Indonesia - TRAID Wheel

Transcription

Indonesia
Positioning Survey for the Dutch water sector
Aidenvironment
Commissioned by
RVO/NWP
April 2015
Project number 2526
Aidenvironment
Barentszplein 7
1013 NJ Amsterdam
The Netherlands
+ 31 (0)20 686 81 11
[email protected]
www.aidenvironment.org
Indonesia
Contents
Glossary
3
Executive Summary
4
1.
1.1
1.2
1.3
Country profile
Facts and figures
The water situation
The water sector
6
6
7
9
2.
2.1
2.2
2.3
2.4
Chances and opportunities
Current situation
Trends
Opportunities
Product-Market Combinations
15
15
22
24
32
3.
3.1
3.2
3.3
3.4
3.5
3.6
Market entry strategies
Entering the country
Seeking finance
Sector performance
Successes and lessons learned
Drivers and bottlenecks
Strategies for each PMCs
35
35
36
42
44
45
48
Appendix I:
Appendix II:
Appendix III:
Appendix IV:
Appendix V:
Methodology
Finance
Elaborated outcomes of web survey
Sources
Respondents
53
55
62
66
67
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imperfections.
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Glossary
ADB
B2B
B2C
BTI
CSR
DG
EIB
EKN
GoI
GoN
GWI
IFI or IFIs
INA
IRP
IWRM
JMP
MDG or MDGs
NGO or NGOs
NRW
NWP
ODA
OS
PMC or PMCs
PPP or PPPs
PSO or PSOs
RVO
SWF or FDW
USDP
WASH
WB
WOP
WTP or WTPs
WUA or WUAs
WWTP or WWTP(s)
Asian Development Bank
Business to business
Business to consumer
Bertelsmann Transformation Index
Corporate Social Responsibility
Directorate General
European Investment Bank
Embassy of the Kingdom of the Netherlands
Government of Indonesia
Government of the Netherlands
Global Water Intelligence
International Financial Institute(s)
Indonesia Netherlands Association
Indonesian Rupee
Integrated Water Resource Management
Joint Monetoring Program (Unicef)
Millennium Development Goal(s)
Non Governmental Organization(s)
Non Revenue Water
Netherlands Water Partnership
Official Development Aid
Ontwikkelings Samenwerking (Development Aid)
Product Market Combination(s)
Public Private Partnership(s)
Public Service Organization(s)
Rijksdienst voor Ondernemend Nederland
Sustainable Water Facility
Urban Sanitation Development Plan
Water and Sanitation and Hygiene
World Bank
Water Operating Partnership
Water treatment plant(s)
Water Users Organization(s)
Waste water treatment plant(s)
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Executive Summary
Introduction:
The aim of the water positioning survey is to identify opportunities, product market combinations
(PMCs), strategies, and approaches for the Dutch water sector in [country]. Chapter 1 gives an
overview of the current water situation and the water sector, chapter 2 provides insight in the current
activities, opportunities, and potential PMCs that are present for the Dutch water sector, and chapter
3 elaborates on the (positioning) strategies to enter and operate on the market.
Demand (pressing needs):
Prolonged droughts, increased frequency in extreme weather events, and heavy rainfall leading to
floods, and food security risks, are a few examples of Indonesia’s sensitivity for climate change
effects. In all sub sectors, pressing needs are there, the most important are:

Changing land use (e.g. urbanization, plantations), economic growth leading to industrial
expansion (e.g. food and garment industry), will increase pressure on the available water
resources (and demand for good quality water).

Increased discharge of municipal and industrial wastewater will deteriorate water catchment
areas and waterways and lead to low quality of river water.

Rapid urbanization, especially near the coasts will lead to increased peak discharges; this will
increase the risks of floods. Besides, urbanization will lead to increased use of groundwater that
causes land subsidence (leading to flooding).

The current coordination between ministries is poor and unsuccessful. Weak water management
leads to poor operations and maintenance of infrastructure.

Hard to reach areas are in need of water supply services. In order to meet the MDG 2015 targets,
1
GoI needs to bridge a USD 3.8 billion funding GAP .
Current interest and activities of Dutch organizations:
Indonesia ranks number one, having a 31% share in total export to Water OS countries. The main
activity of the Dutch water sector is to provide advice / capacity building, or act as supplier on water
management and water supply and treatment (including waste water). Public sector and knowledge
institutes were and still are important client groups; however the local private sector becomes
increasingly important. The Dutch water sector has a strong presence in dredging and land
reclamation; this is a specific niche with a limited number of sector players involved. Additional
promising areas are IWRM, and water productivity (food), cross-overs of interest are water and ICT
(flood warning systems). EKN and RVO support focus on water engineering, IWRM and WASH.
Potential product market combinations:
The confrontation of local demand and Dutch interests lead to the following potential PMCs:

Capacity building of local water providers (PDAMs), knowledge exchange on wastewater, water
and industry, and sanitation, NRW reduction strategies and implementation (client: PDAMs).

Coastal protection, polder development, both integrated into urban development, combined with
ICT based products and services in flood risk management (client: divers within private and
public sector).

Design and supply of wastewater treatment technologies for specific industries and public utilities
within the urban setting (client: PDAMs, garment and food industry).
1
GWI 2014
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Suggestions on positioning strategies for future activities:
Dutch companies should consider forming partnerships with the larger Indonesian companies, which
can then front offers to private companies and / or the government (preferably following an
unsolicited PPP procurement approach). Another strategy is to build consortia that aim to deliver
turnkey solutions while staying involved in the operations and finance for a longer period. Master
Plans and technology demonstration platforms are effective ways for positioning the Dutch
knowledge and products. WOP strategies proof to be effective when operating in urban areas (middle
sized urban areas: 2-3 million inhabitants) on water and sanitation.
This positioning survey is not a fully fledged marketing survey or report. This survey elaborates on
the (current/base line) activities of the Dutch water sector and flags potential opportunities and
product market combinations. The survey makes suggestions on possible positioning strategies for
Dutch sector players. To make a well balanced decision on entering or operating on these markets we
recommend organizations to perform an in-depth due diligence themselves.
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1.
Country profile
This chapter provides an overview of all relevant basic information on the country in general and the
water sector specifically. The chapter has three parts: 1) facts and figures on the country, 2) the
(physical) water situation, and 3) the water sector, describing the institutional setting and
framework. Part 3 ends mentioning the Dutch Government strategy on cooperation.
1.1
Facts and figures
Table 1 Facts and Figures
Stability
Political situation:
Indonesia is a relative stable country, with a large Muslim majority
(87%). Many provinces and districts know ethnic or religious groups
that want to have more law enforcing functions. Some unrest is
visible in Papua. The country knows freedom of (expression of)
religion; however, in practice this can be disputed. In addition, there
is freedom of association and assembly in the country, which has
lead to the establishment of many labor unions, grass root advocacy
groups and women’s rights associations.
After a long political history under President Suharto, the country is
still transforming to a more democratic state. After the financial
crisis of the late 1990s in Asia, a number of presidents have ruled the
country. The current president is Mr. Joko Widodo, who was elected
in 2014. The president is chosen through a general election, which
occurred first in 2004. Important governmental bodies are the
House of Representatives (DPR), the Regional Representatives
Assembly (DPD) and the People’s Consultative Assembly (MPR),
which consists of members of the DPR and the DPD. The
government reaches far in the country, to local municipalities and
village levels. The power of the army is limited, but it is still
influential in the background and has it’s fingers in many economic
activities. The power of large business groups is big, having great
pressure on the political system now-a-days. Indonesia has an antimonopoly policy, which means that the government does not grant
monopolies to politically connected entrepreneurs.
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Language
Population
Population growth
Economic growth (GDP
growth in %)
GDP (PPP)
GDP (PPP) per capita
Unemployment rate (in%)
Inflation rate + forecast
2020 (in %)
Foreign direct investments
(in % of GDP)
ODA in % of GNI
Imports
Import partners (in terms of
total import)
BTI index on banking system
Doing business index
WEF Global competitive
index
Bahasa Indonesia
253,609,643
0.95%
5.3% (2014), 5.6% (2015), 5.6% (2016)
USD 1.285 trillion (2013) comparison to the world: 16
USD 5,200 (2013)
6.6% (2013)
6.23% (2014), 4% (2015), 3.5% (2020)
2.7%
0.0%
USD 178.6 billion
China (15.3%), Singapore (13.6%), Japan (11.6%), Malaysia (6.4%),
South Korea (6.2%), USA (6.1%), Thailand (6%)
8 out of 10
117 out of 189
34 out of 144
Source: CIA Intelligence 2012-2014/BTI/World Bank Indicators/World Economic Forum
1.2
The water situation
This section describes the physical water situation (including flooding of river systems, coastal zones
and maritime areas), the influence of climate change, the effect of irrigation and the water pressure.
1.2.1
Physical description of the water situation
Rainwater:
Indonesia is located in a wet tropical region with an average annual rainfall of about 2,700 mm,
varying from 1,300 mm in East Nusa Tenggara to 4,300 mm in parts of Papua (Bappenas, 2004).
Ground water:
Most of the groundwater, an estimated 90% returns as base flow to the rivers. It is assumed that only
30% of groundwater resources are consumable, called ‘safe yield’. Over-abstraction of groundwater in
Jakarta has caused saline groundwater to reach about 10 km inland from the coastline and has led to
land subsidence at a rate of 2-34 cm/year in north Jakarta. Over-abstraction also occurs at the larger
municipalities like Semarang, Bandung, and others.
Surface water:
Most of the lakes in Indonesia are of volcanic origin. Lake Toba is the largest volcanic lake in the
world with an average surface area of 1,100 km2 and an average volume of 1,258 km3. Based on a
recent river territory inventory, Indonesia has 14 rivers that exceed state boundaries: five rivers with
Malaysia in Kalimantan island, three rivers with Timor Lorosae in Timor island, and six rivers with
Papua New Guinea in Papua island. There are no records of major issues related to these transboundary rivers.
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Sea water:
It’s worth noting that desalination does not have a significant role in Indonesia’s current mediumterm water sector development plan.
Climate and climate change
Being an Archipelago, Indonesia is very vulnerable for losses with climate change. Prolonged
droughts, increased frequency in extreme weather events, and heavy rainfall leading to big floods, are
a few examples of climate change. Indonesia will experience modest temperature increase and more
intense rainfall. Perhaps the largest concern for Indonesia is the impact on food security.
1.2.2
Food security has been a significant government concern starting from the world price shocks of
2008. Presidential Decree No. 5 Year 2011 calls for increased surplus rice production of 10 million
tons (about 15%) by 2015 to address food security through a policy of rice self-sufficiency. In 2011,
Indonesia produced 65 million tons of rice, production has been growing slowly (about 1% annually)
over the last ten years mainly from increases in irrigated area and cropping intensity.
Pressures on water sources
Total renewable water resources
Fresh water withdraw
1.2.3


2
2,019 km3/yr
113.3 km3/yr
Total internal natural renewable water resources are around 2,018.3 km3/year. Surface water
resources are an estimated 1,972.6 km3/year and groundwater resources 457.4 km3/year.
About 70% of the water availability is on Kalimantan and Papua, which is only populated by 13% of
the total population. On Java and Bali water demand exceeds water availability, in Java and Nusa
Tenggara a water deficit occurs during the dry season (July to October, varying by the province).
Even some significantly large river areas in Java are estimated to face water deficit problems during
the dry season.
Irrigation
The total cultivated area in 2009 was 426,000 sq km, which is around 24% of the total area of the
country, which is 1,811,569 sq km. The irrigated land is about 67,220 sq km (2006). The irrigation
potential of the country is an estimated 109,000 sq km. Indonesia’s agriculture sector is dominated
by the cultivation of rice of which 82% is grown under irrigation.
1.2.4
Flooding of river systems
Between 1970 and 2011 3,980 flood events were recorded in Indonesia with an estimated 1.1 ha of
destroyed crop land, and 65,000 kilometer of damaged roads. Yearly on the average 150,000 people
1.2.5
3
need to evacuate, 210 people lose their lives and 11,000 houses are being damaged .
As an example, in and around Jakarta, flooding is a major issue and a direct threat to the population
and the economical development of Indonesia’s biggest city. The capital region of Jakarta is located
on the north coast of the island of Java in the Indonesian archipelago in Southeast Asia. Jakarta is
situated in a lowland area, a delta where 13 smaller and bigger rivers try to reach the sea. About 40%
4
of the city, the area the furthest north near the Java Sea, is situated below sea level . The greatest
climate and disaster‐related risk facing Jakarta is flooding, which will impose high human and
economic costs on the city.
2
3
4
CIA Intelligence 2012-2014
national disaster management center, http://dibi.bnpb.go.id
The World Bank, 2011
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Besides Jakarta, parts in the North West of Sumatra, North Java, and parts of Kalimantan have been
hit by floods during the last decades.
Coastal zones and maritime areas
Indonesia has some 300 public ports scattered over the 54,716 km coastline of the archipelago.
Jakarta, Surabaya, Belawan, and Ujung Pandang, the four largest ports, handle most of Indonesia’s
export and import cargoes, except for special commodities such as crude oil, logs, timber, rubber,
palm oil, and fertilizer which use specialized ports. Much of the domestic traffic originates or is
destined to these four ports.
1.2.6
Inter-island shipping is the prevailing means for distributing goods through the ports in Indonesia.
The cargo volume carried by inter-island shipping services reaches over 300 million tons, far
exceeding international trade volume. It is estimated that inter-island shipping accounts for 60 % of
the total sea borne cargo movement in the country. Especially, for remote islands like Sulawesi and
others, the percentages of cargoes carried by inter-island shipping are even higher.
In the coming years (sea) port development will remain high on the top priority investment list of
GoI. The EKN Jakarta and the Indonesian Embassy in The Hague organize several seminars about
port development (e.g. on 30 April 2015, The Embassy of Indonesia in The Hague organized The
Third Indonesia-Netherlands Infrastructure Forum (IF III)).
1.3
The water sector
This section describes the public sector, the legislation, the spending and investment planning and
the role of the private sector, NGOs and knowledge institutes. This section ends by identifying the
pressing needs and explaining the Dutch Government engagement strategy.
Public sector
Indonesia does not have a centralized body that holds the responsibility for the water sector.
Different governmental bodies handle different tasks and are coordinated by the Government of
Indonesia (GoI ).
1.3.1
Figure 1 Public sector
Relevant for the water sector
GoI
National Development
Planning Agency
(BAPPENAS)
Ministry of Public Works
and Housing
Ministry of Health
Ministry of Finance
Ministry of Home Affairs
Ministry of Environment
Ministry of Energy and
Mineral Resources
Provincial Government
Local Government
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Indonesian
Association of
Water Utilities
Water Utility
Source: GWI 2014
The ministry of Public Works and Housing (also referred as the Ministry of Public Works) is most
involved, this ministry is in charge of 1) the dealing with tenders, contract, and procurement
processes, which are then delegated to specific directorates, and 2) providing national-level water and
wastewater policies, technical standards and technical assistance.
Figure 2 Public sector
Relevant for the water sector
Ministry of Public
Works and Housing
DG Water Resources
DG Human
Settlements
Drinking Water
Development
Research and
Development Board
Water Resources
Research and
Development Center
Environmental and
Settlement Sanitation
Source: Ministry of Public Works 2010
The Directorate General (DG) Water Resources deals with the management and development of the
water sector, DG Human Settlement is involved in the water and wastewater sector through two
directorates. The Research and Development Board is responsible for conducting water resourcerelated research and development activities.
GoI acknowledge the need of a coordinating central body. The coordinating body is called the Water
Resources Council and is structured at different levels (e.g. National, Provincial) The board provides
service to the National Water Resources Board on the development and formulation on national
policy and strategy (water resource management), the management of river and groundwater basins,
and the development and formulation of policies on hydrological information systems. It is unclear
how this body is structured and the power of influence it has.
Besides the different Ministries mentioned above, the National Development Planning Agency
(BAPPENAS) plays a crucial role. This Ministry prepares the National Development Plan, including
project coordination and evaluation within the water sector. This agency is an advisory body to GoI .
Within the Ministry of Agriculture, DG Infrastructure and Agriculture Inputs is responsible for
farmer level irrigation management and the Water User Associations. This DG formulates policies on
land and water management and promotes responsible planning, administration and management.
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Decentral level:
As part of its major bureaucratic reform program, the Jakarta city administration will spin off the
water resources unit from the Public Works Agency. The separation will take effect in 2015.
Currently, the Public Works Agency oversees various infrastructure sectors, including roads (Bina
Marga) and water resources (rivers and coasts). The new agency overseeing rivers and coastal areas
would focus on water resources, flood control and waste treatment, issues deemed crucial to Jakarta.
PDAMs are the local suppliers of drinking water (state-owned), with exception of a small number of
private concessions.
5
Legislation
Indonesia is divided into 33 provinces, made up of 400 cities or municipalities (kota) and districts
(Kapupatan). Districts and cities are divided into sub-districts. Provinces, districts and cities are led
by governors, regents, and mayors. Each level of the three tier structure has an executive and a
legislature. GoI passes legislation and provides detailed guidance for implementation as Indonesia
has a highly decentralized system of government. The majority of local government is heavily in debt,
which has held back implementation and enforcement of regulations.
1.3.2
In 2004 GoI passed the ‘new’ water law, although not fully completed, for the first time this law
provided a framework for water legislation and governance, and included advanced concepts of
IWRM and the decentralization law. From 2004 this framework has slowly been started to fill out.
Regarding drinking water and wastewater discharge standards, the relevant legislation is:

