5. Co-chair Nadim Karkutli advised that he approved of the proposed new structure for this meeting in which three concept proposals will be discussed first with later discussions on strategy. He hoped that the earlier technical workshop on  the three concepts to be considered by the SC had addressed issues to members' satisfaction. He also felt that the new approach would enhance MDTFANS operations.

I. Approval of Agenda and Minutes of Previous Meeting (July 28, 2005)

6. There was no objection to the proposed agenda.

7. With respect to the Draft Minutes of the fourth SC, one member sought clarification/ update in respect of (i) monitoring and evaluation (M&E) of the MDTFANS program and (ii) the MDTFANS communications strategy. The MDTFANS Manager responded that, thanks to the generosity of the German Government, the Secretariat had now recruited an M&E Officer who was already receiving information and would, therefore, be able to "hit the ground running" from 1 September 2005. Her first task would be to prepare a logical framework for the Steering Committee's recovery assistance policy with macro-indicators for assessing the overall performance of MDTFANS. The Secretariat Communications Team comprises Ms. Sabine Joukes, Deputy for Coordination and Communications, and Ms Geumala Yatim, the Aceh-based Communications Officer, who will also act as the Ombudsperson in respect of receiving complaints/grievances. Ms. Joukes has already prepared a comprehensive communications strategy that will be further "boiled down" with the nucleus being circulated to members at a later date for information.However, should members have substantive comments, they are welcome to include the communications strategy on the agenda of a future SC meeting for discussion.

8. The draft Minutes of the fourth SC meeting dated 28 July, 2005 were approved and formally adopted.

9. Co-chair Andrew Steer advised that, while the financial report was quarterly (up to 30 June 2005), it provided data up to 15 August 2005. He hoped that members approved of the current format and he suggested that the report would evolve as the months go by. One member suggested that the total uncommitted funds should also reflect the SC current policy of holding ten percent in reserve. The Secretariat will modify the report accordingly.

10. Commenting on the current situation with respect to pledged amounts, the Head of DFID for Southeast Asia advised that, in addition to the $10 million already pledged by the UK Government, it was an opportune moment for him to announce that the UK was prepared to allocate a further £20 million for the MDTFANS.
This announcement was carried with acclaim.

III. Grant Requests

11. Co-chair Heru reminded members of the technical seminar organized by the Secretariat on Monday 15 August 29, 2005 to enable members to become familiar with the three concept proposals now on the table for consideration. In view of time constraints, Co-chair Heru limited proponents' presentations to about five minutes and suggested that they use that time to answer questions/clarify issues that arose from the earlier technical seminar.

A. Integrating Environment and Forest Protection into the Recovery and Future Development of Aceh (US$14.05 million)

12. The proponents were represented by Mr. Mike Griffiths of Leuser International Foundation (LIF) and Mr. Frank Momberg of Fauna and Flora International (FFI). The project aims to deal with the threat of increased logging to supply the reconstruction of Aceh, and to ensure a guaranteed year-round supply of water for the rehabilitation of Aceh, through strengthening forest protection in the Leuser Ecosystem and the Ulu Masen forest complex. The proposal is responding to pressures such as (i) the reconstruction effort, (ii) illegal logging, and (iii) the peace process, that can impact on environmental sustainability. The proposal will also ensure that environmental services are available. It  includes stakeholder participation. It is vital that a reliable water supply is continuously available for agriculture, fisheries, and village regeneration.
The proponents advised that (i) they hold a letter of recommendation from the Governor, and (ii) local communities that have been consulted want it and will benefit from it.

13. The MDTFANS Manager advised that the Secretariat endorses the concept that avoids plundering of resources, supports environmental sustainability and guarantees flow of fresh water. Co-chair Heru, on behalf of the BRR, advised that the concept had been reviewed by relevant sectoral Deputies and the BRR wants the concept to proceed. Co-chair Nadim advised that a similar project funded by the EC is coming to a close and that, as a result, the EC knows the good work of the proponents and, as the environment is a key sector in terms of the SC Policy, the EC also supports this concept. He commented on the need for the BRR to coordinate future monitoring and also suggested the use of aerial photography. Members generally supported the concept but wondered whether the proposed outputs such as, for example, the saving of 20,000 hectares of forest and the recovery of 18 water catchments might not be too ambitious. Also, development of an appropriate monitoring system with improved baseline and output indicators would be a challenge. It was suggested that appraisal should also strengthen issues such as gender, community involvement, and budget line items such procurement and consulting services as well as clarifying further how desalination would be achieved. The MDTFANS Manager reminded members that interested donors were welcome to join both the appraisal mission and also subsequent supervision missions.

