Full Report - Feasibility Study KSCS K-Exim

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Table 9.16> Benefits from the reduction in healthcare expenditure Year Projected service Reduction in healthcare Year Projected service Reduction in healthcare population (s) expenditure population (s) expenditure (thousand USD/y) (thousand USD/y) KSCS KSCS + KSCS KSCS + Serpong Serpong WTP WTP 2023 1,125,265 8,399 14,411 2049 3,066,805 22,891 39,277 2024 1,687,897 12,599 21,617 2050 3,066,805 22,891 39,277 2025 2,169,093 16,191 27,780 2051 3,066,805 22,891 39,277 2026 2,169,093 16,191 27,780 2052 3,066,805 22,891 39,277 2027 2,169,093 16,191 27,780 2053 3,066,805 22,891 39,277 2028 2,169,093 16,191 27,780 2054 3,066,805 22,891 39,277 2029 2,169,093 16,191 27,780 2055 3,066,805 22,891 39,277 2030 2,169,093 16,191 27,780 2056 3,066,805 22,891 39,277 2031 2,608,871 19,473 33,412 2057 3,066,805 22,891 39,277 2032 2,828,760 21,114 36,228 2058 3,066,805 22,891 39,277 2033 3,004,672 22,427 38,481 2059 3,066,805 22,891 39,277 2034 3,004,672 22,427 38,481 2060 3,066,805 22,891 39,277 2035 3,035,109 22,655 38,871 2061 3,066,805 22,891 39,277 2036 3,035,109 22,655 38,871 2062 3,066,805 22,891 39,277 2037 3,035,109 22,655 38,871 2063 3,066,805 22,891 39,277 2038 3,035,109 22,655 38,871 2064 3,066,805 22,891 39,277 2039 3,035,109 22,655 38,871 2065 3,066,805 22,891 39,277 3,066,805 22,891 39,277 2040 3,066,8051) 22,891 39,277 2066 2041 3,066,805 22,891 39,277 2067 3,066,805 22,891 39,277 2042 3,066,805 22,891 39,277 2068 3,066,805 22,891 39,277 2043 3,066,805 22,891 39,277 2069 3,066,805 22,891 39,277 2044 3,066,805 22,891 39,277 2070 3,066,805 22,891 39,277 2045 3,066,805 22,891 39,277 2071 3,066,805 22,891 39,277 2046 3,066,805 22,891 39,277 2078 3,066,805 22,891 39,277 2047 3,066,805 22,891 39,277 Total 1,072,267 1,839,787 2048 3,066,805 22,891 39,277 Note) Service population after 2040: 100% operation of the Serpong WTP (Q=500,000m3/day)  no change in the service population 9.4.6 Time-saving benefits from the smooth supply of water If domestic water is not properly supplied through waterworks facility, people rely on available sources of water in the neighborhood. And it is mostly women and children who manually draw water from a river or well. Benefits are estimated on the assumption of a household of 5 persons, 1 hour/day of water supply, 0.5 USD/hour of benefit, and 20 working days, by referring to the similar feasibility study for the ECDF project implement in Bandaju, Bangladesh. If domestic water is supplied by the water supply system constructed under this project, time spent 9-12

Chapter 9. Economic and financial feasibility analysis on drawing water can be positively turned into resources to create added value (i.e. employment). Benefits from time-saving enabled by the smooth supply of water (via the conveyance system) are estimated at 2,009,401 thousand USD over the period of 50 years, and the total benefits from the conveyance system and the Serpong WTP combined are estimated at 3,447,715 thousand USD as shown as in <Table 9.17>. <Table 9.17> Time saving benefits from the smooth supply of water Projected service Time saving benefits Projected service Time saving benefits population (s) (thousand USD/y) population (s) (thousand USD/y) Year KSCS + Year KSCS + Serpong Serpong KSCS KSCS WTP WTP 2023 1,125,265 15,740 27,006 2049 3,066,805 42,898 73,603 2024 1,687,897 23,610 40,510 2050 3,066,805 42,898 73,603 2025 2,169,093 30,341 52,058 2051 3,066,805 42,898 73,603 2026 2,169,093 30,341 52,058 2052 3,066,805 42,898 73,603 2027 2,169,093 30,341 52,058 2053 3,066,805 42,898 73,603 2028 2,169,093 30,341 52,058 2054 3,066,805 42,898 73,603 2029 2,169,093 30,341 52,058 2055 3,066,805 42,898 73,603 2030 2,169,093 30,341 52,058 2056 3,066,805 42,898 73,603 2031 2,608,871 36,492 62,613 2057 3,066,805 42,898 73,603 2032 2,828,760 39,568 67,890 2058 3,066,805 42,898 73,603 2033 3,004,672 42,028 72,112 2059 3,066,805 42,898 73,603 2034 3,004,672 42,028 72,112 2060 3,066,805 42,898 73,603 2035 3,035,109 42,454 72,843 2061 3,066,805 42,898 73,603 2036 3,035,109 42,454 72,843 2062 3,066,805 42,898 73,603 2037 3,035,109 42,454 72,843 2063 3,066,805 42,898 73,603 2038 3,035,109 42,454 72,843 2064 3,066,805 42,898 73,603 2039 3,035,109 42,454 72,843 2065 3,066,805 42,898 73,603 2040 3,066,805 1) 42,898 73,603 2066 3,066,805 42,898 73,603 2041 3,066,805 42,898 73,603 2067 3,066,805 42,898 73,603 2042 3,066,805 42,898 73,603 2068 3,066,805 42,898 73,603 2043 3,066,805 42,898 73,603 2069 3,066,805 42,898 73,603 2044 3,066,805 42,898 73,603 2070 3,066,805 42,898 73,603 2045 3,066,805 42,898 73,603 2071 3,066,805 42,898 73,603 2046 3,066,805 42,898 73,603 2072 3,066,805 42,898 73,603 2047 3,066,805 42,898 73,603 Total 2,009,401 3,447,715 2048 3,066,805 42,898 73,603 Note 1) Service population after 2040: 100% operation of the Serpong WTP (Q=500,000m3/day)  no change in the service population Note 2) benefits are estimated on the assumption of a household of 5 persons, 2 hours/day of water supply, and 0.5 USD/hour of benefit 9-13

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia 9.4.7 Benefits from the reduction in infant mortality Water supply projects secure a supply of clean water, thereby greatly improving public health. The improved public health, in turn, contributes to reducing the infant mortality, so indirect benefits form lower infant mortality are estimated. According to the World Bank, the number of infant deaths for every thousand live birth in 2016 was 22.2. The number of infants in Indonesia is 4,952,748, which accounts for 1.9 percent of the total population of 261,115,456. On the condition that the infant mortality is declined at the annual rate of 2 percent, surviving children are economically active for 38 years (aged between 18 and 55), and the monthly average wage is 360.4USD (source: KOTRA), benefits from the reduction in the infant mortality led by the conveyance system are estimated at 77,842 thousand USD over the period of 50 years, and the total benefits from the conveyance system and the Serpong WTP combined are estimated at 133,560 thousand USD, as shown in <Table 9.18>. <Table 9.18> Benefits from the reduction in infant mortality Benefits Benefits Projected Reduction (thousand USD) Projected Reduction (thousand USD) service in infant service ininfant Year population mortality KSCS + Year population mortality KSCS + (s) (s) KSCS Serpong (s) (s) KSCS Serpong WTP WTP 2023 1,125,265 427 - - 2049 3,066,805 1,163 2,405 4,128 2024 1,687,897 640 - - 2050 3,066,805 1,163 2,556 4,385 2025 2,169,093 823 - - 2051 3,066,805 1,163 2,556 4,385 2026 2,169,093 823 - - 2052 3,066,805 1,163 2,582 4,429 2027 2,169,093 823 - - 2053 3,066,805 1,163 2,582 4,429 2028 2,169,093 823 - - 2054 3,066,805 1,163 2,582 4,429 2029 2,169,093 823 - - 2055 3,066,805 1,163 2,582 4,429 2030 2,169,093 823 - - 2056 3,066,805 1,163 2,582 4,429 2031 2,608,871 990 - - 2057 3,066,805 1,163 2,608 4,476 2032 2,828,760 1,073 - - 2058 3,066,805 1,163 2,608 4,476 2033 3,004,672 1,140 - - 2059 3,066,805 1,163 2,608 4,476 2034 3,004,672 1,140 - - 2060 3,066,805 1,163 2,608 4,476 2035 3,035,109 1,151 - - 2061 3,066,805 1,163 2,608 4,476 2036 3,035,109 1,151 - - 2062 3,066,805 1,163 2,608 4,476 2037 3,035,109 1,151 - - 2063 3,066,805 1,163 2,608 4,476 2038 3,035,109 1,151 - - 2064 3,066,805 1,163 2,608 4,476 2039 3,035,109 1,151 - - 2065 3,066,805 1,163 2,608 4,476 2040 3,066,805 1) 1,163 957 1,642 2066 3,066,805 1,163 2,608 4,476 2041 3,066,805 1,163 1,436 2,463 2067 3,066,805 1,163 2,608 4,476 2042 3,066,805 1,163 1,845 3,166 2068 3,066,805 1,163 2,608 4,476 2043 3,066,805 1,163 1,845 3,166 2069 3,066,805 1,163 2,608 4,476 9-14

Chapter 9. Economic and financial feasibility analysis Benefits Benefits Projected Reduction (thousand USD) Projected Reduction (thousand USD) service in infant service ininfant Year population mortality KSCS + Year population mortality KSCS + (s) (s) KSCS Serpong (s) (s) KSCS Serpong WTP WTP 2044 3,066,805 1,163 1,845 3,166 2070 3,066,805 1,163 2,608 4,476 2045 3,066,805 1,163 1,845 3,166 2071 3,066,805 1,163 2,608 4,476 2046 3,066,805 1,163 1,845 3,166 2072 3,066,805 1,163 2,608 4,476 2047 3,066,805 1,163 1,845 3,166 Total 77,842 133,560 2048 3,066,805 1,163 2,219 3,807 Note 1) Service population after 2040: 100% operation of the Serpong WTP (Q=500,000m3/day)  no change in the service population 9.4.8 Annual benefits estimation Annual benefits estimates are aggregated as shown in <Table 9.19>. <Table 9.19> Annual benefits estimation (Unit: thousand USD) KSCS KSCS + Serpong WTP Year Total Reduction Time Reduction Total Reduction Time Reduction in saving in in infant in saving in in infant 2023 mortality mortality 2024 healthcare water healthcare water 2025 expenditure supply expenditure supply 2026 2027 24,139 8,399 15,740 - 41,417 14,411 27,006 - 2028 36,209 12,599 23,610 - 62,127 21,617 40,510 - 2029 46,531 16,191 30,341 - 79,838 27,780 52,058 - 2030 46,531 16,191 30,341 - 79,838 27,780 52,058 - 2031 46,531 16,191 30,341 - 79,838 27,780 52,058 - 2032 46,531 16,191 30,341 - 79,838 27,780 52,058 - 2033 46,531 16,191 30,341 - 79,838 27,780 52,058 - 2034 46,531 16,191 30,341 - 79,838 27,780 52,058 - 2035 55,965 19,463 36,492 - 96,025 33,412 62,613 - 2036 60,682 21,114 39,568 - 104,118 36,228 67,890 - 2037 64,456 22,427 42,028 - 110,593 38,481 72,112 - 2038 64,456 22,427 42,028 - 110,593 38,481 72,112 - 2039 65,109 22,655 42,454 - 111,714 38,871 72,843 - 2040 65,109 22,655 42,454 - 111,714 38,871 72,843 - 2041 65,109 22,655 42,454 - 111,714 38,871 72,843 - 65,109 22,655 42,454 - 111,714 38,871 72,843 - 65,109 22,655 42,454 - 111,714 38,871 72,843 - 66,746 22,891 42,898 957 114,522 39,277 73,603 1,642 67,224 22,891 42,898 1,436 115,343 39,277 73,603 2,463 9-15

