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Transcript of DSF Annual Report 2010
ADB
DECENTRALIZATION SUPPORT FACILITYANNUAL REPORT 2010
Decentralization Support FacilityIndonesia Stock Exchange BuildingTower I, 9th Fl., Suite 901Jl. Jenderal Sudirman Kav. 52-53Jakarta 12190P: +62 21 5299 3199F: +62 21 5299 3299E: [email protected]: www.dsfindonesia.org
Printed in August 2010Cover and layout: Harityas WiyogaPhotos: World Bank and stock.xchngThe findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of DSF members or the governments they represent. DSF does not guarantee the accuracy of the data included in this work.
ANNUAL REPORT 2010
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FOREwORDOver the last year, the Decentralization Support Facility (DSF) has designed, approved, and begun to implement a comprehensive programme of support that addresses important aspects of public service delivery, fiscal decentralization, governance capacity building, and planning. DSF support to the development of local government borrowing (bond issuance); data provision to the regional financial information system; and monitoring and evaluation of the use of special allocation funds (DAK) to local governments is particularly noteworthy. And, among activities soon to commence implementation, its contributions to spatial planning and to the strengthening of the capacity of local government legislatures and local public service providers show great promise.
The challenge now is to ensure these programmes deliver concrete outputs that improve the decentralization process in Indonesia and the quality of governance and service delivery that people experience in their local communities.
However, perhaps the most important development to date has been the deepening of government ownership and leadership of the DSF. The DSF programme now clearly accords with the Jakarta Commitment’s emphasis on government-led capacity building: ‘government will articulate and development partners will support the achievement of capacity development objectives and targets’.
Another striking feature of the DSF programme is that much of it is being - or will be - executed using government procurement and financial management systems (‘on budget’ and ‘on treasury’). This feature of the DSF, which has required close collaboration between the DSF Executive and different units of government, and sometimes between government agencies, sets it apart from other (particularly bilateral) development assistance to decentralization. It has been a time consuming and sometimes complex process, but one that has yielded considerable benefit, in terms both of government capability enhancement and ownership. This too is a cornerstone of international aid effectiveness declarations – which emphasise the need to ‘strengthen and use developing country systems to the maximum extent possible’ and for donors ‘to use country systems as the first option for aid programmes’. These are important and heartening developments.
As the Jakarta Commitment asserts and the DSF demonstrates, multi-donor facilities that take seriously the aspects of government ownership referred to above are vital to aid effectiveness in strong middle income countries like Indonesia. Along the lines set out in this report, government is considering a number of scenarios for the future of the DSF and possible revisions to its governance structure and how best – with development partners - to build on the foundations that have begun here to be laid.
We would also like to take this opportunity to express our gratitude for the hard work that has been done throughout the year by government and donor members of the DSF Management Committee and the important contributions made to the DSF by its Steering Committee founding co-chair, Dr. Max Pohan, and by its outgoing co-chair, Prof. Dr. Mardiasmo.
Prof. Dr. Heru SubiyantoroActing Co-chair DSF Steering CommitteeSecretaryDirectorate General of Fiscal BalanceMinistry of Finance
Dr. Kenny DickCo-chair DSF Steering Committee DirectorDfID, Indonesia
iv
PREFACE
This report again reflects solid progress by the DSF over the past year. Its program of activities continues to make useful contributions to fiscal decentralization; to service delivery; to aspects of governance reform; to planning and performance management; and to knowledge management. However, the execution and implementation of the DSF 2009-2011 programme has brought out the tension between, on the one hand, understandable donor imperatives to disburse funds as quickly as possible and, on the other, government’s ability to absorb development assistance and, associated with this, the quality of the work that is done. This is particularly so for activities whose execution entails the use of government financial management and procurement systems. Much of the year has been consumed by project design work and by preparations for different forms of execution.
The report also draws attention to the evolution of the DSF towards genuine government ownership and leadership and the way in which this has come to be reflected in the management of the day-to-day operations of the DSF. The implications of this for the formal governance structure of the DSF are discussed in the report, and we strongly endorse the general direction of such discussion.
With the help of the DSF Executive, government is now in the process of designing a major programme of support to decentralization that could become a rallying point for development assistance in this field. We feel that the DSF is well placed to continue to play a significant role in relation to this and in relation to government’s management of development assistance for decentralization more generally.
Such progress has arisen from extensive collaboration and growing levels of trust (built on mutual perceptions of competence and integrity) between government entities and between government and other components of the DSF. These are necessary and sufficient conditions for aid effectiveness.
The founding and incoming government co-chairs of the DSF Management Committee, Dr Himawan Hariyoga and Dr Nuryanto, have been instrumental to the development of these conditions, as has the government technical team that supports the DSF. We would like to thank them all for their invaluable contributions.
A special vote of thanks goes to the founding co-chair of the DSF, Dr Himawan Hariyoga, whose equanimity and consummate interpersonal skills were crucial to DSF’s successful navigation of a particularly testing time in its history.
Prof. Dr. Heru SubiyantoroCo-chair DSF Management CommitteeSecretaryDirectorate General of Fiscal BalanceMinistry of Finance
Peter Ellis, PhDCo-chair DSF Management CommitteeSenior EconomistSustainable Development DepartmentWorld Bank
ANNUAL REPORT 2010
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TAbLE OF CONTENTS
SUMMARY ............................................................................................................................................................ 1
Governance and Development Context ........................................................................................................... 1
work Programming .....................................................................................................................................2
work Programme Implementation .................................................................................................................3
Donor Harmonisation and Knowledge Management .........................................................................................5
The Future of The DSF .................................................................................................................................5
Aid Effectiveness ........................................................................................................................................5
Governance, Local Government Engagement, and The DSF Executive ...................................................................5
Risks and Challenges ..................................................................................................................................6
Contracts and Agreements ...........................................................................................................................6
Financial Report .........................................................................................................................................6
Conclusion .................................................................................................................................................6
INTRODUCTION ......................................................................................................................................................7
Chronology of Significant Events ...................................................................................................................7
GOVERNANCE AND DEVELOPMENT CONTEXT ................................................................................................................9
Political Stability Combined with Strong, Sustained Development .......................................................................9
benefits and Challenges of Decentralization .................................................................................................. 10
Policy Choices in Relation to Service Delivery ................................................................................................ 12
Strengthened Purpose and Roles of The DSF .................................................................................................. 12
Governance Context and Decentralization ...................................................................................................... 12
STRATEGIC FRAMEwORK AND wORK PROGRAMMING ................................................................................................. 17
Strategic Framework ................................................................................................................................... 17
work Plan Activities.................................................................................................................................... 18
Public Service Delivery .......................................................................................................................... 18
Fiscal Decentralization .......................................................................................................................... 19
Governance Reform .............................................................................................................................. 19
Planning and Performance Management .................................................................................................. 19
work Programming ....................................................................................................................................20
wORK PROGRAMME IMPLEMENTATION .....................................................................................................................25
Key Milestones ..........................................................................................................................................25
Milestone 1: Improved Regional Financial Information Systems (SIKD) .........................................................25
Milestone 2: Enhanced Fiscal Decentralization Policy .................................................................................26
Milestone 3: Strengthened Monitoring and Evaluation of Special Allocation Funds (DAK) ................................26
Milestone 4: Improved Provincial Spatial Planning.....................................................................................27
Milestone 5: For Legislative Councils (DPRD), Improved Legislative Processes, Resource Allocations,
and Oversight ..................................................................................................................................... 27
Other Parts of the work Programme .............................................................................................................27
vi
Governance Reform ..............................................................................................................................27
Public Service Delivery ..........................................................................................................................30
Fiscal Decentralization .......................................................................................................................... 31
Planning and Performance Management ..................................................................................................32
Donor Harmonisation and Knowledge Management ...................................................................................34
Delays and Remedies .................................................................................................................................35
THE FUTURE OF THE DSF .........................................................................................................................................37
Structural Components and Responsibilities ..................................................................................................38
Achievements and Challenges .....................................................................................................................38
Achievements ......................................................................................................................................38
Challenges ..........................................................................................................................................39
The Future of the DSF: Complementary Strands of Development?......................................................................39
Strand 1: Extension of Existing Technical Assistance? .................................................................................. 41
Strand 2: Technical Support to a Loan? ....................................................................................................42
Towards Nationalisation .........................................................................................................................42
The Future of the DSF: Governance Structure .................................................................................................43
Next Steps ................................................................................................................................................46
AID EFFECTIVENESS ...............................................................................................................................................47
GOVERNANCE, LOCAL GOVERNMENT ENGAGEMENT, AND THE DSF EXECUTIVE ...................................................................49
Governance ...............................................................................................................................................49
Engagement with Local Government .............................................................................................................49
The DSF Executive ......................................................................................................................................50
RISKS AND CHALLENGES ........................................................................................................................................ 51
Risks ........................................................................................................................................................ 51
Challenges ...............................................................................................................................................52
CONTRACTS AND AGREEMENTS ...............................................................................................................................53
CONCLUSION ........................................................................................................................................................55
ANNEX A: SOURCES ...............................................................................................................................................57
ANNEX b: FINANCIAL REPORT ..................................................................................................................................59
ANNEX C: MONITORING FRAMEwORK .......................................................................................................................66
ANNEX D: LIST OF ACRONYMS, AbbREVIATIONS, AND TRANSLATIONS .............................................................................87
1
SUMMARY SThis report presents an account of progress achieved by the DSF over the period July 2009 – June 2010. It also considers a number of scenarios for the future of the DSF and the conditions that must be met in order for its life to be extended beyond the current closing date for the completion of activities, which under current funding arrangements is September 2011. In addition, the report contains short chapters that address a possible aid effectiveness role for the DSF; risks and challenges faced by the DSF; contracts and agreements signed and about to be signed; and DSF governance arrangements, interactions with local government, and the DSF Executive.
The year began with the granting to the DSF by its principal financial donor (DfID) and its other financial donors (AusAID and CIDA) of a no-cost extension through to September 2011.1 The rest of the year was devoted to intensive activity design with government, preparations for activity execution by the Government of Indonesia or the Bank under the approved DSF Work Plan 2009-2011 and, for parts of the work plan, the early stages of implementation. Towards the end of reporting period, there were discussions concerning the future of the DSF and a possible aid effectiveness role for the DSF.
GOVERNANCE AND DEVELOPMENT CONTEXT
Indonesia’s status as a stable and strong democratic country with a healthy and robust economy consolidated over the last year and is increasingly widely recognized in the international community of nations. Despite the financial crisis, Gross Domestic Product (GDP) grew an estimated 4.5% in 2009, with a recovery in trade volumes and an increase in the current account surplus. In the last few years, considerable progress has also been made by government in relation to macroeconomic management, governance reform and development performance generally, and in relation to the political objectives of decentralization. Evidence of this is to be found in Indonesia’s steady climb up the national ‘world competitive’ rankings list (51 in 2008; 42 in 2009; and 35 in 2010). In 2010, Indonesia is ranked ahead of countries like Spain, Portugal, Italy and Russia. Local and foreign investor confidence remains relatively strong.
In terms of sustainable development, according to some estimates, the poverty rate has fallen by about one percent per year since 2003. By 2006, the percentage of people living on less than $1 per day was below the Millennium Development Goal (MDG) target. Even so, progress on certain development
1 Under current funding arrangements, the formal closing date is March 2012. The six months between the cessation of activities (September 2011) and the formal closing date allows for the settlement of outstanding payments and the orderly winding down and closure of the facility.
2
SUMMARY
indicators - such as maternal mortality, chronic malnutrition, access to clean water, stable energy supply, levels of infrastructure investment (3.84% of 2008 GDP), education achievements, and poverty in general - still lags behind some poorer countries in the region. As we did last year, this report again emphasises the importance of striking a better balance between reform inspired by demand and reform based on a supply-side perspective.
In this context, questions of local service delivery are crucial. Expected increases in general (DAU) and special purpose (DAK) fiscal allocations to the regions, together with transfer of responsibilities for program implementation and revenue collection (such as property tax) could help to improved service delivery, but will clearly need to be managed carefully. For financial year 2010, around 322 trillion rupiahs (30% of total) has been budgeted in the state budget (APBN) for transfer to the regions. A further 40 trillion Rupiah will be channelled through deconcentration (Dekonsentrasi) and ‘co-administrative task’ funds (Tugas Pembantuan). However, these significant transfers need to be accompanied by adequate accountability systems. In 2008, only 8 out of 500 regions received unqualified audit opinions. Low absorption of funds is another problem. By the end of 2009, around Rupiah 100 trillion that was undisbursed was returned in the form of Bank Indonesia Certificates kept at the Central Bank.
The report also summarises governance changes that have a more direct impact on decentralization and on different aspects of the DSF work program, noting in particular changes in relevant legislation; institutions; key positions and associated authorities; and practices and processes.
The purposes and roles of the DSF remain valid and important in this governance and development setting. Soundly based, equitable, and well directed and implemented development policy; strong governance institutions; capable people of high integrity; and effective development assistance are more important than ever.
wORK PROGRAMMING
The chapter opens with a brief description of the DSF strategic framework, within which the activities outlined in the DSF Work Plan 2009-2011 are situated. It also contains brief descriptions of activities supported under the work plan, which are structured according to the four priority areas stipulated by the DSF SC and address one or more of the key issues highlighted in the strategic framework.
New program development. The period July-December 2009 was devoted to intensive activity design with government (14 main activities and 9 related, subsidiary activities) and preparations for activity execution by the Government of Indonesia (GOI) or the Bank under the approved DSF Work Plan 2009. The first six months of 2010 saw the beginnings of implementation for parts of the work plan, further preparations for different forms of execution, and the commencement of discussions concerning the future of the DSF and a possible aid effectiveness role for the DSF.
Work Programming process. Before execution and implementation of activities can take place, they must be developed in sufficient detail to provide a basis for procurement - into activity concept notes (ACNs). The (implementation) work to be undertaken must also be set against relevant comparative experience and, as far as possible, should be informed by the best thinking in the field.
Important features of the ACNs developed to date include their genuine genesis in government; their strategic significance to decentralization and their inter-connectedness; their basis in healthy engagement and dialogue with government; and, where feasible, their attention to political economy issues.
During the reporting period, progress in relation to the finalisation of execution arrangements for the majority of the fourteen activities has been satisfactory in the circumstances. Trust funds for eleven of the fourteen activities are now active and the activities are being implemented or are soon to begin implementation. Nevertheless, from a disbursement standpoint, progress has been slow.
ANNUAL REPORT 2010
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Of the remainder, ACN 11 (Formulation of Norms, Standards, Procedures and Criteria - MoHA) is close to finalising the conditions for execution; but progress for ACNs 4 (Management Strengthening and Institution Building for Local Public Service Providers - MoHA), 8 (Institution Building for Accelerated Development of Border Areas - MoHA), and 14 (Capacity Building for Minimum Service Standards Costing and Implementation - MoHA) has been slow and puts these activities at risk of not being able to complete by the closing date of September 2011, at least without significant reduction to the scope of work.
In relation to the second round of programming, six of the nine addenda have now been completed or are covered in an existing ACN or in other documents.
However, there has been little progress in relation to proposals 3 (Local Government Evaluation - MoHA), 5 (Regional Finance - MoF), and 9 (Grand Design on the Implementation of Regional Autonomy - MoHA). For all three of these activities, time is running out and it seems improbable that they would be able to complete by September 2011 without, at least, a significant reduction in scope.
On the basis of a fiscal agency agreement signed between the World Bank and the UNDP on 26 May 2010, the $2 million Provincial Governance Strengthening Programme will commence implementation in July 2010.
Delays. From a disbursement standpoint, progress has been slow: at the end of the reporting period, disbursements totalled USD 17.33 million (39.3% of total pledged or 41.38% of allocations). However, this needs to be viewed partly against inherited ‘disbursement lag’ from 2007, when the DSF had only disbursed 10% of its funds (US$ 4 million). It should also be seen in the light of the recency of its new work program (2009-2011) , which was approved in late 2009. Further explanations for the pace of progress, particularly in relation to recipient-execution, are provided in the body of the report.
wORK PROGRAMME IMPLEMENTATION
Key milestones. Progress is satisfactory in relation to the attainment of five key milestones, although for some there has been a certain amount of drift in relation to target completion dates:
a. ‘Improved Regional Financial Information Systems’: electronic data are available for 8 local governments and the goal of having 25 districts complete electronic data submission is within reach.
b. ‘Enhanced Fiscal Decentralization Policy Framework’: data gathering workshops have been held in three provinces and a revised draft of the grand design is expected in the third quarter of 2010, but delays are probable with work on the grand design of regional autonomy (by MoHA), which will influence speed of progress with this milestone.
c. ‘Strengthened Monitoring and Evaluation of Special Allocation Funds’ (DAK): preparation for data collection is well advanced and field work in Yogyakarta and five other provinces will commence in the third quarter of 2010.
d. ‘Improved Provincial Spatial Planning’: support with the drafting of integrated plans is being provided to local governments in three provinces. The milestone should be achieved by June 2011.
e. ‘For Local Parliaments, Improved Legislative Processes, Resource Allocations, and Oversight’: Recipient execution is underway and procurement has begun. Training preparation is due to commence in the third quarter of 2010 and is on target to complete initial training targets by December 2010.
Governance reform. The DSF finances four activities in this field: (a) local legislature (DPRD) capacity strengthening (ACN 1 and addendum; and Milestone 5); (b) institution building of government education and training centres - on competency-based standards for improved public service delivery (ACN 7); (c) decentralization education and training (ACN 9); and (d) sub-national investment climate reform.
Procurement for the DPRD strengthening activity has begun and it is on track to be completed by September 2011, with initial training targets met by December 2010 (as above). Likewise, procurement
4
SUMMARY
is underway for government education and training centre development and this activity is on schedule to complete by September 2011. Both activities are recipient-executed (MoHA), which necessitated extensive preparation and capacity building.
In relation to sub-national investment climate reform, further institution building of local governments is to be provided for the establishment of effective, efficient and accountable regulations and processes for business licensing. Implementation arrangements are being finalised and the activity should commence in the third quarter of 2010.
The decentralization education and training activity comprises scholarships for coursework postgraduate degrees (abroad) and short courses of training for central, local government, and civil society organization (CSO) officials. The scholarships programme is being administered by the British Council and scholars will commence study in September 2010. English language training for IELTS was conducted in June 2010. Execution arrangements for the short course and study tour components of the activity will be finalised in the third quarter of 2010.
Public service delivery. In the domain of public service delivery, the DSF continues to contribute to the development and dissemination of legislation and procedures governing functional assignments; minimum service standards (MSS) (and costing thereof); service delivery in border areas; and institution and capacity building of service providers (referred to as ‘alternative mechanisms for service delivery’).
Activities in these fields under the DSF Work Plan 2009-2011 have been slow to get off the ground however: the recipient-executed parts of the work on MSS (ACN 14) are not expected to commence until the third quarter of 2010; support to the formulation of norms, standards, procedures, and criteria (ACN 11) will commence in July 2010; and management strengthening and institution building for local public service providers (ACN 4) is also due to commence in the third quarter of 2010.
Fiscal decentralization. DSF supports four areas of fiscal decentralization: (a) sub-national borrowing (ACN 6); (b) data provision to the regional financial information system (ACN 12 – and Milestone 1); (c) the policy framework for fiscal decentralization (Addendum to ACN 13 – and Milestone 2); and (d) monitoring and evaluation of special purpose grants to local governments (ACN 3 – and Milestone 3).
Under the general heading of sub-national borrowing, the DSF has supported activities in debt restructuring; preparatory work for the issuance of a Jakarta bond and a Bandung bond; helped to draft relevant legislation; conducted pre-feasibility studies of projects to be financed; and has helped to estimate local government pay-back capability. Scoping work for a Surabaya bond is planned for August 2010.
Planning and performance management. Six important domains of planning and performance management are currently receiving DSF support: (a) spatial planning (ACN 5 and Milestone 4); (b) institution building for the development of border areas (ACN 8); (c) the strengthening of local government natural resource management capability (ACN 10); (d) capacity building for regional policy formulation; (e) local government evaluation; and (f) strategic planning for the establishment of a regional economic development facility.
In relation to institution building for the development of border areas, recommendations for the organisational design of the National Agency for Border Management (BNPP) have been put to a cross-ministerial group comprising representatives from Bappenas, the Ministry of Home Affairs (MoHA), the Ministry of Disadvantaged Areas, and the Ministry of Finance (MoF). In the third quarter of 2010, among other things, the DSF will support the production by Bappenas and MoHA of national and regional action plans to improve public service delivery in border areas.
The pilot stage of support to spatial planning began in May 2010. By the third quarter of 2010, this should have resulted in the production by local governments in three provinces (West Sumatra, East Java, and Gorontalo) of spatial plans that are integrated with national spatial plans.
ANNUAL REPORT 2010
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The DSF is providing technical assistance to a team comprising representatives of government, commerce and industry, CSOs, and academia whose job it is to assist government with the evaluation of newly-created regions and to make recommendations concerning policy.
Implementation of the support to the strengthening of local government natural resource management capability; capacity building for regional policy formulation; and strategic planning for the establishment of a regional economic development facility will commence in the third quarter of 2010.
DONOR HARMONISATION AND KNOwLEDGE MANAGEMENT
Donor harmonisation. A donor mapping data base (DMD) has been developed and is now in the process of being upgraded and up-dated; supported technically by the DSF; and institutionalised in government. The purpose of the DMD is to monitor and analyze aid rendered to Indonesia by the international donor community, and thereby to serve as a valuable planning and monitoring tool for government and for members of the donor community.
Knowledge management. This consists of four main elements: first, the production of occasional policy briefs arising from DSF-supported activities or other work relevant to decentralization done by others; second, the maintenance of an electronic repository of relevant documents on decentralization produced by development partners in Indonesia; third, the maintenance of a DSF web site; and fourth, knowledge sharing and knowledge building activities concerning critical aspects of the DSF strategic framework for the benefit of central and local GOI officials and CSOs.
THE FUTURE OF THE DSF
The report discusses a number of scenarios for the future of the DSF. Included among them is a scenario – in the very early stages of discussion - that involves the DSF in the design and implementation of a programme of technical assistance and capacity building associated with a Development Policy Loan (DPL) from the World Bank to the Government of Indonesia, possibly building on the Asian Development Bank’s USD 350 million Local Government Finance and Governance Reform Policy loan. This new programme possibility will be developed by government in consultation with stakeholders, including AusAid, CIDA, GTZ, USAID, UKAID, the Netherlands, and UNDP. This section also considers how all or parts of the DSF might be assimilated by government over the medium term and it makes proposals for a revised and more effective and efficient governance structure for the DSF that reinforces government leadership of the facility (‘nationalization’) and involves local government and other stakeholders.
AID EFFECTIVENESS
With a view to establishing a more clearly defined capacity building role for the DSF in relation to aid effectiveness, in the third quarter of 2010, further discussions will be held with government concerning a broad range of aid effectiveness issues – extending beyond ‘donor coordination’ or ‘harmonisation’ to data concerning ‘market’ composition, modalities of assistance, quality of design and implementation; alignment; accountability and reporting; and government ownership.
GOVERNANCE, LOCAL GOVERNMENT ENGAGEMENT, AND THE DSF EXECUTIVE
Towards the end of the second quarter of 2010, the process of formal reassignment of co-chair responsibilities for the DSF Management Committee (MC) and Steering Committee (SC) began. During the transition period, the (predominantly work plan execution and implementation) business of the DSF has been managed effectively and efficiently through breakfast meetings held periodically with the founding government co-chair of the MC, and the outgoing and (possible) incoming government co-chairs.
6
SUMMARY
Also in the second quarter of 2010, there was discussion within government concerning its representation on the DSF SC and of the governance structure of the DSF as a whole (see Chapter 5).
In accordance with MC direction, in May 2010 concrete steps were taken towards the establishment of a local government consultative group for the DSF.
During the first six months of 2010, a number of professional national and international staff appointments were made, thereby bringing the DSF Executive to its full complement of professional staff.
RISKS AND CHALLENGES
Aid effectiveness issues constitute the main risks to the DSF, particularly those arising from the extent to which obligations under international aid effectiveness declarations are fulfilled by signatories to those agreements.
Challenges facing the DSF are discussed in terms of preparations for recipient execution; speed of implementation and disbursement; expectations for improvement (that are likely to be incremental rather than ‘breakthrough’ and to take a long time); and developing a more widely shared understanding of ‘government led’.
CONTRACTS AND AGREEMENTS
This chapter sets out contracts and agreements signed during the first six months of 2010; and those that are expected to be signed by September 2010.
FINANCIAL REPORT
On the basis of exchange rates prevailing at 30 June 2010, the total amount pledged to DSF stands at USD 44.06 million. Of this amount, a total of USD 41.88 million (95% of total pledged) has been formally allocated to approved activities and DSF operations. At the end of the reporting period, disbursements totalled USD 17.34 million (39.3% of total pledged or 41.38% of allocations). A full financial report is set out in Annex B.
CONCLUSION
The report concludes by observing that the DSF remains the only genuinely government-led multi-donor facility in the field of decentralization. It is unusual also in that many of the activities it supports are executed using government systems of financial management and procurement. It is making important contributions to aspects of fiscal decentralization, service delivery, governance reform, and planning and performance management.
For all of these reasons, it is highly valued by government, which is the strongest endorsement that it could receive.
This makes it a viable means for donors to fulfil many of the aid effectiveness obligations set out in the Paris Declaration (2005), the Accra Agenda for Action (2008), and the Jakarta Commitment (2008).
With help from the DSF Executive, in June 2010 government began the process of designing a programme of support to decentralization that will address significant aspects of fiscal decentralization, service delivery, and upward and downward accountability. It is envisaged that this programme (whose design should be completed by around September 2010) will provide the foundation for DSF support beyond March 2012 and the means by which closer links with other programmes of assistance to decentralization soon to commence implementation (such as those of AusAID, CIDA, GTZ, and USAID) can be forged and maintained.
7
In accordance with the DSF Operations Manual, this report is submitted within 30 days following the end of the second quarter of 2010.
The report begins with a chronology of significant events that have taken place over the past twelve months. Next, progress and plans are set against a general discussion of development in Indonesia that – with up-dates - draws partly on discussions of context presented in quarterly reports submitted during the year.
Two chapters are devoted to programming and implementation of DSF-financed activities.
The report also contains a chapter that discusses possible future scenarios for the DSF and the evolution of its governance structure towards greater government ownership; as well as chapters that discuss a possible aid effectiveness role for the DSF; risks and challenges facing the DSF; contracts and agreements signed and due to be signed by the end of the third quarter of 2010; and current DSF governance arrangements, interactions with local government, and the DSF Executive.
Progress of the DSF work programme made against milestones is incorporated in a monitoring framework set out in Annex C. A financial report for the year is presented as Annex B.
CHRONOLOGY OF SIGNIFICANT EVENTS
July-October 2009. Following the granting (on 12 May 2009) by the DSF’s principal financial donor, DfID, and soon thereafter by its other financial donors (AusAID and CIDA) of a no-cost extension of their support to the Facility through to September 2011,2 intensive design work was carried out on 14 activities under the DSF Work Plan 2009-2011. Detailed ACNs were circulated to MC members for comment and to independent reviewers. Following incorporation of feedback, the ACNs were approved by the DSF MC by circulation.
28 October 2009. At a meeting held on 28 October 2009, it was agreed that a further 9 activities that were closely linked to the first batch of 14 activities under the DSF 2009-2011 Work Plan could be described and argued briefly in short concept papers (1-2 pages), reviewed by MC members, and approved by
2 This is the date for the cessation of activities. The formal closing date of the facility is currently 31 March 2012. The six months between the cessation of activities and the formal closing date allows for the settlement of outstanding payments and the orderly winding down and closure of the facility under current funding arrangements. The Contribution Agreement has been revised ac-cordingly. The Government of Indonesia and the World Bank have extended the period of the memorandum of understanding governing the DSF to December 2011.
INTRODUCTION 1
8
INTRODUCTION
circulation. These 9 additional activities were then to be designed in greater detail, reviewed internally, and incorporated as addenda to relevant activities in the first batch of 14 activities.3
November - December 2009. The 9 additional activities were designed, written-up, and approved as above and work continued on preparations for recipient and Bank execution of the first batch of activities. The approval of the 9 additional activities and their associated budgets meant that by December 2009 all pledged monies under the DSF had either been disbursed or committed or allocated to approved activities.
January-June 2010. This period was given over to further design work and the writing of addenda and preparations for recipient and Bank execution of activities, and implementation. It also saw the beginning of discussions within government and the Bank and between government and development partners of future scenarios for the DSF. Steps were also taken towards the establishment of a local government consultative group for the DSF; towards identifying an aid effectiveness role for the DSF; and towards institutionalization within government of a donor-mapping database.
3 Activity concept notes - and addenda to them - set out in sufficient detail to provide a basis for procurement the purposes and ra-tionales of activities contained in the DSF Work Plan 2009-2011. They also indicate the agreed mode of execution to be employed for activities and contain a budget estimate and procurement and implementation schedule.
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Over the course of the reporting period, Indonesia’s status as a stable democracy that plays a constructive role in the regional and international communities of nations continued to grow and to be increasingly widely recognised4.
POLITICAL STAbILITY COMbINED wITH STRONG, SUSTAINED DEVELOPMENT
Political governance. The bases of such development, which were discussed in the DSF Annual Report 2009, remain solid, namely: first, the strength of the electoral system, which has become one of the more competitive in the region. Governments at all levels are elected in free, fair, and peaceful elections that result in a significant turnover of representatives. Second is the Indonesian presidential form of government, which is designed to provide checks and balances between the legislative, judicial and executive branches of government. Third, the Constitutional Court exercises critical oversight of parliament and of other institutions.
Economic governance. Fourth, as a consequence of good economic management over several years, public debt has been reduced, foreign reserves have grown, the financial sector has been strengthened, and a more robust domestic economy has been established. In short, Indonesia’s macroeconomic condition is stable and not in crisis. Fifth, all of this has helped to increase local and foreign investor confidence, and civil society organisations are better able than before to pursue their interests and to be heard. Sixth, recognizing its low standing in international comparisons of the extent of systemic corruption, the government has maintained its vigorous and well-publicised anticorruption drive.
As a result of such developments, Indonesia weathered the global financial turmoil and economic slow-down of recent years better than most other economies in the region and better than many others outside of the region. After macroeconomic stability was restored in 2004-08, economic growth has been strong and sustained. Despite the financial crisis the GDP grew an estimated 4.5% in 2009, with a recovery in trade volumes and an increase in the current account surplus.
Domestic demand has been the main driver of recent growth rates. Public debt has been reduced from more than 80 percent of GDP in 2000 to 32 percent in 2008. And while Indonesia is a net importer of oil it is a net exporter of energy. Booming exports have resulted in balance of payments surpluses, helping to produce foreign exchange reserves that provide a cushion against external shocks.
During the last few months, the country’s financial condition has also remained relatively unaffected by instability in several European sovereign debt markets. Moody’s ratings in June 2010 were positive and on an upward trajectory, noting ‘the country’s capacity for sustained strong growth, the overall stability 4 All secondary sources used as a basis for statements in this report are listed in Annex A.
GOVERNANCE AND DEVELOPMENT CONTEXT 2
10
GOVERNANCE AND DEVELOPMENT CONTEXT
and effectiveness of its fiscal and monetary policies, and expectations of further improvements in the government’s financial and debt position’. The World Bank’s (June, 2010) assessment is also positive – it expects ‘the (Indonesian) economy to accelerate through 2011, largely due to domestic demand’. Inflation has been moderate and is likely to remain so.