The SC endorsed the concept proposal to utilize $14.05 million off the government's budget to Integrate Environment and Forest Protection into the Recovery and Future Development of Aceh with IDA as the designated Partner Agency, subject to satisfactory appraisal.

B. Creating Jobs: Scaling Up Labour-based Rural Road Rehabilitation in Aceh (US$6 million)

14. The proponent was represented by Messrs. Alan Boulton, Walter Illey, Tauvik Muhamad, and Pisit Tusanasorn of the International Labour Organization. The concept features (i) the rehabilitation of 160km of existing rural roads, including small bridges, culverts, drainage etc., (ii) capacity building of 25 small-scale contractors, five district governments (Kabupaten) and the provincial government, (iii) providing labour-based approaches in creating 250,000 person-days of employment for 2,000 people using local community participation in cash-for-work schemes, and (iv) participation modalities for rural road selection. A pilot project is underway and the concept is to scale this up. It was clarified that the concept does not have direct links to other roads projects. It is not designed to build either major or feeder roads but rather to rehabilitate existing rural roads. A decision is needed by GOI (BRR) as to which five districts would be selected. Training would be demand driven and would involve not only the technical aspects of drains, bridges and roads but also project and contract management, selection and logistics. The BRR Deputy for  Infrastructure confirmed ILO involvement in the pilot project since February 2005 and advised that BRR supports scaling up with $6 million being the minimum if significant progress is to be achieved. He also stressed that capacity building on its own often does not work. Just as you do not train for  football in a classroom but rather with a ball on the playing field, so he supports the approach of training by doing.

15. Members supported the innovative ideas proposed by the ILO but had a number of questions and issues about the concept as follows:

16. In the light of these issues, members felt that the concept could be better presented. The above issues need to be addressed so that members can feel more comfortable when making a decision. The BRR also needs to advise on where the project should focus. Members stressed that they were not rejecting the concept and that they liked the principle. It was suggested that ILO, in collaboration with the BRR, and with the assistance of the Secretariat, revise and strengthen the concept note with a quick turn around time (say, one week). The revised concept note would then be circulated to members on a five working day no objection basis.

C. Disaster Response Logistics (US$3.75 million)

17. Co-chair Heru advised that transport, together with housing, is one of BRR's highest priorities.

18. The proponent was represented by Messrs. Paul Arbon and Michael Whiting of the United Nations Joint Logistics Centre (UNJLC) speaking on behalf of Captain David Beresford-Jamieson of Disaster Response Logistics (DRL), a non-profit UK registered charity. During the relief stage, the continued reliance on air operations for the delivery of massive amounts of relief aid was neither sustainable nor rational. The challenge now is how to access the coasts, and particularly the west coast of Sumatra. Recovery operations can be strengthened through a common sea service to transport humanitarian aid and reconstruction materials on behalf of national and international agencies working in Indonesia using specially designed and equipped amphibious ships. UNJLC had been searching the world for several months for suitable vessels. The vessel choice results from a need to cope with sea conditions and poor port / beach access conditions currently and during future repair of the ports. DRL has a lien to purchase, lease, or bareboat charter the only suitable vessels that are available from the Norwegian owners Seaworks A. S. Consequently, as DRL is the sole means to these vessels, the common sea service must arrange chartering through DRL. There is a substantial, real and current gap in the logistics capacity to deliver material to the coastal regions and particularly the west coast. Unless it is filled promptly, then material simply will not be delivered in a timely fashion and construction will not be carried out to anticipated time-lines. The proponents pointed out that there is no overlap, and no commercial alternative. They advise that these vessels are needed, and needed now. Having regard to the sailing time from Europe to Indonesia (six weeks) charter arrangements need to be finalized by September 16.

20. Some members expressed concern that (i) the cost recovery had not been adequately explained, (ii) the concept note refers to the vessels being deployed for ten years when the current life of MDTFANS is only five years, (iii) that procurement would be sole-source rather than on a competitive basis, and (iv) there may be insufficient time to conduct adequate appraisal. The Proponents responded that the MDTFANS grant would be utilized to (i) enable the vessel to be deployed, (ii) purchase the specialized cargo handling equipment and (iii) fund operating costs for one year. Competitive procurement did not apply in this case since the vessels were the only ones of their type available on the world market. UNJLC would provide written clarification of these issues to the Secretariat for circulation to the Steering Committee. Co-chair Nadim noted the real urgency and advised that the EC had no objection to the concept. On the assumption that members would endorse the concept and, in order to save time, it was proposed that appraisal proceed immediately and in parallel to the ongoing shipping survey and charter negotiations.

SC Endorsement No. 08/05

The SC endorsed the Disaster Response Logistics concept proposal to utilize $3.75 million off the government's budget to fund the deployment of one special amphibious vessel and one year's operating costs plus the purchase of specialized cargo handling equipment with UNDP as the designated Partner Agency, subject to satisfactory appraisal.