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia KSCS KSCS + Serpong WTP Reduction Time Reduction Reduction Time Reduction Year Total in saving in in infant Total in saving in in infant healthcare water mortality healthcare water mortality expenditure supply expenditure supply 2042 67,634 22,891 42,898 1,845 116,046 39,277 73,603 3,166 2043 67,634 22,891 42,898 1,845 116,046 39,277 73,603 3,166 2044 67,634 22,891 42,898 1,845 116,046 39,277 73,603 3,166 2045 67,634 22,891 42,898 1,845 116,046 39,277 73,603 3,166 2046 67,634 22,891 42,898 1,845 116,046 39,277 73,603 3,166 2047 67,634 22,891 42,898 1,845 116,046 39,277 73,603 3,166 2048 68,008 22,891 42,898 2,219 116,687 39,277 73,603 3,807 2049 68,195 22,891 42,898 2,406 117,008 39,277 73,603 4,128 2050 68,344 22,891 42,898 2,556 117,265 39,277 73,603 4,385 2051 68,344 22,891 42,898 2,556 117,265 39,277 73,603 4,385 2052 68,370 22,891 42,898 2,582 117,309 39,277 73,603 4,429 2053 68,370 22,891 42,898 2,582 117,309 39,277 73,603 4,429 2054 68,370 22,891 42,898 2,582 117,309 39,277 73,603 4,429 2055 68,370 22,891 42,898 2,582 117,309 39,277 73,603 4,429 2056 68,370 22,891 42,898 2,582 117,309 39,277 73,603 4,429 2057 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2058 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2059 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2060 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2061 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2062 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2063 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2064 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2065 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2066 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2067 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2068 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2069 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2070 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2071 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 2072 68,397 22,891 42,898 2,608 117,356 39,277 73,603 4,476 Total 3,159,510 1,072,267 2,009,401 77,842 5,421,063 1,839,787 3,447,715 133,560 9-16

Chapter 9. Economic and financial feasibility analysis 9.5 Economic feasibility analysis Costs and benefits of the construction and operation of the Karian – Serpong conveyance system are estimated to assess the economic feasibility of this project. 9.5.1 Overview The Benefit/Cost analysis is conducted by measuring benefits and costs expressed in monetary terms. Costs refer to both investment cost and operation cost of the facility and benefits include revenues from raw water fees, benefits from the reduced healthcare expenditure, time-saving benefits, and benefits from the declined infant mortality. A discount rate of 9 percent is applied to convert these values into present values. 9.5.2 Benefit/Cost analysis The result of Benefit/Cost analysis of this project is shown as in <Table 9.20>. <Table 9.20> Benefit/Cost analysis (KSCS) (Unit: thousand USD) Cost Benefit Present value Year Investment Operation Health care Time Infant cost cost Sub-total expenditure mortality Subtotal Cost Benefit NPV saved saved reduced 2019 27,929 - 27,393 - - - - 25,632 - -25,632 2020 71,148 - 71,148 - - - - 59,884 - -59,884 2021 91,047 - 91,047 - - - - 70,305 - -70,305 2022 69,542 - 69,542 - - - - 49,265 - -49,265 2023 1,666 6,001 7,667 8,399 15,740 - 24,139 4,983 15,689 10,706 2024 6,176 6,176 12,599 23,610 - 36,209 3,683 21,590 17,907 2025 - 6,317 6,317 16,191 30,341 - 46,531 3,456 25,454 21,999 2026 - 6,317 6,317 16,191 30,341 - 46,531 3,170 23,352 20,182 2027 - 6,317 6,317 16,191 30,341 - 46,531 2,909 21,424 18,516 2028 - 6,317 6,317 16,191 30,341 - 46,531 2,668 19,655 16,987 2029 - 6,317 6,317 16,191 30,341 - 46,531 2,448 18,032 15,584 2030 - 6,317 23,945 16,191 30,341 - 46,531 8,514 16,543 8,030 2031 17,629 10,512 76,825 19,463 36,492 - 55,965 25,059 18,255 -6,804 2032 66,314 10,568 97,547 21,114 39,568 - 60,682 29,191 18,159 -11,032 2033 86,979 10,612 76,947 22,427 42,028 - 64,456 21,125 17,696 -3,429 2034 66,335 10,612 12,100 22,427 42,028 - 64,456 3,048 16,234 13,187 2035 1,488 10,612 10,612 22,655 42,454 - 65,109 2,452 15,045 12,593 2036 - 10,612 10,612 22,655 42,454 - 65,109 2,250 13,803 11,553 2037 - 10,612 10,612 22,655 42,454 - 65,109 2,064 12,663 10,599 2038 - 22,295 22,295 22,655 42,454 - 65,109 3,978 11,617 7,639 2039 - 10,612 10,612 22,655 42,454 - 65,109 1,737 10,658 8,921 2040 - 10,612 10,612 22,891 42,898 957 66,746 1,594 10,024 8,430 - 9-17

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia Cost Benefit Present value Cost Benefit NPV Year Investment Operation Sub-total Health care Time Infant Subtotal cost cost expenditure saved mortality reduced saved 2041 - 10,612 10,612 22,891 42,898 1,436 67,224 1,462 9,262 7,800 2042 - 10,612 10,612 22,891 42,898 1,845 67,634 1,341 8,549 7,208 2043 - 10,612 10,612 22,891 42,898 1,845 67,634 1,231 7,843 6,613 2044 - 10,612 10,612 22,891 42,898 1,845 67,634 1,129 7,196 6,067 2045 - 10,612 10,612 22,891 42,898 1,845 67,634 1,036 6,602 5,566 2046 - 10,612 10,612 22,891 42,898 1,845 67,634 6,056 5,106 2047 - 10,612 10,612 22,891 42,898 1,845 67,634 950 5,556 4,685 2048 - 10,612 10,612 22,891 42,898 2,219 68,008 872 5,126 4,326 2049 - 18,223 18,223 22,891 42,898 2,406 68,195 800 4,716 3,455 2050 - 10,612 10,612 22,891 42,898 2,556 68,344 1,260 4,336 3,662 2051 - 10,612 10,612 22,891 42,898 2,556 68,344 673 3,978 3,360 2052 - 10,612 10,612 22,891 42,898 2,582 68,370 618 3,651 3,084 2053 - 22,295 22,295 22,891 42,898 2,582 68,370 567 3,349 2,257 2054 - 10,612 10,612 22,891 42,898 2,582 68,370 1,092 3,073 2,596 2055 - 10,612 10,612 22,891 42,898 2,582 68,370 477 2,819 2,381 2056 - 10,612 10,612 22,891 42,898 2,582 68,370 438 2,586 2,185 2057 - 10,612 10,612 22,891 42,898 2,608 68,397 401 2,374 2,005 2058 - 10,612 10,612 22,891 42,898 2,608 68,397 368 2,178 1,840 2059 - 10,612 10,612 22,891 42,898 2,608 68,397 338 1,998 1,688 2060 - 10,612 10,612 22,891 42,898 2,608 68,397 310 1,833 1,548 2061 - 10,612 10,612 22,891 42,898 2,608 68,397 284 1,682 1,421 2062 - 10,612 10,612 22,891 42,898 2,608 68,397 261 1,543 1,303 2063 - 10,612 10,612 22,891 42,898 2,608 68,397 239 1,415 1,196 2064 - 18,223 18,223 22,891 42,898 2,608 68,397 220 1,298 2065 - 10,612 10,612 22,891 42,898 2,608 68,397 346 1,191 952 2066 - 10,612 10,612 22,891 42,898 2,608 68,397 185 1,093 1,006 2067 - 10,612 10,612 22,891 42,898 2,608 68,397 170 1,003 2068 - 22,295 22,295 22,891 42,898 2,608 68,397 156 923 2069 - 10,612 10,612 22,891 42,898 2,608 68,397 300 920 847 2070 - 10,612 10,612 22,891 42,898 2,608 68,397 131 844 620 2071 - 10,612 10,612 22,891 42,898 2,608 68,397 120 774 713 2072 - 10,612 10,612 22,891 42,898 2,608 68,397 110 710 654 Total 500,087 545,919 1,046,007 1,072,267 2,009,401 77,842 3,159,510 101 652 600 347,399 412,098 551 64,699 9.5.3 Sensitivity analysis In case that the discount rate applied in the economic analysis changes, NPV and B/C ratio also change as shown in the table below. 9-18

Chapter 9. Economic and financial feasibility analysis <Table 9.21> B/C ratio by discount rate (KSCS) Discount rate Present value of Present value of NPV B/C Ratio cost benefit (thousand USD) 6% 1.57 7% (thousand USD) (thousand USD) 1.52 8% 1.39 9% 447,573 702,596 255,023 1.19 10% 408,633 621,348 212,714 1.09 11% 377,201 525,224 148,023 1.01 12% 0.93 347,399 412,098 64,699 323,712 352,882 29,170 303,251 305,001 1,750 285,398 265,807 -19,592 When the construction cost, operating cost, or benefits applied in the economic analysis changes, NPV, B/C ratio, and IRR also change as shown in the table below. <Table 9.22> Sensitivity analysis by B/C change (KSCS) Case Sensitivity NPV B/C Ratio IRR(%) (thousand Base 11.07 Case 1 USD) 9.89 Case 2 8.87 Case 3 - 64,699 1.19 9.77 Case 4 8.40 Case 5 10% increase in costs 29,959 1.08 8.66 20% increase in costs (4,781) 0.99 10% decrease in benefits 23,489 1.07 20% decrease in benefits (17,721) 0.95 Combination of case 1 and 3 (11,251) 0.97 (4) Analysis result To summarize the results of the economic feasibility analysis on the construction and operation of the Karain – Serpong conveyance system, the net present value of benefits is 64,699 thousand USD, the benefit/cost ratio is 1.19, and IRR is 11.07 percent. The discount rate that makes NPV zero, (that is, IRR at which the present value of benefit is equals to the present value of cost, or B/C ratio becomes one) is 11.07 percent, greater than the applied discount rate of 9 percent. So, this KSCS project is confirmed economically feasible. 9.5.4. Economic feasibility analysis of KSCS + Serpong WTP Based on benefits and costs expected from the construction and operation of the Karian – Serpong Conveyance System + the Serpong WTP, the economic feasibility for KSCS + Serpong WTP is analyzed. 9-19