Further evidence of the extent of Indonesia’s achievements is to be found in the IMD World Competitiveness Yearbook 2010, where Indonesia’s competitiveness ranking has continued its steady improvement of recent years - from 42nd place in 2009 (up from 51st in 2008) to 35th in 2010. This ranking places Indonesia ahead of countries like Spain (36), Portugal (37), Italy (40), and Russia (51) and not that far behind Japan (27). IMD competitiveness rankings are based on careful and impartial assessments of changes to 329 criteria, two thirds of which are quantitative and ‘objective’.
Cautionary notes include the fact that government spending in the first five months of 2010 deteriorated relative to 2009, particularly for capital expenditure. A projected recovery in global commodity prices is one of a number of factors that could cause inflationary pressure in 2011. GDP growth is projected to be 6.2% in 2011, but this is heavily dependent on unreliable forecasts of increased global commodity prices.
The next phase of reform in Indonesia is likely to be less straight forward than the last one however. More, and more sophisticated, infrastructure will be needed. Special attention will need to be given to secondary and tertiary education, and to the development of sustainable health care and health insurance systems. Crucial also will be employment generation in the formal sector - by, for example, providing better access to finance for smaller firms (constrained at present by an oligopolistic banking sector).
Much will continue to depend on maintaining the commitment to governance improvement – to all legal institutions (and corruption); to public sector efficiency and effectiveness; and to sustainable growth with equity. Without such commitment, it will be difficult to avoid the ‘middle-income trap’ – or of falling between two stools: on the one hand, the speed and range of technical innovation of high-income countries and, on the other, the cheapness of labour in low-income countries. This can lead to stagnant poverty levels, the unsustainable depletion of natural resources, and disruptions to social cohesion.
bENEFITS AND CHALLENGES OF DECENTRALIZATION
In many countries that have embarked on major programmes of decentralization, the primary purposes have been political, either those of consolidating the position of a ruling party and of ruling elites or those of preventing the fragmentation of the state and ensuring political stability, or both. Our brief discussion above would suggest that in Indonesia in large measure the latter political purposes have been – and continue to be - well served by government policy on decentralization, and are well on the way to being achieved.
But as with any complex governance system, there is still room for improvement. As noted above, crucial institutions - such as the civil service, the legal system, the security sector, and provincial and district levels of government - are still weak.
Poverty. According to some estimates, the poverty rate has fallen by about one percent per year since 2003. By 2006, the percentage of people living on less than $1 per day was below the MDG target. Even so, poverty remains a problem. While considerable progress has been made on some indicators (for example, life expectancy) and there is some debate about measurement and indices, it is generally accepted that the number of people living in poverty is high for a middle income country, and (as a percentage of population) comparable to or worse than that of some low-income countries such as Vietnam. On some measures, nearly half of Indonesia’s population can be classified as poor, or as ‘near poor’ and therefore vulnerable to external shocks that can drive them into poverty. Recent increases in food, oil, and other commodity prices are likely to have a disproportionate impact on poor and near-poor households.
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Maternal mortality rates remain high - as much as three times those of Vietnam and six times those of China. Less than 1% of Indonesians have access to piped sewerage systems. And there are problems with chronic malnutrition, access to clean water, stable energy supply, levels of infrastructure investment (3.84% of 2008 GDP), and education achievements. As in many other countries, there is significant geographical variation in these indices and in poverty levels.
Cross-cutting issues. The magnitude, complexity, and speed of Indonesia’s decentralization give rise to inevitable problems: of weak capacity at all levels; of lack of clarity in the attribution and definition of roles and functions between institutions and between levels of government; and weak upward and downward accountability. Rapid urbanization is going to require heavy investment in physical infrastructure and in social services and will exacerbate the other challenges mentioned. The DSF is making important contributions in many of these areas.
Regional autonomy. There are immense challenges surrounding regional autonomy – in June 2010, proposals for up to 181 new regions were being considered by the Ministry of Home Affairs. And opinion is divided as to the benefits - some arguing that local elites benefit disproportionally and that regional proliferation has simply served to multiply the opportunities for local-level corruption. A final decision on the creation of further new regions is likely to be postponed until a ‘grand design’ for the restructuring of regions has been produced. A Grand Design for Regional Autonomy (to 2030) is also being developed. The DSF is assisting with this under its 2009-2011 work plan.
Local government. The new decentralization has changed local government throughout the nation significantly. For example, new funding mechanisms delegate significant discretionary spending authority to local governments; local legislative assemblies are empowered to oversee local allocations and approve local budgets; and the authority and responsibility of district heads (bupati) and mayors (walikota) have been expanded significantly to cover a range of new functions.
The more than 500 provincial, district, and city governments now undertake almost 40 percent of public spending. And a number of sub-national governments have undertaken major reforms of their public sector systems, introducing performance-based budgeting and one-stop public services.
In this context, the questions of local service delivery are crucial. Expected increases in general (DAU) and special purpose (DAK) fiscal allocations to the regions, together with transfer of responsibilities for program implementation and revenue collection (such as property tax) could help to improved service delivery, but will clearly need to be managed carefully. For financial year 2010, around 322 trillion rupiahs (30% of total) has been budgeted in the state budget (APBN) for transfer to the regions. A further 40 trillion Rupiah will be channelled through deconcentration (Dekonsentrasi) and ‘co-administrative task‘ funds (Tugas Pembantuan). However, these significant transfers need to be accompanied by adequate accountability systems. In 2008, only 8 out of 500 regions received unqualified audit opinions. Low absorption of funds is another problem. By the end of 2009, around Rupiah 100 trillion that was undisbursed was returned in the form of Bank Indonesia Certificates kept at the Central Bank.
Government is aware, however, that the realization of national state sovereignty and development goals and the sustainability of the advances made will depend a great deal on the impartial or equitable delivery of local-level benefits or services to ordinary citizens, and the reduction of disparities between levels of society and between geographical regions. Ensuring adequate mechanisms for providing incentives and holding local government accountable to its citizens will be crucial to this. A number of the activities approved in the DSF Work Plan 2009-2011 demonstrate government’s commitment to addressing such issues.
Getting the balance right: To the extent that local governments have grown accustomed to the greater autonomy afforded to them by decentralization (particularly since 2001), a major task facing government will be to strike a balance between national concerns such as the recurring (though seemingly diminishing)
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GOVERNANCE AND DEVELOPMENT CONTEXT
threat of secession, on the one hand, and legitimate demands from the periphery for the maintenance of gains in local government autonomy on the other. Policies are clearly needed that promote the common interests to be found in these positions and that address questions of social and economic exclusion. Again, recognition of this is inherent in the goal of the DSF and its strategic priorities, which accord prime importance to improvements in service delivery for ordinary citizens.
POLICY CHOICES IN RELATION TO SERVICE DELIVERY
We reiterate our observation from 2009 that (understandable early) government emphasis on supply-side social engineering, particularly up-stream; centralist tendencies among power brokers; policy complexities and imperfections; and associated problems of implementation have constrained improvements to local service delivery and, thereby, national performance in relation to certain poverty indicators (as outlined above).
Again, as in last year’s report, our brief analysis of governance and development circumstances in Indonesia confirms that in relation to good governance, and decentralization and service delivery, there is much to be gained from demand side reform that creates heightened awareness of rights (and obligations) and expectations, and thereby demand, among citizens. This should be combined with continued supply side support that (among other things) promotes the allocation of well managed incentives to local governments for service provision. These conclusions are implicit in the four priority areas specified for the DSF by its Steering Committee, which embrace both supply and demand side considerations; capacity building; policy reform; and strengthening governance and accountability.
The need to strike an appropriate balance between demand and supply-side perspectives on support to decentralization is increasingly recognised within the DSF. The programme of support to decentralization that (beginning in June 2010) is in the process of being designed by government with the assistance of the DSF Executive pays particular attention to this question.
STRENGTHENED PURPOSE AND ROLES OF THE DSF
The relevance and importance of the purpose and roles of the DSF are enhanced by these circumstances. In the current global environment, soundly based, equitable, and well directed and implemented policy; strong institutions; capable people of high integrity; and effective development assistance are more important than ever.
Discussion in subsequent sections of this report of existing and planned DSF activities demonstrates DSF’s contribution to date and its potential contribution to these ends.
GOVERNANCE CONTEXT AND DECENTRALIZATION
In the rest of this chapter we collate governance developments that have taken place during the year that have a more direct and immediate bearing on different aspects of the DSF work program (principally changes in relevant legislation; institutions; key positions and associated authorities; and practices and processes).5
Decentralization in general. Two laws that form the basis of decentralization and local government are under revision, namely Law 32/2004 on Local Governance and Law 33/2004 on Fiscal Decentralization. Discussions concerning revisions to Law 32/2004, which are coordinated by MoHA, have been held over the last three years and have involved consultations with the general public as well as a number of local governments throughout the country. The business of revising this law is stipulated in the National Legislative Program 2010-2014. Considerable progress has been made with the revision of Law 32/2004 and a large number of strategic issues have been identified, including issues surrounding the establishment of
5 This does not pretend to be a complete account of such matters.
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13
autonomous regions; the allocation of functions between different levels of government; the accessibility of a number of basic services; the role of the governor as a representative of the central government; inter-regional cooperation; and regional planning and data management.
Government Regulation Number 19:2010 concerning ‘Procedures for the Implementation of Tasks, General and Financial Authorities associated with the Position of Governor as Government Representative in the Provinces’ has been issued as a follow-up to Law 32:2004. Its effective implementation will require a Presidential Decree and/or Minister of Home Affairs Regulation so as to define clearly implementation processes and procedures.
This regulation is geared towards reemphasizing the coordinating, facilitating and supervising role of the governor in governmental affairs implemented by districts and municipalities; reducing the strain or improving relations between province and lower levels of local government in some provinces; providing for stricter control of performance of districts and municipalities in implementing governmental affairs; applying similar norms, standards and performance criteria (NSPK) in regional development throughout Indonesia; reducing gaps in economic development between districts and municipalities; and promoting inter governmental cooperation between districts and municipalities.
Legislative councils (DPRD). In preparation for the 2009 legislative elections, a revision to Law No.22/2003 was passed. In discussions leading up to the revision, the position of the DPRD - as an elected body accountable to local authorities as opposed to an extension of the central government - was debated but not decided, and is therefore not addressed in the revision. However, the debate on this issue continues - in discussions surrounding the proposed revisions to Law No.32/2004 on local governance. Several studies have indicated that a careful review of the system of checks and balances is needed, including the approval of local regulations (whether by judicial review or MoHA) and the relationship between the DPRD and local government heads. In addition, discussions surrounding Law No.32/2004 are examining the role of the governor and whether the position will be an appointment or directly elected. Resulting decisions will have a significant bearing on a number of aspects of governance, such as public accountability and political legitimacy.
Competency-based training. The President announced that his number one priority in the Medium-term Development Plan for 2010-2014 is bureaucratic reform, covering the revision of the system of recruitment, education, appointment, promotion, and transfer of civil servants. The Government Training and Education Centre (Diklat) will make an important contribution to this reform program. Diklat’s mission is formalized in Minister of Home Affairs Decree No.378/2009 on the ‘Formation of a Reform Team for the Government Education and Training Centres in the Ministry of Home Affairs and Regional Governments’. Diklat must map competencies, review systems and procedures, and develop a competency-based training program to transform the training apparatus into a performance-based system. Diklat continues to be involved with the State Ministry of Administrative Reform (Kemenpan), the National Civil Service Agency (BKN), and the National Institute of Public Administration (LAN) on issues of consolidation and capacity building related to bureaucratic reform.
Planning. The Medium-term Development Plan for 2010-2014 (RPJM) became law in January 2010 (Presidential Regulation No. 5, 2010). The RPJM is presented as three books: Book 1 on ‘National Priorities’; Book 2 on ‘Strengthening the Synergies between Sectors’; and Book 3 on ‘Development with a Regional Dimension’. This will clearly be a crucial reference point for all of the support provided in this area, as well as for many other DSF-supported activities. Investment climate is an important part of the RPJM and two ministries – the Ministry of Home Affairs (MoHA) and the National Development Planning Agency (Bappenas) – are designated as being responsible for improving investment climate. The DSF-financed activity will help MoHA to achieve 2010 national targets that have been agreed between the Minister and the President.
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GOVERNANCE AND DEVELOPMENT CONTEXT
The Government continues to press regional governments to bring their spatial plans into line with the national spatial plan, as mandated by Law No. 26, 2007. Through Presidential Decree No. 4, 2009, government established the National Agency for the Coordination of Spatial Planning (BKPRN). This is a cross-ministerial agency whose job it is to ensure sectoral coordination in spatial planning and implementation and to resolve spatial planning problems at national and regional levels. As of June 2010 – over one year since the central government’s deadline for the completion of provincial spatial plans – only a handful of provinces have finalised their spatial plans. The DSF, through Bappenas, is supporting six municipal and district governments within three provinces (West Sumatra, Gorontalo and East Java) with the drafting of spatial plans that are aligned with higher-level spatial plans and integrated with development plans.
Border areas. Presidential Regulation 12/2010 on the establishment of a National Agency for Border Management (BNPP) defines the positions, roles and responsibilities, and membership of the organization. BNPP will provide policy direction for the development of border areas, determine program budget allocations, coordinate implementation and monitoring, and evaluate the management of border areas. The head of BNPP is the Minister of Home Affairs. A permanent secretariat will be established with three deputies responsible for: state boundary management; resource potential management; and border area infrastructure management.
Inter-regional cooperation. Several recent pieces of legislation are relevant to DSF work in this field, namely:
a. Minister of Home Affairs Regulation number 19/2009 that provides guidelines for capacity building of organisations responsible for the implementation of inter-regional cooperation – it provides a syllabus for training; and directions concerning the identification and selection of participants and facilitators, organization, finance, and so on.
b. Minister of Home Affairs Regulation number 22/2009 provides: guidance for the establishment of ‘coordinating teams for inter-regional cooperation’ at both the provincial and local government levels; detailed procedures for implementing inter-regional cooperation; and a list of options for managing such cooperation.
c. Minister of Home Affairs Regulation number 23/2009 sets out procedures for the facilitation and supervision of inter-regional cooperation; and specifies roles, tasks and responsibilities of the joint secretariat for inter-regional cooperation in central government (MoHA) and the coordinating team for inter-regional cooperation, at both provincial and local government levels.
Newly-autonomous regions. In relation to the evaluation of newly-autonomous regions, two ministerial regulations are noteworthy:
a. Minister of Home Affairs Regulation 21/2010 provides guidance on the evaluation of autonomous regions that were created following the implementation of Law 22 of 1999 on regional government.
b. Minister of Home Affairs Regulation 23/2010 sets out methods and procedures for the evaluation of newly-autonomous regions.
Minimum service standards. The proper costing and implementation of minimum service standards (MSS) is clearly crucial at all levels of government. Law 25/2009 (on public services) mandates the setting of service standards in all sectors. To date, seven ministries have formalized MSS legally (health, social services, environment, public housing, home affairs, and women’s empowerment). Only the Ministry of Health has issued formal technical guidelines for MSS costing (Minister of Health Regulation 317/2009). The Ministry of Health has also set up a team to accelerate the implementation of MSS in health (through Minister of Health Decree 341/2010). In 2010, the aim is to formulate and implement minimum service standards in health, environment, social affairs, and home affairs in districts and municipalities in 33 provinces and to have these service standards reflected in local government budgets. Presidential Instruction 3/2010 among other things stresses the importance of equality of access and treatment of
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women and children; the attainment of MDGs on poverty, basic education, gender equality and women’s empowerment, infant and maternal mortality rates, HIV/AIDS, malaria and other contagious diseases; and environmental sustainability. These matters were discussed at a national seminar held on 29 June 2010 (sponsored by MoHA and the DSF).
Public services. Minister of Home Affairs Regulation 4:2010 - Guidelines for Sub-Districts’ Integrated Administrative Services – is designed to enhance the quality, efficiency, effectiveness and accessibility of public services. It does this by delegating some of the authorities in licensing and non-licensing services held by regents/mayors to heads of districts. It puts districts at the forefront of public service delivery, among other things, by establishing the circumstances under which districts can provide administrative services (such as population administration) and can form implementation teams to do this; it sets general standards of service and facilities; identifies budget sources; and provides guidelines on facilitation and supervision.
Ministry of Home Affairs strategic objectives and performance indicators. On February 12, 2010, Minister of Home Affairs Decree 061-41: 2010 was issued. The decree sets out 15 strategic objectives and 33 key performance indicators for MoHA as a whole and does likewise for each directorate general within MoHA. All DSF support to MoHA accords with relevant strategic objectives set by MoHA.
Strategic objectives of particular relevance to the DSF programs include:
a. The enhancement of the development of border areasb. The enhancement of the quality of the democratization processc. The enhancement of the implementation of minimum service standardsd. The regularization of the implementation of evaluation processes surrounding the designation of
newly-autonomous regions and the development of a ‘grand’ strategy for regional arrangementse. The enhancement of partnerships between government and the private sectorf. The widening and acceleration of public services reformg. The harmonization of local regulations with MoHA legislationh. The establishment of accountable and transparent local financial management systems.
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GOVERNANCE AND DEVELOPMENT CONTEXT
17
Following a brief account of the strategic framework that underlies the DSF Work Plan 2009-2011 and broad descriptions of the activities it supports, this chapter outlines progress with the design and execution of those activities. Implementation progress for the DSF work programme as a whole is discussed in Chapter 4.
STRATEGIC FRAMEwORK
The DSF framework builds on the four priority areas identified by the DSF SC and is reflected in the goals and purpose of the DSF monitoring framework. The strategic framework is also informed by the discussion of the general governance and decentralization context, which acknowledges, first, the considerable advances that have been made in recent years in Indonesia in relation to a number of important aspects of good governance; and second, the significant benefits yielded by the government’s decentralization program, at both national and local levels.
A summary of the strategic framework is set out in Box 1 below.
Box 1: DSF Strategic Framework Outline
Demand for Local Public Services
• There exists high reported satisfaction among citizens with the current state of local public service delivery • This co-exists with comparative evidence suggesting that performance on certain development indicators is
lower than that of some poorer countries in the region• Among a substantial proportion of citizens there is low willingness to pay for improvements to service
delivery⇒ Weak citizen demand for public services⇒ Weak citizen demand for local government accountability⇒ Weak citizen understanding of the legitimacy of demand
Supply of Local Public Services
• There are significant productivity issues surrounding current (staff) and capital inputs to service provision (technically inefficient service provision)
• There is an imbalance between current (staff) expenditure (too much) relative to capital spending (allocatively inefficient service provision)
• Service provision is not (and currently cannot easily be made to be) strongly linked to local demand (which is weak)
⇒ Weak local government capacity in provision of local services⇒ Under-responsive local government service provision⇒ Under-developed sense of service to the public
STRATEGIC FRAMEwORK AND wORK PROGRAMMING 3
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STRATEGIC FRAMEwORK AND wORK PROGRAMMING
Box 1: DSF Strategic Framework Outline
Policy Framework for Supply of Local Public Services
• There are numerous problems surrounding central/local assignment and implementation of decentralized functions
• Local staffing rules and payment are too centralized• Tax assignments are too centralized• Local own-source revenues are low • Too frequently, central-local transfers are perceived as unrestricted entitlements• The regulatory system for local infrastructure finance is incomplete and cumbersome⇒ Weak central government capacity in policy design⇒ Weak central demand for (upward) and support of (downward) local accountability
Overall Outcome
Insufficient continuing improvements to local public service provision
Generalized Factors Underlying Result
• Insufficient upward and downward accountability • Insufficient citizen demand• Inadequate local and central government capacity
DSF Strategic Framework
• Promote local government (downward) accountability to citizen demand and strengthen citizen demand• Promote local government (upward) accountability to central government• Build local government capacity in service provision• Build central government capacity in design of policies that govern service provision
The strategic framework expresses the overall purpose of the DSF in terms of: (a) demand for local public services; (b) supply of local public services; and (c) policy frameworks for the supply of local public services. A full account of the framework is presented in the DSF Annual Report 2009.
wORK PLAN ACTIVITIES
The activities supported under the work plan – described briefly below - are structured according to the four priority areas stipulated by the DSF SC and address one or more of the key issues highlighted in the strategic framework. Most activities contain significant institution building components.
Public Service DeliveryThe Government of Indonesia has been keen to specify clearly the functions that local governments should carry out and the standards to which they should perform these functions; and to strengthen generally the system of public service provision. Through the Ministry of Home Affairs, the DSF is supporting four activities in this category, namely:
a. Improved definition of service functions: this involves support for the formulation of norms, standards, procedures and criteria for service delivery and review of their implementation in selected sectors.
b. Capacity building for costing and pilot implementation of minimum service standards.c. Management strengthening and institution building for local public service providers - to begin
with, in certain sectors and selected regions.d. Service delivery in border regions: this entails a review of public services in border regions, leading
to policy recommendations and development of a national action plan for institution building.
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These activities go directly to the purpose of the DSF, and hold considerable strategic significance for the government’s overall program of decentralization. They all have potential for scaling-up nationally; and they all carry important implications for upward and downward accountability.
Fiscal Decentralization In this area, the Ministry of Finance is being provided with DSF support directed at:
a. Sub-national borrowing.b. Monitoring and evaluation of DAK.c. Strengthening regional financial information systems.d. The improvement of the policy framework (grand design) for fiscal decentralization.
All of these activities are central to accountability and to other aspects of good governance, such as transparency. They contain significant elements of policy influence and capacity building.
Governance Reform Proposed by the Ministry of Home Affairs, the activities under this heading address local government capacity in the provision of local services and central government capacity in policy design. The first batch of activities in this category is outlined below.
a. Capacity development for legislative council representatives: this involves tailor-made capacity strengthening workshops and follow-up action learning to meet DPRD performance targets and general, wide-scale DPRD orientation on basic duties and functions for DPRD provincial, district, and municipal representatives from 10 provinces.
b. Education and training on decentralization: here support comprises a limited number of coursework Master degree programmes, short courses, seminars, workshops, and study tours on fiscal decentralization and social accountability for selected local and central government officials and CSO representatives.
c. Sub-national investment climate reform. This support continues to build capacity within local governments for the effective and efficient management of business licensing.
d. Government education and training centres: this support covers: first, the refinement of a strategic framework for the introduction of competency-based training in MoHA; second, training on competency based needs assessments and development of competency based standard training; and third, the design and piloting of competency-based training and education in the public service of ‘population administration’ in MoHA and three selected provinces and districts and municipalities.
Planning and Performance Management Proposed by Bappenas and MoHA, the activities in this category analyse problems surrounding the quality and integration of different types of planning and build human and organizational capacity to do the work involved. They also provide support to local government management of natural resources and local economic development.
a. Institution building for the integration of national-regional and spatial planning: this activity builds institutional capability at different levels of government for the better horizontal and vertical integration of sectoral, development, and spatial planning.
b. Managing natural resources for local economic development: Reform of natural resource planning and management to promote local economic development and local government fiscal capacity.
c. Capacity building for regional development policy formulation: Contributing to government’s attempts to reduce inter-regional disparities, this activity is designed to produce better-informed and better-managed policy making and planning for regional development.
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STRATEGIC FRAMEwORK AND wORK PROGRAMMING
d. Border area development planning: This activity builds capacity for development planning in border areas.
e. Local government evaluation: this support will help government to assess performance differences on a number of criteria (e.g., institutional, financial, and public service), first, between regions created during the last ten years and, second, between those established during the last three years.
f. Institution building for a regional economic development facility: DSF will help to establish in Bappenas strategic management and planning capability for the establishment of a regional economic development facility.
Before execution and implementation of activities under the work plan can take place, they must be developed in sufficient detail to provide a basis for procurement (into activity concept notes). The (implementation) work to be undertaken must also be set against relevant comparative experience and as far as possible should be informed by the best thinking in the field. The conditions for execution and procurement (by government or the World Bank) must then be established.
wORK PROGRAMMING
Background. As indicated in Chapter 1, in May 2009, a no-cost extension for the DSF to September 2011 was formally approved.6 Pending such approval (that is, up to late May 2009), in accordance with the wishes of the principal financial donor and so as not to raise expectations that might not be met, design and development of activities under the DSF Work Plan 2009-2011 had been put on hold. Commencing immediately upon the granting of the no-cost extension, in the seven months from May to December 2009, a total of 23 activities, each involving in one way or another one or more of 20 government directorates in three different government agencies, were designed, subjected to a thorough process of internal and external review, and formally approved by the DSF MC. Considering the large number and variety of interested parties involved, the complexity of the issues addressed, and the relatively short time within which the work was done, this was a noteworthy achievement.
Two rounds of programming. The 23 activities were separated into two rounds of programming. The first round, involving 14 full-blown activities (described in 14 separate ACNs), was largely approved in the third quarter of 2009 (12 out of 14 activities). The second round, involving 9 activities that were designed and conceived as extensions or developments of those that constituted the first round, was approved by the MC (by circulation) during November/December 2009.
Progress of first round of programming. As indicated above, to 31 December 2009, fourteen full-blown activities had been through a thorough process of development, review, and approval. These activities are now in various stages of execution and implementation. A summary of progress to 30 June 2010 is provided in Table 1 below.
Table 1: First Round of Programming under DSF Work Plan 2009-2011
ACN # Name(counterpart)
Budget Estimate
(USD)Trust Fund
Status Implementation Status
1/2009 Capacity Strengthening Program for Local Government Legislatures (MoHA)
500,000 Active Grant agreement signed and effective. See Chapter 4 for further discussion of progress (Milestone 5).
6 In December 2009, a further no-cost extension – to 31 March 2012 – was formally approved and the Contribution Agreement between the Bank and DfID was amended accordingly.
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ACN # Name(counterpart)
Budget Estimate
(USD)Trust Fund
Status Implementation Status
2/2009 Capacity Building for Regional Development Policy Formulation(Bappenas)
Part 1: 142,500
Part 2:700,000
Active
Funds being transferred
Policy analysis and data collection in a number of sectors underway. Report entitled, ‘A Study of Regional Development in Indonesia: a Review of Experiences and Achievements’ completed.Procurement underway; services to commence by third quarter of 2010.
3/2009 Monitoring and Evaluation of Special Allocation Funds (DAK)(Bappenas)
550,000 Active See Chapter 4 for discussion of implementation (Milestone 3).
4/2009 Management Strengthening and Institution Building for Local Public Service Providers (MoHA)
500,000 GFR approved, awaiting GA signature for activation
Financial management and procurement assessments completed. Operations manual approved. Awaiting GA signature.
5/2009 Institution Building for the Integration of National-Regional Development and Spatial Planning(Bappenas)
483,400 Active Data collection and analysis commenced (Dec 1, 2009 – June 30, 2010). See Chapter 4 for discussion of implementation (Milestone 4).
6/2009 Building Capacity for the Development of Sub-National Government Capital Markets for Municipal Bonds(MoF)
900,000 Active See Chapter 4 for discussion of implementation.
7/2009 Government Training and Education Centre Development: Introducing Competency Based Standards for Improved Public Service Delivery(MoHA)
797,0001 Active Grant agreement signed and effective. See Chapter 4 for further discussion of progress.
8/2009 Institution Building for the Accelerated Development of Border Areas(Bappenas & MoHA)
500,000
500,000
Active for Bappenas activity
Will use existing trust fund if MoHA activity is Bank executed, otherwise GFR is prepared for submission if MoHA activity is Recipient executed
See Chapter 4 for discussion of implementation.
Financial management and procurement assessments completed. Operations manual under review. Grant agreement can be prepared on the basis of this information if MoHA activity is Recipient executed.
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STRATEGIC FRAMEwORK AND wORK PROGRAMMING
ACN # Name(counterpart)
Budget Estimate
(USD)Trust Fund
Status Implementation Status
9/2009 Capacity Building through Decentralization Education and Training for Public Service Delivery(MoHA)
1,593,520 Active(scholarships component)
See Chapter 4 for discussion of implementation.
Short course & study tour components under preparation.
10/2009 Strengthening Local Government Natural Resource Management Capability(MoHA)
749,500 Active Implementation will commence in third quarter of 2010.
11/2009 Formulation of Norms, Standards, Procedures and Criteria (NSPK) for Local GovernmentService Delivery(MoHA)
1,000,000 GFR approved, awaiting GA signature for activation
The GA has been signed by the WB and sent to MoF for countersignature. The operations manual is being finalized. Procurement and disbursement plans are being written.
The Centre for Economic and Public Policy Study, Gadjah Mada University will assess NSPK status (beginning in August 2010).
12/2009 Strengthening Data Provision to the Regional Financial Information System (MoF)
250,000 Active See Chapter 4 for discussion of implementation (Milestone 1).
13/2009 Grand Design of Fiscal Decentralization(MoF)
900,000 Active See Chapter 4 for discussion of implementation (Milestone 2).
14/2009 Capacity Building for Costing and Pilot Implementation of Minimum Service Standards(MoHA)
1,200,000 GFR prepared The project will be recipient and Bank executed; TOR and budget completed; division of responsibilities between MoHA and DSF agreed; and the operations manual is written. Procurement and disbursement plans are being written.
It can be seen in Table 1 that during the reporting period progress in relation to the finalisation of execution arrangements and implementation for the majority of the fourteen activities has been satisfactory in the circumstances. Nevertheless, from a disbursement standpoint, progress has been slow.
Trust funds for eleven (including part of ACN 8) of the fourteen activities are now active and are being implemented
Of the remainder, ACN 11 is close to finalising the conditions for execution; but progress for ACNs 4 (MoHA), 8 (MoHA component), and 14 (MoHA component) has been slow and puts these activities at serious risk of not being able to complete by the closing date of September 2011, at least without significant reduction to the scope of work.
Progress of second round of programming. As indicated in Table 2 below, six of the nine addenda have now been completed or are covered in an existing ACN or in other documents referred to in that table.
However, there has been little progress in relation to proposals 3 (MoHA), 5 (MoF), and 9 (MoHA). There are a number of reasons for this, some of which are discussed in a separate section below and others of
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which are discussed in the DSF quarterly report for December 2009. There are also a number of project-specific reasons for delay.
Proposal 9 in Table 2, the ‘Grand Design on the Implementation of Regional Autonomy’, is clearly a highly complex matter of considerable moment and political sensitivity for government and involves all three DSF counterpart agencies. At the same time, government is working on a revision to Law 32/2004 – on local government. This has important implications for the ‘grand design’ of regional autonomy. Discussions surrounding the addendum have therefore been protracted and senior officers from all three agencies have wanted to participate in them, making organization more difficult. The latest estimate for an approved design (addendum to an existing ACN) is the end of July 2010. Assuming no further delays and Bank execution, this activity is still at risk of not being able to complete by September 2011.
In relation to proposals 3 and 5 in Table 2, the slow rate of progress is partly due to changing priorities in government and partly a function of the lengthy delay in appointing a replacement senior economist to the DSF Executive and the increased qualitative and quantitative load this put on the fiscal decentralization specialist.
However, for all three of these activities, time is running out and it seems improbable that they will be able to complete by September 2011 without a significant reduction in scope.
Table 2: Second Round of Programming under DSF Work Plan 2009-2011
Proposal(notional budget) Link to ACN Counterpart Status
1 DPRD Orientation($500,000)
ACN 1/2009 MoHA (Diklat) Addendum approved.RAB finalized (total $473,300). Financial management and procurement assessments completed. Draft amendment to GA completed. Signature awaiting initial DIPA approval of ‘mother’ GA.
2 Regional Development Policy($700,000)
ACN 2/2009 Bappenas (Pengembangan Wilayah)
Covered in existing ACN – no addendum required.Implementation will commence in third quarter of 2010.
