Lca Plastik

STRATEGIC ENVIRONMENTAL ASSESSMENT
MASTERPLAN FOR ACCELERATION AND EXPANSION OF

INDONESIA'S ECONOMIC DEVELOPMENT
(SEA MP3EI)
EXECUTIVE SUMMARY
MINISTRY OF FOREIGN AFFAIRS OF DENMARK
DANIDA INTERNATIONAL
DEVELOPMENT COOPERATION
FOREWORD
The Master Plan for Acceleration and Expansion of Indonesian Economic Development 2011-2025 (MP3EI)
aims to achieve economic connectivity and accelerated growth in Indonesia in order to transform the country
into a developed country by 2025. This includes a strategic focus on 22 economic activities and the
implementation of these activities in the defined 6 Economic Corridors (ECs). The MP3EI consisted of
hundreds of individual projects that have potential either direct or indirect impact to the environment and
society: natural ecosystem, biodiversity, carrying capacity, and local community. Therefore, the inclusion of
principle of sustainable development has been stipulated since the launched of MP3EI in 2011.
After one and half year of the implementation of MP3EI, there was an increasing awareness that the
sustainable principle need further elaboration in the implementation strategy of the Master Plan. Through
the revised version of MP3EI by Presidential Decree No. 48/ 2014, we set the means of implementation to
address the sustainability (green) aspect of the Master Plan, in addition to conveying the equality (pro-poor)
and blue economy aspect. It is expected that a thorough assessment of these aspects on the economic
development will strengthen the economic, social, and environmental benefits of the Master Plan.
For ‘greening’ the MP3EI, a Strategic Environmental Assessment (SEA) was conducted to perform a strategic
environmental analysis in order to prevent environmental degradation and foresee future problems. As
mandated by the Law of Environmental Protection and Management No. 32 year 2009, the SEA-MP3EI is
carried out from the policy formulation through the implementation strategy. The process involved all the
stakeholders in all 6 economic corridors of MP3EI, so that the recommendations include principles of conflict
mitigation. The recommendations can also be utilized throughout the planning and project implementation
processes.
Herewith, we are delighted to deliver the SEA-MP3EI report as part of our main task at the Connectivity
Working Group of the Committee of Acceleration and Expansion of Economic Development (KP3EI). The
report provides an overview of the collective processes that bring recommendations to mitigate the
environmental and social risks of MP3EI. We are making efforts that the recommended actions will be
adopted in the MP3EI implementations so that MP3EI will contribute to meet national sustainable
development goals. The collected data for the project are vast and the variety of environmental data for all
the economic corridors will be used to develop environment baseline data for eco-region officers. The
baseline data is an asset for the environment policy plan in the next Medium Term National Development
Plan (RPJMN) 2015-2019.
In this occasion, I would like to thank the Ministry of Environment, The Office (The Coordinating Ministry
for Economic Affairs) for the joint work. I would also like to thank Danida for their support and cooperation
in this collaboration to continuously pursue greener investments and green growth for sustainable
development.
Vice Minister of National Development Planning /

Vice Head of National Development Planning Agency (BAPPENAS)
Lukita Dinarsyah Tuwo

CONTENTS
1 Introduction................................................................................................................. 1
1.1 Project Background ........................................................................................................................ 1
1.2 Objective ........................................................................................................................................ 1
1.3 Approach ........................................................................................................................................ 1
2 Overview of the Main MP3EI SEA Findings .............................................................. 3

2.1 Policy Related Risks ...................................................................................................................... 3
2.1.1 Water .............................................................................................................................................. 4
2.1.2 Air and Climate ............................................................................................................................... 4
2.1.3 Land and Soil ................................................................................................................................. 4
2.1.4 Forests ........................................................................................................................................... 5
2.1.5 Coastal Areas ................................................................................................................................. 5
2.1.6 Biodiversity ..................................................................................................................................... 6
2.1.7 Human Health ................................................................................................................................ 6
2.1.8 Livelihood and Local Communities ................................................................................................ 7
2.1.9 Environmental Management & Horizontal Key Activities ............................................................... 7
2.2 MP3EI Policy Recommendations ................................................................................................... 8
2.2.1 Key Recommendations for Adjusting Policy .................................................................................. 8
2.2.2 Recommendations for Enhancing the Institutional Context ........................................................... 9
2.2.3 Recommendations for Specific Categories of Economic Activities..............................................10
2.3 Main Findings and Recommendations for MP3EI Economic Corridors .......................................11
2.3.1 Java Economic Corridor ...............................................................................................................12
2.3.2 Sumatra Economic Corridor .........................................................................................................14
2.3.3 Kalimantan Economic Corridor ....................................................................................................16
2.3.4 Sulawesi Economic Corridor ........................................................................................................18
2.3.5 Bali – Nusa Tenggara Economic Corridor ...................................................................................19
2.3.6 Papua – Maluku Economic Corridor ............................................................................................21
2.4 MP3EI Impacts and the Economic Value of Natural Resources..................................................23
3 Conclusion ................................................................................................................ 24
0 SEA for Indonesian Master Plan for Accelerated Economic Development / 2014-09
1 Introduction
This document constitutes an overview of the main findings and conclusions from the SEA
analyses conducted for both the Policy and Economic Corridor components of the Acceleration
and Expansion of Indonesia Economic Development 2011-2025 (MP3EI). Given the extensive
coverage of the SEAs, the summary focuses on providing an explanation of key findings, in
some cases through examples, and the related recommendations for mitigating unacceptable
risks and likely adverse impacts associated with the Policy and Planning.
1.1 Project Background

In 2011, the Government of Indonesia introduced the first version of the Master Plan for
Acceleration and Expansion of Indonesia Economic Development 2011-2025 (MP3EI). While
executing the recently released updated version of the MP3EI, however, it was realised that the
MP3EI, and the associated National Medium Term Development Plan (RPJMN), needed to align
its policies and plans with national commitments to social and environmental sustainability. To
accomplish the required MP3EI ‘Greening’, a Strategic Environmental Assessment (SEA) – as
the tool required by Indonesian legislation. – was initiated by Bappenas and the KP3EI. This
MP3EI SEA Project is supported by the Royal Danish Embassy and DANIDA; and was launched
in June 2013 and lasted until the second half of 2014.
1.2 Objective
The objective of the MP3EI SEA Project – in line with general role of SEA – was to provide
creditable strategic environmental analyses of the MP3EI Policy and Economic Corridor (EC)
Planning and recommendations on how to minimize or avoid associated negative effects and
the means to strengthen positive effects.
Besides addressing the MP3EI itself, dissemination of the MP3EI SEA results into the upcoming
RPJMN was seen as a ’window of opportunity’ for implementing SEA recommendations through
the national economic and other related planning.
The other main objectives in which the MP3EI SEA oriented itself, included:
• Providing feedback for related KSN (Kawasan Strategis Nasional) and Provincial Planning
• Provision of feedback for ‘Greening’ Related Legal & Institutional Setting and in relation to
‘significant’ MP3EI Projects
• Addressing MP3EI consequences in relation to Climate Change.
1.3 Approach
Assessment Framework
The MP3EI document, itself, highlights its Policy and Economic Corridor (EC) planning
intentions in one integrated document. Thus, in realisation of the inherent connection between
these aspects, the MP3EI SEA was designed to enable mutual reinforcement between the
findings of the MP3EI Policy and EC SEAs, e.g.:
• MP3EI Policy SEA provided a general framework by:

o Identifying the key strategic sustainability issues at the national level
o Describing (in qualitative terms) likely risks related to the MP3EI Economic
Categories, and
o Formulating policy recommendations
• SEAs for Economic Corridors were focused on conducting detailed analyses to:
o Describe baseline conditions,
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o Determine, via scoping and stakeholder consultation, EC-specific strategic issues
and Áreas of Concern´,
o Verify the scoped strategic impacts linked to the EC MP3EI planning, and
o Provide EC-specific recommendations and mitigation measures
Figure 1.1 Linkages between MP3EI Policy SEA and SEAs for Economic Corridors
To support analysis of the likely risks and impacts on key sustainability issues and resulting
recommendations, other analyses were also carried out. A general legal analysis conducted as
part of the MP3EI Policy SEA in order to identify potential problems that MP3EI Policy would
have in relation to existing legal framework, legal procedures or law enforcement.
An analysis of typically externalised economic costs, related to the MP3EI induced social and
environmental risks or impacts, was carried out. For the MP3EI Policy SEA, this include a
qualitative description of the often unaccounted economic consequences, Actual estimations of
the value (USD) of these consequences were calculated at national (e.g. in the Policy SEA) and
EC levels.
Since Climate Change was considered as a key issue, two dedicated analyses of MP3EI
Projects in relation to greenhouse gases (GHG) emissions were conducted.
The MP3EI SEA also addresses – as appropriate – six principles that a SEA analysis has to
include, as stipulated by the Law 32/2009 ‘Protection and Environmental Management’, Article
16.
Mitigation Framework
The analyses conducted within the MP3EI SEA project have resulted in a number of
recommendations and mitigation measures aimed at avoiding and/or minimizing environmental
and social risks and likely impacts linked to the MP3EI implementation. These address both
MP3EI Policy and Economic Corridor Planning issues in a logical structure (see Figure 1.2). At
the policy level, the key areas where mitigation measures are offered include ‘Adjustments of
MP3EI’, and ‘Amendments of Legal and Regulatory framework’.
At the EC planning / project execution levels key areas where mitigation measures are offered
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include ‘Improvements of National and Provincial Planning ’ ‘Guidelines for Project Execution’,
‘Improving Institutional Environmental Management & Coordination’, and ‘MP3EI Greening
Audits’.
1 Improvement in planning can, for example, also be associated with national KSN planning and RENSTRA and can therefore be seen as a link between MP3EI policy
and EC planning.
Figure 1.2 Linkages between categories of mitigation measures
Discussion of specific recommendations is provided in Section 2.2 and the summary of

