Project Preparation for Livable Cities in Asia: PFS on Climate … · 2016. 8. 9. · 41/2008 and City Reg. 9/2013 on Traditional Market2. Dinas Pasar is responsible for 51 markets

Project Preparation for Livable Cities in Asia: PFS on Climate Proofing and Revitalization of Pasar Johar

August 2014 Executive Summary

Cities Development Initiative for Asia P a g e | 2

A. Project Background and Pre-Feasibility Analysis Approach Project History 1. Pasar Johar is the largest of the 51 traditional markets owned by Semarang City, and is located in Semarang Tengah sub-district in the center of Semarang City. The area is dominated by commercial activity with some residential land use. The market is located along Jalan Pemuda and in close vicinity of the Pandama Triangle, the center of commercial development in Semarang. On the eastern edge, Pasar Johar borders the Old Town of Semarang, another area that has been a focus of redevelopment efforts of the City Government of Semarang (Figure 1).

Figure 1: Pasar Johar Location

2. Pasar Johar is home to approximately 7,800 vendors stalls that are rented from the city on a renewable 3-year lease. Around 6,400 vendors, mainly micro-enterprises, manage these stalls. Almost 90% of these stalls are 5m2 or less and focused on retail rather than wholesale activities. Based on sample interviews, annual earnings for licensed retailers range between IDR 36,000,000 – IDR 60,000,000, depending on the product and location. Almost 80% of these vendors are women. Despite its popularity, the market is in dilapidated condition, highly exposed to climate elements, and lacks basic facilities needed to support the efficient functioning of a traditional market, affecting its competitiveness. 3. The City of Semarang is highly committed to the redevelopment of Pasar Johar. In 2008, the City prepared a feasibility study and program for the redevelopment of Pasar Johar. This program formed the basis of a national design competition to redevelop the traditional market in 2010. In 2011, the design was unsuccessfully put out to bid for the private sector. A City Infrastructure Investment Prioritization and Programming (CIIPP) workshop facilitated by CDIA in late 2012 again prioritized the project within the City’s programs. In response, in 2013 the City requested CDIA help in preparing a pre-feasibility study for the revitalization and climate proofing of Pasar Johar. Project Workplan 4. The design of the 4-month long pre-feasibility analysis responded to the multi-disciplinary challenges posed by the project. The analysis used a three-pronged approach, shown in Figure 2, which also formed the basis of the communication and consultation workplan with the City of Semarang.


Figure 2: Pre-Feasibility Analysis Approach

5. The consultant team sought the support of the City agencies to form an informal PMU, the Working Group. The working group had representation from all the relevant agencies in the City of Semarang and was given monthly updates on the progress of the project. The working group was supported byfour focus groups to deep-dive into the social and institutional viability, the design and infrastructure viability and the financial viability of the project. Dinas Pasar, the main agency responsible for building and managing traditional markets, Bappeda (Planning) and Finance were represented in all focus groups.

Figure 3: Consultation and Communication Schedule for Pasar Johar

6. A very intense consultative program was employed with the City agencies involved in the focus groups, as can be seen in Figure 3. Monthly meetings were held with the various focus groups at the start/end of every month. The outcomes of these meetings were reported to the larger working group at its monthly meetings, which were held in the middle of every month. Meetings were held with the Mayor at the start of the project to inform him of the work plan and hear his concerns related to Pasar Johar and at the end of the study to get his buy-in on the recommendations of the City and the Consultant team. 7. The interrelationships and communication between the groups through the period of the study are illustrated in Figure 4.


Figure 4: Interrelationship between Pasar Johar Focus Groups

8. The first part of the program focused on site analysis, operational and municipal finance data collection, and relocation plan discussions with the SCG and the vendor groups. The second part of the analysis was focused on alternative development, infrastructure needs assessment, market sounding, and financing needs and options analysis. The final part of the analysis was focused on alternative refinement, downstream financing discussions and implementation strategy development. B. Social and Institutional Viability Assessment 9. Pasar Johar is an integral part of Semarang’s history. It is the largest traditional market in Central Java and, based on the social expert’s analysis, has almost 26,000 direct beneficiaries, mainly vendors and their dependents, and 161,000 indirect beneficiaries, including buyers/retailers from other traditional markets inside and outside of Semarang, individual buyers, as well as pedicab drivers, porters, seasonal workers, scavengers, and others. While not easy to assess, it is estimated that most of these direct and indirect beneficiaries earn less than Indonesia’s median per capita income1. 10. The Social Viability assessment focused on:

10.1. an assessment of existing conditions; 10.2. an assessment of institutional capability; and 10.3. identification of relocation and redevelopment needs.

Social Conditions 11. Pasar Johar is composed of six blocks – Yaik Baru, Yaik Permai, Johar Utara/Tengah (heritage building), Johar Selatan, and Kanjengan, and Pungkuran – with 7,739 vendor stalls. 12. The dominant vendor groups in the markets include clothing (27%), seasoning (20%), glassware (11%), and fruits (10%). The vendors are organized into vendor management associations and these associations have been an integral part of the discussions on social analysis. An informal survey of vendor sales and income in these four major vendor groups shows monthly net profits ranging from IDR 3-6 million for small

1 Estimated to be US$3,420 in 2013, according to Doing Business in Indonesia 2014, World Bank


retailers to IDR 30-50 million for the wholesalers. The market is extremely crowded with more than 100% vendor occupancy and this demand is resulting in significant rent seeking. According to the social expert’s analysis, the vendor spaces are being sub-leased informally for a fee of IDR 3 million – 4 million per square meter. 13. Despite its extensive popularity and role in local trade, the market is suffering from a significant lack of amenities and extensive deferred maintenance that are hurting its efficiency and impacting its competitiveness. Figure 5: Condition of Existing Amenities in Pasar Johar

14. Inadequate drainage and climate proofing results in significant loss of income to vendors and, on the low end, is estimated to be at least IDR 500,000/m2 annually. Continuous discussions were held with the vendors and they want a redeveloped market with adequate parking, good circulation, and good infrastructure. Institutional Capability 15. Pasar Johar is managed by Dinas Pasar, a SCG agency, under Local Regulation No 41/2008 and City Reg. 9/2013 on Traditional Market2. Dinas Pasar is responsible for 51 markets in the City of Semarang and reports directly to the Mayor of the City of Semarang. Its main functions include license provision, revenue collection, space planning, security and new market development. 16. The stalls in Pasar Johar are leased to vendors for a renewable three-year period, with no initial fee, and a daily rent of IDR 600/m2. All the fees are regulated by the above SCG regulations and both the initial fee and daily rent are substantially lesser than charges in neighboring cities. Neighboring cities like Solo, Surabaya, Temanggung, and Kendal charge a lease fee between IDR 2 million – 12 million/m2 for space in a newly redeveloped market.

