Urban infrastructure and poverty alleviation in Indonesia

This study addresses the question of how to ensure that the new project meets the legal requirement that HG funds benefit households below the national median income. The study suggests, first of all, that while the IUIDP has made major contributions to improved living conditions for lower-income families in urban centers, it can and should do more in this regard. Recommendations are to: (1) require an explicit focus on poverty alleviation, and the participation of the poor in preparing infrastructure plans; (2) eliminate constraints on infrastructural investments by reducing procedural bottlenecks, promoting private sector participation in infrastructure provision, and upgrading local governments" capacities to generate and spend revenues; and (3) promote new land development on the urban fringe. Secondly, the study finds that planned HG expenditures will benefit the poor, but suggests some adjustments. USAID should (1) support further data analyses to better understand how infrastructure serves different income groups and how the benefits of new infrastructure are distributed, and (2) consider using HG funds to support environmental infrastructure for low-income beneficiaries of urban renewal and area development projects.