Economic Corridor’s impacts and risks is in Section 2.3.
2 Overview of the Main MP3EI SEA Findings
2.1 Policy Related Risks

The analysis of the MP3EI Economic Categories has uncovered both risks and opportunities in
relation to key Indonesian sustainability policy goals. From a pure economic growth perspective,
the overarching MP3EI strategic policy of bolstering 22 existing areas of economic growth
through improving ‘connectivity’ has merit. In addition, there are some promising MP3EI
commitments in relation to transportation and the provision of water treatment.
The analysis undertaken, however, also shows that as a policy, the MP3EI misses the inclusion
of critical sustainability issues and is generally unclear regarding the implementation of positive
MP3EI initiatives. Taken as a whole, it is evident that the general MP3EI strategy lacks the
sufficient level of commitment, vision or operationalization, i.e. in terms of planning; institutional
support, and regulatory vigour, to counteract the clearly evident environmental and social
impacts which will be associated with MP3EI-stylped economic growth. Given this, a significant
portion of existing sustainability goals and targets stipulated by national polices and strategic
documents, as well as international commitments, are in conflict with MP3EI if mitigation actions
are not properly implemented.
Furthermore, the economic analysis revealed significant potential costs related to ecosystems
and habitats which may be adversely affected by the MP3EI implementation. Thus, unmanaged
environmental risks will cause not only degradation of environment and worsening of human
health but also impose problems regarding the economic efficiency of the MP3EI.
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The following section supports this key finding by providing examples of key sustainability
weakness, or gaps, in the MP3EI policy and, thereafter, by providing a synopsis of the related
environmental and social risks that will likely result.
2.1.1 Water
MP3EI encouragement of the continuation of intensive agriculture, projected industrial growth
(e.g. food and beverage, textile industry, oil and gas), planned expansion of conventional fossil
fuel power plant capacity and tourism development will increase the demand for water and thus
lead to further pressures on existing water resources. This may exceed available capacities in
certain areas – e.g. Greater Jakarta, Bali, and numerous small islands such as Maratua or
Derawan. In addition, the large-scale removal of forest cover associated with agroforestry
activities as well as hydro-energy development can alter water regimes and affect water
resources.
The MP3EI accelerated growth will also increase the risk of water pollution due to, among other
sources, the application of agro-chemicals, nutrient loading from animal husbandry –
aquaculture production, sediment runoff from land conversion and industrial / mining wastewater
discharges. Offshore mining and deep sea tailing disposal can also lead to seawater quality
impacts and increased sedimentation in coastal waters.
Although MP3EI policy goals include further development of the water supply and wastewater
systems, and thus aim to contribute to relevant objectives for Water Resources Management
stipulated in the existing RPJMN, the MP3EI need to address the specific actions of how water
demand and wastewater from, for example, industrial, mining, agriculture, and residential
expansion water emissions. There is therefore a substantial risk that the MP3EI-related
development will not meet water resource management objectives. There is also a conflict with
the goal of ‘reducing impacts of floods and droughts’, as MP3EI only elaborates on this issue for
the Greater Jakarta Area, while there are many other areas within the country which face risks
from floods and droughts. The MP3EI also does not address a need to ensure sanitation
infrastructure and waste management systems that are resilient to climate change (as stipulated
by the RAN-API, Rencana Aksi Nasional Adaptasi Perubahan Iklim).
2.1.2 Air and Climate

Climate change-related analysis showed that the majority (~66%) of related MP3EI projects fall
into negative categories of Greenhouse Gas (GHG) contribution; and GHG estimates revealed
that enactment of the MP3EI Policy would lead to substantial additional GHGs in most of the
calculation categories. This indicates a clear conflict with the main objective of the RAN-GRK
(Rencana Aksi Nasional Penurunan Emisi Gas Rumah Kaca), i.e. “…to reduce greenhouse gas
emissions by 26% on its own, and up to 41% if Indonesia receives international aid, by the year
2020 from the condition without any action (BAU or Business as Usual)”. If not managed
properly, MP3EI developments will accelerate GHG emissions include – among others –
deforestation and peat degradation, fossil fuel consumption, or expected intensification of
transportation (terrestrial, water and air).
MP3EI implementation of industrial developments and expected associated transport intensity

will also lead to additional pressures on air quality – especially in congested urban areas with
existing and planned energy-intensive industries such as steel, aluminium and copper/nickel
smelters and mills, oil refineries, petrochemical complexes; and new Connectivity projects such
as power-plants and ports. Since the MP3EI strategy mainly stipulates the development of fossil
fuel-based energy, the combined expansions (industrial, mining, power and urban growth etc.)
will likely negatively affect and/or worsen already poor air quality in certain areas throughout
Indonesia.
2.1.3 Land and Soil

There is a risk that MP3EI implementation will lead to peat land degradation and, due to
improperly managed contamination pathways (e.g. heavy industry, agriculture fertiliser and
pesticide treatment, landfills), further exacerbate the risk of land and soil / groundwater quality.
Large-scale removal of forest cover resulting from planned agroindustry and mining activities
(including coal mining for energy production) exacerbates the risk of continued soil degradation
and soil loss. Inundation associated with hydroelectric power plant development can also affect
fertile low-lands and the simple poor land management can render areas of land unproductive.
Land subsidence is a substantial risk that will continue with MP3EI strategies; driven by two
major factors. First, further industrial development will lead to increased extraction of ground
water resources, which – specifically in Java coastal metropolitan areas – will exacerbate the
issue of the land subsidence. The second driver is peatland degradation, i.e. especially in
Kalimantan, which causes irreversible lowering of the surface as a consequence of peat
shrinkage and biological oxidation.
The MP3EI did not recognise these problems and has not yet prepare measures to counteract
them. Therefore, recommended actions should be implemented so that MP3EI will contribute to
meeting the relevant goals stipulated by the Strategic Action Plan of the Ministry of Environment
(RENSTRA or Rencana Strategis), and those provided by the Indonesia Climate Change
Sectoral Roadmap (i.e. which, among its priorities, stipulate Óptimalization of land and water
resources use and development of agricultural activities with environmental knowledge´).
2.1.4 Forests
MP3EI agriculture and forestry activities, especially plantation expansion and timber harvesting,
will be the largest source of further reductions of forested areas in Indonesia. This deforestation
will also have significant secondary impacts to biodiversity and traditional or small-scale forest-
based livelihoods. Although likely a lesser pressure, deforestation will also continue due to:
• Mining sector expansion (i.e. due in part by coal-based electricity generation development
and other mining developments)
• Inundation associated with hydro-plant developments.
• Urban encroachment associated with expansion of the economic activities
• Inland road, railroad and transmission network expansions
Many of the stated MP3EI strategies for the 22 economic activities that lead to deforestation are
careful to not overtly indicate expansions into forested areas. The strategy for oil palm, for
example, stresses the goal to improve productivity (e.g. downstream during processing) and
‘verify’ productive areas. Existing reforestation schemes are also referenced as a counter-
balance to any increases in deforestation.
This apparent misalignment in sub-strategies of MP3EI is weakness in the MP3EI, as it may

conflicts with Indonesia’s law and commitments in Forestry and Peat Land Sectors of RAN-GRK
and in the Asia Forest Partnership.
2.1.5 Coastal Areas