Redevelopment Experience 17. Dinas Pasar has extensive experience in redeveloping traditional markets and over the last 5 years has completed 8 redevelopments of varying scale. All of these markets have been built through a bid-build process with the private sector, with an initial consultant involved in the designing and socialization of the design. Currently, markets are developed

2 On Fundamental Tasks, Principal and Function of Dinas Pasar


under a “pay-as-you-go” approach, wherein Dinas Pasar is completely dependent on allocation and transfers from the city, province and central budgets to finance the market. There is no formula as to how much is allocated from each level of government and, further, the allocations/transfers are not necessarily coordinated between the different levels of government, resulting in delays. 18. Uncertainty in the source of financing and dependence on an annual budget has resulted in significant delays in redevelopment varying from 1 year for a very small rehabilitation project to 4 years for a small development project.

Finances and Opportunity to Increase User Charges 19. Revenue collection in Pasar Johar is low, and Dinas Pasar currently collects only 60% of the collectible3. An analysis of the finances, at existing levels of retribution, shows that even under an attainable collection rate of 80%, Pasar Johar will be able to cover its operational expenses, but will still not be able to cover its initial capital needs for redevelopment. Table 1: Current and Pro-forma 2013 Expenses for Pasar Johar

20. As a first step, an analysis was undertaken to understand the financial feasibility of market development for Pasar Johar under the current process of market development. The process of market development with its current methods of procurement and highly subsidized user charges is not financially feasible or sustainable in the long run. Considering inflation and even ignoring the opportunity costs related to the land, our analysis estimates that the low rental fees charged to the vendors costs the city more than IDR 3 million for construction of every new square meter of effective trading space created in Pasar Johar4. 21. User charges are a very viable option for traditional markets as there are distinct users, the vendors, who benefit from the improved quality of life and service from the development of the market. The vendors eventually cover these costs through increased patronage, improved sales, and a better quality of life. Most neighboring cities including Solo, Kendal and Demak charge between IDR 2 million – 3.5 million/sq. m. 22. Considering Dinas Pasar is managing 51 markets in Semarang, the development of Pasar Johar offers a significant opportunity to take a step towards making the development of such markets financially feasible and self-sustainable. Three options exist to increase user charges to defray the cost of development of a new market and reduce dependence on the city’s budget – a lease fee, increased rent, and increased parking fee. Discussions with Dinas Pasar and Bappeda suggested that the SCG realized the tariff is extremely low and SCG would be willing to apply a one-time lease fee of up to IDR 2.5 million/sq.m, which would be in keeping with what is charged in neighboring cities. Given the high social impact, the City would be willing to absorb the rest of the costs of market development.

3 The reasons for this low collection were unclear and attributed mainly to cashflow problems for vendors

4 Details of the analysis can be found in the next chapter under Alternative 1, Scenario 1 - Pay-as-you-go approach


23. Increasing user charges to make the development of these markets financially feasible is also critical to scale up the program while maintaining the health of the city’s finances. Shift of Dinas Pasar to a Local Government Owned Enterprise (LGOE) 24. Dinas Pasar, as with many SCG agencies, functions as a pass-through, where all the revenue that is collected is passed to the City’s treasury and the City, in return, allocates an annual budget for development, operations and maintenance to Dinas Pasar. Such a structure has resulted in a significant lack of clarity in finance and operations of individual markets and delays in implementation till budget is made available. For example, while the revenue related to an individual market like Pasar Johar is known, the related expenses cannot be easily estimated and, hence, have to be prorated. 25. Dinas Pasar is currently working on a proposal to change its management structure to an LGOE. The proposal is currently under development and approval and implementation is expected in early 2016. A major impact of this change will be that Pasar Johar will be managed by its own LGOE, which will be responsible for collecting its revenue, managing operational and capital expenses, and delivering the profits to the City at the end of each fiscal year, thereby increasing accountability of each LGOE in the areas of revenue collection and maintenance. 26. The Consultant team highly supports this proposal for change in management structure to an LGOE to increase Dinas Pasar’s capability to successfully manage a redeveloped Pasar Johar. The Consultant team also recommends that each LGOE be provided the ability to set its retribution and lease fee in keeping with the level of facilities and amenities provided. Relocation Planning and Need for Certainty in Financing 27. It is no surprise that the length of relocation remains one of the major concerns of the vendors in Pasar Johar. 28. Relocation is an unavoidable aspect of redevelopment of Pasar Johar and has significant costs for the vendors. Estimates of annual losses range from IDR 5 – 10 million for a wholesaler vendor to IDR 1 -2 million for a retail vendor. For analysis purposes, these losses are estimated to be IDR 1.75 million/m2/year of effective trading space and discussions with the vendor management associations indicated that for many vendors such losses are crippling5. However, these losses can be minimized through good phasing, an effective relocation plan, strong socialization, wide marketing and a shortened time of construction and phasing. 29. The consultant team worked closely with the SCG and the vendors to assess four relocation sites and has recommended the Johar Shopping Center (SCJ) and Pasar Dargo as the most suitable relocation sites. SCJ, located across Jalan Agus Salim from Pasar Johar, is a BOT project currently under private ownership and will be transferred to SCG in the year 2022. It is partly occupied by retail vendors and has almost 10,000m2 of space available that can be used by the relocated retail vendors without much disruption in sales. Pasar Dargo is owned and managed by Dinas Pasar and has nearly 600 empty stalls that could be used by wholesale vendors. Discussions were held with the private owners of the Johar Shopping Center to obtain an initial letter of intent allowing the City to lease space in the SCJ till 2022. These discussions should be formalized in the next phase as the redevelopment of Pasar Johar progresses.

5 Vendor discussions have indicated that substantial losses during relocation caused many retail vendors in Pasasr Dargo to

lose their livelihood. Similar fears exist about the relocation involved in the redevelopment of Pasar Bulu.


Figure 6: Potential Relocation Sites

30. Besides a good relocation plan, certainty of financing, addressed later in this report, can significantly reduce the time for construction and, therefore, the length of relocation. Under the current procurement process and given past experience6, it can be reasonably expected that the average relocation for a vendor for a project at the scale of Pasar Johar would be at least 5 years, resulting in significant relocation losses to the vendors. In these conditions, certainty in financing and the resulting shortened construction period can result in significant savings. C. Proposed Redevelopment for Pasar Johar Existing Conditions: Opportunity for Redevelopment 31. Pasar Johar has significant social, locational and cultural advantages that can be capitalized to improve its competitiveness. A SWOT analysis was undertaken to understand the potential of Pasar Johar, assess demand, weaknesses and opportunities for redevelopment. 32. Almost all weaknesses relate mainly to the current physical and managerial conditions of the market. Low amenities, lack of climate proofing, and dilapidated infrastructure are reducing the competitiveness of Pasar Johar. Lack of control and very low rents are resulting in proliferation of legal and illegal traders. Many of these weaknesses can be addressed through redevelopment and better management of the market. 33. A site assessment, including land ownership and conditions, was undertaken to identify the opportunities for redevelopment and implementation of the design as proposed by Design Competition winner. This design cannot be built for 2 reasons:

33.1. Land acquisition Issues: The footprint of the competition winning design was compared with orthographic maps from Spatial Planning Departement and land ownership plats from Dinas Pasar. The southern end of the proposed design extends into privately-owned land and the City does not want to acquire this land. 33.2. Ongoing legal issues in Kanjengan: Many portion of Kanjengan area are under legal dispute between the city and the local vendors in the area. The issues related to Kanjengan were discussed with the Legal Division of the City of Semarang in June, 2014. Issues related to ownership have been resolved for the Bioskop.