Part II

21. Co-chair Kuntoro Mangkusubroto, Chairman of the Rehabilitation and Reconstruction Agency for Aceh and Nias (BRR) joined the meeting together with Plt. Gubernur (Acting Governor) for Aceh, Ir. Azwar Abubakar.

IV. BRR PRESENTATIONS

22. Co-chair Kuntoro made a presentation on "Built-Back Better Through a "Development Project-Driven Capacity Building" (See attached). He pointed out the change in vision that now uses the words Dignified, Transparent, and Democratic. He also drew members' attention to the three BRR principles or pillars that are Community-oriented, Internal, and Donor-oriented. He reminded members where the various pledges to assist Aceh and Nias are sourced from, with some being on the government's budget while others from NGOs and private sector are off-budget. He appreciated the fact that MDTFANS has the flexibility to be both on- and off-budget. He reminded members of the delay in finally approving the MDTFANS-financed Settlements (Housing) project and advised that there will now be another bureaucratic cycle to face because, being on-budget, the APBN has its own bureaucracy to overcome before the DIPA is issued. Regarding the role of MDTFANS, he advised that it should not just be funding gaps but rather should be working with the BRR, which has the overall "global" perspective to address strategic and priority needs. He reminded members that concept proposals being considered by MDTFANS must be endorsed by BRR Deputies. His aim is to built a beres province (i.e. a province that is "smooth" or without problems). As "an agent of change" in Aceh and Nias he wants development projects to become the "learning ground" for local government capacity building. He reminded members of the cultural and ethnic differences between Aceh and North Sumatra and how he wanted transport etc to focus on hubs (ports etc.) within the province of Aceh, with Banda Aceh being the main hub. Finally, he reminded members of the expected development funding cycle that will eventually shift from NGO and donor grants to program and project loans.

23. Following Co-chair Kuntoro's comments that he wanted development projects to become the "learning ground" for local government capacity building, Pak Eddy Purwanto, BRR Deputy for Infrastructure, Housing and Land made a presentation (see attached). Concept proposals submitted to the MDTFANS for consideration are usually provided by outside proponents, as demonstrated by the three concepts considered today. Pak Eddy now proposed that a future concept be put forward for consideration by the MDTFANS Secretariat that is directly initiated by the BRR in conjunction with interested donors. There is an immediate need to strengthen the local government network within Aceh and Nias in order to improve the reconstruction and rehabilitation process. Key points of the proposed concept are

The long term goal is that local government networks in Aceh and Nias will be capable of answering the needs of their constituents and become the local government model for Indonesia. The concept is that any potential project might be spread over 17 Kabupaten and 4 Kota (cities) within Aceh and Nias. Assuming that each of these needed somewhere between $10 - 20 million, the potential total cost might range somewhere between $210 - 420 million. As a consequence, he expected that any proposed project be co-financed between MDTFANS and other donors.

24. Co-chair Andrew Steer appreciated a concrete proposal initiated by the BRR itself that considered the bigger picture. He felt that this, coupled with the revised SC format, was a new way of MDTFANS doing business. He found it encouraging that the BRR was proposing to bring concept proposals to the MDTFANS itself and that the BRR is proposing to work together with interested donors in preparing the concepts.

25. Co-chair Nadim fully endorsed Co-chair Steer's comments. Lessons have been learned. He is happy that the EC is putting its funds into MDTFANS. With a joint desire for high quality projects that have everybody on board, i.e. joint GOI (BRR) and donor ownership, he hoped that resources could be mobilized more quickly. The sustainability of local government in Aceh is important and he hoped that those donors that are key actors in local government reform and capacity building will coordinate under BRR leadership to develop the proposed concept.

26. Members advised that the proposed BRR initiative is topical with several donor institutions involved in local government activities. A local government working group under the chairmanship of Pak Bima Wibisana, BRR Deputy for Institutional Development, meets about every two weeks to coordinate activities. The representative from ADB advised that ADB welcomed the initiative and expressed a willingness to work with the BRR on preparing the concept as proposed by Pak Eddy.

28. At the request of the Co-chairs, observers from Australia and Japan provided an update of the aid programs to Indonesia in general, and Aceh/Nias in particular, provided by their respective countries.

31. It was agreed that meetings would be held more regularly in Banda Aceh. The timing of the next SC would have to take into consideration the commencement of Ramadan and other activities such as the Aceh-specific CGI. The Secretariat will notify members in due course as to the exact date of the next meeting. It is hoped that the BRR initiated concept on local government capacity building and delivery of sub-district level infrastructure can be tabled for consideration at the next meeting. A technical seminar on the concept proposal would be held prior to the next SC.

32. The meeting closed at approximately 12.30pm

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