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia (1) Overview Same criteria are applied as in the economic feasibility analysis of the KSCS project. (2) Benefit-Cost analysis (B/C) The B/C analysis result is described as in <Table 9.23>. <Table 9.23> Benefit/Cost analysis (KSCS + Serpong WTP) Cost Benefit Present value Year Investment Operation Subtotal Health care Time Infant Sub- Cost Benefit NPV cost cost expenditure saved mortality total reduced saved 2019 38,811 - 38,811 - - - - 35,606 - -35,606 2020 92,015 - 92,015 - - - - 77,447 - -77,447 2021 131,909 - 131,909 - - - - 101,858 - -101,858 2022 100,010 - 100,010 - - - - 70,850 - -70,850 2023 1,666 11,363 13,029 14,411 27,006 - 41,417 8,468 26,919 18,450 2024 - 12,432 12,432 21,617 40,510 - 62,127 7,413 37,044 29,613 2025 - 13,287 13,287 27,780 52,058 - 79,838 7,268 43,674 36,406 2026 - 13,287 13,287 27,780 52,058 - 79,838 6,668 40,068 33,400 2027 - 13,287 13,287 27,780 52,058 - 79,838 6,118 36,760 30,642 2028 - 13,287 13,287 27,780 52,058 - 79,838 5,613 33,724 28,112 2029 - 13,287 13,287 27,780 52,058 - 79,838 5,149 30,940 25,791 2030 17,629 13,287 30,916 27,780 52,058 - 79,838 10,992 28,385 17,394 2031 74,438 21,961 96,399 33,412 62,613 - 96,025 31,443 31,321 -122 2032 95,041 22,301 117,342 36,228 67,890 - 104,118 35,114 31,157 -3,957 2033 76,974 22,573 99,547 38,481 72,112 - 110,593 27,329 30,362 3,033 2034 1,488 22,573 24,061 38,481 72,112 - 110,593 6,060 27,855 21,795 2035 - 22,573 22,573 38,871 72,843 - 111,714 5,216 25,814 20,598 2036 - 22,573 22,573 38,871 72,843 - 111,714 4,785 23,683 18,897 2037 - 37,835 37,835 38,871 72,843 - 111,714 7,359 21,727 14,369 2038 - 34,256 34,256 38,871 72,843 - 111,714 6,112 19,933 13,821 2039 - 22,573 22,573 38,871 72,843 - 111,714 3,695 18,287 14,592 2040 - 22,573 22,573 39,277 73,603 1,642 114,522 3,390 17,199 13,809 2041 - 22,573 22,573 39,277 73,603 2,463 115,343 3,110 15,892 12,782 2042 - 22,573 22,573 39,277 73,603 3,166 116,046 2,853 14,669 11,815 2043 - 22,573 22,573 39,277 73,603 3,166 116,046 2,618 13,458 10,840 2044 - 22,573 22,573 39,277 73,603 3,166 116,046 2,402 12,346 9,945 2045 - 22,573 22,573 39,277 73,603 3,166 116,046 2,203 11,327 9,124 2046 - 22,573 22,573 39,277 73,603 3,166 116,046 2,021 10,392 8,370 2047 - 31,567 31,567 39,277 73,603 3,166 116,046 2,593 9,534 6,940 2048 - 22,573 22,573 39,277 73,603 3,807 116,687 1,701 8,795 7,093 2049 - 30,184 30,184 39,277 73,603 4,128 117,008 2,087 8,091 6,004 2050 - 22,573 22,573 39,277 73,603 4,385 117,265 1,432 7,439 6,007 2051 - 22,573 22,573 39,277 73,603 4,385 117,265 1,314 6,825 5,511 9-20

Chapter 9. Economic and financial feasibility analysis Cost Benefit Present value Cost Benefit NPV Year Investment Operation Subtotal Health care Time Infant Sub- cost cost expenditure saved mortality total reduced saved 117,309 117,309 2052 - 37,835 37,835 39,277 73,603 4,429 117,309 2,020 6,264 4,244 117,309 1,678 5,747 4,068 2053 - 34,256 34,256 39,277 73,603 4,429 117,309 1,014 5,272 4,258 117,356 4,837 3,906 2054 - 22,573 22,573 39,277 73,603 4,429 117,356 931 4,437 3,584 117,356 854 4,093 3,289 2055 - 22,573 22,573 39,277 73,603 4,429 117,356 783 3,736 3,018 117,356 719 3,428 2,768 2056 - 22,573 22,573 39,277 73,603 4,429 117,356 659 3,145 2,540 117,356 605 2,885 2,330 2057 - 22,573 22,573 39,277 73,603 4,476 117,356 555 2,647 1,935 117,356 712 2,428 1,961 2058 - 22,573 22,573 39,277 73,603 4,476 117,356 467 2,228 1,655 117,356 573 2,044 1,651 2059 - 22,573 22,573 39,277 73,603 4,476 117,356 393 1,875 1,514 117,356 361 1,720 1,166 2060 - 22,573 22,573 39,277 73,603 4,476 117,356 555 1,578 1,118 117,356 461 1,448 1,169 2061 - 22,573 22,573 39,277 73,603 4,476 117,356 279 1,328 1,073 5,421,063 256 1,219 2062 - 31,567 31,567 39,277 73,603 4,476 234 1,118 984 215 707,075 903 2063 - 22,573 22,573 39,277 73,603 4,476 512,613 194,461 2064 - 30,184 30,184 39,277 73,603 4,476 2065 - 22,573 22,573 39,277 73,603 4,476 2066 - 22,573 22,573 39,277 73,603 4,476 2067 - 37,835 37,835 39,277 73,603 4,476 2068 - 34,256 34,256 39,277 73,603 4,476 2069 - 22,573 22,573 39,277 73,603 4,476 2070 - 22,573 22,573 39,277 73,603 4,476 2071 - 22,573 22,573 39,277 73,603 4,476 2072 - 22,573 22,573 39,277 73,603 4,476 Total 629,982 1,164,749 1,794,731 1,839,787 3,447,715 133,560 (3) Sensitivity analysis In case that the discount rate applied in the economic analysis changes, NPV and B/C ratio also change as shown in the table below. <Table 9.24> B/C ratio by discount rate (KSCS + Serpong WTP) Discount rate Present value of Present value of NPV B/C Ratio cost benefit (thousand USD) (thousand USD) (thousand USD) 6% 679,772 1,205,509 525,736 1.77 7% 616,724 1,066,104 449,380 1.73 8% 563,761 901,175 337,413 1.60 9% 512,613 707,075 194,461 1.38 10% 474,516 605,472 130,956 1.28 11% 442,075 523,318 81,243 1.18 12% 414,127 456,070 41,942 1.10 9-21

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia When the construction cost, operating cost, or benefits applied in the economic analysis changes, NPV, B/C ratio, and IRR also change as shown in the table below. <Table 9.25> Sensitivity analysis by B/C change (KSCS + Serpong WTP) NPV Case Sensitivity (thousand B/C Ratio IRR(%) USD) Base - 194,461 1.38 13.40% Case 1 10% increase in costs 143,200 1.25 12.02% Case 2 20% increase in costs 91,939 1.15 10.82% Case 3 10% decrease in benefits 123,754 1.24 11.87% Case 4 20% decrease in benefits 53,046 1.10 10.27% Case 5 Combination of case 1 and 3 72,493 1.13 10.57% (4) Analysis result To summarize the results of the economic feasibility analysis on the construction and operation of KSCS + Serpong WTP, the net present value of benefits is 194,461 thousand USD, the benefit/cost ratio is 1.38 and IRR is 13.4 percent. The discount rate that makes NPV zero, (that is, IRR at which the present value of benefit is equals to the present value of cost, or B/C ratio becomes one) is 13.4 percent, greater than the applied discount rate of 9 percent. So, this KSCS + Serpong WTP project is confirmed economically feasible. The investment cost for KSCS including construction as well as maintenance cost for 50 years is estimated 58% of the grand total investment cost including Serpong water treatment project. “Benefit” is distributed in accordance with the share of portion of investment cost to the KSCS project. But the result of economic analysis, B/C ratio for KSCS only is calculated 1.19 and 1.38 including Serpong water treatment plant project which doesn’t show significant difference considering portion of investment cost. The reason is identified that the investment cost for Serpong water treatment plant project is smaller than KSCS at the beginning stage of project but the maintenance cost including chemical & electric cost is much higher than KSCS, but the discount rate is applied to the maintenance cost which highly affects to the “Cost” to Serpong water treatment project. 9.6 Financial feasibility analysis In this project, the EDPF is basically limited to the Karian – Serpong conveyance system (KSCS) project, so the scope of this financial feasibility analysis also needs to be limited to the KSCS project. Nevertheless, the KSCS is not a project that seeks profits and its operating budget will be fully funded by the Indonesian government, therefore we do not conduct the financial feasibility analysis. 9-22

Chapter 10. Social and environmental impact assessment Chapter 10. SOCIAL AND ENVIRONMENTAL IMPACT ASSESSMENT 10.1 Social and environmental legislation and approval procedure in Indonesia 10.1.1 Environmental legislation, standard, and approval procedure (1) Environmental approval procedure in Indonesia: environmental impact assessment Indonesia’s environmental impact assessments are classified into three types – AMDAL, UKL/UPL, and SPPL. ① The AMDAL refers to an overall assessment of the environmental impact, which corresponds to a Category A categorized by ADB. In the AMDAL is the ANDAL, which is an environmental impact assessment on a specific matter of importance, and the RKL/RPL, which is equivalent to the Environmental Management and Monitoring Plan (EMP). ② The UKL/UPL (Environmental Management/monitoring Measure) corresponds to a Category B (IEE), which is usually conducted if environmental management or environmental monitoring measures need to be taken according to relevant legislation. It may be upgraded to an AMDAL level depending on the decision or judgment made by the environmental agency. ③ The SPPL means environmental management policy, corresponding to a category C. For a project that does not require AMDAL or UKL/UPL, only SPPL shall be submitted. <Table 10.1> Environmental impact assessments of ADB and Indonesia ADB’s (or multinational development banks such as Indonesia’s grading and assessment IFC and World Bank) grading and assessment system system for environmental/social impact for environmental/social impact and risk and risk Category A: a project that is highly likely to cause AMDAL: a project that requires an serious damage to the environment, thus requires an AMDAL pursuant to the Indonesian EIA law. Category B: a project that is likely to cause damage to UKL/UPL: a project that requires an the environment but not so much as category A, thus UKL/UPL pursuant to the Indonesian requires an Initial Environmental Examination. law. Category C: a project that is not likely to cause any SPPL: a project that does not require an damage to the environment, thus has no specific AMDAL or UKL/UPL, thus only submits requirements, but reviews the environmental aspects a SPPL, a statement of the environmental in general. management and monitoring capability. Category FI: a project that includes a credit line or equity investment by a financial intermediary, so applies the environmental management system. * Source: Environmental Assessment and Review Framework; Indonesia: Flood Management is Selected River Basins Sector Project. ADB May 2015 10-1