Law No 32/2009 Protection an Management of the Environment

Government Regulation No. 16/2005 Development of Water Supply System

Law No. 32/2004 Local Government Autonomy

Minister of Environment Decree No. 51/2004 Sea Water Quality Standard

Law No. 7/2004 Water Resources

Government Regulation No. 82/2001 Water Quality Management and Water Pollution Control

Law No. 23/1992 Health (setting drinking water quality standards)

Minister of Environment Decree No.45/1996 Clean Beaches/Shores program
In the first quarter of 2015 the Water Law 7 of 2004 was declared unconstitutional by the
Constitutional Court in February and is now void in its entirety. This has far-reaching consequences
for all commercial activities that use water. The extent of these consequences requires further
research and will depend on the effectiveness of attempts by the Ministry of Public Works to repair
the legal loopholes that now exist. In any case, it will increase the pressure on companies to minimize
their extrusion of water from the environment, and recycle and reuse water as much as possible.
Regarding wastewater discharge (standards), the relevant legislation is:

Government regulation No. 16/2005

Regulation of the Minister of Environment No. 112/2003 (domestic wastewater)

Minister of Environment Decree No.51/1995 KEP-51/MENLH/10/1995 (industrial wastewater)

Specific decrees per industry sectors (e.g. Minister of Environment Decree No. 122/2004)

Specific decrees for Industrial Zones (e.g. Minister of Environment Decree No. 3/2010)

Law 32/2009 allows the provisions to strengthen the enforcement

Minister of Environment Decree No. 29/2003 (reuse of wastewater for irrigation)
Regarding Water Resource Management:
5
GWI 2014
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



PP No. 41/2008
PP No. 69/2014 (on water rights)
Perpres No. 33/2011 (on the national water resources management policy)
Permen PU No 04/PRT/M/2008 (on the guidelines for the establishment of Water resources
Management Coordination at the Provincial, Kabupaten and River Basin level
Specific regulation applies to use of water in industry, just as activities performed under other water
sub sector. The listing of these regulations goes beyond the scope of this survey.
Public sector current spending and investment plans
Water and wastewater sector funding is primarily the responsibility of the local government and the
respective PDAM in the particular area. However local budgets are not sufficient to finance the
infrastructure needed to meet demand, therefore local governments pursue alternative funding
sources. The total contribution of PDAM and local government into the common water infrastructure
1.3.3
6
is USD 62.2 million (2009) and growing 25% ever since . The Indonesian Investment Agency (PIP)
started its operation in 2007, its assets have grown from USD 518 million to USD 1.6 billion in 2011.
The Indonesian Water and Sanitation Financing Program is expected to start its operations from
2013 and is financed by GoI , World Bank and other donors. In 2011 capital expenditure (drinking
water and wastewater) reached a level of about USD 2.1 billion. GoI has allocated a budget for Water
Supply in Urban and Rural settings of USD 6.7 billion (2011-2014), and a budget of USD 3.4 billion
for the wastewater sector (2009-2014).
Public spending on irrigation decreases slightly, but still the GoI spends about EUR 250 million on
irrigation annually, EUR 218 million through central budgets of the Ministry of Agriculture, and EUR
7
33 million through the so called Special Allocation Funds .
Private sector
At the local level, the government acknowledges the need of private sector involvement in small-scale
private sector cooperation, large-scale PPPs and CSR projects. The potential of CSR funding is
estimated between USD 1.5 and 2 billion annually. Commercial on lending is currently possible
through the World Bank assisted Urban Water Supply and Sanitation Project, a project that allows a
selected number of PDAMs to improve their water supply infrastructure.
1.3.4
The Water Resource Law No.7/2004 allows a degree of water privatization by giving water
exploitation rights to individuals or businesses. So far international companies participate mostly
through PPPs (mainly concessions and BOT contracts). Progress in engaging the private sector in the
water and sanitation sector has been slow. Factors that constrain PPPs include institutional
coordination and leadership issues, land clearance problem, poor project identification and
preparation, and the continuing regulatory uncertainty (Indonesian Infrastructure Five Years and
Beyond Key Themes and Priorities for the 2015-2019 Development Plan. Ind. II, 2013).
6
GWI 2014
7
Regional fiscal balance funding is a fund, financed by the central budget and allocated to an area/region to fund area’s necessity in
decentralization implementation. This funding comprises three different funds: Revenue Sharing Fund, General Allocation Fund, and
Special Allocation Fund. Based on the Indonesian Proposed Budget 2015 the regional fiscal balance funding in 2015 is IDR 509,499.2
billion (USD 38.5 billion (1 USD = 13,245 IDR)). The amount of money pledged in the special allocation fund is IDR 35,820.7 billion
(USD 2.7 billion), IDR 496 billion (USD 37.4 million) of this fund is allocated to irrigation.
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NGOs and knowledge institutes
In terms of Indonesian (local) NGOs who are working on water issue, there are quite a few of local
NGOs doing water programs around Indonesia especially in rural areas. These NGOs focus mainly on
sanitation and hygiene behavior. This is in line with the GOI ’s national policy on community-based
sanitation. NGOs tend to follow the donor trends, and have water and sanitation as one of their
programs, besides e.g. health or livelihood for example. NGOs focus on the areas or communities that
are left behind in GoI water programs.
1.3.5
Local NGOs operating in the water sector are: Yayasan Dian CD Bethesda, Yayasan Rumsram, and
Yayasan Masyarakat Peduli. Dutch NGOs actively involved are SNV, Plan Indonesia, and Simavi. The
biggest water and sanitation programs in Indonesia are those from WSP World Bank and UNICEF at
the national level, as for the international agencies working for WASH in Indonesia AusAID, and
USAID (IUWASH) play an important role as well.
Every Ministry in Indonesia has a Research and Development Institute. Besides, five non-ministerial
government institutes are in place, coordinated by the State Ministry of Research and Technology,
one of these five is worth to mention: Lembaga limu Pengetahuan Indonesia (LIPI). Indonesia hosts
the Regional Water Knowledge Hub for River Basin Organizations and Management (CRBOM) as
well. CRBOMs’ knowledge partners include local, national, regional and international institutions.
8
Dutch cooperation and priorities through EKN
EKN Jakarta focuses on three areas: 1) water and safety, 2) water, food eco/river basin systems, and
3) sanitation and wastewater treatment.
1.3.6
Regarding water safety, the objective is to apply the jointly generated Indonesian and Dutch
knowledge and experience in the field of flood control, delta management and integrated water, land
and spatial management at the level of government policy and planning, and private sector
investment activities. The expected result is 1) to enhance the Netherlands’ share in the effective
implementation of the Jakarta coastal development Master Plan by private and public investments in
a substantial way, and 2) to make sure flood and water management programs are operational or
completed in similar delta or flood prone areas (Semarang, Surabaja, Bandung, Maluku river basins).
Regarding water, food and eco/river basin systems, the objective is to improve land- and watermanagement on Java and Bali in such way this will contribute to higher yield level and more efficient
water use in agriculture through use of Dutch water and agricultural expertise. The expected results
are 1) firms from the Netherlands continue to play a significant role on the water and food (security)
nexus, 2) improved operation and management of irrigation systems and (irrigated) land in
Indonesia by applying the approach of the Participatory Irrigation Sector Project (PISP) in the
Indonesia Irrigation Sector Program (IISP), and 3) intensive agriculture approaches for peri-urban
areas (re-use, water efficiency) are applied.
Regarding sanitation and wastewater treatment, the objective is to 1) strengthen the role of the Dutch
water sector in sanitation programming and implementation in the public sphere as well as the
market presence in private (urban) markets, and 2) promote the use of Dutch experience in the field
of water treatment, monitoring of water quality and environmental regulations. EKN aims 1) the
Netherlands will acquire a central position in the areas of urban sanitation and water quality
management, 2) the Urban Sanitation approach (PPSP) to be applied in all 490 urban centres (policy,
plan, implementation), 3) off-site sanitation installations operational in selected cities in Indonesia,
4) (post-) MDG targets on sanitation and national STBM objectives reached in selected districts and
8
MASP 2014-2017
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villages in East Indonesia and South Sumatra (persons and districts), and 5) inclusion of the
PPSP/USDP and STBM experience within the Five Year Plan 2015-2019.
Cross cutting themes are 1) climate change, and 2) capacity and institutional development.
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2.
Chances and opportunities
This chapter presents the results of the web survey among Dutch water sector players, completed by
the main observations derived from previous (existing) market studies and interviews with water
professionals and strategic actors within the Dutch water sector (please refer to Appendix 1 providing
an overview of the method of research). The first section describes the current situation. The second
section describes the most important trends, linking the current situation with future opportunities,
which is the topic of the third section. This chapter ends by identifying promising product market
combinations (PMCs).
2.1
Current situation
The section starts by describing the current situation, how the Dutch water sector is involved, the
type of activities performed, client groups and performance on specific development indicators.
Dutch sector involvement
The share of total Dutch exports in the water sector to the 12 OS-countries is estimated at 25%of total
2.1.1
9
Dutch exports in this sector, this equals about EUR 60 million . Figure 3 shows the breakdown of
these exports over the various OS-countries. The share of Indonesia is 31% of this total.
Figure 3 Breakdown of Dutch exports in the water sector to the 12 OS-countries, in %
of turnover (N = 60)
0%
5%
10%
15%
20%
25%
30%
35%
Indonesia
Bangladesh
Ghana
Mozambique
Kenia
Rwanda
Ethiopia
Benin
Palestinian territories
SouthSudan
Mali
Yemen
9
This estimation is based on the sample results of the web survey. Starting from this value relative export shares of the various regions
and countries have been determined for the sample. Since the sample may not represent the whole water sector in an optimal way, the
research cannot draw any hard or general conclusions. The actual value of export will be higher, but this value can only be obtained with
sample results once the whole population is known. Getting to know the population is complex and cannot be realized in the context of
this study. Another complicating factor lies in the fact that large projects (especially those in water construction) may influence export
figures drastically and lead to large fluctuations over time. For the sample of the web survey no such ‘disturbing’ projects have been
found. The method used in this survey is in line with the method used for WEX 2014, which are also based on sample results.
Project number 2526
15
Source: Web survey Panteia, 2014/2015
10
Figure 4 shows that Indonesia is a popular country for Dutch companies as well as for NGOs in the
water sector (see 1.3.5. for an overview of most important NGOs active in Indonesia). It appears that
33% of the companies and 50% of the NGOs in the sample are active in this country. About 33% of
the companies and nearly 20% of the NGOs in the sample are not active yet in Indonesia but
interested though. Do note, this overview does not comprise the perspective of the size of the
activities (in contrast to figure 3 that involves the monetary value of activities).
Figure 4 Popularity of OS-countries amongst Dutch parties in the water sector, % of
active or interested companies in the various countries (N=87) and NGOs
(N=16)
20%
30%
40%
50%
60%
70%
80%
90%
100%
NGOs
companies
NGOs
companies
NGOs
companies
Ethiopia
Bangladesh
NGOs
companies
companies
companies
Benin
10%
companies
Rwanda
Mozambique
Ghana
Kenia
Indonesia
0%
NGOs
NGOs
NGOs
companies
NGOs
Mali
companies
Yemen
South Sudan
Palestinian
territories
NGOs
companies
NGOs
companies
NGOs
companies
NGOs
Active in
10
Interested in
It should be noted that we apply the term ‘companies’ for companies as well as for knowledge institutes and water boards unless these
latter terms are used separately in the text.
Project number 2526
16
NWP drafted an overview of Dutch projects and business involvement in Indonesia. Please refer to:
http://www.ina.or.id/images/stories/download/water/12-0156-projectkaart-wt-lr-20120917.pdf
This map will be updated in 2015.
Examples of Dutch organizations having activities in Indonesia are:
Project number 2526
17
Table 2 Dutch water sector involvement
In Indonesia
11
Organization
PMC
Royal Eijkelkamp
Coastal management, development, land
reclamation, urban water management
Urban water management, coastal management,
land reclamation, port development and
management
reclamation subsidence and salinization,
Integrated water (resources) management
reclamation
reclamation
Local presence in the form of an Indonesian
consultancy and engineering company, focusing
on all sub sectors and cross-overs; various
projects: Urban Sanitation, Water Management,
Coastal Development
Collection and treatment of industrial
wastewater
wastewater
Coastal management
Water productivity and food production –
irrigation, Drinking water supply and treatment
Reuse of industrial wastewater
Water and food, wastewater treatment
Knowledge development, capacity building
WASH
Coastal management, development and land
reclamation
Water and Industry (mining), off shore vessels
Drinking water supply and treatment, water
distribution and quality, drinking water
transport and distribution, and collection and
treatment of domestic wastewater
Drinking water treatment (B2C)
Water and Agriculture, urban planning
Drinking water treatment
Water and Food production
WASH, drinking water supply, wastewater
treatment
Water treatment
Witteveen + Bos
Deltares
Ecorys
Grontmij
Royal HaskoningDHV
Nijhuis Water Technology
Aqua Industrial Water Treatment
Arcadis
Euroconsult Mott MacDonald
TNO
REDOX Water Technology
Unesco IHE
Simavi
BAM
IHC
WAVIN
Basic Water Needs
TU Twente ITC
AAWS
Hatenboer
VEI
Berson UV
Source: Strategic interviews Aidenvironment / Engelsman
11
From a geographical point of view, Dutch involvement is strongly focused on Jakarta, Soerabaja, and Medan, and not ‘spread all over
the country’.
Project number 2526
18
Current activities in various subsectors in Indonesia
Most companies in the sample are active in the subsector water management and water supply and
treatment, followed by wastewater and water and green. PSOs operate in the subsector water supply
and treatment, while NGOs focus on water management and water and green. See figure 5.
Figure 5 Current activities of Dutch companies (n=21), Public Service Organizations
(knowledge institutes, water boards and water providers: PSOs (n=7)) and
NGOs (n=8) in the various subsectors of Indonesia, in % of total
observations
0%
20%
40%
60%
80%
100%
Water supply and treatment
Wastewater
Water management
Water and green
Water construction
Companies
PSOs
NGOs
Figure 5 does not include the perspective of the size of economic activities. E.g. the water
construction sector (especially land reclamation, port and coastal development) is characterized by
large (in terms of monetary value) projects.
Activity areas of Dutch parties in Indonesia
Nearly 60% of Dutch companies is active in the activity area ‘Advice’. Another substantial %age
(>60%) is supplier of goods and/or services. Capacity building / knowledge transfer is the main
activity of NGOs in Indonesia followed by technical advice / supports in projects. See Figure next
page.
Project number 2526
19
Figure 6 Current activity areas of Dutch companies (n=19), PSOs (n=6), and NGOs
(n=8) in Indonesia, in % of respondents (more answers possible)
0%
20%
40%
60%
80%
100%
Advice
Design
Procurement
Contracting
Operations
Maintenance
Supplier
Research / knowledge
development
Capacity building /
knowledge transfer
Implementation
Technical advice /
support in projects
Lobby / advocacy
Capacity building /
knowledge transfer
Implementation
infrastructure
Technical advice /
support in projects
Companies
PSOs
NGOs
Project number 2526
20
Client groups of Dutch parties in Indonesia
The public sector financed by ODA and the public sector with own finance are the most important
client group for companies in Indonesia. The public sector financed by ODA, local NGOs and
international NGOs are the important client group of NGOs. PSOs focus on water companies and the
public sector financed by own means. See Figure 7.
Figure 7 Current client groups of Dutch companies (n=19), PSOs (n=6) and NGOs
(n=8) in Indonesia, in % of respondents (more answers possible)
0%
20%
40%
60%
80%
100%
Public sector with own finance
Public sector financed by ODA
Water companies
Contractors
Local private sectors
Industrial companies
Agricultural companies
Port authorities
Local NGOs
International NGOs
End beneficiaries
Local knowledge institutions
Companies
PSOs
NGOs
The strategic interviews revealed for Dutch companies, the Indonesian private sector becomes more
and more important as a client group (business to business).
Progress on MDGs
In Indonesia the relative poverty decreased from 16% (2005) to 11% (2014), in 2014 28 million
2.1.2
12
Indonesian people lived below the poverty line . The progress on MDG reflects the countries results
on this specific MDG while the other relevant development indicators show the results of programs
supported by EKN.
Table 3 MDG 7 reporting
Drinking water and sanitation
MDG indicator
In % of total population
Improved drinking water source total
Improved sanitation facility access total
84.9%
55.8%
Source: JMP 2014
12
World Bank Statistics 2014
Project number 2526
21
GoI ambition is set on 100% coverage (water and sanitation). According to the Joint Monitoring
Program, Indonesia met targets on drinking water, and is lacking behind on reaching the MDG goals
on sanitation
The result fiche of the Dutch Embassy reports on a specific set of parameters, four specific indicators
relate to the water program portfolio.
Table 4 Dutch development support
Through the Dutch Embassy program
Development indicator
Units
Baseline
2013
2015 (target)
Rehabilitated irrigation
Improved OandM costs
Set up of Water User Associations
Reduced risk of flooding
ha
ha
# WUA
% less risk
0
0
0
0
142099
314777
5719
5
142443
274068
6250
5
Source: Result Fiche 2013
2.2
Trends
This section describes the trends starting by summarizing the most important pressing needs
followed by an overview of government plans and the agenda of donors and funders.
Pressing needs
Although water resources are abundant, the seasonal and spatial variation in the rainfall pattern and
lack of adequate storage create competition and conflicts among users. The continuing urban and
industrial expansion will put more pressure on the available water resources, and will lead to
increased demands for good quality water.
2.2.1
Municipal and industrial wastewater is discharged virtually untreated into the waterways causing
rapid deterioration in the quality of river water. The Ministry of Environment indicates a number of
12,000 SMEs with surface water pollution potential, about 50% of the industries can be found in the
food and beverage sector, about 20% in the textile industry. Water quality standards are frequently
exceeded and the collapse of existing reservoirs’ natural purification capacity is an important threat
for the future water supply in the region. Within the urban settlements, there is a lack of public
understanding on the importance of proper sanitation and wastewater treatment, causing diseases
and environmental damages.
13
Especially the small islands have limited ground water resources and face acute water stress . Deep
groundwater resources are being exploited at a rate which is not sustainable.
Rapid urbanization, especially near the coasts will lead to increased peak discharges. Together with
the large subsidence in cities like Jakarta and Bandung, this will increase the risks of floods. Climate
change will have an accelerating effect on this trend. Together with the deterioration of watersheds,
flooding causes massive sedimentation of reservoirs.
13
FAO, Aquastat 2014
Project number 2526
22
The main threat to water availability is poor water management. There is a lack of a centralised body
that specifically deals with all water sector related issues, the current coordination between ministries
is poor and unsuccessful. This leads to poor operations and maintenance of the current water and
wastewater infrastructure.
Hard to reach areas are in need of water supply services. In order to meet the MDG 2015 targets, GoI
14
needs to bridge a USD 3.8 billion funding GAP .
15
Government plans and agenda
Since 2010 GoI has been using the five pillar strategic approach for the development of the drinking
water sector:

