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PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Project Name
Region
Sector
Project ID
Borrower(s)
Implementing Agency
Environment Category
Safeguard Classification
Date PID Prepared
Estimated Date of
Appraisal Authorization
Estimated Date of Board
Approval
Report No.: AB1252
Marginal Fishing Communities Development Project
EAST ASIA AND PACIFIC
General agriculture, fishing and forestry sector (40%);Micro- and
SME finance (20%);Vocational training (20%);Agricultural
marketing and trade (20%)
P090257
REPUBLIC OF INDONESIA
Ministry for Marine Affairs and Fisheries (MMAF) and Districts
[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
[ ] S1 [X] S2 [ ] S3 [ ] SF [ ] TBD (to be determined)
December 2, 2004
September 9, 2005
March 1, 2006
1. Key development issues and rationale for Bank involvement
There are four key development issues that set the context for Bank involvement in Indonesia’s coastal
resource management: (i) fishery, the next forestry—It is well recognized globally that fishery is the next
forestry in terms of a once abundant natural resource in serious decline due to a lack of governance,
consensus, and competing interests over common property which come at the expense of the resource
(coastal ecosystems and the fisheries they support) and resource users (poor fishers), and institutional
weakness to appropriately deal with its sustainable use and management. At risk are coastal products
accounting for approximately 25% of Indonesian GDP annually (according to FAO) coming from
Indonesia’s 81,000 kilometers of coastline; (ii) poverty-coastal environment nexus—Approximately 5,500
rural coastal communities dependent on the coastal ecosystem for their livelihoods are spread across
1,129 rural sub-districts and due to their more remote geography are often neglected from the
development process and development services. Estimates suggest that over 50 percent of rural coastal
inhabitants are considered poor. Moreover, a lack of economic opportunities for these communities, and
particularly the high number of unemployed youth, has contributed to increasing pressures on the
depleting coastal resource base; (iii) co-management, a solution to address the institutional weaknesses
and lack of governance—A legally defined partnership between local government and resource users in
managing and defining sustainable use of coastal ecosystems sets the framework for institutional
strengthening and capacity building, and has proven effective in reaching consensus among communities
and multiple resource users with competing interests and objectives for a rational and sustainable use of
the coastal ecosystems; the private sector’s role—by reducing impediments to growth and development
of micro, small and medium size enterprises in coastal areas (as an alternative to fishing and
unsustainable marine resource extraction), pressure on coastal ecosystems can be reduced and fisher
incomes can increase.
A package of targeted and cross-sectoral development interventions are needed to address the above
issues, that include both community empowerment and local institution building for sustainable
ecosystem and resource management, and private sector development and economic diversification to
provide alternative and future opportunities outside of the current patterns of overexploitation of the
coastal resource base. The Bank is in the position to assist the government to address these issues and
support such a package of interventions, through the proposed Marginal Fishing Communities
Development Project. This proposed project builds upon the lessons emerging from a $1.6m pilot of the
same name currently under implementation, and seeks to practically broaden the government’s coastal
resource management agenda from the existing, but more narrow focus on coral reef management through
the Bank-GEF financed COREMAP.
A. How would the proposed operation support the borrowers objectives, policies, and strategies in
this sector?
The Government of Indonesia (GOI) identified the economic development of rural coastal fishing
communities and the management of the coastal ecosystems they depend on as a national priority in the
mid-1990s and as a result, requested support from the donor community in this area. Because of the
importance of coastal ecosystems to the development objectives of Indonesia, the Government’s current
medium-term development strategy (PROPENAS) and the Guidelines of State Policy (1999-2004) support
a coastal and marine sector policy which calls for (i) efficient and sustainable management of maritime
resources, with collaborative management as the key approach, (ii) optimizing the sustainable utilization
and management of marine resources and assets, (iii) local broad-based economic development in rural
coastal areas, and (iv) the improvement of the socioeconomic conditions of coastal communities, and
particularly youth, small fishers and other vulnerable peoples living across the archipelago. The proposed
project is conceptualized around these four key themes (please see Section 3 for details).
B. What is the evidence of the borrowers commitment to and ownership of the relevant policies?
GOI has recently embarked on policy shifts towards decentralized coastal resource management focused
on collaborative partnerships between communities and local government, and the use of marine reserves
and larger marine protected areas to restock fishing grounds. Based on the evidence that such measures
can help rejuvenate coral reef ecosystems, the Bank supported GOI’s COREMAP Phase II. Through the
proposed project, GOI seeks to broaden the policy to include the wider number of rural communities
throughout the country dependent on all types of coastal ecosystems, and focus on the broad economic
development of these rural coastal fishing communities. Moreover, since rural youth unemployment and
underemployment stand at 23 percent and 43 percent respectively, GOI seeks to specifically target youth
in their broad economic development efforts. To address the country’s need for youth development, the
newly elected SBY government reinstated the Ministry for Youth Affairs.