The likely MP3EI-associated risks to coastal systems are mainly linked to ‘Connectivity’, Fishery,
Tourism, and Mining. Left un-managed, it was assessed that MP3EI accelerated ‘business as
usual’ connectivity and economic activities in coastal environmental will lead to direct destruction
of coastal habitats; such as coral reefs, mangrove and seagrass.
The development of port infrastructure and intensification of marine transport will also generate
further pressure on coastal ecosystems (e.g. noise, spills/leaks), including physical alteration of
natural coastlines and the related current and morphological dynamics (e.g. from dredging of
seabed). Offshore mining in coastal waters will also increase sedimentation and thus lead to
pressures of the coastal ecosystems.
Although there are several MP3EI goals that are dependent on maintaining the health of
Indonesian coasts, e.g. fisheries, the MP3EI does not elaborate on any regulation or measure
aimed at coastal protection or the need for sustainable integrated coastal management. Instead,
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it focuses on the ‘connectivity’ needs for significant harbour and port developments; and implies
the associated industrial and urban development that is associated with it.
Given this and the obvious risk to coastal systems, the MP3EI is significantly weak as it relates
to obligations to protect coastal areas; e.g. those stipulated by the Water Resources
Management Targets (current RPJMN) and Indonesian Action Plan for Climate Change
Adaptation (RAN-API).
2.1.6 Biodiversity
MP3EI does not specifically stipulate any need for heightened biodiversity protection measures
to counteract the risks and impacts from economic development. Considering this, and that
many existing conservation related legislation and initiatives have not been effective in curbing
current levels of biodiversity loss at present day levels of growth, suggests that accelerated
MP3EI growth must include equally fast-tracked biodiversity protection measures. As it does not,
it is more than probable that the MP3EI will be in conflict with objectives stipulated by the
Indonesian Biodiversity Strategic and Action Plan 2003 – 2020 and UN Convention on Biological
Diversity.
Given this policy conflict, the MP3EI will contribute, and likely hasten, biodiversity loss. The
continued conversion of primary and secondary lowland rainforest into palm oil plantations for
MP3EI Agro-Industry activities and other extensive agriculture development, i.e. the most
important cause of declining biodiversity in Indonesia; can be expected to lead to loses of
biodiversity.
Furthermore, development of transport infrastructure (e.g. including agriculture and forestry-

related transport infrastructure e.g. logging roads) will also have significant impacts on
biodiversity through disturbance, destruction and fragmentation of ecosystems as well as it can
highly increase the rate of poaching and encroachment in newly accessible areas. Similarly,
energy development will negatively affect biodiversity from hydro energy utilization on aquatic
ecosystems and by construction and operation of energy infrastructure. Further, fishery, tourism
and port development proposed by the MP3EI will negatively affect marine biodiversity both
through direct destruction of habitats (e.g. project footprints, over-exploitation, destructive fishing
methods and tourism activities) as well as indirectly by deteriorating water quality in coastal
waters. Additional MP3EI marine navigation presents added pressures to biodiversity via its
impact to environmental quality and increased risk of introduction of alien invasive species.
2.1.7 Human Health

In relation to human health, the MP3EI Policy has both strengths and weaknesses. The aspect
that shows signs of strength, but is not yet sufficiently operationalised, is the MP3EI objectives
to further develop water supply and wastewater systems. This suggests the aim is to contribute
to Indonesian Millennium Development Goals to reduce proportion of population without access
to safe drinking water and basic sanitation.
However, the evident risk of MP3EI induced worsening of environmental quality will threaten
human health in areas that become more congested with urban development and industrial
production. The aforementioned worsening air and water quality would be the key strategic
vectors that would affect human health.
The increased mobilisation of disease vectors associated with MP3EI related economic
migration is also not properly addressed in the MP3EI Policy. The risk of additional spread of
HIV/AIDS in new MP3EI development areas is therefore in conflict with goals stipulated by the
Indonesian Millennium Development Goals regarding AIDS/HIV and the National AIDS Strategy
and Action Plan 2010 – 2014. The apparent risk that existing health care capacities will become
overstretched is also unaddressed.
The MP3EI also does not elaborate on policy measures to combat the health risks related to the
Climate Change. For example, MP3EI induced migration to areas endangered by the
consequences of the Climate Change. Planned expansion of industry and tourism, together with
increased mobility, will potentially result in greater portions of the population inhabiting coastal
areas; which are often disaster-prone (e.g. tsunami and floods) as well as are likely to be
endangered by the consequences of climate change, especially by sea-level rise. Therefore, it
can be concluded that MP3EI implementation must still consider objectives stipulated by the
Indonesian Climate Change Sectoral Roadmap, Indonesia Action Plan for Climate Change
Adaptation (RAN-API) and National Disaster Management Plan 2010 – 2014.
2.1.8 Livelihood and Local Communities

It can be expected that implementation of the MP3EI will enhance economic performance
throughout Indonesia, in line with the Millennium Development Goal to decrease the number of
low-income people. The positive effects likely to result from economic growth are, higher job
availability and flexibility of labor force; better living conditions from the development of water
supply / wastewater management systems (i.e. mainly in the Greater Jakarta Area) and more
stable energy supply. In terms of transport development, the MP3EI will also enhance the
accessibility and mobility of the population (i.e. mainly in the Greater Jakarta Area) and thus it
will support relevant objectives contained in the Strategic Plan of the Ministry of Transport.
On the other hand, further development in key Economic Activities (e.g. agroindustry, industry,
fishery etc.) can lead to loss of economic and livelihood opportunities of the local communities –
smallholder farmers, traditional fishermen, indigenous communities depending on forest
resources etc. Overly extensive development of certain economic activities can also negatively
affect local economic performance and thus have a contrary effect on local livelihoods. Large
scale development of agroindustry, industry, mining or tourism can also lead to conflicts with
local small scale landholders and it can further accelerate social inequity. There is, therefore, an
anticipated risk of growing number of conflicts over natural resources mainly related to
agroindustry, fishery, energy, mining and tourism.
Further risks to livelihoods includes increased incidences and severity of floods and droughts
due to altering watersheds from deforestation or hydropower development, or from excessive
water extraction for industry, agriculture or tourism.
The MP3EI attempts to deal with social conflict issues by proposing regional level regulations
and permits systems aimed at overcoming land use conflicts related to plantation and mining
area in forests. Although positive, policy weakness is still apparent as there is no specific
elaboration on how to achieve the planning and regulatory improvements, and also because it
does not yet integrate Climate Change in permitting procedures as suggested by the Indonesian
REDD+ National Strategy.
The MP3EI does emphasise a need for educated and skilled labour force, and is therefore in
line with the national objective to increase the skilled labour force; i.e. stipulated by the Strategic
Plan of the Ministry of National Education.
2.1.9 Environmental Management & Horizontal Key Activities

Considering the existing situation and challenges related to environmental management in
Indonesia, including improper application of environmental assessment (i.e. SEA, regional
AMDAL, and project-level AMDAL) there are a number of potential problems associated with the
MP3EI implementation.
• The lack of integrated watershed management can result in further degradation of water
resources due to implementation of the MP3EI projects
• Since enforcement of environmental regulations (emission standards) for industries is not

always demonstrated in Indonesia, the number of non-compliant industrial operations
would likely increase
• Mine closure and mine reclamation policies are not well developed or implemented. The
environmental and financial costs of this are generally borne by the communities nearby
the mining sites for many decades after mining has ceased. Also, the environmental
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management plans for mine operations are often not consistently implemented and
enforced. Therefore – if not properly managed and controlled – MP3EI mining activities
may further worsen the situation.
• Fishery development can further intensify illegal, unregulated and unreported fishing
practices; therefore this will require enhancing of the Fishery Management system
including proper involvement of local communities in fishery planning and management
• The lack of proper application of the Integrated Coastal Zone Management System
(ICZM) in Indonesia can result in further significant problems in coastal areas associated
with tourism, industry, aquaculture etc.
• Similarly, a lack of systematic planning of industrial development (i.e. industrial sites) can
likely lead to further degradation of environmental quality (especially air and water) and
exacerbation of environmental management (waste and wastewater management) and
related human health problems.
Energy and Waste

Higher energy demand is expected, which the MP3EI mainly accounts for via fossil fuel based
energy production; giving only very limited allocation to renewable energy resources. Specific
waste-related concerns are connected with what will certainly be an increase in industrial waste
generation (including hazardous waste); coupled with an already inadequate waste
management system and infrastructure. Although it is expected that some waste streams can be
recycled, increasing amounts of hazardous waste will remain and require adequate treatment
and management.
Industry and Mining

The MP3EI offers an opportunity to introduce and replace existing inefficient and
disproportionate polluting technologies in Indonesia. This chance is not yet, however,
recognised. The current MP3EI Policy also needs to emphasise the possible introduction of
cleaner industrial technologies that are commonly referred to as Best Available Techniques
(BAT).
2.2 MP3EI Policy Recommendations
2.2.1 Key Recommendations for Adjusting Policy

