Indonesia - Third National Program for Community Empowerment in Rural Areas Project

Page 1 PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB5394 Project Name Third National Program for Community Empowerment in Rural Areas (PNPM-Rural III) Region EAST ASIA AND PACIFIC Sector Sub-national government administration (25%);Water supply (20%);Irrigation and drainage (20%);Roads and highways (20%);Primary education (15%) Project ID P115052 Borrower(s) REPUBLIC OF INDONESIA Government of Indonesia Indonesia Implementing Agency DG Community and Village Empowerment - Ministry of Home Affairs (MOHA) Jl. Raya Pasar Minggu km 19 Jl. Medan Merdeka Utara No. 7 DKI Jakarta Indonesia 12072 Tel: (62-21) 794-2373 Fax: (62-21) 794-2374 ppkpmd@yahoo.com Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared January 27, 2010 Date of Board Approval March 30, 2010 1. Country and Sector Background Indonesia has shown solid progress in economic growth and poverty reduction since the Asian crisis 12 years ago and has demonstrated sustained resilience and robustness during the recent global economic downturn. Poverty rates have fallen from 17.4 percent of the population in 2004 to 14.2 percent in 2009. Despite these gains, 32.5 million Indonesians currently live below the poverty line and 40 percent of households live just above the national poverty line of US$21 per month and remain vulnerable to falling into poverty. Poverty is particularly high in rural areas, where about half of the population and more than two-thirds of poor people reside. Non-income poverty remains a serious problem in terms of indicators related to health, access to safe water and sanitation, and education outcomes. Inequality is increasing as evidenced by a Gini coefficient of 31.7 percent in 1999, which has risen to about 35 percent in 2009. In August 2006, the Government of Indonesia (GOI) launched its flagship community-based poverty alleviation program, the National Program for Community Empowerment or Program Nasional Pemberdayaan Masyarakat (NCEP/PNPM).