C. How would this operation support the borrowers CAS objectives?
The proposed project’s co-management objective draws squarely upon all three pillars of the CAS (Pillar
1: Improving the investment climate; Pillar 2: Improving services for the poor; and Pillar 3: Improving
governance), as well as the general focus of the CAS on empowering the poor. Specifically, the proposed
operation will support:
 Improving governance over management of the coastal resource base that supports the livelihoods
and food security of coastal communities (Pillar 3);
 Strengthening local government agencies and institutions to provide improved services and support
communities in co-management of the coastal ecosystems in order to reverse the current trend of
resource depletion (Pillar 2); and
 Building capacity and linkages to commercial micro-finance and business development services in
order to improve the investment climate and to encourage alternative economic opportunities that
would help reduce the current pressures on the dwindling coastal resource base (Pillar 1).
The CAS highlights the need for targeted interventions in rural coastal fishing communities and the
institutions that support them, noting that “in coastal areas, the Bank will …support targeted poverty
alleviation in poor coastal fishing communities, through the proposed Marginal Fishing Communities
Development Project (Box 4, pp 21).”
D. What are the main lessons from AAA, other projects, and partner activities?
The environment-poverty nexus in the coastal and marine sector in Indonesia is well recognized by GOI
and the donor community. What to do about it is only now beginning to converge. The main lessons from
a broad range of GOI, donor, NGO, and Bank-financed initiatives are: (a) coastal management should be
ecosystem based; (b) coastal ecosystem management is most likely to be successful when local
governments form partnerships with coastal communities (i.e. collaborative management); (c) NGOs can
play an important role in establishing the partnership between coastal communities and local
governments; (d) as a result of the 1999 laws (laws 22 and 25) supporting decentralization, district
governments should be charged with program implementation, with coordination and support from
national government; (e) collaborative coastal ecosystem management is a process, and must be
implemented as such, rather than in a compartmentalized or fragmented approach; (f) coastal
communities, and particularly fishers are often excluded from development assistance due to their way of
life, as well as geographic isolation; (g) the coastal resources and fisheries are overexploited in the
majority of coastal rural areas, and any efforts to more sustainably manage these resources are likely to
fail without simultaneously assisting communities to diversify their economies and pursue alternative
livelihoods to resource extraction; (h) unemployment and underemployment amongst Indonesia's young
people is at crisis levels, particularly in rural and coastal areas encouraging their active participants in
destructive fishing practices, therefore directed interventions are needed to provide them with alternative
opportunities; (i) one of the key obstacles to economic diversification in rural coastal areas is that the
local business environment in coastal areas pose greater obstacles for micro, small, and medium size
enterprises to grow as they generally lack access to capital, market information, technology, etc. By
reducing these impediments, and facilitating access to sustainable and commercial micro-banking
services, income opportunities will diversify with job creation outside of fishing; (j) increasing the
productivity of non-threatened coastal resources by creating a sustainable supply of value-added coastal
products (seaweed, coconut, etc) could increase fisher incomes, increase employment and reduce pressure
from an overexploited fishery.
E. What can the Bank's lending accomplish that cannot be accomplished by other means or other
sources of funding?
Rural coastal fishing communities in Indonesia have been traditionally marginalized from the
development process, by way of both geographic isolation and the nature of fishing livelihoods. As such,
targeted development assistance is needed. The World Bank has a comparative advantage in the coastal
and marine sector. This advantage includes: (i) policy dialogue: to facilitate the needed reform in the
management of coastal ecosystems; (ii) coordination: to enable collaboration between multiple donors to
parallel and co-finance complementary activities; (iii) convening power: to bring together stakeholders
from community, district, province and national levels to reach consensus for resolving competing
demands on coastal ecosystem resources; (iv) sustained commitment: to promote sector adjustments and
policy reforms over a period of time; (v) scale: the bank has the unique ability to scale-up activities that
work for sustainable impact at scale; (vi) leveraged resources: to bring in grant co-financiers such as GEF
and IDA resources to soften the IBRD terms and ultimately the country's debt burden as well as private
philanthropy.
F. What is the evidence of the borrowers (i) interest in borrowing for this operation, (ii)
preparedness to work on project preparation?
The borrower has indicated its commitment to the proposed operation through the following actions: (i)
GOI first requested the Bank to solicit $1.6m in grant funds through the Japanese Social Development
Fund window to develop the Marginal Fishing Communities Development PILOT, in order to pilot
interventions that could be scaled up with bank assistance, based on lessons learned; (ii) GOI (MOF and
BAPPENAS) has agreed in principle to a larger MFCDProject for FY'06; and (iii) the Ministry of Marine
Affairs and Fisheries have begun discussions with BAPPENAS and MOF as well as the Bank on the
procedures to formally establish a preparation team to design a scaled up project. Finally, the new
Minister MMAF has intimated his support for the proposed operation during discussions with Bank
Senior Management in early November.