Besides recommendations related to the specific economic sectors there are several issues
which would need to be properly emphasised by the MP3EI overall policy and/or addressed in
the upcoming RPJMN:
Preventing or minimizing forest and peat land conversions
• MP3EI, and/or the upcoming RPJMN, should – among its main principles – emphasize
the importance of protecting the forest (especially primary forests) and peat land with the
aim to prevent (or minimize) its conversion
• MP3EI, and/or the upcoming RPJMN, should promote the sustainable forest management
principles (PHPL or Pengelolaan Hutan Produksi Lestari) for primary, secondary, and
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production forests
• Besides MP3EI, and/or the upcoming RPJMN, the policies and regulations in relevant
sectors should be adjusted accordingly, and operations and activities in forests should
follow provisions of the President Instructions No. 6/2013 the Delay of New Permit
Issuance and Improving the Management of Primary Forest and Peat Land, and related
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In accordance with Regulation No.43/ Menhut-II / 2014 on Assessment of Sustainable Forest Management Principle
(PHPL) and Verification of Wood Legality (VLK).
Indicative Map of the New Permit Delay (PIPIB or Peta Indikatif Penundaan Izin Baru)
revision IV.
Reducing reliance on non-renewable natural resources
• MP3EI, and/or the upcoming RPJMN, should strongly emphasize necessity of increasing
the energy efficiency of the entire country´s economy (especially in industry and transport
sector) and higher utilization of renewable energy resources as the only ways how to, in
long-term perspective, minimize reliance on the non-renewable natural resources.
Considering the Climate Change and its likely consequences
• MP3EI, and/or the upcoming RPJMN, should clearly claim that it intends to contribute to
fulfilling the country´s commitments regarding the GHG emissions – and subsequently
also adjust planning for the most relevant sectors (industry, energy, transport). In result,
the list of the MP3EI projects should include larger number of the projects having
relationship with Indonesia´s Nationally Appropriate Mitigation Actions (so far there are
only three such projects within MP3EI)
• Since Indonesia may be significantly affected by the consequences of the changing

climate, MP3EI (and/or the upcoming RPJMN) policy should clearly stipulate a necessity
for proper consideration of the risks likely related to the changing climate in the MP3EI
sectoral planning and – similarly to the GHG emissions – make further adjustments in
policies and regulations for relevant sectors (tourism, agriculture, connectivity etc.).
General principles of environmental management
Implementation of the MP3EI projects should follow the following key principles to ensure it
properly considers relevant environmental, social and health concerns:
• Protected or ecologically sensitive areas and biodiversity hotspots should be primarily

considered as “no-go-areas”, their status maintained or enhanced and these areas should
be prioritized to be protected (if it is not the case yet)
• Suitable brownfield areas or already degraded land should be reclaimed and primarily
used for relevant MP3EI projects
• Existing tools and approaches for good planning should be utilized i.e. applied for
planning and implementation of the MP3EI projects and the development stipulated by the
upcoming RPJMN – namely Integrated Coastal Zone Management, River Basin
Management Planning etc.
• Sensitivity of area to and likely impacts of natural disasters and likely consequences of
the climate change (sea-level rise etc.) should be considered for planning location for
specific economic developments
• The appropriate capacity of health and educational services, water supply and
waste/waste water management systems have to be ensured before or in parallel with the
MP3EI, and/or the upcoming RPJMN, related developments.
2.2.2 Recommendations for Enhancing the Institutional Context

Considering existing problems with environmental management in Indonesia, it is probable that
the implementation of the projects under the MP3EI (and/or RPJMN) would face similar
difficulties. Therefore, the MP3EI SEA provides related recommendations to enhance the
structures coordinating the MP3EI implementation.
Among others, these may entail establishing ‘institutional space’ for better coordination among
MP3EI governmental stakeholders, as well as non-governmental organizations, to ensure
proper implementation of the relevant MP3EI social and environmental measures. Considering
its position in the governmental scheme, it is obvious that the Ministry of Environment (KLH)
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should play a pivotal role and be involved (as part of the KP3EI) in recommended activities,
such as the:
• Development, adoption and application of downstream MP3EI “planning guidelines”
• Monitoring the SEA and EIA processes related to the MP3EI projects in order to ensure
their appropriate quality including extensive involvement of relevant stakeholders and
transparent disclosure of reports and results
• Ensuring transfer of MP3EI SEA recommendations to provincial plans and related SEAs
• Ensuring the environmental compliance of the MP3EI projects
• Establishing web-based EIA/SEA Information System (optimally within the KP3EI

website), where information and documents related to SEAs/EIAs for MP3EI projects
would be publicly available and which could later-on be used for all SEAs/EIAs conducted
in the country
• Developing and applying mandatory guidelines for Keystone MP3EI projects on social
aspects to be applied in associated planning, project design and related environmental
assessments
• Strengthening implementation of “moratorium” on primary natural forest and peatland

(Presidential Instruction No. 10/2011) for the MP3EI projects
• Allocating appropriate funds and human resources to protected areas management to

strengthen the control of illegal logging and poaching likely to be linked to the MP3EI
projects.
2.2.3 Recommendations for Specific Categories of Economic Activities

This section provides examples of the recommendations for main MP3EI economic categories.
Agriculture and Forestry

• Guidelines integrating Principles and Criteria developed by the Indonesian Sustainable
Palm Oil (ISPO) should be legislated
• A clear decision should be made on size of ‘productive plantation areas’ in the upcoming
RPJMN and introduce intergovernmental cooperation to maximize efficiencies while
reducing the area of existing plantation concessions
• Before allocating public funds for further Oil Palm (or other plantation) development, the
review of existing land use conversion concessions shall be performed in order to avoid
conflicts and inefficiencies in territorial development and infrastructure investments. The
relevant sectoral plan should elaborate necessary procedure to ensure the above-
mentioned.
Industry
• Reduce MP3EI-related (and/or that of the upcoming RPJMN) public funding for extractive
resource use and shift it to dedicated projects for sustainable peat land management,
development of carbon sequestration projects in forestry and agriculture
• Use of BAT should be obligatory for relevant MP3EI projects as well as BAT application
should be subsidised among existing industries to create additional carrying capacity for
new industries.
Mining
• The licensing mechanism for mining should be revised to make the procedure of issuing
the mining license as an administrative process as well as to clarify the permitting
procedure for mining areas within forest areas.
• Elaborate and enforce controlling scheme and provide financial framework to ensure that
mine closure plans and reclamation plans are implemented.
Energy
• Emphasize necessity of increasing the energy efficiency of the entire country´s economy
and higher utilization of renewable energy resources to target at a minimum of 30% of
feasible non-fossil fuel energy
• Through the upcoming RPJMN, elaborate options for developing the pricing mechanisms
for energy and gradual phase out of fuel subsidies.
Fisheries
• The upcoming RPJMN could promote a shift in fishery management practices, focusing
on sustaining fish stocks as a contributor to economic growth, rather than continuing the
present approach that prioritizes growth in production with only limited consideration to
sustainability of fish stocks.
• Amend the Fisheries Act to further integrate the Precautionary Principle and EAFM
approach (Ecosystem Approach to Fisheries Management).
Tourism
• Make a clear commitment to application of Integrated Coastal Zone Management
Planning as a basis for development of tourism facilities and related infrastructure (for
MP3EI projects as well as for entire economic sector) to avoid current rather haphazard
location of tourism facilities.
• Introduce permitting regulations that require tourism developments to prove sufficient

capacities of water supply, and appropriate solid waste and wastewater management
systems.
Connectivity
• Where technically possible, reposition ports / marine navigation routes away from
sensitive coastal habitats
• Where possible re-route roads, railways and transmission lines away from sensitive or
protected habitat
2.3 Main Findings and Recommendations for MP3EI Economic

