Problem overview:

     Policies and measures: Rapid industrialization activities to recover the country's economic crisis is imposing a strain on the environment. The establishment of the IEPC-project will tackle industrial pollution problem through the government's provision of investment loans to SMEs for efficient production and cleaner technology.

     Stakeholders participation: The IEPC-project is a pilot project established by the Indonesian government and supported by the German government. Bapedal is administrating the technical implementation of this project in cooperation with the Ministry of Finance (MoF) and four Regional Development Banks (RDB). Other stakeholders are SMI, environmental consultants, and local government administration units.

Background in summary:

     The IEPC Project: is an environmental revolving fund, which provides investment loans to SMI. The grant finances SMI investment loans to combat industrial pollution and investments in efficient and cleaner production technologies. The project is one of several GOI incentives to industrial enterprises aimed at abating industrial pollution.

     IEPC loans finance three main types of environmental investments:

• Investments in production facilities
  
  
• Investments in machinery and equipment
  
  
• Investments in waste treatment plants and equipment
  
  

     Stakeholders involved: Bapedal has assigned a Technical Assistant Unit, presently with four banking consultants and two technical consultants to the IEPC project. The consultants work closely with Bapedal and MoF counterpart staff. The total grant of DM 11.7 million will be withdrawn from the German State Bank, Kreditanstalt fur Wiederaufbau (KfW) by the RDB in accordance with the regulations for the IEPC project.

     The main tasks of the TAU:

• to provide information on project investment loans
  
  
• to identify and appraise eligible SMI project proposals in cooperation with RDB staff and Bapedal counterparts
  
  
• to undertake technical evaluations of the environmental impacts
  
  
• to assist the SMI owners in selecting appropriate, cost efficient technical solutions
  
  
• to monitor implemented projects
  
  
• Etc.
  
  

Peer Review Committee Good practice rating: (1 for the best, 5 for the lowest score)
Sustainability		Efficiency
2	Improvement in either the environment of economic condition with no harm to the other.	2	Cost efficient.
2	Sustainable over time (not one-off)	Process
Adaptability		-	Participation of the community
2	Location adaptability (can the project be done in other places?)	2	Participation of resource owners/users
2	Socio-cultural adaptability.	2	Partnerships between various actors (Governments, NGO, Academia, Private)
3	Level of development adaptability.	2	Degree of coordination and cooperation between government departments.
2	Style of government adaptability.	2	Ability to attract political interest/support
3	Degree of decentralization adaptability.	2	Procedures for feedback and review.
Comments on this example: Environmental process factors Investments financed with IEPC loans must lead to significant reduction in pollution and industrial waste from the financed SMI Production equipment/technologies must be appropriate and in line with the technical ability and capacity of the SMI The technical solutions must have a replication effect, i.e., can be used by similar SMI in other locations The IEPC project must allow for increased cooperation and coordination between all stakeholders Sustainability of the project:      Sustainable over time (not one-off): Although there has been some doubts over projects that are externally financed by international donors that when financial assistance is withdrawn, the project comes to and end. However, with the IEPC project, the financial assistance will be used to develop infrastructure for cleaner technology. Meaning that the structure is there, even though the financial assistance is gone making this project a very sustainable initiative over time. Adaptability of the project to other situations:      This type of project should be adaptable to SMEs in other countries of the region as well. As long as the country's government is determined to provide financial/technical assistance to SMEs over a period of time and if there were international donors available to provide financial/technical assistances on top of what the government could offer, the project should hopefully be successful. Process of decision making and implementation:   Cost efficiency: IEPC loans must be granted to viable SMI in order to minimize the number of non-performing IEPC loans The efficiency/cleaner production components of the IEPC loans must lead to increased earnings and better product quality It must be possible to measure achieved pollution reduction and resources savings resulting from each IEPC loan