelopment of the food crops for additional income did not meet appraisalexpectations as soils were not suitable without continued fertilizer use.PTPs were not technically competent to provide the agronomic services forsustained food crop production, and there was a lack of credit facilities tofinance inputs.

1.16 Nucleus Estate Development: The quality of nucleus estate oilpalm and rubber, but not coconuts (see above) established by the PTPs wasgenerally satisfactory, and appraisal physical targets were essentially met,although with delays. After considerable delays due to late planning,institutional constraints and slow progress in tree crop establishment, theconstruction of the palm oil mills was completed as planned to provide centralprocessing facilities for smallholder fresh fruit bunches (FFB) at Ngabang and

South Banten. Put farmers were confronted with transport difficultiesresulting from poorly constructed and badly maintained roads. The widelyscattered locations of holdings, particularly at South Banten, increasedtransport costs and posed collection problems as good quality FFB could not bedelivered to the mills on a regular and timely basis. The rubber factory atSanghyang Damar was upgraded and its capacity increased to process the rubberfrom the nearby holdings. PTP XI built copra mills at Bantar Jaya and Ciemasas planned at appraisal. However the capacity of both mills was scaled downin view of lower coconut yields than those anticipated at appraisal. AtCimerak, PTP XIII initially installed only kilns to produce copra as coconutproduction at this site was insufficient to justify construction of a mill foroil production. In 1988, however, the Association of PTP XIII Employees(Puskop PTP XIII) acquired and rehabilitated an old mill which currentlyprocesses nucleus estate and smallholder coconut production. The finances ofthe PTPs, in particular PTP XI, were particularly strained duringimplementation. The SAR presented summary PTP accounts as at December 31,1979, and commented that the financial standing of the PTPs was good and wouldsubstantially improve with the project investments, although cash flowforecasts were not presented. PTP XI in particular suffered severe liquidityproblems during implementation. The PTP XI project investments were valued atUS$49.7 million, compared to the PTP's 1979 total assets of US$38.0 millionand profits after tax of US$4.6 million. The new development was to befinanced without fresh equity, but would rely entirely upon loans and profitretention, which proved to be a risky financing plan.

1.17 Training and other Program Support: The training componentsought to further upgrade the capacity of the LPP at Yogyakarta, which hadbeen supported under the NES I Project, and to establish a new campus at Medanand four regional training centers. These objectives were substantiallyachieved. A board of trustees was appointed for LPP in 1982, the Institute'sprograms were rationalized, new well-qualified staff were hired, library andinformation facilities were expanded and upgraded, a new campus was developedand staffed at Medan, four Regional Training Centers (RTC) were built, andteaching and support facilities constructed at Yogyakarta.

1.18 Although the LPP had a less than immediate impact on tree croptraining, resulting, in part, from turnover of Directors, by project ClosingDate some improvements could be noted. LPP's staff mix of younger, moreacademically qualified people and experienced ex-PTP personnel had becomeacceptable to the client group; the Institute had a mission statement -- toassist the clients with the management of agro-technology -- which emphasizedthe role of LPP as a management training institute rather than an institutionwhich duplicated the role of research; LPP staff had begun to provide moreconsultancy (problem solving) services to the PTPs; and increasingly privateestates were requesting and paying for LPP assistance with their training andstaff development programs.

1.19 The remainder of the program support component provided forconsultancy serviLes to assist the DGE and PTPs implement the Project and theDGE in its overall smallholder development program. The program provided for386 and 297 months of internationally and locally recruited consultant timerespectively but actual months utilized were 250 and 263. At DGE, tree crop

8-

agronomists, financial experts and process engineers provided useful technicalsupport services in the field. Through the support program Team Khusus staffalso received training overseas in management and computer usage. The PTPsreceived consultancy services for (a) financial management and training ofcounterparts; and (b) design and supervision of processing facilities atNgabang, South Banten, and Bengkulu.

1.20 Economic and Financial Returns: The incomes of about lC,000 poorfamilies zeceiving rubber and oil palm holdings are estimated to increasesubstantially due to the Project. The economic rate of return (ERR) for theProject as a whole is estimated at 11Z. The comparison between economic ratesof return estimated at appraisal and PCR estimates, and PCR financial rates ofreturn (FRR) estimates (none were estimated at appraisal) are presented inPart III, Table 6. Re-estimated ERRs for the whole Project and all projectcomponents are lower than appraisal estimates due to the decline in projectedworld prices of rubber, oil palm and copra, delayed benefits resulting fromimplementation delays and more importantly, lower yield expectations due tosubstandard smallholder plantings. The ERRs for the Cimerak and Bantar Jaya-Ciemas smallholder coconut components are re-estimated at 0% and 6%respectively compared to 18X and 14% estimated at appraisal. The FRR for thewhole Project (estimated at 14Z) and for individual components are alsopresented in Part III, Table 6. The FRR for the two smallholder coconutscomponents are estimated at 02 for Cimerak and at 7% for Bantar Jaya-Ciemas,due to the pessimistic outlook on yield levels at these sites (para. 1.14).Although PCR price and yield estimates for rubber and oil palm are also lowertha.a those estimated at appraisal, FRRs for the other project components areall 14Z or better.

1.21 Environment: Little separate attention was paid at appraisal toenvironmental concerns as distinct from the normal attention to agronomicconcerns which provided for anti-erosion and other sound environmentalprocedures, and no specific implementation or monitoring measures werediscusseil. However, in general tree crop development by the Project had apositive impact on the physical environment. Prior to the Project, thevegetation in the project areas was either degraded secondary bush or alang-alang, a coarse grass which is particularly destructive to soil nutrients.Planting these areas with productive trees replaced large areas of alang-alangand reduced soil erosion in those areas which had been used for shiftingcultivation and had inadequate ground cover. During supervision, particularattention was given to ensuring proper treatment of factory effluent atNgabang, South Banten and Sanghyang Damar.

1.22 NES Program Implementation Problems: The NES V implementationexperience has much in common with other Bank-assisted NES projects, asdiscussed in the PCR for the NES VI Project (Report No. 9368). Summarizingfrom that report, NES projects as a whole fell short of expectations in threekey areas:

(a) Quality of Smallholder Plantings: The quality of much of thesmallholder rubber and coconut plantings established under NES Vand other NES projects was below expected standards. Substandardplantings were a result of: (i) poor field establishment and

-9-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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maintenance arising from faulty management by the PTPs, inadequatefunding and delays in the release of funds for essential inputssuch as fertilizers and herbicides; (ii) inadequate monitoring ofthe projects' implementation progress by Team Khusus and lack ofinspection services within DGE to visit project sites regularlyand provide objective feedback that would allow the Government totake timely remedial steps. Inspection services were establishedin 1990. For NES V, in addition to the above factors, oil palm atSouth Banten suffered extensive damage by wild animals.

(b) Food Crop Development: The development of food crops forsmallholders' subsistence and for supplementing smallholders'incomes did not meet expectations due to: (i) the PTPs' lack ofprev±jus experience and knowledge of the technology required forfood crop production on a sustainable basis; (ii) lack ofeffective extension service support and seasonal credit forfinancing further inputs to supplement first year inputs providedby the PTPs; and (iii) overly optimistic expectations about foodcrop cropping on largely poor soils in the project areas.