Corridors
This section provides an overview of the conclusions for MP3EI Economic Corridors (EC).
These mainly planning-related issues occur due to the cumulative or interactive stresses that
MP3EI projects, KPI’s or nodes have on physicochemical, ecological and social conditions. After
carrying out expert and stakeholder scoping workshops and exercises, key risks and impacts
were identified and further categorised in Areas of Concern´ (AoC) within each Economic
Corridor. Further analyses of the scoped impacts and risks provided additional tangible evidence
and verification that these issues required additional planning attention.
It is beyond the scope of the Executive Summary to explain all identified impacts and risks.
Therefore, to gain a full perspective of the detailed Economic Corridor SEA analyses, it is
recommended that the reader refer to the full SEA documents for each EC. In addition, a brief
synopsis of the key planning mitigation recommendation is offered.
11
2.3.1 Java Economic Corridor
The Java EC has been assigned by the MP3EI to act as the “driver of national industry and
service provision”. The aim is therefore to further diversify service-based industries within the
currently predominant manufacturing-based economy. Thus, in general, the MP3EI Policy has
resulted in Java EC Connectivity planning that centres on energy, transport, and water
sanitation projects. In terms of economic activities, the focus is on heavy and light industry
expansion, and 23 prioritised Zones of Investment Focus (i.e. KPIs), and 3 Potential KPIs have
been established, among others, the investment focus includes oil and gas, food and beverage
industry, defence equipment, transportation equipment and textile. The Java EC also includes
3
the Greater Jakarta (Jabodetabek) Special Area .
Scoping identified eight Area of Concern (AoCs), comprising of Bandung, Cilacap, Greater
Jakarta, Pantura East Java, Pantura West Java, Semarang, Wonogiri – Jogjakarta; where the
most significant instances of strategic MP3EI impacts were related to air and water pollution that
were assessed to have corresponding impacts to ecological and social receptors.
For example, air quality problems were verified in the Greater Jakarta, Bandung and Pantura
4
East Java AoCs (as estimated through IPC/DSS ). Jakarta is perhaps the most obvious concern
where well - documented existing air quality problems will clearly be exacerbated by substantial
additional atmospheric emissions from MP3EI developments. Water quality issues are more
widespread as the MP3EI sources of water pollution and existing non-compliant water quality in
Java waters is also widely distributed.
10000
Total Emissions (kg)
100
Millions
1
0.01
0.0001
0.000001 PM2.5
PM10
Ni
NMVOC
NH3
TSP
Hg
NOx
Pb
As
Cr
Cd
CO
Cu
SOx
Pollutants
Figure 2.1 Estimated MP3EI related air pollution quantities in the Greater Jakarta Area
Land subsidence from excessive groundwater extraction puts large coastal areas at risk from
flooding, especially along the northern coastlines where previous urban and industrial
development has taken place on extensive areas of peatland. Without adequate water supplies,
added industrial activities and expanding urban populations will further accelerate this process.
3
The special area Jabodetabek KSN (Jakarta, Bogor, Depok, Tangerang, Bekasi) general has the similar investment focus scheme for
the Java economic corridor.
4
Integrated Pollution Control Decision Support System
Figure 2.2 Estimated magnitude of coastal impacts from MP3EI projects in the Pantura East Java AoC
Impacts and risk were assessed to ecosystems due to MP3EI project footprints and the
physicochemical changes they cause (i.e. poor air and water quality) at ecological and social
receptors. Risks to coastal systems were especially evident in Java, as demonstrated by the
example coastal threat assessment result of the Pantura East Java AoC coastline where,
among other stressors, water pollution impacts to coral and mangroves were analysed (see
Figure 2.2).
Java’s existing population pressures influence the magnitude of likely social impacts resulting
from the implementation of MP3EI. Apart from the impacts on human health from excessive air,
water and land pollution, other negative social issues are likely to occur from the introduction of
large numbers of migrant workers. For some, this will be somewhat counter-balanced by
additional employment opportunities, expected rise in the standard of living and enhanced social
mobility.
In general, Greater Jakarta and Pantura East Java were assessed to have the most serious
negative strategic impacts, while by the environmental receptors across the whole Java EC,
water quality has the highest negative impact with air quality and human health also being of
concern.
Recommended Mitigation Measures
Following the full analysis of the Java EC, a wide selection of planning mitigation
recommendations was developed for each AoC. An example of the most relevant measure
included reorganising envisaged industries in the Java EC into zones, thereby making their
cumulative impacts easier to manage; and relocating them away from areas with existing air and
water quality non-compliance issues. An offered option could be to subsidise the implementation
of Best Available Techniques (BAT) pollution abate among existing industries, thus allowing new
industries to develop without exceeding quality tolerances. The Policy recommendation to apply
BAT and stricter environmental quality standards is ultimately needed to realise the necessary
level of sustainable planning in this regard. Related to this, it is recommended that investment in
water resources and wastewater treatment to be prioritised beyond Jakarta to other emerging
urban centres such a Surabaya and Bandung.
Integrated Coastal Zone Management (ICZM) and Integrated Catchment Management (ICM)
plans are suggested as the vehicles by which decision-making is made for required detailed
planning improvements. This particularly applies to Jakarta Bay and Madura Straits (ICZMs) and
Bengawan Solo and Citarum watersheds (ICMs) where multiple projects pose serious risk of
cumulative water quality impacts.
13
2.3.2 Sumatra Economic Corridor
The Sumatra Economic Corridor (EC) has the theme ‘Centre for Production and Processing of
Natural Resources as the Nation’s Energy Reserves’. Sumatra is also expected to be the
‘Gateway to the national economy markets of Europe, Africa, South Asia, East Asia, and
Australia’. The combination of MP3EI economic activity and Connectivity projects reflect the
mixed character and designs for this region and focus upon oil and gas, coal, oil palm and
energy production / processing; and road construction. The 13 priority KPIs, and 2 potential
KPIs, mimic this focus, with - among others - oil palm, rubber and coal, shipping and steel
5
investment themes. The Sumatra EC also includes the Selat Sunda Special Area .
The scoping process identified seven Areas of Concerns (AoC) that were largely confirmed to
experience significant cumulative and interactive impacts from MP3EI activities. The seven AoC
include Cilegon–Banten Bay, Lampung Bay, Medan - Lhokseumawe, Muara Enim - Prabumulih,
Palembang, Sibolga - Aceh Singkil, Tanjung Api Api - Bangka.
While lesser air quality risks was assessed for emerging mixed urban and industrials areas such
as Medan, water quality is expected to be significantly impacted by MP3EI in at least two AoCs
(Cilegon–Banten Bay AoC and Muara Enim – Prabumulih AoC) with lesser negative impacts in
four other AoCs (Lampung Bay AoC, Medan – Lhokseumawe AoC, Palembang AoC, and
Tanjung Api Api – Bangka AoC). This was assessed due to multiple and significant sources of
MP3EI water pollution such as oil palm plantation expansions and timber and rubber plantations.
All of which will, when combined with expected deforestation, contribute to reduced water
quality. Other sources included industrial development, particularly where MP3EI investments
tend towards heavy industries such as oil and gas, iron and steel, and coal and include
improperly planned urban growth resulting from economic migration towards larger cities.
In relation to ecosystem impacts, it was observed that relatively large portions of Sumatra EC
conservation areas and protected habitats (including those for ‘flagship’ species) are threatened
by the implementation of MP3EI projects and the related oil palm and mining activities (i.e.
concessions). This mainly stems from planning conflicts where envisaged development result in
deforestation and habitat loss, i.e. mostly by deforestation and habitat fragment for the
expansion from projects such as road development, oil palm and mining. One AoC that
highlights this issue is Cilegon - Banten Bay (see Table 2.1) where analysis suggests a potential
loss of over 50 percent of certain habitats. Habitat fragmentation from roads, railways or
transmission line construction is also expected to affect biodiversity, as well as the negative
impacts of illegal poaching or logging that occur when accessibility to remote areas is opened.
Table 2.1 Potential incursion of MP3EI development in Cilegon – Banten Bay AoC habitats
Category of Receptor Original Area (ha) Area at Risk from MP3EI (ha) % Area at Risk
Primary/Secondary Forest 1,514 850 56

Important Bird Areas 2,776 1,080 39
Mangrove Forests 300 190 63
Impacts of development will also be felt on environmentally sensitive coastal habitats such as
coral, seagrass and mangroves, which will arise predominantly from the direct MP3EI
development footprint and broader-scale indirect effects from pollution and/or sedimentation.
Coastal Habitat Threat analysis in the Tanjung Api Api – Bangka AoC (Figure 2.3), for example,
estimated that approximately 5,500 hectares of mangrove were at risk from direct impacts and a
further 12,000 hectares were at risk of moderate or limited damage from indirect impacts.
5
The special area is a KSN that includes the potential development of the Selat Sunda Bridge, and also the iron and steel industry in
Cilegon (Banten, Java) area.
Figure 2.3 Estimated magnitude of coastal impacts from MP3EI projects in the Tanjung Api Api –
Bangka AoC
Damage is not constrained to the coastal environment but, as livelihoods are affected, it is also
felt in terms of negative social impacts. These impacts and other development and land
conversion related social tensions (i.e. as evident in a multitude of existing cases of social
conflicts) were therefore highlighted in relevant AoCs.
Also, as with several other AoCs, health impacts are assessed in relation to worsening
environmental quality. This is also the case for the Sumatra EC where, as mentioned, existing
urban pollution coupled with additional heavy industries and energy plants pollution is expected
to lead to areas of non-compliant air quality. For example, calculations of MP3EI-related
atmospheric emissions in Medan - Lhokseumawe AoC showed the largest contribution from
particulate matter (PM2.5, PM10 and Total Suspended Particles) predominantly from automotive
use and open-burning. These pollutants will have impacts on human health, contributing to
incidences of respiratory diseases, but also on the economy through lost production from
sickness, increased health costs, etc.

