Jakarta. The World Bank's board of executive directors has approved a $49.6 million loan to Indonesia to finance its National Urban Development Project.

The aim of the project is to improve urban planning and achieve sustainable urban development goals in cities throughout the archipelago.

Indonesia is one of the largest contributors to urbanization globally. According to the United Nations, the country's urban population increased by nearly 59 million people between 2010 and 2018, third only to China and India. About 54 percent of the population, or 137 million people, live in cities. The country's share of urban residents is expected to grow to 68 percent of the population by 2025. 

Indonesia has not fully benefitted from the positive effects of urbanization due to inadequate infrastructure and poor spatial planning.

"This project will cause more effective financing of infrastructure to make cities more livable and productive," said Rodrigo A. Chaves, World Bank country director for Indonesia and Timor-Leste.

The National Urban Development Project (NUDP) will help cities integrate sectoral plans and strategies, including master plans for transportation, housing, economic strategies and environment. It will also strengthen the link between medium-term capital investment, infrastructure prioritization and financing needs.

"Indonesia is vulnerable to the adverse impacts of climate change. This project will improve links between urban planning and infrastructure development to make the investments more efficient and reduce the vulnerability to climate-related hazards by directing development towards lower risk areas," Chaves said.

The NUDP will also support the development of higher-quality data and studies for urban planning, help city governments make better capital investments across sectors and enhances their ability to access alternative sources of financing.

"Helping municipal governments integrate spatial planning with capital investment planning will help cities become drivers of prosperity for the country's fast-growing urban population," said Rudy Prawiradinata, deputy for regional development at the National Development Planning Agency (Bappenas).

The project is expected to benefit around 12.5 million people living in 13 Indonesian cities. Municipal agencies will also benefit from improved capacity for evidence-driven urban planning and financial management, as well as better integration of spatial and socioeconomic development planning.