(c) Cost Recovery: The conversion of smallholder developmentexpenditures into smallholder loans (the first step in therecovery of credit) is seriously behind schedule. As for all Bank-assisted NES projects, it was stipulated that at the end of thethird year after planting, smallholder plantation and housingexpenditures by the PTPs would be converted into credit accountsfor which individual smallholders would then enter into loanagreements with BRI. Few such accounts have in fact beenestablished. A committee comprising senior level staff from therelevant Government agencies was established in 1988 to devise andoversee the implementation of procedures for accelerating theconversion process. While conversion criteria and procedures havebeen clarified and improved, the conversion process continues tolag due to: (i) substandard plantings; and (ii) delays by theGovernment Land Agency (BPN) in surveying smallholder plots andissuing land certificates required as collateral for smallholderloans, the Government Audit Agency (BPKP) in auditing smallholderdevelopment expenditures to determine the amount of individualsmallholder debt, and BRI in finalizing credit arrangementsfollowing inputs by BPN and BPKP. The Government continues tokeep the matter under review.

1.23 Apart from problems which were specific to individual projectsites and components, the main shortcomings in the implementation and resultsof Bank-assisted NES projects can be attributed to five principal factors:

(a) Inadequate Preparation. A particular difficulty in the Projecthas been the major complications associated with release of landfor project purposes. In a country where land ownership and usageis in the main decided by traditional processes, the experienceindicates that the Government cannot simply rely upon its legalpowers to alienate land for project purposes. The time-consuming

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processing of consultation with people in the area is alsoimportant for more clearly establishing that projects are reallyresponsive to beneficiaries' needs, and are not simply imposed ona top-down approach;

(b) Poor Quality of Management. The PTPs clearly have substantialtechnical knowledge and capacity to establish quality trees,maintain them properly and handle processing efficiently. Perhapsthe most outstanding constraint to the successful implementationof NES projects has been the quality of management, particularlyin the PTPs. Management was either not able, due to overstretchedcapacity, or was not sufficiently motivated or willing toimplement the projects to the standards contracted by them underthe Smallholder Development Agreements. In NES V, the PTPs'performance in the execution of project civil works left much tobe desired. The quality of settler houses was often below tenderspecifications, and roads of inferior construction were built (aproblem which is compounded by lack of regular maintenance). PTPsXI and XIII did not have in-house civil engineers to plan andsupervise conistruction and were reluctant to recruit thisexpertise when it was lacking even when funding was readilyavailable.

{c) Inadequate Monitoring of Project Implementation: To strengthenthe DGE's capacity to carry out its responsibility for overseeingthe execution of the Government's tree crop development program,agreement had been reached at the NES II negotiations that:(i) the Government would establish Team Khusus to assist DGE inthe planning, execution and monitoring of NES projects; and(ii) DGE would employ consultants to provide inspection servicesto visit projects regularly and to provide objective feedback thatwould allow the Government to take timely remedial steps toresolve major implementation problems. Although Team Khusus wasestablished as agreed, it was not provided with sufficientresources to adequately carry out its responsibilities, in partbecause Government finances later in the 1980s became severelyconstrained as oil prices fell. Moreover inspection serviceswhich would have supplemented Team Khusus' role were notestablished. Establishment of the inspection services wasinitiated only in 1990 -- too late to benefit the implementationof past NES projects. In hindsight, it would have been desirableto include in the Loan Agreements of past NES projects specificcovenants requiring establishment and financing of inspectionservices and satisfactory staffing and financing of Team Khusus,commensurate with its responsibilities.

(d) Delayed approval and Release of Budget Funds: Delays in theapproval and release of budgeted funds for smallholder developmentseriously slowed implementation. Moreover the amounts whenreleased were normally significantly less than the amountsrequested by the implementing agencies. Delays also resulted fromthe limits imposed by the Government on unit costs for settler

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houses and roads being unrealistically low. The constraints onunit costs were removed only in the 1988-89 budget, aftercontinued representations by DGE to the Ministry of Finance andBappenas. It is also only recently that the Government has changedprocedures for funding smallholder tree crop development projectsto allow timely approval of budgets and release of funds toproject agencies.

(e) Lack of Mature Phase Extension: Smallholders have not receivedadequate extension service support from the PTPs and otherGovernment agencies after tree crop maturity to ensure continuedviability of smallholdings, through attention to tree cropmaintenance, harvesting, crop transportation, processing,marketing and credit recovery.

Sustainability

1.24 The projections of future benefits from rubber and oil palm haveassumed that maintenance by smallholders, especially fertilizer usage, willcontinue at less than optimal levels. The projections have also allowed foryield reductions from substandard plantings. With these assumptions, projectbenefits as projected are considered sustainable, but they could be enhancedby further Government support. Firstly, better and adequately maintainedroads would increase the value of farm output. Secondly, mature phaseextension services could assist farmers, individually or collectively, tofollow good maintenance and harvesting procedures. Thirdly, assistance mightbe provided to farmers to assist them to produce better quality output.Practical approaches include providing farmers with low-cost group processingfacilities such as those planned for rubber smallholder (Smallholder RubberDevelopment Project II - Loan 2494-IND) and PTP XIII's copra drying method forsmall group of farmers. Finally, the situation concerning coconuts at theWest Java sites should be reviewed promptly, to determine whether remedialmeasures are still possible and warranted. In addition, Government has inmind a project to deal with the mature phase needs of all NES projects, forpossible assistance by the Bank. This should be pursued urgently to ensurethat the benefits of the past investments are realized.

Bank Performance

1.25 In retrospect, it appears that the appraisal report could havediscussed more fully the risks inherent in the complex administrativearrangements, including those for credit, land availability and suitability,participants' interests, the yield projections particularly those forcoconuts, and the financial effects of the Project on the PTPs, particularlyPTP XI. Risk discussion in SARs generally tends to focus on risks which havebeen countered and to gloss over or ignore risks accepted. In the case of NESV, it can be argued that it was correct to proceed in spite of risks, for inthe event the Project has an acceptable rate of return and has benefitted manysmall farmers. However, if Bank practice provided for a more frank discussionof risks, more attention might be focussed during implementation on themeasures needed to manage them adequately. Supervision of such a large

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project was greatly facilitated by it being handled from the resident mission.Although substantial Bank staff resources were deployed in discussing withGovernment possible measures for addressing implementation problems, the Bankwas not prepared to insist upon compliance with important covenants, such asthe requirement under the NES II Loan to create inspection services for treecrops. In the later years of the Project, as the implementation problems ofthe program as a whole were becoming apparent, the Bank followed acomprehensive approach to their resolution, and linked the achievement ofprogress on a prioritized list of problems, to key actions such as closingdate extensions, loan re-allocations, and consideration of further projects.This supervision strategy was successful in keeping a focus on, and makingprogress on the main implementation issues.

Borrower Performance

1.26 During project implementation, Government performance was weak insome critical areas: (a) delays in approval and release of funds; (b) inade-quate funding; (c) DGE's supervision input through Team Khusus was inadequatedue to staff and fund constraints; (d) the formation of an independentinspection team to support DGE's activity was significantly delayed; and(e) the cooperation and coordination between the project management staff, theDGE, provincial governments and other line ministries was not sufficient toachieve timely and efficient implementation. Recognizing these weaknesses,the Government took actions to address these problems including granting DGEclear authority over the tree crop development program, improvements in thebudgeting and financing procedures for tree crop projects, seeking consultantinspection services, and establishing a special committee to expedite creditrecovery. The Government's action plans were considered constructive andsecured further Bank participation with extensions of the Closing Date toDecember 1990.