Following comprehensive analysis of the available data for Sumatra a number of
recommendations were made to address the planning challenges.
To reduce urban air pollution, for example, it is recommended that investments into public
transportation be made in emerging Sumatran urban areas to reduce the numbers of vehicles
on the road. As with the Java EC, it is also proposed to avoid planning heavily polluting
industries near urban areas. The policy recommendation to implement stronger emission
controls and incentivising the use of renewable energy sources will support this and, to some
extent, additional wastewater treatment requirements.
To ensure the protection of conservation related sites, new protection or buffer areas are
proposed in the most significantly affected AoCs to hold back or push deforestation related
activities to less impacting areas. Where this is not possible, other project related mechanisms,
such as maintaining or establishing ‘ecological’ corridors, is recommended, such as for road
construction projects.
In relation to the clear social threats, it was recommended that planning conflicts with customary
land be addressed, and that, at a minimum, a dedicated ‘Social Impact Assessment’ be carried
out for each MP3EI project to ensure that the programs are developed to either protect local
communities or ease their necessary transition.
15
2.3.3 Kalimantan Economic Corridor
The objective of MP3EI Economic Corridor (EC) planning in Kalimantan is to develop a centre
for ‘Production and Processing of National Mining and Energy Reserves’. The planned
developments are dominated by, or based on, extractive industries such as oil and gas, coal, oil
palm, iron-steel, bauxite and timber. With increased economic efficiency as a core goal,
envisaged Connectivity projects include road extensions and upgrades (including bridges),
power generation, water resource infrastructures (e.g. dams and reservoirs), and ports. In
addition to individual MP3EI Projects, there are 36 KPIs that range in focus from oil and gas,
coal, bauxite, and agroindustry (oil palm and timber). It is also clear that Kalimantan MP3EI EC
aims to add formerly absent down-stream processing of raw resources into the future growth of
the corridor.
Altogether five Areas of Concern (AoCs) were identified in the EC, along with several strategic
issues outside of these AoCs; namely Balikpapan-Samarinda-Bontang, Kutai Timur, Kotabaru-
Tanah Bumbu-Tanah Laut, Central Kalimantan, and West Kalimantan. The scoped and
strategically confirmed ecological and social risks are diverse. On one hand, city centres such
as Balikpapan and Samarinda, are expected to experience typical air - water quality problems;
along with health and other social issues associated with unabated urban expansion. On the
other hand, there is strong evidence that MP3EI planning, and the related spin-off growth (e.g. in
mining and oil palm concessions), will lead to significant deforestation. It is ultimately clear that
MP3EI deforestation intensifies threats to sensitive terrestrial habitats rich in biodiversity and, if
left unattended, a host of social issues; i.e. including social conflict, may arise.
In terms of physicochemical issues, air and water quality problems were confirmed for
Balikpapan-Samarinda-Bontang AoC and Kotabaru-Tanah Bumbu-Tanah Laut AoC; and to
slightly lesser extent for Kutai Timur AoC. It is also apparent that certain watersheds in the
Balikpapan, Kotabaru, and Central Kalimantan AoCs are at risk due to the individual or
combined effects of planned ‘water resource’ infrastructure and anticipated intensive
agroindustry or mining. The amount of peat land that would be destroyed from these activities,
especially in Central Kalimantan, is a serious issue; as it would not only impact biodiversity but
also be responsible for substantial GHG emissions and land subsidence.
Serious threats to biodiversity from deforestation and coastal degradation were assessed for all
AoCs and several other locations. Of these areas, Central Kalimantan AoC is one clear example
of potential habitat destruction (including habitat fragmentation) and clear planning conflicts with
protected areas (i.e. see Table 2.2).
Table 2.2 Estimated MP3EI direct impact in various sensitive habitats in Central Kalimantan
Category of Receptors Original Area (Ha) Area at Risk from MP3EI (Ha) % Area at Risk
Forests 4,559,561 728,000 16

Important Bird Area 57,759 3,100 6
Mangrove Forests 23,847 360 2
Orang-utan Habitat 5,816,296 1,436,000 25
Peat land / Wetland Areas 2,664,759 480,000 18
Likely coastal degradation in the Kalimantan EC is related to the direct footprint of MP3EI
Projects such as ports and coastal developments; as well as environmental quality stressors
(e.g. water pollution and shipping activities). Significant strategic impacts in this regard were
assessed in all AoCs. Figure 2.4 shows the example of various degrees of impact severity to
coral, seagrass and mangrove in Kotabaru Regency.
Figure 2.4 Estimated magnitude of coastal impacts from MP3EI projects in Kotabaru Regency
While increased economic opportunities and growth were generally assessed to have positive
impacts; altered social dynamics and negative impacts to environmental quality and important
customary lands will affect some communities or portions of Kalimantan society negatively.
Among others, pressures from the influx of migrant workers is expected to lead to several
unwanted side effects (e.g. competition for jobs, inflation, the spread of disease), and worsening
environmental quality will impact the health of populations in growing urban centres. Land
conversion for MP3EI related developments is also expected to exacerbate existing, or create
new, social conflicts over land; especially in West and Central Kalimantan.

A selection of planning related measures were recommended to lessen the assessed risks or
impacts in the Kalimantan EC. To address water and air pollution, similar measures as that
suggested for the Java EC (i.e. establishing industrial zones and/or relocating industries,
subsidising cleaner production in existing industries). Also, emerging urban centres in
Kalimantan are recommended to be prioritised for investment into additional industrial and
domestic wastewater treatment. In addition, planning watersheds at risk should be routed
through BPDAS (River Basin Management Body) and based on sufficient technical analysis.
In relation to deforestation / land conversion, measures aim at correcting planning conflicts in

protected areas, and where necessary creating social or ecological buffer zones and/or
additional conservation areas to restrict MP3EI intrusion into biodiversity and/or social-conflict
sensitive areas; e.g. Central and West Kalimantan. Routing coastal development decision-
making for especially sensitive coastlines (i.e. and eventual long term management) via
Integrated Coastal Zone Management, e.g. Balikpapan, Kotabaru, and Kutai Timur, was
proposed to address both ecological and social issues.
The Policy recommendation to apply BAT, stricter environmental quality standards, and
Sustainable Palm Oil production support and/or are needed to realise the necessary level of
sustainable planning. In relation to mining sites, better project level environmental management
is recommended (e.g. water management, tailing ponds and post project rehabilitation), namely
for projects in all AoCs, and especially Kotabaru.
17
2.3.4 Sulawesi Economic Corridor
The objective of Sulawesi EC planning is to develop a “Center for Production and Processing of
National Agricultural, Plantation, Fishery, Oil and Gas, and Mining”. The primary planned
economic developments include projects in agriculture, cocoa, fisheries and nickel mining
sectors. Thirty one Zones of Investment Focus (KPI) within the economic corridor are also
envisaged with the themes ranging from fisheries, cocoa, and food agriculture, to gold, nickel,
iron-steel and oil and gas industries. In addition, substantial investment into Connectivity
infrastructure is planned that predominantly entail projects in the transport and energy sectors
that create synergy with the envisaged economic activities.
Altogether seven AoCs were determined within the Sulawesi EC; i.e Greater Makassar, Manado
- Bitung, Towuti – Matano, Greater Gorontalo, Greater Palu, Mamuju – Mamasa, and Southeast
Sulawesi. Several risks and/or impacts outside of these AoCs were also identified.
Concerning issues were situated in both rural and urban settings and include a variety of
potential planning challenges. Air quality and water quality problems were the key
physicochemical issues; and deforestation and coastal degradation were again confirmed as
issues, along with the related threats to biodiversity and social issues associated with land
conversion.
Greater Makassar Area AoC and Manado-Bitung AoC were assessed to have a high risk of air
quality problems due to their emerging urban centres and the estimated quantity of air pollution
added to these ‘air sheds’ from MP3EI developments (see Table 2.3 below). Water pollution and
water resource degradation (e.g. from agroindustry, food processing, aquaculture, mining and
metal processing pollution) is also assessed as a strategic problem. For example, nickel mining /
production in Towuti - Mahalona Lakes AoC or gold mining in Gorontalo AoC, coupled with the
estimated increase in waste-water production in growing urban areas, are the main reason for
determining significant and widespread water quality risk for certain rivers, lakes and coastlines.
Table 2.3 Estimated sum of air emissions from the MP3EI-related activities in Greater Makassar Area
Pollutant Emission from MP3EI (kg/year)

Non-methane volatile organic compounds (NMVOC) 1,927,500
Nitrogen Oxides (NOx) 3,149,300
Lead (Pb) 7
Particulate Matter-10 (PM10) 265,500
Particulate Matter-2.5 (PM2.5) 242,400
Sulfur Oxide (SOx) 109,700
Further deforestation due to implementation of MP3EI projects can be expected, together with
degradation of coastal ecosystems leading to loss of biodiversity. For example, in the Towuti -
Mahalona AoC alone, as much as 4.28% of the total forests are at risk from MP3EI
Developments. In terms of coastal systems, analysis of the Mamuju-Mamasa AoC suggests that
approximately 3,500 ha of coral reefs may be subjected to severe impacts, along with more than
1,000 ha of mangrove forests.
Strategic social risks and impacts for the Sulawesi EC are similar to those of other ECs, and it is
likely that some would benefit while others would not. For example, anticipated MP3EI
contribution to urban population growth reinforces existing demographic trends that are the main
cause of health impacts (e.g. from insufficient management of liquid and solid wastes, and the
spread of diseases), livelihood conflicts (e.g. migrant workers), and stress on public
infrastructure. Outside of cities, land conversion for MP3EI related developments are expected
to lead to similar, yet less concentrated social issues and conflicts. For example, the Greater
Palu AoC includes oil palm concessions on customary lands and further migratory induced
population growth is also expected (see Figure 2.5). It is estimated that this will very likely fuel
existing social conflicts in Poso Regency.
Figure 2.5 Significant indigenous communities and customary lands versus MP3EI planning in Palu
Greater Area