2. Proposed objective(s)
A. Project Development Objective
The development objective for the proposed Indonesia Marginal Fishing Communities Development
Project is the reduction of poverty in rural coastal communities in participating districts through
sustainable utilization and collaborative management of coastal ecosystems. This will be accomplished
by (i) assisting local governments and rural coastal communities (and particularly youth, indigenous
people and women living in these communities) to sustainably co-manage the associated coastal
ecosystems and fisheries resources, on which they are often dependent for their livelihood, and (ii)
establishing public-private partnerships to promote economic diversification and sustainable growth in
order to lift them out of poverty and provide economic alternatives to continued overexploitation of the
depleted coastal resource base.
The rationale behind this objective is that by the nature of their remote location, the approximately 5,500
rural coastal communities in Indonesia are often marginalized from the economic development process
and they have few livelihood opportunities outside of a dwindling fisheries resource base. They often
lack access to markets, appropriate technology, education, economic opportunities, and microfinance to
improve their lives, and capacity to sustainably manage natural and coastal resources. The project will
support participatory approaches that will protect the coastal ecosystems that support critical biodiversity,
and promote public-private partnerships to stimulate sustainable economic growth in these same coastal
areas, particularly in opportunities outside of the fisheries. One theme that will run across the entire
project is its focus on the vulnerable members of rural coastal communities, including youth, women, and
indigenous peoples.
At a reduced scale, the above approach is currently being piloted through the Indonesia Marginal Fishing
Communities Development Pilot, funded by a $1.6 million Japanese Social Development Fund grant to
the Government of Indonesia. The Government has requested that the Bank assist in scaling-up this pilot.
B. Global Objective
The global objective of this project is to establish viable collaborative coastal ecosystem management in
participating districts. The proposed areas under collaborative management are globally significant
coastal and marine ecosystems (including key species) which contribute to the livelihood and food
security of resource dependent users.
This objective responds to the guidance provided by the first Conference of the Parties to the Convention
on Biological Diversity, reflected in the GEF’s Operational Program 2: Coastal, Marine and Freshwater
Ecosystems. OP2 prioritizes projects that promote the conservation and sustainable use of biological
diversity of coastal and marine resources under threat. Throughout the rural coastal areas of Indonesia,
communities are directly dependent on critical coastal ecosystems for the livelihood, the same ecosystems
which support a wide array of globally significant biodiversity, such as sea grasses, mangroves, sea
turtles). However, these critical ecosystems are under threat from the vary populations dependent on
them. The project will promote an ecosystem-based approach (community-based marine protected
areas).
3. Preliminary description
A. What are the alternative development interventions or approaches being considered? If an
approach is favored, what is the rationale for it?
The alternatives to the proposed interventions, which utilize a CDD delivery mechanism for
empowerment and service delivery, with a sectoral overlay and technical assistance to address the
predominant common issue of sustainable use and management of the coastal resource base, include:

A Sectoral program only to address the needs of coastal fishing communities, which would just
be focused on the coastal resource base, the fisheries they support and sustainable resource
management. However, past lessons from the first phase of the World Bank-financed Indonesia
Coral Reef Rehabilitation and Management Program (COREMAP), as well as numerous other
examples throughout the country and indeed the world, demonstrate that it is extremely difficult
to address the sustainability of coastal resource use and the health of these resources, without also
addressing the economic incentives driving the use of these resources, and the often limited
opportunities for employment outside of fishing in many rural coastal fishing communities.

A CDD project only to address the needs of coastal fishing communities, which would just be
focused on empowerment for delivery of basic services, and potentially expanding economic
opportunities. However, surveys and discussions with coastal communities revealed that the
main source of livelihoods in many coastal fishing communities is the coastal resource base, so
that without addressing the use and sustainability of that resource, CDD projects will not be able
to prevent the continued overexploitation and decline of the resource base and the livelihoods that
it supports.
B. What lending instrument is being proposed and why; or what alternative instruments are being
considered?
A specific investment loan (SIL) is being proposed, as the simplest and most efficient instrument to
deliver the proposed project’s objectives.
C. If the proposed operation is to support a sector program, what would be the key elements of the
program and how would the proposed project fit into it?
The proposed project will support the Government of Indonesia’s coastal and fisheries sector: specifically
the efficient and sustainable management of maritime resources, the rehabilitation of damaged coastal
and marine ecosystems, and the improvement of socio-economic conditions of coastal communities as
well as GOI’s regional development sector. Similarly, the proposed project supports the sectoral program
outlined in the World Bank’s Fisheries Approach Paper: Saving Fish and Fishers (2004), which
emphasizes assistance for improved governance of coastal and fisheries resources in developing
countries, and the promotion of alternative livelihoods to fishing.