Pro]ect Relationships

1.27 A key difficulty in the early years of the Project was a differ-ence in view between the Bank and the Government concerning the authority ofthe DGE over the PTPs. The Ministry of Agriculture was reluctant to grant DGEthe degree of authority the Bank considered desirable for effective projectexecution. The issue was far from theoretical as the Ministry was requiringPTPs to greatly expand their participation in the Government's parallel (PIR-Khusus and Lokol) programs. Otherwise the Bank, through its resident missionstaff, maintained good relationships with the PTPs, DGE-Team Khusus and allother relevant Government agencies involved in project implementation. TheBank's supervision interaction with Government focused on actions required toresolve project specific problems and generic issues which impeded efficientdevelopment of the tree crop subsector such as those concerning delayedreleases of approved budget funds, the inadequacy of major budget amounts, theinadequacies of Team Khusus, the lack of inspection services, the need formore effective conversion of smallholder credits, the introduction of agreedcredit recovery procedures and attention to auditing problems.

1.28 Tackling the underlying causes of delays in project implementationsuccessfully, required close coordination among DGE, the PTPs and the local

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government agencies which were responsible for acquiring land for smallholderdevelopment, village infrastructure and social services for the recruitment ofsettlers. Overall, the concerned agencies, including the PCCs, which weremeant to work closely with the PTPs in project implementation, did not fullyfunction as a team as envisaged.

Project Documentation and Data

1.29 The Loan Agreement provided some safeguards for satisfactoryproject implementation, but late compliance in funding, financial reporting,auditing of project accounts, release of land for development, slow issuanceof land titles, slow establishment of smallholder credit accounts, and delayedcompletion of processing facilities nevertheless occurred with negativeeffects on implementation and were the subject of continued representation bythe Bank.

1.30 The SAR adequately described land issues, but the Governmentalienation of land failed to resolve them, was optimistic in hybrid coconutyield assumptions, did not discuss financial uncertainties arising from loanfinancing of major investment programs by the PTPs, and superficial, inkeeping with general Bank practice, in its discussion of risks. It providedguidelines for implementation through the immature phase but was short ofdetails for sustained mature phase development which was relevant to oil palmand coconuts.

1.31 Data on the status of project activities reported throughout theProject were initially recorded by several agencies without the benefit ofcross-checking for accuracy and consistency. As a result, the data compiledby Team Khusus were often inconsistent with the data provided by the PTPs atproject sites and at PTP head offices. This Report is based on: informationgathered by a Bank mission which visited the project sites and implementingagencies in March 1990, (b) the SAR, supervision reports and other internalproject documents, and (c) data provided by the PTPs, LPP and Team Khusus.Despite the mission's efforts, accuracy of some of the data provided by thePTPs could not be verified.

Conclusions and Lessons Learned

1.32 Despite delays and problems encountered during project implement-ation and less than expected results achieved - substandard smallholderplantings, failure of the coconuts and food crop components, a non-effectivecost recovery system - the Project has achieved a satisfactory rate of return(11Z) and has been successful in benefitting about 10,000 farm families andcreated about 6,000 new jobs. The training component has helped furtherdevelop an institution for training farmers and estate managers. Key lessonslearned in this and similar NES projects include:

(a) it is essential that all land for development should be wellidentified before starting any major development. This processshould not only involve the target people during preparation aswas done, but also to promote their greater participation and seektheir input on the intention and scope of the Project.

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(b) any project which involved several participating agencies shouldhave a strong central coordinating unit with clearly definedresponsibilities and authority throughout the life of the Project,including adequate trained staff and funding:

(c) the management capacity of an implementing agency should not beoverstretched, and if it is a semi-autonomous agency such as aPTP, it should be a willing participant, undertaking a developmentproject best suited to its management capability and style.

(d) central processing is suitable for tree crop projects planted incompact blocks, but for projects with scattered plantings centralprocessing poses problems.

(e) for a tree crop project, it is necessary to have contingency fundsimmediately available to correct defects (or pest or diseaseattack) before the cost of correction escalates;

(f) government financing commitments for a tree crop project should belonger than one year's activities because land clearing andnursery establishment in one year presuppose planting in the next,and then maintenance to maturity. Multi-year budgeting isrequired;

(g) support for training should distinguish between reasonableexpectations for short term impacts, and the slower process ofdevelopment of training institutions, where benefits will in themedium term.

1.33 Finally, there is need to review the status of mature phasemanagement of smallholdings, as with restricted budgets on'ly limited effectiveleadership has been provided by Team Khusus so far to ensure the sustaineddevelopment of the holdings. The Bank should accord high priority toresponding to Government's request for support in this area.

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PROJECT COMPLETION REPORT

INDONESIA

NUCLEUS ESTATE AND SMALLHOLDERS V PROJECT(LOAN 2007-IND)

II. ProJect Review From Borrower's Perspctive

Introduction

2.00 The information 'n Part III of the report primarily came from therecords of the nucleus estate implementing agencies, i.e., PTP VII, PTP XI,PTP XIII and PTP XXIII so far as these data pertain to protect siteaccomplishments. These field data were checked by Tim Khusus and re-checkedby a Bank mission which visited the project sites and implementing agencies inMarch 1991. Other data presented in Part III originates from the SAR,supervision reports and from the files of Team Khusus and LPP.

2.01 Part I is a perceptive and insightful analysis and evaluation ofthe Bank and is an accurate assessment of the Nucleus Estates andSmallholder V Project during the project preparation and implementation.Likewise, the systemic issues and problems raised by the Bank in Part I ofthis report provides an in-depth evaluation of the various Nucleus Estates andSmallholders Projects. This analysis and evaluation presented by the Bank andthose in Part II of this report presented by the Borrower would be importantsources of insights in future courses of actions especially as these relate tofuture Nucleus Estates and Smallholders Projects and even are applicable toother estates crops projects in Indonesia.

Bank Performance

2.02 The International Bank for Reconstruction and Development (IBRD)up to the present is the largest foreign lender in the estate crops sub-sectorin Indonesia when jointly with the Government of Indonesia both started theimplementation of the Nucleus Estates and Smallholders I Pro 3ct in late 1977.Prior to this date the International Development Association a sister companyof IBRD, assisted selected government-owned estate crops enterprises in theirrehabilitation and expansion programs. The assistance of the IBRD has notonly been on a project-specific basis or in the determination of certaincommon issues and problems of various estate crops projects, assessing themand suggesting solutions, but also in certain macro-economic aspectspertaining to the estate crops sub-sector.

2.03 Supervision by professionals from IBRD and consultants it hiredconducted regular missions not only for this project but for all other estatecrops projects the Bank has been assisting during the loan period. Theseinspection missions were useful in identifying project-specific issues andproblems including solutions which serve as a basis in the identification,

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assessment and recommendations related to common issues and problems. Asidefrom these supervision missions the Bank's professional staff stationed in theResident Staff of Indonesia were available for discussions and consultation toresolve certain problems in between these supervision missions. These inputswere important in improving project implementation. Based on hindsight, theBank should have fielded, depending on the state of the project implementa-tion, specialists not only on most of the various physical aspects and financebut also in relation to the smallholder component, specialists in extension,smallholders organization, training including of farmers, sociology/anthro-pology and food crop agronomy. These aspects should not have only beenconsidered during project implementation by way of training of staff andconsultancy but should have been sufficiently assessed as part of the projectpreparation.

2.04 Notwithstanding these hindsights, both the government officialsconcerned and the Bank's professionals coordinated closely with each other toimprove the performance of the projects during the loan period. At a laterstage of the implementation of the Nucleus Estates and Smallholders Projectsthe use of action plans was introduced by the professionals of the Bank as aresult of supervision missions. These action plans were discussed withgovernment agencies concerned and agreements reached on courses of actions tobe taken. This tool help in improving project implementation. Furthermore,at a later stage a sharper focus on specific issues and problems wasemphasized which developed skills in problem solving and had likewise animpact on project performance.