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Figure 10.1> Screening and approval procedure for an environmental project in Indonesia Proposal AMDAL SPPL UKL/UPL Public announcement and UKL/UPL application consultation evaluation KA-ANDAL preparation Administrative screening Administrative screening UKL/UPL screening KA-ANDAL evaluation ANDAL&RKL/RPL preparation ANDAL&RKL/RPL application evaluation Administrative screening ANDAL&RKL/RPL evaluation SKKLH UKL/UPL recommendation Not Environmental approval feasible Public announcement (2) Environmental legislation in Indonesia All projects to be implemented in Indonesia shall abide by the environmental legislation and approval procedure specified in the relevant laws and regulations. <Table 10.2> shows the list of the environmental legislation in Indonesia. 10-2

Chapter 10. Social and environmental impact assessment <Table 10.2> Indonesia’s environmental legislation No. Name of Act 1 Constitution of Indonesia (1945) 2 Law No 32/2009 on Environmental Protection and Management(dated Oct 3 2009) 3 Government Regulation No. 27/2012 on Environmental Permit Decree of Minister of Environment No. 05/2012 on Screening Criteria 4 (type/scale/magnitude of activities requiring AMDAL/EIA) Regulation of Minister of Environment, Republic of Indonesia No. 16/2012 on Guideline 5 on Preparation of Environmental Document Decree of Minister of Environment No. 17/2012 on Community Participation and 6 Information Disclosure in Environmental Impact Assessment Regulation of Minister of Public Works, Permen PU No. 10/PRT/M/2008 on the 7 Environmental Management Measure (UKL) and Environmental Monitoring Measure (UPL) Criteria Decree of Ministry of Environment No. 17/2012 on Community Participation and 8 Information Disclosure in Environmental Impact Assessment Regulation of Minister of Environment (Permen LH) No. 07/2010 on Competence 9 Certification of AMDAL Preparation and Training Requirements for AMDAL Preparation 10 Environmental Protection and Management Act EPMA 32/2009 According to laws and regulations on environmental assessment, the AMDAL (environmental impact assessment) must be performed by a group of experts who are trained and certified. The group must comprise one team leader and two experts (and more) who are certified by the LSC (Competence Certification) approved by the Minister of Environment. Other than that, there are is specific certification procedure required for the preparation of the UKL (environmental management measures) and UPL (environmental monitoring measures). According to EMPA 32/2009 Article 74, a performer of an environmental assessment has the right to implement the environmental monitoring, request information, prepare related documents/copies, access a certain area, take a photograph, record video, collect related samples, and inspect machines. The social impact assessment is conducted as part of the environmental impact assessment, in case that there is a large-scale land acquisition and resettlement causing major social influence, the LARAP is established. 10-3

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia (3) International environmental and social conventions joined/ratified by the Indonesian government As shown in <Table 10.3>, there are several international environmental and social conventions joined or ratified by the Indonesian government, but its legal and administrative systems do not fully conform to the international environmental convention and international standard policy. <Table 10.3> International conventions on society and environment ratified / signed by the Indonesian government No. Name of Act ASEAN Agreement on the Conservation of Nature and Natural Resources (1985) 1 About: conservation and management of natural resources need to be included in every stage of a development plan Convention on Biological Diversity (1996) About: an environmental impact assessment needs to be mandatory for a project that is 2 likely to do harm to biological diversity, or an action needs to be taken to mitigate/avoid such harm United Nations Framework Convention on Climate Change (1995) 3 About: measures need to be taken to prepare, prevent, or mitigate impacts from climate change Vienna Convention for the Protection of the Ozone Layer (1998) 4 About: public health and the environment need to be protected against activities that destroy the ozone layer 5 International Covenant on Civil and Political Rights (2006) 6 International Convention on the Elimination of All Forms of Racial Discrimination (1999) 7 Convention on the Elimination of All Forms of Discrimination against Women (1980) 8 International Covenant on Economic, Social and Cultural Rights (2006) 9 Convention on the Rights of the Child (1990) 10 Convention on the Rights of Persons with Disabilities (2007) 10.1.2 Social legislation and approval procedure in Indonesia (1) Indonesia’s social impact assessment and legislation on land compensation In Indonesia, the social impact assessment of a public project is conducted as part of the environmental impact assessment. In case that there is a large-scale land acquisition and resettlement causing major social influence, the LARAP, a separate management plan for land acquisition and resettlement, is established. Indonesia’s legislation on land acquisition and resettlement compensation is shown as in <Table 10.4>. 10-4

Chapter 10. Social and environmental impact assessment <Table 10.4> Legislation on land acquisition in Indonesia No. Act Details1 Legislation on land acquisition - Pursuant to this law, any entity whether it be the ministry of the central government, the local government, a governmental institution, a state-owned corporation, or a state-owned agency is entitled to acquire land. In case of a PPP project, a private corporation is also entitled to acquire land. Law No. 2/2012 (Law No. 2/2012 - A land acquisition plan participated by all 1 on Land Acquisition for Project interested parties shall be implemented. Activity for Public Interest) - Shall uphold reasonable and fair compensation, and indemnification principle - Land acquisition shall conform to the following plans: a) Regional spatial Plan b) National/regional development plan c) Strategic plan d) Land acquisitor’s implementation plan [major amendments] - No. 40 of 2014: on a basis of exchange agreed by both parties who have the will to purchase/sell, the relevant party is entitled to directly acquire an area of land less than 5 ha. (provided that, the land to be acquired shall be 2 No. 71/2012 (Presidential located within one region and the acquisition Regulation) shall be made in one fiscal year.) No. 71/2012 (on Land Acquisition - No. 99 of 2014: estimation of the land and its amendments) compensation amount. The chief of the land amended four times acquisition implementation committee issues a (the latest amendment: No. compensation amount recommended by a 40.2014) certified public appraiser. - No. 30 of 2015: an enterprise who receives relevant rights on behalf of the governmental institution, is entitled to acquire land - No. 148 of 2015: if land with an area less than 5 ha is acquired, there is no need to prepare a location statement. Shall utilize an appraiser to estimate land values. 1 Reference data: http://dcouments.worldbank.org/curated/en/550941481616793080/pdf.SFG2741-EA- P154948-Box396337B-PUBLIC-Disclosed-12-9-2016.pdf 10-5

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia No. Act Details1 3 Guidelines on the Implementation [Technical Guidelines on the Implementation of of the Land Acquisition (BPN, the Land Acquisition] National Land Agency) - This act sets forth a legal basis of BPN’s land RI No. 5/2012 (Regulation of the acquisition intended for public use. Head of BPN (Local Government - The provincial BPN may delegate a Land Agency) regency/city-level land agency to set up a land RI No. 5/2012 on Technical acquisition committee. Guidelines on the Implementation - [amendment] No. 6 of 2015: the bailout plan of the Land Acquisition) for the acceleration of infrastructure development State Minister of Agrarian Affairs - Provisions on land acquisition are amended / Chairman of BPN (National according to BPN’s RI No. 5/2012 Technical Land Affairs Agency) Guidelines on the Implementation of the Land 4 [Regulation — Peraturan Menteri Acquisition (refer to no.3 in this table) Negara Agraria/Kepala BPN - Provides an private enterprise with an (Badan opportunity to relieve its land acquisition fund Pertanahan Nasional)] (replaced by the national budget of relevant (No.6/2015)) department/agency) Other laws and regulations on land acquisition 5 Law No. 5 of 1960 (September 24, 1960) on Basic Agrarian Law 6 Government Regulation No. 40 of 1996 (June 17, 1996) on Right of Cultivation, Right to Build, and Right of Use of Land 7 Government Regulation No. 24 of 1997 (July 8, 1997) on Land Registration 8 Regulation No. 3 of 1997 (August 25, 1997) on the Implementing Provisions of GR No. 24/1997 9 PD No. 55 of 1993 (June 17, 1993) on Land Procurement for the Public Interest 10 Regulation No. 1 of 1994 (July 14, 1994) on Implementing Provisions of PD No. 55/1993 11 Regulation No. 3 of 1999 (February 19, 1999) on Delegation of the Authority to Issue and Revoke Decisions to Grant Rights over State Land Regulation No. 9 of 1999 (October 24, 1999) on Procedures for the Granting and 12 Cancellation of Rights on State Land and Rights of Management State Minister of Agrarian Affairs/Chairman of BPN (National Land Affairs Agency) 13 Regulation No. 5 of 1999 (June 24, 1999) on Guidelines for Settling Customary Law Community Communal Rights Issues; 14 Decree No. 21 of 1994 (December 7, 1994) on Procedures to Obtain Land Titles for a Company within the Framework of Capital Investment 10-6

Chapter 10. Social and environmental impact assessment (2) Procedure for social impact assessment and compensation Pursuant to Law No. 2/2012, land acquisition process is composed of the preparation stage and implementation stage. ① Preparation stage: (the agency) sets up a land acquisition plan, prepares the initial list of the affected residents (inventory), holds a public hearing, and if the consent of the residents is obtained, then confirms the region of land acquisition and implements acquisition. If the residents appeal to the court above, they will take legal proceedings in the administrative court or supreme court. If the court’s ruling is in favor of the residents, (the agency) shall change the previously scheduled region of land acquisition. ② Implementation stage: (the agency) finalizes the list of the affected residents and identifies their assets. If an agreement is reached through rounds of negotiation, the agency begins the compensation and construction. 10-7

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Figure 10.2> Procedure for land acquisition pursuant to Law No. 2/2012 on Land Acquisition for Project Activity for Public Interest) Project execution Set up a land acquisition plan agency (PEA) prepares F/S and screens land plan PEA prepares the list of the affected residents (inventory) and public hearing Investigate the list of the affected residents (inventory) Consent Hold public hearing for a Organize an region to be affected evaluation team Non- consent Confirm the region Refuse a protest Evaluation team’s public hearing / evaluation / the Residents appeal to the Acceptance administrative court Acceptance teams’ chief makes a decision Residents appeal to the supreme Accepts a protest court Change a (previously scheduled) region for land acquisition Implement land acquisition *Source: Indonesia: Dam Operation Improvement and Safety Project Additional Financing WB. January 2017 10-8

