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Five lessons on affordable housing provision from Indonesia

Dao Harrison's picture
When first-time homeowner Dewi moved into her new house in the Yogyakarta area a year ago, thanks to a government subsidy program, she thought: everything is perfect.
 
Well, not quite. Located an hour away from the city center, Dewi’s house is far from employment opportunities, shopping, and schooling for her two children. Two years after completion, more than half the housing development remains unoccupied. Because the house is not connected to the local water system, Dewi buys water twice a week. When seasonal floods are underway, the heavy rains impede access to her house.



Providing affordable and adequate housing has become a top policy priority for the government of Indonesia with the launch of Satu Juta Rumah (One Million Homes) program. Previous efforts to address the demand for affordable housing – a function of both new annual demand creation and an unmet housing deficit – had not effectively improved housing outcomes at the scale necessary.
Source:  Ministry of Public Works and Housing, Indonesia

But should homeownership volume be the sole indicator of a successful housing subsidy program? Is it possible to have a program that meets the government’s needs to be fiscally and economically cost effective, while also responding to the private market as well as the needs of residents?
 
Options are being explored. The recently approved National Affordable Housing Program Project (NAHP), for example, aims to innovate the affordable housing market by addressing bottlenecks and actively engaging the private sector in delivering for unserved segments. So far, Indonesia’s efforts provide valuable lessons. The lessons are:

A decade of PPPs in Latin America and the Caribbean: What have we learned?

Roland Michelitsch's picture

Also available in: EspañolPortuguês


Photo (right): Mr. Amarin Jitnathum / Shutterstock

The Latin America and Caribbean region (LAC) has an infrastructure gap: the region needs to invest at least 5% of GDP to cover its infrastructure needs, but is currently investing only half that. To put it mildly, there is still a lot of room for improvement for both the public and private sectors, and also for multilaterals working in the region.

In a combined effort to reduce infrastructure gaps, Public-Private Partnerships (PPPs) have become, again, a popular tool since 2005. LAC was the predominant region for PPPs until the late 1990s, when investments plummeted due in part to a backlash of poorly-implemented PPPs.

Triggered by low commodity prices and rising fiscal deficits, as well as by improvements in PPP readiness, many countries established dedicated agencies and strengthened regulations leading to increases in PPP investments from $8 billion in 2005 to $39 billion in 2015. In total, LAC has seen investments of $361.3 billion in around 1,000 PPP infrastructure projects in just one decade, mostly in energy and transport.

Uma década de PPPs na América Latina e Caribe: O que aprendemos?

Roland Michelitsch's picture

Also available in: Español | English


Foto (direita): Amarin Jitnathum / Shutterstock

A região da América Latina e Caribe (ALC) apresenta uma lacuna em termos de infraestrutura: a região precisa investir no mínimo 5% do PIB para atender suas necessidades neste setor, mas atualmente investe apenas metade desse percentual.  Explicando de uma forma suave, há ainda muito espaço para melhorias por parte do setor público, do setor privado, bem como das organizações multilaterais que trabalham na região.

Em um esforço combinado de reduzir as lacunas de infraestrutura, as Parcerias Público-Privadas voltaram a ser uma ferramenta popular a partir de 2005. A ALC era a região com maior predominância de PPPs até o fim dos 1990s, quando os investimentos despencaram em parte como reação adversas provocadas por PPPs mal implementadas.

Incentivados pelos preços baixos dos produtos primários e déficits fiscais crescentes, assim como pelo aprimoramento da capacidade de preparação de PPPs, muitos países criaram agências específicas e fortaleceram regulamentações que levaram ao aumento de investimentos em PPPs de US$ 8 bilhões em 2005 para US$ 39 bilhões em 2015. No total, em apenas uma década, a ALC teve investimentos de US$ 361,3 bilhões referentes a aproximadamente 1000 PPPs de projetos de infraestrutura, principalmente nos setores de energia e transportes.

The Global Infrastructure Facility: What is it really and what have we been doing?

Towfiqua Hoque's picture

Photo: Ashim D'silva | Unsplash 

From “Billions to Trillions”, to the Hamburg Principles and Ambitions, to Maximizing Finance for Development (MFD), mobilizing private capital to deliver on the sustainable development agenda is in the spotlight. Realizing that constrained public and multilateral development bank (MDB) funding cannot fully address the critical challenges that developing nations face, the World Bank Group is pursuing private sector solutions whenever they can help achieve development goals, in order to reserve scarce public finance for when it’s needed most. This is especially true in the delivery of infrastructure.
 

From Istanbul to Manila—different fault lines, similar challenges

Elif Ayhan's picture
 “It’s not the mountain we conquer, but ourselves.” This was the response given by Sir Edmond Hillary when asked how he and his companion Tenzing Norgay became the first to summit Mt Everest, when so many before had failed. He believed we could all overcome our biggest challenge simply by deciding to act.