Borrower's Performance

2.05 Project identification was performed by the government andassessed by the Bank. The expected nucleus estate implementing ag nciesconducted the initial surveys of proposed project areas which was tullowed upby a feasibility study by an independent team of consultants. Later, Bankprofessionals and its hired consultants conducted the appraisal. During thesevarious stages of project preparation various government agencies concernedwere consulted and meeting were conducted to thresh out identified issues andproblems considering improvements made during the first NES projects. NES Vfollowed the past project design and incozporated project-specific problemsidentified, such as, size of smallholders areas in West Java consideringpopulation density. The early NES projects were started during a short periodand not enough experience had been gained hence features which could haveaffected project design and implementation were not incorporated.

2.06 Sufficiency and capability of various government staff includingthose of nucleus estates implementing agencies were not assessed duringproject preparation hence the required staffing and training were not part ofthe project design. Staffing requirements were therefore partially addressedduring project implementation considering constraints and training was basedon learn as you gain experience.

2.07 Reliance was therefore placed on consultants in areas identifiedbut not all of these areas with significant impacts on project performance

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were considered during project preparation considering that sufficient projectimplementation had not been gained.

2.08 Coordination among various govermnent agencies had also to be doneas a result of issues and problems arising from project implementation. Thesecoordination issues and problems were not reasonably identified during projectimplementation since the role3 and functions of each of these governmentagencies were not clearly enumerated as these roles and functions pertained toproject implementation. Because these project-specific roles and functions ofvarious government agencies had to evolve during project implementation, theintegration of various elements and factors of pro,ject implementation wasinadequate resulting in not so sound sequencing o. various project componentsaffecting project performance.

2.09 The continuing delay in yearly budgetary approach of credit andnon-credit financing for the smallholder development followed by the delay inreleasing of funds, and the unit cost set up for development based on regionsinstead of project-specific costs also have contributed to the poor quality ofproject performance and to a .'ertain extent the low utilization of the Bankloan.

2.10 The overhead and management fees for the smallholder components tothe nucleus implementing agencies was based as a percentage of estate cropsfield establishment cost hence these nucleus estate implementing agenciesplaced emphasis on estate crops field establishment instead of sequencingimplementation of various project component on a sound basis considering theirinterrelationships to achieve hetter performance. These fees were likewiseinadequate so that the nucleus estate implementing agencies had to spend theirown funds to implement the smallholder components.

2.11 In the case of the nucleus estate components, where the scope ofthe project's activities, among others, was the establishment of facilities ofprocessing and marketing, delays in implementing the project's activities,both in the nucleus estate and smallholder development has adverse impact, onthe production schedule and productivity which resulted in the deteriorationof the capital structure, profitability and the liquidity ratios of therelated PTPs as Nucleus Estate.

2.12 Since the support required of government agencies concerned wasnot reasonably assessed during project implementation, those governmentagencies did not have sufficient financial support to undertake the work theywere commissioned to perform.

Borrower and Bank Relations

2.13 Notwithstanding deficiencies as a result of inadequate experiencewhich resulted in certain shortcomings in project design and implementation,the Borrower and the Bank were in close coordination with each otherespecially the Team Khusus and the nucleus estate implementing agencies. TheDirector General of Estates coordinated closely with Bank officials especiallyon problems and issues requiring resolution by higher authorities of govern-ment. Team Khusus closely coordinated with the Resident Staff in Indonesia in

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resolving certain problems and issues identified in the action plans andconducted the necessary meetings with Bank professionals and representativesfrom government agencies. The supervision mission closely coordinated withthe nucleus estates implementing agencies to improve project performance.

2.14 When requested the Bank staff with the Resident staff in Indonesiaand later on with those at the Bank's Headquarters provided the requiredassistance not only to resolve issues and problems but even to amend certainprovisions of the Loan Agreement. This close coordination between theBorrower and the Bank was an important element 4.n raising project performance.

Lessons Learned

2.15 The NES concept is sound not only as a vehicle of social andeconomic development but also as a mode of pursuing a commercial venture.Nonetheless, to increase its effectiveness and efficiencies certain changes inproject design during project preparation has to be incorporated and theirfeatures adhered to during project implementation. Among others, thesefeatures should consider:

(i) A sufficiently detailed land suitability survey should beconducted. Land availability should not only considerexisting laws on land embodied in statutes but should includecustomary and traditional practices pertaining to land by thelocal inhabitants.

(ii) Manpower adequacy and capability of the estate cropsenterprise including those for a specific project area and atleast important government agencies concerned have to besufficiently addressed.

(iii) Aside from a multi-year budgeting, a stable and adequatesource of local funds should be available and budgeting ofcosts based on project-specific requirements.

(iv) All aspects of functional areas especially as this pertains tothe smallholder component has to be sufficiently assessed.

(v) The fees for the nucleus estate implementing agencies have tobe adequate and based on a per unit of physical accomplishmentto be paid for work completed based on findings and assessmentof inspection services. All aspects of physical accomplish-ment and related activities have to be considered indetermining the fee per unit of work performed.

(vi) The roles and functions specific to project implementation ofvarious government agencies concerned has to be clearlyenumerated and interrelationship between these agenciesreasonably explained.

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(vii) Support requirements not only for the project but in case ofseveral projects of the same type should be sufficientlyassessed, such as, research, training, consultancies,equipment and others.

(viii) Sequencing of various physical items and related factors haveto be clearly spelled out.

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PART III - STATISTICAL INFORMATION

Table 1: Related Bank Loans

Loan Year ofTitle Purpose approval /b Status Comments

1499-IND Support GOI's tree crop 1978 Closed PCR issued June 1988.NES I program. /a

1604-IND 1978 Closed PCR issued June 1988.NES II

1751-IND 1980 Closed PCR issued March 1989.NES III

1835-IND 1980 Closed PCR issued June 1989.NES IV

212b-IND 1982 Closed PCR issued June 1990.NES VI

2232-IND 1983 Under Loan extendedNES VII SPN to Dec. 1991.

3000-IND Improve oil palm and 1989 Under Loan effectiveTree Crops rubber processing SPN March 1989.Processing capacity and effi-

ciency.

/a All seven Bank-financed NES projects have an identical purpose --supporting GOI's program for the development of the major tree crops(rubber, oil palm and coconuts), using public estate companies (PTPs) todevelop tree crops on nucleus estates and smallholders with a view toimproving rural incomes and increasing production and export of non-oilcommodities.

lb IBRD Fiscal Year.

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Table 2: Project Timetable

Activity Planned Revised Actual

Identification - - April 1978

Preparation - - February 1980

Appraisal Mission - - October 1980

Loan Negotiations - - April 1980

Board Approval - - May 1981

Loan Signing - - June 1981

Loan Effectiveness - - September 1981

Project Completion June 30, 1988 - December 1990

Loan Closing June 30, 1988 June 30, 1989 December 31, 1990December 31, 1989December 31, 1990

22 -

Table 3: Loan DlsbursaAmftw

Fonial lyFiscal Actual Aja. Profi le At. Rovl*W Amt. Original Amt. Rav1u jAn%.Year Cumlative Cumulative Cumulat ia CuuIlatlv Cumlat4v.