Improve of coverage and quality of drinking water

Optimalisation of multi funding development, aimed to attract financing from local governments

Institutional and regulatory development especially on water service providers’ level

An IWRM strategy to protect river basin areas

Strengthen the partnership with private sector and general public
2.2.2
On wastewater GoI has developed a five pillar strategy as well:

Increase access to on-site and off-site sanitation, regarding the first mentioned the aim is to reach
a 55% coverage on national level through application of individual or communal septic tanks

Increased community and private participation

Strength institutional capacity of service providers

Improving law enforcement

Improve financial capacity and increase access to alternative funding sources
GoI is focusing its efforts on reaching the MDGs, which opens up opportunities for the private sector
as GoI cannot reach these goals on their own. Especially the BOT contracts for Water Treatment
Plants and water supply pipe networks will open new opportunities. Due to the ongoing
decentralization, GoI pays attention to the capacity building of new local water service providers in
the newly developed urban areas.
Though climate change is not a key driver for policy change, the government of Jakarta set policies
related to climate adaptation in their Spatial Planning for 2030. The increasing attention of the
government in climate adaption will probably result in more regulations for the private sector,
especially for the property developers. This might become a driver for solutions that focus on e.g.
increasing water catchment and groundwater recharge. However, in order to be effective, such
policies and regulations will have to be monitored. At the moment this is not always the case and
therefore policies do not always result in opportunities yet.
During the research the plans and agenda of the new government (2015-2019) were not known yet.
Agenda of donors and funders
Please read the section on IFIs (section 2.3.1. and 3.2.2.)
2.2.3
Macro developments in agriculture and industry
As the manufacturing industry on Java is growing, the water use by industrial sector is expected to
increase. In 1990 this sector contributed 1% of the water consumption, in 2000 6%, in 2011 16%.
2.2.4
14
GWI 2014
15
GWI 2014
Project number 2526
23
The fiber, textile and garment (FTG) sector is one of Indonesia’s oldest and most strategically
significant industries, employing 11% of the national labor force, accounting for 8.9% of total exports
(2010). The industry uses vast amounts of water, and is one of the major contributors of water
pollution in West Java.
The food and beverage sector grew by 176.3% during 2000-2009, the economic value in 2010 was
16
USD 194 billion . Domestic consumption is expected to continue growing, this will lead to a higher
demand and increase of production capacity. The food and beverage sector is a heavy water user as
well.
Indonesia is one of the largest exporters of (thermal) coal, aluminum, nickel and tin. Like any other
country the minimization of water and energy usage is trending as prices rise. In Indonesia however
this is not directly driven by country or site-specific parameters (e.g. scarcity) but rather in the light
of climate change and an increasing demand of other users. Therefore it can be expected that the
drive for the implementation of water/energy saving techniques will be low. Water security and
supply are generally not regarded as an issue by the community but rather the pollution that may
17
occur as a result of mining operations .
The agriculture sector on contrary becomes more water efficient as the water consumption dropped
from 93% (1990) to 80% (2011). However based on monitoring by GoI, a decline in conditions of
large irrigation areas (especially those managed by districts/cities) was observed, due to neglected
investments. In 2010 GoI calculated an estimated loss of 10 million ton of harvested rice. Facing this
reality and a rapidly growing population, GoI had to allocate significant budgets to finance the
18
rehabilitation of 3 million ha, and the construction of 1 million of new irrigated area .
2.3
Opportunities
This section provides insight in concrete programs and projects that offer opportunities for the Dutch
water sector. Identifying examples of past and present opportunities and the way these opportunities
have been financed provide insight in product market combinations that offer potential to enter and
explore or to expand and consolidate. The web survey among Dutch sector players, the supporting
programs by Dutch Government, the planned activities of the major IFIs and GoI provided input for
this section. This section does not provide an exhaustive list of opportunities.
Past and current opportunities
This section focuses on the past and current opportunities derived from Dutch support programs and
the statements of Dutch sector players (through the web survey).
2.3.1
Dutch support programs (RVO and Nuffic)

RVO supported through the DHK a program for water efficiency in the paper industry. Dutch
based company PCF Maintenance BV was involved

RVO finances market research performed by CBI on fishery products

Nuffic runs programs on Capacity Development (PUSDIKLAT) in IWRM Education and Training
CDIET, and Capacity Building in Maritime Transportation and Logistics Education and research
at ITS MARLOG
16
Indonesia Food and Beverage Association, GAPMMI
17
‘The Right Time to Mine, Dutch Business Opportunities in Water and Mining’, Witteveen + Bos, 2015
18
Country Water Assessment Indonesia, Deltares, January 2015 (draft)
Project number 2526
24
Partners for Water (PvW), managed by RVO, financed (2014-2015) ten different projects:
Table 5 Partner for Water Program
2014-2015 portfolio
Organization
Project
Aqua-Aero Water Systems B.V.
Sarvision
Aqysta Holding BV
Water for Water
Global tropical wetland monitoring
Enhancing Food Security through hydropowered pumps
Final Evaluation of the SHAW program
Young Water Development Program
NCICD technical End of Project Review
NCICD institutional End of Project Review
NCICD financial End of Project review
TA for Program Management Unit NCICD
Master Plan NCICD
South Consult
MDF Training en Consultancy
HKV Lijn in Water
ARCADIS Nederland NV
Rabobank
HaskoningDHV Nederland B.V.
Witteveen + Bos
Source: RVO
Dutch support programs (EKN)

The Netherlands supports the implementation of the five year plan for urban sanitation that was
initiated in 2010. Jakarta and the Citarum basin are of particular interest for sanitation,
wastewater treatment and water quality management. Rural sanitation will maintain its focus on
increasing access to sanitation through off site technologies. The main program is the Urban
Sanitation Development Project (HaskoningDHV), additional projects are SHAW (Simavi), and
Sanitation program Sumbawa.

Water safety is the main area where government to government cooperation will operate. This
area comprises the Jakarta coastal development program, the scaling up of the Jakarta coastal
development pilot to other areas in Northern Java, water security and catchment area
management, water purification and quality control, food security under circumstances of water
and land scarcity, capacity development and cooperation between Netherlands and Indonesian
knowledge institutes.