6 Relocation for Pasar Bulu, a project one fifth the size of Pasar Johar, laster 3 years because of budgetary delays.


Table 2: SWOT Analysis for Pasar Johar

34. The redevelopment of the market and increased utilization of the space also present an opportunity to both increase rents and identify complementary uses that can increase visitors of varying demographic and economic groups. This will allow vendors to diversify into selling products with higher value or margins. The markets are facing threats from supermarkets throughout Indonesia, but Semarang has limited the number and locations of markets through the Mayor of Semarang Regulation (Peraturan Walikota) No. 5 Year.2013 article 57. Figure 7: Site Assessment for Pasar Johar

7 Details of this regulation are included in the Social Interim Report.


Alternatives for Redevelopment 35. In response to the existing conditions, a series of alternate designs were developed and socialized with the various stakeholders – the SCG, vendor groups and private developers. These alternatives are responsive to the outstanding legal land use issues in Pasar Johar, the City of Semarang’s redevelopment needs, vendor needs, and private sector participation concerns. 36. Two distinct alternatives, differing in scale, level of private sector participation, and implementation, are being recommended by the Consultant team.

Alternative 1: Redevelopment of traditional market only; Alternative 3: Redevelopment of traditional market with BOT for commercial development8.

Alternative 1 - Public Traditional Market Only 37. The smaller in terms of scale, this alternative focuses solely on the redevelopment and climate proofing of the traditional market and associated parking with no commercial uses. This alternative concentrates development in the Yaik Baru, Yaik Permai and Johar Tengah and does not consider any development in the disputed Kanjegan area, except for the footprint of the Bioskop building where land issues have been resolved9.

Figure 8: Alternative 1 – Public Traditional Market Only

38. Pasar Johar Utara and Pasar Johar Tengah are heritage buildings, identified in the city’s register, and will be retained. It is proposed that these buildings be brought to their original state through removal of add-on structures, reducing intensity of uses, and redesigning the space to only include smaller stalls (los) in keeping with the original design. 39. While the costs of this renovation are considered in the analysis, it is proposed that the city continue to seek international heritage funds to defray the cost of renovation. 40. Yaik Baru, Yaik Permai, Johar Selatan and Bioskop will be redeveloped to house all the vendors located in Yaik Permai and Yaik Baru, Pungkuran, and Kanjengan and to absorb the kiosk vendors relocated from the heritage buildings. The original aloon aloon, or public square, that was located in front of the mosque will be recreated.

8 Alternative 2, proposing a public traditional market and limited commercial development without the use of the Kanjegan area,

was dropped because of private sector concerns about vertical mixing of ownership between public traditional market and commercial uses and SCG’ desire to include all the vendors in the Pasar Johar area. 9 Details on legal issues related to the Kanjegan area are discussed in more detail in the Interim Design Viability Report.


41. The capital costs for this level of development, assuming no financing costs, is approximately IDR 200 billion and shown in Table 3 below. The costs for the associated parking and infrastructure to support Alternative 1 are expected to be approximately IDR 48 billion and IDR 5 billion respectively. Table 3: Capital Costs for Alternative 1 - Public Traditional Market only

Alternative 2 - Traditional Market with BOT for Commercial Development 42. The redevelopment of Pasar Johar presents a significant opportunity for the City of Semarang to not only climate proof and redevelop the traditional market, but also spur development in the Old town area of the City. 43. This alternative focuses on the redevelopment and climate proofing of the traditional market and includes commercial development and associated parking. 44. Traditional market activity is concentrated on the lower levels of Yaik Permai, and in Selatan, Kanjengan Bioskop and SCJ. As in Alternative 1, Johar Utara and Tengah are restored to their original condition. The aloon aloon is recreated. 45. The vendor management association has expressed concern about 3 floors of retail in Johar Selatan and Kanjegan buildings, and the challenges of getting patrons to the third floors of a traditional market especially if it deals in vegetables, seasoning or wet foods. These concerns have been alleviated through parking on the roof of the Selatan and Kanjengan buildings, which will force patrons to walk through the third-level of the traditional market. Design features like atrium has also been included to increase visibility of the higher levels. Figure 9: Alternative 3 - Redevelopment of Traditional Market with BOT for Commercial Uses


46. The alternative concentrates commercial development in the higher visibility Yaik Baru, Yaik Permai area. The type, location, and intensity of commercial development was decided upon through a consultative process with the City, private developers, and the vendors with an aim to incorporate uses that complement and increase patronage to the traditional market and spur development in the area. The proposed uses, including a 4-star+ hotel (23,000m2), offices (35,500m2) and retail (8,900m2), were decided based on a highest and best use analysis and ensure the proposed program is commercially viable and desirable. 47. The lower levels of Yaik Baru are commercial retail and include complementary uses like electronics/phones, cinema hall and food courts that supplement the traditional market and increase patronage to the area. 48. Including infrastructure and relocation, such a project is estimated to cost approximately IDR 731 billion. The traditional market portion is estimated to cost close to IDR 261 billion and the commercial portion is estimated to be approximately IDR 470 billion. Details of the associated capital costs for this level of development (assuming no financing costs) are shown in Table 4 below. Table 4: Capital Costs for Alternative 3 - Traditional Market with BOT for Commercial Development

D. Infrastructure and Environmental Assessment 49. Pasar Johar is impacted by two kinds of concerns – site specific and regional. Infrastructure and environmental considerations do not differ much across the two alternatives. 50. The main infrastructure considerations that have a significant impact on the timeline and costs are discussed in detail below. These include the renovation of the heritage building, the temporary relocation sites, and spatial and environmental permitting. The design of the phasing and construction program reflects these considerations. Requirements for Renovation of Heritage Building 51. Decisions will need to be made as to the level of renovation and reconstruction of the heritage buildings during the pre-development phase. Two extremes were considered, and options between these are also viable:

51.1. structural refurbishment to safe standard and general clean-up, or 51.2. full heritage building renovation.