Sep, 190Doe, 1990Mar, 1991Jun, 191

1982

Sop, 1981*Co, 1991Mar, 1982 .76 1.17Jun, 1962 2.34 1.03 2.00 2.34

1983

S*p, 192 6.31 2.06 6.00 5.40Doc, 1962 8.31 3.09 8.00 8.44Mar, 1983 10.69 4.12 13.00 11.20Jun, 1983 13.84 6.17 18.00 13.97

1984

Sap, 1963 10.78 8.23 20-60 16.70Doc, 1963 19.33 11.83 36.00 19.45Mar, 1984 30.13 16.43 43.00 30.07Jun, 1984 40.64 19.6v 61.00 40.61

Sop, 1964 44.35 23.67 O0.S0 43.26Doe, 1984 45.70 27.78 70.00 45.82Mar, 1985 46.68 31.90 78.00 47.26Jun, 1995 48.67 35i.60 86.00 48.69

199t

Sop, 1986 49.S1 39.10 96.00 60.31oc, 1995 61.84 42.70 104.00 61.9"Mar, 1998 63.31 46.30 112.00 64.60Jun, 1996 67.11 49.91 120.00 57.23

1987

Sop, 196 S8.93 53.51 12S.00 59.16Doc, 1988 W0.8 67.62 136.00 61.06Mar, 1987 62.61 61.74 148.00 63.30Jun, 1987 85.40 65.38 160.00 65.SC

1998

Sap, 1967 69.30 69.97 158.50 68.01DOC. 1967 71.32 74.09 161.00 70.47Mae, 1968 73.11 76.20 161.00 72.36Jun, 198 76.16 82.32 161.00 74.25

1969

Sop, 1966 7.84 S6.44 76.42Dec, 198S 0.48 90.55 7t.6CMar, 1969 81.54 94.67 42.00 60.00Jun, 1969 83.87 96.78 68.30 81.45

1990

Sop, 1969 84.89 102.90 73.75 62.66Doc, t199 6.69 102.90 79.20 64.2SMar, 1990 88.42 102.90 84.65 86.6UJun, 1990 89.64 102.90 90.10 n.00

1991

S*p, 1990 90.53 102.90 96.60 90.50oeo, 1990 92.03 102.90 101.00 92.00Mar, 1991 93.SS 102.90 106.00 93.50Jun, 1991 94.06 102.90 94.10

- 23 -

TABLE 4: Project Implementation

Appraisal Revised Actual as IUnit estimate estimate Actual Apr/Rev Est

sA %H0OUER DEVELOPMENT--- … ____ __ _*___

1. Ngabang (PTP VII)

a. Oil palm planting Ha 11,000 8,000 8,000 100%b. Roads:

- Primary km 60 9O 150%- Secondary km 140 375 268%

c. Settler housing No 5,500 4,000 4,000 100%d. Smallholder families No 5,500 4,000 4,000 100%

2. South Banten (PTP XI)

a. Oil palm planting Ha 8,000 6,296 79%b. Roads:

- Primary km 48 149 310%- Secondary km 24 120 500%

c. Settler housing- New construction No 4,750 2,700 57%- Rehabilitation No 550 655 119%

d. Smallholder families No 5,333 4,418 83%

3. Sanghyang Damar (PTP XI)

a. Rubber planting Ha 3,700 2,820 2,585 92%b. Roads:

- Primary km 18 20 111%- Secondary km 88 23 26%

c. Settler housing No 2,017 1,880 1,723 92%- New construction No 2,050 1,430 983 69%- Rehabilitation No 450 450 740 164%

d. Smallholder families No 2,467 1,880 1,723 92%

4. Bintar Jaya - Ciemas (PTP XI)

a. Coconut planting Ha 6,700 4,850 4,850 100%b. Roads:

- Primary km 70 43 61%- Secondary km 109 30 28%

c. Settler housing No 1,758 905 51%- New construction No 2,400 1,741 1,394 80%- Rehabilitation No 2,100 1,507 654 43%

.d. Smallhqlder families No 4,500 3,233 3,246 100%

5. Cimerak (PTP XIII)

a. Coconut planting Ha 3,000 2,610 2,610 100%b. Roads:

- Primary km 25 18 72%- Secondary km 25 32 128%

c.' Settler housing No 2000 1740 1740 100%- New construction No 1000 870 1600 184%- Rehabilitation No 1000 870 140 16%

d. Smallholder families No 2000 1740 1740 100%

-24 - Table 4Page 2

Appraisal Revised Actual as %Unit estimate estimate Actual Apr/Rev Est

NUCLEUS ESTATE DEVELOPMENT

1. Ngabang (PTP VII)

a. Oil palm planting Ha 3,500 3,500 100%b. Estate roads km 45 204 204 100%c. Palm oil mill No 1 1 100%

2. South Banten (PTP XI)

a. Oil palm planting Ha 4,000 4,729 118%b. Coconut seed garden Ha 180 180 100%c. Estate roads km 100 67 67%d. Palm oil mill No 1 1 100%

3. Sanghyang Damar (PTP XI)

a. Rubber factory (Upgrade) No 1 1 100%4. Bantar Jaya - Ciemas (PTP XI)

___________

a. Copra mills No 2 2 100%

5. Cimerak (PTP XIII)

a. Coconut planting Ha 700 700 100%b. Estate roads km 15 15 100%c. Copra mill No 1 1 100%

6. Seluma (PTP XXIII)a. Rubber planting Ha 5,000 4,650 4,617 99%b. Estate roads km 45 18 40%c. Bridges m 90 123 137%d. Rubber factory No 1 1 100%

-25 - Table 4Page 3

Appraisal Revised Actual as %Unit estimate estimate Actual Apr/Rev Est

TOTAL SMALLHOLDER DEVELOPMENT

A. Tree Crop Planting- Oil palm planting Ha 19,000 8,000 14,296 179%- Rubber Planting Ha 3,700 2,820 2,585 92%- Coconut Planting Ha 9,700 7,460 7,460 100%

B. Roads:- Primary Km 221 320 145%- Secondary Km 386 580 150%

C. Settler housing No 11,275 7,620 8,368 110%- New construction No 15,700 8,041 10,677 133%- Rehabilitation No 4,100 2,827 2,189 77%

D. Smallholder families No 19,800 10,853 15,127 139%

TOTAL NUCLEUS ESTATE DEVELOPMENT

A. Tree Crop Planting- Oil palm planting Ha 7,500 8,229 110%- Coconut planting Ha 700 700 100%- Rubber planting Ha 5,000 4,650 4,617 99%

B. Coconut Seed Garden Ha 180 180 100%C. Estate roads km 205 204 304 149%D. Bridges m 90 123 137%E. Mill/Factory Construction

- Palm oil mill No 2 2 100%- Rubber factory No 1 1 100%- Rubber factory (Upgrade) No 1 1 100%- Copra mill No 3 3 100%

- 26 -

Table 5: ProLect Costs and Financing

A. Project Costs(USS million)

Appraisal Estimate ActualLocal Foreign Total Local Foreign Total

Smallholder Development 92.8 71.5 164.3 32.8 36.0 68.8Nucleus Estate Development 61.0 58.8 119.8 49.4 39.9 89.3Program Support 7.2 15.2 22.4 1.1 11.5 12.6New Project Start-Up 0.0 15.5 15.5 0.0 11.2 11.2

Total Project Costs 161.0 161.0 322.0 13.3 98.6 181.9

B. Project Financing(US$ million)

Planned Actual

IBRD 161.0 94.1

PTPs 21.0 38.9

Government 140.0 48.9

Total 322.0 181.9

- 27 -

Table 6: Economic and Financial Analysis

Economic Rate Financial Rateof Return (Z) of Re (Z)SAR PCR SAR /a PCR

A. Smallholder DevelopmentNgabang (PTP VII) Oil Palm 15 12 - 14South Banten (PTP XI) Oil Palm 13 12 - 15Sanghyang Damar (PTP XI) Rubber 15 15 - 19Bantar Jaya-Ciemas (PTP XI) Coconut 14 6 - 7Cimerak (PTP XIII) Coconut 18 - -

B. Nucleus Estate DevelopmentNgabang (PTP VII) Oil Palm 19 11 - 14South Banten (PTP XI) Oil Palm 14 11 - 14Cimerak (PTP XIII) coconut 17 4 - 5Bengkulu (PTP XXIII) Rubber 17 14 - 18

C. Overall for Project 16 11 - 14

Economic Variables Appraisal PCR

A. Prices 1981 Constant 1991 Constant

B. Conversion FactorsLabor 1.0FertilizerlAgrochemicals 1.2Other Inputs 0.8

C. Exchange Rate: US$1 - Rp 625 Rp 1,901

/a FinAncial rates of return were not estimated at appraisal.