In order to avoid or mitigate identified risks and likely impacts, a number of recommendations
were formulated. To curb urban air pollution, for example, strengthening of Connectivity
investments for mass transportation systems in the Greater Makassar AoC and Manado-Bitung
AoC is one of the proposed measures. Integrated Watershed Management, through which
additional watershed planning analysis and improvement is vetted, was recommended for,
amongst others, Jeneberang and Tallo watersheds. Integrated Coastal Zone Management for
the Greater Makassar and Manado-Bitung AoCs was also recommended to ensure sufficient
consideration of MP3EI related risks to sensitive coastal ecosystems. In relation to mining sites,
better project level environmental management is recommended (e.g. water management,
tailing ponds and post project rehabilitation), namely for projects in the Towuti-Mahalona AoC.
Correcting land conversion planning conflicts is a key measure to address assessed social
conflict. For example, the overlap between oil palm concessions and customary land in the Lore
Lindu region (Greater Palu AoC), and the overlap between mining concessions and forest land
and conservation areas in the Mamuju-Mamasa AoC.
2.3.5 Bali – Nusa Tenggara Economic Corridor

The MP3EI economic development theme for Bali – Nusa Tenggara Economic Corridor is to be
the ‘gateway for tourism and national food support’. The main MP3EI planned economic
activities recognise this theme by concentrating on three major economic sectors; namely
tourism, fisheries, and animal husbandry - with lesser investments planned in timber plantations
and mining (gold, copper, oil and gas, and manganese). The economic activities are supported
by Connectivity infrastructure developments including construction, expansion and maintenance
of ports and ferry ships, airports, roadways, power plants, and water infrastructure (dam,
reservoir, treatment and distribution). Most of the economic and connectivity projects are located
within 24 KPIs (8 priority KPIs and 16 potential KPIs), that are closely related in the envisaged
economic activities.
Following an initial scoping process, six AoCs were identified where MP3EI induced strategic
risks and impacts can be expected. The AoCs include Southern Bali, South-North Lombok, KNP
Area, Sawu Sea, Bima Bay, and Sumbawa Barat.
Air quality parameters (i.e. particulate matter) already exceed threshold limits in areas of Bali
and analyses suggest that MP3EI traffic, industry and waste-burning emissions will only worsen
19
the situation. Water pollution, both in river basins as well as in coastal areas, was identified as
an important environmental issue in all AoCs - most significantly in Southern Bali and Lombok.
6
Specialist analysis (IPC DSS ) of key water pollutants and wastewater volumes (see Figure 2.6)
supported analyses in the Southern Bali AoC where poor water quality is already documented.
Here was confirmed that MP3EI activities, such as food and drink production / processing and
increased domestic wastewater discharge, will worsen water quality problems particularly in
Benoa Bay, Badung Regency, Denpasar City, and Gianyar Regency. The expansion of tourism
and tourist facilities, particularly on Bali, is also likely to lead to additional pressures on water
supplies.
Figure 2.6 Estimated MP3EI related water pollution quantities in Southern Bali
Figure 2.7 Estimated magnitude of coastal impacts from MP3EI projects in Lombok area
While impacts to forest ecosystems were identified only in two AoCs (i.e. Bima Bay and
Sumbawa Barat), e.g. from mining activities and conversion to commercial timber plantations,
degradation of coastal ecosystems and related loss of biodiversity are present as strategic
issues for all AoCs. For example, despite many coastal localities already being in poor condition,
large areas of mangroves, seagrass and coral reefs can be found in the Lombok AoC. Coastal
Threat Analysis showed (see Figure 2.7) that planned MP3EI development stressors, such as
6
IPC DSS = Industrial Pollution Control Decision Support System
water pollution and/or sedimentation, will cause degradation of these coastal habitats.
Estimations suggest that up to 1,500 Ha of coral, large areas of mangrove and significant
seagrass beds in Lombok Barat are at risk from the development of tourism zones, timber
plantations and port development.
While many already have and will continue to benefit economically from development in the EC,
social pressures are already apparent in Bali and Lombok. Increased tourist developments and
pressures are therefore expected to heighten related social problems such as the spread of
HIV/AIDS, erosion of cultural values, and economic inflation. An example of social conflict is
tension between local communities and the tourist industries in Southern Bali AoC, which is
predicted to continue. Related ÉC-wide´ social issues include vulnerability to sea-level rise and
the risk of overfishing. Many MP3EI projects will also increase water demand, despite
decreasing levels of water availability and certain cases of water scarcity. Coastal ecosystems
and biodiversity receptors have the most negative impacts, while air and water issues are most
prevalent in Southern Bali and South-North Lombok AoCs.

In order to avoid or mitigate identified risks and likely impacts, a number of recommendations
were formulated. For example, it is proposed to prioritise investments to wastewater treatment
facilities, mass transit, and solid waste management projects in, among others, the Southern
Bali AoC. To deal with increased tourism and related coastal developments risks in the Southern
Bali and Lombok AoCs, it is proposed that necessary planning improvement and management
be routed through Integrated Coastal Zone Management (ICZM) processes.
It is also suggested that financial allocations be made for awareness-raising activities among the
providers of tourist services, visitors, and the general public regarding the environmental issues
in the area, namely water, energy savings and biodiversity protection.
2.3.6 Papua – Maluku Economic Corridor

The objective of economic development in Papua – Maluku Economic Corridors (EC) is to
create a centre for Development of Food, Fisheries, Energy, and National Mining. The planned
economic development is dominated by projects such as in agriculture, copper, nickel, oil and
gas and fisheries. Connectivity projects generally include port development, new and upgraded
roads, power plants, and water supply infrastructure. In addition to the agglomeration of MP3EI
Connectivity and economic activity projects, there are also 22 KPIs located throughout the
Economic Corridor; which, among others, includes animal husbandry, fisheries, cement,
agroindustry and mining investment themes.
Altogether five Areas of Concern (AoCs) were identified in the Papua – Maluku EC in relation to
the above-mentioned plans; these include Halmahera, Sorong – Manokwari, Fakfak - Bintuni -
Cendrawasih Bay, Timika, and Merauke. The expected strategic risks and impacts in these
areas were, however, somewhat different than those associated with other Economic Corridors.
While risk of cumulative impacts typical of other ECs was assessed; Papua, in particular, is
sparsely populated and is still relatively ‘untouched’ by dense urban expansion and development
projects. As such, strategic biodiversity and social assessments were more associated with the
scale of disrupting remaining and relatively pristine environments.
Water quality impacts were assessed for several AoCs (especially Halmahera AoC and Timika
AoC, followed with Sorong - Manokwari, Fakfak - Bintuni - Cendrawasih Bay, and Merauke
AoCs) due mainly to runoff from agriculture and mining developments, and air quality is only
deemed relevant in the Timika AoC because of existing pollution levels and expected MP3EI –
related atmospheric emissions. Habitat and biodiversity degradation will occur at varying levels,
where the most concerning terrestrial biodiversity impacts are evident in the Merauke AoC (see
Table 2.4) from the habitat destruction and fragmentation related to planned agroindustry
7
developments (e.g. MIFEE , oil palm - mining concessions, and road development).
7
Merauke Integrated Food and Energy Estate
21
Table 2.4 Estimated MP3EI direct impact in forests in the Merauke AoC
Forest Classification Original Area (Ha) Existing Concessions (Ha) % Area at Risk
Total Forest 2,639,239 558,400 21

Primary Dry Land Forest 961,054 20,600 2
Primary Swamp Forest 286,815 80,900 28
Secondary Dry land Forest 946,883 220,100 23
Secondary Swamp Forest 442,668 85,500 19
Total Mangrove 188,042 12,100 7
Primary Mangrove Forest 167,066 11,500 7
Secondary Mangrove Forest 20,977 700 3
MP3EI related coastal degradation, and related biodiversity loses, are strategic in the Fakfak-
Bintuni - Cendrawasih Bay AoC and Sorong - Manokwari AoC due to the areas’ respective
importance for the ecological functionality of the coral triangle and/or overlap with migratory
routes of threatened and endangered marine mammals and turtles. Impacts to coastal habitat in
Halmahera from port development and, among others, predicted water quality impacts should
also be mentioned; as well as the Fisheries KPI related threat of over fishing in Maluku waters.
Strategic biodiversity impacts are deemed to be significant in all AoCs.
Strategic social risks and impacts for the Papua – Maluku EC are, in general, deemed to be
more intensive as aboriginal communities may be more vulnerable to changes in their
environments and existing social structures. Thus, for example, typical livelihood and cultural
risks associated with the influx of migratory workers are considered to be more significant.
Health impacts can also be expected from worsening environmental quality, and interactions
with expected newcomers. An analysis of important traditional sites and customary lands in
relation to planned MP3EI also illustrates significant planning conflicts, as exemplified in the
Merauke AoC planning (see Figure 2.8).
Figure 2.8 Map of MIFEE Planning incursion in Merauke AoC Traditional Sites