52. The Consultant team recommends a solution closer to full heritage building renovation to improve conditions, improve tourism and allow the SCG to seek international heritage funds for the renovation. Key aspects of the renovation or reconstruction are as follows: 53. Removal of Add-On Structures. The heritage buildings should be returned to their original condition and structures and walls not part of the original building should be removed or renovated. 54. Structural Survey. Visual inspection shows extensive corrosion of the soffit of suspended floors and of the roof ventilator covers. However, it cannot be concluded without intrusive inspection whether internal corrosion has occurred and been masked by routine renovation work and a structural survey is recommended. 55. Lighting. The original building is reported to have had artificial lighting. The types and locations of the original lighting need to be identified, from available historic documents, in order to assess how best to renovate or reconstruct. 56. Ventilation. A key feature of the original design was the open structure with cross-ventilation. Ventilation is now much more restricted by the addition of roofs over the main aisles, by external walls, and by allowing kiosks to build up to two floors across the building. It is envisaged that if the building is to be returned to its original state, vendors will be limited to the use of los, and kiosk vendors will be housed in the new buildings. 57. Drainage. As regional subsidence has taken place the ground floor level of the building has progressively sunk in relation to the roads and surrounding newer developments. As mitigation, parts of the ground floor aisles have been raised and new drains installed below them, effectively reducing headroom. During renovation, these raised walkways must be removed, and new drainage system installed below original floor system and will require pumped discharge to the local drainage system.

Figure 10: Pasar Johar in 1950

58. The heritage building will require an extended study before a budget and plan can be finalized, and a two-phase redevelopment program for Pasar Johar with the heritage building in the second phase is preferable from this perspective. This will allow more time for a comprehensive evaluation and funds sourcing for the renovation. The city investment program of 2010 identified a cost for the renovation of IDR 54,675 million for a building floor area of 13,500m2. This equates to IDR 4.05 million/m2. A figure of IDR 4.4 million/m2 has been adopted for the financial analysis.


Renovation of Temporary Relocation Sites 59. The relocation sites were visually assessed to evaluate conditions and identify specific requirements for refurbishment. 60. Johar Shopping Centre (SCJ). No evidence of any structural distress was identified in the walk through. There is some apparent corrosion of steel in beam soffits on the fourth floor, which would need further investigation if the building were to be used long-term. The sub-lessee reported that all utilities are in good working order except that the escalators to the second, third and fourth floors require replacement rubber handrails, and most probably a full maintenance. Replacement stair handrails and repainting and floor finish are also required prior to relocation of vendors. 61. SCJ North, the vendor building behind Matahari, has four floors. The building is generally in reasonable condition Table 5: Assessed Relocation Costs though there is substantial structural cracking in stair well walls, which may indicate the building has settled. A full-structural survey of this building should be incorporated into the market redevelopment program. 62. Pasar Dargo. The roof of this existing two-storey public market is in poor condition and roof debris, which is likely to be asbestos-based, is extensive over the unused part of the first floor. 63. Based on the available access for inspection and information a cost estimate has been made and is summarised in Table 5: Assessed Relocation Costs. Table 5: Assessed Relocation Costs

Spatial Planning Codes and Regulations 64. Semarang City Local Government Regulation No. 6 of 2004 on Detail Urban Spatial Plan (Rencana Detail Tata Ruang Kota/RDTRK) of Semarang City, Area I, Year 2000-2010 currently regulates the use, level and intensity of development in Pasar Johar. However, this regulation has expired, and RDTRK 2010-2020 is still to be drafted. 65. Discussions with the Semarang City Planning and Settlement Office, suggested that urban spatial planning guideline will be revised given the very dynamic development of Semarang City in the last 10 years. In revising the guideline, the Office will accept inputs and recommendations from the Consultant team for Pasar Johar. 66. Lot height, lot coverage and FAR guidelines vary based on the use, street width and classification fronting the lot. As such, considering that the Johar area revitalization is not a single buildable lot but consists of several building blocks in an area of about 4.5 hectares, it is proposed that the redevelopment be treated similar to a Planned Unit Development, and the whole development area be considered as one lot. Table 6 compares the alternatives to RDTRK 2000-2010 and provides guidance to the City Planning office on recommendations that should be incorporated in RDTR 2010-2020.


Table 6: Guidance on Spatial Planning Guidelines for RDTR 2010-2020

Parking Codes and Regulations 67. Parking needs for Pasar Johar are accommodated based on guidance provided by the Technical Implementation Guidelines for Parking Facility, Directorate General of Land Transportation Ministry of Transportation Number: 272/HK.105/DRJD/96. 68. Based on the above guidance, total parking area calculated for the alternatives was 7,385 m2 for Alternative 1 and 9,461 m2 for Alternative 2. Discussions with the vendor management associations and the Transportation Department indicated the desire to accommodate parking for Masjid Agung within the site. Determination of the needs of Masjid Agung is beyond the scope of this project, but either of the alternatives have sufficient space under the aloon-aloon to accommodate these needs, if so desired by the City. Transport 69. Road Improvements. Upgrading of the existing roads around the site, signal improvements, and removal of buildings encroaching into the existing roads is proposed. This is expected to cost approximately IDR 4 billion. 70. Vehicular Traffic. Vehicular access around the site is proposed by a clockwise one-way road around the periphery of the development from Jalan Permuda/Agus Salim junction to Jalan Alun Alun Barat and across to Jalan Pedamaran. 71. Pedestrian access. The site lies close to the planned Green City Walk. Since the Pasar Johar heritage building should be incorporated into future tourist focus, extension of this green route down Jalan Agus Salim would be appropriate. Along the Agus Salim frontage of the redeveloped Yaik area a wide pedestrian walkway at road level will be incorporated, along with a pick-up point for local public transport. Strong pedestrian connections across Agus Salim to the SCJ building should be designed to increase pedestrian safety and easy connections.