D. What project components are being considered? Can indicative costs be identified?
Component A: Co-Management of Coastal Ecosystems and Fisheries Resources
The objective of this component is to establish viable collaborative management partnerships for coastal
ecosystems and fisheries resources between local governments and rural coastal communities and based
on each partner’s comparative advantage to undertake various roles and responsibilities. This component
would likely support:


Strengthening government and local institutions in support of co-management;
Support to rural coastal communities in support of co-management, such as (i) providing legal
support in the form of access/use rights and/or management rights to the coastal ecosystems and


fisheries resources, as well as technical and facilitation assistance to develop community-based
resource management plans; (ii) providing scientific and monitoring support to obtain the
information necessary for communities to make informed resource management decisions (e.g.
monitoring and evaluation of the baseline resource situation and the impacts of co-management
upon the resources); and (iii) providing participatory surveillance and enforcement support to
help patrol and enforce community management plans.
Critical habitat management and protection in rural coastal areas, in order to assist the intended
beneficiaries to manage and protect the key ecosystems and habitats that support the natural
resource base. These activities would include: (i) specific support for marine protected areas
(e.g. identification, guidance on establishment, delineation, boundary markers, mapping, etc.); (ii)
mapping of critical coastal habitats near intended beneficiaries; and (iii) specific critical habitat
restoration activities (e.g. coral reef rehabilitation, mangrove reforestation, wetland restoration,
etc.).
Public awareness activities, to inform rural coastal fishing communities about the benefits and
opportunities presented by the project, as well as the need for sustainable coastal resource use.
Component B: Economic Diversification and Sustainable Growth
The objective of this component is to promote economic diversification and sustainable growth in rural
coastal communities, which would both ease current pressures on the depleting natural resource base and
expand private sector investment in these areas. A special emphasis will be placed on the most marginal
of coastal inhabitants (youth, women/widows, and indigenous people). This component would likely
include the following activities:




Public services and infrastructure in rural coastal fishing communities, through block grants
identified and chosen by the communities as necessary to support economic diversification and
sustainable growth.
Support for small and medium-sized private sector enterprises in rural coastal areas, such as (i)
technical assistance and pilots to help demonstrate innovative, cost-saving and sustainable
technologies appropriate for specific communities; (ii) technical assistance and capacity-building
for small to medium-size enterprise development (e.g. extension and technical assistance for
better business management, business planning, accounting, cash flow management, etc.; (iii)
assistance to enterprises to form production cooperatives and outgrower schemes with linkages to
value-added processors and other potential markets; (iv) assistance to enterprises to improve the
reliability, volume and quality of the product, etc.); and (v) promotion of linkages to local or
venture capital finance for such enterprises.
Facilitate access to microbanking services (credit and savings products) for rural coastal
communities and small and medium-size enterprises in these areas. This may include capacity
building to strengthen local banking and micro-credit institutions for transparent governance,
financial accounting and reporting, that would increase their creditworthiness and facilitate
capital flows from larger banks; investments to reduce impediments to extending existing
commercial microbanking operations to rural coastal areas.
Livelihood and Development for Vulnerable Groups (youth, women/widows, indigenous people).
The objective of this component would be to reduce unemployment (23%), underemployment
(43%) and increase employability of youth in rural coastal areas, and improve the lives of
women/widows, indigenous peoples and other vulnerable people living in coastal areas. For
example, the project will help create a new generation of successful young entrepreneurs in
coastal areas by providing them with the educational opportunities, targeted financial resources,
skills, training and business development services necessary to start youth-led micro-enterprises
and small businesses, which will in turn, serve as engines of growth and job creation in their
communities and as a result, reduce pressure on coastal ecosystems. Lessons from PEKKA and
COREMAP will be used to design interventions to support women/widows and indigenous
peoples.
E. What issues are there at this stage, if any, regarding possible partnerships and co-financing with
other international agencies?
Because the proposed project would focus on establishing collaborative management partnerships
between local governments and rural coastal communities in Indonesia to sustainably manage coastal
ecosystems containing globally significant biodiversity, the Global Environment Facility (GEF) is
expected to be a key partner. Likewise, the United Kingdom development agency (DFID) could be a
potential co-financier, due to their interest in decentralization and focus on the global fishery crisis.
However, support from both need confirmation.
4. Safeguard policies that might apply
[Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project
and in what ways? What actions might be needed during project preparation to assess
safeguard issues and prepare to mitigate them?]
5. Tentative financing
Source:
BORROWER/RECIPIENT
INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
GLOBAL ENVIRONMENT FACILITY
($m.)
10
40
Total
6. Contact point
Contact: Pawan G. Patil
Title: Sr. Economist
Tel: (202) 458-4276
Fax: (202) 477-2733
Email: [email protected]
40
10
100