Chapter 10. Social and environmental impact assessment <Figure 10.3> Implementation of land acquisition pursuant to Law No. 2/2012 on Land Acquisition for Project Activity for Public Interest PEA requests and submits Organize a task force team (with land implementation documents acquisition implementing division) Confirm the list of assets Designate license assessment to and affected residents evaluate the assets and land of the affected residents Publicly announce the list of assets and the affected residents (map, register) Negotiate Reach an agreement Fail to reach an agreement Make compensation Hold a trial and send trust money for the affected residents Residents appeal to the court Residents appeal to the supreme court Construction Make compensation according to requests made by the affected residents Monitoring evaluation * Source: Indonesia: Dam Operation Improvement and Safety Project Additional Financing WB. January 2017 10-9

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia 10.1.3. Application of the EDPF and international standards This project is financed by the Economic Development Promotion Fund (EDPF) of the Korean government, but the EDPF environmental policy has not been confirmed as of the date of this report. Therefore, international standards including the EDCF Safeguard Policy (2016), OECD Common Approaches, and IFC Performance Standards are referred for this project. (1) EDCF Safeguard Policy EDCF Safeguard Policy and international standards on land acquisition, resettlement, and compensation are compared and items applied in this project are summarized as shown in <Table 10.5>. <Table 10.5> EDCF Safeguard policy and requirement Item /Source Policy requirement Requirement for If a non-voluntary relocation and its corresponding influence establishing a are likely resettlement plan (EDCF SP Para. 10) Matters to be included in Table of contents of the resettlement plan (for example) the resettlement plan 1) executive summary (SP annex 5) 2) about project 3) scope of land acquisition and resettlement 4) initial survey 5) information disclosure, consultation, participation 6) handling civil complaints 7) legal system 8) compensation items, support, and benefits 9) preservation of income 10) budget and finance execution plan 11) implementation plan 12) report of monitoring result Compensation The resettlement plan shall aim to recover the quality of the support and residents’ lives to where it was before a planned project or make (SP text Para. 26) it better. The plan shall be established in a specific and comprehensive manner, given the significance of its accompanying impact. 10-10

Chapter 10. Social and environmental impact assessment Item /Source Policy requirement - Three types of the affected residents: Types of the affected residents/ households to be resettled and How to support compensated Type (a) :a person who has the formal legal right of a land to Provide an appropriate land Classification of the or facility that can be affected be acquired residents/households to replaceable or make a be resettled and Type (b) :a person who has the compensation in cash compensated customary right of a land to be depending on the type (SP annex 2: requirement acquired of socio-environmental impact assessment /Para. - Make a compensation for 22 & 24) the loss of assets Country’s law & EDCF SP obligation to specify excluding the land screening (SP annex 2: Type (c) :a person who has - Compensate those who environmental/ social impact assessment neither legal nor customary have lived in the affected requirement/Para 23) right of a land to be acquired area before the cutoff Basic principles of land compensation date, which is set to (SP annex 2: environmental/ social confirm the price for impact assessment requirement/Para 25) resettlement The borrower shall - analyze and summarize the country’s laws and regulations on land acquisition, compensation, and resettlement in the resettlement plan (RP). - compare with the key principles and requirements of EDCF SP - shall consider providing the replacement land (public land or acquired (private) land) to the affected residents whose livelihood relies on land - substitute land: shall have at least the same value as the acquired land in terms of production potential and location. - if the affected residents do not prefer the replacement land, if it causes negative influence to parks or preservation regions, or if appropriately priced-land is not available, the borrower may consider other compensation methods such as cash compensation or employment. Compensation ratio for - the total replacement cost shall be calculated as much as land or asset to be possible acquired - the total replacement cost: shall be calculated by reflecting as 10-11

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia Item /Source Policy requirement (SP annex 2: many applicable costs as possible including market price, environmental/ social transaction cost, interest rate, and transition and restoration impact assessment cost. requirement/Para 26) The borrower shall provide the following for the households to Compensation item for be physically relocated: physical displacement - relocation/resettlement assistance (SP annex 2: - provide the tenure of the resettled land environmental/ social - relocate to the region with easy access to employment, impact assessment requirement/Para 27) economic activity, social infrastructure - transition and development support (cultivation/reclamation of Compensation item for households economically the resettled land, vocational training) affected - share development benefits from a project (SP annex 2: environmental/ social The borrower shall provide the following for the household to impact assessment be economically affected: requirement/Para 28) - compensate for the economic displacement (loss of How to utilize the income/livelihood) at the total replacement cost level resettlement plan to - provide development benefits from a project maximize development - compensation the replacement cost that includes transitional benefits from a project (SP annex 2: cost, and cost for factory and equipment installation environmental/social - compensate the economic loss during the transitional period impact assessment requirement/Para 29) - the non-voluntary resettlement shall be planned and implemented as part of a development project/program. When to implement compensation - one of the best strategies is to offer the re-settlers an (SP annex 2: opportunity to share various benefits from a project in environmental/social addition to compensation and resettlement support. impact assessment requirement/Para 30) - this will help prevent poverty of the affected residents and satisfy the call for the ethical purpose of development. - therefore, the borrower shall expand opportunities for the affected residents by identifying more chances to make the residents enjoy benefits that a project will bring. Compensation for physical and economic displacement shall be implemented after the following activities: 1) make a compensation based on a sufficient replacement cost, and then acquire the pertinent land/facility 2) provide other compensation included in the RP 3) implement a program for the preservation of income/livelihood - in principle, compensation shall be made before relocation. But bear in mind that a complete fulfillment of the RP takes 10-12

Chapter 10. Social and environmental impact assessment Item /Source Policy requirement a long time. If the access to the land use, statutory parks, or preservation area needs to be limited due to a planned project, the borrower shall impose a limit based on the RP agreed by the borrower and the KEXIM. Other procedural - Not applied for the voluntary relocation requirements on - land acquisition shall be implemented based on the negotiation resettlement and compensation for an appropriate and fair compensation amount (SP annex 2: - take note that the affected residents are an underdog in requirements of socio- environmental impact negotiation in terms of information asymmetry and assessment /Para 31 bargaining power. As part of an effort to avoid (unfair) negotiations, an independent organization shall keep records of negotiations and arbitration proceedings. - matters related to applicable laws on consultation procedure, policy, compensation; confirmation by the third party/method of replacement cost estimation; and requirements for record keeping and documentation, shall be agreed upon by the borrower and the KEXIM All policies and principles of EDCF Safeguard Policy on resettlement and compensation conform with international policies and principles such as World Bank Safeguard Policy and IFC Performance Standards. (2) IFC Performance Standards (2012) Composition of IFC Performance Standards - Performance Standards (8 items, 2012) <Table 10.6> Composition of IFC Performance Standards Classification Performance Policy requirement standards Assessment and - a system intended to predict and prevent management of environmental/social impact shall be adopted. If it is PS 1 social and not possible to prevent such impact, it shall be environmental minimized. Any remaining impact on labor, local impact and risk community, and environment shall be compensated and made up for. - environmental/social performance of an enterprise shall be promoted. - appropriate response and management for the communication with interested parties shall be 10-13

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia Classification Performance Policy requirement standards ensured. - public participation shall be promoted during the whole process of a project and relevant environmental/social information shall be disclosed. - to promote fair treatment, nondiscrimination, equal opportunity - to establish, maintain, and enhance a better labor- management relationship - to promote the compliance of national Labor and working PS 2 labor/employment law environment - to protect workers including but not limited to vulnerable workers (children, migrants, workers hired by the third party, sub-contracted workers by suppliers) - to prohibit force labor - harmful impact on public health and environmental shall be prevented and minimized through pollution Efficiency of control measures. PS 3 resources and - sustainable use of resources such as energy and pollution prevention water shall be promoted. - project-related greenhouse gas emissions shall be reduced. - harmful impact on public health and safety of the local community shall be predicted and prevented Public health, safety, during the project period. PS 4 and security of - the protection of workers and private property shall community be implemented based on the principle of basic human rights and risk prevention. - compulsory eviction shall be avoided. If that is not possible, displacement shall be minimized through an alternative project design. Land acquisition and - negative social/environmental impact caused by the PS 5 non-voluntary restriction on land acquisition/land use shall be resettlement predicted and prevented. If that is not possible, compensation for the asset loss shall be made. Information disclosure, consultation, participation, and resettlement shall be guaranteed. 10-14

Chapter 10. Social and environmental impact assessment Classification Performance Policy requirement standards - the living standards and livelihood of displaced people shall be improved or restored. - biological diversity shall be protected and Conservation of conserved. biological diversity - benefits coming from the eco-system service shall and sustainable be maintained. PS 6 - the sustainable management of living natural management of living natural resources shall be promoted by adopting the resources implementation initiative that reconciles development priority and conservation demand. - human rights, dignity, aspiration, culture, and livelihood on natural resources shall be respected and protected. - negative impacts on the local economy shall be predicted and prevented. If that is not possible, such PS 7 Indigenes (natives) impact shall be minimized and/or compensated. - free, prior, and informed consent of the affected communities of indigenous peoples shall be guaranteed. - culture, knowledge, customs of indigenous people shall be respected and protected. - cultural assets shall be conserved and protected from negative impact that a project will bring about. PS 8 Cultural heritage - fair distribution of benefits from the use of cultural assets shall be promoted. - Guidance Notes (2012) - Interpretation Notes (three documents) · Interpretation Note on Environmental and Social Categorization · Interpretation Note on Financial Intermediaries · Interpretation Note on Small and Medium Enterprises and Environmental and Social Risk Management) (3) OECD Common Approaches (recommendation of the council on the adoption of common approaches for officially supported export credits and environmental and social due diligence) The Common Approaches is common guidelines on environmental and social due diligence for officially supported export credits, recommended by the OECD Working Party on Expert 10-15

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia Credits and Credit Guarantees. It has been revised several times since its adoption in the late 1990s, and its latest version is revised in April 2016. The Export-Import Bank of Korea (KEXIM) as an official export credit agency in Korea has adopted and applied the said recommendation. The OECD has applied differently either World Bank Safeguard Policy or IFC Performance standards depending on the type of a project funded by export credit. (see the table below) <Table 10.7> Requirement of the application of social and environmental safeguards according to the type of a project set forth in the OECD Common Approaches Type of project Applied environmental and social safeguards Non PF (Project 1) 10 World Bank Safeguard Policies (OP/BP) or; Financing) Projects 2) IFC Performance Standards Limited or non-recourse IFC Performance Standards PF Projects Projects participated by May benchmark safeguard policies of the relevant institution Major Multilateral (*the African Development Bank/ the Asian Development Financial Institutions)* Bank/ the European Bank for Reconstruction and Development/ the European Investment Bank/ the Inter- American Development Bank/ the International Bank for Reconstruction and Development/ the International Finance Corporation/ and the Multilateral Investment Guarantee Agency) All projects - EHS guidelines (if specific guidelines by area are not available – apply other standards internationally adopted and used -) - WB OP/BP 4.01 (environmental assessment)/ & IFC PS 3 (efficiency of resources and pollution prevention) * Source : OECD Common Approaches Section V. ENVIRONMENTAL AND SOCIAL REVIEW: (Article 13-30) (Summary) 10-16