A selection of planning related measures were recommended to lessen the assessed risks or
impacts in the Papua- Maluku EC. For example, limiting agroindustry or mining land allocation in
primary forests or peat land was recommended to limit biodiversity impacts and social conflicts
in Merauke AoC, and also for avoiding habitat fragmentation in sensitive terrestrial areas. To
protect sensitive coastal areas, dedicated project requirements, such as strict wastewater
management or tailing ponds, and strict avoidance of especially sensitive habitats were offered.
In relation to the clear social threats, it was recommended that planning conflicts with
traditionally relevant sites be corrected, and that dedicated ‘Social Impact Assessment’ be
carried out for each MP3EI project to ensure that that programs are developed to either protect
local communities or ease their necessary transition.
2.4 MP3EI Impacts and the Economic Value of Natural Resources

An estimate of the potential MP3EI risk to Indonesia’s natural resources was undertaken to
provide a general illustration of costs typical excluded in economic planning. Based on estimates
of MP3EI impacts on habitats of various types across the six Economic Corridors (EC), the
value of Indonesia’s national ‘natural capital at risk’ was calculated and is summarized in the
following table.
Table 2.5 Estimate of the value of National ‘natural capital at risk’
Value of Natural Capital at EC as % of MP3EI

BY ECONOMIC CORRIDOR
Risk ($m) Total
BALI-NT 10,149 2.16%
JAVA 10,757 2.29%
KALIMANTAN 185,503 39.46%
PAPUA-MALUKU 82,527 17.56%
SULAWESI 28,160 5.99%
SUMATRA 152,970 32.54%
INDONESIA/ALL MP3EI 470,067 100%
Value of Natural Capital at Habitat as % of MP3EI

BY TYPE OF HABITAT
Risk ($m) Total
Combined Conservation Area (CCA) 34,824 7.41%
Coastal Wetlands 220,190 46.84%
Coral Reefs 41,381 8.80%
Inland Wetlands 115,501 24.57%
Marine 336 0.07%
Tropical Forest 57,835 12.30%
ALL BIOMES/CCA 470,067 100%
On this basis, the estimated value of Indonesia’s ‘natural capital at risk’ is likely to be around
$470 billion annually. The analysis suggests that the largest impacts in monetary terms on
natural resources may be in the ECs of Kalimantan, Sumatra, and Papua-Maluku, and that
monetary impacts on coastal and inland wetlands account for some 60% of all impacts. The
interpretation of these results in economic terms is essentially as follows:
• the figure of about $470 billion annually reflects the estimated economic value of natural
resources which may be considered to be ‘at risk’ from the set of MP3EI investments over
the whole 15-year plan period
• the actual level of impact will likely be less than this (unless planned investments are
increased in scale), because not all MP3EI infrastructure, economic and mining projects
will actually result in the loss of all components of TEV (Total Economic Value). It is also
the case that not all projects will start immediately, so – at least in early years – the scale
of impact will be less than that envisaged at full MP3EI implementation
• although a direct comparison is not advised, certain imbalances in sustainability may be

evident in noting the annual value of ‘natural capital at risk’, the estimated MP3EI total
8
investment value of about $340 billion and Indonesia’s annual GDP of about $880 billion
(in 2012).
8
As provided by the MP3EI, p. 49, but this value has not yet counting the value of income generated from new
businesses and created employment.
23
3 Conclusion
The systematic and dedicated MP3EI SEA Policy and Economic Corridor analyses has revealed
that, in its current state, the MP3EI mainly entails intensification of ‘business as usual’
development policy and plans that do not yet properly address the clear environmental and
social issues associated with rapid economic development.
Examples of this were abundant in the MP3EI policy where a range of challenges to align the
MP3EI with national commitments to sustainability are apparent. These policies have been
translated into somewhat unrefined Economic Corridor planning, where planning conflicts or the
combined consequences of MP3EI developments to physicochemical, ecosystems and social
receptor were verified to lead to risks or impacts that cannot be adequately addressed in EIA
(AMDAL) procedures and contradict national planning requirements (e.g. Indonesian SEA
Principles, Article 16 of Law No 32/2009).
Ultimately, in its present state, the MP3EI Policy and Economic Corridor Planning exacerbates
existing environmental problems, leads to very high environmental and socio-economic costs,
and poses a significant challenge for future governments and citizens in Indonesia to correct.
The SEA process, through concerted analyses and stakeholder consultation, has developed
comprehensive policy and planning specific recommendations within a mitigation framework
(see section 1.3) that cumulatively address the identified environmental and social challenges.
These, however, cover various levels of governance, planning and project execution and are not
a so-called ‘easy fix’. Their inclusion in the MP3EI or the upcoming RPJMN would be the first
positive step in a roadmap of actions that require cooperation and continued dedication on many
fronts.
In recognising the problems and committing to the mitigation actions, however, it is believed that
the MP3EI Policy and Economic Corridor Planning has an opportunity to be transformed into a
strong mechanism that equally accelerates the necessary investment, policies, planning and
regulations needed to deal with the impacts associated with rapid economic growth.
The technical contributions in this document were prepared by the consortium of DHI Water and
Environment (S) Pte. Ltd. and Integra Consulting Ltd. under the Environmental Support Program 3
(www.esp3.org). This initiative is part of the Indonesia - Denmark ESP3 development grant
cooperation.
This technical contributions in this document have been prepared under the DHI Business Management
System certified by DNV to comply with
Occupational Health and
Quality Management Environmental Management
Safety Management
ISO 9001 ISO 14001 OHSAS 18001
DHI Water & Environment (S) Pte Ltd• 1 Cleantech Loop • #03-05 CleanTech One • Singapore• 637141
Telephone: +65 67776330 • Telefax: +65 67773537 • dhi@dhi.com.sg•

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STRATEGIC ENVIRONMENTAL ASSESSMENT

MASTERPLAN FOR ACCELERATION AND EXPANSION OF

MINISTRY OF FOREIGN AFFAIRS OF DENMARK

Vice Minister of National Development Planning /

Lukita Dinarsyah Tuwo

2 Overview of the Main MP3EI SEA Findings .............................................................. 3

1.1 Project Background

• MP3EI Policy SEA provided a general framework by:

Discussion of specific recommendations is provided in Section 2.2 and the summary of

2 Overview of the Main MP3EI SEA Findings

2.1 Policy Related Risks

2.1.2 Air and Climate

MP3EI implementation of industrial developments and expected associated transport intensity

2.1.3 Land and Soil

This apparent misalignment in sub-strategies of MP3EI is weakness in the MP3EI, as it may

2.1.5 Coastal Areas

Furthermore, development of transport infrastructure (e.g. including agriculture and forestry-

2.1.7 Human Health

2.1.8 Livelihood and Local Communities

2.1.9 Environmental Management & Horizontal Key Activities

• Since enforcement of environmental regulations (emission standards) for industries is not

Energy and Waste

Industry and Mining

2.2 MP3EI Policy Recommendations

2.2.1 Key Recommendations for Adjusting Policy

Preventing or minimizing forest and peat land conversions

Reducing reliance on non-renewable natural resources

Considering the Climate Change and its likely consequences

• Since Indonesia may be significantly affected by the consequences of the changing

General principles of environmental management

• Protected or ecologically sensitive areas and biodiversity hotspots should be primarily

2.2.2 Recommendations for Enhancing the Institutional Context

• Development, adoption and application of downstream MP3EI “planning guidelines”

• Ensuring the environmental compliance of the MP3EI projects

• Establishing web-based EIA/SEA Information System (optimally within the KP3EI

• Strengthening implementation of “moratorium” on primary natural forest and peatland

• Allocating appropriate funds and human resources to protected areas management to

2.2.3 Recommendations for Specific Categories of Economic Activities

Agriculture and Forestry

• Introduce permitting regulations that require tourism developments to prove sufficient

2.3 Main Findings and Recommendations for MP3EI Economic

Recommended Mitigation Measures

Primary/Secondary Forest 1,514 850 56

Recommended Mitigation Measures

Forests 4,559,561 728,000 16

Recommended Mitigation Measures

In relation to deforestation / land conversion, measures aim at correcting planning conflicts in

Pollutant Emission from MP3EI (kg/year)

Recommended Mitigation Measures

2.3.5 Bali – Nusa Tenggara Economic Corridor

Recommended Mitigation Measures

2.3.6 Papua – Maluku Economic Corridor

Total Forest 2,639,239 558,400 21

Recommended Mitigation Measures

2.4 MP3EI Impacts and the Economic Value of Natural Resources

Table 2.5 Estimate of the value of National ‘natural capital at risk’

Value of Natural Capital at EC as % of MP3EI

Value of Natural Capital at Habitat as % of MP3EI

• although a direct comparison is not advised, certain imbalances in sustainability may be

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