Is it possible for the same sentiment to be applied by government leaders – leaders who have the privilege and responsibility to preside over some of the world’s largest and most dynamic cities, especially those that share a common challenge in terms of seismic risk? Metro Manila, the megacity of the Philippines, the seat of government, and the engine of the national economy, has been destroyed numerous times over the last 500 hundred years by earthquakes, and currently sits upon a fault that is overdue to move. Istanbul, with world-class cultural heritage sites treasured by all, also sits near major fault lines expected to move any day. Tokyo and Wellington, the heart of government, culture, and history, also share exposed locations close to major fault lines.

In Wellington, decades of work – including the current Get Ready week! – have aimed to prepare the city for the next “big one”; but compared to the burgeoning megacities of Manila, Tokyo, or Istanbul, it is a small hill to conquer. How do you prepare these megacities with population of up to 15 million people? How do you climb the mountain of needs to build resilience? According to Sir Hillary, the answer is simple, you need to take the decision to accomplish something extraordinary.

In September 2017, the World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) through the Japan-World Bank Program for Mainstreaming Disaster Risk Management in Developing Countries supported a knowledge exchange between Turkey and the Philippines focused on the challenge of building seismic resilience in megacities with high urbanization. For the World Bank, it was clear from the start that seismic risk is a priority on the Urban Resilience Agenda, when Johannes Zutt was able to explain to the visiting delegation the technical details of how base isolation is used to protect critical hospitals in Istanbul. The delegation saw impressive progress made by Turkey and Istanbul, from revised institutional frameworks, strengthened preparedness and response capabilities, and retrofitted schools and hospitals to adapted municipal e-services that ensure that the construction of resilient new buildings are approved fast and with the right safety checks. While massive seismic risk still exists within Istanbul, visible and concrete actions are also underway to improve the safety of its citizens.
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As iron sharpens iron

Jeff Delmon's picture


Photo: totojang1977 / Shutterstock.com

In my last blog, I compared Public-Private Partnerships (PPPs) with marriage. I had explained that, though very different, the public and private can come together as they each possess characteristics beneficial to the other. Great in theory, but often difficult in practice.

Critics of PPPs abound and listing them here would be impractical. But whether they are auditors, civil society or within the World Bank Group, critics help us improve. We try to respond to our critics, including through blogs such as this one.

Disaster risk and school infrastructure: What we do and do not know

Sameh Wahba's picture
This page in: Français
Credit: Tracy Ben/ Shutterstock

“At 14:28:04 on May 12, 2008, an 8.0 earthquake struck suddenly, shaking the earth, with mountains and rivers shifted, devastated, and parted forever….” This was how China’s official report read, when describing the catastrophic consequences of the Sichuan earthquake, which left 5,335 students dead or missing.
 
Just two years ago, in Nepal, on April 25, 2015, due to a Mw 7.8 earthquake, 6,700 school buildings collapsed or were affected beyond repair. Fortunately, it occurred on Saturday—a holiday in Nepal—otherwise the human toll could have been as high as that of the Sichuan disaster, or even worse. Similarly, in other parts of the world—Pakistan, Bangladesh, Philippines, Haiti, Ecuador, and most recently Mexico—schools suffered from the impact of natural hazards. 
 
Why have schools collapsed?

Coming together is the way forward: Maximizing Finance for Development

Hartwig Schafer's picture
Also available in: Español



Those following the discussions during the IMF and World Bank Group Annual Meetings held in Washington last week will have noticed that our approach toward international economic development is changing in a major way—and, I believe,  for the better.
 
Saturday’s panel discussion on Maximizing Finance for Development set the context that many in the development community now know well, but bears repeating: It will take not billions, but many trillions of dollars to meet rising aspirations for better infrastructure, health and education. Specifically, we are talking about $4 trillion every year needed to meet the Sustainable Development Goals to which the international community agreed in September 2015.

Slight bump in half-year private investment in infrastructure: a sign of recovery?

Cledan Mandri-Perrott's picture



With the World Bank Group focusing on maximizing finance for development, understanding the role of private participation in infrastructure is drawing a lot more attention.

In emerging markets and developing countries, the largest source of infrastructure investment is still domestic public spending. However, government budgets are tight, so crowding in private finance is necessary to meet large infrastructure needs. The World Bank has a tool to help understand private investments in infrastructure in the developing world: the Private Participation in Infrastructure (PPI) Database. With 27 years of data on PPI investments in emerging markets, the PPI Database can tell us a lot about development, challenges, and trends in infrastructure investments.

Whilst the enthusiasm for private sector participation in infrastructure gains pace, it is also important to look at the trajectory of PPI over the past decades. The numbers are, in fact, quite sobering.

Three ways to manage construction risk to support infrastructure investment

Eric Dean Cook's picture


Photo: Pixabay

At the Global Infrastructure Facility (GIF) Advisory Council Meeting in March, we talked about construction risk and the way it shapes the delivery environment early in a project’s investment life. As a practicing engineer accustomed to attacking construction risk at the granular level, I enjoyed the broader discussion, particularly from the banking and credit perspective (meeting outcomes).

Unfortunately, construction risk realization will continue to be the norm. Perhaps we need to consider taking the longer view to reach potential investors by aligning the risk environment with risk tolerance.

Here are three ways to do this:


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