Utilities 72. The utility works for the overall development are quite straightforward, and there are no significant differences in the general requirements for either of the alternatives. 73. Sewage. A new sewage treatment plant for Semarang is planned to be completed in 2017 and a trunk sewer system in 2018. The city master plan for installation of a foul sewer network should be seen as linked to this project, and that investment in the city revitalization is more likely to be forthcoming if the sewer network is installed. 74. Waste Collection. The vendors and their waste collection contractors already practice waste separation for reuse and recycling. Consequently the city approach of reuse and recycling should not be imposed on the new market development. However it is appropriate for the private sector development on the site, and a 3R transfer station has been allowed for in that development. 75. Electricity. Adequate electrical supply is available from the PLN grid. The use of renewables in individual developments is not well advanced in Indonesia as a result of low grid tariffs and a developing feed-in tariff system. Photovoltaic electrical supply generation on the new buildings can be adopted as a pilot demonstration project and may be financially feasible for the traditional market, considering the low cost of capital from PIP. 76. Rain Water Harvesting. The long dry season in Semarang means that rainwater harvesting is not very practical as an integral part of the water supply system to the development. However a modest rooftop collection system could be of benefit for use in soft landscaping irrigation. Environmental Concerns 77. A preliminary environmental assessment found no significant issues related to the development. Most of the development is incremental and as such has an incremental but manageable impact. The environmental concerns raised are mainly social and relate to the pre-construction and construction phase of development. 78. Social concerns relate to negative attitudes and perceptions of community/traders. A good socialization during the preliminary planning process, detailed discussions with the community and close coordination with the vendors is proposed as a part of the next stages of the project implementation. 79. Construction phase environmental concerns relate to lack of employment opportunities, impact on traffic, air quality, noise and solid waste. A strong relocation plan and attention to safety and management can mitigate many of these impacts. 80. Post-construction, improvements in air quality, traffic, surface water quality, hydrological, and solid waste are expected. Climate Change Adaptation and Mitigation 81. A major concern that is not alternative dependent or site-specific relates to climate change adaptation and flood control in the Semarang and the associated impact on Pasar Johar.


Effects of Climate Change on Semarang City and Pasar Johar 82. Regional and local1011 studies on climate change have confirmed that Semarang City is and will be affected by significant climate change impacts including increasing temperatures, increase in rainfall and drought extremes, and rising sea level. 83. Increase in temperature. The increase in temperature is not of direct significance to the alternatives. It is proposed that energy efficiency design principles be incorporated in the detailed design of the alternatives to mitigate the negative effects of slightly higher temperature. 84. Rising sea level. Rising sea levels provide a significant threat to the long-term viability of the whole of downtown Semarang, which is on an alluvial plain, less than two metres above sea level in the Pasar Johar area. The City has developed flood prevention measures consisting of canals, pumping systems and dikes12. These are under construction and except for the Northern Dyke they should be complete in 201413. The Northern Dyke is the inner ring road, under the management of Bina Marga, and they will be responsible for raising the dike as required to maintain a freeboard on high tides and storm surges. 85. It was therefore concluded that the Pasar Johar Redevelopment should be considered within the context of these measures, and it assumes that the citywide flood control measures will be completed and maintained, such that Pasar Johar is not subjected to significant flooding. 86. Subsidence. While not a part of climate change, the situation of vulnerability to climate change in Semarang and Pasar Johar is exacerbated because of the ongoing subsidence caused by groundwater extraction in the aquifer below the compressible near-surface deposits in this alluvial plain. The present rate of subsidence of nearly 10cm/year is an order of magnitude greater than the projected sea level rise in the future. Pasar Johar is already reported by vendors to flood on ten days each month during the rainy season, and other buildings in downtown Semarang have been abandoned for this or related reason. 87. Legislation to control extraction of groundwater has been put in place14, and the City is developing other water sources to replace groundwater. If regulations are applied in compliance with the Acts then the rate of subsidence should eventually reduce substantially. Climate Proofing of the Proposed Project 88. Local flooding due to extreme rainfall or short-term capacity limitations of the main flood control system remains a concern for Pasar Johar. It is therefore recommended that new buildings be constructed with ground floor level above general street level. A height of two metres is recommended and should be reviewed at the detailed design stage. This general concept is already generally adopted in Semarang, and the SCJ Building on Jalan Agus Salim is more than one meter above ground level. 89. Currently car parking for the new buildings, particularly in Alternative 2, is planned to be in basement and pumped drainage will be required; however with ground floor at two meters above street level the pumping requirements become quite modest.

10

Building climate change resilience in Semarang, 2nd World Congress on Cities and Adaptation, Asian Cities Climate Change Resilience Network (ACCCRN), 2011 (presentation) 11

Gunawan Wicaksono, Urban Climate Change Resilience in Semarang – Indonesia, City Engagement and Key Findings from Vulnerability Assessments (undated presentation) 12

Further details on this can be found in Section 3.4 of the Infrastructure Viability Report. 13

Further information is based on a field visit with the Drainage Engineer after production of the Interim Report 14

Central Java Provincial Act No. 6/2002 on groundwater extraction; Central Java Provincial Act No. 7/2002 on groundwater extraction tax.


90. The renovation of the heritage building will require a pumped drainage system, as the ground floor of this building is well below existing street level. Climate Change Proofing of Buildings 91. Climate change proofing falls into two categories: i) regulations imposed by government and ii) energy-efficiency measures adopted because they provide an economic return to the investor. 92. In Indonesia the control of development to provide climate change mitigation is still at an early stage. However any specific requirements identified at the design stage will need to be incorporated. 93. Energy efficiency will be a focus in the design, and in addition to the Indonesian Standard15, there is a developing interest in Indonesia in “green buildings” as evidenced by the Green Buildings Council Indonesia. Guidance on improved designs may be expected from this organization in the future, as well as from the regional center in Singapore. Climate Change Mitigation 94. Measures proposed to mitigate the effects of climate change, and to reduce the environmental impact of the project, have been considered, as follows:

94.1. Use of energy efficient design in the new buildings, in accordance with standard practices for green buildings generally and as appropriate for the specific types of buildings.

94.2. The possible use of solar power would be economically feasible under PIP funding and can be provided as a demonstration project.

94.3. Rainwater harvesting to reduce the demand on the main water network sources.

94.4. Continuation of waste separation in the market buildings, and better waste management. However biomass conversion should take place at the City landfill site where economies of scale exist, and where the site is more appropriate for this activity.

94.5. Provision of a waste separation facility in the new private sector building, in accordance with City policy for waste management.

95. These are discussed further in following sections. Flood Control 96. The Master plan for flood control in Semarang is underway and the main components that impact Pasar Johar are in various stages of implementation. The North Ring Road Dyke is constructed, and the dredging of Kali Semarang is due to be undertaken in 201416. The Consultant team has been advised that therefore Pasar Johar is not at risk from future flooding. However the control of ongoing subsidence which could put flood-control measures at risk in the long-term, will be essential.