3 Local Government Evaluation ($300,000)
ACN on EPPD MoHA (PDOK) Activity design, budget, and mode of execution are being finalised with MoHA.
4 Inter-Regional Cooperation($760,000)
ACN 2/2009 ACN 4/2009
Bappenas (Otda)MoHA (PUM)
Addendum approved. Implementation for Bappenas component will commence in third quarter of 2010.
5 Regional Finance($850,000)
ACN 12/2009ACN 13/2009
MoF (DJPK) 1. PEA-Otsus (600K): ACN under preparation with MoF. 2. Regional fiscal incentives (250K): discontinued at MoF request (as similar support being provided by ADB).
6 Provincial Governance Strengthening Programme($2,000,000)
ACN 2/2009 ACN 4/2009ACN 5/2009ACN 14/2009
Bappenas (KKDT),MoHA (UPD, PUM)
Fiscal agency agreement & letter of understanding on performance signed.Implementation will commence in third quarter of 2010.
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Proposal(notional budget) Link to ACN Counterpart Status
7 Regional & Local Economic Development Facility($600,000)
ACN 10/2009 Bappenas (Perkotdes) Addendum approved.Implementation will commence in third quarter of 2010.
8 Sub-national Investment Climate Reform($700,000)
DSF Work Plan 2007-2008 continuation
MoHA (Bangda & Diklat)Bappenas (Biro Hukam)
Grant agreement justification and summary proposal are drafted and will be submitted to the World Bank Country Leadership Team for review in July.
9 Grand Design on Implementation of Regional Autonomy($700,000)
ACN 13/2009 MoHA (Otda) Draft addendum completed; awaiting final confirmation by the Director of Local Government Affairs. Following a decision by the Director of Local Government Affairs, the project will be Bank-executed.
The Provincial Governance Strengthening Program (PGSP). This major ($2 million) activity is designed to strengthen provincial government roles and functions, paying particular attention to policy-making, regional development planning, and public service delivery. This should lead to better integration between policies, planning, and budgeting, which in turn should translate into improved service delivery in selected pilot provinces. The counterparts for this program are Bappenas and the Ministry of Home Affairs. Initially, activities will be implemented in two provinces, Gorantalo and Bangka Belitung.
The activity is being implemented through a fiscal agency agreement (FAA) between the World Bank and UNDP. Following thorough discussion within the Bank and, subsequently, between the World Bank and the UNDP, a FAA between the two parties was signed on 26 May 2010. Resolution of the issues involved, which was outside of the sphere of influence of both the DSF MC and the DSF Executive, consumed much of the first quarter of 2010. A letter designed to enhance communication and cooperation between the parties in relation to DSF reporting requirements was drawn up during the reporting period and was signed on the date that the FAA was signed. The formal launch of the project will take place in late July 2010.
Work programme implementation and results achieved are discussed in the next chapter.
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This chapter outlines results achieved to date from the implementation of DSF-financed activities. The chapter also discusses impediments to progress, particularly problems associated with speed of execution and implementation.
KEY MILESTONES
The results achieved by five of the activities under the DSF Work Plan 2009-2011 have been designated by the principal financial donor as ‘key milestones’ for gauging DSF progress. Progress in relation to these milestones is discussed below.
Milestone 1: Improved Regional Financial Information Systems (SIKD)A well-functioning national budget and expenditure information system is clearly critical to successful budget and national fiscal policy implementation. It is also vital to redirecting resources and investments to local governments under the so-called national fiscal ‘grand design’.
The development of computer software intended for transferring electronic data from the regions to MoF is complete. For FY 2007, data from 375 of 461 districts (81%) have been uploaded and are accessible to the public. For FY 2008, realization data for 317 out of 484 (65%) of the districts have been uploaded to the government website. Realization data for FY 2007 and 2008 are available at the Directorate General for Fiscal Balance website www.djpk.depkeu.go.id/datadjpk/47/.
Officials at the Directorate for Funding Evaluation and Regional Financial Information (EPIKD) have opted to postpone further data entry for FY 2007 and instead to concentrate on data entry for FY 2008. For primarily data security reasons, EPIKD carries out manual data entry in-house.
Preliminary systems for data transfer and new data entry modules were completed in April 2010. Socialization of the new (electronic transfer) SIKD system began soon thereafter, starting with North Sulawesi province (as the data for developing the systems came from 3 local governments in North Sulawesi). During the life of the activity, MoF expects to have 25 local governments transmitting their financial data electronically - for easy transfer to its national SIKD system.
The system will be made compatible with those being developed with support from the Asian Development Bank (ADB) – in 171 local governments.
EPIKD and DSF staff have carried out several joint missions to the regions to collect regional financial data, as well as to inform and enable local governments to transfer regional financial data to the SIKD.
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Thus far, electronic data are available for 8 local governments. The goal of having 25 districts complete electronic data submission is within reach, a goal whose attainment is made more likely by the fact that EPIKD intends to undertake 2-3 socialization missions to the provincial level to solicit local government’s financial electronic datasets.
This activity is on target - to complete by December 2010.
Milestone 2: Enhanced Fiscal Decentralization Policy (through Grand Design for Fiscal Decentralization - GDFD)The GDFD is designed to strengthen links between funding, performance and regional autonomy and is therefore a cornerstone of successful decentralization in Indonesia. The GDFD will attempt to align the fiscal policy framework (transfers, revenue generation and sharing, including inputs to the revision of Law 33/2004 on fiscal balance between central- and local government), with revisions to the policy framework on regional autonomy (Law 32/2004 on the Grand Design for Regional Autonomy).
Three public consultations have been conducted - in Pontianak (West Kalimantan), Makassar (South Sulawesi) and Surabaya (East Java) – in order to gain insight into a wide range of perspectives on issues surrounding the current GDFD.
Based partly on the qualitative data produced through these consultations, a first draft of a revised GDFD document is expected to be ready by late July 2010. The draft will address a wide range of issues connected with the five pillars of fiscal decentralization, namely; human resources; institutional and organizational matters, including mandates; information systems; regulations; and know how. The draft revision will be considered initially by the Secretary of the Directorate General of Fiscal Balance.
Discussion on the improvement of balancing funds - the DAU and DAK - have been constructive and will feed into the revision of Law 33/2004 on fiscal balance between central and local government
With DSF support, efforts to harmonize the GDFD (and respective inputs to the revision of Law 33/2004) with the revision of Law 32/2004 and the Grand Design for Regional Autonomy are currently underway.
However, it now seems unlikely that MoHA will be able to finalize the Grand Design for Regional Autonomy in the near future. Consequently, the current milestone, which reads: ‘Policy Framework of fiscal decentralization improved, accepted by MoF, and harmonized with MoHA’s Design for Decentralization and Regional Autonomy by September 2010’ should be amended to read: ‘Policy framework of fiscal decentralization improved, and accepted by MoF, and a harmonization strategy for the revision of Law 33/2004 and Law 32/2004 completed’.
This (revised) activity should be completed by June 2011.
Milestone 3: Strengthened Monitoring and Evaluation of Special Allocation Funds (DAK) (in 5 Provinces and 47 Districts) DAK grants for FY09 total about $2.4 billion for 14 sectors and constitute 8% of total transfers to local governments. DAK grants are used for capital maintenance and small infrastructure investments at the local level and therefore constitute a critical area for government oversight and efficacy in capital spending. Building capacity (human capabilities and systems) for monitoring and evaluation is clearly crucial to this. A number of preparatory steps have been taken towards this end, including: preparation of explanatory (‘socialization’) materials and instruments for data collection and for training of field teams. A pre-test on data collection and facilitation thereof was conducted in Karawang district in March 2010.
Implementation will be split into two phases: the first phase in the D.I. Yogyakarta province, followed by a second phase conducted in a further 4 provinces (Jambi, Central Kalimantan, West Sulawesi and North Maluku). The purpose of this separation is to obtain data on - and lessons learned from - the
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implementation of DAK monitoring and evaluation within the province of D.I. Yogyakarta. Lessons learned will be applied in the second phase.
A seminar on lessons learned from the implementation in D.I. Yogyakarta as well as early results from the four provinces is planned for September 2010. Preliminary results on the application of a capacity strengthening strategy for central and local government will be presented in the seminar.
A revised completion date for this activity is February 2011.
Milestone 4: Improved Provincial Spatial Planning (3 provinces and 3 districts/municipalities have approved spatial plans in line with the national spatial plan)Decentralization of increased decision making authority to local governments has greatly complicated planning, allocation and coordination of capital investments in projects such as ports and airports. Ensuring that national plans and needs are aligned with island, provincial and district needs has proved to be particularly problematic. With DSF support, local governments in the provinces of West Sumatra, Gorontalo and East Java are drafting spatial plans that are aligned with the national spatial plan and integrated with other provincial planning documents (and conform to provincial policies).
Draft spatial plans should be completed by September 2010 and the milestone should be achieved by June 2011.
Milestone 5: For Legislative Councils (DPRD), Improved Legislative Processes, Resource Allocations, and Oversight Decentralization in Indonesia has devolved key functions to local parliaments. Elected officials have expanded mandates and new roles and responsibilities, but many of them do not possess the skills or knowledge needed to carry out their duties. Significant performance problems at the local level - including administrative and legislative failings - have arisen as a result of this. This activity will address skills and knowledge deficits among DPRD members, particularly those associated with legislative processes, budgeting, and oversight. Initially, the training will be provided to 150 provincial and district DPRD members, of which at least 30% will be women. By the end of the implementation period, about 1260 DPRD members will have been trained (300 under DPRD capacity strengthening and 960 under DPRD orientation). The target will be met by two parallel DPRD activities (capacity strengthening with follow-up action learning and technical assistance to meet DPRD performance targets and a separate general orientation and induction to DPRD duties). GOI has taken all of the steps necessary to bring this activity on-budget and on-treasury and has begun contracting of a local university or institute to implement the training for the first activity. An amendment to an existing grant is being prepared for the second activity and this too will be brought on-budget, on-treasury. As relevant government curricula are readily available for the second activity, it will be possible to fast-track associated training.
This activity is progressing as planned and the milestone should be completed by December 2010 (and exceeded by September 2011).
OTHER PARTS OF THE wORK PROGRAMME
Progress of activities approved in 2007, and in 2009 under the DSF Work Plan 2009-2011 is described below. Some cases are presented in a way that illustrates the range of processes that must be completed in order for an activity to be executed and implemented. For further discussion of progress, see Annex C.
Governance ReformThe DSF finances four activities in this field: (a) local legislatures capacity strengthening; (b) government education and training centre development on competency based standards for improved public service delivery; (c) decentralization education and training; and (d) sub-national investment climate reform.
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Local legislatures (DPRD) (approved in 2009). The DPRD strengthening program was proposed by the Local Government Affairs directorate of the Directorate General for Regional Autonomy in the Ministry of Home Affairs. This activity assesses the needs of selected DPRD at the provincial, district and municipality levels, develops relevant materials and modules, and provides capacity strengthening workshops for newly-elected DPRD members. Following the workshops, action learning and technical assistance will be provided to assist DPRD members in achieving performance targets. Initially, six provincial-level and six district-level legislatures will be targeted - with a view to replication in other interested DPRDs or regions identified by MoHA.
This activity is GOI-executed. With DSF support, MoHA prepared the necessary documents, including: a detailed budget that met both GOI and WB standards; and a project operations manual containing detailed project activities, financial management and procurement procedures, anti-corruption measures, and performance indicators. MoHA also underwent financial management and procurement assessments, and attended World Bank financial management and procurement training.
Once the grant agreement had been signed (January 2010), MoHA submitted the documentation required for grant effectiveness (March 2010) and researched the process for registering the grant with MoF and activating DIPA (budget implementation document). This was a complicated process, which entailed: preparation of an annual work plan, procurement plan, and disbursement plan according to MoF specifications; the issuing of a Directorate General Regulation for the project; opening a special account; and registering for DIPA funds. A contract to an implementing agency should be issued in the third quarter of 2010.
The skills and knowledge acquired by the Local Government Affairs Directorate and by procurement committee members - particularly in relation to applying procurement rules and regulations - is an achievement of significant practical value. Local Government Affairs has made considerable progress in relation to its understanding of the market for DPRD capacity-strengthening implementing agencies and it has learned how to evaluate expressions of interest. Local Government Affairs and the procurement committee have also learned about common corruption practices associated with procurement and how to avoid them. Once DIPA funding is available, Local Government Affairs will proceed with a ‘road show’, signing of MOUs with selected DPRDs, and (with the implementing agency) conduct needs assessments of participating DPRDs.
In a related activity, the Government Education and Training Centre (Badiklat) requested DSF support to implement orientation for newly-elected DPRD members. The activity includes training of trainers (TOT), together with DPRD orientation in all districts and municipalities of four high priority provinces for approximately 960 DPRD members. Using an up-date of an existing curriculum, the DSF activity will conduct TOT and training in target provinces. The activity concludes with a technical coordination evaluation meeting to review the TOT and DPRD orientation and determine recommendations for improvement and national scale-up.
This activity is recipient-executed through an amendment to an existing grant agreement (signed in January 2010 and effective in March 2010). Badiklat has registered the grant, set up a special account, and worked to obtain DIPA approvals from MoF. The grant agreement amendment for DPRD orientation will be signed following the request for initial deposit for the ‘mother’ grant. The financial management and procurement assessments have been completed and counterpart funding has been secured.
The activity will run from July-December 2010.
Competency-based standards for improved public service delivery (approved in 2009). This activity will build the capacity of government (MoHA) training and education centres so as to enable them to develop competency-based training for civil servants in important aspects of public service delivery. It does this through training of trainers for training needs assessments and the formulation of competency-based
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standard training modules. The activity will be implemented in three provinces and will be directed at provincial and district and municipality government training and education centers therein. The work will be done in collaboration with local line agencies.
The activity is recipient-executed (‘on budget’ and ‘on treasury’). Diklat prepared all documentation (as set out above in relation to ‘local legislatures’), underwent financial management and procurement assessments, and attended World Bank financial management and procurement training.
Once the grant agreement had been signed, Diklat went through the steps described above in relation to ‘local legislatures’.
DIPA funds should be available by August 2010. Diklat will then proceed with the refinement of the strategy on competency-based training (CBT) and with setting up workshops on CBT needs assessment and with the formulation of training programmes. To assist with implementation of the project, and through GOI procurement processes, Diklat will hire consultants in human resource management, competency-based standards, population administration, and finance. Procurement of these consultants commenced in May 2010 and the appointments should be made in the third quarter of 2010.
Decentralization Education and Training (DET). This activity, which provides up to 40 scholarships for coursework Master degrees at UK universities and short courses of training and study tours on decentralization, is designed to contribute to the development of a group of professionals in central and local government who are able to provide for decentralized public service delivery that has downward accountability to citizens as an integral part.
The scholarships part of the programme is being implemented through a grant agreement between the World Bank and the British Council (signed in May 2010). Scholars will commence their education in the UK at the beginning of the 2010 academic year. Before they leave for the UK they will undergo intensive English language training in Jakarta (see below).
A long list of scholarship candidates was drawn up on the basis of written applications, formal qualifications and structured interview. All long-listed candidates qualified for a six-week English language course that began on 1st June 2010 and will end on 16th July 2010. IELTS scores will constitute the final selection hurdle for scholarship awardees. The British Council will assist scholars with their applications to UK universities, and it will provide academic and other forms of support while scholars are in the UK. The British Council will also help scholars with the development of action plans for the application of knowledge and skills acquired under the program upon return to their jobs in Indonesia.
Execution arrangements for the short course and study tour components of the programme are in train.
Sub-national investment climate reform (approved in 2009). This activity builds on the achievements of a previous project of this name (approved in 2007). It responds to important sections of the government’s RPJM 2010-2014. The aim of the activity is to institutionalize capacity within local governments to implement effective, efficient and accountable regulations and processes for business licensing. The program will: (a) support MoHA in monitoring the performance of one stop services (OSS) for business licensing across the country; (b) help three selected provincial governments (PGs) with facilitating the establishment of district-level OSS and improving the performance of existing ones; and (c) through support to Bappenas and three selected PGs, assist with the diffusion of regulatory impact assessments.
The follow-on activity is being proposed for execution on the basis of a grant agreement. The grant agreement justification and summary proposal have been drafted and will be submitted to the World Bank Country Leadership Team for ‘no objection’ in July 2010.
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Public Service DeliveryMinimum Service Standards (approved 2009). Central government is aware that problems of basic service delivery must be addressed. The National Action Plan for Fiscal Decentralization (2005) commits government to improving basic public services, especially in health, education and infrastructure. One way to improve the accessibility and quality of those services is to establish minimum service standards for them, as mandated in law 32/2004 on local governance. To date, government has issued MSS in seven sectors: health, environment, public housing, social, home affairs, women’s empowerment and family planning. In addition, final draft legislation has been prepared for MSS in education and this will be formalized soon in legislation.
The objectives of this activity are to: (a) Improve MoHA’s capacity to work with other ministries to cost MSS for selected sectors, including the drafting of a manual on this subject for local governments; (b) Support central and provincial governments to implement MSS in selected local governments; (c) Develop the capacity of selected local governments to implement MSS and integrate MSS in their planning and budgeting documents; and, for selected sectors, (d) examine whether there is any relationship between MSS and the attainment of the MDGs.
Pending the formal commencement of this activity (in the third quarter of 2010), DSF support has helped MoHA to develop an electronic system for costing MSS in health that was tested using data from Kota Yogyakarta (May, 2010). Feedback has been used to modify the system, with a view to its diffusion to other local governments.
Norms, standards, procedures and criteria (approved in 2009). Law 32/2004 on Regional Administration stipulates that all sectoral ministries should amend and update their own statutes and regulations to be in accordance with the regional autonomy law (Law 32/2004 article 237 refers). Similarly, Article 9 in Government Regulation 38/2007 - on ‘Task Division between Central, Provincial and District Governments’ - requires ministries to formulate norms, standards, procedures and criteria (NSPK) that are designed to guide the implementation of regional government functions. The Directorate General of Regional Autonomy of MoHA has been helping ministries to formulate NSPK. The initial deadline for NSPK formulation was set at two years. This was an ambitious goal, as there are 31 sectors, each with a different NSPK that need to be developed and harmonised. Progress has been slow and there is no clear account of the NSPK that need to be formulated or revised.
The objectives of this activity are to: (a) Strengthen MoHA’s capacity to facilitate, monitor and evaluate the formulation of norms, standards, procedures and criteria for service delivery in all sectors; (b) Support ministries in the formulation of norms, standards, procedures and criteria for service delivery and thereby help them to define more clearly the roles and responsibilities of every level of government in a number of selected sectors; and (c) Assess the extent and quality of the implementation of NSPK by local governments.
A grant agreement for this activity has been signed and is awaiting counter-signature. The initial part of DSF-financed support will assess NSPK formulation status. The work will be done by the Centre for Economic and Policy Studies at the University of Gajah Mada and will commence in August 2010.
Alternative mechanisms for service delivery. The government also recognizes that there are widespread and significant weaknesses in the management of service delivery. Most provinces, districts and municipalities deliver public services directly through local service units and their implementing facilities. In a limited number of special cases, local government-owned enterprises are the public service providers (as with local government owned water enterprises - PDAM). While government owned not-for-profit service delivery institutions are formally permitted, they have rarely been used to assist in the delivery of public services at the sub-national level and the formal use of private sector entities to deliver public services is also rare.
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DSF support has resulted in the production of a ‘blueprint’ for promoting AMSD in regional governments that addresses basic aspects of organizational functioning and performance such as: organizational strategy and structure; human resource management; organizational culture; covering the costs of service delivery; out-sourcing; and inclusiveness, community integration, and gender.
DSF support has also assessed the legal and regulatory framework on management development and institution building for public service delivery; produced a draft plan for pilot activity in this area; and, taking into account the support offered by other donors in this field, an implementation plan.
In November 2009, a national workshop was held in Jakarta to present the AMSD system to a wider audience - including representatives from MoHA, Ministry of Finance, Bappenas, donors, and other stakeholders. The purpose was to inform and update progress on pilot regions’ implementation of the AMSD system.
The follow-on activity commissioned by GOI was formalized in ACN 4/2009 on Management Strengthening and Institution Building of Local Public Service Providers. The TOR and budget have been finalized. Financial management and procurement assessments have been completed and a report produced. The GA is awaiting signature from GOI and the Bank. The Bank-executed component comprises: (a) preparation for the implementation of a pilot project in West Java Province; and (b) development of baseline information on women’s access to selected public services.
Fiscal DecentralizationDuring the reporting period, the DSF provided support to four areas of fiscal decentralization: (a) sub-national borrowing (ACN 6); (b) data provision to the regional financial information system (ACN 12 – and Milestone 1 above); (c) the policy framework for fiscal decentralization (ACN 13 – and Milestone 2 above); and (d) monitoring and evaluation of specific purpose grants to local governments (ACN 3 – and Milestone 3 above).
Progress in relation to the three fiscal decentralization milestones is discussed above, in the section entitled ‘Key Milestones’. The remaining fiscal decentralization activities are discussed below.
Sub-national borrowing - Jakarta bond. In relation to sub-national borrowing, DSF support has done much of the background analysis and preparatory work for the issuance of such a bond, which would be the first municipal bond to be issued in Indonesia. Such analysis has included debt servicing capability. Staff training and development needs have also been identified. In addition, the support has helped government to asses a long list of mainly infrastructure projects that might be financed in this way, and to draw up a short list for approval by the Governor. In the short term, future activities will focus mainly on the preparation of documentation required by PMK 147/2006 - for presentation to local government legislatures (DPRD) and Ministry of Finance as a basis for seeking approval to proceed with bond issuance.
With DSF support, MoF has prepared a revised draft of Government Regulation 54/2005 on Regional Government Borrowing. The availability of alternative sources of financing (such as municipal bonds), and hence this piece of legislation, is important to the accelerated provision of infrastructure, regional economic development, and public service delivery. The draft has been approved by the Ministry of Finance (December 2009) and has been discussed with the Ministry of Law and Human Rights (February and May 2010). Further discussions with Ministry of Law and Human Rights are ongoing – and any issues arising therefrom must be resolved before approval by the President.
By the end of July 2010 it is planned to present the draft local regulation and related technical documents to the DPRD for approval.
In addition:a. Pre-feasibility studies and draft terms of reference for the four projects funded by the proposed
municipal bond have been completed.
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b. Two draft local regulations have been written - the first to authorize a municipal bond issue and the second to establish a bond management unit within the local government’s financial section.
c. DKI Jakarta’s ability to payback municipal bonds has been assessed.d. A ‘service note’ (Nota Dinas) is to be issued, which must be signed by the Governor to authorize
formally municipal bond preparation for DPRD approval.
Sub-national borrowing - Bandung bond. This work began in March 2009. To date, a detailed road map has been produced that sets out the steps that will need to be taken in order for Kota Bandung to be able to make use of such a financial instrument. The support has also assessed the borrowing or debt servicing capacity of Kota Bandung and various forms of capacity building have been provided.
Sub-national borrowing - Surabaya bond. A scoping mission to Surabaya was planned for late April 2010 but was postponed until the inauguration of the new mayor of Kota Surabaya has taken place (in August 2010).
Planning and Performance ManagementSix important domains of planning and performance management are currently receiving DSF support: (a) spatial planning (ACN 5 and Milestone 4); (b) institution building for the development of border areas (ACN 8); (c) the strengthening of local government natural resource management capability (ACN 10); (d) strategic planning for the establishment of a regional economic development facility; (e) evaluation of newly-created regions; and (f) capacity building for regional policy formulation.
Spatial planning (approved in 2009). This activity seeks to build central and local government institutional capacity for the better integration of development and spatial planning. The DSF is helping Bappenas (through the Directorate of Spatial Planning and Land Affairs) to map the institutional structure of planning; identify integration problems of development planning and spatial planning at the national level; make recommendations as to how better integration can be achieved; and to provide capacity building support to three provincial governments and six district/city governments to enable them to produce spatial plans that are integrated with the national spatial plan and with other regional planning documents. Progress in relation to this activity is discussed above, in the section entitled ‘Key Milestones’.
Border areas (approved in 2009). The development of border areas is a matter of great national concern. This activity is a joint endeavour by Bappenas and MoHA that is designed to provide more comprehensive national government assistance for the development of border areas, both in terms of economic development and improved service delivery.
Working under the close direction of the Director of Special Areas and Less Developed Regions (Bappenas), to date DSF support has provided input for a key government planning document – the Medium-term Development Plan 2010-2014 – for the section on border area development (Book 2, Chapter 9 on Policy Direction and Development Strategy). This required consensus between ministries on the identification of border areas and performance indicators to evaluate progress towards the attainment of development goals. This will help to improve consistency between ministries’ border area programs, the quality of such programs, and to promote more effective coordination. The activity has also helped Bappenas to address questions of organisational design and inter-institutional arrangements for the government’s nascent national agency for the management of border areas (BNPP). In February 2010, an analysis and recommendations concerning institutional arrangements for BNPP was presented to a cross-ministerial group comprising representatives from Bappenas, MoHA, the Ministry of Disadvantaged Areas and the Ministry of Finance.
From June 2010 to September 2011 technical assistance will be given to BNPP, through Bappenas, to enable them to draft a master plan for the development of border areas. Among other things, this will set
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out government policy on border areas. The master plan will be used by MoHA to develop national and regional action plans for the improvement of public service delivery in border areas.
In addition, DSF will help MoHA to develop regulations for government functions in border areas; and draw up guidelines for monitoring the implementation of border area management policies. These initiatives will be crucial to the formulation and implementation of government policies in border areas. The financial management assessment, the procurement assessment and the operations manual have all been finalized. The grant funding request has been completed and procurement will be initiated as soon as confirmation of Bank execution has been obtained.
Natural resource management. The activity will: (a) examine in a small number of local governments the ways in which a sample of natural resources is managed; (b) consider means for improving such management and propose organizational changes and capacity building measures at the local level that take into account important aspects of the political economy context and draw on comparative experience; (c) build local capacity for undertaking such organisational development in two pilot areas; (d) make suggestions for the revision of governing legislation and on broader issues of organizational design at other levels in the government system; (e) establish principles underlying the better management of the sample natural resources that may be generalized to other local governments and/or natural resources; (f) devise training and development programs that embody these general principles and can be used as the basis for their dissemination; and (g) design training and development programs for carrying out such dissemination in the relevant sections of Bappenas.
Local government evaluation. This activity deals with the evaluation of newly-created regions – those created from 1999 to 2009 and those created in the last three years. From 1999 to 2009, 205 new autonomous regions were created (Daerah Otonom Hasil Pemekaran/ DOHP) comprising: 7 provinces, 164 districts, and 34 municipalities. Government is very conscious of attendant political and development risks and has therefore put a moratorium on the creation of more new regions so that it could ensure conformity with the law. The government is also in the process of evaluating different aspects of the performance of DOHP (under Minister of Home Affairs Decree 21/2010), including, among other things, the economic, financial, public service, and human resources aspects of government; and citizen welfare. The evaluation will also attempt to explain variations in such performance; assess capacity building needs and formulate a capacity building plan; and consider policy alternatives for the creation, termination, and merger of autonomous region in Indonesia.
To do this work, the Directorate for Capacity Development and Evaluation of Regional Performance and Directorate General for Regional Autonomy, Ministry of Home Affairs have established an evaluation team, whose membership includes experts from major universities and the Indonesian Institute of Sciences, and representatives from the Indonesian Chamber of Commerce and Industry, non-governmental organizations, and mass media.
Towards this end, the DSF has supported the socialization of MoHA Decree 21/2010 among regional governments, thereby helping to pave the way for the evaluation. A national launch was held in Jakarta in February, 2010; it was opened by the Minister of Home Affairs and was attended by more than 700 representatives from more than 200 newly-created regions. DSF will continue to provide technical support to the evaluation team, particularly in terms of data collection and analysis.
Regional development policy. The aim of this activity is to build within Bappenas sustainable institutional capability to: (a) assess the empirical basis of existing Indonesian policy on regional development and related policies and make recommendations for improvements; (b) propose improvements to regional development planning processes; and (c) disseminate the results and develop a cross-ministerial and regional consensus in relation to such policy and planning improvements. A central part of the activity is
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to help local governments to produce development strategies for each of the seven major island-regions (as part of the implementation of the Medium-term Development Plan for 2010-2014).
Economic development facility. This activity is designed to help government to accelerate local economic development through the establishment of a facility with a nation-wide remit to promote local and regional economic development. The activity will help the Bappenas’ Directorate of Rural and Urban Affairs to develop a concept and strategic plan for such a facility; and to develop cross-ministerial support for the initiative, which is to be piloted in several provinces. The DSF has collaborated with GTZ’s Regional Economic Development program to provide integrated support to Bappenas.
Implementation of the support to the strengthening of local government natural resource management capability; capacity building for regional policy formulation; and strategic planning for the establishment of a regional economic development facility will commence in the third quarter of 2010.
Donor Harmonisation and Knowledge ManagementDonor harmonisation (third phase – from 2009). In 2006, the Ministry of Home Affairs commissioned the DSF to create a donor mapping database (DMD). The purpose of the DMD is to track, monitor, and analyze aid rendered to Indonesia by the international donor community, and thereby to serve as a valuable management tool for government and donors. Programme information will include: development objectives; geographic location; modalities of assistance; and monitoring methods and expected results.
Database development has proceeded in phases. In phase 1, a prototype was created. In phase 2, the design was upgraded to a web-enabled dynamic HTML database. This version is now available in both English and Bahasa Indonesia on the DSF web-site at http://www.dsfindonesia.org/apps/dsf-dm/cgi-bin/dw.cgi.
The third phase of the activity is designed to institutionalise the database and its management in government. In close collaboration with government, DSF support will therefore:
a. Upgrade design features; b. Improve data comprehensiveness and quality; c. Transfer responsibility for updating information online to respective donor agencies; andd. Hand over management responsibilities to the ‘owner’ entity in government.
Knowledge management. This consists of four main elements: first, the production of occasional policy briefs arising from DSF-supported activities; second, the maintenance of an electronic repository of relevant documents on decentralization produced by development partners in Indonesia; third, the maintenance of a DSF web site; and fourth, knowledge sharing and knowledge building activities concerning critical aspects of the DSF strategic framework for the benefit of central and local GOI officials. The latter includes specialized education and training and exposure to international experiences – for example, on different aspects of fiscal decentralization and upward and downward accountability. In July 2010 a delegation of senior government officials (Echelons, 1, 2 and 3) drawn from all three of DSF’s government counterpart agencies will attend a two week short course on these matters at the European University in Budapest. The course has been tailored to meet the special requirements of the DSF. The fourth category also includes support to MoHA’s engagement with communities, civil society and the public generally, to begin with via a series of forums and public consultations on different aspects of governance such as the election of the heads of regions (the majority favoured direct elections) and issues of public service capacity building in the regions. The next public consultation will explore questions of border area management. The Minister of Home Affairs has attended these forums, and they have generated vigorous and useful discussion.
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DELAYS AND REMEDIES
In the December 2009 and March 2010 quarterly reports, we discussed a number of factors that were contributing to delays in programming and implementation. Below, we reiterate some of these points, primarily as a means for recording our experience of implementing the processes involved, so that we – and others – can learn from it.