Chapter 10. Social and environmental impact assessment 10.2 Environmental and social impact grades 10.2.1. Current state of the AMDAL Criteria for screening procedure and grade classification related to a project are specified in Decree of Minister of Environment No. 05/2012 on Screening Criteria. Under the aforementioned regulation, this project was classified as a project that requires an official AMDAL, and back in 2009, it obtained an approval for its AMDAL. - As for the main pipeline route with the length of 36.7km, Indonesia’s Ministry of Environment proposed the Terms of Reference (TOR) to conduct the environmental impact assessment in 2008, and issued an Environmental Permit (EP) for the submitted AMDAL in 2011. - In 2013, the ministry recognized the need for another AMDAL on the route with an extended length of 27.3km, and obtained an approval. - As of November 2018, the approval of three year’s duration is already expired, and the project execution agency is currently preparing an integrated AMDAL for the main and branch pipelines. The whole process of obtaining an EP will require several months. <Table 10.8> Current state of documents approved for AMDAL AMDAL Approved documents Notes Documents Document proposing the TOR for the The three-year duration is approved for environmental impact assessment expired; it is no longer AMDAL in 2009 (2008): “The Ministry of Environment effective. (main line: initially Kepmen LH No. 475/2008 concerning planned route 36.5 the ToR for KSCS Development km) (Kerangka Acuan KA-ANDAL Pembangunan KSCS)2 Document approving an EP (2011): “Decree of Ministry of State for the Environment No. 503 Year 2009 \"About the Development Activity Environmental Feasibility Karian Serpong Conveyance System (KSCS) Along the 36.5 miles in Lebak district, Banten Province and Tangerang District and Boger Regency, West Java Province by Balai Besar Wilayah Sungai Ciujung Cidanau- 2 KRC 2015 report: refer to chapter 9 in Basic Design and PPP Basic Scheme of Karian – Serpong Conveyance system and water treatment construction project (English version) 10-17

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia AMDAL Approved documents Notes Cidurian The receipt of an EP is Directorate General Resources Water confirmed by the original Ministry of Public Works” document from the project 1) document approving an EP: execution agency. “KEPUTUSAN GUBERNUR BANTEN NOMER: 660.1/Kep.27-Huk/2013 The documents approved in 2011 and 2013 are no TENTANG longer valid. IZIN LINGKUNGAN KEGIATAN (see the image below) PEMBANGUNAN KARIAN Documents SERPONG approved for CONVYANCE SYSTEM SEPANJANG AMDAL in 2011 +27.3 KM DI KABUPATEN and in 2013 -2016 TANGERANG [the total main line DAN KOTA TANGERANG SELATAN route with the PERVINSI BANTENOLEH BALAI length of 27.3km, BESAR changed from the WILAYAH SUNGAI original length of CIDANAU-CIUJUNG-CIDURIAN 36.5 km.] DIREKTORAT JENDERAL SUMBER DAYA AIR KEMENTERIAN PEKERJAAN UMUM ( DECREE OF THE GOVERNOR OF BANTEN NUMBER: 660.1 / Kep.27-Huk / 2013/ On: Environment Environmental Activity Development Services Serpong Conveyance System Allow +27.3km in Tabgerang Regency and City of South Tangerang Pervinsi Bantenoleh Balai Besar Wilayah Sungai Cidanau- Ciujung-Cidurian Directorate General of Water Resources Ministry of General Public“) 10-18

Chapter 10. Social and environmental impact assessment AMDAL Approved documents Notes Graded according - present requirements of grading and Pursuant to Indonesia’s to the international management plan in accordance with legislation and policy, this standards the relevant policies of the project project is classified as a (EDCF Safeguard execution agency of the recipient Category A project, and this Policy & IFC PS) country. classification deems valid under the international - recommend adopting stricter standards standards. if there is a gap between standards of the recipient country and of the international community. 10.2.2. Environmental and social impact grading system As clearly specified in the EDCF Safeguard Policy and IFC Performance Standards (PS 1), the project execution agency of the recipient country shall identify environmental/social impact and risks in the initial stage of the project preparation, predict the likely magnitude and consequences of such impact and risks by thoroughly reviewing their types, sizes, and locations, and establish an environmental/social management measures corresponding to the prediction. In case that a major influence that is irrevocable occurs, it is stipulated in the said international standards that an official environmental impact assessment and management plan need to be established (Category A). In case of a not much significant influence, a summary environmental impact assessment and management plan are required (Category B). If there is no or insignificant impact, none of the procedures are required (Category C). The standards also recommend complying with Good International Industry Practice (GIIP) in predicting the future impact and setting up a management plan3. This project is a massive civil engineering/construction project that has great environmental and social impact on the local economy, thereby requiring the resettlement plan. Which means that once this project is implemented, there will have irrevocable environmental and social impact. Therefore, it is fair to say that this project will be classified as Category A. It is deemed reasonable that the AMDAL needs to be implemented for this project pursuant to the Indonesian standards for the environmental and social impact/risk. 3 For more details, refer to Clause 7 of IFC Performance Standards 1. 10-19

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia 10.3 Planning and preparation of environmental and social impact assessment 10.3.1. Environmental and social impact assessment (ESIA) (1) Current state of AMDAL (Environmental Impact Assessment) The BBWS C3, one of the project execution agencies, conducted its first environmental impact assessment (AMDAL) on the main conveyance pipeline back in 2009, and again in 2012 on the changed and extended route of the conveyance pipeline. <Table 10.9> Current state of AMDAL Time of preparation Details AMDAL (2009) ∙ Length = 36.5km AMDAL (2012) ∙ Route : Lebak Regency –Parung Panjang WTP ∙ Interference region by the conveyance pipeline : Parung Panjang, Bogor, West Java ∙ Route changed for L=27.3km - Extended L=11.9km - Changed L=15.4km ∙ Reason for change : to exclude the interference region (West Java) To construct the Karian – Serpong conveyance system, a written permission should be obtained from the Governor of the Banten province, the construction area. The environmental impact assessment (AMDAL) is included in this permission. The valid period of the AMDAL in Indonesia is 3 years, and the current state of the AMDAL conducted by the BBWS C3 is described as in <Figure 10.4>. <Figure 10.4> History of AMDAL 10-20

Chapter 10. Social and environmental impact assessment The two AMDALs are currently expired and not conforming with the Indonesian laws revised in 2012, which calls for the preparation of a new AMDAL. The first AMDAL report prepared in2009 for the route starting from Lebak regency to Parung Panjang WTP (L=36.5km) was expired, but in 2012 the second AMDAL report was conducted through technical review for the total route of 47.9km with the changed (15.4km) and extended (11.9km), as shown in <Figure 10.5>. <Figure 10.5> Current state of AMDALs on changed route (2009~2012) (2) Renewal and approval of AMDAL The AMDAL prepared for the main conveyance line connecting the Karian dam and the Serpong water treatment plant with the length of 47.9km is already expired. Under the relevant law amended in 2012, it is mandatory either to revise the existing AMDAL or to prepare a new one. ◦ Since an AMDAL for the branch conveyance pipeline extending to four water treatment plants – Rangkas Bitung, Maja, Solear, and Parung Panjang WTPs has never been prepared, a new AMDAL needs to be written. ◦ The final approval of the AMDAL is authorized by the Governor of the Banten province, the project area, whereas the examination and approval-related affairs are performed by the Environmental Agency of Banten province. ◦ The project execution agency (PUSATAB, BBWS C3) is currently preparing an integrated AMDAL for the main and branch conveyance pipelines, which is expected to be finished by early 2019. 10-21

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Table 10.10> Regulations on implementing AMDAL Regulation Details I. Law No.32/2009 on Article 36.3: “In any case of any change in business Environmental Protection and./or activity, personnel in charge of the business and Management (Oct, and/or activity shall be obliged to renew environmental 2009) permit.” II. documents approved for “In the event of expansion, transfer and / or change of AMDAL in 2013(SKKPL) activity plan so that the document of Environmental Impact Analysis (ANDAL), Environmental Management Plan (RKL), and Environmental Monitoring Plan (RPL) are no longer suitable to be used as reference of environmental management activity plan, a new Environmental Impact Assessment (AMDAL) study is required.” 10.3.2 Review of Land Acquisition and Resettlement Plan (LARAP) (1) Current state of LARAP (Land Acquisition and Resettlement Plan) The construction of the conveyance system and the booster pumping station requires land acquisition. As a result, civilians may lose their property or some resources of production, which in turn need to be properly compensated. To ensure a successful implementation of a project, it is necessary to establish a Land Acquisition and Resettlement Plan (LARAP) pursuant to Indonesia’s related regulation and rules. To acquire land for the project site, the project execution agency should prepare a location statement for land and houses to be affected by the construction project in accordance with the related regulation and rules and then request a land acquisition negotiation with landowners from the governor of the Banten province. If the governor finishes the negotiation amicably, the project execution agency compensates the landowners and then starts construction. The two rounds of the social impact assessment (LARAP) were conducted in 2011 and 2017, of which, the latest LARAP was prepared for the main conveyance pipeline with the length of 47.9km. It surveyed potential houses and area to be affected by the construction of the Karian – Serpong conveyance system to prepare for the land acquisition. The Indonesian agency is currently asking the KEXIM to include the branch conveyance pipeline connecting to the four planned water treatment plants in the project scope. In September 2018, the project execution agency submitted an integrated LARAP on the entire project route which includes the branch line with the length of 17.5km. (the LARAP report for the mainline is the same as the one submitted in February 2018. An additional report for the branch line was submitted in September 2018.) 10-22

Chapter 10. Social and environmental impact assessment <Table 10.11> Current state of LARAP Year Report Conducted by Notes 20114 Master Planning and Consortium of KRC - funded by KOICA, conducted Feasibility Study of (Korea Rural as part of MP and F/S of KSCS KSCS – Supporting Corporation), Kyung project Report Vol. VI-6: Dong Engineering, - 7 sub-districts / 18 villages LARAP and ShinWoo along the main line route (27.3 Engineering km, partially) 2017 Review (Renewal) of PT OSEANO - conducted by project execution LARAP of KSCS (Indonesian agency on its own consultants) - 11 sub-districts / 28 villages along the main line route (47.5 2018 Consolidated report: PT ADITYA km in total) 1) Review (Renewal) Engineering Consultant - along the entire main line that of LARAP of (Indonesian includes the branch line KSCS (mainline) consultants) connecting to WTPs (17.55km) 2) Study of LARAP & the entire branch line route KSCS(Phase II) - as for the main line, it is the Lebak District same as a 2017 report. A (branch line) separate report for the branch line is prepared. <Figure 10.6> Area of project analysis [Red & blue lines: mainline route (phase 1) / Purple colored: branch line connecting to 4 WTPs (phase 2)] 4 Under the Indonesian law, a LARAP is a report that needs to be renewed and confirmed according to a project’s progress such as site confirmation and land acquisition, not a report whose effective period needs to be renewed after its expiry. 10-23