15

Konservasi Energi Sistem Tata Udara Bangunan Gedung, SNI 6390: 2011 16

Harsono,pers comm


97. Locally the main storm-water sewer pipe in Jalan Agus Salim outlets into Kali Semarang and is sufficient. Drainage Division would prefer that the storm-water system not be pumped as the maintenance requirements are too high. However it was accepted that if Pasar Johar Utara &Tengah are to be renovated to the original state then pumped drainage will be required for them. 98. Although the existing sewer along Jalan Pedamaran is reported to be in working condition, it will be prudent to allow for replacement as a part of the redevelopment. 99. Finally, as stated earlier, new buildings will be constructed with ground floor level at approximately 2m above street level, to further reduce risk of flooding, and to minimize pumping from the basements. Total Infrastructure Costs 100. The total infrastructure costs to support the relocation and redevelopment of Pasar Johar is shown in Table 7. It is expected that the City will absorb the relocation costs. The infrastructure costs are included as a part of the overall construction budget and funded as a part of the redevelopment of Pasar Johar. Table 7: Relocation and Infrastructure costs

E. Financial Viability of Alternatives 101. SCG is highly interested in mobilizing private sector participation in the redevelopment of the Pasar Johar for the following reasons:

101.1. Limited Fiscal Capacity and Accelerated Provision: The City is interested in using private participation to overcome constraints on the City’s budget and budgeting process. Currently, markets in the City have been redeveloped in a “pay-as-you-go” fashion17, with limited budgets causing delays in project selection and implementation.

101.2. Larger Scale of Redevelopment: Private sector participation and inclusion

of non-traditional market uses will allow the City to develop a much larger project than a traditional market alone. A larger project could help catalyze other development in the Old town area.

17

Please refer to the Finance Viability Report. The City has redeveloped 8 markets in the last 10 years.


101.3. Land Value Capture and Revenue Innovation: Low density throughout Pasar Johar provides an opportunity to increase density in the redevelopment and capture increased value.

Project Structuring for Alt 1 - Public Traditional Market Only 102. Under the currently used “pay-as-you-go” scenario of budget funding for redevelopment, it can reasonably be reasonably expected that completion of a project at the scale of Pasar Johar would take 5 years for construction, resulting in significant relocation losses to the vendors. 103. To ensure certainty of financing, three alternate funding scenarios – private sector financing, PIP financing, and IDFI financing - are considered. Reduced dependence on the city budget could reduce the time of construction to 2 years and substantially reduce vendor loss. In either of these scenarios, the private sector would design and build the project as a fee-development and transfer it to Dinas Pasar for management and operations. The City would then repay by refinancing or from revenue from Pasar Johar operations or the city budget. Any grants that may be available from the Centre or the Province will be used to reduce the obligation. Discussions with the private sector indicated an increased interest in bidding for construction allowing improvements in procurement if a guaranteed source of financing is available and construction can be completed without annual procurement and associated “fits and starts.” Figure 11: PSP Options for Traditional Market Development

Discussion of Findings for Alternative 1 - Public Traditional Market Only 104. The main difference in these scenarios, as shown in Table 8, is the associated cost of capital, which has been estimated based on market sounding and interviews with agencies. 105. A comparison across the scenarios shows that a stand-alone market is not financially feasible under any of the scenarios, even without considering the cost of land. 106. Second, as the figure shows, there are significant losses to vendors due to the uncertainty of transfers and the additional years of relocation in Scenario 1, which make the financing costs associated with the alternate scenarios viable.


Table 8: Comparison of Project Structuring Scenarios for Alternative 1 - Traditional Market Only

107. The difference between PIP financing and IDFI financing is not very significant. Conversations with PIP have been very encouraging, and although more conservative than IDFI financing, the analysis of the traditional market in the report assumes PIP financing. Break Even Analysis for Alternative 1 - Public Traditional Market Only 108. A break-even one-time lease fee analysis and a break-even rent analysis were performed to identify how much either of these retributions would have to be increased to defray the costs for the market’s redevelopment. 109. One-time Lease Fee. As shown in Table 9, the fee that would have to be charged vendors at the start of rental varies from IDR 2.25 million/m2 for Scenario 4 (IDFI financing) to IDR 6.67 million/ m2 in Scenario 2 (private financing). Table 9: Break Even Analysis for Scenarios for Alternative 1 – Public Traditional Market Only

110. Break Even Rent. Assuming Dinas Pasar can improve its collection rate to 80%, the daily tariff that would have to be charged vendors to fully absorb the cost of the traditional market varies from IDR 752/m2 for Scenario 4 (IDFI financing) to IDR 2,994/m2 in Scenario 2 (private financing). 111. Break Even Parking Fee. The break-even parking fee of IDR 3,200/car and IDR 1,550/motorcycle for a 2-hour period is in keeping with fees being charged at private facilities in the area. Financing Options for Alternative 3 - Traditional Market with BOT for Commercial Development 112. Alternative 3 is structured as a BOT, wherein the private sector would build the project and transfer the traditional market to the City for ownership and management while retaining the ownership and management of the commercial development for a 30-year term. In return, the private sector would pay the City an annual stream of payments through a land-lease and a one-time up-front payment.


113. This one-time payment and the annual stream can be ring-fenced to reduce the debt-needs for the project and the debt-service coverage for the debt respectively. Together, this land value capture can reduce the financial impact of the development. This reduction in user charges increases the acceptability for the end-users, the vendors, and makes the commercial development alternatives more politically and socially viable. 114. The City has had prior experience with BOTs and has participated in eight BOTs since 1990, though none of the BOTs has been of this scale. Most of these BOTs have been focused on developing offices or higher-end retail uses and the largest has involved the development of a high-rise office building with an area of 47,643 square meters18. Table 10 shows the ownership, financing and management structures for the different components of Alternative 3. All parking, whether publicly or privately owned, will be managed by the private sector giving it the flexibility to set market rates. Table 10: Proposed Ownership/Management Structure for Different Components of Alternative 3

Discussion of Findings for Alternative 3 - Public Traditional Market with BOT for Commercial Development 115. Commercial Uses: The commercial uses – hotel, retail and office - will be financed, owned and managed by private sector under a 30-year BOT agreement. It is projected that the private sector would be willing to pay an upfront payment of IDR 68 billion and an annual payment of IDR 3.3 billion for the land use rights for the proposed program of development. This estimate is based on cash flow projections of the proposed program of uses and developer equity requirements for developing such uses19. It is proposed that these fees be used to defray the debt servicing costs for the construction of the traditional market.

18

A detailed risk assessment along the life-cycle of Pasar Johar's redevelopment for its use as a mix of traditional market on the lower floors with the commercial floors on the upper levels is discussed in Figure 2.2 of Volume 4: Financial Viability Assessment. Mitigation of the major risks is discussed in Chapter 6 of this report. 19

Please refer to Chapter 4: Financial Analysis in Volume 4: Finance Viability Assessment for details.


