WB to push infrastructure development
Endy M. Bayuni and Prodita Sabarini, The Jakarta Post
It's full steam ahead for World Bank infrastructure lending thanks to the insistence of its new president, Paul Wolfowitz, who feels that the bank needs to be part and parcel of poverty eradication programs in developing countries.
But this time around, the bank is involving civil society organizations in these projects as a means of ensuring their efficiency, and preventing the corruption and environmental degradation that has beset many of its projects in the past.
In a paper distributed during a discussion Monday, the World Bank said its infrastructure lending could reach $10 billion a year within the next two years, up from $7.4 billion in 2005 and a mere $5 billion a few years ago.
Wolfowitz, the former U.S. defense undersecretary who took up office as World Bank president last year, took part from Tokyo in the discussion on "Infrastructure: Lessons from the Last Two Decades of World Bank Engagement". The discussion involved video linkups with participants in Bangkok, Canberra, Hanoi, and Jakarta, as well as Tokyo.
"I was surprised to learn that we'd gone out of infrastructure," Wolfowitz said, speaking about a World Bank decision taken prior to his time.
He said infrastructure was critical to poverty reduction programs, and he had instructed his staff to recommence the funding of such projects, but without repeating the mistakes of the past.
He underlined the importance of the involvement of civil society organizations in the planning, execution and monitoring of such projects.
In the paper he presented during the discussion, he said that the World Bank had identified five lessons from failed infrastructure projects in the past -- the need to balance growth with access, to engage the private sector in these projects, to ensure safeguards for people and the environment, to confront corruption decisively, and to remember the basics of any successful project, such as planning, design, and analysis.
Many World Bank-funded projects in Indonesia have been canceled because of corruption scandals, including a project for the procurement of school textbooks.
It remains uncertain whether Indonesia will be among the beneficiaries of the World Bank's return to the infrastructure sector, given that the country is still struggling to cope with widespread corruption. However, the development of infrastructure projects is one of the economic priorities of President Susilo Bambang Yudhoyono to help propel economic growth, generate jobs and eliminate poverty.
Indonesia's endemic corruption problem was highlighted by Rizal Ramli, a former economics minister, who pointed out that the World Bank was involved in the negotiations for a number of power plant projects in the 1990s that were clearly detrimental to the Indonesian people, but benefited the Indonesian as well as foreign contractors. One obvious indicator of this was the power rates to be charged to Indonesian customers, which were double international rates.
Wolfowitz said, however, that it was not only the World Bank, but also the governments of the United States and other developed countries that had played a part in pushing these lucrative "Triple A" projects on the Indonesian government.
"These were bad lessons to learn. I hope we don't forget that," he said.