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia (2) Expected direct social impact (such as land acquisition) and compensation plan : phase 1 (mainline) land expected to be acquired due to the implementation of this project and expected social impact, and compensation plan 1) Communities to be affected by land/asset acquisition (phase 1: mainline) ① Regions affected by this project <Table 10.12> Affected area by phase 1 project (mainline) Classification Regency / City District Village Sajira 1 Ciuyah Curugbitung 2 Cidadap Mekarsari 3 Padasuka Pasirkembang 4 Curugbadak Maja Baru Lebak 5 Maja Lama Sangiang Maja 6 Cikasungka Bantar Panjang 7 Cileles Tapos 8 Jambe Rancabuaya 9 AncolPasir Ciangir Solear 10 Babat Bojong Kamal 11 Cirarab Karang Tengah TigaRaksa 12 Jatake Kadusirung Kabupaten 13 Cisauk 14 Suradita Cibogo Jambe 15 Kademangan Serpong 16 17 Tangerang Legok 18 19 20 21 Pagedangan 22 23 24 Cisauk 25 26 Kota Tangerang Setu 27 Serpong 28 Source) 2018 LARAP /cited from Field Survey Results, Consultants 2017 10-24

Chapter 10. Social and environmental impact assessment ② Types of the affected land <Table 10.13> Types of land to be affected by phase 1 project (mainline) Regions to be affected/passed through by the pipeline No. Administrative division Types of available land Village District Regency/City 1 Ciuyah Sajira Lebak 2 Cidadap Curugbitung Lebak Lebak Rice paddy/garden 3 Mekarsari Maja 4 Padasuka Maja Lebak 5 Mekarsari Maja Lebak 6 Pasirkembang Maja Lebak 7 Curugbadak Maja Lebak Paddy/garden/settlement 8 Maja Baru Maja Lebak 9 Maja Lama Maja Lebak 10 Sangiang Maja Lebak Paddy/garden 11 Cikasungka Solear Tangerang Paddy/garden/settlement 12 Cirarab Legok Tangerang Paddy/garden 13 Bojong Kamal Legok Tangerang Paddy/garden/residence/private graveyard 14 Babat Legok Tangerang Paddy/garden/settlement 15 Ciangir Legok Tangerang Paddy/garden/residence/Muslim boarding school/family graveyard 16 AncolPasir Jambe Tangerang Paddy/cemetery 17 RancaBuaya Jambe Tangerang Paddy/garden/cattle shed 18 Jambe Jambe Tangerang Paddy/garden/residence/factory/house 19 Tapos Jambe Tangerang Paddy/garden 20 Bantar Panjang Jambe Tangerang Paddy/garden/residence/house Source) 2018 LARAP cited from Field Survey Results, Consultants 2017 10-25

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia ③ Households to be affected and area of influence Area of Influence (AoI) estimation: to construct the main conveyance line which is 27.3kmlong and 30mwide <Table 10.14> Households to be affected and area of influence (phase 1 mainline project) Potential influence factors Regency/City District Village No. of No. of Area of households influence(m2) affected land5 13,321 Sajira Ciuyah 1 1 66,558 84,021 Curugbitung Cidadap 44 55 9,477 Mekarsari 53 69 27,049 45,005 Padasuka 5 5 26,271 22,018 Lebak Pasirkembang 19 19 11,634 90,731 Maja Curugbadak 20 28 60,834 58,055 Maja Baru 9 10 11,089 367,602 Maja Lama 14 18 - Sangiang 10 10 37,271 40,333 Solear Cikasungka 87 111 33,609 28,225 Tangerang Tigaraksa Cileles 56 66 Kota Tangerang Jambe Bantar Panjang 10 13 3,303 1 1 46,744 Legok Tapos 32 35 52,933 Jambe - - Pagedangan Rancabuaya 40 42 7,579 Cisauk AncolPasir 21 27 185,581 Setu Ciangir 14 21 14,042 Serpong Babat 30 39 54,986 Bojong Kamal 2 2 2939.3 Cirarab 35 43 5167.862 Karang Tengah 21 22 1,406,378 Jatake 3 3 Kadusirung 18 22 Cisauk 4 4 Suradita 1 1 Cibogo 13 15 Kademangan 18 18 Serpong Total 581 700 Source) 2018 LARAP / cited from Field Survey Results, Consultants 2017 5 Means the number of land lots simply calculated based on the boundaries. 10-26

Chapter 10. Social and environmental impact assessment According to the survey, there will be a total of 700 affected lands in 11 districts (28 villages), Lebak and Tangerang regencies and Tangerang city, due to the construction of the first phase conveyance mainline. Land to be acquired is mostly composed of rice paddy and arable land, with some residential areas or graveyards. Of 581 affected households (in the main conveyance pipeline), the number of households whose houses to be affected is estimated at 196. (this group was not classified as those who need to be physically relocated; our team of consultants calculated them by identifying the type of land to be acquired that falls on residential. <Table 10.15> Number of households to be relocated in the main conveyance pipeline District No. of households Maja 13 Solear 18 Tigaraksa 52 Jambe 25 Legok 19 Pagedangan 31 Cisauk 16 Setu 13 Serpong 18 Total 196 2) Compensation policy/amount/implementation plan (phase 1: mainline) ① Procedure for asset compensation (land, building, crops) ◦ the Governor issues official documents on the decision of a project site (decision letter, location statements) ◦ under the official decision letter on land acquisition, the land acquisition committee is organized. ◦ determine land prices ◦ if an agreement on compensation is not reached, report to the Mayor (regency). if it is not able to reach an agreement at the regency level, hold a follow-up meeting before reporting to the Governor. ◦have multiple rounds of negotiations according to provincial/regency policies ◦ the court makes a final decision 10-27

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia ② Basis of calculation of land acquisition price <Table 10.16> Basis of calculation of land acquisition price Classification Minimum Maximum Market prices in local Rp. 412,457,639,383.00 Rp. 585,455,434,383.00 community Rp. 193,859,910,683.00 Rp. 286,618,090,483.00 Rp. 1,555,924,835,483.00 Rp. 1,991,534,715,483.00 Selling Value of Tax Objects (NJOP) Results of interview(s) with the residents Source) 2018 LARAP ③ Procedure for resettlement decision ◦ conduct a primary F/S on candidate sites for resettlement ◦ obtain an approval from the local government, and then conduct a formal F/S and environmental investigation on the resettlement site. - pay a visit to the site and have a consultation - make a decision on a specific location of the resettlement site - review and discuss the resettlement and restoration plan according to available resources in the area - conduct monitoring and coaching re-settlers ④ Compensation for displacement of the resettled area ◦ compensation for physical displacement - resettlement assistance for the affected households: after making the asset compensation - construction of infrastructure (road, water service, electricity, temple): after making the asset compensation ◦ compensation for economic displacement - transitional cost assistance: for 2 months in the resettlement - capital assistance for the affected households: after displacement/resettlement - capacity building program: for 2 months before the displacement/resettlement 10-28

Chapter 10. Social and environmental impact assessment <Table 10.17> Compensation table (phase 1 mainline project) Unit price for Classification Type Unit Quantity Exchange compensation Compensation rate (NJOP Max amount for land)6 in IDR 136,923 45,443,626,800 Rice paddy m2 331,892 in KRW 10,954 3,635,490,144 in USD 10.14 3,366,195 in IDR 221,329 92,053,097,900 Land Land m2 415,910 in KRW 17,706 7,364,247,832 in USD 16.39 6,818,748 in IDR 179,005 81,707,765,600 Farmland m2 456,454 in KRW 14,320 6,536,621,248 in USD 13.26 6,052,427 Building and in IDR 1,020,567 55,267,759,900 house m2 54,154 in KRW 81,645 4,421,420,792 75.60 in USD 4,093,908 in IDR - - Tree Nos. N/A in KRW - - in USD - - Crops in IDR 88,475 2,197,454,383 m2 24,837 in KRW 7,078 175,796,351 in USD 6.55 162,774 in IDR 2,205,674 311,000,000 Cemetery Nos. 141 in KRW 176,454 24,880,000 in USD 163.38 23,037 Public facility School in IDR 2,589,588 1,069,500,000 m2 413 in KRW 207,167 85,560,000 in USD 191.82 79,222 Mosque/temple m2 in IDR 985,366 767,600,000 779 in KRW 78,829 61,408,000 in USD 72.99 56,859 in IDR 278,817,804,583 Total in KRW 22,305,424,367 in USD 20,653,171 Base exchange rate) IDR 13,500/ KRW, 1,080/ USD 12.5 * Our investigation team re-calculated an exchange rate based on the 2018 LARAP. 6 Selling Value of Tax Object (NJOP) is applied in the estimation of the land compensation amount. The NJOP refers to the officially assessed land price. In contrast, Surveyed Market Prices and Prices Based on Information from the village head are exposed to tax issues related to the transfer of rights under the relevant Indonesian law and tend to have a large fluctuation in prices. Therefore, among the three criteria proposed in the LARAP, the most stable price base, NJOP is chosen to estimate the land compensation amount. 10-29

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia 3) Public participation and consultation ① Purpose ◦ to help local governments (authorities), residents, civic groups (NGOs) have a better understanding of a planned project ◦ to avoid unnecessary misunderstanding or conflicts in connection with a planned project ◦ to promote public relations of the government ② Stakeholders/interested parties ◦ local governments of the relevant district or sub-district ◦ villages ◦ NGOs ◦ other related agencies ③ Main activities ◦ to collect/listen to opinions from residents ◦ to express and share views and opinions ◦ to reach an agreement on compensation unit price and land acquisition ④ Progress of public hearings <Table 10.18> Progress of public hearings (phase 1 mainline project) Overview Details First round of public hearing ◦ purpose: to give a presentation on the background and (phase 1: on main general introduction of the KSCS (Karian – Serpong conveyance pipeline) Conveyance System) project to concerned/interested parties from the affected region, village, and NGOs ◦ when/where: October 31, ◦ content: the need for land acquisition and resettlement 2017 / conference room in accompanied by the KSCS construction project, and changes Maja district, Lebak regency that the project will bring to the local community ◦ attendees: Lebak local ◦ key issues government, village - on whether farming possible in the land where the pipelines governments (Maja, Sajira, Curug, Ciuyah, Padasuka, are installed? -> the installation of dual pipelines is Pasir, Kembang, Curug planned; the land cannot be used for farming Badak, Maja Baru), local - on criteria for the estimation of the land compensation: the community, and NGOs compensation for land and buildings will be made based on market prices or negotiated prices. Second round of public - on requirements for land sale and documentary evidence for hearing (phase 1: on main land ownership -> AIB, SPH letters, and documentary evidence for ownership need to be prepared. Cases at law will be submitted to the authentication court. ◦ attendees: Tangerang local government, village governments (Jambe, Pegedangan, Cisauk, Cikasungka, Cileles, Bantar 10-30

