Oceans for Prosperity : Reforms for a Blue Economy in Indonesia

Public Disclosure Authorized

Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized

OCEANS FOR PROSPERITY

OceansReforms for Blue Economy in Indonesiafor

Prosperity

OCEANS MDTF

01

OCEANS FOR PROSPERITY

Disclaimer:

This report is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundar- ies, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

Copyright Statement:

The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly.

For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone [phone],

fax [phone], http://www.copyright.com/.

All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax [phone],

e-mail [e-mail].

Suggested Citation:

World Bank (2021). Oceans for Prosperity: Reforms for a Blue Economy in Indone- sia. The World Bank, Washington, D.C.

OCEANS FOR PROSPERITY

Table of Contents

04_ Foreword

09_ Acknowledgements

10_ Acronyms

12_ Executive Summary

28_ 01. Introduction

36_ 02. A Sustainable Fisheries Future

Indonesia can get more from its fisheries sector through improved management

44_ 03. Realizing Indonesia's Tourism Potential

To be a leading tourism destination, Indonesia must ensure that its marine and coastal assets are managed sustainably

50_ 04. Managing Coastal and Marine Assets

Protecting Indonesia's marine and coastal assets is crucial to ensure continued benefits from ocean sectors

58_ 05. Combating Plastics from Source to Sea

Marine plastic debris represents a significant risk to Indonesia's ocean sectors

64_ 06. Conclusion: Integrated Policy for a Blue Economy

Close ecological and economic links between ocean sectors means that reforms can deliver broad benefits

72_ References

02

03

OCEANS FOR PROSPERITY	OCEANS FOR PROSPERITY
Foreword	Foreword

Building a sustainable ocean economy is one of the most important tasks for Indonesia. As an archipelagic country with high marine biodiversity, Indo- nesia must ensure that its actions balance the needs of its people and its

oceans. These needs align with current and upcoming challenges, including performance in seafood exports, threats from natural resources degradation, access to and volatility of markets, climate change, and marine debris.

A sustainable and prosperous oceans economy will contribute to higher revenues from marine-based activities, improved coastal communities' livelihoods, and healthier oceans and coastal ecosystems that can generate services and products and preserve unrivalled biodiversity. There are opportunities to implement this transformation through establishing an ecosystems approach within the Fisheries Management Area system (Wilayah Penangkapan Perikanan, WPP), and integrating WPP management with marine protected areas, spatial planning in marine and coastal areas, reduced marine debris, and improved livelihoods to ensure long- term sustainable fisheries and marine tourism industries.

I welcome this report, Oceans for Prosperity, and I am honored to provide this foreword. This concise report describes the opportunity for Indonesia to re-energize a sustainable oceans economy or "blue economy," to improve economic growth and to optimize the value of natural resources. The Government of Indonesia has and continues to make efforts along this pathway, as part of our commitment to economic growth, prosperity, and the sustainability of our oceans.

I look forward to partnerships that help build oceans-related opportunities. The closeness of the ocean grants us the possibility of improving lives through innovative and sustainable use of its resources. We will replace "doom and gloom" with a more optimistic vision. In collaboration with other nations that face similar chal- lenges, we will further diversify our economy and secure the goods and services provided by our oceans.

Dr. Ir. Aryo Hanggono, DEA, In Memory

Former Director General for Marine Spatial Management, Ministry of Marine Affairs and Fisheries (MMAF)

The ocean covers more than two-thirds of Indonesia's area and connects the many islands of our archipelagic country. The ocean provides livelihoods to the people of Indonesia, sustains social and economic activities, and ensures cultur-

al richness. It is our duty to protect, restore, and sustain the diverse natural resources of our ocean for generations to come.

Indonesia has based its development planning for the next five years on the Rencana Pembangunan Jangka Menengah Nasional (RPJMN), which serves as the national guideline and roadmap towards one important goal: transforming Indonesia into a developed country. The first agenda item in the 2020-2024 RPJMN is to achieve economic resilience for high quality, equitable growth. As a maritime country, Indonesia's vast marine resources must be utilized to improve people's welfare. We see "blue" sectors in the future providing even greater support towards strengthening our national econ- omy. However, Indonesia still faces challenges to fully achieve "blue" prosperity.