- 28 -

TABLE 7: STATUS OF LOAN COVENANTS

AGREEMENTYPE OF UPOATE C0R ST

SECTICN COVENAT DATE CQOE DESCRIPTION OF COVEW#T CU9RT COVENT STA11JS DESCRIPTIoN

LOMNART. 3.01(A) 7 06/25/91 2 B9 OER SHALL PROWTLY PRODE RWS IN COPLLANCE.

REUIED FOR CARRYING OUT THE PROJECT.ART. 3.01 () Fl 06/25/91 2 R£UND T ESTATES UNER MMSID Y LOAN i COMPLIANCE.

AGREEMEXS INCLVUING TERMS AND COrTICS INSOEDULE 5.

ART. 3.01 (8)() F 06/25/91 2 REUDO ESTATES UNODR SsSMIY LOAN AOEBAMES EXEUED.AGREDE4TS DIUNLN TERMS AN COToNM SIN SOQEDUA.E S.

ART. 3.01() (II) F7 06/25/91 2 WL TO ESTATE SUCH ADOrrIM4AL RWS REWIED IN COPL!ANCE.BY ESTATE TO CARRY OWT m ESTATEDEVEUPIETUOER PROJECT.

ART. 3.01(D)(II) F7 06/25/91 2 ESREE THAT FUNS AE PRVED IN ACCODANCE IN COIPLIANEWIH SECTION 3.03(A) MO S>>UlE 8.

ART. 3.02 () I 06/25/91 2 EMLOY EXETS/CONSULTANTS IN ACCORDCE WI IN COWPLIME.PROVISIONS IN SOCUHED 2.

ART. 3.03(A) f3 06/25/91 4 SRI TO ENTER INT wALLHOLDER RDIT NOT IN CCLIANCE; C RSTION OF SAGREEM0NTS WI SETTERS "ER CONDITIONS TREE CROPS DEV3OPM EXWIlUTRESSATISFACTORY TO THE BQA. CREDITS IS SERIOUSLY BEHITO SOLU

PROBLEMS OF SLESTANDAtD PLtnINO ABY 00¢ Aq4CIES (BRI, AOAIA, BISPIN CARRYIN WrT VARICUS ACTIVITIES tCERTIFICATION, UDIT OF EENDITRESTECONICAL EVALUATION OF PLATI) FCOVCERSION.

RT. 3.030() F3 06/25/91 2 DGE/ESTATES TO ENTER INTO SMALJ.HOLDER IN COFLIANCE.DEVELQMENT AW?ED1ETS WI1H EACH PTP UNDERTERMS AND CONTrIONS SATISFACT TO M .SAW.

ART. 3.04(A) I13 06/25/91 2 DGE (ASSISTED BY TEM *4MS) PREPARE ANNUAL IN COMPLIANCE.OK PROGWA kV BOGVET FOR PROJECT FOR NEXT

YEAR BY 10/31 (START FROM 10/31/81).ART. 3.04(0) M3 06/25/91 2 EA ESTATE/PROVINCE TO PREPAREANAL W IN COWLIANC.

PROM BLDGET AND SfBMIT TO DGE BY OCT. 15

ART. 3.04(9) us 06/25/91 2 (STARTIN 10/16/81)ART. 3.0e(A) I 06/25/91 2 ESTABLISH BOARD OF TRUSTEES FOR LPPS AN IN COWNCE.

APPOINT EXECJTIVE DIPECTOR AND OTHER 1MeRBY 10/31/81.

ART. 3.08(B) I 06/25/91 2 ENGAGE AoTiomNL QAUIFIED PERScNEL TO IN COPLIAE.STAFF ADEQUATELY LPPS AT YOGYAARTA ANDMEDAN BY 1/31/82.

ART. 3.09 ml 06/25/91 2 COPLETE OIL PALM PROCESSG FACILITIES BY IN COWPLANCE. 0EVER, MlLL WAS a1/31/86 ADO 1/31/86 (OR S" OTHER AGREED 3 YMS BEHO SCH4.L.DATES PROVIDED APPROPRIATE ARRANGEMENTS AREMADE BY PTP XI (AFtER 1/31/8) AND PNP VII(AFTER 1/31/86) TO ADEQATELY COMP4SATESETTLERS FOR OIL PALM PRODUCTION OFFERE FORSALE.

5SC. 1, PARA. 4(9) Fl 06/25/91 2 SUBSIDIARY LOAN AGEEfIAS - SECTION 3.01(9). AGREEMlES EXECUTED.$CH. 1, PARA. 4(C) F3 06/25/91 2 SUALLOLDER DEVELPIENT AGReDE - SECTION AGREDQTS EXECJTED.

3.03(9).

*****STATUS CODES,***. **s***eCOVEANT TYPE CODES*** * * * TYPE CODES.******a**s******l4AVAILASE INSTIlUTION- IsCREATE/REVISE/UPDATE ORGANI- F4dSELF-INANCINQ RATIO2dlN COPLIANCE NAL: ZATIONS;IWPROVE MrT S MIS; F9xDEBT/EQUITY RATIO; DEST SERVICE RATIO3=PARTLY COPLIED AGRESATS BET1ED OR WIH F6=PRICING OF PROUCTS4UNOT IN COWLIANCE AGECIES F7 ROVISION OF LOCAL RFNS6=TO BE WAIVED/DELETED MANAGER- M1=SUPERVISION OF IMPLEMENTA- ' REPARE SECTOR INVESTMENT PROGRA"

"1 LONGER RELEVANT IAL: TION (PLAN/ACTION/REPORTING F9sLEEL OF TSTMANDIN4 ARREARS.BE AMENED INCL. PRO0*ENT ACnTON, FlO-ASSET REVALUATION; DEPRECIATION

SatLT YET DM DEVEL5P ACCOUNTDNC SYSTEM) TECHNIC- Tl=CONSTRUCTION STANDARDShM2ADEQUATE TRAINDNC PO"RAU CAL: T2zLAND ACQUISITICN & MAPPING

M3=*0 PR0GRAV/3WR ET PREP'D T3=SITE SELECTIONFMANC- FlSIGNINQ OF SUISDIARY T40ETAILED ENDGD DNGAL1: AGREMENT T6SENSURE 0 A M PLAN FUDING

F2zRATES OF RETURN T62ENVIRgNENTF3COST RECOVERY A INT. RATES OTHERS: OTHlTHERS

- 29

TABLE 8: USE OF BANK RESOURCES

A. Staff Inputs (s/w)

Stage of Project Cycle Planned Revised Actual

Through appraisal n.a. n.a. 50.3Appraisal through Board approval n.a. n.a. 118.6Board approval through effectiveness n.a. n.a. n.a.Supervision n.a. n.a. 175.7

Total n.a. n.a. 344.6

B. Missions

Stage of Project No. of Days in Specialization Perf. Type ofCycle Mo/Yr Persons Field/a Represented /b Status/c Problems/d

Appraisal 10/80 7 na. AE,TC,FA,EG n.a. n.a.