Regarding water, food and eco/river basin systems, the PPTA of the Indonesia Irrigation Sector
Project (IISP) is the leading program in 2013, co financed by ADB, improving land- and watermanagement on Java and Bali in such way this will contribute to higher yield level and more
efficient water use in agriculture through use of Dutch water and agricultural expertise.
Dutch water sector involvement (strategic interviews)
The table on the next page provides a non exhausted list of organizations involved in the Indonesian
water sector.
Project number 2526
25
Table 6 Dutch water sector involvement in Indonesia
Organization
Project
Royal Eijkelkamp
CO2 emission reduction and carbon trade
Kalimantan: The objective is to reduce methane
gas emissions from wetlands in Kalimantan by
managing groundwater levels (measuring and
monitoring). The project has been developed by
local partner PT. Servita Beningdo. Funding
from RABO Bank and Atradius State Business is
essential in securing this project.
Masterplan Jakarta: Royal Eijkelkamp is
positioning for downstream projects in this
program. Contacts are maintained with Royal
HaskoningDHV (Project Management Unit) and
Witteveen+Bos and partners (Masterplan) to
identify possible opportunities in an early stage.
Masterplan Jakarta: in partnership with
Grontmij, Kuiper Compagnons, Deltares and
Ecorys and Indonesian architects Triple-A has
secured this project by winning the tender.
Dutch and Indonesian research institutes
upgrade collaboration on water, weather and
climate, a new Joint Cooperation Programme
(JCP) targeting more joint research and
development in the area of systems relating to
water management.
wastewater: 60 m3/day wastewater treatment
plant for cocoa butter production plant in
Gresik, near Surabaya for Cargill, 730 m3/day
wastewater treatment plant for flavours and
fragrances plant near Jakarta for Givaudan,
3000 m3/year manure treatment plant for
agroindustry near Padang.
wastewater for diary processing plants
Decentralized Irrigation System Improvement
Project II in Eastern Region of Indonesia,
supporting role to the Project Management Unit
in monitoring the work, this project is financed
by JBIC, DHV is participating as well.
Integrated Citarum Water Resources
Management Investment Program, financed by
ADB, Euroconsult delivers TA on option,
feasibility and design studies for bulk water
supply, and a groundwater management plan,
and upper catchment management and
development plan.
TNO was involved in treatment technology for
mining of natural gas for clients Pertamina and
Royal Eijkelkamp
Witteveen + Bos, Deltares, Ecorys
Deltares, KNMI, Alterra WU, ITC TU Twente
Euroconsult Mott MacDonald, DHV
Euroconsult Mott MacDonald
TNO
Project number 2526
26
Exxon. The project was discontinued for political
reasons.
The SHAW Program is active on sanitation,
hygiene and water in Eastern Indonesia. The
program aims to reduce poverty by improving
the health status of rural communities, in
particular that of mothers and children, in a
sustainable way.
Dredging and Land Development Works for
Pluit City off the coast of Jakarta. This project
involves reclaiming approximately 160 hectares
of new land requiring in excess of 20 million
cubic meters of dredged sand. Two jumbo
trailing suction hopper dredgers will be deployed
for the dredging and reclamation activities
sourcing sand from local borrow areas.
IHC Asia Pacific, a subsidiary of IHC Merwede,
signed an agreement with Jaya Shipbuilding and
Engineering Pte Ltd, which enables IHC Asia
Pacific’s high-specification offshore vessels to be
produced by Jaya at its yards in Singapore and
Batam, Indonesia.
Study delivered to mining company PT Timah in
Indonesia. This report informed the company
about viable cassiterite (tin ore) mining at larger
depths than usual, as well as potential mining
methods and tools for the purpose.
The operation of a small plant on Bali producing
bottled drinking water in combination with a
network of small scale water kiosks.
Delivering water treatment technology to Cargill
(Indonesia)for its water for food processing.
Water Operating Partnerships
First launching project on the demonstration of
UV water treatment products
Simavi
BAM, Boskalis, Van Oord
IHC
IHC
AAWS
Hatenboer
VEI
Berson UV
Source: Strategic interviews Aidenvironment / Engelsman
Project number 2526
27
International Finance Institutions (IFIs)
ADB focuses on reduced environmental pollution and improved water supply in urban and rural
areas through their Metropolitan Sanitation Management and Health Project and PNPM Mandiri
(community empowerment program). Besides, ADB is planning to make investments in urban
sanitation (including waste water treatment) during the period 2016-2019.
ADB Projects Indonesia
Project
Description
Sector
Project
Period
Sustainable
Infrastructure
Assistance Program Capacity
Development for the
Metropolitan
Sanitation
Management
Investment Project
(Subproject 6)
Provide sewerage and
wastewater treatment
facilities within the
central districts of the
cities of Cimahi and
Jambi (North Sumatra
province), Makassar
(south Sulawesi),
Palembang (South
Sumatra) and Pekanbaru
(central Sumatra)
Waste
treatment
13 Jun 2014
Amount
(USD
millions)
2
ADB’s flood Management in the Selected River Basins Project (USD 108.7 million) has been moved
from 2013 to 2014. The Ibu Kota Kecamatan Water Supply Project (USD 50 million) is on standby in
2014. ADB’s Integrated Citarum Water Resources Management Investment Program second periodic
financing request (USD 130 million) has been moved to 2015 standby.
The World Bank supports the water sector in strengthening regulatory framework and enhancing
capacity for select water utilities (PDAMs), also in reconfiguring irrigation, dams and reservoirs to
adapt to climate change and enhance productivity. In sanitation and community based water
services, The World Bank builds capacity to plan system integration for centralized, community and
household sanitation, and to make long-term financing available to municipalities for infrastructure.
Project
Description
Sector
Project periods
Additional Financing
PAMSIMAS Support
Trust Fund
The objective of
the Additional
Financing for the
Third Water
Supply and
Sanitation (WSS)
for Low Income
Communities
Support Trust
Fund Project for
Indonesia is to
increase the
number of underserved and low
WASH
April 23, 2014
Project number 2526
Amount (USD
millions )
44
28
Jakarta Urgent Flood
Mitigation Project
income rural and
peri-urban
populations
accessing
improved and
sustained water
and sanitation
services.
The development
objective of the
Jakarta Urgent
Flood Mitigation
Project for
Indonesia is to
contribute to the
improvement of
the operation and
maintenance of
priority sections of
Jakarta's flood
management
system.
Water Mgt.
January 17,
2012
139.64
The Bank financed Water Resources and Irrigation Sector Program (WISMP) supports the
Government in the implementation of its reform agenda providing more stakeholder participation
and accountability in the management of water resources and irrigation.
Regarding WASH the Bank finances the Urban Water Supply and Sanitation Project (UWSSP), which
assists three local governments and water utilities (PDAMs) to improve and expand coverage of water
supply services for more than 90,000 households. The Indonesia Sanitation Sector Development
Program (ISSDP), implemented in six pilot cities under the WSP, initiated the development of the
National Sanitation Acceleration Development Program. The Bank has financed the flagship Rural
Water and Sanitation Program (PAMSIMAS), by 2015, this program is expected to provide some 7
million rural Indonesians with piped water supply and some 3.4 million with improved on-site
sanitation.
Source WB Strategy Paper 2013-2015
Future opportunities
The following opportunities have been identified, but the intention is not to provide a comprehensive
overview.
2.3.2
Flood protection:
The Jakarta city administration plans to assess cooperation on the evaluation of flood management
master plan. Cooperation on flood management evaluation is necessary, because Jakarta needs more
downstream management rather than upstream. Cooperation may take place in the form of the
construction of giant sea wall in the northern coast of Jakarta. Moreover, knowledge transfer on
water management is also necessary.
Urban drinking water provision:
According to BAPPENAS there are two construction projects in process: the development of bulk
water supplies and raw water extraction infrastructure (Bandar Lampung Water Supply) and a bulk
water supply project in Umbalun Spring. In the future three large scale projects are planned: 1) the
Project number 2526
29
establishment of water supply infrastructure that spans the cities of Bekasi and Karawang (BOT
contract worth USD 189 million), 2) the provision of municipal water supply for the western part of
Semarang City (BOT contract worth USD 78 million) and 3) water supply to the southern part of Bali
19
(BOT contract worth USD 287 million) . Although the Dutch water sector does not have track record
on BOT contracts, such BOT contracts might offer opportunities for Dutch water technologies
through sub contracts covering roles such as technology provider or equipment supplier.
(Waste) Water Treatment ((W)WT)
Five large scale projects are expected to be planned and executed as well: 1) the construction of a
water treatment plant (WTP) for Karian Water Supply, Banten, 2) the construction of 2 WTPs for
Jatigede Water Supply, West Java, 3) construction of WTPs for Greater Pontianak Municipal Water
20
Supply, West Kalimantan, 4) construction of a wastewater treatment plant (WWTP) for DKI Jakarta .
Coastal zone management (IWRM):
Jakarta is planning the so-called National Capital Integrated Coastal Development project in
Jakarta's northern coastal areas. Phase A—the first phase of the project—which is contracted to the
Jakarta Public Works Agency and the Ministry of Public Works, has entered the feasibility study
phase. The eight-kilometer project will cost IRP 3.2 trillion, and the cost will be proportionally
divided between the central government and Jakarta's administration. The government plans to
establish a new state-owned enterprise that will be focused specifically on the development of the
project. The enterprise will involve the provincial government of Jakarta as one of the shareholders in
the giant sea wall project, and as the coordinator of the project.
Ministry of Agriculture will repair irrigation system for 3 million hectares of farm lands as part of the
program to improve the productivity of food crops. The project would be carried out by phases to be
completed in 2017. In 2015, repairs would cover irrigation system for 1 million hectares of farmlands.
View of the Dutch water sector
According to the Dutch sector players (companies and NGOs) the promising area in the Indonesian
market is IWRM, urban water management and the supply of drinking water treatment technology.
Additionally, companies specifically identify opportunities in water and industry and enhancing
water productivity in relation to food production and agriculture (as cross-overs).
Obviously PSOs identify PMCs related to drinking water supply and treatment as promising areas.
NGOs identify additional opportunities in the subsectors IWRM and drinking water supply and
treatment. NGO identified water and food (among others agriculture) as an important cross-overs,
PSOs tend to value water and ICT as a promising cross-over.
Specifically, the Dutch private sector identifies opportunities in the following niches: industrial
wastewater treatment, integrated approach toward coastal zone and flood protection (in combination
with IT modeling), and support to drinking water service providers in lowering the non revenue
water (as part of water operating partnerships).
19
GWI 2014
20
GWI 2014
Project number 2526
30
Figure 8 Promising areas in Indonesia according to companies (n=9), PSOs (n=4)
and NGOs (n=6) active in Indonesia, in % of respondents (more answers
possible)
0%
20%
40%
60%
80%
100%
Drinking water supply and treatment
Drinking water transport and distribution
Industrial water supply and treatment
Industrial water transport and distribution
Ground and surface water for water supply
Collection and treatment of domestic…
Reuse of domestic wastewater
Collection and treatment of industrial …
Urban water management
Subsidence and salinization
Water productivity and food production …
Water distribution and quality
Dams and flood control
Coastal management, development and…
Port development and - management
Companies
PSOs
NGOs
Figure 9 Promising cross-overs in Indonesia according to companies (n=16), PSOs
(n=6) and NGOs (n=8) active in this country, in % respondents (more
answers possible)
0%
20%
40%
60%
80%
100%
Water and industry
Water and food (a.o. aquaculture)
Water and ICT
Urban port development
Companies
Project number 2526
PSOs
NGOs
31
2.4
Product-Market Combinations
Based on secondary market research and the outcome of the web survey, demand and potential
supply have been matched, and the following Product Market Combinations were identified as being
‘potential’.
Table 7 Product market Combinations
Most potential from demand and supply view
Need
Product
Market
Inadequate retention basins, the
under-sized drainage network,
increase in non-absorptive surfaces
and land subsidence has created the
conditions for prolonged and
extensive flooding during high
rainfall events. The main factors
driving the deterioration of urban
drainage problems are the lack of city
wide drainage design, and
assessment of individual projects on
the effect on drainage, increasing
subsidence, altering drainage
patterns, and discharge capacity, and
the lack of solid waste management.
Due to the high urbanization, the
demand for sanitation facilities and
waste water treatment (WWT) will
increase. Just as important the
management of sanitation services
and WWT plants has to improve.
Priority should be given to
enhancement of the institutional
strength, which is needed to generate
(and manage) the huge investments
needed.
Due to the large discrepancy between
the PDAM capacity and the projected
population demand (especially in
urban areas), PDAMs need to
improvement management. In many
of the PDAM, especially the ones in
the bigger cities, the reduction of
Non Revenue Water (NRW) becomes
a priority in the short term.
Polder development in vulnerable
coastal lowlands, responsible lowland
development
Large scale
property
developers
Coastal protection in combination
with land reclamation, and protection
against erosion
Ministry of Public
Works
‘Integrated urban development’
ICT based products and services in
flood risk management
The design and supply of waste water
treatment technologies for specific
industries
City
Administrations
Special Purpose
Vehicles set up by
local or central
government (state
owned)
Garment Industry
and Food Industry
Water operating partnership
PDAM
The design and supply of waste water
treatment technologies within urban
context
Water Operating Partnership

Advice on NRW reduction
strategies and implementation of
NRW programs

Enhance the management of
water supply and sanitation
facilities
Knowledge exchange:

On water supply, wastewater,
industry services, and sanitation
PDAM
Local Knowledge
Institutes
Source: Aidenvironment
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The local private sector as counterpart for the Dutch water sector becomes more and more important
(also refer to figure 11, section 3.1). For Dutch sector players (especially the SMEs), it is not always
easy to find entry points (for doing business) within the Indonesian public sectors.
Water engineering, IWRM: Flooding, coastal management and land reclamation
Opportunities in coastal management, flood prevention / management, and land reclamation will
present themselves on an ad hoc basis, while competition will be heavily influenced by financing
packages (regarding the development of infrastructure). There is significant Indonesian demand for
Dutch consultancy and knowledge regarding delta technologies. Specific PMCs are: ‘landscape
21
architecture’, ‘building with nature’, ‘efficient water catchment and intrusion’, ‘building on water’ ,
‘information as input for design and engineering’, and ‘decision support systems and flood
forecasting’.
Sanitation and Waste Water treatments: wastewater treatment technologies
Due to the increasing pollution of water (lack of waste water treatment, see above), ad stricter
enforcement, the heavy water using industries are increasingly willing to invest in technological and
sustainable solutions and high quality of Dutch market players: industrial services (equipment,
design and engineering).
At present municipal sanitation projects continue to take a back seat, with most projects taking the
form of small-scale community sanitation programs, funded by international donors, providing less
opportunity for Dutch water sector players. However, the potential large-scale water treatment plant
for Jakarta (worth USD 200 million) demonstrates that this tendency may change in the near future
22
as the population and economy continues to grow .
Based on the government investment program and the data on utility capital expenditure, Global
Water Intelligence calculated the market forecast below.
21
Flood Risk Management and the Private Sector of DKI Jakarta, Groningen University, 2012
22
GWI 2014
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Figure 10 Projected capital expenditure
Indonesian utilities
Capex Utilities
$1.200,0m
$1.000,0m
$800,0m
$600,0m
$400,0m
$200,0m
$0,0m
2011
2012
Wastewater networks
2013
2014
2015
2016
Wastewater treatment plants
2017
2018
Sludge management
Source: Global Water Intelligence 2014
Jakarta and the Citarum basin are of particular interest for sanitation, wastewater treatment and
water quality management. Rural sanitation will maintain its focus on increasing access to sanitation
through traditional off site technologies (e.g. septic tanks), this PMC is of limited interest to Dutch
23
suppliers, however there is a strong need for technical assistance .
Drinking Water: Strengthening the capacity of PDAM
Especially from a development perspective, this PMC provides opportunities to create development
impact. This PMC is potentially interesting for Dutch knowledge institutes, NGOs and Dutch
24
drinking water providers (through Water Operating Partnerships (WOPs)). In short term, the
commercial opportunities for delivering drinking water technology will be limited due to limited
capacity at local government level. However, when this capacity improves, niche markets in drinking
water treatment (specific technologies like UV treatment), and quality monitoring systems might
become ‘potential’.
23
MASP 20174-2017 and GWI 2014
24
It should be noted, as evidence is lacking, the questions remains unanswered how and if WOPs will create opportunities for the Dutch
water technology sector, local water professionals are not convinced business opportunities will arise.
Project number 2526
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3.
Market entry strategies
To convert market opportunities into business requires a plan: a market strategy. Strategic interviews
and results from the web survey, completed with desk research on existing market studies provided
valuable insight in different market (entry) strategies. The chapter starts by describing how Dutch
organizations cooperate with parties, projects and programs. The second section describes how
activities within the water sector are being financed. How Dutch organizations operate on the market
is part of section three. Section 4 describes lessons learnt, while section 5 describes the major
bottlenecks and drivers. The chapter ends by suggesting specific positioning strategies per potential
product market combination (PMCs).
3.1
Entering the country
After a thorough assessment of the market and the feasibility of the business case / project,
organizations have different ways to enter the country. Finding the right local partner and building
up a relationship by working together is the first step.
Figure 11 provides an indication of the status and intensity of the cooperation of Dutch parties with
various other parties in Indonesia, such as private sector/other companies, knowledge institutions
and government (bodies). Cooperation with private sector/other companies appears to be the most
intensive: 27% of the companies state that cooperation with these parties is (very) intensive.
Figure 11
Intensity of cooperation of Dutch companies with various parties in
projects and programs in Indonesia, in % of respondents (n=22)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Private sector/other companies
Knowledge institutions
Goverment(bodies)
NGOs
Other Dutch parties
Totally not
To some extent
On average
Intensive
Very intensive
A number of NGOs are involved in financing water supply and sanitation projects, mainly in
relation to poverty reduction in rural areas. These organizations include UNICEF, Canada-
Project number 2526
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Care Indonesia, Simavi, Mercy Corps, Plan and the Red Cross.
The Indonesia Netherlands Association (INA) is a good entry point for Indonesia to get information
on how to do business in Indonesia. INA facilitates a special working group on water, this working
group consists of 35 INA member companies and is open for INA members/companies that operate
(or would like to operate) in the Indonesian water sector.
Indonesia has various state owned companies active in sectors like energy (Pertamina/PLN), port
development (Pelindo), real estate, construction, etc. The current government has given state-owned
companies in the water sector a strong role, and substantial budgets, to invest in infrastructure and
development. State owned companies are interesting partners to engage with, however these
companies are often bound by the same procurement regulations as the government.
3.2
Seeking finance
Finding appropriate financial means needed to start up the business (or project) is a critical success
factor when starting up. In this section most interesting financial sources have been analyzed and the
results from the web survey on how the Dutch water sector finances its activities in the various OS
countries have been published. Please refer to Appendix II for getting an overview of Dutch financial
instruments, applicable for the water sector.
Most Dutch sector players financed the past and current activities using full Dutch funding (43%), or
a mix of Dutch funds and foreign funds (27%), as can be seen in figure 12.
Figure 12
Sources for current or realized projects in the various OS-countries, in
% of total number of projects mentioned by respondents (N = 70)
Mix of Dutch and foreign
finance
27%
Full Dutch finance
43%
No Dutch finance
30%
Looking at future opportunities, the perception of Dutch water sector players on the different type of
funds is quite divers. The combination of own means (36%), donor funding (12%) and government
subsidies (14%) are the main funding sources. The Dutch water sector is clearly looking for (a
combination of) different funding opportunities, which increases the complexity of getting a full
coverage of budgets.
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Figure 13
Sources for funding perceived opportunities in the various OScountries, in % of total number of sources mentioned by respondents (N = 47)
Unknown
10%
No sources available
8%
Own financial sources
36%
Other sources
10%
Private sector
2%
Consortium partner
8%
Donors
12%
Government subsidies
14%
Dutch supporting programs
Appendix II provides an overview of the most important Dutch programs providing (financial)
support. Besides these financial programs (often managed by RVO), the Dutch Embassy in Jakarta
provides financial support as well. The programs managed centrally by the Dutch Ministry of Foreign
Affairs (often managed by the IGG/DGIS) do not provide opportunities.
3.2.1
Figure 13: RVO financed programs
Program budgets per July 2014
9.000.000
Program budget in EUR
8.000.000
7.000.000
6.000.000
5.000.000
4.000.000
3.000.000
2.000.000
1.000.000
FDOV
DHK
PSI
FOM
PUM
Agri Pro
Focus
ARF
CBI
NUFFIC
FNV
CNV
PVW
RVO instruments
Source: RVO (July 2014)
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The Partners for Water (Partners voor Water: PVW, colored blue) program is the main instrument
used for financing water related activities. Second is the Nuffic program (colored light blue), EUR 1.5
million of this program finances the capacity development PUSDIKLAT in IWRM Education and
Training CDIET. Third is the DHK instrument (colored light blue), financing activities geared
towards water efficiency in the paper industry. Surprisingly the FDW (Sustainable Water facility)
instrument is not being used to finance PPP related activities.
Taking these three instruments as starting point for further analysis, the RVO instruments finance
mainly water engineering and IWRM activities. The NCICD project (Jakarta Flood Protection) is the
25
major project financed (sub sector water engineering) .
Figure 14 RVO financed programs
Program budgets per July 2014 per sub sector
4.500.000
4.000.000
Program budgets in EUR
3.500.000
3.000.000
2.500.000
2.000.000
1.500.000
1.000.000
500.000
0
Water engineering
IWRM
Water supply
WASH
Water and Industry
Sub sectors
Source: RVO (July 2014)
EKN financed programs (spending in 2013)
Sanitation is part of WASH programs; however EKN Jakarta finances programs that specifically
target on improving access to sanitation. The EKN spending (2013) focuses on sanitation to a large
extend (60%), WASH projects come second (21%).
25
Strictly speaking, the RVO managed programs are being financed by the Foreign Affairs Development Cooperation Budget, with
exception of the PvW funds (Water Mondiaal) that are financed by several Ministries. The PvW funds (about EUR 1 million per year) are
relatively seen limited to the Foreign Affairs Development Funds (EUR 8-10 million per year). Source: EKN Jakarta.
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Figure 15 EKN financed programs
Spending in 2013 per sub sector
4.000.000
3.500.000
Spending in EUR
3.000.000
2.500.000
2.000.000
1.500.000
1.000.000
500.000
0
Water
Water
Engineering Management
Irrigation
WASH
Sanitation
Aquaculture
Sub Sector
Source: EKN result fiche 2013
Quote:
The OS funding support in projects like Master plan Protection and Development of Jakarta is very
positive to position Dutch expertise/companies in a potentially very interesting market. However
companies from countries with large funding programs for capital investments such as Japan, South
Korea or China, may benefit most from the large down-stream projects. It would be very beneficial
for Dutch companies if such funding could be matched by Dutch funding sources.
Anonymous #3
3.2.2
International Finance Institutions
ADB has allocated USD 2.28 billion of ordinary capital resources for public sector lending to
Indonesia during 2014–2016. The non lending program is set at USD 39.45 million over the 2014–
2016 period. Project loans will continue to support urban water infrastructure, the ADB private
sector programs will continue to focus on urban water supply and sanitation.
The ADB finances programs related to climate resilience and sustainability to enhance freshwater,
marine, and forest resources management for improved food security (irrigation component), and
activities related to improved water and sanitation supply.
Project number 2526
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Table 8 Lending and non lending
ADB in the water sector in Indonesia (in USD millions)
Sub sector
Program
Lending
Irrigation
Integrated Participatory Development and
Management of Irrigation Project for
Western and Eastern Indonesia Phase
IKK Water Supply Project
Second Water Supply and Sanitation Sector
Development Assistance
Capacity Development for Water Resources
Integrated Citarum Water Resource
Management Investment Program, PFR2
200
Water Supply
IWRM
IWRM
Non
lending
50
1.5
1.5
130 standby
130 firm
Source: ADB Country Operational Plan 2014-2016
The World Bank is an important financier in Indonesia as well. World Bank commitments (in the
fiscal years including IBDR and IDA) ranged from USD 2.4 billion (2011), reaching a 4 year
maximum of USD 3.3 billion (2012), and slowing down to USD 1 billion (2015).
Regarding water the actual spending and future commitments are hard to capture as a
comprehensive overview was not made available to us. As an example the following is worth to
mention. Co financed by JICA (Japan), World Bank invest significant amounts in the irrigation
sector, the MRT project and WISMP-2 project count for USD 184 million. These funds are often
matched by GoI funding, however in a modest way.
The EIB is not a major player within the water sector in Indonesia. In the beginning of 2015 no water
related projects were part of the pipeline of projects to be financed. The only link to water is the
priority EIB has on the finance of activities linked to climate change, however the link is indirect and
the size of activities applicable to Indonesia is very small. The same counts for the EU cooperation
and development program.
Local Finance
After the financial crisis late 1990s, the Indonesian banking system has recovered well and is now
stable. The Financial Services Authority (OJK) has been established (or will be soon) which will have
the supervisory functions of the Central Bank and the function as watch dog. Despite oppositions of
such institution, it will probably bring continuity of the current banking system. The current banking
system allows foreign banks to have a 99% share in Indonesian banks. An increased demand for
3.2.3
26
reducing the %age to max 49% is currently visible .
The Indonesian banking sector is quite small (domestic credit amounts to around 50% of the GDP),
however the sector improved significantly over the last decade. State-owned banks account for only a
third of the total banking sector and the %age of non-performing loans has decreased over the last
couple of years to 6%. However, state-owned banks are still highly exposed to state-owned
enterprises (like PDAMs).
Both ING and Rabobank have branches in Indonesia. Rabobank International opened its office in
Indonesia in 1990. Rabobank has 90 branches in Indonesia, employing 1,510 FTE. Rabobank
International strategy focuses on Food and Agriculture, the water sector is not a specific market niche
26
BTI 2014
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of interest. Rabobank provides local banking services, local credit lines can be made available often
structured under a guarantee provided by the Rabobank branch in the Netherlands.
Dutch commercial finance
As an example, Rabobank is involved in financing the dredging, water engineering and construction
sector, and does provide export finance (often in combination with Atradius) to its clients. Looking at
the 12 Water OS countries, Rabobank mentions the dredging opportunities for Dutch Water sector as
a specific market of interest. Out of the strategic interviews, one company specifically mentioned the
Rabobank as a financier of its local activities in Indonesia.
3.2.4
Quote:
Local private clients often request for financing, to avoid high local interest rates. RABO is only
interested in projects above EUR 3-4 million of investment. Smaller projects are more difficult to be
financed. The Danish, Italian and German governments have better funding facilities for such smaller
projects.
Anonymous # 3
Atradius activities regarding Indonesia are worth to mention as well. The export credit insurance
portfolio related to the Water OS countries (outstanding exposure February 2015) provides a
representative overview (see figure below) of Atradius’ business involvement.
Figure 16 Export Insurance
Exposure on Water OS countries
1.600,0
1.400,0
Exposure in EUR 1000
1.200,0
1.000,0
800,0
600,0
400,0
200,0
-
Water OS countries
Source: Atradius
Atradius is not able to provide sector specific information regarding its Indonesian business
activities; the exposure within the water sector (with exception of the Maritime sector and Port
development) is not significant.
Government budgets
Please refer to the section 1.3.3. in chapter 1, in addition to this the following is worth to mention.
3.2.5
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The Indonesian government will soon release a five-year infrastructure improvement plan worth over
USD 400 billion aimed at stimulating economic growth. While fiscal reforms will help fund the
improvement plan, Indonesian President Joko "Jokowi" Widodo is in favor to centralize
authorization procedures to encourage private sector investment and speed up administration of the
projects. The National Development Planning Agency (BAPPENAS) is putting the final touches on
the budgets. The project outline will cover a broad array of works. Projects will include improving 24
27
ports as well as construction of roads and water treatment facilities .
3.3
Sector performance
After finding the right local partner and the appropriate financial means, Dutch organizations follow
different strategies to represent themselves in the country. NGOs prefer to work within one to one
partnerships and through a local representation or branch. The preferences of companies is quite
divers. Companies represent themselves in different ways. PPP is a less preferred option. (see figure
18).
Representation characteristics of Dutch parties in Indonesia
Figure 28
Current representation characteristics of Dutch companies (n=16),
PSOs (n=6) and NGOs (n=8) in Indonesia, in % of respondents (more answers
possible)
0%
20%
40%
60%
80%
100%
Local agent / representation
Local branch
One or more PPPs
One or more strategic alliances with same
partners
Temporary coalitions
One to one partnerships
Contacts with key players
Companies
PSOs
NGOs
Current strategies of Dutch parties in Indonesia
Following their clients, international expansion, and contributing to the development of a country are
the main drivers behind the strategies Dutch companies when entering and operating on the
27
http://asia.nikkei.com/Politics-Economy/Economy/Government-to-spend-436B-on-infrastructure
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Indonesian market. NGOs strategies are geared towards the formation of partnerships (‘one to one
partnerships’ is the most common option).
From the seventies of last century many Dutch water sector players set up a business in Indonesia
and often opened a local branch office, as a way to enter the market and further develop business.
However during the ’90-’00, many companies closed offices due to political issues between GoI and
the Government of the Netherlands (GON), decreasing GON funds for development programmes and
projects. Soon after, more strict European and National laws and regulations on transparency and
integrity had further downward effects on international operations of Dutch companies. Since the
dramatic events in Aceh/North Sumatra following the Tsunami in December 2003 relations have
tremendously improved, GON development budgets have been on the rise again and selected
companies are returning and expanding under rather prudent business approaches.
Learning from this experience, organizations on the average take an approach following 5 steps: 1)
find a launching client or project (through tendering), 2) project based presence through a project
office, 3) build up a portfolio of multiple projects, 4) open a REP office, and 5) establish a local
branch.
Knowledge institutes enter the market by establishing long term relationships with local knowledge
institutes first, and jointly acquire research of knowledge driven projects that focus on solving
complex issues by offering integrated solutions.
Quote:
Opportunities are generally found in niche markets and products for which local capacity is in short
supply. For new comers, access requires a combination of the following:

Expertise and products that are internationally competitive

Good and reliable local partners

Understanding of local market conditions

Good relationship with clients

International references and track record

Good reputation
Anonymous #2
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Figure 39
Current strategies Dutch companies (n=20), PSOs (n=6) and NGOs
(n=8) in Indonesia, in % of respondents (more answers possible, N=56)
0%
20%
40%
60%
80%
100%
International expansion
Contributing to development of the country
Following clients
Following tenders
Formation of PPPs
Formation of strategic alliances with…
Formation of temporary coalitions
Formation of 1 to 1 partnerships
Cooperation within programmes
Other strategies
Companies
PSOs
NGOs
3.4
Successes and lessons learned
Through desk research and web survey, a list of best practices and important lessons learnt were
identified and discussed during the strategic interviews with relevant Dutch water sector players. In
this section we elaborate on a limited overview of best practices and capture the lessons learnt.
National Capital Integrated Coastal Development (NCICD)
During this project a consortium of several Dutch water sector players developed a Master Plan for
the development of flood protection, land reclamation, sanitation, and road and port development in
the Jakarta region. In addition Dutch water experts drafted an operational plan for a Project
Management unit and a financing strategy. The implementation of this plan is subject to further
decision by the GoI and GoN. The consortium recommended the set up of a separate development
company to oversee the implementation.
Quote:
The most important success factors for the coastal protection project in Jakarta are:

Innovative power of the Dutch water sector

Collaboration of Dutch companies

Relations with the Indonesian authorities at the highest levels

Availability of seed money from the Dutch government (using the “Orange Card”)
Anonymous #1
Project number 2526
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Providing drinking water to the local communities
Two Dutch based companies provided the technology to treat drinking water. Company A provided
the equipment to the local public authority, supported by a local agent, company B set up its own
company in a joint venture with a trusted partner that sells bottled drinking water and supports the
set up of small water kiosks.
Company A initial intention was charity. The company initiated a project and the local agent was
hired to provide local support (networks). The local agent did not see any significant business
opportunity and worked as being assigned for a specific task, his commitment was modest. The
public authority involved lacked capacity to execute the tasks assigned (operating and maintaining
the equipment, drilling a well). Trying to succeed the company had to manage the project from a
distance, which was rather difficult and expensive.
Company B initial intention was to start a (social) business. The company raised a JV together with a
partner out of its own Dutch network. Both believed in the business opportunity. Finding the right
manager to run the operations was difficult; this hampered the operations in a severe way. At present
a manager is running the operations and the ‘water factory’ is operating according expectations. The
entrepreneurs invest part of the profit in supporting local entrepreneurs in setting up a small water
kiosk. After a promising start, the first entrepreneur left business as he had the opportunity to set up
an alternative business earning more money.
The central lesson learnt is the importance of a strong local partner or manager. To secure long term
commitment the business case (or benefits) to the local partner must be clear and attractive
compared to other alternatives.
Important learning from previous (market) research:

Good planning and follow up on a set of services/products: knowledge exchange -> institutional
development -> capacity building -> construction or products.

As cooperation and mutual strengthening are identified as important success factors, it is
recommended to implement any PMC as a group of partners, public and/or private. The most
appropriate and logical relationships between Dutch market players and the Indonesian
subsectors are in the fields of institutional development, capacity building and knowledge transfer
through training.

Learn from past and current projects, hook into existing initiatives.

Focus is identified as one of the success factors of current Dutch involvement in the water sector
of Indonesia. Effectiveness of Dutch water involvement in Indonesia greatly benefits from focus.
Demand and needs are endless, means and opportunities are limited.
Source: Market Scan on the Indonesian Water sector, Witteveen+Bos, 2010
3.5
Drivers and bottlenecks
This section describes the drivers and bottlenecks, entering (and operating on) the Indonesian
market (water sector). This section does not intend to provide an exhausted list, the section combines
insights from the web survey and secondary market research.
Ambitious and fast rising—these words aptly describe modern Indonesia. Amidst a global economic
slowdown, Indonesia was the third fastest growing economy among the G-20 for 2009 and it
continues to post strong economic growth, at a projected rate of 5.6% for 2016. This growth is an
important driver for many companies to become active in Indonesia. Besides, the Dutch have a long
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tradition in ‘doing business’ in Indonesia, the Dutch governments has long term trade and aid
programs in place that support Dutch organizations in entering in and operating on the Indonesian
market. However when entering the market, organizations have to face challenges too.
Finding financial means and the right partners are the main challenges for companies to scale up
their activities. NGOs share the first challenge and add to this the lack of institutional funding for
program management and coordination. NGOs seem not to have any challenge in finding the right
partners to scale up their activities.
Figure 20
Top 5 challenges for scaling up activities in Indonesia for companies
and NGOs, in % of respondents (more answers possible)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Top 5 Challenges Companies (N=47)
get to financial rescources
realisation of the right contacts
formation of strategic alliances with same partners
improvement of current results
succesfully dealing with the culture
Top 5 Challenges NGOs (N=13)
get to local financial rescources for implementation
get to institutional funding voor progamme management and coordination
scaling up current programmes
formation of PPPs
More specifically former market studies and respondents of the web survey mention:

Poor governance and capacity within the public water sector, current coordination between
different ministries is unsuccessful, there is a lack of a centralized body within GoI coordinating
all efforts on water.

Distribution of mandate, tasks and responsibilities between central and regional governments are
often not clear; this is partly caused by mechanisms of de-concentration rather than
decentralization (a method of central government to stay de facto in power at the regional level).

Various regional governments have not yet the capacity and capability to implement development
plans; development budgets are being stocked up in bank accounts at regional levels; regional
authorities evade risks of transparency and integrity issues causing several delays in economic
development.

Interpretation of Indonesian laws and regulations is complex, especially regarding rules for
participation in and the set up of legal entities, and the arrangement of working permits

Severe competition with respect to conventional solutions, approaches or products, leading to
competition on price and the selection of ‘cheap solutions’

The government procurement procedures especially at local levels, are still often in-transparent at
best and rigged in a number of cases, and usually focus on the lowest price
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Quote:
The cycle of large scale water infrastructure projects exceeds the political cycle; this jeopardizes the
continuity of our business. This is why we prefer to build on existing networks that have a clear link
with The Netherlands, e.g. the Unesco IHE Alumni Network.
Anonymous #37
Companies and PSOs seeing opportunities but are not active (yet) in Indonesia do not prioritize this
country within their strategies, NGOs on the other hand lack the resources to become active.
Figure 24
Reasons why companies (n=20), PSOs (n=5) and NGOs (n=5) are not
active in Indonesia, in % of respondents
0%
20%
40%
60%
80%
100%
We see opportunities but this country is not
our priority
We see opportunties but we do not have the
means to pick these up
We see opportunties but the political
situation is too unstable
We see opportunties but it is too dangerous
and unsafe in this country
We do not see any opportunities in this
moment
Companies
PSOs
NGOs
Most respondents, who are not active in Indonesia, are not willing to invest until a specific
opportunity arises. When willing to invest, most respondents tend to invest in finding the right
contacts, by participating in a trade mission.
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Figure 22
Willingness to invest, in % of respondents (N=21)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
yes, participating in a trade mission
yes, by approaching local parties and
building up networkcontacts
yes, by realising a trade representation
yes, by finding a local partner
yes, by starting a local branch or joint
venture
no, we wait for specific opportunities
for an assignment
other actions
3.6
Strategies for each PMCs
Based on secondary market research and the outcome of the web survey, demand and potential
supply have been matched, and the following Product Market Combinations were identified as being
‘potential’. In addition to section 2.4, per PMC entry strategies are being suggested in combination
with finance and possible partners.
More in general the current government aims to give more opportunities to domestic companies and
develop domestic technical and managerial capabilities. Especially the large Indonesian companies
are placing more emphasis on quality and sustainability, and are more willing to pay higher prices.
Foreign companies should therefore consider forming partnerships with domestic companies, which
can then front offers to the government.
Opportunities exist in the supply of technologies, but more so in the offering of complete solutions, in
which a group of companies provides turnkey solutions and remains involved in the operations and
finance for a number of years : Dutch companies should consider forming such consortia. The same
applies for water management: a joint approach of Dutch companies offering integrated water
solutions to potential clients in Indonesia is more effective than individual approaches by companies
offering only a part of the solution.
The private sector as entry point for doing business becomes increasingly important for the Dutch
water sector. Not based on evidence but more on experience, Dutch water sector players do not
always find the right entry points at governmental level (public sector), this applies especially for
Dutch SMEs.
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Table 9 Entry strategies
For selected PMCs: drinking water supply, IWRM and water engineering, sanitation and waste
water treatment
Product
Market
Strategy
Finance
Partners
Water Operating
Partnership

Advice on NRW
reduction strategies and
implementation of NRW
programs

Enhance the
management of water
supply and sanitation
facilities
Knowledge exchange:

On water supply,
wastewater, industry
services, and sanitation
Polder development in
vulnerable coastal lowlands,
responsible lowland
development
PDAM
Capacity
Building
Dutch
drinking
water
companies,
Dutch ODA
(SWF), ADB
interlink
WOP facility
Local NGOs,
local
knowledge
institutes
Consortium
Coastal protection in
combination with land
reclamation, and protection
against erosion
Special Purpose
Vehicles set up
by local or
central
government
(state owned)
TA funds
(grants), PPP
instruments,
private
finance in
combination
with
concessional
loans, credit
insurance
coverage
Local public
sector funded
by GoI
through IFI
programs
Local partner
providing a
local legal
entity and
relevant track
record
Private sector
Local agent
‘Integrated urban
development’
ICT based products and
services in flood risk
management
Water operating partnership
(sanitation component)
The design and supply of
waste water treatment
technologies for specific
industries
Local
Knowledge
Institutes
Increasing
access to
additional
financial means
Center of
expertise,
demonstration
platform
Ministry of
Public Works
City Authority
Large scale
property
developers
PDAM
Garment
Industry and
Food Industry
The design and supply of
waste water treatment
technologies within Urban
Context
Unsolicited
(and solicited)
PPP
procurement
methods
Co creation in a
strategic
program
lifecycle
approach
(integrated
planning
through the
project
lifecycle)
The B2B
procurement
model (PDAM)
B2B acquisition
or procurement
model (private
sector)
Local public
sector
commitment
and buy in is
key
Demonstration
projects
Source: Aidenvironment, Web survey Panteia, 2014/2015, GWI 2014
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Drinking Water: Strengthening the capacity of PDAM
For Dutch water sector, the water operating partnership (WOP) is a common strategy to provide
support to local water provider services (including sanitation and waste water treatment). The WOP
contract describes the way a Dutch drinking water company provides capacity building geared toward
improving the operations of the local water service provider. An efficient and effective operation
improves access to additional financial means. Combined with the showcase of Dutch innovative
technologies and solutions, this might open up windows of business opportunities.
Vitens Evides International is the leading provider of WOP support, this organization finances its
activities by investing own means (% of collected water fees) in combination with ADB funding
(10%), EIB (10%), EU grants (20%), Dutch ODA (SWF, EKN programs and ORIO: 40%).
The backbone of the WOP is a strategic alliance between the Dutch drinking water company, the local
water service provider and additional NGOs providing support to the program.
Knowledge Institutes providing support to the exchange of knowledge could be an interesting
alternative approach. Most of these contracts are won as tenders.
Quote:
The positioning strategy of our knowledge institute is built upon the following elements:

Long term relationships with local knowledge institutes

Jointly develop and acquire projects in the public and private sector markets

Focus on complex problems, requiring an integrated approach

Opportunistic approach to good opportunities with limited risks

The change to free and open source use of software

Use of alumni networks

Independent status is recognized by clients as an important asset
Anonymous #11
Water engineering, IWRM: Flooding, coastal management and land reclamation
A proven way to position for an integrated delta approach is to support the writing of a Master Plan.
The aim of supporting a Master Plan is to bring in and showcase Dutch expertise and to create a
strategic advisory position for The Netherlands. The positioning instrument used here is capacity
building (TA support). The advantage of continuing this TA support is the less funding needed and as
a result the reduced risk, the disadvantage is the lack of commitment from GoI and lesser control on
future execution. An alternative would be to offer a program management and support package
structured as a PPP, or structured by the set up of a contracting authority / development company.
Quote:
In the coastal protection project in Jakarta, Dutch companies are currently very well positioned. This
early involvement is positive to be prepared for the significant future investments, however in the
follow up phase strong competition is expected from countries with richer loan programs such as
Japan.
Anonymous #1
A strategic partnership with a country having funds (but not the expertise needed) could mobilize
large amounts of (concessional) finance. Investments from the Dutch site will be needed to trigger
these funds and to c0-finance Dutch involvement during the different stages of the project (master
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plan, concept, feasibility, design and procurement, implementation and operation and maintenance).
In parallel Dutch efforts should be focused on getting strong buy in by the GoI .
28
Sanitation and Waste (Water) Treatment: UDSP project on sanitation
Sanitation in Indonesia comprises three elements: drainage, fecal sludge management and solid
waste management. In 2011 GoI ambition to realize 100% sanitation coverage in 2019 became part
of a fast track program. EKN decided to support this ambition through the Urban Sanitation
Development Project (USDP). The support of USDP focused on capacity building (training and
methodology design) and was let by DHV, the project formally ended in 2014. Based on an evaluation
of USDP EKN considers continuing the support (USDP2).
Although a final decision has not been made yet, USDP2 is intended to comprise two work streams:
1) TA support (continuation USDP1, financed by ODA), and 2) involvement of the Dutch water sector.
Regarding the second track the evaluators of the program identified two PMCs: 1) solid waste
management (niche: composting and plastic recycling), and 2) faecal sludge management (niche:
innovative treatment techniques, business development support to local informal waste collectors).
Public sector dominates both PMCs. Only in waste collection, informal private sector plays a role.
Still donor driven programs exist, especially let by Germany (ODA) and ADB (concessional loans).
The contracting parties (direct clients) are the local ministries of public works and local planning,
USDP1 (and probably 2) will cover 500 cities and municipalities for planning and programming
stages; the USDP evaluators have identified a list of 10 frontrunners for implementation works.
The strategy for Dutch water sector for positioning would be to set up a demonstration platform and
center of expertise for innovations. Although a platform should be set up separately, such a platform
would ideally link to a water operating partnership. Dutch sector players should be willing to cofinance the demonstration of their product, which must fit within the plans of the local authorities.
Waste Water treatment: the B2B procurement model
The B2B model is the best route for companies to enter the Indonesian Water PPP market, this model
is a form of direct negotiation between a PDAM and a private party for a project.B2B models are not
labeled as public procurement and do not need to follow the procurement procedures. In order to
participate a company needs to raise a legal entity, rep office or project office, or a subsidiary.
The process starts with a PDAM identifying a need for extended water treatment capacity not covered
within the master investment plan. Finding out about these upcoming projects requires significant
efforts, companies that are already established and known for other projects have a clear advantage.
After assessing the PDAMs needs, the company proposes the project and conducts a feasibility study.
29
When positive the company and PDAM enter into negotiations .
IWRM and water engineering: the unsolicited PPP procurement model
According to the NWP Market Scan (Witteveen + Bos, 2010), as the government of Indonesia is
attempting to promote PPP programs, this is the preferred business form for market. Companies can
prepare unsolicited projects and offer them to the government. The projects technical feasible to
integrate in the master plan, economically and technically feasible, and do not require financial
government support (GWI 2014).The procurement of such projects follows the so called ‘Swiss
Approach’. Other competitors are invited to improve the original bid. The initiator is often entitled to
28
interview Paul van Koppen 18-02-2015
29
GWI 2014, note the EKN Jakarta questions the mandate of the PDAMs regarding waste water treatment, e.g. the mandate in Jakarta is
allocated within the Jakarta Municipality (local government) and NOT at the PDAM
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get additional points in the evaluation, to match the offer of the preferred bidder, or to receive
30
financial compensation .
30
GWI 2014
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Appendix I:
Methodology
The Water OS positioning survey is part of the Water OS program: a facility of the Ministry of
Foreign Affairs. The Water OS program aims at providing support to the Dutch Embassies in 12
partner countries in the formulation and implementation of their water programs. Central element of
the program is the involvement of the Dutch water sector, i.e. companies, NGOs, knowledge
institutes and governmental organizations.
In order to generate more evidence for effective continuation of the Water OS Program and to
‘trigger’ Dutch water sector players, RVO contracted Aidenvironment, in collaboration with Panteia,
Chris Engelsman and Jan Oomen, to conduct a “Positioning Survey”. This survey identifies
opportunities, strategies and approaches for the Dutch water sector, and more specifically seeks high
potential Product/Market Combinations (PMCs) in the 12 Water OS countries included in the Survey.
The final deliverables of the survey are twelve positioning survey reports (one for each country) and
one overarching management summary. Primary target group for the Positioning Survey Reports are
the Technical Experts (TDs) at the Netherlands Embassies in the 12 OS countries, with all Dutch
water sector players as secondary target group.
The methodology comprises desk research, a web survey and additional strategic interviews:
 The desk research studied the most essential reports and documents per country (market scans,
market reports, strategic papers of Embassies and International Financial Institutions). The Key
Advisors within the Water OS program played an important role in rendering accessible and
prioritizing the data available.
 In the period November 2014 – January 2015, Panteia carried out a web survey. Two different
questionnaires have been applied, one for companies, knowledge institutions and water boards,
and another questionnaire for NGOs. Despite the length of the survey and thanks to a considerable
effort of the project team and NWP, the response rates were not disappointing and for a web survey
in general above average: NGOs: 16 out of 48 implying a response rate of 33,3%, and companies
(including knowledge institutions and water boards): 87 out of 531 implying a response rate of
16,4%.
 Based on the outcomes of the desk study and web survey, Aidenvironment selected 27 companies, 3
(semi) commercial financiers, 7 NGOs, and 8 knowledge institutes (including Water Boards
(‘waterschappen’) and water service providers) to be interviewed on strategic topics focusing on
market opportunities and applicable market entry strategies (and business models). Through these
strategic interviews, the research team gained more detailed information on projects of front
runners. These projects gave more information on lessons learned, success factors, and
opportunities for up scaling.
Regarding the web survey, two important remarks can be made:
Value and limitation of the survey results
The web survey results have provided very useful data for this study. The value of the results
especially lies in the provision of relative figures on various aspects enabling comparisons between
countries, opportunities, bottlenecks, groups or respondents, etc. and to monitor the developments in
these figures over time. The limitation of the study lies in the inability to provide reliable absolute
figures on for instance turnover values.
OS-study versus WEX
For the web survey a similar methodology has been applied as is done for the WEX (Water Export
Index) – study, which is carried out twice a year. A sample of companies and institutions is asked to
provide data on national and export turnover in the water sector and the division of this turnover
over regions and over subsectors. The samples do not have the same composition. Also over time the
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samples may differ in the WEX, but never provide a bottleneck though to assess the WEX and to
make reliable comparisons over time. Like in the WEX, the estimation of the export turnover is based
on the sample results of a survey. Starting from this value relative export shares of the various
regions and countries have been determined for the sample. Since the sample may not represent the
whole water sector in an optimal way, we cannot draw any hard or general conclusions about the
export turnover figure and division of this figure over subsectors, regions and countries. The real
value will be higher, but this value can only be obtained with sample results once the whole
population is known. Getting to know the population is difficult and cannot be realized in the context
of this study nor in the WEX-study. Another complicating factor for generalizing study results lies in
the fact that large projects (especially those in water construction) may influence total and regional
export figures drastically and lead to large fluctuations over time. For the sample of the web survey
no such ‘disturbing’ projects have been found. The sample results of the OS-study regarding relative
export shares of regions are in line with the results of the WEX 2014.
The average budget per country positioning report is EUR 7,000. Therefore, the positioning survey
cannot be seen as a fully fledged market research. An in-depth assessment of the markets (the OS
Water countries) was not part of this research, instead the research relied on secondary information
(reports available) and expert opinions (Key Advisors Water OS program, TD staff on Embassies,
YEP network, and a network of ‘water professionals’).
An important disadvantage of the web survey – in contrast with a telephone survey for which a
stratified sample has been selected - is that the characteristics of the total population are unknown.
By lack of a stratified sample, the outcome of the web survey does not offer the opportunity to level
up the sample results to the total population and to calculate absolute figures for turnover and export
volumes for each subsector and region. Despite this limitation of the web survey, it does provide very
useful information for the positioning studies.
Additionally to the country specific positioning reports, a management summary was drafted. The
management summary elaborates on the overall findings and provides overall conclusions.
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Appendix II: Finance
The Dutch Government is able to support activities performed by the water sector in developing
countries (in this case the 12 Water OS countries) in different ways. On a strategic level, financial
support can be labeled as:



Bilateral support (country to country)
Multilateral support (to different countries often funneled through International Financial
Institutes or UN related organizations)
Specific instruments (e.g. managed by RVO or commercial organizations like Atradius and FMO)
The financial support from Dutch Government related to the 12 Water OS countries aims to combine
trade and aid perspectives. The policy focuses on three key points: 1) improved management of water
catchments and safe deltas, 2) efficient use of water, especially in the agriculture sector, and 3)
improved access to clean drinking water and sanitation.
This appendix provides an overview of the support provided on different strategic levels: bilateral,
multilateral and specific instruments. The content is structured following the most important
organizations involved in funneling these funds starting with the Ministry of Foreign Affairs, The
Dutch Embassies, RVO, Dutch (Semi) Commercial Players, and the most relevant International
Finance Institutes. At the end, the appendix provides a non exhausted list of foundations financing
water related projects and activities.
Centralized programs managed by IGG/Water DGIS/Ministry of Foreign Affairs
DGIS (within the Ministry of Foreign Affairs) focuses on the Dutch international cooperation with
partnering countries. The cooperation involving the water sector is mandate of the section water
within the department of DME (future: IGG (Inclusive Green Growth)). This section manages the
water related portfolio of programs providing regional and multilateral support. The funding is often
labeled and does not provide direct opportunities for the Dutch water sector.
Decentralized programs managed by Embassies:
The Multi Annual Strategic Plans (MASP) is the nucleus of Dutch bilateral support to a country.
Projects, programs or businesses being part of the Embassies’ program to implement the MASP fit
into the country specific strategy and are aligned with the overall water policy of Dutch government.
The funding of Dutch Embassies provides opportunities for the Dutch water sector.
Specific Instruments: RVO
RVO has developed different type of instruments depending on the phase the
project/program/business is in, starting at the development of an idea, testing the concept in a pilot,
scaling up the pilot to significant size to start building a business or self financing project on. We
follow this structure when presenting the different instruments.
To finance the development of an idea, innovation or RandD:
VIA water:
This is a relatively small fund (EUR 10 million over 4 years) to finance out of the box ideas and smallscale innovations using grants. Aqua for all manages the fund, which started operating in 2015.
Maximum size of the grant is EUR 200,000 per project.
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To finance a pilot:
Partners for Water:
This is a funding program (grants) financed by different Ministries runs from 2010 till 2014. After
2015 the program will continue following the same strategy. In 2015 the facility is not open for new
application. The program financed 80 projects of which 50 included a pilot. The average subsidy size
was EUR 200,000 financing 20-80% of the budget. The new program will start with a total budget of
EUR 10.5 million.
DHK:
This instrument provides grants and aims to finance demonstration pilots, feasibility studies and
acquiring of knowledge. The program has a specific EUR 3 million window for DGGF countries of
which EUR 1 million is allocated to the least developed countries. This facility is specifically
applicable for projects in fragile states.
DRR:
DRR finances the Dutch Risk Reduction Team, a database of Dutch Water Experts that are available
for solving water related issues with respect to disasters. DRR is not a facility financing disaster
response or aid, though DRR provides knowledge that can be used to e.g. avoid disasters. RVO in
close cooperation with NWP manages the facility.
To finance the scale up of activities or pilots:
ORIO / DRIVE:
ORIO was cancelled in 2014. ORIO used to be a grant facility financing investments related to the
development, implementation and operation of infrastructure in developing countries. Governments
of these countries submit the applications and the private sector is involved in the development and
execution of projects.
DRIVE is the successor of the ORIO program and provides concessional loans to governments of
developing countries to develop, construct and operate infrastructure. DRIVE will be launched in
April 2015 and has an available budget of EUR 100.000.000 annually expecting to finance 10-15
projects. The facility aims to actively involve the Dutch Water sector and contribute to development
of the receiving country.
G4AW:
G4AW stands for Geodata for Agriculture and Water and finances projects, programs and businesses
aiming to improve food security in developing countries by using satellite data. Netherlands Space
Office (NSO) is executing this program, commissioned by the Dutch Ministry of Foreign Affairs. In
2014-2015 the facility has EUR 30.5 million available to provide grants (EUR 0.5-5.0 million)
financing up to 70% budgets. Proposals and partnerships should be based on a business plan geared
towards satellite data at the start of the information chain.
FDW/FDOV and GWW:
RVO developed three facilities to finance Public Private Partnerships (PPP) in the water (and
agriculture) sector. These facilities aim to: 1) increase access to drinking water and sanitation, 2)
enhance efficient and sustainable water use (especially in the agriculture sector), 3) improve
management of catchment areas and safe deltas, and 4) (specifically for FDOV) improve food security
and private sector development. GWW (Ghana Wash Window) is a specific window financing water
related PPPs in Ghana.
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The three facilities are in place since 2012, in 2014 FDW and FDOV launched and closed its second
call, the GWW second call for proposals closes in February 2015. The facilities are planning the third
call to be executed in 2016. Because the facilities just started operating, (impact) results have not
been reported yet.
The facilities provide grants and have different modalities. The facilities received many applications
and resulted into the finance of new initiatives. The application process is being perceived by a
significant group of applicants as complex, and requires a clear business case, or theory of change
aiming to enhance the enabling environment as part of the proposal, plus a significant contribution
by the private sector. The facilities are especially applicable for large applications fitting into
investment agenda’s or strategic objectives of the private sector players involved.
DGGF:
The Dutch Good Growth Fund started operations in mid 2014 and aims to combine aid and trade
goals. DGGF is a revolving fund, providing finance (not grants) to initiatives with a ‘healthy risk
profile’. DGGF focuses on 66 countries (called the DGGF countries), including the Water OS
countries. DGGF is build on three pillars: 1) a fund financing activities of Dutch SMEs in DGGF
countries (managed by RVO), 2) a fund financing local SMEs and banks in DGGF countries
(managed by PWC and Tripple Jump), and 3) a fund financing export credit insurance and export
finance activities (managed by Atradius).
In Pillar 1, RVO works closely together with Dutch banks. The fund is equipped to provide guarantees
to banks up till 60% of the credit risk, loans to banks and investment funds (equity). The maximum is
EUR 10 million per project or business. A TA facility will be in place to provide assistance on
improvement of the business plan or investment proposal.
Pillar 2 is under construction; this pillar will provide fund to fund investments up to EUR 175,000.
Pillar 3 provides export credit insurances covering non-market risks up till a maximum claim amount
of EUR 15 million. Besides insurances, this fund provides export finance instruments. Products focus
on Dutch SMEs needs, covering small and large transactions.
Besides these above mentioned programs and facilities, the following instruments can
be useful and applicable for financing water related activities.
PSI:
PSI was grant program available for non-Dutch and Dutch companies wishing to make an innovative
investment, in cooperation with a local partner in one of the PSI countries. This program stopped
operating mid 2014.
MMF:
MMF is a match making program, aiming to establish a long term business relationship between a
Dutch entrepreneur and an entrepreneur from a developing country.
OS Partner Countries:
This program finances the projects, managed by the local Dutch Embassies. These projects fit into the
Multi Annual Strategic Plans of the specific Embassies.
TDs / economic diplomacy:
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This program finances the so called thematic experts working at the Dutch Embassies in a limited
number of OS Partner Countries.
TMEA:
Managed by DDE / DGIS, this large program focuses on the East African region financing initiatives
contributing to the enhancement of trade relations within the region. The facility is applicable for
financing initiatives linked to port development.
Water Mondiaal:
Water Mondiaal is a program launched by the Dutch government to cooperate actively with countries
in low-lying delta areas, protecting them against floods and ensuring sufficient, clean water. Partners
for Water is managing this program, the program aims creating long lasting cooperation agreements
between the public and private sector , and civil society and knowledge institutes. Water Mondiaal
focuses on five deltas: Egypt, Bangladesh, Indonesia, Mozambique and Vietnam.
(Semi) Commercial Organizations managing funds on behalf of Dutch Government
The following facilities or organizations are in some way closely linked to RVO or the Ministry of
Foreign Affairs.
Atradius:
Atradius offers a comprehensive range of credit management solutions that protect businesses of all
sizes against the commercial and political risks inherent in domestic and global trade. Atradius
provides credit insurance, debt collection services, bonding, reinsurance and a range of special
products.
Atradius Dutch State Business performs different facilities on behalf of and for account of the Dutch
State. There is no direct link with the RVO organization, though Atradius products can be combined
with RVO instruments (e.g. ORIO/DRIVE).
Atradius does not specifically focus on the water sector. However dredging, waste management, port
development and the maritime sector are important sectors from a business perspective. Atradius is
not actively involved in all Water OS countries; the table below provides an overview of the
outstanding volumes of credit insurance products per January 2014.
Table 10 Atradius business in Water OS countries
Credit Insurance outstanding risks
Country
Risk Volume (EUR million)
Mali
Yemen
South Sudan
1
1.2
0
0
0
105
0
0.1
182
118
1,373
0
Palestine
Ethiopie
Mozambique
Benin
Rwanda
Ghana
Kenya
Indonesia
Bangladesh
Source: Atradius January 2015
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Atradius manages the third pillar of DGGF. In the first six months Atradius received 7-8 requests,
one of these came from the maritime sector. The DGGF facility provides support on smaller
transactions; therefore this product is applicable for Dutch small and medium enterprises.
FMO:
FMO manages three funds relevant for the Dutch water sector.
FOM-OS
The first pillar of the DGGF program will replace this fund. The fund offered loans to private sector
players investing in non (commercially) bankable projects or businesses in developing countries.
Innovative Finance Fund for Development
This fund aims to catalyze private sector investments.
IDF
IDF stands for Infrastructure Development Fund. The IDF is aimed at creating reliable infrastructure
in many sectors, ranging from potable water and mobile telecommunication services to roads and
power. By providing risk capital through the IDF, FMO takes on definite risk while acting as a
gateway for other financers.
IDF offers finance through equity, mezzanine and debt products that can be used even in early stage
of projects. The fund has the following fund limits:
 Individual transaction amounts maximized at EUR 25 million
 Financing about 25% of total project investment
 Shareholding maximum 25%
 Maximum tenor of 20 years
 Convertible contributions are selectively available for financing during the development phase of
projects (up to 49% of total development cost)
About 8% of the portfolio is allocated to water related projects (mainly water related to energy:
dams). IDF hardly finances projects in other sub sectors of the water sector, this is due to: 1) the
limited willingness to pay (drinking water), 2) the strong involvement of a weak public sector, 3) the
limited role of the private sector, 4) the lack of involvement by Dutch water sector as a strategic
operator or investor.
Within the FMO organization the department NL Business manages the IDF fund and provides
(financial) transaction advisory support to Dutch businesses aiming to become active in developing
markets. NL business brings in the financial perspective when Dutch businesses want to develop a
consortium. Regarding consortium development within the Dutch water sector, port development,
dredging and waste (water) treatment are potential sectors. Thinking along the lines of so called
corridor concepts (infrastructure connection points like transfer utilities) seems to be a promising
market entry point.
EP - Nuffic:
EP-Nuffic is the main expertise and service centre for internationalization in Dutch education, from
primary and secondary education to higher professional and academic higher education and
research. EP – Nuffic runs several programs, the NICHE program is relevant for the water sector.
The Netherlands Initiative for Capacity development in Higher Education (NICHE) is a Netherlandsfunded development cooperation program. By sustainably strengthening higher education and
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technical and vocation education and training (TVET) capacity in partner countries, it contributes to
economic development and poverty reduction. The program focuses on four policy priorities: 1)
Water, 2) Food security, 3) Sexual and Reproductive Health and Rights (SRHR) and 4) Security and
the rule of Law.
Dutch Commercial Banks:
Looking at the global networks of the larger Dutch international operating banks (ABN AMRO, Rabo
bank and ING), the Rabobank has the most visible overall presence in the 12 Water OS. In the
strategic interviews, this bank was the only commercial bank mentioned a couple of times as being
active in the international water sector.
The water sector is not a specific priority sector for Rabobank. From an international perspective
Rabobank focuses on the agriculture sector. However Rabobank is involved in financing the Dutch
water sector in The Netherlands. From this perspective, Rabobank ‘follows its clients abroad’
(especially the dredging and water engineering sector plus larger consultancies are being mentioned).
Rabobank has branches in Kenya and Indonesia, participations in Rwanda and Mozambique and
operates in partnership with e.g. Standard Charter Bank in Mali, Ghana, and Bangladesh.
Export finance, guarantees and currency risk management are the most common services/products
offered to international operating clients.
International Financial Institutes (IFIs):
The so-called multilateral aid program of governments is being managed by IFIs like the Worldbank,
ADB, AfDB and EU (EU grant program and EIB). The following IFIs play an important role financing
water sector related projects, programs and businesses.
World Bank (WB):
In 2014 WB announced reorganization. The new structure has five relevant departments focusing on
water: GP14 Water, GP1 Agriculture, GP3 Energy and Extractives, GP 4 Environment and Natural
Resources, GP12 Transport and ICT, and GP13 Urban and Rural Social Development.GP14 Water
department integrates WASH, irrigation, and Water Resource Management. One global staff pool is
in place to partner with outside organizations. More weight is put on knowledge into operations. WB
offers loans to developing countries, projects have to fit the multiyear WB strategy, and the fund
receiving countries lead the tender procedure. About 20% of the annual budget is allocated to water
projects of which 53% WASH, 13% irrigation, 24% water and energy, and 10% flood protection and
delta technology.
The Asian Development Bank:
Programs of ADB are complementary to other donors and have the starting point to promote
inclusive water policies (including the poor). Focus on mainstreaming water efficiency in supply and
use and enhanced cooperation with the private sector. From 2010-2020 the budget is USD 20-25
billion.
The African Development Bank (AfDB):
Looking at the AfDB strategy 2013-2022 paper, the 10 year focus will be on inclusive growth and
green growth. The bank identifies five operational priorities: 1) infrastructure development, 2)
private sector development, 3) governance and accountability, 4) regional economic integration, and
5) skills and technology. In implementing its ten-year Strategy, the Bank will pay particular attention
to fragile states, agriculture and food security, and gender. Supporting the water sector is specifically
part of the agenda on infrastructure and agriculture and food security.
Project number 2526
60
In view of its important contribution to the achievement of all the MDG goals and therefore its
unique contribution to poverty reduction on the continent, the water sector has received major
attention as a strategic priority of the Bank. Since 2000, following the adoption of its Integrated
Water Resources Management (IWRM) Policy, the Bank has increased its focus on the water sector,
especially on drinking water, sanitation and hygiene, and the promotion of integrated management
of water resources.
The African Water Facility is an interesting facility that can be used to finance WASH related
activities.
The EU:
These funds are the main source of EU development aid for the African, Caribbean and Pacific (ACP)
countries and the overseas territories (3% of the annual EU budget in 2008-13). The funds are
connected to the Cotonou Treaty. The European Investment Bank invests significant amounts in the
water sector. The grant programs do not have a specific focus on water related projects, the EU Water
Facility, one of the grant programs focusing specifically on water will be cancelled.
Foundations:
Especially for development related activities within the water sector, foundations provide interesting
opportunities to finances projects and programs. Below an unexhausted list of foundations provides a
first entry point to seek for funds. As each foundation has its own finance policy, we refer to the
individual websites for more information.




