The RPJMN acknowledges that improved management of blue sectors is key to achieving Indonesia's development agenda. Additionally, it is one of our commitments as global citizens towards the Sustainable Development Goals (SDGs). Based on these responsibilities, marine and fisheries management strategies are designed to protect, conserve, and utilize marine resources in a sustainable manner.

One of those strategies is spatially-based management, such as the establishment of the Fisheries Management Area (WPP) system, and Marine Protected Areas (MPAs), which can help ensure long-term sustainability of ocean resources. We need to emphasize the importance of balancing conservation and economic growth to fully embody the concept of sustainability.

It is with great pleasure that I welcome this new publication by the World Bank, Oceans for Prosperity: Reforms for a Blue Economy in Indonesia. I hope that this publication will escalate efforts towards realizing blue prosperity in Indonesia. We would like to ensure that through these efforts we can strive consistently to support the government's strategic plan to achieve our collective goal, the welfare of the Indone- sian people.

Dr. Ir. Arifin Rudiyanto, MSc.

Deputy of Maritime and Natural Resources, Ministry of National Development and Planning (Bappenas)

04

05

OCEANS FOR PROSPERITY

Foreword

Indonesia is an archipelagic country with enormous marine biodiversity and ocean resources, which are important sources of food security, livelihoods, carbon sequestration, and means of transportation. Ocean ecosystems and the

economy they support must be preserved by overcoming current threats and chal- lenges, including coastal degradation, climate change, unsustainable aquaculture practices, over-exploitation, and marine pollution such as plastic debris and solid waste in waterways and seas.

Gross Domestic Product (GDP) summarizes the size of an economy, representing the total value of certain goods and services produced. However, GDP leaves out important details of the ocean economy. How does the ocean affect local communities and individuals? How does economic activity damage or improve the health of ocean ecosystems? These knowledge gaps limit our ability to make effective, inclusive decisions about how we use the ocean and build a sustainable ocean economy, or "blue" economy, that can deliver on the National Ocean Agenda, as well as the 2030 Agenda for Sustainable Development.

An integrated and multi-sectoral blue economy strategy as described in this report, Oceans for Prosperity, is the key to improving marine and coastal activities, equal opportunities, and livelihoods. Fisheries and coastal tourism are the most significant sectors to develop and transform based on a foundation of healthy and productive marine and coastal ecosystems, including marine plastic pollution reduction and marine conservation. This is Indonesia's commitment. Fundamen- tally, a blue economy strategy enables governments to monitor and manage three critical trends with respect to the ocean economy:

1. Changes in ocean wealth, including mangroves, seagrass, and coral reefs
2. The distribution of oceans-related income among different groups of people (including income from fisheries or tourism for local communities)
3. The contribution from oceans-based economic activities to national eco- nomic output

The Coordinating Ministry for Maritime and Investment Affairs and other stakeholders look forward to increasing cooperation and collaboration to develop our blue economy with equal opportunities. We will continue the success of current initiatives, including the Oceans Multi-Donor Trust Fund1, and look forward to positive global trends to position Indonesia's ocean economy for sustainable growth, especially after the COVID-19 pandemic.

Dr. Ir. Safri Burhanuddin, DEA.

Deputy Coordinating Minister for Maritime Resources, Coordinating Ministry for Maritime and Investment Affairs (CMMIA)

	1 The Indonesia Oceans Multi-Donor Trust Fund was established in 2017 at the request of the Government
	of Indonesia and with the support of the Governments of Denmark and Norway. It provides technical assis-
06	tance to implement oceans policy, reduce marine debris, and strengthen coastal resilience.