Supervision 06/83 2 5 AG,FA 3 F08/83 2 6 AG,FA 2 M07/83 2 3 AG,FA 107/85 3 17 TC,FA 2 F,M04/88 7 30 ED,TC,EC,AG 2 F,M02/87 6 7 FA,TC,ED 3 M10/87 3 30 FA,TC 3 F,M08/88 3 28 FA,TC 3 F,M04/89 3 15 TC,FA 3 F,M05/90 2 19 TC, FA 3 F,M

PCR 03/91 1 28 TC n.a. n.a.

/a PCR mission estimates based on Bank's project files./0 Specialization: AG=Agriculturalist; FA=Financial Analyst;

TC=Tree Crops Specialist; EG=Engineer; ED=Education Specialist/c Performance Rating: 1=Problem-free or minor problems; 2=Moderate problems;

3=Major problems./d Types of problems: F=Financial; M=Manag.rial

C. Costs

Data are not available on cost of staffing inputs; broken down by each stageof the project cycle.

- 30 -

Table 9: Trro crop Yield Estlmate - Rubber and Coconut(pee he per year)

.i l a ~ __ _ _ _ _ __._. _ ._. . ..ol d, ,

| .uvighe Cimeruli senQhyetg 0.are Cruhang-joyg Ce a,.a

Ce,TP~~~U~ (pTP~~IZZ) (Y'WX1~o (PT !)(P t)~l @ 2 ::* w _ :~~~~~~~~a"hn e: lf4L oft s /

SA SAR PCR PeM SANt PC SAM PMsA PM~

. _ 1,000 234 5 . 800 144 a00 1

7J30 400 1,900 644 6 473 J S NSO 250 1,5 O 350

1,030 900 2.00 1, OS 7 730 160 2.200 500 2,200 S00

1,220 1.000 3. 00 1,2" 4 950 600 2,400 SW 2. NO 900

1,400 2,100 4,100 1.733 9 1,040 760 3,300 9oo 3,300 1,000

1,4bO 1.200 4, 00 1,947 10 1,100 *70 3,700 1. 100 ,700 1,300

1, g0 1, 300 4. SO 2,076 11 1.150 90 3,900 1,100 4,000 S.XO

1,S70 1.SOO 4, 500 2,201 . 2 1,340 1.100 3.9a0 1,1 o 4*,1 1,700

1,750 1,SOW 4,500 2,201 L3 1.300 1,160 3,900 1. a0 4,100 2,100

1.6 0 1,600 4. SO 2.201 14 1,420 1,20 3. o0 1.11 4,1 oo 2,100

1, 50 1,700 4. COO 2.201 i5 1.4,0 1,320 3, 0o 1. 15 4, WC 2,100

2.100 1,700 4, 5O 2,201 14 1, M0 1.300 3, 1,1.50 4.100 2.100

2,350 1, 800 4, S0 2,201 17 U 1, 1.420 3,900 1,150 4,100 2.100

2,280 1. 900 4,500 2,201 16 1.560 1.450 3,900 1,150 4, t00 2.100

2,000 1, 800 4,5 0 2,201 1C 1.5 1,450 3,900 1a,1 5 4,100 2,100

2,130 1,700 4. SO 2,201 20 1,470 1.420 3.900 1,5 0 4, 100 2,100

2,000 1,700 4,0 S0 2,201 21 1.480 1.400 3,900 1, 5o 4,100 2,100

1. 940 1,700 4,5 O 2,201 22 1,320 1, 32 3,900 1,150 4,100 2,100

1,920 1.700 4,500 2.201 23 1,300 1,300 3,9W0 1. 0 4,100 2, 100

1,900 1,500 4. 500 2.201 24 1,220 1,22 3,900 1,15 4,100 1 ,600

1,750 1,400 4, S0 2.201 2.3 1,190 1.180 3,9CO 1,1 *,too 1.300

1.610 1.300 4,000 2,230 2 1,110 1,110 3,4o0 1,100 3.a S 1.100

1,550 1,200 4,000 2,010 27 1.095 1,040 3.400 1,100 3,60W 1,100

1,340 1,000 4,00 2.030 23 990 940 3.400 1,100 a,600 1,100

1,30 1,000 4, 000 2,010 29 970 64 3,400 1,100 1,100

1,220 1,000 30 610 SOO

PMavene 1,394 1,911 1.000 1500

SAM. avene 1,705 4,052 1,210 3,454

t PCIiMAR 2 so0 50 _ . 00 2 42

- 31 -

Table 10: Tr.. Crop Y'ild EWM*t4M - O II Pa. - No*bang(per he per' year)

Nucloeu EstateSulhIdP.,.- - -L'' - -...

PISRm* FS Ot l CPO Kerniol Kernol o CPyear Tons t Tons - T-n- T- o TO -

4 4 17 0.66 3.5 0.14 2.5 0.43 0.09

5 S 16 1.08 3.7 0.22 3.5 0.U3 0.13

t10 19.5 1.95 3.8 0.3 a 1.17 0.23

7 12 20 2.40 4.0 044 a 1.t0 0.32

* 12 21.5 2.50 4.5 0.54 9 1.94 0.41

9 t13 21.5 2.80 4.5 0.59 1t 2.37 0.50

10 13 21.5 2.a0 4.5 0.59 11 2.37 0.50

11 15 21.5 3.23 4.5 0.88 13 2.80 O.5S

12 1S 21.5 3.23 4.5 0.88 13 2.80 0.59

13 1S 21.5 3.23 4.5 0.de 13 2.90 0.40

14 14 21.5 3.01 4.5 0.83 12 2.58 0.54

15 14 21.5 3.01 4.5 0.63 12 2.54 0.54

16 13 21.5 2.80 4.5 0.59 11 2.3? 0.50

17 13 21.5 2.80 4.5 0.59 1i 2.37 0.50

to 12 21.5 2.5S 4.8 0.54 11 2.3? 0.50

19 12 21.5 2.58 4.5 0.54 10 2.15 0.48

20 12 21.5 2.58 4.5 0.54 10 2.15 0.45

2X 12 21.5 2.54 4.5 0.54 10 2.15 0.48

22 1L 21.5 2.37 4.5 0.50 9 1.94 0.41

25 11 21.5 2.37 4.5 0.50 9 1."4 0.41

24 11 21.5 2.37 4.5 0.50 9 1.94 0.41

25 10 21.5 2.15 4.8 0.45 6 1.72 0.34

26 10 21.5 2.15 4.5 0.45 5 1.72 *.0.34

28 10 21.5 2.15 4.5 0. S a 1.72 0.30

Tota 290 520 61.63 109.5 12.S5 235 50.z1 10.50

Averag- 11.6 21.04 2.44 4.38 0.51 9.4 1.94 0.41

SAR awevrug 17.4 22.40 4.02 3.s 0.62 15.5 3.55 0.-4

67 94 St 125 847 1t 57 76

- 32 -

Table 11: Tree Cros Yid Estimate. - Oil Pal. South Benton(p*r ha per year)