Table 11: Financial Analysis for Alternative 3

116. Traditional market. The analysis assumes that the traditional market component of the project will be 100% financed by PIP, including infrastructure costs. The financing need can be reduced by the above-mentioned one-time payment from the private sector, estimated to be approximately IDR 68 billion. The proportional cost of the and, as in practice, it is not expected Break Even Analysis for Development 117. The user charges that should be under PIP financing are shown below. 118. One-Time Lease Fee. The break reduces to IDR 1.07 million/m2. This charging and the lease fee of IDR 2.5 119. Break Even Rent. Alternatively, the the current IDR 600/m2. 120. Break Even Parking Fee. The for a 2-hour period for the traditional fees are in-keeping with the fees Comparison of Alternate 1 and Alternate 3 121. Figure 12 compares the sources and uses for Alternative 1 and Alternative 3 with the current “pay-as-you-go” method of market development. The figure compares the uses of funds for the construction of the market against the possible sources for the two alternatives, and for simplicity ignores the vendor loss related with relocation. 122. Under the current scenario, the low user tariff would result in the City spending IDR 3.3 million to build every square meter of vendor stall space in the new Pasar Johar. 123. The costs go up in Alternative 1 due to an increase in financing costs. Although preferred by the vendors, Alternative 1 has very low financial feasibility and is not a sustainable option for the City without the introduction of a system of user charges (either through a one-time lease or an increase in daily tariff). Politically and socially, a one-time lease fee would be more acceptable, and the City would as it would target only the users of the redeveloped Pasar Johar and is shown here. The City is willing to absorb any costs above a IDR 2.5 million lease fee, and would have to spend IDR 1.9 million to build every square meter of vendor stall space in the new Pasar Johar.


Figure 12: Comparison of Alternatives 1 and 3

124. In comparison, Alternative 3 is financially feasible and self-sustaining. Land value capture will allow the city to obtain IDR 3.3 million from the private sector towards the construction of every square meter of vendor stall space. This inflow from the private sector removes the need for dependence on the City and reduces the one-time lease fee for the vendors to IDR 1.1 million, thereby increasing its acceptability. Preliminary discussions on this option have highlighted the need for more socialization of the concept. The horizontal and vertical mix of ownership and management will require legal condominiumization and clear output specifications for the private and public sector alike. 125. Given the private sector interest in development, the social, economic, and financial benefits to the city from a larger scale of development, the prior experience of the City in negotiating BOTs, and the ability of the City to manage the risks associated with a large-scale BOT, the Consultant team recommends Alternative 3 for the redevelopment of Pasar Johar. Ability of the City to Finance Alternatives 126. An assessment of the City’s ability to repay the amount needed for the financing of the traditional market is a critical component in assessing the financial viability of the alternatives. 127. Based on the financial analysis and as shown in Table 12, the financing need for Alternative 1 ranges from IDR 203 billion (if no lease-fee is charged) to IDR 138 billion (if the City charges a lease fee of IDR 2.5million/m2). For Alternative 3, the financing need reduces substantially due to the expected private sector contribution of approximately IDR 68 billion, and ranges from IDR 138 billion (if no lease-fee is charged) to IDR 70 billion (at a lease fee of IDR 2.5million/m2). Municipal Finance Assessment of the City of Semarang 128. An analysis of the municipal finances shows that:


128.1. The finances of the City are turning around. The city had deficits in 2010 and 2011. But in 2012 and 2013, the City has showed surpluses of Rp. 85 billion and reached Rp.323 billion respectively. Over 2009-2013, the revenue income has shown an average growth of 16.3% annually while expenditures grew at 13.2% annually.

128.2. Consistent level of transfers. The City is reliant on transfers as a dominant

source of revenue, and make up 52% of the total revenue. The level of transfers, though, has been reliably consistent over the period from 2009-2013.

128.3. Significant borrowing capacity. The City would have repaid all its debts by

the end of 2014, and based on 2013 financial statements has a net borrowing capacity of IDR 895 billion. As seen in the table below, at the top-end of the range the financing needs for Pasar Johar’s redevelopment is lesser than 15% of the total borrowing capacity of the City. This drops to less than 8% if the City proceeds with Alternative 3 and an IDR 2.5million/m2 lease fee.

Table 12: Debt Needs for Pasar Johar as Proportion of Semarang Net Borrowing Capacity

129. Substantial room for discretion. At an average, only 52% of the total expenditures were nondiscretionary, providing substantial capacity to prioritize, finance, and implement the Pasar Johar redevelopment. 130. Figure 13 compares the annual debt service needs of Alternative 1 and Alternative 3 (at different levels of one-time lease fee) as a percentage of the City’s discretionary expense. It can be seen that the debt service for Pasar Johar is a very small component of the discretionary expense for the City of Semarang, and ranges from 6.3% on the high end for Alternative 1 to less than 2% on the lower end for Alternative 3. 131. In summary, the City has the financial wherewithal to finance either of the alternatives for the development of Pasar Johar.


Figure 13: Debt Servicing Needs for Pasar Johar as Proportion of 2013 Discretionary Expenditure

F. Implementation Strategy and Next Steps 132. Effectively managing the risks associated with a project of Pasar Johar’s scale and complexity requires front ending and tackling the main risk elements. The three main risk elements identified through the pre-feasibility of the project include: 133. Design Risk. Given the high social, economic, and planning objectives of Pasar Johar, it is important that the City front-end the planning, design and uses of the commercial development. On one hand, the preliminary design will allow effective socialization with the vendors, design and environmental permitting and reduce social and environmental risk. On the other, the design will allow more targeted market sounding and investor interest elicitation. A preliminary design will allow procurement documents to ensure design viability, specify and locate expected uses, PPP partner resource needs, and simplify comparison of bids, and assist in the negotiations. 134. Social/Relocation Risk. To effectively manage the social risk, the pre-feasibility has front-ended the finding of suitable and acceptable relocation sites. A complete structural and design assessment of these sites should be completed and socialized to allow development of a detailed relocation plan. 135. Financing Risk. The ability of the city to seek PIP or IDFI financing is critical to the implementation of the project and investor interest elicitation. Managing private sector timeline of project construction and delivery requires the city to be able to fund its portion without delays. 136. Political Risk. While efforts were made to ensure the project development, financing, and implementation structure are in keeping with existing regulations, the regulatory regime is sub-optimal for PPPs for traditional markets and allowable uses/terms are limited. The pre-feasibility study has identified the importance of a review of the local BOT regulations and local regulations and tariffs for traditional markets to enable ring-fencing of land value capture and increase the sustainability of projects like Pasar Johar for the City of Semarang.


137. The complete project is expected to take around 6.5-7 years for completion, and can be divided into 3 phases: Pre-development, Phase 1 of construction, Phase 2 of construction. The project implementation strategy aims at tackling these risks early in the pre-development phase. Implementation Programme 138. The proposed pre-development and construction program for the project is shown in Figure 14. Figure 14: Pre-Development and Construction Program for Pasar Johar

Pre-development Phase 139. The success of Pasar Johar’s redevelopment depends significantly on the ability of the City to maintain momentum during the pre-development phase of the project. This phase sets the stage for the success of the PPP and focuses on preliminary design development, financing discussions, PPP structuring, partner selection, and regulation revisions in support of the project. Project Management Unit 140. The Consultant team recommends the formation of a PMU to manage the project. A draft local regulation (SK) requesting authorization of a PMU has been submitted to the Mayor of Semarang. It is envisioned that the steering committee will include Bappeda, Dinas Pasar, Finance and Legal Departments as key members. This PMU will have the responsibilities and the rights to:

140.1. Prioritize Pasar Johar in the Medium Term Infrastructure Investment Plan 140.2. Revise and approve designs, 140.3. Recommend legal document revision, and 140.4. Seek, negotiate and recommend private partner for selection.