Chapter 10. Social and environmental impact assessment Overview Details conveyance pipeline) ◦ when/where: November 1, Panjang, Papos, Ranca Buaya, AncolPasir, Ciangir, Babat, 2017 / conference room in Bojong Kamal, Cirarab, Karang Tengah, Kadu Sirung, Jambe district, Tangerang Cisauk, Suradita, Cibogo), local community, and NGOs regency ◦ purpose: to give a presentation on the background and general introduction of the KSCS (Karian – Serpong Third round of public Conveyance System) project to concerned/interested parties hearing (phase 1: on main from the affected region, village, and NGOs conveyance pipeline) ◦ content: the need for land acquisition and resettlement ◦ when/where: November 2, accompanied by the KSCS construction project, and changes 2017/conference room in that the project will bring to the local community Serpong district, South ◦ key issues Tangerang City - on criteria for the estimation of the land compensation: the ◦ attendees: Tangerang Selatan City local government, compensation for land and buildings will be made based village governments on market prices or negotiated prices. (Serpong, Setu, - on the need for measures by which affected households Kadamangan), local have access to drinking water -> supply of drinking water community, and NGOs is under the jurisdiction of PDAM. - on the request to partially change the location of the pipelines (include more dry land while excluding village’s sacred places) -> at present, we are checking the location of the land to be acquired and its area. ◦ purpose: to give a presentation on the background and general introduction of the KSCS (Karian – Serpong Conveyance System) project to concerned/interested parties from the affected region, village, and NGOs ◦ content: the need for land acquisition and resettlement accompanied by the KSCS construction project, and changes that the project will bring to the local community ◦ key issues - some pieces of information are not clear; / request to provide the list of affected residents for those who were absent. -> agreed to provide copies - on when the land acquisition is scheduled: the installation of the main conveyance line (phase 1) is scheduled in 2019. Around that time, land acquisition will begin. 10-31

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Figure 10.7> Minutes of the first round of public hearing (phase 1 project) Minutes – text (excerpts) Minutes – signature of attendant villages (left) / list of attendees (right) (source: chapter 6 “public hearings” in the 2018 LARAP report for mainline 10-32

Chapter 10. Social and environmental impact assessment <Figure 10.8> Minutes of the second round of public hearing (phase 1 project) Minutes – text (excerpts) Minutes – signature of attendant villages (left) / list of attendees (right) (source: chapter 6 “public hearings” in the 2018 LARAP report for mainline 10-33

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia <Figure 10.9> Minutes of the third round of public hearing (phase 1 project) Minutes – text (excerpts) Minutes – signature of attendant villages (left) / list of attendees (right) (source: chapter 6 “public hearings” in the 2018 LARAP report for mainline 10-34

Chapter 10. Social and environmental impact assessment 4) Survey of land to be acquired and expected social impact due to the first phase project (mainline) To implement the KSCS project, it is necessary to acquire a land located in the construction area but owned by civilians. The construction route includes the Banten province and parts of Parung Panjang. Since the land with an area of 14,383m2, which is needed to install the booster pumping station, is a state-owned land, there requires no extra procedure, but the land for the entry road to the pumping station needs to be acquired. As for the land required for the installation of the main pipeline connecting the Ciuya pumping station and the Serpong water treatment plant, the land acquisition with the occupation and use width of 30m is planned. The number of houses to be migrated in the construction area for the first phase route is tallied 581. The Indonesian government needs to proceed the land acquisition process as follows: prepares the LARAP report and related documents which are submitted to the Banten province. Conducts a survey on demand for land and evaluation. Notifies the land acquisition. Makes a compensation for land/asset loss. And completes the resettlement. The Banten province begins negotiations with the landowners in accordance with the Location Statement prepared by the project execution agency. As for the land whose negotiation is finished, the project execution agency compensates the landowners before the construction begins. (3) Expected direct social impact (land acquisition) and compensation plan: land to be affected by phase 2 (branch line) project and the expected social impact, and compensation plan 1) Communities to be affected by land/asset acquisition (phase 2: branch line) ① Area of Influence estimation for LARAP As for the planned width for occupation and use for the branch pipelines to be installed in the second phase, it is 6m for the Rangkas Bitung branch line, 4m for the Maja branch line, 13m for the Solear branch line, and 6m for the Parung Panjang branch line. <Table 10.19> Area of (social) Influence by phase 2 branch line project No. Branch line route Width (m)* Width for social impact assessment (m)** 1 Rangkas Bitung branch line 6 15 2 WTP Maja branch line 4 10 3 WTP Solear branch line 13 20 4 WTP Parung Panjang branch line 6 10 ② Area and size to be affected by the branch line construction (4 WTPs) 10-35

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia According to the survey, there will be a total of 271 affected lands in 12 districts, Lebak Bogor, and Tangerang regencies, due to the construction of the second phase conveyance mainline. <Table 10.20>Area of Influence (phase 2 branch line project) Service area Regency/city District No. of land to Size/Area of be affected influence(m2) Maja (Maja) 7 465,904 Maja Lebak Kopo 9 561,492 Solear Lebak Maja (Sangiang) 3 107,405 Rangkas Bitung Lebak Solear 77 9,280,903 38 3,489,808 Parung Panjang Bogor Sajira (Ciuyah) 16 1,684,655 Tangerang Sajira (Parung Sari) 8 5,398,596 3 1,118,411 Rangkas Bitung 19 Maja (Sindangmulya) 43 698,128 47 1,608,652 Tenjo 1 2,238,875 Parung Panjang 271 42,668 Jambe 26,695,497 Legok Total Source) 2018 LARAP ③ Types of the affected land and number of the acquired land <Table 10.21>Types of the affected land and number of the acquired land (phase 1) Types of Branch line route by WTP Percentage land (%) No. Maja Solear Rangkas Parung Total Bitung Panjang 1 Garden 13 25 40 34 112 41.33 2 Cemetery 2 - - 2 0.74 3 PDAM* 1 - - - 1 0.37 4 House - 11 2 4 17 6.27 5 Rice paddy 5 38 22 70 135 49.82 6 Pond - 1 - - 1 0.37 7 Others - - 1 2 3 1.11 Total 19 77 65 110 271 100 Source) 2018 LARAP ※ PDAM (Perusahaan Daerah Air M inum): water service provider owned by the provincial government 10-36

Chapter 10. Social and environmental impact assessment ④ Area of Influence by type of the affected land There will be the largest land acquisition in the Rangkas Bitung branch line. Along the four branch lines, the acquisition of agricultural land (with farmland/cultivated land (56%) and rice paddies (41%)) accounts for 97 percent of the total land acquisition. The land to be acquired is mostly located in non-urban areas, hence the acquisition of residential area account for less than one percent. <Table 10.22> Area of influence by type of the affected land (phase 2) Area of branch line route by WTP (m2) Percentage (%) No. Type of land Maja Solear Rangkas Parung Total Bitung Panjang Garden 1 (farmland/ 7,974.58 28,047.07 95,592.38 16,865.64 148,479.67 55.62 cultivated land) 2 Cemetery - 3,185.02 - - 3,185.02 1.19 3 PDAM* 770.66 - - - 770.66 0.29 4 House - 2,264.63 - 381.60 2,646.23 0.99 5 Rice paddy 2,602.77 57,739,60 21,322.32 28,378.47 110,043.16 41.22 6 Pond - 1,572.71 - - 1,572.71 0.59 7 Others -- - 257.52 257.52 0.10 Total 11,348.01 92,809.03 116,914.7 45,883.23 266,954.97 100 Source) 2018 LARAP ※ PDAM (Perusahaan Daerah Air M inum): water service provider owned by the provincial government ⑤ Number of the affected households <Table 10.23> Number of the affected households (phase 2) No. Branch line route by WTP No. of the affected households 1 Maja 19 2 Solear 77 3 Rangkas Bitung 65 4 Parung Panjang 110 Total 271 Source) 2018 LARAP *Limited to landowners who registered one’s legal ownership of land (OTD)7 7“an OTD identity: basically, the OTD identity is identical to the OTD data because the land owner (OTD) is the respondent visited / interviewed.” (2018 LARAP report for branch conveyance line, Section 5.3.2) 10-37

Feasibility Study for Karian – Serpong Raw Water Conveyance System (KSCS), Indonesia Of 291 affected households (in the branch conveyance pipeline), the number of households whose houses to be affected is estimated at 19. (this group was not classified as those who need to be physically relocated; our team of consultants calculated them by identifying the type of land to be acquired that falls on residential. <Table 10.24> Number of households to be physically relocated in the branch line route (phase 2) Branch line by WTP No. of households Maja 0 Solear 10 Rangkas Bitung 2 Parung Panjang 7 Total 19 * the number of households or residents to be actually affected or resettled in relation to the land acquisition is not restricted to those who have legal ownership of land (OTD)for 271 individual cases of land acquisition. Further investigation is needed. [271, the minimum number of the affected households (land owner/head of household) * 3.9 PAX (the 2018 average number of family members in Indonesia)] = 1,057. The total number of the affected households is likely to increase if more people (tenant farmers, unofficial residents) who live on the land are included. A total of 1,200 and more will be subject to relocation and resettlement. ⑥ Area of land to be acquired by type Agricultural land to be acquired is mostly used for rice paddy. <Table 10.25> Area of land to be acquired by type (phase 2) No. Crops Area of influence by branch line route (m2) Total area Maja Solear Rangkas Bitung Parung Panjang (m2) 1 Rice 2,473 37,741 12,091 28,733 81,038 2 Corn 324 - - - 324 3 Pepper - - 759 - 759 Total 2,797 37,741 12,851 28,733 82,122 Source) 2018 LARAP 10-38

Chapter 10. Social and environmental impact assessment ⑦ Types of (annual) plants in the affected region Trees (annual plants) that are located in the affected region and need to be cut down are mostly rubber and palm trees. Trees will be felled particularly along the route connecting the Rangkas Bitung water treatment plant. <Table 10.26> Types of (annual) plants in the affected region (phase 2) No. Tree Branch line route Total Solear Rangkas Bitung Maja Parung Panjang 1 Jackfruit 2 - 7 -9 2 Acacia 2 - - -2 3 Bamboo 2 4 28 - 34 4 Cassava 1 5 1 -7 5 Albasia 2 2 - -4 6 Banana 2 2 3 -7 7 Rambutan 1 4 6 - 11 8 Rubber - 1 346 - 347 9 Millennium - - 1 -1 10 Palm - - 252 - 252 11 Teak - - 1 -1 12 Mangosteen - - 1 -1 Total 12 18 646 - 676 Source) 2018 LARAP ⑧ Current state of land ownership The land to be acquired for the installation of the branch pipeline is mostly owned by individuals (65%), private institutions (25%), and local government/public agencies (8%). The remaining is not identified due to insufficient data, so further investigation is needed. 10-39