Recipient-execution. In order that government may commence procurement for the implementation of activities, three conditions must be satisfied:
a. First, a grant agreement between government and the World Bank must be signed. This requires that budgets, together with financial management and procurement systems, have been developed by government to standards considered to be satisfactory by the Bank (on the basis of assessments the Bank carries out).
b. Second, conditions for grant effectiveness must be established. Such conditions depend primarily on the production of an acceptable project operations manual, and the conduct of financial management and procurement training. The satisfactoriness of such conditions is assessed by the Bank.
c. Third, grant activation must be instigated by government. This requires that government takes the steps necessary to allow for disbursement to commence. These steps comprise internal GOI processes that include grant registration; the establishment of a special account; and DIPA processing.
Directorates in government naturally vary in their capacities (and eagerness) to satisfy these conditions, which in turn affects the pace of progress. For example, as earlier discussion in this report notes, some parts of MoHA have shown considerable energy and commitment in relation to the above; have sought advice and other forms of assistance when they were needed; and have been prepared to follow through on clearances and approvals in order to keep projects moving ahead. The Local Government Affairs directorate of the Directorate General for Regional Autonomy and the Government Education and Training Centre (Diklat), both in the Ministry of Home Affairs, have exhibited these qualities and are well advanced in relation to the above.
Commitment to recipient-execution - implications. In the MoHA there has been laudable commitment to the idea of recipient-execution, premised on a desire to acquire necessary skills and knowledge as a basis for creating lasting institutional capability. For the reasons we have given, this can threaten to take longer than the current lifespan of activity implementation under the DSF (September 2011) or other implementation deadlines will comfortably accommodate (e.g., for scholarships, university admission deadlines and degree program lengths).
It follows that recipient-execution slows down disbursement (for financial donors, and for the Bank, disbursement is regarded as an important performance measure). Balancing these competing claims is not easy, partly because judgements about what to do and when are subject to individual and institutional idiosyncrasies that are not amenable to any formal control that can be exercised either by the DSF’s governance structure7 or by the DSF Executive.8
Implementation of recipient-executed activities. Government-executed projects can also take longer to implement, partly because of the DIPA processing schedule and partly because of the need to follow
7 The MC has some formal authority in relation to such matters, but it is not clear how far this extends, particularly when it comes to institutional boundaries. The MC and the government technical team have done their best to influence these matters, primarily through exhortation (with strong TA and liaison support from a MC GOI position funded by the DSF). But this can only go so far. 8 The DSF Executive has no formal authority in relation to such matters and must rely exclusively on rational argument and ex-hortation, with all of the attendant limitations for getting things done efficiently and effectively. The DSF Executive is converting a part-time position devoted to supporting government in a wide range of matters associated with recipient-execution to a full-time one.
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government procurement procedures. However, the DPRD and CBT projects have anticipated these possible delays and taken a number of steps to minimise them.
Nevertheless, delays in DIPA disbursement and/or procurement processes are likely to arise in government-executed activities, which in turn will slow down project implementation and the attainment of project objectives.
The desirability of recipient-execution and associated capacity building. In all cases, however, it is clear that government capability for doing this type of work needs to be, and is being, improved. The importance of such capacity building is recognised by DSF’s counterparts in government. To date such capacity building has comprised:
a. A training and orientation workshop for government staff; andb. Day-to-day interactions between professional staff of the DSF Executive and government
counterparts; coaching; and what amounts to action learning in relation to different aspects of execution and procurement.
From time-to-time workshops or clinics have been – and will continue to be – held that address different points in the critical paths for recipient-executed activities. For example, in April 2010, a workshop was held with staff of MoHA that attempted to produce in one-sitting drafts of all or most of the documents needed for recipient-execution. In May 2010, a clinic was conducted by DSF procurement and administrative staff with MoHA project implementing units on the format and requirements for preparing Request for Expression of Interest and criteria for short-list evaluation reports.
World Bank and DSF Executive practices. The DSF Executive has taken a number of steps to help ensure that Bank and DSF Executive processes – for both recipient and Bank-executed activities - work as expeditiously as possible. These steps include:
a. The reconfirmation of internal service standards between units in the Bank for the turnaround of approvals and the conduct of financial and procurement assessments, and so on;
b. The clarification of lines of authority and communication between the DSF Executive and relevant sections of the Bank;
c. Meetings between the DSF Program Manager and Deputy Program Manager and relevant heads of units in the Bank (accounting and procurement) to explain underlying rationales for modes of execution and the number of transactions and to discuss ways of clearing bottlenecks on the Bank side and building capacity and maintaining momentum on the government side;
d. Within the DSF Executive, at least bi-weekly portfolio review meetings between the Program Manager and Deputy Program Manager and portfolio managers to examine progress and devise means for addressing obstacles to it;
e. The establishment within the DSF Executive of a greater awareness of the importance of internal service standards and a better sense of shared responsibility by all concerned for the work that has to be done; and
f. Among staff of the DSF Executive continuous review of work processes, including working lunches on critical paths related to Bank and recipient-execution.
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In its present circumstances, the formal life expectancy of the DSF is determined by two documents. The first is the memorandum of understanding between the Government of Indonesia and the World Bank concerning the DSF, which expires in December 2011.9 The second is a letter from the DSF’s principal financial donor, DfID, addressed to the World Bank as trustee, which stipulates a closing date for the DSF of 31 March 2012. Under the latter agreement, DSF activities must be completed by no later than 30 September 2011.10
If the life of the DSF is to extend beyond these dates, at least two conditions must be satisfied. First, and most important, government11 must derive sufficient benefit from the existence of the DSF for it to want the DSF (in some form) to continue. And second, sufficient funding must be committed by government and by donors to allow this to happen.
Assuming that these conditions can be met, and with a view to allowing sufficient time for an orderly transition to whatever end state is deemed desirable and feasible, the purpose of this chapter of the report is to provide a basis for discussion of some of the issues involved. It does this, first, by describing briefly the current structure and functioning of the DSF; achievements to date; and challenges.
Second, it considers a number of possible future scenarios for the DSF. One of these scenarios envisages two complementary streams of operation or strands of technical assistance: the first involving a continuation of the relatively localized and tailored technical assistance currently provided to directorates in DSF’s three counterpart government agencies; and the second involving technical support associated with a larger and strategically more significant form of support, possibly financed by a sector investment or development policy loan.
It is suggested that at least for the first of these streams the role played by the DSF Executive in its supply of technical assistance lends itself to gradual assimilation by government over the medium term12 (nationalization). The chapter considers briefly how this might be done.
9 While this document is not legally binding on its signatories, and therefore is not in any sense the legal basis of the DSF, its ab-sence would probably make the DSF untenable.10 As mentioned earlier in this report, the six months between the cessation of activities and the formal closing date allows for the settlement of outstanding payments and the orderly winding down and closure of the facility.11 As represented principally by government institutional membership of the DSF – the Ministry of Finance, the Ministry of Home Affairs, and Bappenas.12 Having in mind the gradually diminishing needs in middle income countries for technical assistance, we surmise that ‘medium term’ will be a period of about ten years.
THE FUTURE OF THE DSF 5
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Third, a revised governance structure for the DSF is proposed, which is well-suited to all of the scenarios discussed and constitutes a natural progression towards enhanced government leadership and ownership. This proposal has been reviewed by government members of the MC and by the government technical team that supports the DSF.
And finally, fourth, it sets out the next steps to be taken.
STRUCTURAL COMPONENTS AND RESPONSIbILITIES
The DSF is made up of three structural components:
a. A Steering Committee (SC) comprising senior (Echelon 1 level) representatives of the Ministry of Finance, the Ministry of Home Affairs, and the National Development Planning Agency, and the heads of nine international development partners. This entity is responsible for the strategic management of the DSF and for determining work program priorities and the roles that the DSF as a whole shall play. The committee is co-chaired by one government and one donor member.
b. A Management Committee (MC) that is responsible for overseeing the operations of the DSF Executive and approving its work program. The committee is co-chaired by one government and one World Bank member.
c. The DSF Executive whose job it is: first, to assist government with the design, procurement, and management of projects financed by the DSF and with the realization of aid effectiveness objectives; second, to promote informed debate of decentralization and aid effectiveness issues among the decentralization development community, and action; and third, to provide secretariat support to the SC and the MC. The World Bank serves as trustee and administrator of the funds contributed by donors and it staffs and manages the DSF Executive.
ACHIEVEMENTS AND CHALLENGES
AchievementsThe achievements of the DSF fall into three categories.
Technical assistance and development support. The first and most obvious of these pertains to its work programme of technical assistance and development support. Such achievements are discussed in detail elsewhere in this report and will not be repeated here.
The second and third categories of achievement are perhaps less obvious and less remarked upon. Both are concerned with institution and capacity building - one constituted by the development of the DSF itself (as a multi-donor, government-led facility) and the other by virtue of the type and extent of interactions between different directorates within ministries and between ministries, and between professional staff of the DSF Executive and professional staff of its three counterpart government agencies, particularly in relation to preparations for recipient-execution.
Government capacity building arising from the project cycle. As mentioned in Chapter 4, this has been a product of activity design, preparations for execution, and procurement. For example, there has been considerable capacity building that has occurred as a result of joint activity design; sometimes protracted and rarely straightforward preparations for recipient-execution (including the strengthening of financial management and procurement capabilities in government); and government involvement in or exposure to procurement processes for both Bank and recipient modes of execution.
Multi-donor facility institution building. The importance to effective development of multi-donor facilities such as the DSF has long been recognised by the development community, and is clearly expressed in the Paris Declaration on Aid Effectiveness (2005), the Accra Agenda for Action (2008) and the Jakarta Commitment (2008).
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The sine qua non for the effectiveness of such facilities is that there should be genuine government leadership of them, combined with good levels of mutual trust between the executive arms of such facilities and their principal clients in government. From a starting point about 18 months ago where confidence in the DSF on the part of both government and donors had been at very low ebb, it is probably now safe to say that both of these conditions have been reasonably well satisfied. And while there is still room for improvement in relation to these conditions and in relation to other aspects of its performance, the DSF can be said to be operating satisfactorily in relation to its purposes. It therefore constitutes a viable means for realizing the advantages for development effectiveness and efficiency (through lower transaction costs for all stakeholders) contemplated by the international declarations and commitments referred to above.
In the circumstances of a fast-developing middle-income country like Indonesia, it is important that such vehicles be established, and that the sometimes considerable time and other resources needed to make them work be invested in them by all concerned.
ChallengesThe main challenge facing the DSF is that of speeding-up the transition from the general approval of an idea for support through its translation into a detailed design document and then to implementation and disbursement. A second challenge is to arrive at a more widely shared interpretation of the meaning of government-led. Both of these matters are discussed in the chapter in this report entitled ‘Risks and Challenges’.
THE FUTURE OF THE DSF: COMPLEMENTARY STRANDS OF DEVELOPMENT?
Despite the advances that have been made by the DSF, the existence of strong government support for it, and the general desirability of such facilities in middle-income countries, the future of the DSF beyond its current closing date remains uncertain. Outlined below and in Figure 1 are five possible future scenarios for the DSF.
a. Scenario 1 – closure. This would entail winding-down and closure of the Facility at the existing end date of 31 March 2012. Before then, it is possible that following a review of the DSF by its principal financial donor (DfID), a ‘culling’ of non-performing activities could take place in September 2010, with ‘savings’ either being withheld or re-allocated.
b. Scenario 1b – delayed closure. This would involve completion of as many existing activities (DSF Work Program 2009-2011) as possible by the current end date, but with a further no-cost extension (of, say, 12 months) for those that had not completed – to September 2012, with a Facility end date of 31 March 2013. This scenario also includes a possible ‘culling’ of non-performing activities following the review in August 2010. It is also likely to include a phased reduction in DSF Executive staffing.
c. Scenario 2 – continuation of existing operations with new funding. This would entail a continuation of the Facility beyond its existing end date – for, say, a period of three years - along its current lines of operation, but with additional donor funding for new and probably larger and more strategically significant technical assistance activities proposed by government. In addition, (as above) for existing activities, a further no-cost extension could be granted by the principal financial donor.
d. Scenario 3 – new program in support of a loan. This would entail the design of a new program of donor-financed technical assistance that supports a larger and more strategically significant government program financed by a loan from the World Bank and through collaboration with the ADB. Under this scenario, and following the DSF review in August/September 2010, savings from the existing program could be diverted to preparing the way for a loan to government. The closing date for the existing DSF program would remain 31 March 2012, but with the possibility of a no-cost extension for some existing activities under the DSF Work Program 2009-2011.
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e. Scenario 4 – some combination of Scenario 2 and 3. This might entail the maintenance of two somewhat inter-related but organizationally separate (within the DSF Executive) streams of activity. Under this scenario, in addition to new donor funding, a further no-cost extension might be granted by the principal financial donor for the existing DSF program.
In Figure 1 below, September 2010 is the likely submission date for a DfID review report on the DSF; 31 March 2013 is a possible no-cost extension date for uncompleted activities under current financing; and 31 March 2015 is a possible end date for a technical assistance programme in support of a loan.
Figure 1: Future Scenarios for the DSF
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Below we discuss some of the issues that are relevant, in particular, to Scenarios 2, 3 and 4.
Demand from government. There is clear demand from central government for the type of support currently provided by the DSF. As in other middle-income countries, the Government of Indonesia perceives access to national and international expertise and experience, among other things, as being vital to policy development; to institution building; and to the professional development of government officials. Moreover, government clearly likes to be able to direct development assistance to where government perceives its most important and urgent needs to lie; to play an active lead role in the design of the support that it receives; and either to execute and manage implementation itself or to be integral to non-recipient execution and implementation management. All of this is achievable under the DSF and much of it is being - and has been - done.
Systemic change. The question arises, however, as to how the relatively large number and diversity of activities currently undertaken under the auspices of the DSF can be augmented by other forms of support that cohere around (or address) some higher order unifying objective and that are capable of generating greater momentum for constructive systemic change at a faster pace.
Grounds for development. The current program of support prepares the ground for larger, more strategically significant13, and different, forms of support in at least three important ways. First, the existing DSF program, which is well-premised in the logic of piecemeal social engineering, addresses important and urgent relatively localized problems identified by central government directorates in the MoHA, MoF, and Bappenas. Some of these activities have the potential to be scaled-up. Moreover, the program has arisen from, and rests on, a foundation of trust between these units of government and the executive arm of the DSF. Such trust has been built painstakingly from the bottom up on the basis of three necessary ingredients: perceptions of sufficient levels of competence; integrity (doing what you say); and benevolence (genuine intentions).
Second, while there is still considerable room for improvement,14 important elements of the institutional arrangements that now comprise the DSF constitute strengths to be built upon.
Likewise, third, as mentioned above under ‘achievements’, the capacity building in government that has come about as a result of the extensive work that has been done with government on the preparations for recipient-execution and activity design will clearly make it easier for new activity design and for recipient-executed activities that follow.
In the next section, we consider in broad outline how the early stages of such complementary strands of technical assistance might be energised and sustained.
Strand 1: Extension of Existing Technical Assistance?The existing work program. The DSF has legal and moral commitments to complete the work that it has begun under its approved work program for 2009-2011, particularly those parts of the program for which financial commitments have been made, but also those in which government still has strong interest. To some extent, and in some cases, the degree of government interest in a particular activity can be gauged by the pace of recipient-execution and implementation progress.
Refining the program. However, at some stage soon – perhaps at the time of the forthcoming DSF evaluation in August 2010 or earlier (see Chapter below) – judgements will need to be made about which
13 In employing this much over-used term, we simply mean to imply that the support should be capable of yielding results that can be argued or, preferably, shown to contribute clearly - directly or indirectly - to the attainment of national development goals, whether expressed in terms of national unity and political stability or economic development or different aspects of poverty re-duction or sustainable human development.14 Below, we discuss some such possibilities in relation to the DSF’s existing governance structure and we have mentioned above difficulties encountered with speed of execution and implementation.
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activities are showing sufficient progress to enable them to complete by the current DSF activity end date of September 2011, and which activities are not. With the approval of the principal financial donor and the DSF MC, savings arising from a weeding-out of non-performing activities could then be put to other uses, at least one of which is discussed under Strand 2 below.
Time needed for satisfactory completion? However, for at least some of what remains of the DSF 2009-2011 program, considered and effective implementation is likely to take longer than the current activity end date allows - for some activities perhaps as much as 12 months longer.
Designing a new program. An extension of 12 months to the existing programme should allow all concerned to fulfil their obligations and should provide sufficient time and resources for the development of a second, related but strategically more substantial strand of work to be developed and implemented.
It is envisaged that at the end of this proposed extension period either:
a. If the work done by the DSF under its existing programme does not yield good enough results to sustain donor and government confidence, or government and the DSF have not been able to design new projects of a similar type that attract new donor funding, a declining Strand 1 would be absorbed by Strand 2 (see below Strand 2 and Scenario 3 above); or
b. If the work done by the DSF under its existing programme does yield good enough results to sustain donor and government confidence, and new programs are designed that attract new donor funding, then Strand 1 could continue to operate along current lines (Scenarios 2 or 4 above).
Strand 2: Technical Support to a Loan? The second strand of DSF work would be designed to:
a. First, with government, prepare the ground for a ‘development policy’ loan from the Bank. As suggested above, such preparation is likely to take at least 12 months from the date that a decision is taken by government and the World Bank to proceed with some form of loan.
b. Second, once the loan has been made, provide technical assistance in support of the loan for a period of, say, three years. As mentioned above, it is envisaged that such technical assistance would be financed partly by possible savings from the DSF work plan for 2009-2011and partly by new donor grant funding (Scenario 4 above).
c. Third, alternatively, grant-funded technical assistance channelled through the DSF might be used to support an existing WB loan to government – such as the so-called ‘DAK reimbursement loan’.
Depending on the purposes to which any loan might be put, it is possible that some existing DSF activities (under Strand 1) would be complementary to a loan technical assistance program. This would make it easier for Strand 1 to be absorbed by Strand 2.
Towards Nationalisation If Scenario 4 above were to come about, then over a period of, say, three years a process of nationalisation of at least one division (responsible for Strand 1 activities) of the DSF Executive should be well advanced. Such nationalisation might comprise some or all of the following:
a. A re-design of the governance structure of the DSF that strengthens government leadership and ownership (see below);
b. Gradual nationalisation of professional staff positions in one structural division of the DSF Executive;c. Physical relocation of one division of the DSF Executive to an appropriate location in government
(this would probably entail spinning-off one structural division of the DSF’s work into a separate organisation);
d. Nationalisation of the position of Division Manager or the creation of a new Program Manager position; and
e. Some (preferably, increasing) level of government financing.
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THE FUTURE OF THE DSF: GOVERNANCE STRUCTURE
Basic principles of organization design suggest that management systems and structures work best when they are adapted to the circumstances in which they operate. Most importantly, in designing systems of organisation and management attention should be given to the complexity of the activities to be managed, the experience and capabilities of the human resources available to do the work, and the speed and predictability of change in the surrounding environment. An environment characterised by high product or activity complexity and variability coupled with rapid and unpredictable environmental change calls for management systems and structures that are small, accessible, well-informed, flexible, and capable of rapid response. This is a reasonable representation of likely DSF operating conditions under any of the scenarios discussed above.
The structural elements proposed below and set out in the organisation chart in Figure 2 are those that are best suited to such an environment and to the type of work carried out by the DSF. They also constitute a natural progression towards the type of government leadership and ownership of development assistance envisaged in international declarations (Paris and Accra) and in the Jakarta Commitment (2008).
Figure 2: Proposed Governance Structure for the DSF
DSF Supervisory Board. Responsibility for the oversight or supervision of the DSF as a whole would be assumed by a small body comprising Echelon 1- level representatives from each of the Ministry-level entities involved on the side of the government (one from each), with the Program Manager of the DSF Executive as secretary. The roles of this body will be principally those of:
a. Good governance oversight. The Supervisory Board will act both as an assurer and facilitator of good governance (effectiveness, efficiency, upward and downward accountability, transparency, equity, inclusiveness, and so on) within the DSF itself and in so far as possible within the activities that the DSF supports.
b. Government policy amplification and guardianship. It will also act as an amplifier (downward to the DSF) and guardian of government policy concerning decentralization. With respect to the latter,
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and relying on advice received from the DSF Management Group (see below), the Supervisory Board will ensure that the DSF’s work program is supportive of such policy, and its development.
c. Review of policy recommendations. The technical assistance financed by the DSF will have implications for policy development at different levels of government. Where implications for policy cannot be considered and decided at the levels at which the technical assistance is operating or by the DSF Management Group, it will be the job of the DSF Management Group to draw such matters to the attention of the DSF Supervisory Board for their review and determination as to how best to proceed.
d. Determination of operating procedures. On the basis of recommendations received from the DSF Management Group, the Supervisory Board will approve revisions to the DSF Operations Manual.
e. Operational review. Here, the Supervisory Board could be expected to play an important facilitative role in relation to resolving bureaucratic bottlenecks or impediments to progress that cannot be resolved by the DSF Management Group. Such bottlenecks or impediments may be either intra- or inter-ministerial – for example, issues surrounding recipient-execution. This work would be done on the basis of the periodic formal written reports produced by the DSF, but also on the basis of briefings provided from time-to-time by members of the DSF Management Group.
f. Determination of Donor Consultative Group mandate and membership. On the basis of recommendations from the DSF Management Group, the Supervisory Board will determine the criteria to be employed in determining membership of the Donor Consultative Group and approve its terms of reference.
g. Donor liaison. As needs arise, the Supervisory Board will liaise with donor heads of agencies concerning DSF business, including the World Bank.
Much of this business could be done semi-formally among government colleagues, or between government and donors, or by circulation, with a necessity for, say, only one formal meeting per year.
DSF Management Group. For the DSF, experience to date and principles of organization design suggest that the management of DSF operations could best be performed by a small group comprising Echelon 2-level representatives from each of the Ministry-level entities involved on the side of the government (one from each ministry, each with representative functions). The Program Manager of the DSF Executive would act as secretary. This body would assume all of the roles and functions of the existing DSF MC and would have authority to make decisions concerning all DSF operational matters, including its work program. Meetings would be held according to need, probably bi-monthly. In summary, the roles of this body will be principally those of:
a. Work program design and oversight. The Management Group (MG) will determine the work program of the DSF and oversee its execution and implementation. This will naturally entail extensive intra- and inter-ministerial communication and coordination, which it will be the duty of the MG to foster.
b. Drafting of operating procedures. The MG or its agents will draft, and make recommendations to the Supervisory Board concerning, changes to the DSF Operations Manual.
c. Government policy implementation. Here, the MG will ensure that the work program of the DSF conforms to government policy and is supportive of it or its development or revision.
d. Policy influence filter. Where the work of the DSF has implications for government policy that cannot be dealt with at the level of the MG or at the level at which the work is done, then the MG will act as a filter of upward policy influence, which it shall direct to the Supervisory Board in whatever form it sees fit.
e. Donor liaison. The MG will draft terms of reference for the Donor Consultative Group (DCG) and criteria for membership thereof, for the approval of the DSF Supervisory Board. It will also liaise with the DCG about DSF business and about donor-supported activities outside of the DSF. The MG will determine appropriate means for periodic reporting of the latter to the DSF. The MG will also liaise with the World Bank Sector Manager or nominee in a manner and as frequently as deemed
ANNUAL REPORT 2010
45
necessary to allow the World Bank to fulfil its fiduciary obligations, both as trustee of the DSF and as lender.
f. Determination of consultative and advisory group mandates and membership. The MG will determine the terms of reference and membership of all consultative and advisory groups apart from the DCG.
g. Inter-governmental, civil society, and community liaison. The MG will determine the extent and form of liaison with other arms and levels of government, civil society, and communities.
Government leadership and ownership. The sine qua non of DSF future scenarios 2, 3 and 4 is strong government ownership and leadership, which is reflected in the membership of the governance components outlined above. Donor Consultative Group. The DSF would manage donor support and ensure informed donor involvement in its business through a Donor Consultative Group, representatives of which could be invited – or request - to attend DSF Management Group or Supervisory Board meetings. Donors would also be provided with written quarterly and annual reports of progress and occasional policy briefs, which could be supplemented from time to time by face-to-face meetings with government or with representatives of the DSF Executive. As suggested above, formal responsibility for donor liaison on all operational matters would rest with the Management Group.DSF Technical Advisory Group. In relation to the technical assistance activities financed under the DSF, it would be desirable to have access to an advisory body comprising authorities on decentralization in Indonesia and internationally. This body would comprise, say, two national and two international members, who would be accomplished in both fiscal and administrative decentralization; knowledgeable of the latest thinking on decentralization and of international and Indonesian experience; and would be of either national or international standing in their respective fields. Members of the Technical Advisory Group would be paid a retainer, and a daily consulting fee for any work undertaken on behalf of the DSF.Local Government Consultative Group. This soon-to-be established body among other things will provide for the DSF a much-needed bottom-up perspective on decentralization in Indonesia; on possibilities for DSF support to local government; and on existing and planned DSF activities. All of the matters referred to above would be clearly spelled out in a revised operations manual.
World Bank fiduciary responsibilities. As depicted in Figure 2 above, the World Bank’s fiduciary responsibilities in relation to the DSF would be managed at different levels through close liaison with the Supervisory Board and the Management Group and through the DSF Executive. Any loan would be managed by a World Bank-designated Task Team Leader.15 When necessary, this person would liaise with the DSF Executive. Natural progression towards enhanced government leadership and ownership. The proposed governance structure outlined above, which builds on DSF experience to date, constitutes a natural progression precisely towards the ends envisaged by international declarations on aid effectiveness (e.g., Paris and Accra) and the Jakarta Commitment (2008), and particularly in relation to:
a. Enhanced (formalised) government leadership and ownership (responsibility);b. Reduced transaction costs for government and for donors or greater efficiency;c. Greater flexibility and responsiveness; andd. Better informed and more inclusive decision-making and, thereby, enhanced effectiveness.
In short, while ensuring sufficient levels of oversight and good governance for the DSF, the lightly-engineered governance structure depicted above is designed to optimise government ownership and leadership, informed management flexibility and speed of response, overall performance, and stakeholder consultation.15 It is assumed that government would put in place a separate governance structure for its management of any loan. To reiterate, the proposed DSF structure is designed only to govern technical assistance associated therewith.
46
THE FUTURE OF THE DSF
NEXT STEPS
Next steps to be taken are likely to include:16
a. DSF Executive/World Bank discusses with government different possible scenarios for the future of the DSF.17
b. Government discusses the scenarios internally and decides what it wants to do and how it wants to proceed.
c. DSF (government) and the DSF Executive/World Bank jointly or severally discuss the above with the DSF’s principal financial donor.18
d. DSF (government) and the DSF Executive/World Bank jointly or severally discuss with other donors the scenarios for the future of the DSF.19
e. Government commissions through the DSF studies of large and strategically significant decentralization projects that would lend themselves to financing by donor grants and/or a loan from the World Bank.20
f. Building on (e) above, with government, DSF/World Bank explores program design possibilities that might be financed by a loan from the World Bank.
g. World Bank reviews its own positioning and internal organisation vis-a-vis support to decentralization in Indonesia and identifies a role for the DSF in relation to this.21
In order for there to be sufficient lead time to avoid closure of the DSF at the current end date of 31 March 2012 (Scenario 1 above) and for there to be sufficient resources available to carry out the work envisaged under Scenarios 2, 3 or 4, by no later than August/September 2010, the scenarios outlined in this paper or others like them will need to have been carefully considered by, in particular, the Government of Indonesia, the DSF’s current principal financial donor (DfID), other donor members of the DSF (and non-members), and the World Bank.
16 This is not a precise or complete critical path. The ordering of steps could vary and clearly some steps could be carried out in parallel. Moreover, as indicated below, some work has already been done in relation to most of these steps.17 The first discussions with government representatives of the DSF MC on the basis of the material set out in this chapter took place on 17 May 2010 and its contents were well-received. Further discussions were held in June 2010.18 Such discussions commenced in the fourth week of May and were continued in the first week of June 2010.19 Discussions - initially with donor members of the DSF MC (AusAID, CIDA, and USAID) and the Government of Germany (GTZ as proxy) - commenced in the second week of June. Beginning in July 2010, these discussions are likely to be extended to include donor members of the DSF SC (ADB, The Netherlands, and UNDP) and possibly others like the European Union.20 This work commenced in late May 2010.21 This work is ongoing under the direction of a former Lead Economist of the World Bank.
47
AID EFFECTIVENESS 6The DSF MOU assigns a ‘donor coordination’ (or ‘harmonisation’) function to the DSF. To date, the DSF’s contribution to donor coordination has been limited to the establishment of a donor mapping data base, which is in the process of being up-dated and institutionalised within government. The DSF has also participated in donor meetings that have been held from time-to-time on the general subject of harmonisation.
Discussions with relevant arms of government – in Bappenas and MoHA – concerning how best to proceed in relation to aid effectiveness (as defined below)22 began late in the second quarter and wil continue in the third quarter of 2010. Aid effectiveness will be considered in some or all of the following (conventional) terms:
a. ‘Market’ composition – including the overall significance of development assistance in relation (for example) to government spending on decentralization; the type and number of participants; size and type of contributions; length of presence; and so on.
b. Alignment – or the extent to which development assistance is in line with government policy and government interests and variability in relation to this.
c. Modalities, accountability, and government systems – for the market as a whole and according to participant, how development assistance is rendered in terms of the full range of possibilities (budget support; stand-alone bilateral projects; multi-donor trust funds; different forms of execution and implementation; and so on); how it is governed; how it is monitored and evaluated; and how it manages questions of accountability and reporting to government.
d. Government ownership and leadership – and, in particular, the extent to which this might vary according to modality and/or participant.
e. Harmonisation – or the extent to which different programs of development assistance take account of one another, so as to optimise complementarity and to avoid so-called ‘duplication’ and ‘overlap’.
f. Programme emphases and geographical dispersion – or a typography and geographical mapping of development assistance programmes.
g. Quality of design and implementation – or the way in which programmes are designed and, in particular, the extent to which they can be said, genuinely, to represent government ownership and leadership and to represent government interests and concerns; but also the quality of technical assistance rendered and how this is managed and by whom.
22 Donor coordination per se is a relatively minor contributor to aid effectiveness. A role for the DSF should be fashioned in relation to the support that it could provide to government across the full spectrum of aid effectiveness constituents.
48
AID EFFECTIVENESS
It is envisaged that discussions concerning these aid effectiveness matters between different arms of government and the DSF may result in some rational division of labour and responsibilities, and a program of support rendered by the DSF.
49
Governance arrangements that have evolved during the transition period (from January to June 2010) between the incoming and outgoing MC and SC government co-chairs are discussed briefly below. This is followed by an account of progress in relation to DSF engagement with local government and then by a description of developments in the DSF Executive.
GOVERNANCE
Transfer of co-chair responsibility. The government-held positions of co-chair of the MC and the SC are in the process of being reassigned.
Government membership of SC. There has been discussion in government concerning government representation on the SC. Adjustments to such membership are likely to be mooted formally during the third quarter of 2010 – see Chapter 5 above.
Management and conduct of DSF business. During this transition period, the business of the DSF has continued uninterrupted and more than satisfactorily under the guidance of breakfast meetings held from time to time between the DSF Executive and government members of the DSF MC (principally, the first government co-chair of the MC, from Bappenas; the outgoing co-chair, from the Ministry of Finance; and the - possible - incoming co-chair, from the Ministry of Home Affairs).
ENGAGEMENT wITH LOCAL GOVERNMENT
In late October 2009, a paper outlining a number of possibilities for DSF engagement with local government was put to the MC for its consideration. The MC agreed that the idea of a ‘local government consultative group reporting to the DSF MC be endorsed and recommended to the DSF Steering Committee for its consideration.’ The relevant minute of the meeting also states that: ‘subject to Steering Committee approval of the recommendation, a MC task force be established comprising members drawn from the government technical team and the DSF Executive, whose job it would be to make detailed recommendations concerning terms of reference for the consultative group; membership; and forms of logistical and other support to be provided.’
