David Ray is the Director of the Indonesia Infrastructure Initiative (IndII), an AusAID-funded facility to promote economic growth through improvements in both the quality and quantity of Infrastructure in Indonesia, particularly in urban areas. To date, IndII has focussed on the water/ sanitation sector and the roads/transport sector as well as a number of cross-sectoral issues, such as infrastructure finance. This presentation will outline key lessons learned from the first phase of IndII, highlighting the main infrastructure problems and constraints; and their potential remedies, from both a policy and donor-action perspective. Central to the presentation, is the argument that institutional problems, rather than resource constraints, is the primary reason for infrastructure failures. Various examples will be drawn from the watsan and transport sectors to show how poor institutional coordination, capacity and commitment have undermined infrastructure delivery and outcomes. Time permitting; the discussion will also consider a new, innovative and promising mechanism for donors in the infrastructure sector known as results-based financing, covering output and performance based aid. The first phase of IndII is scheduled for completion in June 2011. It is expected that IndII will be extended beyond this date for a period of four years.