141. This Committee will be supported by a social working group, a financial/legal working group and a Design/Infrastructure working group; very similar to the focus group structures that have been used in this pre-feasibility approach. Supporting Consultant Team 142. Each of these working groups will be supported by a group of consultants. The Consultant team should be comprised of:

142.1. An international Team leader/PPP expert to support the Finance and Legal group and to lead the overall coordination between the Team, City, PIP and Private Sector. His main duties, initially, will include overall project planning, debt-financing discussions, market sounding, investor interest elicitation, PPP detailed structuring and document preparation for bidding, and, later, partner selection, and negotiations. 142.2. A local architectural/engineering team to support the Design/Infrastructure group and lead the preliminary design and engineering, relocation site assessment and renovation planning. 142.3. A local NGO to support the Social Working group to socialize the preliminary design with the vendors, lead the space programming for vendor groups, and manage relocation. 142.4. A local legal expert to support the Finance and Legal group to review/revise local laws related to raising tariffs for traditional markets, BOT regulations for apartments, and land value capture ring fencing, and for PPP bid documentation review. 142.5. A local environmental consulting company to support the Design/Infrastructure group to lead the environmental assessment and transportation analysis.

143. A budget to obtain these resources in FY 2015, shown in Table 13, has been proposed and preliminarily approved by the Mayor. Table 13: Proposed Pasar Johar Pre-Development Budget for FY 2015

Debt Financing 144. Removing dependence on the annual budgeting process and obtaining debt-financing from alternate sources like the Indonesia Investment Agency (PIP) or IDFI is critical for the implementation of the project. Preliminary conversations have been held with PIP and have been highly encouraging.


145. PIP is a government agency under the Ministry of Finance focused on financing local government investments in prioritized multi-year projects that provide direct benefits to the public including hospitals, roads, and traditional markets. 146. Discussions with PIP indicate that requirements for the qualification of the City of Semarang for a loan for Pasar Johar will include the following:

146.1. The total amount of outstanding loan of the City of Semarang and the proposed loan for Pasar Johar does not exceed 75% of 2013 budget total income.

146.2. Semarang’s minimum debt service coverage ratio equals 2.5 times the annual

projection of loan principal, interest, as well as any borrowing cost incurred. 146.3. Semarang has no arrears for loans given by the Central Government. 146.4. Semarang should submit audited financial reports for the last 3 consecutive

years. 146.5. Semarang should have a budget deficit lower than that benched by the

Finance Minister. 147. The City meets all of the requirements to seek financing from PIP for the redevelopment of Pasar Johar. The first step for seeking funding from PIP requires the Mayor of Semarang to submit a proposal letter indicating the purpose and need for the loan. Post due-diligence and if approved, PIP will provide a letter-of-intent showing its willingness to finance 100% of the hard costs for the construction of the traditional market portion of the project. 148. Such a letter-of-intent will alleviate any private sector concerns about the ability of the City to provide uninterrupted funding for the project. 149. At the end of the Pre-development phase, it is expected that the city would have:

149.1. Prepared and socialized preliminary design with the stakeholders. 149.2. Obtained a letter-of-intent from PIP or an IDFI showing willingness to fund the

traditional market. 149.3. Procured a PPP partner that is comprised of a

developer/investor/architect/contractor team to lead the construction phases of the project.

149.4. Completed assessment and renovation of the relocation sites. 149.5. Obtained/processed environmental and planning permits 149.6. Completed review/revision of local regulations related to traditional markets

and ring-fencing of land value capture for BOTs. Construction Phase 1 150. Phase I of the project deals with the construction of the commercial development component in Yaik Baru and Yaik Permai and the traditional market in Kanjengan Bioskop and Johar Selatan and the associated relocation.


Relocation for Phase 1 151. During this phase, the City will relocate the affected vendors in Yaik Baru, Permai, Pungkuran, Kanjengan Bioskop and Johar Selatan to the renovated SCJ and Pasar Dargo. It is expected that this relocation can be completed in three months. Preliminary conversations with the stakeholders suggest that SCJ will be used for vendors of dry commodities such as textile/clothing, glassware and Pasar will be Dargo used for wet commodities and seasoning. Construction for Phase 1 152. Demolition and construction of traditional market in Selatan and Kanjengan as traditional concrete frame and block infill buildings will require some 18 months for construction. The demolition of the existing buildings would normally be undertaken with substantial manual input and an initial six months has been allowed, leading to a 2-year contract period. 153. For the fifteen-storey buildings in Yaik Baru and Permai a three-year construction program using traditional build, plus six months for demolition, is appropriate if managed by the private sector. A six-month reduction in the overall program may be achieved with through use of precast materials. 154. Faster methods of construction such as steel-frame with proprietary cladding, or precast concrete and precast panels, could shorten the overall period by six months and should be investigated further in the pre-development phase. At the end of construction, all of the relocated vendors in Pasar Dargo will be moved back to the new Kanjengan and Selatan. The relocated dry commodity vendors in SCJ will be moved to the new Yaik Permai. Construction Phase 2 155. Phase 2 of the project deals with the renovation of the heritage buildings, Johar Utara and Johar Tengah, and the associated relocation. Moving the renovation to the end of the implementation allows SCG to continue its efforts to seek international donor funding for conservation. Relocation for Phase 2 156. During this phase, the City will relocate the affected vendors in Johar Utara and Tengah to SCJ and Pasar Dargo. It is expected that the relocation to SCJ will be permanent to reduce density and allow rehabilitation of Johar Utara and Tengah to its original conditions. If space permits, many of these vendors (mainly dealing in clothing) can also be accommodated in the remaining space in the new Yaik Permai. Construction for Phase 2 157. For the renovation of the heritage building, a detailed survey of the structural condition, and the requirements for removal of later additions, will be required and a year should be allowed for survey and renovation design, and this can be done only after the vendors have been relocated from these buildings. Renovation of the building is expected to take 18 months. 158. At the completion of construction, the vendors relocated to Pasar Dargo will be moved back to the renovated Utara and Tengah buildings.

Documents

Project Preparation for Livable Cities in Asia: PFS on Climate … · 2016. 8. 9. · 41/2008 and City Reg. 9/2013 on Traditional Market2. Dinas Pasar is responsible for 51 markets