A discussion paper on the roles and responsibilities of the Local Government Consultative Group (LGCG) has been reviewed by the GOI technical team and approved by the MC co-chair. The LGCG initial membership will consist of the heads of the six local government associations and representatives from local governments participating in DSF projects. An invitation for expressions of interest was sent by the MC co-chair to the potential membership mentioned above and an inaugural workshop is scheduled for August 2010.
GOVERNANCE, LOCAL GOVERNMENT ENGAGEMENT, AND THE DSF EXECUTIVE 7
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GOVERNANCE, LOCAL GOVERNMENT ENGAGEMENT, AND THE DSF EXECUTIVE
THE DSF EXECUTIVE
Institution building. Further progress has been made throughout the year in building an effective, efficient, and cohesive DSF Executive. All aspects of institution building continue to receive attention, namely: organizational structure and design, including roles and responsibilities and distribution of authority; internal communication, meetings, and team working; internal work processes and interactions with other sections within the World Bank; selection, placement, induction, and development of staff; performance management, quality control, and discipline; organizational culture and staff morale; corporate image and external relations, including engagement with government; and reporting.
Our philosophy in relation to all of these matters remains one of continuous improvement.
Staffing. International and national professional staff appointments (replacements and new appointments) during the year were as follows: Adviser Decentralization (Anahit Karapetyan, July 2009); Senior Adviser Decentralization (Widjono Ngoedijo, February 2010); Senior Economist (Soren Nelleman, March 2010); and Senior Governance Adviser (Henrik Lindroth, April 2010).
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RISK AND CHALLENGES 8RISKS
In the DSF 2009 Annual Report, we drew attention to five significant and inter-related categories of risk faced by the DSF, namely: aid effectiveness; the management of expectations concerning civil service reform; project design, execution, and implementation (the project cycle); engagement with local government; and the DSF’s governance structure. Elsewhere in this report, we have dealt with questions surrounding the DSF’s governance structure, engagement with local government, and with the project cycle. Our earlier (2009) arguments concerning the character of civil service reform remain valid and relevant, but will not be repeated here.
Aid effectiveness considerations continue to be of paramount importance to the DSF. The extent to which the aid effectiveness commitments made by donors under the Paris Declaration (2005), the Accra Agenda for Action (2008) and the Jakarta Commitment (2008) are not fulfilled constitutes the main risk to the DSF. These declarations emphasise the importance of government ownership and leadership of development assistance, a reduction in the number of stand-alone bilateral projects, and the use wherever possible of national (financial and procurement) systems. On the question of government leadership, we reiterate that the Jakarta Commitment (2008) states that ‘government will articulate and development partners will support...development objectives’ and that ‘development partners will align themselves more fully with government programmes and systems’ (p. 2).
The Jakarta Commitment (2008) also points out that ‘multi-donor trust funds have emerged as important vehicles for (the provision of)...support to Indonesia’s development’ (p. 3), and the DSF is mentioned as an example. Moreover, it goes on to state that ‘government and development partners commit to reduce the number of ad hoc freestanding (projects)’ (p. 3), which multiply transaction costs for government and donors alike.
In relation to the use of government systems, the Accra Agenda for Action (2008) states that: ‘we will strengthen and use developing country systems to the maximum extent possible’ and ‘donors agree to use country systems as the first option for aid programmes’.
The DSF is the only genuinely government-owned and led multi-donor trust fund in the field of decentralization. It is well placed to provide some of the efficiency and effectiveness gains contemplated in the declarations and commitments referred to above. It is also the only programme of development assistance to decentralization that employs recipient execution for a significant percentage of its activities, that is, it provides grants to government that are both ‘on budget’ and ‘on treasury’ and thereby makes use of government systems of financial management and procurement.
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RISKS AND CHALLENGES
The main threats to significant movement towards the use of multi-donor facilities like the DSF and away from stand-alone bilateral projects remain as stated in the DSF Annual Report 2009. These stem from donor hesitancy occasioned, first, by perceived dilution and increased complexity of control of project design, execution, implementation, and identity; second, by disbursement delays and inefficiencies that could arise from different forms of project execution; and third, by the perceived crowding-out effects (in a shrinking market) on participants whose operations depend either on sole-source bi-lateral funding or on third party contributions more generally.
CHALLENGES
Speed of implementation and disbursement. As mentioned in Chapter 5, the main challenge facing the DSF is that of speeding-up the transition from the general approval of an idea for support through its translation into a detailed design document and then to implementation and disbursement. As for much development assistance, the DSF experiences acutely the tension between, on the one hand, its principal donor’s imperative to disburse funds as quickly as possible and, on the other, government’s ability to absorb technical assistance, particularly its capacity to execute and implement activities. Almost inevitably, the latter takes longer than donors want or are able easily to accommodate.
Recipient-execution. For recipient-execution in particular, the various steps that need to be taken – design; establishing the necessary conditions for procurement and financial management; and implementation - generally require extensive preparation and capacity building and involve government budgetary and other processes that have largely predetermined and inflexible (and long) timelines. This is not to say, however, that there is not scope for speeding things up, on the parts of all involved.
Progress. And some headway is being made, particularly as a result of the groundbreaking preparatory work already undertaken by the DSF in relation to recipient-execution. But improvement is always likely to be incremental and to take longer than is ideal. Even so, all parties would agree that if the idea of government ownership is to be taken seriously, then an important part of it should comprise government execution, that is, execution based on government financial management and procurement systems.
The meaning of government-led. A second challenge is to arrive at a more widely shared interpretation of the meaning of government-led. Interpreted literally (as we think it should be, and as we have done), it means that government will decide what support it needs and wants and how such support will be rendered. This interpretation is stated explicitly in the Jakarta Commitment (2008) and is consistent with Indonesia’s status as a strong lower-middle income country and with the sentiments expressed in signed declarations of intent arising from international aid effectiveness meetings such as those held in Paris (2005) and Accra (2008).
This view implies that the role of donors and their agents should be to help government: first, to make the best use of international experience in the design and implementation of the support that it (government) says that it needs and wants; second, to build capacity for recipient-execution and the management of implementation; and third, to make the long term commitments that these things require.
53
This chapter sets out contracts and agreements signed during the first six months of 2010 (Table 3); and those that are expected to be signed by September 2010 (Table 4).
Table 3: Signed Agreements and Contracts for First & Second Quarters of 2010
Activity Amount of Signed Legal Contract or GA Notes
Public Service Formulation of Norms, Standard, Procedures, and Criteria for Local Gov. Serv. Delivery
905,000 Grant Agreement (GA)
Support to Public Service Delivery 26,053 Short Term Consultants (STC)
Fiscal Decentralization Improving the Policy Framework for Fiscal Decentralization
260,986 STC
Strengthening Data Provision to the Regional Financial Information System by Sub-National Governments with Stand-Alone Electronic Data Bases
1,360 STC
Building Capacity for the Development of Sub-National Government Capital Markets for Municipal Bonds
90,951 STC
Governance Reform Strengthening Program for Local Government Legislatures
500,000 GA
Introducing Competency Based Standards for Improved Public Service Delivery
797,576 GA
Decentralization Education and Training (DET) Scholarships for Public Service
908,059 GA
Provincial Governance Strengthening Program (PGSP) 2,000,000 FAAPlanning and Performance Measurement Inst. Building for the Integration of Nat. Reg. Dev. and Spatial Planning
376,496 Firm
3,568 STC
CONTRACTS AND AGREEMENTS 9
54
CONTRACTS AND AGREEMENTS
Activity Amount of Signed Legal Contract or GA Notes
Institution Building for the Accelerated Development of Border Areas
409,832 Firm
Regional Development Policy 31,609 STCKnowledge Management MoF Budapest training 13,392 CEUCommunications Assistant 14,674 STC
Total 6,339,556
Table 4: Projections of Contracts and Agreements to be Signed by 30 September 2010
ActivityAmount of Projected
CommitmentNotes
Unsigned Grant Agreements MSIB (Public Service) 429,000 GABorder Areas MoHA (Public Service) 450,000 GASub-national Investment Climate (Governance Reform)
700,000 GA
Amendments to Existing Grant AgreementDPRD Orientation (Governance Reform) 473,300 GAUnsigned ContractsInter-regional Cooperation (Public Service & Planning and Performance Measurement) *
760,000 Firm & STC
NRM (Planning and Performance Measurement) 631,842 FirmLocal Government Evaluation (Planning & Performance Measurement)
300,000 Workshops and STC
DET Bank Executed activities (Gov Reform) 685,461 Study Tours & Short CoursesMSS Bank Executed activities (Public Service) * 450,000 Workshops, travel & STCRegional Development Policy 700,000 FirmRegional & Local Economic Development 600,000 FirmsRegional Finance 250,000 Workshops and STCSupport for EPPD / EDOHP 100,000 Workshops and STCGrand Design for Regional Autonomy 500,000 Workshops and STCKnowledge ManagementMoF Budapest training 43,848 Travel & accommodationMoHA Public Consultations 50,000 Workshops & documentationKnowledge Management 150,000 Aid effectiveness; workshops;
& STC Total 7,273,451
*This activity will commence procurement in the 3rd quarter and contracts should be signed in the 4th quarter of 2010.
55
The DSF remains the only genuinely government-led multi-donor facility in the field of decentralization in Indonesia. It is clearly government owned and is valued by government as a means for managing development assistance to decentralization. It has made, and will continue to make, important contributions to capacity building for fiscal decentralization, public service delivery, planning, and good governance. Its support to the development of local government borrowing (bond issuance); data provision to the regional financial information system; and monitoring and evaluation of the use of special allocation grants to local governments is particularly noteworthy. And, among others, its strengthening of the capacity of local government legislatures and local public service providers shows great promise.
Many of the activities financed under the DSF Work Plan 2009-2011 are in the process of being implemented using government systems of financial management and procurement (‘on budget’ and ‘on treasury’). The DSF is unusual in this respect.
While there is still room for improvement (mainly in terms of speed of execution and implementation), the DSF constitutes a viable means for donors to fulfil many of the aid effectiveness obligations set out in the Paris Declaration (2005), the Accra Agenda for Action (2008), and the Jakarta Commitment (2008). Currently, most development assistance to decentralization in Indonesia is delivered via stand-alone bilateral projects, which can dilute government leadership and ownership and multiply transaction costs for government and donors alike. Signatories to the Jakarta Commitment (2008, p. 3) have undertaken ‘to reduce the number of ad hoc freestanding (projects)’.
In the context of discussion on the future of the DSF, the report raises the question as to how the relatively large number and diversity of activities currently undertaken under the auspices of the DSF can be augmented by other forms of support that cohere around (or address) some higher order unifying objective and that are capable of generating greater momentum for constructive systemic change at a faster pace.
Led by government, and in consultation with other interested parties, the DSF is in the process of designing such a programme. A vital part of programme design will be to identify links to development assistance to decentralization provided outside of the DSF and to consider prospects for genuine collaboration and synergy between these different elements. The aim is to have this (programme design) completed by around September 2010 and for it to provide the basis upon which assistance to decentralization managed through the DSF beyond 2012 can be built and the means by which links with other programmes of development assistance to decentralization soon to commence implementation (such as those of AusAID, CIDA, GTZ, and USAID) can be forged and maintained.
CONCLUSION 10
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CONCLUSION
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ANNEX A: SOURCES
Blunt, Peter. 2002. ‘Public Administrative Reform and Management Innovation for Developing Countries.’ Paper presented at the Fourth Global Forum on Reinventing Government organized and sponsored by The United Nations Division for Public Economics and Public Administration of the Department of Economic and Social Affairs (New York). Marrakesh, Morocco, 10-11 December.
Blunt, Peter. 2003. ‘The Anatomy of Development Cooperation: Principles and Prospects Derived from Exemplars at the Ministry of Finance Government of Lebanon.’ UNDP, pp. 44.
Blunt, Peter. 2004. ‘UNDP Programme Support to Governance Reform in Lebanon: An Outcome Evaluation.’ Beirut: UNDP, pp. 23.
Blunt, Peter. 2006. ‘Support to Policy Development and Implementation in the Government of Lebanon: A Review of UNDP Modalities.’ Beirut: UNDP, pp. 41.
Blunt, Peter, & Turner, M. 2007b. ‘Decentralization, Deconcentration and Poverty Reduction in the Asia Pacific.’ In S. Cheema & D. Rondinelli (Eds.), ‘Decentralized Governance: Emerging Concepts and Practices’. Brookings Institution Press and the Ash Institute for Democratic Governance and Innovation, John F.K. Kennedy School of Government, Harvard University.
Blunt, Peter. 2009. ‘The Political Economy of Accountability in Timor-Leste: Implications for Public Policy.’ Public Administration and Development, 29 (2), 89-100.
British Cabinet Office 1999. ‘Professional Policy Making in the Twenty-First Century.’ London: Strategic Policy Making Team, British Cabinet Office, pp. 78.
Bullock, H., Mountford, J., & Stanley, R. 2001. ‘Better Policy Making.’ London: Centre for Management and Policy Studies, British Cabinet Office, pp. 44.
Cheema, S., & Rondinelli, D. (Eds.). 2007. ‘Decentralized Governance: Emerging Concepts and Practices’. Brookings Institution Press and the Ash Institute for Democratic Governance and Innovation, John F.K. Kennedy School of Government, Harvard University.
DSF Policy Brief No.5. 2008. ‘Exploring Reform Options in Functional Assignments.’
DSF Policy Brief No.7. 2008. ‘Local Tax Effects on the Business Climate.’
Government of Indonesia. 2009. ‘National Action Plan on Fiscal Decentralization.’
ANNEXES A
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ANNEX A: SOURCES
Government of Indonesia. 2009. ‘National Framework for Capacity Building to Support Decentralization.’
Government of Indonesia. 2004. ‘National Medium-Term Development Plan (RPJMN 2004-2009).’
Government of Indonesia, Director of Special and Less Developed Regions, Bappenas. 2008. Discussion document: ‘Preparation for Formulation of RPJM 2010-2014, Program for Development of Border Regions.’
Government of Indonesia. ‘Regional Autonomy Implementation Strategy.’
IMD. 2010. ‘World Competitiveness Yearbook 2010’. Geneva.
Lewis, Blane D., & Daan Pattinasarany. 2009. ‘Determining Citizen Satisfaction with Local Public Education in Indonesia: The Significance of Actual Service Quality and Governance Conditions.’ Growth and Change 40(1), pp. 85-115.
Lewis, Blane D., & Daan Pattinasarany. 2008. ‘The Cost of Public Primary Education in Indonesia: Do Schools Need More Money?’ Working Paper, DSF.
Lewis, Blane D., & Smoke, P. 2008. ‘Fiscal Decentralization in Indonesia: Where to Now?’ Working Paper, DSF. Mimeo, pp. 15.
MacIntyre, A., & Ramage, Douglas E. 2008. ‘Seeing Indonesia as a Normal Country.’ Canberra: Australian Strategic Policy Institute.
Silver, C. 2003. ‘Do the Donors have it Right? Decentralization and Changing Local Governance in Indonesia.’ The Annals of Regional Science, 37 (3), pp. 421-434.
The Jakarta Commitment: Aid for Development Effectiveness-Indonesia’s Road Map to 2014. December 2008.
UNDP (P. Blunt & D. Rondinelli). 1997. ‘Reconceptualising Governance’. UNDP Division of Public Affairs: New York, pp. xi & 93.
USAID-DRSP. 2009. ‘Stocktaking on Indonesia’s Recent Decentralization Reforms.’
World Bank. 2010 (June). ‘Indonesia Economic Quarterly: Continuity Amidst Volatility’. Jakarta, pp. 60.
World Bank. 2009. ‘The Online Sourcebook on Decentralization and Local Development’. http://www.ciesin.org/decentralization/SB_entry.html
World Bank Institute. 2005. ‘Country-Tailored Capacity Development.’ Chapter of WBI Annual Report 2005.
ANNUAL REPORT 2010
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ANNEX b: FINANCIAL REPORT
Summary• Donor Contributions: Three donors have pledged a total of USD 44.06 million (exchange rate June
30, 2010).• Commitments: USD 41.88 million or 95% of total pledges has been allocated to 58 projects, the
approved DSF Work Plan 2009 – 2011, and DSF operations.• Disbursements: USD 17.34 million or 39.33% of total contributions pledged or 41.38% of allocations. • Remaining Funds: USD 3.19 million in Unallocated and Uncommitted Funds.
I. Donor Contributions
DSF has 9 donor partners, 3 of whom are financial contributors: DFID, AusAID, and CIDA. Total pledges amount to USD 44.06 million (30 June 2010 exchange rate). About 96.6% of the total amount (USD 42.56 million) has been pledged by DFID. As of 30 June 2010, DSF had received USD 29 million or 65.82% of total pledges (see Table 1): USD 27.50 million from DFID, USD 1 million from AusAID, and USD 500K from CIDA.
Table 1: Pledges Received on the Basis of Signed Contribution Agreements
Contributors Contribution Currency
Contribution Amount
USD equivalent
Cash Received in USD million
DFID GBP 24.36 42.56 27.5AusAID USD 1 1 1CIDA CAD 0.5 0.5 0.5 Total 44.06 29
II. Fund Allocations and Commitments
The projects and allocations set out in Table 2 were approved by the MC at its meetings of 24 January 2007, 16 February 2007, 12 February 2009, and 28 October 2009 and by circulation in November 2009.
Table 2: Fund Allocations and Commitments to 30 June 2010
Budget (USD)
Total Pledges 44,058,315Investment income (as of June 30, 2010) 1,421,933Projected Administration fee (1% of total pledges) -440,583Other Income (as of June 30, 2010) 24,836Total Available Funds 45,064,501
Fund Allocations approved in January 2007 20,547,866Focal Area 1 2,968,714Tax Assignment and Own-source Revenue - Transfer 350,000Borrowing 600,000
60
Budget (USD)
Surplus and Reserves 275,000Data for Monitoring and Evaluation 480,000Assessing and Revising the System for Setting Territorial Boundaries 227,500Fiscal Agency Intergovernmental Framework Fund 476,214Exploring Future Reform Options in Functional Assignment 55,000Supporting the Establishment of Financially Feasible Minimum Service Standards 305,000Alternative Mechanism of Service Delivery 200,000
Focal Area 2 1,395,774Local Government Performance Measurement 187,174Identification and Replication of Good Practice 382,392Appraisal : Sub national Investment Climate Reform 600,000Knowledge Management for Effective Local Government Support Programs 58,823Mapping and Analysis of Local Planning and Budgeting Processes 49,703Improved Evidence Base of Good and Bad Local Perda 117,682
Focal Area 3 5,413,244National Program for Community Empowerment 1,072,961CDD Summit 421,705Policy Development for PNPM 58,666Cost Accounting Review for CDD Programs 16,512Technical Assessment for CDD Programs 53,685Information, Education and Communication for PNPM 484,739User Fee Assessment for CDD Programs 419,000MIS Improvement for PNPM 106,000Short Term Monitoring and Evaluation 710,385Medium / Long Term Monitoring and Evaluation 399,926CCT Baseline Survey 1,669,665
Support Office for Eastern Indonesia (SOfEI) 2,972,226
Quick starts 97,908
Project Operations thru March 31, 2010 7,700,000Staff costs 4,200,000Operations costs 3,500,000
Approved Work Plan 2009 - 2011 (1st round) 10,890,520ACN 1/2009: Capacity Strengthening Program for DPRD (Local Government Legislatures)
500,000
ACN 2/2009: Capacity Building for Regional Development Policy Formulation 150,000ACN 3/2009: Improving and Piloting the Implementation of Monitoring and Evaluation System of Special Allocation Funds Utilization
550,000
ACN 4/2009: Management Strengthening and Institution Building for Local Public Service Providers (MSIB-LPSP)
500,000
ANNEX b: FINANCIAL REPORT
ANNUAL REPORT 2010
61
Budget (USD)
ACN 5/2009: Institutional Building for the Integration of National Regional Development and Spatial Planning
500,000
ACN 6/2009: Building Capacity for the Development of Sub-National Government Capital Markets for Municipal Bonds
900,000
ACN 7/2009: Government Training and Education Centre Development: Introducing Competency Based Standards for Improved Public Service Delivery
797,000
ACN 8/2009: Institution Building for the Accelerated Development of Border Areas 500,000ACN 9/2009: Capacity Building through Decentralization Education and Training (DET) for Public Service Delivery
1,593,520
ACN 10/2009: Strengthening Local Government Natural Resource Management Capability
750,000
ACN 11/2009: Formulation of Norms, Standards, Procedures and Criteria (NSPK) for Local Government Service Delivery
1,000,000
ACN 12/2009: Strengthening Data Provision to the Regional Financial Information System by Sub-National Governments with Stand-Alone Electronic Data Bases
250,000
ACN 13/2009: Improving the Policy Framework for Fiscal Decentralization 900,000ACN 14/2009: Costing and Pilot Implementation of Minimum Service Standards 1,200,000Service Delivery in Border Regions 500,000Support for EPPD 300,000
Approved DSF Work Plan 2009 - 2011 (2nd round) 7,650,000DPRD Orientation 500,000Regional Development Policy 700,000Local Government Evaluation 300,000Inter-Regional Cooperation 1,000,000Regional Finance 850,000Provincial Government Support Program 2,000,000Regional & Local Economic Development 600,000Sub-National Business Climate Reform 1,000,000Grand Design on Implementation of Regional Autonomy 700,000
Approved additional DSF Executive Operations Work Plan 2009 - 2011 2,788,505Knowledge Management for Aid Effectiveness 700,000DSF Executive Operations 1,502,043Additional donor contribution for DSF Operations 586,462
Total allocations to programming & DSF Executive staffing & operations 41,876,891Total Unallocated and Uncommitted Funds[1] 3,187,609
[1] Fund balance for unallocated and uncommitted funds fluctuates according to the prevailing exchange rate and return on investment.
III. Disbursement Status
To date, DSF has received USD 30.45 million, consisting of USD 29 million of donor contributions and USD 1.42 million of investment income. As of June 30, 2010, USD 17.34 million had been disbursed to work streams and operations. In addition, a total of USD 290,001 has been charged as WB administration fee (see Table 3).
62
Focal Area 1 (Strengthening Inter-Governmental Framework) has disbursed USD 2.23 million or 75% of the total approved budget of USD 2.97 million.
Focal Area 2 (Support to Sub-National Entities) has disbursed USD 1.39 million or 100% of the total approved budget.
Focal Area 3 (Strengthening Accountability, Participation and Civic Engagement) has disbursed USD 5.37 million or 99.26% of the total approved budget of USD 5.41 million.
Table 3: Disbursement Status of the DSF as of June 30, 2010
Budget (USD)
Actual (USD)
Commitments (USD)
Receipts Paid in Contributions 44,058,315 29,000,052 Investment Income 1,421,933 Other Income 24,836 Total Receipts 44,058,315 30,446,821 DisbursementsFocal Area 1 2,968,714 2,233,522 30,391 Tax Assignment and Own-source Revenue * - - - Transfer 350,000 90,754 - Borrowing 600,000 588,973 7,967 Surplus and Reserves 275,000 183,105 - Data for Monitoring and Evaluation 480,000 360,467 - Assessing and Revising the System for Setting Territorial Boundaries
227,500 227,500 -
Fiscal Agency Intergovernmental Framework Fund 476,214 476,214 - Exploring Future Reform Options in Functional Assignment 55,000 47,467 3,140 Supporting the Establishment of Financially Feasible Minimum Service Standards
305,000 59,287 19,283
Alternative Mechanism of Service Delivery 200,000 199,755 - Focal Area 2 1,395,774 1,394,890 - Local Government Performance Measurement 187,174 187,174 - Identification and Replication of Good Practice 382,392 382,392 - Appraisal : Sub national Investment Climate Reform 600,000 599,116 - Knowledge Management for Effective Local Government Support Programs
58,823 58,823 -
Mapping and Analysis of Local Planning and Budgeting Processes
49,703 49,703 -
Improved Evidence Base of Good and Bad Local Perda 117,682 117,682 - Focal Area 3 5,413,244 5,373,135 11,985 National Program for Community Empowerment 1,072,961 1,072,961 - CDD Summit 421,705 421,705 - Policy Development for PNPM 58,666 58,666 - Cost Accounting Review for CDD Programs 16,512 16,512 - Technical Assessment for CDD Programs 53,685 53,685 - Information, Education and Communication for PNPM 484,739 484,739 -
ANNEX b: FINANCIAL REPORT
ANNUAL REPORT 2010
63
Budget (USD)
Actual (USD)
Commitments (USD)
User Fee Assessment for CDD Programs 419,000 391,215 - MIS Improvement for PNPM 106,000 93,676 11,985 Short Term Monitoring and Evaluation 710,385 710,385 - Medium / Long Term Monitoring and Evaluation 399,926 399,926 - CCT Baseline Survey 1,669,665 1,669,665 -
Decentralization Support for Eastern Indonesia (SofEI) 2,972,226 2,972,226 - Quick starts 97,908 97,908 - Project Operations 8,700,000 4,894,770 175,692 Staff costs 5,200,000 2,990,925 20,240 Operation costs 3,500,000 1,903,845 155,452
Approved Work Plan 2009 - 2011 (1st round) New projects approved and registered in FY09 (1st round) 7,071,635 371,670 1,821,991 Support to Public Service Delivery 366,000 5,222 26,020 Strengthening Data Provision to the Regional Financial Information System by Sub-National Governments with Stand-Alone Electronic Data Bases
250,000 9,826 59,118
Improving and Piloting the Implementation of Monitoring and Evaluation System of Special Allocation Funds Utilization
550,000 9,967 4,334
Improving the Policy Framework for Fiscal Decentralization 900,000 113,605 232,734 Building Capacity for the Development of Sub-National Government Capital Markets for Municipal Bonds
900,000 42,991
66,047
Decentralization Support Facility II Capacity Strengthening Program for Local Government Legislatures
500,000 75,000
-
Government Training and Education Center Development: Introducing Competency Based Standards for Improved Public Service Delivery
797,576 - -
Institutional Building for the Integration of National Regional Development and Spatial Planning
500,000 53,071 343,280
Capacity Building for Regional Development Policy Formulation 150,000 49,171 31,609 Institution Building for the Accelerated Development of Border Areas
500,000 10,756 416,409
Strengthening Local Government Natural Resource Management Capability
750,000 2,061 642,441
Capacity Building through Decentralization Education and Training (DET) Scholarships for Public Service
908,059 - -
Approved Work Plan 2009-2011 in process of registration (1st round)
3,818,885
Approved DSF Work Plan 2009 - 2011 (2nd round) Approved DSF Work Plan 2009 - 2011 (2nd round) registered 3,300,000 - - Provincial Government Support Program 2,000,000 - - Regional & Local Economic Development 600,000 - - Regional Development Policy 700,000 - -
64
Budget (USD)
Actual (USD)
Commitments (USD)
Approved DSF Work Plan 2009 - 2011 (2nd round) in process of registration
4,350,000
Approved additional DSF Executive Operations Work Plan 2009 - 2011
1,788,505 - 28,358
Knowledge Management for Aid Effectiveness 700,000 - 28,358 Approved additional DSF Executive Operations Work Plan 2009 - 2011 in process of registration
1,088,505 - -
Total Project Disbursements 41,876,891 17,338,121 Administration fee 440,583 290,001 Total Disbursements 42,317,474 17,628,122 Outstanding commitments 2,068,417 2,068,417 Total Cash Available (= receipts - disbursements - commitments)
10,750,282
Support Office for Eastern Indonesia (SOfEI) has disbursed USD 2.97 million or 90% of the total USD 3.31 million approved budget. Since this project was ended, fund balance of SOfEI was returned back to Main TF.
For DSF operations, USD 4.90 million has been disbursed. This includes office and project operations as well as staff costs.
Outstanding commitments: as indicated in footnote 8 above this refers predominantly to formal contractually-based financial commitments. Such commitments amount to USD 5.6 million in DSF operations, including staff contracts over the life of the DSF plus the existing programmatic contracts of USD 2,068,417.
Total cash available as of June 30, 2010 is USD 10.75 million. These funds are fully committed, that is, either in the process of being allocated to child TF or earmarked for such allocation – for programming and for DSF Executive staffing and operations.
IV. Outlook
Table 4 shows expected cash receipts and disbursements for the current and projected portfolio of projects. The Fund expects to disburse USD 32.38 million to project accounts through to the end of fiscal year 2011.
Table 4 is based on total project funds committed, as set out in the current Contribution Agreement and Administrative Agreement. The current DSF TF closing date is March 31, 2012.
Table 4: Projection of Cash Receipts and Disbursements 2007 – 2011
Actual per June 30, 2010
Year ended June 30, 2011 (USD million)
Projections as of Apr. 30, 2012
(USD million) Expected ReceiptsProjected Cash Remaining from prior period - 10.76 13.14 Paid in Contributions
DFID 27.50 15.06 - AusAID 1.00 - - CIDA 0.50 - -
Cash Receipt during current period 29.00 15.06 -
ANNEX b: FINANCIAL REPORT
ANNUAL REPORT 2010
65
Actual per June 30, 2010
Year ended June 30, 2011 (USD million)
Projections as of Apr. 30, 2012
(USD million) Investment Income 1.42 - - Other Income 0.03 - - Expected Cash Available to DSF TF 30.45 25.82 13.14 Disbursements Focal Area 1 2.23 0.80 - Focal Area 2 1.39 - - Focal Area 3 5.37 - - Eastern Indonesia projects (SoFEI) 2.97 - - Quick starts 0.10 - - Project Operations 4.89 3.30 2.30 Priority Area per FY09 Public Services 0.01 3.19 1.50 Fiscal Decentralization 0.22 2.38 0.85 Planning and Performance Measurement 0.08 2.12 3.60 Governance Reform 0.08 2.82 1.70
Total Project Disbursements (Projections) 17.33 14.61 9.95 Administration fee 0.29 0.15 - Total Disbursements (Projections) 17.62 14.76 9.95 Outstanding commitments 2.07 (2.07) - Total Cash Available for subsequent year(s) 10.76 13.14 3.19
66
ANNE
X C:
MON
ITOR
ING
FRAM
EwOR
K
Proj
ect N
ame
Dece
ntra
lizati
on S
uppo
rt F
acili
ty (
DSF)
Pha
se 2
Goa
l sIn
dica
tors
Prog
ress
Ratin
gCo
mm
ent
Impr
oved
soci
o-ec
onom
ic
deve
lopm
ent a
nd re
duce
d po
vert
y
Indo
nesia
’s Hu
man
De
velo
pmen
t Ind
ex (H
DI)
Purp
ose
Indi
cato
rsPr
ogre
ssRa
ting
Com
men
tEq
uita
ble,
acc
ount
able
and
hi
gh q
ualit
y pu
blic
serv
ices
pr
ovid
ed b
y na
tiona
l and
lo
cal g
over
nmen
ts
Loca
l gov
ernm
ent
expe
nditu
re a
nd
loca
l gov
ernm
ent
perf
orm
ance
in b
asic
pu
blic
serv
ice
deliv
ery
Furt
her c
ontr
ibuti
ons t
o th
e de
velo
pmen
t and
di
ssem
inati
on a
nd im
plem
enta
tion
of le
gisla
tion
and
proc
edur
es g
over
ning
func
tiona
l ass
ignm
ents
; m
inim
um se
rvic
e st
anda
rds i
nclu
ding
cos
ting;
in
stitu
tion
and
capa
city
bui
ldin
g of
serv
ice
prov
ider
s;
and
iden
tifica
tion
and
diffu
sion
of g
ood
prac
tices
.