A swirling tornado of Barracuda in blue water above a warm, tropical coral reef. Photo: © shutterstock.com

OCEANS FOR PROSPERITY

Acknowledgements

This report was prepared by a World Bank team led by David Kaczan (economist) and André de Aquino (se- nior natural resources management specialist), and

comprising Andrew Harvey (fisheries consultant), Jia Jun Lee (environmental consultant), Bertine Kamphuis (senior private sector specialist), Nikola Kojucharov (senior economist), Anjali Acharya (senior environmental specialist), Andhyta F. Utami (environmental economist), Celine Lim (natural resources management specialist), John Perrottet (senior private sector specialist), Frank van Woerden (lead environmental engineer), Xavier Vincent (lead fisheries specialist), Katelijn van den Berg (senior environmental specialist), Yadranka Farita (natural resources management specialist), Abdul Halim (oceans con- sultant), Juan-Pablo Castaneda (environmental economist), Dias Natasasmita (oceans consultant), Kian Siong (senior environmental engineer), Geertrui Paula Uyttendaele (geo- spatial consultant), Desta Pratama (oceans consultant), Ina Pranoto (senior oceans consultant), and Taruc Siham (oceans consultant). The report builds on an article in the World Bank's Indonesia Economic Quarterly (IEQ) entitled Oceans of Opportunity , published by the World Bank in June 2019.

Mangrove trees. Photo: © shutterstock.com

The team thanks Satu Kristiina Kahkonen (country director for Indonesia), Rodrigo A. Chaves (former country director for In- donesia), Rolande Simone Pryce (former manager of operations for Indonesia), Karin Kemper (global director for environment, natural resources, and the blue economy), and Ann Jeannette Glauber (practice manager) for encouragement, guidance and support. Dinesh Aryal (senior natural resources management specialist) also provided support.

Constructive reviews of this report and the earlier IEQ article were received from Andrew Mason (lead economist), Ergys Islamaj (senior economist), Francesca de Nicola (senior economist), Frederico Gil Sander (lead economist), Derek Chen (senior economist), Jaffar Al-Rikabi (economist), Urvashi Narain (lead economist), Delphine Arri (senior environmental engineer), Miguel Angel Jorge (senior fisheries specialist), and Charlotte de Fontaubert (senior fisheries specialist).

The team thanks Bapak Arifin Rudiyanto (Deputy of Maritime and Natural Resources, Ministry of National Development and Planning, Bappenas), Bapak Safri Burhanuddin (Deputy for Maritime Resources, Coordinating Ministry of Maritime Affairs and Investment, CMMAI), Ibu Nani Hendiarti (Deputy for Environment and Forestry Management, Coordinating Ministry for Maritime Affairs and Investment, CMMAI) and their teams, for valued input and reviews. The team also thanks Bapak Andreas A. Hutahaean (coordinator of the Oceans Multi-Donor Trust Fund, CMMAI) for his input and coordination support. Input and reviews from staff at the Marine Spatial Management and Capture Fisheries Directorates, Ministry of Marine Affairs and Fisheries, were also received with appreciation.

The team thanks the World Bank's communications staff in Jakarta, including Puni Anjungsari, Annemarie Sieraphin Min- aesta, Reidinar Juliane Wardoyo, Irfan Tonnei Herlambang, and David Irianto, for production and dissemination. The manuscript was edited by Zubair Qamar.

The report was funded by the Indonesia Oceans Multi-Donor Trust Fund, established in 2017 at the request of the Government of Indonesia with the support of the Governments of Norway and Denmark. The Oceans Multi-Donor Trust Fund provides technical assistance to implement oceans policy, reduce marine debris, and strengthen coastal resilience. The earlier IEQ article was funded by the Australian government under the Support for Enhanced Macroeconomic and Fiscal Policy Analysis (SEMEFPA) program.

Any errors or omissions are the responsibility of the authors.

Finally, the team would like to acknowledge the support and inspiration of Bapak Aryo Hanggono (former Director General for Marine Spatial Management, MMAF), who provided advice, technical input, and the report's foreword, and passed away before publication. He is remembered as a champion of the oceans and a tireless public servant for Indonesia.

09