_ _ _

| PlarRil" FFB cm CPO KoIl* K.rri FQ CPO KIer"en. r T rons s to,s Tons TOna To.a

4 4 14 0.58 3.0 0.12 3.5 0.49 0.1l

a 8 15 0.90 3.5 0.21 6 0.90 0.21

G 10 17 1.70 3.5 0.35 9.5 1.12 0.33

7 12 19 2.28 4.0 0.4 10 1.90 0.40

6 12 20 2.40 4.0 0.41 12 2.00 0.40

9 14 21 2.93 4.0 0.54 11 2.31 0.44

t0 16 21 5.38 4.0 0.t4 12 2.52 0.4

11 1t 21 3.34 4.0 0.64 12 2.52 0.44

12 10 21 3.34 4,0 0.64 12 2.62 0.48

1.3 10 21 3.38 4.0 0. 4 12 2.52 0.45

14 1S 21 3.15 4.0 0.60 '.2 2.S2 0.44

15 Is 21 3.15 4.0 0.60 12 2.52 0.44

1i 14 21 2.94 4.0 0.35 12 2.52 0.44

17 14 21 2.94 4.0 0.34 12 2.52 0.44

La 13 21 2.73 4.0 0.52 11 2.31 0.44

19 13 21 2.73 4.0 0.52 1I 2.31 0.44

20 12 21 2.52 4.0 0.44 10 2.10 0.40

21 ; 21 2.52 4.0 0.48 10 2.10 0.40

22 11 21 2.31 4.0 0.44 9 1.69 0.35

23 11 21 2.31 4.0 0.44 0 1.89 0.38

24 10 21 2.10 4.0 0.40 a 1. 6 0.32

25 10 21 2.10 4.0 0.40 a 1.64 0.32

26 9 21 1.8t 4.0 0.3a 7 1.47 0.26

26 a 21 1. 4.0 0.32 a 1.23 0.24

Tot,iFM averse 11.9 20.4 2.44 J.92 0.47 9.7 2.02 0.3a

SAM *aweS.. 18.2 21.3 2.69 3.40 0.44 13.4 2.65 0.44

, SAzS z 74 go 6 115l 107 60 71 83- - - - - -~~~~~~~~~~~ln

_ _A_ __ND_ IBRD 1563XSA0LANO / (PoLIr.SEs 102046 MARCH 198

' RUNI . - INDONESIAMALAVSIA t-^tA/SIDJ;> ) D^"C. NUCLEUS ESTATES AND

X 'ES0N~OAPOP¾t. J\ lSMALLHOLDERS V PROJECTO.A00ANYAN,.

e, StXVtV' ''$BENGKULU(SELUMA SITE)PTP XXIIIJRAN A IA

.~~~~ rA, of Mop O. tl

'A VA o - .I.,,s I PROPOSED SMAL8HOLDE R DEMONSTRATION AREA.0 2 PROPOSED RUBBER ESTATE SITE(PTP XXiIIJ)

~"T0 2° O 102°30 t =CO N STRUCTED ACCESS ROA D

102~~~~~~~~~~~~~~1 ~~~~~~1020'30r ROADSPaDeda t a - RIVERS

- , , - - - KABUPATEN BOUNDARIES

-h -< n - INTERNATIONAL BOUNDARIES3030' anIunojteodana Koanagtongg 30309

0~~~~~~~~~~~~~12 p ) Z ~~~~~ 2 KIL0METERS = < 4 6 TR 10~~~~~~~~~4

t fljuflgarung J . O 0

.N \ ) w ef 4@t&d#{ODSZ40e#POYTPR0^tH O$SfVI-$$t w-<~~~~~~~~~~~~~~~~~~~~~~~~tato' o .4,00 .000*.0 ?V0 0000000O.0 O00 00t'

9,ENGKULU {¢- e Kembangnadar ,00,-, 00, 000 0 0f0 so,rtooc 00000 boOom0

< \ f~~~~~Dusun Besal 8

NOIO KuL -

P_, ag9ardevwa tbahiagan 0E

3045 314 -

A/e, 2J9 ItD o -ICL-US -S7a7. PTPYA

TO. /,g _ aJ a

/ ~ ~~~~~~~~~~~ro Sukaalrl

4000,o0 *l1... 1t_03

1D0216 0 102030 _ _ _- ?45

IBRD 15634150 1u71 ~ s1 ThaILAND kSleNSIn! 2 v PHIlaorrues MARCH 1981

LA I4PULAG ANA"nA

M.,ak g A-AIA

Cikonen. pZ < 1A _, A JAKAR7, TXa

log.~~~~~~~~~~ioo

PAND EGELANG /G Sd B/T?N C 7 \-,I/0-9 Cd

SAG, KnNCo

. tzv:sT X / \ ._ . 0 / ajalengha ' j/ _ G !~~~~~~~~~~~~~~~~~~~~~/ PangoaoaIanqon% ySa/[1,Bndug>Sedong ojaIehgk

Io gNDONESIA Kunin-an~VJi _-7

70~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0.

NUCLEUS ESTATES AND SMALLHOLDERS V PROJECT - -zva <t,'.>l( 70

It" I~~~~~~~~~~~~~~~~~~~~-

WEST JAVA SITE(PTPXI & PTPXIII) - CC '- A

PRCPOSED NUCLEUS ESTATES SITE SegaaoJA AEXISTING NU,CLEUS ESTATES SITE

PROPOSED SMALLHOLDER SITES Onggeog

ROAD

RAILWAYS S ndnngboron\RIVERIS

_ _ XABUPATEN BOUNDAPIES I,PROVINCIAL BOUNDARIES _f

INTERNATIONAL BOUNDARIES ,Pmoungpenk

KILOMETERS 10 20 3j0 4,0 50 B0 70 80 ICpptupM0LES 10 20 3 40 50 T7hs map h- b.een.p.ppd by rho World -ank o sIOlletclosfeOl for lb. --oeen-e COCONUT (PT? hull

,_w I=da, shown P10 np Oh h mplp the f at of td- WoO-d -ar dnd h,f

acrl.orf Of -l,h o-ds,,e-

106,~~~~~~~~~~~~~~~~ 1 7 1o500'

_ _ 7>4090 100 110030,-, BenIr90 , - INDONESIA

NUCLEUS ESTATES AND SMALLHOLDERS V PROJECTWEST KALIMANTAN (NGABANG SITE)PNPVII

PROPOSED NUCLEUS ESTATE SITE ROADS

Belango PROPOSFD SMALL HOLDER SITES - --- RIVERS

( _ EXISITNG ESTATE SITE - - KABUPATEN BOUNDARIES/ - - - ~~~~~~~~~~~~~~~~~~~~INTERNATIONAL BOUNDARIES

0 10 20 30 40 50 KILOMETERS

/iy / Z. 8 - 0 10 MIL20 3 MlES-0030' vl / zf /} < ,_5i / > 0°30'-

~~A(P 0.11 OIL PALM

MempeP P

S 0 .o / 6 rh r a \\ \ <~~~~~~~~~~~~~~~~~~~~EXISTING PNP V7PIVP 'Y OILPALMIL PALME OPENT

_oO PO NT I A N AKASOAN \Cl

. ,,p

T\-Al. A - r.Fhls rap has been orepared by the ,T...World Bank s staff e.clus,oely for Lthe coneen-ece of the reades ofthe 'eoor to wh,ch ri .s attached . s ARA Of MAP7he denom.nar.ons used and the . 7 Pont,.,,boundar,es shovvn on th.s nap /A- IaAL 1-N rAt,do notrtply. on the Dart of rhe

0 5ArrS51 IR"A -ArA S E t> WorMt Bnk and 'ts aff.ates. anv ' A. RII gudgnent on the leg,al starts oI

JAoARfAare lerr'tpory or any endolsenteno' acceptance of such bhondanos IJ.0 ES _

g109 109030- 110° SA,, 'tfO