3*
* Fi
rst m
ilest
one/
targ
et
1 –
Fully
ach
ieve
d
2
– La
rgel
y ac
hiev
ed
3
– Pa
rtial
ly a
chie
ved
4 –
Achi
eved
to a
ver
y lim
ited
exte
nt
5
– N
ot a
chie
ved
at a
ll
X–
Too
early
to ju
dge
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
67
Out
put 1
: Pub
lic S
ervi
ce D
eliv
ery
Obj
ectiv
esIn
dica
tors
Prog
ress
Ratin
gCo
mm
ent
1.1.
Gui
delin
es (n
orm
s,
stan
dard
s, p
roce
dure
s and
cr
iteria
-NSP
K) fo
r ser
vice
de
liver
y in
sele
cted
sect
ors
form
ulat
ed
Num
ber o
f new
gui
delin
es
(nor
ms,
stan
dard
s,
proc
edur
es a
nd c
riter
ia) f
or
serv
ice
deliv
ery
com
plet
ed/
issue
d
Phas
e 1:
Con
sulta
tions
hel
d w
ith re
gion
s in
July
200
9 fo
r for
mul
ation
of
26
norm
s, st
anda
rds,
pro
cedu
res a
nd c
riter
ia (N
SPK)
in h
ealth
. Th
is re
sulte
d in
con
firm
ation
that
10
out o
f 26
NSP
K w
ere
defin
ed
as e
ligib
le fo
r fur
ther
acti
on. P
rese
ntly
5 o
ut o
f the
10
NSP
K ha
ve
been
issu
ed b
y th
e M
inist
er o
f Hea
lth a
s reg
ulati
ons i
nclu
ding
: ho
spita
l lic
ensin
g; fo
reig
n he
alth
wor
kers
in In
done
sia; a
nd h
ospi
tal
clas
sifica
tion.
As
sess
men
t on
the
conf
orm
ity o
f the
26
draft
NSP
K in
hea
lth w
ith
Gove
rnm
ent R
egul
ation
38/
2007
resu
lted
in p
rioriti
zatio
n of
at l
east
5
heal
th fu
nctio
ns fo
r NSP
K fo
rmul
ation
. Brie
f ass
essm
ents
wer
e al
so
mad
e of
NSP
K in
oth
er fi
elds
i.e.
agr
icul
ture
, tra
de, l
and
man
agem
ent,
ener
gy a
nd m
iner
al re
sour
ces.
A ke
y pr
oduc
t of t
his a
ctivi
ty is
a p
aper
on
“Exp
lorin
g Re
form
Opti
ons
in F
uncti
onal
Ass
ignm
ents
,” w
hich
was
com
plet
ed in
Mar
ch 2
008.
The
final
repo
rt o
n th
e N
SPK
asse
ssm
ent w
as su
bmitt
ed in
Aug
ust
2009
, mar
king
the
end
of p
hase
1. T
he d
iscus
sion
proc
ess p
rovi
ded
inpu
ts fo
r dev
elop
ing
the
Activ
ity C
once
pt N
otes
for p
hase
2.
Phas
e 2:
ACN
11/
2009
on
Form
ulati
on o
f Nor
ms,
Sta
ndar
ds,
Proc
edur
es a
nd C
riter
ia (N
SPK)
was
app
rove
d in
Oct
ober
200
9. It
was
ag
reed
by
MoH
A an
d th
e DS
F Ex
ecuti
ve th
at a
ppro
xim
atel
y 90
% o
f th
e bu
dget
wou
ld b
e re
cipi
ent e
xecu
ted
and
10%
Ban
k ex
ecut
ed.
The
term
s of r
efer
ence
and
bud
get h
ave
been
pre
pare
d. F
inan
cial
m
anag
emen
t and
pro
cure
men
t ass
essm
ents
hav
e be
en c
ondu
cted
by
the
Bank
and
the
asse
ssm
ent r
epor
ts h
ave
been
com
plet
ed.
The
Gran
t Agr
eem
ent (
GA) w
as si
gned
by
the
Bank
in Ju
ne 2
010
and
subm
itted
to M
oF fo
r cou
nter
signa
ture
, and
disc
ussio
n an
d co
nsul
tatio
n w
ith M
oHA,
and
Bap
pena
s. T
he o
pera
tions
man
ual w
as
prep
ared
and
subm
itted
for a
ppro
val.
The
annu
al p
lan,
incl
udin
g a
proc
urem
ent a
nd a
disb
urse
men
t pla
n ha
s bee
n fin
alize
d. It
is
expe
cted
that
the
Gran
t Agr
eem
ent w
ill b
e sig
ned
by M
oF in
July
20
10.
With
rega
rd to
the
Bank
exe
cute
d co
mpo
nent
, req
uest
s for
ex
pres
sions
of i
nter
est f
or a
sses
smen
t of N
SPK
stat
us h
ave
been
co
mpl
eted
. The
impl
emen
ting
agen
cy h
as b
een
sele
cted
. Tec
hnic
al
and
finan
cial
pro
posa
ls ha
ve b
een
subm
itted
and
revi
ewed
. The
co
ntra
ct w
ill b
e sig
ned
in Ju
ly 2
010.
Thi
s acti
vity
is e
xpec
ted
to
achi
eve
mile
ston
e 1
in D
ecem
ber 2
010.
1 4
68
Out
put 1
: Pub
lic S
ervi
ce D
eliv
ery
Obj
ectiv
esIn
dica
tors
Prog
ress
Ratin
gCo
mm
ent
1.2.
Min
imum
Ser
vice
St
anda
rds (
MSS
), in
ta
rget
ed se
ctor
s bud
gete
d an
d im
plem
ente
d in
sele
cted
dist
rict
gove
rnm
ents
Impl
emen
tatio
n of
MSS
in
sele
cted
sect
ors i
n se
lect
ed
dist
ricts
and
mun
icip
aliti
es
Phas
e 1:
A M
anua
l for
Min
imum
Ser
vice
Sta
ndar
ds (M
SS) C
ostin
g ba
sed
on fi
eld
testi
ng o
f reg
iona
l dat
a w
as p
repa
red
by M
oH in
co
oper
ation
with
MoH
A an
d DS
F. Th
e m
anua
l was
form
alize
d by
M
inist
er o
f Hea
lth D
ecre
e 31
7/20
09.
DSF
supp
orte
d th
e pr
intin
g of
10
00 c
opie
s of t
he m
anua
l whi
ch w
as d
istrib
uted
to th
e re
gion
s by
MoH
A an
d M
oH.
An e
lect
roni
c in
stru
men
t for
MSS
cos
ting
in h
ealth
has
bee
n de
velo
ped
with
ass
istan
ce fr
om D
SF. A
fter fi
rst t
estin
g th
e co
sting
in
stru
men
t Yog
yaka
rta
is no
w u
ploa
ding
MSS
rela
ted
data
.M
oHA,
in c
oope
ratio
n w
ith D
SF, o
rgan
ized
a se
min
ar in
co
mm
emor
ation
of R
egio
nal A
uton
omy
Day
title
d “C
reati
vity
of
Regi
ons i
n Im
prov
ing
Publ
ic S
ervi
ces”
, whi
ch w
as o
pene
d by
the
Min
ister
of H
ome
Affai
rs. A
TV
dial
ogue
on
the
sam
e th
eme
was
also
or
gani
zed.
The
se e
vent
s rec
ogni
zed
regi
ons a
nd h
eads
of r
egio
ns fo
r th
eir c
reati
vity
and
inno
vativ
e id
eas a
s wel
l as a
ction
s for
impr
ovin
g pu
blic
serv
ices
. Reg
ions
wer
e en
cour
aged
to b
e m
ore
crea
tive
and
inno
vativ
e in
impl
emen
ting
thei
r fun
ction
s, a
nd to
mor
e eff
ectiv
ely
docu
men
t and
diss
emin
ate
expe
rienc
es fr
om se
rvic
e de
liver
y an
d co
mm
unity
impr
ovem
ents
. It w
as a
lso su
gges
ted
that
a re
visio
n of
La
w 3
2/20
04 sh
ould
enc
oura
ge in
nova
tion
by re
gion
s.Ph
ase
2: A
CN 1
4/20
09 o
n Ca
paci
ty D
evel
opm
ent f
or M
inim
um
Serv
ice
Stan
dard
s Cos
ting
and
Impl
emen
tatio
n w
as a
ppro
ved
in N
ovem
ber 2
009.
Initi
ally
the
GOI w
as to
exe
cute
mos
t of t
he
activ
ities
. How
ever
in M
ay 2
010
the
GOI d
ecid
ed o
n a
new
allo
catio
n of
exe
cutio
n re
spon
sibili
ties w
ith 5
0.1%
MoH
A ex
ecut
ed a
nd 4
9.9%
Ba
nk e
xecu
ted.
Conc
erni
ng th
e re
cipi
ent e
xecu
ted
com
pone
nt, a
TO
R an
d bu
dget
ha
ve b
een
final
ized.
Fin
anci
al m
anag
emen
t and
pro
cure
men
t as
sess
men
ts w
ere
com
plet
ed b
y th
e Ba
nk. A
fina
ncia
l rep
ort h
as
been
pre
pare
d an
d a
proc
urem
ent r
epor
t is e
xpec
ted
to b
e fin
alize
d.
The
Gran
t Agr
eem
ent w
ill b
e pr
oces
sed
as so
on a
s the
pro
cure
men
t re
port
is c
lear
ed w
hich
is e
xpec
ted
to b
e in
Aug
ust.
In p
aral
lel,
an
oper
ation
s man
ual i
s bei
ng p
repa
red
and
an a
nnua
l pla
n, in
clud
ing
proc
urem
ent a
nd d
isbur
sem
ent p
lans
, has
bee
n co
mpl
eted
. Co
ncer
ning
the
Bank
exe
cute
d co
mpo
nent
, an
asse
ssm
ent o
f MSS
st
atus
will
be
cond
ucte
d. W
hen
the
city
of Y
ogya
kart
a ha
s com
plet
ed
the
costi
ng fo
r MSS
ach
ieve
men
t of t
arge
ts th
e co
sting
for M
SS
heal
th w
ill c
ontin
ue in
oth
er d
istric
ts/m
unic
ipal
ities
in th
e pr
ovin
ce
of Y
ogya
kart
a. A
Cos
ting
Man
ual w
ill b
e co
mpl
eted
for o
ther
sele
cted
se
ctor
s, in
clud
ing
elec
tron
ic in
stru
men
ts fo
r the
MSS
cos
ting
data
sy
stem
.
2 4Dr
awn
out d
ecisi
on-
mak
ing
proc
ess r
egar
ding
ex
ecuti
on re
spon
sibili
ties
has d
elay
ed p
roje
ct
initi
ation
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
69
Out
put 1
: Pub
lic S
ervi
ce D
eliv
ery
Obj
ectiv
esIn
dica
tors
Prog
ress
Ratin
gCo
mm
ent
1.2.
Min
imum
Ser
vice
St
anda
rds (
MSS
), in
ta
rget
ed se
ctor
s bud
gete
d an
d im
plem
ente
d in
sele
cted
dist
rict
gove
rnm
ents
Impl
emen
tatio
n of
MSS
in
sele
cted
sect
ors i
n se
lect
ed
dist
ricts
and
mun
icip
aliti
es
Phas
e 1:
A M
anua
l for
Min
imum
Ser
vice
Sta
ndar
ds (M
SS) C
ostin
g ba
sed
on fi
eld
testi
ng o
f reg
iona
l dat
a w
as p
repa
red
by M
oH in
co
oper
ation
with
MoH
A an
d DS
F. Th
e m
anua
l was
form
alize
d by
M
inist
er o
f Hea
lth D
ecre
e 31
7/20
09.
DSF
supp
orte
d th
e pr
intin
g of
10
00 c
opie
s of t
he m
anua
l whi
ch w
as d
istrib
uted
to th
e re
gion
s by
MoH
A an
d M
oH.
An e
lect
roni
c in
stru
men
t for
MSS
cos
ting
in h
ealth
has
bee
n de
velo
ped
with
ass
istan
ce fr
om D
SF. A
fter fi
rst t
estin
g th
e co
sting
in
stru
men
t Yog
yaka
rta
is no
w u
ploa
ding
MSS
rela
ted
data
.M
oHA,
in c
oope
ratio
n w
ith D
SF, o
rgan
ized
a se
min
ar in
co
mm
emor
ation
of R
egio
nal A
uton
omy
Day
title
d “C
reati
vity
of
Regi
ons i
n Im
prov
ing
Publ
ic S
ervi
ces”
, whi
ch w
as o
pene
d by
the
Min
ister
of H
ome
Affai
rs. A
TV
dial
ogue
on
the
sam
e th
eme
was
also
or
gani
zed.
The
se e
vent
s rec
ogni
zed
regi
ons a
nd h
eads
of r
egio
ns fo
r th
eir c
reati
vity
and
inno
vativ
e id
eas a
s wel
l as a
ction
s for
impr
ovin
g pu
blic
serv
ices
. Reg
ions
wer
e en
cour
aged
to b
e m
ore
crea
tive
and
inno
vativ
e in
impl
emen
ting
thei
r fun
ction
s, a
nd to
mor
e eff
ectiv
ely
docu
men
t and
diss
emin
ate
expe
rienc
es fr
om se
rvic
e de
liver
y an
d co
mm
unity
impr
ovem
ents
. It w
as a
lso su
gges
ted
that
a re
visio
n of
La
w 3
2/20
04 sh
ould
enc
oura
ge in
nova
tion
by re
gion
s.Ph
ase
2: A
CN 1
4/20
09 o
n Ca
paci
ty D
evel
opm
ent f
or M
inim
um
Serv
ice
Stan
dard
s Cos
ting
and
Impl
emen
tatio
n w
as a
ppro
ved
in N
ovem
ber 2
009.
Initi
ally
the
GOI w
as to
exe
cute
mos
t of t
he
activ
ities
. How
ever
in M
ay 2
010
the
GOI d
ecid
ed o
n a
new
allo
catio
n of
exe
cutio
n re
spon
sibili
ties w
ith 5
0.1%
MoH
A ex
ecut
ed a
nd 4
9.9%
Ba
nk e
xecu
ted.
Conc
erni
ng th
e re
cipi
ent e
xecu
ted
com
pone
nt, a
TO
R an
d bu
dget
ha
ve b
een
final
ized.
Fin
anci
al m
anag
emen
t and
pro
cure
men
t as
sess
men
ts w
ere
com
plet
ed b
y th
e Ba
nk. A
fina
ncia
l rep
ort h
as
been
pre
pare
d an
d a
proc
urem
ent r
epor
t is e
xpec
ted
to b
e fin
alize
d.
The
Gran
t Agr
eem
ent w
ill b
e pr
oces
sed
as so
on a
s the
pro
cure
men
t re
port
is c
lear
ed w
hich
is e
xpec
ted
to b
e in
Aug
ust.
In p
aral
lel,
an
oper
ation
s man
ual i
s bei
ng p
repa
red
and
an a
nnua
l pla
n, in
clud
ing
proc
urem
ent a
nd d
isbur
sem
ent p
lans
, has
bee
n co
mpl
eted
. Co
ncer
ning
the
Bank
exe
cute
d co
mpo
nent
, an
asse
ssm
ent o
f MSS
st
atus
will
be
cond
ucte
d. W
hen
the
city
of Y
ogya
kart
a ha
s com
plet
ed
the
costi
ng fo
r MSS
ach
ieve
men
t of t
arge
ts th
e co
sting
for M
SS
heal
th w
ill c
ontin
ue in
oth
er d
istric
ts/m
unic
ipal
ities
in th
e pr
ovin
ce
of Y
ogya
kart
a. A
Cos
ting
Man
ual w
ill b
e co
mpl
eted
for o
ther
sele
cted
se
ctor
s, in
clud
ing
elec
tron
ic in
stru
men
ts fo
r the
MSS
cos
ting
data
sy
stem
.
2 4Dr
awn
out d
ecisi
on-
mak
ing
proc
ess r
egar
ding
ex
ecuti
on re
spon
sibili
ties
has d
elay
ed p
roje
ct
initi
ation
Out
put 1
: Pub
lic S
ervi
ce D
eliv
ery
Obj
ectiv
esIn
dica
tors
Prog
ress
Ratin
gCo
mm
ent
A na
tiona
l sem
inar
on
“Im
plem
enta
tion
of M
inim
um S
ervi
ce
Stan
dard
s Tow
ards
Ach
ieve
men
t of M
illen
nium
Dev
elop
men
t Go
als (
MDG
s)”
was
con
duct
ed in
June
201
0. T
he o
bjec
tives
of t
his
sem
inar
wer
e: (a
) diss
emin
ate
the
issue
d M
SS to
regi
ons t
o in
crea
se
com
mitm
ent o
f reg
ions
in M
SS a
chie
vem
ent;
(b) l
aunc
hing
of t
he
capa
city
bui
ldin
g pr
ogra
m o
n M
SS c
ostin
g an
d im
plem
enta
tion;
and
(c
) ann
ounc
emen
t of M
SS a
s a n
ation
al p
riorit
y an
d eff
ort i
n M
DG
achi
evem
ent.
The
sem
inar
was
follo
wed
by
disc
ussio
ns w
ith p
ilot
regi
ons i
n pr
epar
ation
for C
apac
ity D
evel
opm
ent f
or M
inim
um S
ervi
ce
Stan
dard
s Cos
ting
and
Impl
emen
tatio
n ac
tivity
. Sev
eral
pilo
t reg
ions
co
nfirm
ed th
eir p
artic
ipati
on, o
ther
s are
like
ly to
follo
w.
Mile
ston
e 1.
MSS
impl
emen
tatio
n in
hea
lth a
nd w
omen
’s em
pow
erm
ent i
n 5
sele
cted
dist
ricts
is e
xpec
ted
to b
e un
derw
ay b
y De
cem
ber 2
010.
1.3.
Alte
rnati
ve se
rvic
e de
liver
y sc
hem
es e
stab
lishe
d in
sele
cted
sect
ors a
nd
dist
ricts
and
mun
icip
aliti
es
with
bett
er a
cces
s for
w
omen
(ACN
Titl
e: M
anag
emen
t St
reng
then
ing
and
Insti
tutio
n Bu
ildin
g fo
r Lo
cal P
ublic
Ser
vice
Pr
ovid
ers (
MSI
B-LP
SP))
Num
ber o
f sel
ecte
d di
stric
t go
vern
men
ts d
evel
oped
pi
lot a
ltern
ative
sche
mes
in
serv
ice
deliv
ery
and
num
ber
of w
omen
reac
hed
by th
ese
pilo
t sch
emes
Phas
e 1:
Ass
essm
ent o
f Leg
al a
nd R
egul
ator
y Fr
amew
ork
repo
rt
com
plet
ed in
Oct
ober
200
9.Re
gion
al W
orks
hop
was
con
duct
ed in
Aug
ust 2
009.
The
pro
gres
s re
port
s of e
ach
sele
cted
pilo
t reg
ion
(dist
rict S
eran
g, L
ebak
and
city
Ci
lego
n) w
ere
pres
ente
d at
the
wor
ksho
p.
Nati
onal
Wor
ksho
p on
Alte
rnati
ve M
echa
nism
s for
Ser
vice
Del
iver
y (A
MSD
) was
hel
d in
Nov
embe
r 200
9. R
epre
sent
ative
s fro
m 3
re
gion
s in
Prov
ince
Ban
ten
pres
ente
d pr
epar
ation
for t
he p
ilot
impl
emen
tatio
n of
: Man
agem
ent S
tren
gthe
ning
and
Insti
tutio
n Bu
ildin
g fo
r Loc
al P
ublic
Ser
vice
Pro
vide
rs.
The
‘Alte
rnati
ve M
echa
nism
s for
Ser
vice
Del
iver
y’ (A
MSD
) acti
vity
was
su
cces
sful
ly c
ompl
eted
in D
ecem
ber 2
009.
A fi
nal r
epor
t con
tain
ing
a bl
uepr
int f
or p
rom
oting
AM
SD w
as p
repa
red
and
subm
itted
to D
SF.
Phas
e 2:
The
follo
w-o
n ac
tivity
com
miss
ione
d by
GO
I was
form
alize
d in
ACN
4/2
009
on M
anag
emen
t Str
engt
heni
ng a
nd In
stitu
tion
Build
ing
of L
ocal
Pub
lic S
ervi
ce P
rovi
ders
. Thi
s is a
reci
pien
t exe
cute
d ac
tivity
. Th
e TO
R an
d bu
dget
hav
e be
en fi
naliz
ed. F
inan
cial
man
agem
ent
and
proc
urem
ent a
sses
smen
ts h
ave
been
com
plet
ed a
nd a
repo
rt
prod
uced
. The
pro
ject
ope
ratio
ns m
anua
l was
app
rove
d. T
he G
rant
Ag
reem
ent i
s aw
aitin
g sig
natu
re fr
om G
OI a
nd th
e Ba
nk.
The
Bank
exe
cute
d co
mpo
nent
con
sists
of t
wo
activ
ities
: (a)
pr
epar
ation
of t
he im
plem
enta
tion
of p
ilot p
roje
ct M
SIB-
LPSP
in
Wes
t Jav
a Pr
ovin
ce a
nd (b
) dev
elop
men
t of b
asel
ine
info
rmati
on o
n w
omen
’s ac
cess
to se
lect
ed p
ublic
serv
ices
.
1 3
70
Out
put 1
: Pub
lic S
ervi
ce D
eliv
ery
Obj
ectiv
esIn
dica
tors
Prog
ress
Ratin
gCo
mm
ent
Pilo
t reg
ions
sele
cted
incl
ude:
Wes
t Ban
dung
(for
pop
ulati
on
adm
inist
ratio
n se
rvic
es),
Sum
edan
g (fo
r hos
pita
l ser
vice
s) a
nd
Maj
alen
gka
(for w
ater
supp
ly se
rvic
es).
Prel
imin
ary
findi
ngs i
ndic
ate
that
Rum
ah S
akit
Um
um D
aera
h (R
SUD)
in S
umed
ang
has p
artia
lly
impl
emen
ted
som
e of
the
MSI
B-LP
SP e
lem
ents
such
as t
he u
se
of p
erfo
rman
ce in
dica
tors
, per
form
ance
con
trac
ts a
nd d
esig
n of
st
rate
gic
plan
ning
mea
sure
s, w
hich
sign
ifica
ntly
impr
oved
pro
visio
n of
se
rvic
es. I
t was
agr
eed
with
Dire
ctor
Gen
eral
of P
ublic
Ser
vice
s, M
oHA
(Ditj
en. P
UM
), pr
ovin
cial
gov
ernm
ent o
f Wes
t Jav
a an
d pa
rtici
patin
g re
gion
s to
cond
uct t
rain
ing
wor
ksho
ps fo
r loc
al M
SIB-
LPSP
faci
litat
ors
by A
ugus
t 201
0Tw
o ge
nder
spec
ialis
ts h
ave
com
plet
ed th
eir fi
eld
wor
k, in
clud
ing
reco
rdin
g ba
selin
e da
ta o
n w
omen
’s ac
cess
to a
ltern
ative
serv
ice
deliv
ery
in th
e ab
ove
pilo
t reg
ions
. Ini
tial fi
ndin
gs in
dica
te th
at
in B
ante
n w
omen
’s ac
cess
to w
ater
and
hea
lth se
rvic
es is
still
low
. Sub
stan
tial i
mpr
ovem
ents
hav
e be
en m
ade
in p
opul
ation
ad
min
istra
tion
serv
ices
. In
Sum
edan
g W
est J
ava,
subs
tanti
al
impr
ovem
ents
in w
omen
’s ac
cess
to h
ospi
tal s
ervi
ces h
ave
been
m
ade.
Mile
ston
e 1.
The
repo
rt o
n ba
selin
e da
ta is
exp
ecte
d to
be
com
plet
ed
by e
nd o
f Aug
ust 2
010.
1.4.
Im
prov
ed p
ublic
serv
ice
deliv
ery
by se
lect
ed lo
cal
gove
rnm
ents
in b
orde
r ar
eas
Actio
n pl
ans f
or im
prov
ed
publ
ic se
rvic
e de
liver
y co
mpl
eted
by
sele
cted
loca
l go
vern
men
ts in
bor
der a
reas
The
TOR
has b
een
final
ized
for t
his g
over
nmen
t-exe
cute
d (M
oHA)
ac
tivity
. A p
rocu
rem
ent p
lan
and
finan
cial
man
agem
ent a
sses
smen
t is
sche
dule
d to
be
com
plet
ed in
July
201
0.Th
e O
pera
tions
Man
ual w
as p
repa
red
by G
OI w
ith D
SF su
ppor
t and
aw
aits
cle
aran
ce b
y th
e Ba
nk.
This
activ
ity li
nks t
o ac
tivity
4.3
on
bord
er a
rea
deve
lopm
ent.
ACN
2/
2009
cov
ers o
bjec
tives
1.4
and
4.3
and
repr
esen
ts th
e DS
F’s s
uppo
rt
for o
ne o
f the
gov
ernm
ent’s
key
dev
elop
men
t prio
rities
. For
obj
ectiv
e 1.
4 th
e cl
ient
is M
oHA
and
the
focu
s is o
n im
prov
ed se
rvic
e de
liver
y.
The
TOR
has b
een
final
ized
for t
his g
over
nmen
t-exe
cute
d ac
tivity
.M
ilest
one
1. P
ublic
serv
ice
asse
ssm
ent i
n se
lect
ed se
ctor
s in
sele
cted
bo
rder
are
as is
exp
ecte
d to
be
met
in D
ecem
ber 2
010.
For o
bjec
tive
4.3
the
clie
nt is
Bap
pena
s and
the
focu
s is o
n im
prov
ed
plan
ning
. Thi
s is a
Ban
k ex
ecut
ed a
ctivi
ty o
n be
half
of B
appe
nas.
4M
oHA
and
Bapp
enas
are
se
ekin
g to
stre
ngth
en c
ross
-m
inist
eria
l sup
port
for
bord
er a
rea
deve
lopm
ent.
Activ
ity 4
.3 p
rovi
des
supp
ort t
o Ba
ppen
as
for t
he p
rodu
ction
of a
m
aste
r pla
n fo
r bor
der
area
dev
elop
men
t. Th
is w
ill c
onsti
tute
the
basis
fo
r acti
vity
1.4
, whi
ch
is co
ncer
ned
with
the
deve
lopm
ent o
f nati
onal
an
d re
gion
al a
ction
pla
ns.
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
71
Out
put 1
: Pub
lic S
ervi
ce D
eliv
ery
Obj
ectiv
esIn
dica
tors
Prog
ress
Ratin
gCo
mm
ent
1.5.
Im
prov
ed lo
cal
gove
rnm
ent s
yste
ms
for d
issem
inati
on a
nd
repl
icati
on o
f goo
d pr
actic
es in
serv
ice
deliv
ery
Nati
onal
pol
icy
on g
ood
prac
tices
issu
edCo
mpa
rativ
e an
alys
is of
goo
d pr
actic
e pr
ogra
ms i
n In
done
sia
com
plet
ed in
Apr
il 20
09.
MoH
A ha
s hel
d se
vera
l rou
nds o
f con
sulta
tions
on
a dr
aft
perm
enda
gri (
min
ister
ial r
egul
ation
) on
best
pra
ctice
s.
The
proj
ect i
mpl
emen
tatio
n co
nsul
tant
s pre
sent
ed a
mid
-term
re
port
to M
oHA
in A
ugus
t 200
9. In
spite
of D
SF e
ffort
s to
recti
fy
the
situa
tion,
it w
as n
oted
that
pro
gres
s was
disa
ppoi
nting
. The
co
nsul
tant
s had
not
subm
itted
an
ince
ption
repo
rt in
Bah
asa
Indo
nesia
, nor
com
plet
ed th
e pi
lots
and
dat
abas
e w
ork
as sti
pula
ted
in th
e TO
R.
In o
rder
to e
nabl
e th
e co
nsul
tant
s to
mee
t with
GO
I and
recti
fy th
e de
ficie
ncie
s, a
one
mon
th n
o-co
st e
xten
sion
was
allo
wed
bey
ond
the
proj
ect c
losin
g da
te o
f 30
Sept
embe
r 200
9. A
s the
con
sulta
nts f
aile
d to
com
ply,
the
proj
ect w
as c
lose
d on
31
Oct
ober
200
9.
4Pr
ojec
t im
plem
enta
tion
was
han
dica
pped
by
key
mem
bers
of t
he se
lect
ed
cons
ulta
ncy
team
not
bei
ng
avai
labl
e as
pro
pose
d an
d po
or c
ompl
ianc
e to
TO
Rs.
MoH
A (D
irect
orat
e fo
r Ca
paci
ty B
uild
ing
and
Loca
l Go
vern
men
t Per
form
ance
Ev
alua
tion)
and
DSF
ex
pres
sed
diss
atisf
actio
n w
ith a
ctivi
ty p
erfo
rman
ce.
As a
con
sequ
ence
, the
pr
ojec
t was
clo
sed
on 3
1 O
ctob
er 2
009.
1.
6. L
ocal
gov
ernm
ents
ado
pt
effec
tive,
effi
cien
t and
ac
coun
tabl
e re
gula
tions
an
d pr
oces
ses f
or b
usin
ess
licen
sing
Loca
l gov
ernm
ent
perf
orm
ance
in
impl
emen
ting
OSS
for
busin
ess l
icen
sing
Phas
e 1:
The
pro
ject
has
succ
essf
ully
del
iver
ed a
ll ou
tput
s stip
ulat
ed
in th
e co
ntra
ct, w
ith re
gard
to b
oth
One
Sto
p Sh
ops (
OSS
) for
bus
ines
s lic
ensin
g an
d us
e of
Reg
ulat
ory
Impa
ct A
sses
smen
ts (R
IA).
A pr
esen
tatio
n of
pro
ject
ach
ieve
men
ts to
all
key
stak
ehol
ders
, in
clud
ing
the
DSF
Man
agem
ent C
omm
ittee
, was
hel
d in
Janu
ary,
2010
. Thi
s mee
ting
refle
cted
on
less
ons l
earn
t and
disc
usse
d na
tiona
l st
rate
gies
to sc
ale
up th
e pa
ce a
nd p
erfo
rman
ce o
f sub
nati
onal
bu
sines
s lic
ensin
g re
form
s in
orde
r to
impr
ove
the
over
all b
usin
ess
and
inve
stm
ent c
limat
e in
the
regi
ons.
The
Sub-
Nati
onal
Bus
ines
s clim
ate
Refo
rm a
ctivi
ty w
as su
cces
sful
ly
com
plet
ed in
Janu
ary
2010
. Fin
al re
port
was
subm
itted
.Ph
ase
2: To
ens
ure
the
mom
entu
m o
f thi
s wor
k, a
follo
w-o
n pr
ojec
t w
as a
ppro
ved
by th
e DS
F M
anag
emen
t Com
mitt
ee in
late
200
9.