Blood:Water.
Blue Planet Network Foundation
Charity Water
ExxonMobil Foundation
Global Water Challenge
Millennium Water Alliance
Project Concern International
ActionAid International USA
Alcoa Foundation
Boeing Company Charitable Trust
BP Foundation
Global Green USA
Habitat For Humanity International, Inc.
Lemelson Foundation
McKnight Foundation
Prem Rawat Foundation
Water 1st International
Water Environment Research Foundation
Wateraid America, Inc.
World Vision, Inc.
Project number 2526
61
Appendix III: Elaborated outcomes of web survey
The Comext database of Eurostat includes trade statistics for a limited number of water sector related
products. Table 1 demonstrated the development of the exports of these products for EU-28 in total
and for some EU-countries during the 2010-2013 period. The Dutch share in total EU-28 exports to
Asia is only 2% on average , far lower than the share of Germany (53%) and also lower than the share
of France (11%).
Table 1 Exports from EU28-countries to Indonesia (in mln. EUR ) in total and for water
sector related products and export shares of some EU-countries, 2010-2013
2010
2011
2012
2013
Total 2010-2013
Total EU-28
6.405
7.399
9.738
exports to
Indonesia
Water sector
203
208
350
related products
Shares in EU-28 exports of water sector related products
- Netherlands
3%
3%
1%
- Germany
38%
28%
51%
- France
13%
20%
11%
- Denmark
0%
1%
1%
9.701
33.243
465
1.226
2%
73%
5%
1%
2%
53%
11%
1%
Water sector related products:
TUBES, PIPES AND HOSES, AND FITTINGS THEREFOR, OF PLASTICS
TUBES, PIPES AND HOLLOW PROFILES, AND TUBE OR PIPE FITTINGS, OF IRON OR STEEL
STEAM TURBINES AND OTHER VAPOUR TURBINES AND PARTS THEREOF, N.E.S.
PUMPS FOR LIQUIDS, WHETHER OR NOT FITTED WITH A MEASURING DEVICE; LIQUID ELEVATORS; PARTS
FOR SUCH PUMPS AND LIQUID ELEVATORS
Source: Comext Eurostat
Project number 2526
62
Figure A.1 Promising areas in Indonesia according to companies and NGOs interested in
Indonesia, in % of respondents (more answers possible)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Drinking watersupply and treatment
Urban watermanagement
Waterproductivity and food production - irrigation
Industrial watersupply and treatment
Groud and surface water for watersupply
Reuse of domestic wastewater
Water distribution and quality
Drinking watertransport and distribution
Industrial watertransport and distribution
Collection and treatment of domestic wastewater
Collection and treatment of industrial wastewater
Subsidence and salinization
Dams and flood control
Coastal management, development and land reclamation
Port development and - management
Companies (N=34)
NGOs (N=5)
Figure A.2 Promising cross-overs in Indonesia according to companies and NGOs
interested in Indonesia, in % of respondents (more answers possible)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
water and industry
water and food (a.o. aquaculture)
water and ICT
urban port development
companies (N=57)
NGOs (N=10)
Project number 2526
63
Figure A.3 Development opportunities in Indonesia according to companies and NGOs
interested in Indonesia, in % of respondents (more answers possible)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
WASH
Water management and safe deltas
Higher waterproductivity in agriculture
Other developmentgoals
companies (N=55)
NGOs (N=10)
Figure A.4 Challenges for scaling up activities in Indonesia according to Dutch
companies, water boards and knowledge institutions, in % of respondents
(N=47)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
get to financial rescources
realisation of the right contacts
formation of strategic alliances with
same partners
succesfully dealing with the culture
formation of 1 to 1 partnerships
formation of temporary coalitions
formation of PPPs
start a local representation or agency
other challenges
start a local branch
Project number 2526
64
Figure A.5 Challenges for scaling up activities in Indonesia according to NGOs, in % of
respondents (N=13)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
get to local financial rescources for implementation
get to institutional funding voor progamme management and coordination
scaling up current programmes
formation of PPPs
formaion of 1 to 1 partnerships
finding the right partners
start a local representation or branch
formation of temporarily coalitions
dealing with social and cultural aspects in cooperation
Project number 2526
65
Appendix IV: Sources
Help Jakarta Zinkt! Mag Nederland
het Probleem Oplossen?
Grontmij, 2014
Indonesia Contextual Analysis in
Water Supply and Sanitation Sector
The Water Dialogues
Indonesia, 2009 (?)
Quickscan Indonesia
G4AW Facility, 2014
From Aid to Trade in the Lowlands
Opportunities for the Dutch Water
Sector to Cooperate with the
Productive Sector in the Lowlands in
Indonesia
Van Marwijk Advies,
2014
MASP 2014-2017
EKN Indonesia
Air Belanda Indonesia - Cooperation
between Indonesia and the
Netherlands in the Field of Water
NWP, 2012
Projectkaart Indonesië
2012
Water Mondiaal Jaarplan Indonesië
2014
NWP, 2013
Partnership for a new perspectiveDe Nederlandse propositie voor de
Integrale kustontwikkeling van Jakarta
Topsector Water, 2014
Flood Risk Management and the
Private Sector of DKI Jakarta. Market
Opportunities for the Dutch Water
Sector
Groningen University,
2012
Market scan on the Indonesian
Water sector - ‘Opportunities and
niches for the Dutch Water sector’
Witteveen + Bos, 2012
Concept note - Vision of the Dutch
Water Sector in Indonesia
NWPI, 2013
Partnership Indonesia Netherlands for
Greater Jakarta
Topsector Water, 2013
‘The Right Time to Mine, Dutch
Business Opportunities in Water and
Mining’
Witteveen + Bos, 2015
Indonesia Country Partnership
Strategy 2013-2015
WB, 2012
Indonesia Country Partnership
Strategy 2012-2014
ADB, 2012
Indonesia Country Strategy Paper
2007-2013 + mid term review
EU, 2007
Project number 2526
66
Appendix V: Respondents
NWP/Core Advisors:
Ivo van der Linde
Paul van Koppen
Dutch Embassy:
Peter de Vries
Local water professionals (YEP, peer reviewers):
Anton Sanjaya
Lourens Meijer
Aditya Reymonza
Arthur Geilvoet
Dwi Wanna
Anna-Marthe Sessink
Elmar Bouma (peer review)
Simon Warmerdam (peer review)
Web survey:
Not disclosed
Strategic interviews:
Name organization
Contact person
Alkyon + ARCADIS
Ferry Vis
Aqua for All
Sjef Ernes
Marik Beerten
AquaAero Water systems
Martijn Nitzsche
Atradius
Oscar Boot
Bam International
Maikel Jagroep
Bam International
Henk van Veen
Basic Water Needs
Martijn Smits
Berson UV
Paul Buijs
Boskalis
Bastiaan Lammers
Bucon Industries
Peter Bulsing
Colubris Environment
Marco Moekardanoe
Deltares
Ron Thiemann
ECORYS Nederland
Viek Verdult
ECORYS Nederland
Ilse van de Velde
Euroconsult Mott Macdonald
Pieter van Stuijvenberg
Euroconsult Mott Macdonald
Hero Heering
FMO
Roel Messie
Genap
Dick van Regteren
Groasis
Pieter Hoff
Grontmij Nederland
Ernst Malipaard
Hatenboer-Water
Peter Willem Hatenboer
ID Consultancy
Dick Konijn
Project number 2526
67
IHC Merwede
Sergio Ooijens
IRC
Stef Smits
ITC
Victor Jetten
ITC
Dinand Alkema
Landustrie Sneek
Arie van Steen
MetaMeta
Simon Chevalking
Christiaan Beuzel
Norit
Jan van den Dikkenberg
Rabobank International
Alexander Hoogendoorn
Redox Water Technology
Maurice Nijrolder
Royal Eijkelkamp
Fons Eijkelkamp
Royal Eijkelkamp
Frank Tillmann
Royal Haskoning DHV Nederland
Harrie Laboyrie
Safisana Holding
Aart van den Beukel
Simavi
Ewout van Galen
SNV
Leendert Bos
TNO
Albert Jansen
UNESCO-IHE
Pieter van der Zaag
Vitens-Evides International
Marco Schouten
WASTE
Jacqueline Barendse
Waterschap Aa en Maas
Paule Dobbelaar
Wavin Overseas
Giles Crofts
Wetlands International
Chris Baker
Witteveen + Bos
Polite Laboyrie
WUR
Ivo Demmers
ZOA
Harm Bouta
Project number 2526
68

Indonesia - TRAID Wheel

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