The
aim
of t
he
proj
ect i
s to
insti
tutio
naliz
e ca
paci
ty w
ithin
loca
l go
vern
men
ts to
impl
emen
t effe
ctive
, effi
cien
t and
acc
ount
able
re
gula
tions
and
pro
cess
es fo
r bus
ines
s lic
ensin
g. T
he p
roje
ct w
ill: (
a)
supp
ort M
oHA
in m
onito
ring
the
perf
orm
ance
of t
he O
SS fo
r bus
ines
s lic
ensin
g ac
ross
the
coun
try;
(b) s
uppo
rt th
ree
sele
cted
pro
vinc
ial
gove
rnm
ents
(PGs
) to
faci
litat
e es
tabl
ishm
ent o
f dist
rict-l
evel
OSS
an
d im
prov
e th
e pe
rform
ance
of t
he e
xisti
ng o
nes;
and
(c) s
uppo
rt
the
Nati
onal
Dev
elop
men
t Pla
nnin
g Ag
ency
( Ba
ppen
as) a
nd th
ree
sele
cted
PGs
in d
issem
inati
ng a
nd u
tilizi
ng th
e RI
A m
etho
d.Gr
ant j
ustifi
catio
n an
d su
mm
ary
prop
osal
for p
hase
2 h
ave
been
pr
epar
ed b
y th
e DS
F an
d ar
e ex
pect
ed to
be
appr
oved
by
July
201
0.
1 4
72
Out
put 1
: Pub
lic S
ervi
ce D
eliv
ery
Obj
ectiv
esIn
dica
tors
Prog
ress
Ratin
gCo
mm
ent
Mile
ston
e 1
(a) 1
0% in
crea
se in
OSS
ope
ratin
g un
der r
evise
d gu
idel
ines
is o
n tr
ack
to b
e ac
hiev
ed in
Sep
tem
ber 2
010,
and
(b) t
arge
t pro
vinc
es a
nd
dist
ricts
app
ly R
IA to
eva
luat
e dr
aft lo
cal r
egul
ation
s will
be
achi
eved
as
sche
dule
d as
sum
ing
the
proj
ect i
s ini
tiate
d be
fore
mid
Aug
ust
2010
.1.
7. I
mpr
oved
und
erst
andi
ng
of i
nter
natio
nal b
est
prac
tices
, soc
ial p
oliti
cal
dim
ensio
ns, c
osts
and
be
nefit
s an
d al
tern
ative
s fo
r ter
ritor
ial r
efor
m
Evid
ence
d ba
sed
rese
arch
on
terr
itoria
l ref
orm
ado
pted
by
thre
e ke
y m
inist
ries:
MoF
, Ba
ppen
as a
nd M
oHA
for
polic
y in
put
Six
anal
yses
com
plet
ed fo
r Ba
ppen
as, M
oF, M
oHA,
DPD
, DPR
, an
d lo
cal g
over
nmen
t, w
ith in
form
ation
on
less
ons l
earn
ed fr
om
inte
rnati
onal
, nati
onal
, and
loca
l exp
erie
nce
of te
rrito
rial r
efor
m:
•Ex
perie
nces
in Te
rrito
rial R
efor
m: I
mpl
icati
ons f
or In
done
sia•
Terr
itoria
l Res
truc
turin
g: C
ount
ry C
ase
Stud
ies
•Pr
oces
s and
Impl
icati
ons o
f the
Soc
ial-P
oliti
cal D
imen
sions
of
Terr
itoria
l Ref
orm
: Cas
e St
udie
s fro
m S
amba
s and
But
on.
•Co
sts a
nd B
enefi
ts o
f Pro
lifer
ation
of R
egio
ns (P
emek
aran
) an
alys
is co
mpl
eted
for M
oF w
ith k
ey fi
ndin
gs fo
r fisc
al tr
ansf
er
form
ulas
rela
ted
to p
emek
aran
, Nov
embe
r 200
7•
Eval
uatio
n of
the
Prol
ifera
tion
of A
dmin
istra
tive
Regi
ons i
n In
done
sia 2
001-
2007
•Te
rrito
rial R
efor
m a
nd P
eopl
e’s W
elfa
re: F
indi
ng A
ltern
ative
sCo
nsul
tatio
ns a
nd d
issem
inati
on w
orks
hops
with
nati
onal
and
loca
l m
ulti-
stak
ehol
der f
orum
s wer
e he
ld d
urin
g pr
epar
ation
, fina
lizati
on,
and
outr
each
for t
he a
naly
ses.
Par
ts o
f the
repo
rts h
ave
been
us
ed in
pre
sent
ation
s and
sem
inar
s by
seni
or G
OI c
entr
al a
nd lo
cal
gove
rnm
ent o
ffici
als.
The
rese
arch
also
info
rmed
pol
icie
s rel
ated
to
fisca
l, ad
min
istra
tive,
and
soci
al-p
oliti
cal a
spec
ts o
f ter
ritor
ial r
efor
m.
1 A
Fisc
al A
genc
y Ag
reem
ent
(FAA
) with
UN
DP fo
r co
vera
ge o
f wor
k un
der
terr
itoria
l ref
orm
, disa
ster
m
anag
emen
t, an
d su
b na
tiona
l dat
a w
as
oper
ation
al u
ntil J
une
30,
2009
. UN
DP su
bmitt
ed th
e fin
al re
port
cov
erin
g th
e en
tire
body
of w
ork
unde
r th
e FA
A in
Dec
embe
r 200
9.
How
ever
, the
wor
k th
at
form
ed th
e ba
sis o
f the
re
port
was
car
ried
out b
y RT
I Int
erna
tiona
l, U
NDP
, an
d a
free
lanc
e co
nsul
tant
. Th
e tr
ust f
und
for t
he FA
A ha
s bee
n cl
osed
.
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
73
Out
put 2
: Fis
cal D
ecen
tral
izatio
n an
d Ca
paci
ty D
evel
opm
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
t2.
1. T
he M
inist
ry o
f Fi
nanc
e Re
gion
al
Fina
ncia
l Inf
orm
ation
Sy
stem
reco
rdin
g lo
cal
gove
rnm
ent b
udge
ts is
up
grad
ed
Num
ber
and
proc
ess o
f dat
a en
try
of lo
cal g
over
nmen
t bu
dget
s rec
orde
d in
the
Min
istry
of F
inan
ce R
egio
nal
Fina
ncia
l Inf
orm
ation
Sys
tem
Phas
e 1:
DSF
supp
orte
d da
ta e
ntry
of M
oF’s
Regi
onal
Fin
anci
al
Info
rmati
on S
yste
m (S
IKD)
for F
iscal
Yea
r 200
7 Su
ppor
t dur
ation
: May
-Au
gust
200
9.Da
ta e
nter
ed a
nd v
erifi
ed in
Pha
se 1
: Bu
dget
dat
a (A
PBD,
200
9): 4
81 d
istric
ts a
nd m
unic
ipal
ities
(94
perc
ent
of to
tal)
Real
izatio
n da
ta (L
RA, 2
007)
: 351
dist
ricts
and
mun
icip
aliti
es (7
5 pe
rcen
t of t
otal
).Tw
o us
er m
anua
ls w
ere
prep
ared
: dat
a en
try
proc
edur
e in
tend
ed fo
r da
ta e
ntry
ope
rato
rs; a
nd a
gui
de fo
r use
rs to
acc
ess t
he d
ata.
Phas
e 2:
ACN
12/
2009
on
Stre
ngth
enin
g Da
ta P
rovi
sion
to th
e Re
gion
al
Fina
ncia
l Inf
orm
ation
Sys
tem
by
Sub-
Nati
onal
Gov
ernm
ents
with
Sta
nd-
Alon
e El
ectr
onic
Dat
a Ba
ses,
app
rove
d by
DSF
MC
in O
ctob
er 2
009.
Scop
ing
miss
ion
to 4
loca
l gov
ernm
ents
in N
orth
Sul
awes
i and
2 in
Ea
st Ja
va to
revi
ew re
gion
al fi
nanc
ial i
nfor
mati
on sy
stem
s car
ried
out
in D
ecem
ber 2
009,
Janu
ary
and
June
201
0. E
lect
roni
c da
ta fr
om th
e re
gion
s is a
vaila
ble
for 8
dist
ricts
as o
f Jun
e 20
10.
The
deve
lopm
ent o
f com
pute
r app
licati
on/s
oftw
are
inte
nded
for
tran
sfer
ring
elec
tron
ic d
ata
from
the
regi
ons t
o th
e M
oF S
IKD
syst
ems
was
com
plet
ed in
June
201
0. In
add
ition
to tr
ansf
errin
g th
e da
ta,
the
softw
are
is al
so d
esig
ned
for d
ata
entr
y pu
rpos
e; th
e la
tter i
s an
add
ition
al re
ques
t fro
m D
irect
orat
e fo
r Fun
ding
Eva
luati
on a
nd
Regi
onal
Fin
ance
Info
rmati
on (E
PIKD
). •
Data
ent
ry fo
r LRA
200
7 w
as su
spen
ded
by th
e go
vern
men
t in
orde
r for
it to
focu
s on
LRA
2008
inst
ead.
The
curr
ent L
RA 2
007
data
is th
us, i
n eff
ect,
100
perc
ent c
ompl
ete
(Mile
ston
e 1
and
mile
ston
e 2
i).•
For s
ecur
ity re
ason
s dat
a en
try
for 2
008
will
be
cond
ucte
d by
the
gove
rnm
ent i
n-ho
use.
As a
resu
lt DS
F ca
nnot
be
resp
onsib
le fo
r the
com
pleti
on o
f LRA
200
8 da
ta e
ntry
(Mile
ston
e 2
ii).
•Th
e go
al o
f hav
ing
5 pe
rcen
t, or
25,
dist
ricts
subm
it da
ta
elec
tron
ical
ly to
the
EPIK
D by
Dec
embe
r 201
0 is
with
in re
ach.
Be
twee
n Ju
ne a
nd D
ecem
ber 2
010,
EPI
KD in
tend
s to
unde
rtak
e 2-
3 so
cial
izatio
n se
ssio
ns a
t the
pro
vinc
ial l
evel
to so
licit
loca
l go
vern
men
t’s fi
nanc
ial e
lect
roni
c da
tase
ts. (
Mile
ston
e 2
iii)
1 3
74
Out
put 2
: Fis
cal D
ecen
tral
izatio
n an
d Ca
paci
ty D
evel
opm
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
tPr
ocur
emen
t for
cap
acity
bui
ldin
g fo
r EPI
KD st
aff is
on-
goin
g. T
he
capa
city
bui
ldin
g w
ill b
e un
dert
aken
thro
ugh
(a) a
wor
ksho
p on
re
gion
al fi
nanc
e an
d da
ta a
naly
sis to
be
cond
ucte
d by
LPE
M, a
rese
arch
in
stitu
te u
nder
the
Depa
rtm
ent o
f Eco
nom
ics,
Uni
vers
ity o
f Ind
ones
ia,
and
(b) c
onsu
ltatio
ns w
ith e
xper
ts fr
om L
PEM
for p
repa
ring
shor
t an
alys
is on
var
ious
regi
onal
fina
nce
topi
cs. T
hese
will
be
post
ed o
n th
e DG
FB w
ebsit
e by
Sep
tem
ber 2
010.
2.2.
Im
prov
ed fi
scal
de
cent
raliz
ation
pol
icy
Impl
emen
tatio
n of
‘G
rand
Des
ign
of F
iscal
De
cent
ralis
ation
’ acr
oss
gove
rnm
ent m
inist
ries a
nd
loca
l gov
ernm
ents
ACN
13/
2009
ACN
on
Impr
ovin
g th
e Po
licy
Fram
ewor
k fo
r Fisc
al
Dece
ntra
lisati
on (‘
Gran
d De
sign
of F
iscal
Dec
entr
aliza
tion’
- GD
FD)
appr
oved
by
DSF
MC
in N
ovem
ber 2
009.
Proj
ect i
mpl
emen
tatio
n pl
an fo
r the
who
le su
ppor
t com
plet
ed in
Ja
nuar
y 20
10Th
ree
wor
ksho
ps/p
ublic
con
sulta
tions
wer
e co
nduc
ted
in P
ontia
nak
(Wes
t Kal
iman
tan)
, Mak
assa
r (So
uth
Sula
wes
i) an
d Su
raba
ya (E
ast
Java
). Th
e pu
rpos
e of
thes
e w
orks
hops
was
to g
ain
insig
hts f
rom
a w
ide
rang
e of
stak
ehol
ders
in In
done
sia, r
egar
ding
the
appr
opria
te st
rate
gy
to im
prov
e th
e cu
rren
t GDF
D.
Inpu
ts to
the
revi
sion
of L
aw 3
3/20
04 a
re b
eing
pro
vide
d th
roug
h im
plem
enta
tion
of st
udie
s rel
ated
to in
terg
over
nmen
tal t
rans
fers
(in
parti
cula
r on
the
gene
ral-
and
spec
ific
allo
catio
n fu
nd);
thes
e st
udie
s ar
e on
-goi
ng.
Effor
ts to
har
mon
ize th
e GD
FD (a
nd re
spec
ted
inpu
ts to
the
revi
sion
of
Law
33/
2004
) with
the
revi
sion
of L
aw 3
2/20
04 a
nd, t
here
fore
, Gra
nd
Desig
n fo
r Reg
iona
l Aut
onom
y (G
DRA)
are
cur
rent
ly u
nder
way
.Re
visio
n to
the
mai
n id
eas o
f fisc
al d
ecen
tral
izatio
n po
licy
fram
ewor
k is
curr
ently
bei
ng fi
naliz
ed a
nd is
exp
ecte
d to
be
com
plet
ed fo
r MoF
ap
prov
al b
y Se
ptem
ber 2
010
(Mile
ston
e 1)
.
3Th
e DS
F w
ill p
rovi
de
supp
ort t
o M
oF te
am in
ch
arge
for t
he re
visio
n of
La
w 3
3/20
04.
In th
e ab
senc
e of
a d
ecen
t dr
aft o
n GD
RA a
s wel
l as
MoF
and
MoH
A im
med
iate
ne
eds t
o sy
nchr
onize
an
arra
y of
subs
tanti
ve is
sues
re
late
d to
the
revi
sion
of
Law
32/
2004
and
33/
2004
, eff
orts
shou
ld b
e re
dire
cted
to
the
harm
oniza
tion
betw
een
the
revi
sion
of
Law
33/
2004
(whi
ch is
ba
sed
on G
DFD)
and
that
of
Law
32/
2004
.
2.3.
Nati
onal
pol
icy
on lo
cal
gove
rnm
ent b
orro
win
g,
incl
udin
g iss
uanc
e of
m
unic
ipal
bon
ds, a
dopt
ed
Mun
icip
al b
ond
issua
nce,
in
clud
ing
cred
it w
orth
ines
s as
sess
men
ts
Phas
e 1:
Rev
iew
of I
ndon
esia
n Ci
vil C
ode
on is
sues
rela
ting
to d
ebto
r, cr
edito
r, an
d ba
nkru
ptcy
/inso
lven
cy c
ompl
eted
May
200
9.Re
view
of R
egul
ator
y Fr
amew
ork
and
Best
Pra
ctice
s Stu
dy o
n Lo
cal
Gove
rnm
ent F
inan
cial
Em
erge
ncy
Proc
edur
es c
ompl
eted
in D
ecem
ber
2009
.Su
ppor
t for
revi
sion
of G
over
nmen
t Reg
ulati
ons G
R 54
/200
5: L
ocal
Go
vern
men
t Bor
row
ing
and
GR 5
7/20
05: L
ocal
Gov
ernm
ent G
ranti
ng,
is co
mpl
ete.
Dra
ft re
visio
ns h
ave
been
sign
ed b
y th
e M
inist
ry o
f Fi
nanc
e an
d ar
e cu
rren
tly b
eing
disc
usse
d w
ith th
e M
inist
ry o
f Law
and
Hu
man
Rig
hts (
MLH
R).
2
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
75
Out
put 2
: Fis
cal D
ecen
tral
izatio
n an
d Ca
paci
ty D
evel
opm
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
tPh
ase
2: A
naly
sis a
nd p
repa
rato
ry w
ork
for i
ssua
nce
of D
KI Ja
kart
a an
d ci
ty o
f Ban
dung
bon
ds:
•pr
efea
sibili
ty st
udie
s and
dra
ft te
rms o
f ref
eren
ce (k
eran
gka
acua
n ke
giat
an/K
AK) d
ocum
ents
for t
he fo
ur p
roje
cts t
o be
fund
ed b
y th
e pr
opos
ed m
unic
ipal
Jaka
rta
bond
wer
e co
mpl
eted
in Ju
ne 2
010.
•
Thes
e fo
ur p
roje
cts a
re:
o p
rovi
sion
of im
prov
ed se
wag
e fa
ciliti
es in
the
cent
ral b
usin
ess
dist
rict a
nd ja
lan
Casa
blan
ca a
reas
;o c
onst
ructi
on o
f an
inte
r-city
bus
term
inal
at P
ulo
Geba
ng;
o lo
w-c
ost h
ousin
g re
habi
litati
on a
t Tan
ah P
asir;
and
o a
dditi
on o
f a tr
aum
a w
ing
at P
asar
Reb
o ho
spita
l.(to
tal e
stim
ated
val
ue o
f the
four
pro
ject
s is R
p 1.
7 tr
illio
n in
201
1 pr
ices
)•
Two
draft
Per
da (l
ocal
regu
latio
n) to
i) a
utho
rize
a m
unic
ipal
bon
d iss
ue a
nd ii
) est
ablis
h a
Satk
er (i
mpl
emen
tatio
n un
it) w
ithin
the
loca
l go
vern
men
t’s fi
nanc
ial u
nit t
o m
anag
e an
d ad
min
ister
the
Jaka
rta
bond
wer
e co
mpl
eted
in
June
201
0.•
Anal
ysis
on D
KI Ja
kart
a’s a
bilit
y to
pay
bac
k m
unic
ipal
bon
ds
com
plet
ed in
June
201
0.•
The
DSF
team
has
supp
orte
d th
e pr
epar
ation
of a
pre
sent
ation
on
the
mun
icip
al b
onds
with
in D
KI Ja
kart
a.•
A N
ota
Dina
s (offi
cial
mem
o) h
as b
een
prep
ared
whi
ch m
ust b
e sig
ned
by th
e Go
vern
or o
f Jak
arta
to fo
rmal
ly a
utho
rize
mun
icip
al
bond
pre
para
tion
for D
PRD
appr
oval
in Ju
ne 2
010.
•Ca
paci
ty b
uild
ing
has b
een
prov
ided
to th
e go
vern
men
t of c
ity
Band
ung,
but
thei
r pro
ject
, a th
eme
park
, req
uire
s con
sider
able
te
chni
cal d
efini
tion
and
may
be
beyo
nd th
e le
vel o
f ass
istan
ce w
hich
th
e DS
F ca
n re
ason
ably
pro
vide
. Tw
o ro
unds
of d
iscus
sions
on
revi
sion
of G
R 54
/200
5 on
loca
l bo
rrow
ing
betw
een
MoF
and
MLH
R to
ok p
lace
in F
ebru
ary
and
May
20
10. A
dditi
onal
mee
tings
are
war
rant
ed to
com
plet
e re
visio
n.M
ilest
one
1: C
redi
t wor
thin
ess a
sses
smen
t of t
wo
pilo
t mun
icip
aliti
es
for i
ssua
nce
of m
unic
ipal
bon
ds w
ill b
e co
mpl
eted
by
an in
depe
nden
t cr
edit
ratin
g co
mpa
ny b
y De
cem
ber 2
010.
Mile
ston
e 2:
Dat
es fo
r fut
ure
disc
ussio
ns to
fina
lize
the
GR w
ill b
e de
term
ined
by
MLH
R. It
is e
xpec
ted
that
the
revi
sed
GR w
ill b
e sig
ned
by th
e Pr
esid
ent b
y la
te 2
010
or e
arly
201
1.
3Di
rect
orat
e of
Reg
iona
l Fi
nanc
ing
and
Capa
city
-M
oF h
as su
bmitt
ed re
ques
t to
exp
and
the
scop
e of
ac
tiviti
es to
the
Prov
ince
s of
Kep
ulau
an R
iau
and
Kota
Su
raba
yaSc
opin
g m
issio
n to
Kot
a Su
raba
ya w
ill ta
ke p
lace
aft
er th
e in
augu
ratio
n of
th
e ne
w m
ayor
of K
ota
Sura
baya
in A
ugus
t 201
0.
76
Out
put 2
: Fis
cal D
ecen
tral
izatio
n an
d Ca
paci
ty D
evel
opm
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
t2.
4. I
mpr
oved
pub
lic fi
nanc
ial
man
agem
ent o
f Spe
cial
Al
loca
tion
Fund
s (SA
F) b
y lo
cal g
over
nmen
ts
Publ
ic fi
nanc
ial a
naly
sis o
f SA
F co
mpl
eted
by
sele
cted
lo
cal g
over
nmen
ts a
s a
basis
for l
ocal
gov
ernm
ent
plan
ning
and
bud
getin
g
Phas
e 1:
Em
piric
al a
naly
sis o
f reg
iona
l gov
ernm
ent s
urpl
uses
bas
ed o
n da
ta fr
om 2
7 pr
ovin
ces a
nd 2
20 d
istric
ts a
nd m
unic
ipal
ities
resu
lting
in
repo
rt w
ith re
com
men
datio
ns c
ompl
eted
in Ju
ne 2
008.
Empi
rical
ana
lysis
on
regi
onal
gov
ernm
ent i
nves
tmen
t in
publ
ic
infr
astr
uctu
re b
ased
on
audi
ted
finan
cial
dat
a fo
r 200
4-20
07 c
ompl
eted
in
June
200
9.Ph
ase
2: A
CN fo
r Pub
lic E
xpen
ditu
re A
naly
sis o
n SA
F in
Ace
h un
der
prep
arati
on w
ith M
oF. K
ick-
off m
eetin
g to
solic
it in
puts
on
this
activ
ity
is sc
hedu
led
for A
ugus
t 201
0.
1 4
Phas
e 2
was
on
hold
unti
l go
vern
men
t app
rova
l was
re
ceiv
ed in
May
201
0. D
ue
to ti
me
cons
trai
nts,
MoF
an
d DS
F ha
ve a
gree
d to
lim
it th
e co
vera
ge o
f the
st
udy
to o
nly
one
prov
ince
, Ac
eh. I
mpl
emen
tatio
n in
th
e re
mai
ning
2 p
rovi
nces
, Pa
pua
and
Wes
t Pap
ua, a
s tim
e pe
rmits
. Con
sequ
ently
m
ilest
one
1, w
hich
m
anda
tes t
he a
ctivi
ty to
be
com
plet
ed in
3 p
rovi
nces
, m
ay n
ot b
e ac
hiev
ed.
2.5.
Gov
ernm
ent p
ro-p
oor
spec
ial a
lloca
tion
fund
(D
AK) m
onito
red
and
eval
uate
d
Mon
itorin
g an
d ev
alua
tion
repo
rts c
ompl
eted
on
expe
nditu
res o
f pro
-poo
r go
vern
men
t fun
d in
sele
cted
lo
cal g
over
nmen
ts
ACN
3/2
009
on S
ocia
lizati
on a
nd P
ilot I
mpl
emen
tatio
n of
Join
t Circ
ular
Le
tter (
SEB)
on
Mon
itorin
g of
Tech
nica
l Im
plem
enta
tion
and
Eval
uatio
n of
Use
of S
peci
al A
lloca
tion
Fund
s (DA
K) a
ppro
ved
by D
SF M
C in
July
20
09.
Proj
ect i
mpl
emen
tatio
n pl
an fo
r the
enti
re a
ctivi
ty c
ompl
eted
in
Janu
ary
2010
.In
ord
er to
obt
ain
initi
al fe
edba
ck o
n SE
B-DA
K fo
cus g
roup
disc
ussio
ns
and
soci
aliza
tion
on S
EB-D
AK c
ondu
cted
for B
appe
da, c
ity o
f Bog
or in
Ja
nuar
y 20
10.
Mod
ules
for fi
eld
faci
litat
ors a
nd d
ata
colle
cting
acti
vitie
s com
plet
ed
by D
AK C
oord
inati
on, P
lann
ing,
Mon
itorin
g an
d Ev
alua
tion
Team
(T
KP2E
-DAK
) Sec
reta
riat,
Bapp
enas
, Feb
ruar
y 20
10. T
hese
doc
umen
ts
com
prise
(a) D
AK g
ener
al c
ompr
ehen
sion
(pem
aham
an u
mum
tent
ang
DAK)
; (b)
DAK
mon
itorin
g (p
eman
taua
n DA
K); (
c) D
AK e
valu
ation
(e
valu
asi D
AK);
(d) D
AK re
porti
ng sy
stem
(sist
em p
elap
oran
DAK
); (e
) org
aniza
tion
of D
AK m
onito
ring
and
eva
luati
on (o
rgan
isasi
pela
ksan
aan
mon
itorin
g da
n ev
alua
si DA
K); a
nd (f
) gui
delin
es o
n da
ta a
nd in
form
ation
col
lecti
ng in
the
field
(pen
gum
pula
n da
ta d
an
info
rmas
i di l
apan
gan)
.SE
B da
ta fo
rms t
este
d an
d te
chni
cal a
ssist
ance
to fi
ll ou
t the
se fo
rms
prov
ided
to o
ffici
als i
n Ka
raw
ang,
Wes
t Jav
a in
Mar
ch 2
010.
3Im
plem
enta
tion
will
be
split
into
two
phas
es: t
he
first
pha
se in
the
Daer
ah
Istim
ewa
Yogy
akar
ta (D
IY)
prov
ince
, fol
low
ed b
y a
seco
nd p
hase
con
sistin
g of
4
prov
ince
s (Ja
mbi
, Cen
tral
Ka
liman
tan,
Wes
t Sul
awes
i an
d N
orth
Mal
uku)
. The
pu
rpos
e of
this
sepa
ratio
n is
to o
btai
n le
sson
s lea
rned
on
how
to p
rope
rly
impl
emen
t DAK
mon
itorin
g an
d ev
alua
tion
Thes
e in
puts
will
be
utiliz
ed in
the
exec
ution
in th
e ot
her f
our
prov
ince
s.
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
77
Out
put 2
: Fis
cal D
ecen
tral
izatio
n an
d Ca
paci
ty D
evel
opm
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
tTa
rget
(a) “
Gove
rnm
ent d
esig
ned
mon
itorin
g an
d ev
alua
tion
syst
em fo
r DA
K w
ill b
e im
plem
ente
d in
the
dist
rict o
f the
pro
vinc
e of
Yog
yaka
rta
by S
epte
mbe
r whi
le in
the
othe
r fou
r pro
vinc
es im
plem
enta
tion
will
be
com
plet
ed b
y Ja
nuar
y 20
10.
Targ
et (b
) A se
min
ar o
n le
sson
s lea
rned
from
the
impl
emen
tatio
n in
D.I.
Yo
gyak
arta
as w
ell a
s ear
ly re
sults
from
the
four
pro
vinc
es a
re p
lann
ed
for S
epte
mbe
r 201
0. P
relim
inar
y re
sults
on
capa
city
stre
ngth
enin
g st
rate
gy fo
r cen
tral
- and
loca
l gov
ernm
ent w
ill b
e pr
esen
ted
at th
e se
min
ar.
78
Out
put 3
: Inc
reas
ing
Acco
unta
bilit
yO
bjec
tives
Indi
cato
rsPr
ogre
ssRa
teCo
mm
ent
3.1.
Effe
ctive
legi
slativ
e pr
oces
ses,
reso
urce
al
loca
tion
and
over
sight
fu
nctio
ns d
emon
stra
ted
in
sele
cted
loca
l leg
islat
ures
Num
ber o
f pro
vinc
ial a
nd
dist
rict M
Ps, i
nclu
ding
w
omen
MPs
, tra
ined
in
legi
slativ
e pr
oces
ses,
bu
dgeti
ng a
nd o
vers
ight
DSF
II Ca
paci
ty S
tren
gthe
ning
for D
PRD
(Loc
al G
over
nmen
t Leg
islat
ures
) TF
095
584
Gran
t Agr
eem
ent w
as si
gned
by
the
Wor
ld B
ank
in Ja
nuar
y 20
10 a
nd c
ount
ersig
ned
by th
e Go
vern
men
t of I
ndon
esia
(rep
rese
nted
by
the
Min
istry
of F
inan
ce) i
n Fe
brua
ry 2
010.
MoH
A su
bmitt
ed a
re
ques
t for
gra
nt e
ffecti
vene
ss w
ith su
ppor
ting
evid
ence
and
the
Gran
t Eff
ectiv
enes
s Dec
lara
tion
lette
r was
sign
ed b
y th
e Ba
nk in
Mar
ch 2
010.
MoH
A to
ok th
e st
eps n
eces
sary
to re
gist
er th
e Gr
ant A
gree
men
t w
ith th
e M
inist
ry o
f Fin
ance
(MoF
); to
ope
n a
spec
ial a
ccou
nt w
hich
re
quire
d pr
epar
ation
and
app
rova
l of a
n an
nual
wor
k pl
an a
nd is
suan
ce
of a
Per
dirje
n (D
irect
or G
ener
al re
gula
tion)
for t
he p
roje
ct; a
nd to
co
mpl
ete
budg
et im
plem
enta
tion
docu
men
t (DI
PA).
MoH
A ad
verti
sed
requ
est f
or e
xpre
ssio
ns o
f int
eres
t for
the
impl
emen
ting
agen
cy in
June
201
0. S
hort
listi
ng, r
eque
st fo
r pro
posa
ls an
d ne
gotia
tions
will
pro
ceed
in th
e ne
xt q
uart
er. M
oF re
ques
ted
and
rece
ived
the
initi
al d
epos
it fo
r the
pro
ject
in Ju
ne 2
010.
Nee
ds
asse
ssm
ent,
curr
icul
um d
evel
opm
ent a
nd te
sting
, and
impl
emen
tatio
n of
cap
acity
bui
ldin
g w
orks
hops
are
sche
dule
d fo
r com
pleti
on in
the
four
th q
uart
er 2
010
and
first
qua
rter
201
1.
The
adde
ndum
for t
he D
PRD
orie
ntati
on im
plem
ente
d th
roug
h th
e Go
vern
men
t Edu
catio
n an
d Tr
aini
ng C
ente
r (Ba
dikl
at) w
as c
ompl
eted
an
d a
draft
am
endm
ent w
as p
repa
red
to th
e Ba
dikl
at G
rant
Agr
eem
ent
TF09
5995
. The
pol
itica
l affa
irs u
nit o
f Bad
ikla
t suc
cess
fully
com
plet
ed
finan
cial
man
agem
ent a
nd p
rocu
rem
ent a
sses
smen
ts a
nd in
tern
al
budg
et re
view
to a
lloca
te c
ount
erpa
rt fu
ndin
g fo
r the
acti
vity
, a fi
rst f
or
this
unit.
The
am
endm
ent i
s sch
edul
ed fo
r sig
ning
in th
e ne
xt q
uart
er
with
Tra
inin
g of
Tra
iner
s (TO
T) im
plem
enta
tion
and
DPRD
Orie
ntati
on
com
plet
ed b
y De
cem
ber 2
010.
Th
e m
ilest
one
of 1
50 D
PRD
mem
bers
trai
ned
by D
ecem
ber 2
010
in th
e DS
F lo
gica
l fra
mew
ork
will
be
met
and
will
dra
w fr
om D
PRD
mem
bers
tr
aine
d th
roug
h th
e DP
RD c
apac
ity st
reng
then
ing
prog
ram
(Loc
al
Gove
rnm
ent A
ffairs
/Reg
iona
l Aut
onom
y) a
nd/o
r the
DPR
D or
ient
ation
ac
tivity
(Loc
al G
over
nmen
t Tra
inin
g an
d Ed
ucati
on C
entr
e) w
hich
is a
lso
adm
inist
ered
by
the
DSF.
3Th
e DP
RD a
ctivi
ties a
re
impl
emen
ted
thro
ugh
gove
rnm
ent s
yste
ms.
Bot
h th
e Lo
cal G
over
nmen
t Aff
airs
Dire
ctor
ate
of th
e DG
Reg
iona
l Aut
onom
y an
d Ba
dikl
at h
ave
been
acti
ve
in b
ringi
ng th
e pr
ojec
t on-
budg
et, o
n-tr
easu
ry. W
ith
DSF
supp
ort t
he p
roje
ct
impl
emen
ting
units
hav
e ga
ined
cap
acity
in p
rogr
am
man
agem
ent a
nd h
ave
broa
dene
d th
eir n
etw
orks
w
ith k
ey c
ount
erpa
rts
with
in M
oF. T
hey
have
al
so g
aine
d kn
owle
dge
on
finan
cial
man
agem
ent,
proc
urem
ent,
and
anti-
corr
uptio
n m
easu
res
appl
icab
le to
oth
er
gove
rnm
ent p
roje
cts.
The
MoH
A DP
RD a
ctivi
ties
incl
ude
two
appr
oach
es:
1) D
PRD
capa
city
st
reng
then
ing
cove
ring
tailo
r-mad
e tr
aini
ng b
ased
on
nee
ds a
sses
smen
ts in
se
lect
ed p
rovi
nces
and
di
stric
ts fo
llow
ed b
y ac
tion
lear
ning
and
tech
nica
l as
sista
nce
to a
chie
ve
perf
orm
ance
targ
ets;
and
2)
DPR
D or
ient
ation
in
targ
eted
pro
vinc
es a
nd
dist
ricts
for n
ewly
ele
cted
DP
RD m
embe
rs p
rovi
ding
ba
sic k
now
ledg
e on
na
tiona
l affa
irs, l
ocal
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
79
Out
put 3
: Inc
reas
ing
Acco
unta
bilit
yO
bjec
tives
Indi
cato
rsPr
ogre
ssRa
teCo
mm
ent
gove
rnm
ent,
and
basic
du
ties a
nd fu
nctio
ns o
f DP
RD. T
he tw
o ac
tiviti
es
shar
e re
spec
tive
curr
icul
um
and
teac
hing
/lear
ning
m
etho
dolo
gy to
enc
oura
ge
syne
rgy
whe
re a
ppro
pria
te,
and
coor
dina
te re
gard
ing
geog
raph
ical
dist
ributi
on
of p
artic
ipati
ng D
PRDs
to
avoi
d ov
erla
p.3.
2. E
ffecti
ve a
nd a
ccou
ntab
le
publ
ic se
rvic
e de
liver
y by
loca
l gov
ernm
ent
offici
als a
nd e
ffecti
ve
mon
itorin
g by
CSO
lead
ers
dem
onst
rate
d in
sele
cted
lo
cal g
over
nmen
ts
Num
ber o
f nati
onal
and
loca
l go
vern
men
t offi
cial
s and
CSO
le
ader
s pro
fess
iona
lly tr
aine
d in
effe
ctive
and
acc
ount
able
pu
blic
serv
ice
deliv
ery
ACN
No.
9/2
009
on C
apac
ity B
uild
ing
thro
ugh
Dece
ntra
lized
Edu
catio
n an
d Tr
aini
ng (D
ET) a
ppro
ved
for a
tota
l bud
get o
f USD
1.5
93,5
20.
The
activ
ity h
as 3
com
pone
nts t
hat a
im to
enh
ance
the
prof
essio
nal
capa
city
of l
ocal
and
nati
onal
offi
cial
s to
prov
ide,
and
CSO
s to
mon
itor,
im
prov
ed p
ublic
serv
ice
deliv
ery:
•Sh
ort c
ours
es in
Ind
ones
ia a
nd th
e Re
gion
•St
udy
tour
s •
Scho
lars
hips
for M
aste
r deg
ree
prog
ram
s in
dece
ntra
lizati
on re
late
d st
udie
s in
the
UK.
Follo
win
g a
”no
obje
ction
” by
the
Coun
try
Lead
ersh
ip Te
am (C
LT) o
f th
e gr
ant j
ustifi
catio
n an
d su
mm
ary
prop
osal
, the
gra
nt a
gree
men
t was
sig
ned
in M
ay 2
010b
y th
e Ba
nk, a
nd th
e Br
itish
Cou
ncil
whi
ch w
ill b
e th
e im
plem
entin
g pa
rty
of th
e sc
hola
rshi
p pr
ogra
m.
After
rigo
rous
inte
rvie
win
g, th
e se
lecti
on c
omm
ittee
iden
tified
ca
ndid
ates
for a
1.5
mon
th E
nglis
h la
ngua
ge p
rogr
am w
hich
will
be
com
plet
ed b
y m
id Ju
ly. T
he c
andi
date
s will
sit t
he In
tern
ation
al E
nglis
h La
ngua
ge Te
sting
Sys
tem
(IEL
TS) e
xam
and
the
resu
lts o
f the
IELT
S te
sts
will
det
erm
ine
who
will
be
prov
ided
with
a sc
hola
rshi
p. S
ucce
ssfu
l ca
ndid
ates
will
be
supp
orte
d by
the
Briti
sh C
ounc
il in
app
lyin
g to
UK
univ
ersiti
es, a
nd w
ill a
lso re
ceiv
e ac
adem
ic a
nd p
racti
cal g
uida
nce
whi
le e
nrol
led.
The
Briti
sh C
ounc
il w
ill fo
llow
-up
with
the
scho
lars
on
the
deve
lopm
ent o
f acti
on p
lans
for t
he a
pplic
ation
of k
now
ledg
e an
d sk
ills a
cqui
red
unde
r the
pro
gram
upo
n re
turn
to th
eir j
obs i
n In
done
sia.
3AC
N 9
/200
9 ha
s bee
n di
vide
d in
to 2
gra
nts:
1)
scho
lars
hips
and
2) s
hort
co
urse
s and
stud
y to
urs.
In v
iew
of t
he ti
ght ti
mel
ine
for t
he e
xecu
tion
of th
e sc
hola
rshi
ps p
roje
ct, o
n 31
M
arch
201
0 AK
LN/M
oHA
aske
d th
at th
e Ba
nk a
ssum
e re
spon
sibili
ty fo
r the
ex
ecuti
on o
f the
scho
lars
hip
com
pone
nt o
f the
pro
ject
.
80
Out
put 3
: Inc
reas
ing
Acco
unta
bilit
yO
bjec
tives
Indi
cato
rsPr
ogre
ssRa
teCo
mm
ent
By S
epte
mbe
r 201
0, 2
0 ca
ndid
ates
are
exp
ecte
d to
be
enro
lled
in
Briti
sh u
nive
rsiti
es fo
r prim
arily
adv
ance
d p
rogr
ams t
hat o
ffer a
on
e ye
ar M
aste
rs p
rogr
am sp
ecia
lized
in fi
scal
dec
entr
aliza
tion(
such
as
tax
polic
ies,
fisc
al tr
ansf
ers,
sub-
natio
nal b
orro
win
g), a
nd so
cial
/ad
min
istra
tive
polic
ies h
avin
g a
bear
ing
on se
rvic
e ou
tcom
es.
The
scho
lars
hip
prog
ram
is o
n tr
ack
to b
e co
mpl
eted
by
Sept
embe
r 20
11 a
nd w
ill m
eet m
ilest
one
2.In
add
ition
an
estim
ated
30
natio
nal a
nd lo
cal g
over
nmen
t offi
cial
s and
Ci
vil S
ocie
ty o
rgan
izatio
ns (C
SO) l
eade
rs w
ill h
ave
rece
ived
trai
ning
in
effec
tive
and
acco
unta
ble
publ
ic se
rvic
e de
liver
y pa
rtici
patio
n in
shor
t co
urse
s in
line
with
mile
ston
e 1.
Sho
rt c
ours
es a
nd st
udy
tour
s will
be
orga
nize
d in
the
third
qua
rter
pen
ding
dec
ision
on
exec
ution
met
hod.
3.3.
Loc
al tr
aini
ng a
nd
educ
ation
cen
tres
de
mon
stra
ted
impr
ovem
ent i
n co
nduc
ting
trai
ning
pr
ogra
mm
es fo
r loc
al
gove
rnm
ent o
ffici
als
Com
pete
ncy-
base
d tr
aini
ng p
rogr
amm
es o
n de
cent
raliz
ed p
ublic
serv
ice
deliv
ery
deve
lope
d by
loca
l go
vern
men
t tra
inin
g ce
ntre
s
DSF
II Go
vern
men
t Tra
inin
g an
d Ed
ucati
on C
entr
e De
velo
pmen
t: In
trod
ucin
g Co
mpe
tenc
y-Ba
sed
Stan
dard
s for
Impr
oved
Pub
lic S
ervi
ce
Deliv
ery
TF 0
9599
5 Gr
ant A
gree
men
t was
sign
ed b
y th
e Ba
nk in
Ja
nuar
y 20
10 a
nd c
ount
ersig
ned
by th
e Go
vern
men
t of I
ndon
esia
(r
epre
sent
ed b
y th
e M
inist
ry o
f Fin
ance
) in
Febr
uary
201
0. D
ikla
t su
bmitt
ed a
requ
est f
or g
rant
effe
ctive
ness
with
supp
ortin
g ev
iden
ce
and
the
Gran
t Effe
ctive
ness
Dec
lara
tion
lette
r was
sign
ed b
y th
e Ba
nk
in M
arch
201
0.Aft
er th
e Gr
ant A
gree
men
t was
sign
ed in
Janu
ary,
MoH
A to
ok th
e ap
prop
riate
step
s to
regi
ster
the
Agre
emen
t with
MoF
; ope
n a
spec
ial
acco
unt w
hich
requ
ired
prep
arati
on a
nd a
ppro
val o
f an
annu
al w
ork
plan
and
issu
ance
of a
Per
dirje
n fo
r the
pro
ject
; and
com
plet
ed th
e bu
dget
impl
emen
tatio
n do
cum
ent (
DIPA
). Ba
dikl
at a
dver
tised
for i
ndiv
idua
l con
sulta
nts i
n Ju
ne 2
010.
The
co
nsul
tant
s will
be
offici
ally
hire
d an
d th
e ki
ck-o
ff w
orks
hop
impl
emen
ted
in th
e ne
xt q
uart
er w
hen
DIPA
fund
s are
exp
ecte
d to
be
ava
ilabl
e. P
rovi
ncia
l Dik
lats
in E
ast J
ava,
Wes
t Kal
iman
tan,
and
Ea
st N
usa
Teng
gara
hav
e al
loca
ted
regi
onal
bud
get f
or p
artic
ipati
on
in tr
aini
ng a
nd a
re p
repa
red
for i
mpl
emen
tatio
n. O
ther
acti
vitie
s sc
hedu
led
in th
e ne
xt q
uart
er in
clud
e tr
aini
ng fo
r ass
essm
ent,
verifi
catio
n, a
nd d
evel
opm
ent o
f com
pete
ncy
base
d st
anda
rds
incl
udin
g pr
epar
ation
for c
ompe
tenc
y ba
sed
trai
ning
in th
e pu
blic
se
rvic
e of
pop
ulati
on a
dmin
istra
tion
and
civi
l reg
istra
tion.
The
mile
ston
e of
cap
acity
bui
ldin
g ne
eds a
sses
smen
t on
man
agem
ent
of se
rvic
e de
liver
y tr
aini
ng is
on
trac
k to
be
met
by
Dece
mbe
r 201
0.
3Th
is is
the
first
tim
e Ba
dikl
at h
as m
anag
ed a
gr
ant t
hrou
gh g
over
nmen
t sy
stem
s (on
-bud
get,
on-
trea
sury
). W
ith D
SF su
ppor
t Ba
dikl
at h
as d
evel
oped
ca
paci
ty in
pre
parin
g go
vern
men
t doc
umen
ts
for t
he p
lann
ing
bure
au
of B
adik
lat a
nd M
oHA
and
for t
he tr
easu
ry, d
ebt
man
agem
ent,
and
budg
et
office
s with
in M
oF. B
adik
lat
has d
evel
oped
cap
acity
in
pro
gram
man
agem
ent
and
dem
onst
rate
d pr
oper
ow
ners
hip
of g
rant
fund
ed
activ
ities
. Bad
ikla
t has
also
de
mon
stra
ted
the
abili
ty
to u
se th
e co
ncep
t of a
nd
appr
oach
to c
ompe
tenc
y ba
sed
trai
ning
dev
elop
ed
with
DSF
ass
istan
ce to
m
eet t
he st
rate
gic
need
s of
Bad
ikla
t with
oth
er
dono
r sup
port
ed p
roje
cts
incl
udin
g U
NDP
ACT
P in
Ac
eh, A
usAI
D LO
GICA
in
Aceh
, and
CID
A BA
SICS
pr
ogra
m in
Sul
awes
i.
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
81
Out
put 3
: Inc
reas
ing
Acco
unta
bilit
yO
bjec
tives
Indi
cato
rsPr
ogre
ssRa
teCo
mm
ent
3.4.
Im
prov
ed p
ublic
ac
coun
tabi
lity
of lo
cal
gove
rnm
ents
del
iver
ed b
y CS
Os
Publ
ic a
ccou
ntab
ility
m
echa
nism
s dev
elop
ed a
nd
impl
emen
ted
by C
SOs
In O
ctob
er 2
009
a pa
per o
utlin
ing
optio
ns fo
r loc
al g
over
nmen
t en
gage
men
t in
the
DSF
was
revi
ewed
by
the
DSF
Man
agem
ent
Com
mitt
ee a
nd th
e fo
rmati
on o
f a L
ocal
Gov
ernm
ent C
onsu
ltativ
e Gr
oup
was
end
orse
d. A
disc
ussio
n pa
per d
etai
ling
the
role
s,
resp
onsib
ilitie
s, a
nd m
embe
rshi
p of
the
LGCG
was
pre
pare
d in
May
20
10, d
iscus
sed
with
the
GOI t
ask
forc
e ap
poin
ted
for t
his p
urpo
se, a
nd
final
ized.
An
invi
tatio
n fo
r exp
ress
ions
of i
nter
est/
parti
cipa
tion
in th
e LG
CG w
as se
nt b
y th
e DS
F co
-cha
ir in
June
201
0 to
loca
l gov
ernm
ent
asso
ciati
ons a
nd lo
cal g
over
nmen
ts p
artic
ipati
ng in
DSF
pro
ject
s. T
he
kick
-off
wor
ksho
p is
sche
dule
d fo
r Aug
ust 2
010.
Task
forc
e es
tabl
ished
an
d op
erati
ons i
nitia
ted.
Disc
ussio
n pa
per o
n lo
cal g
over
nmen
t con
sulta
tive
grou
p pr
oduc
ed in
M
ay 2
010
appr
oved
by
the
Man
agem
ent C
omm
ittee
.
N/A
The
Loca
l Gov
ernm
ent
Cons
ulta
tive
Grou
p is
mov
ing
tow
ard
achi
evin
g th
e in
dica
tor o
f im
prov
ed
publ
ic a
ccou
ntab
ility
of
loca
l gov
ernm
ents
but
doe
s no
t yet
invo
lve
CSO
s.
The
Man
agem
ent
Com
mitt
ee d
id n
ot
com
miss
ion
wor
k on
pub
lic
acco
unta
bilit
y de
liver
ed
by C
SOs i
n th
e 20
09-2
011
wor
kpla
n. H
owev
er G
OI
has r
eque
sted
incl
usio
n of
pub
lic a
ccou
ntab
ility
m
echa
nism
s in
the
futu
re
DSF
prog
ram
cur
rent
ly
unde
r disc
ussio
n.3.
5. I
mpr
oved
kno
wle
dge
shar
ing
on su
ppor
t to
loca
l go
vern
men
ts
Publ
icly
acc
essib
le d
ata
base
on
supp
ort t
o lo
cal
gove
rnm
ent d
evel
oped
and
nu
mbe
r of
deve
lopm
ent
foru
ms a
nd h
arm
oniza
tion
activ
ities
faci
litat
ed
In 2
006,
the
Min
istry
of H
ome
Affai
rs c
omm
issio
ned
the
DSF
to c
reat
e a
dono
r map
ping
dat
abas
e (D
MD)
The
pur
pose
of t
he D
MD
is to
tr
ack,
mon
itor,
anal
yze
and
prio
ritize
aid
rend
ered
to In
done
sia b
y th
e in
tern
ation
al d
onor
com
mun
ity, a
nd th
ereb
y se
rve
as a
val
uabl
e pl
anni
ng a
nd m
onito
ring
tool
for t
he g
over
nmen
t and
mem
bers
for t
he
dono
r com
mun
ity. F
or th
e go
vern
men
t and
don
ors a
like,
it is
cle
arly
de
sirab
le to
mai
ntai
n su
ch a
n up
-to-
date
map
of d
onor
-sup
port
ed
activ
ities
, one
that
pro
vide
s com
para
ble
data
on
key
dim
ensio
ns:
matt
ers a
ddre
ssed
; geo
grap
hic
loca
tion;
tool
s and
app
roac
hes u
sed;
na
ture
of a
ssist
ance
- w
heth
er lo
an/g
rant
/TA;
mon
itorin
g fr
amew
orks
; ex
pect
ed re
sults
; and
so o
n. T
he d
atab
ase
deve
lopm
ent h
as p
roce
eded
in
pha
ses.
In p
hase
1, a
pro
toty
pe w
as c
reat
ed. I
n ph
ase
2, th
e de
sign
was
upg
rade
d to
a w
eb-e
nabl
ed d
ynam
ic H
TML
data
base
. Thi
s ver
sion
is no
w a
vaila
ble
in b
oth
Engl
ish a
nd B
ahas
a In
done
sia o
n th
e DS
F w
eb-
site
at h
ttp:
//w
ww
.dsfi
ndon
esia
.org
/app
s/ds
f-dm
/cgi
-bin
/dw
.cgi
.
3Th
e da
taba
se is
wel
l re
ceiv
ed a
nd c
omm
ende
d as
a u
sefu
l too
l for
co
ordi
natio
n an
d m
onito
ring
of d
onor
su
ppor
t to
dece
ntra
lizati
on.
GOI i
s kee
n to
inco
rpor
ate
the
tool
in a
gov
ernm
ent
syst
em fo
r mon
itorin
g an
d re
porti
ng o
n de
velo
pmen
t ass
istan
ce in
de
cent
raliz
ation
. DS
F w
ill su
ppor
t MoH
A to
up
date
and
adm
inist
er th
e DM
D
82
Out
put 3
: Inc
reas
ing
Acco
unta
bilit
yO
bjec
tives
Indi
cato
rsPr
ogre
ssRa
teCo
mm
ent
The
third
pha
se o
f the
acti
vity
is d
esig
ned
to in
stitu
tiona
lize
the
data
base
and
its m
anag
emen
t in
gove
rnm
ent.
A co
nsul
tant
is th
eref
ore
in th
e pr
oces
s of b
eing
bee
n hi
red
in o
rder
to, i
n cl
ose
colla
bora
tion
with
gov
ernm
ent,:
•up
grad
e de
sign
feat
ures
, inc
reas
e an
d re
fine
data
con
tent
, an
d pr
ovid
e te
chni
cal m
aint
enan
ce su
ppor
t;•
tran
sfer
resp
onsib
ility
for u
pdati
ng in
form
ation
onl
ine
to
indi
vidu
al d
onor
age
ncie
s; a
nd•
iden
tify
and
hand
ove
r adm
inist
rato
r rig
hts a
nd
resp
onsib
ilitie
s to
the
“ow
ner”
enti
ty in
MoH
A
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
83
Out
put 4
: Pla
nnin
g an
d Pe
rfor
man
ce M
easu
rem
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
t4.
1. P
rovi
ncia
l and
dist
rict/
mun
icip
al sp
atial
pla
ns
prod
uced
whi
ch a
re in
lin
e w
ith n
ation
al sp
atial
pl
an a
nd in
tegr
ated
with
pr
ovin
cial
and
dist
rict/
mun
icip
al d
evel
opm
ent
plan
s
Prov
inci
al a
nd d
istric
t/m
unic
ipal
spati
al p
lans
co
mpl
eted
and
app
rove
d by
re
spec
tive
parli
amen
ts
ACN
5/2
009
on In
stitu
tion
Build
ing
for t
he In
tegr
ation
of N
ation
al-
Regi
onal
Dev
elop
men
t and
Spa
tial P
lann
ing
appr
oved
. Ini
tial w
ork
was
im
plem
ente
d by
a c
onsu
ltant
bet
wee
n De
cem
ber 2
009
and
Mar
ch
2010
. Pap
er p
repa
red
on: “
Iden
tifyi
ng th
e Co
nnec
tions
bet
wee
n Re
gion
al S
patia
l Pla
ns w
ith R
egio
nal D
evel
opm
ent P
lans
.”Th
is ac
tivity
was
des
igne
d to
supp
ort t
hree
pro
vinc
ial a
nd si
x di
stric
t/ c
ity g
over
nmen
ts to
dra
ft sp
atial
pla
ns. T
hree
pro
vinc
es a
re
clos
e to
fina
lizin
g th
eir p
lans
. In
line
with
evo
lvin
g ne
eds a
nd a
t the
go
vern
men
t’s re
ques
t DSF
will
focu
s mor
e on
the
dist
rict/
city
leve
lA
firm
has
bee
n co
ntra
cted
to d
raft
spati
al p
lans
and
to st
reng
then
th
e na
tiona
l age
ncy
for t
he c
oord
inati
on o
f spa
tial p
lann
ing
(BKP
RN).
The
firm
has
beg
un w
ork
in c
ities
/dist
ricts
in a
ll th
ree
prov
ince
s- W
est
Sum
atra
, Gor
onta
lo a
nd E
ast J
ava.
M
ilest
one
1 (a
) sho
uld
be a
men
ded
to fo
cus o
n di
stric
t/ci
ty le
vel
inst
ead
of p
rovi
ncia
l lev
el a
nd th
ree
dist
rict/
city
pla
ns w
ill b
e su
bmitt
ed
to p
arlia
men
t by
Dece
mbe
r 201
0. M
ilest
one
1 (b
) cap
acity
bui
ldin
g pl
ans w
ill b
e de
velo
ped
for t
arge
ted
dist
rict/
citie
s by
Sept
embe
r 201
0.
ACN
2/2
009
on C
apac
ity B
uild
ing
for R
egio
nal D
evel
opm
ent P
olic
y Fo
rmul
ation
is li
nked
to O
bjec
tive
4.1.
Par
t 1 w
as im
plem
ente
d by
fiv
e co
nsul
tant
s bet
wee
n Se
ptem
ber 2
009
and
July
201
0. T
he m
ain
outp
uts a
re a
n in
put p
aper
for t
he R
PJM
N 2
010-
2014
(for
Boo
k 3
on
Deve
lopm
ent w
ith a
Reg
iona
l Dim
ensio
n) a
nd th
e re
port
: “A
Stud
y of
Re
gion
al D
evel
opm
ent i
n In
done
sia.”
Part
2 o
f thi
s acti
vity
will
dev
elop
isl
and
base
d de
velo
pmen
t str
ateg
ies t
o be
impl
emen
ted
by a
firm
. Pr
ocur
emen
t is u
nder
way
; req
uest
for p
ropo
sals
will
be
issue
d in
July.
3 3
Activ
ities
und
er A
CN 5
/200
9 ar
e de
signe
d to
impr
ove
the
cons
isten
cy b
etw
een
regi
onal
gov
ernm
ent
plan
ning
doc
umen
ts (s
patia
l pl
ans a
nd d
evel
opm
ent
plan
s) a
nd a
lso th
e co
nsist
ency
bet
wee
n sp
atial
pla
ns a
t diff
eren
t le
vels
of g
over
nmen
t. A
key
com
pone
nt o
f the
ac
tivity
is to
dev
elop
the
capa
citie
s of t
he 3
pro
vinc
ial
gove
rnm
ents
and
3 d
istric
t/ci
ty g
over
nmen
ts in
eac
h to
pr
oduc
e sp
atial
pla
ns th
at
are
alig
ned
with
the
natio
nal
spati
al p
lan
and
inte
grat
ed
with
regi
onal
dev
elop
men
t pl
ans.
The
impl
emen
ting
agen
cy w
ill fo
cus o
n pr
ovid
ing
capa
city
bui
ldin
g su
ppor
t to
dist
rict a
nd c
ity
gove
rnm
ents
to d
raft
spati
al
plan
s.
ACN
2/20
09 is
an
addi
tiona
l ac
tivity
requ
este
d by
Ba
ppen
as’ D
irect
orat
e of
Re
gion
al D
evel
opm
ent.
It is
linke
d to
acti
vity
4.1
but
not
lis
ted
in th
e Lo
g Fr
ame.
The
first
par
t of t
he a
ctivi
ty
has p
rodu
ced
a su
bsta
ntial
re
view
pap
er o
n re
gion
al
deve
lopm
ent p
olic
y th
at
draw
s on
less
ons l
earn
ed
from
pas
t exp
erie
nces
and
bu
ilds u
pon
the
RPJM
N fo
r 20
10-2
014
to p
rovi
de k
ey
84
Out
put 4
: Pla
nnin
g an
d Pe
rfor
man
ce M
easu
rem
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
t
An a
dden
dum
to A
CN 2
/200
9 co
vers
inte
r-reg
iona
l coo
pera
tion
and
addr
esse
s iss
ues o
f con
cern
to b
oth
Bapp
enas
(Dire
ctor
ate
of S
peci
al
Regi
ons a
nd L
ess D
evel
oped
Are
as) a
nd M
oHA
(Dire
ctor
ate
for
Deco
ncen
trati
on a
nd C
oope
ratio
n). B
oth
min
istrie
s see
k to
stre
ngth
en
inte
r-reg
iona
l coo
pera
tion
thro
ugh
the
prov
ision
of c
apac
ity b
uild
ing
inte
rven
tions
and
supp
ort t
o im
plem
ent n
ation
al le
gisla
tion.
The
ad
dend
um is
the
resu
lt of
inte
r-dep
artm
enta
l disc
ussio
ns o
n ho
w D
SF
supp
ort c
an b
est a
ddre
ss g
over
nmen
t’s d
evel
opm
ent o
bjec
tive
of
impr
ovin
g se
rvic
e de
liver
y an
d ac
cele
ratin
g ec
onom
ic g
row
th in
bor
der
area
s.
4
inpu
t int
o go
vern
men
t’s
appr
oach
to re
gion
al
deve
lopm
ent p
olic
y.
Bapp
enas
is th
e cl
ient
. The
se
cond
par
t bui
lds u
pon
this
wor
k by
form
ulati
ng
deve
lopm
ent s
trat
egie
s for
th
e m
ajor
isla
nd g
roup
s, w
ith
a fo
cus o
n ea
ster
n In
done
sia.
Impl
emen
tatio
n is
expe
cted
to
com
men
ce in
the
third
qu
arte
r of 2
010.
This
activ
ity h
ighl
ight
s th
e im
port
ance
of c
ross
-m
inist
eria
l coo
pera
tion
in
activ
ity d
evel
opm
ent a
nd
impl
emen
tatio
n, w
hich
is
likel
y to
yie
ld p
ositi
ve
resu
lts in
term
s of g
reat
er
coor
dina
tion
betw
een
rela
ted
inte
r-reg
iona
l co
oper
ation
pro
gram
s.
Impl
emen
tatio
n is
expe
cted
to
com
men
ce in
the
last
qu
arte
r of 2
010.
4.2.
Nat
ural
reso
urce
pla
nnin
g an
d m
anag
emen
t pol
icie
s de
velo
ped
by ta
rget
ed
loca
l go
vern
men
ts
Loca
l gov
ernm
ents
ado
pting
po
licie
s and
syst
ems
for
natu
ral r
esou
rce
plan
ning
an
d m
anag
emen
t pol
icy
ACN
10/
2009
on
Stre
ngth
enin
g Lo
cal G
over
nmen
t Nat
ural
Res
ourc
e M
anag
emen
t Cap
abili
ty w
as a
ppro
ved.
A
firm
has
bee
n co
ntra
cted
to su
ppor
t loc
al g
over
nmen
ts in
Pap
ua
and
Sout
h Ea
st S
ulaw
esi t
o de
velo
p im
prov
ed n
atur
al re
sour
ce
man
agem
ent s
yste
ms.
Pro
cure
men
t of t
hese
serv
ices
has
take
n lo
nger
th
an e
xpec
ted
due
to d
elay
s ass
ocia
ted
with
tech
nica
l pro
blem
s w
ith th
e on
-line
pro
cure
men
t sys
tem
. As a
resu
lt th
e ac
hiev
emen
t of
mile
ston
e 1,
impr
oved
nat
ural
man
agem
ent s
yste
ms d
rafte
d in
4 lo
cal
gove
rnm
ents
, is e
xpec
ted
to b
e m
argi
nally
del
ayed
but
ach
ieve
d by
N
ovem
ber 2
010.
4Th
is ac
tivity
seek
s to
impr
ove
the
way
nat
ural
reso
urce
s ar
e m
anag
ed b
y lo
cal
gove
rnm
ents
. The
cap
acity
to
do
this
type
of w
ork
will
be
deve
lope
d in
loca
l go
vern
men
ts in
2 p
ilot t
arge
t pr
ovin
ces a
nd is
inte
nded
to
assis
t loc
al g
over
nmen
ts to
id
entif
y th
e po
tenti
al
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
85
Out
put 4
: Pla
nnin
g an
d Pe
rfor
man
ce M
easu
rem
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
t
An a
dden
dum
to A
CN 2
/200
9 co
vers
inte
r-reg
iona
l coo
pera
tion
and
addr
esse
s iss
ues o
f con
cern
to b
oth
Bapp
enas
(Dire
ctor
ate
of S
peci
al
Regi
ons a
nd L
ess D
evel
oped
Are
as) a
nd M
oHA
(Dire
ctor
ate
for
Deco
ncen
trati
on a
nd C
oope
ratio
n). B
oth
min
istrie
s see
k to
stre
ngth
en
inte
r-reg
iona
l coo
pera
tion
thro
ugh
the
prov
ision
of c
apac
ity b
uild
ing
inte
rven
tions
and
supp
ort t
o im
plem
ent n
ation
al le
gisla
tion.
The
ad
dend
um is
the
resu
lt of
inte
r-dep
artm
enta
l disc
ussio
ns o
n ho
w D
SF
supp
ort c
an b
est a
ddre
ss g
over
nmen
t’s d
evel
opm
ent o
bjec
tive
of
impr
ovin
g se
rvic
e de
liver
y an
d ac
cele
ratin
g ec
onom
ic g
row
th in
bor
der
area
s.
4
inpu
t int
o go
vern
men
t’s
appr
oach
to re
gion
al
deve
lopm
ent p
olic
y.
Bapp
enas
is th
e cl
ient
. The
se
cond
par
t bui
lds u
pon
this
wor
k by
form
ulati
ng
deve
lopm
ent s
trat
egie
s for
th
e m
ajor
isla
nd g
roup
s, w
ith
a fo
cus o
n ea
ster
n In
done
sia.
Impl
emen
tatio
n is
expe
cted
to
com
men
ce in
the
third
qu
arte
r of 2
010.
This
activ
ity h
ighl
ight
s th
e im
port
ance
of c
ross
-m
inist
eria
l coo
pera
tion
in
activ
ity d
evel
opm
ent a
nd
impl
emen
tatio
n, w
hich
is
likel
y to
yie
ld p
ositi
ve
resu
lts in
term
s of g
reat
er
coor
dina
tion
betw
een
rela
ted
inte
r-reg
iona
l co
oper
ation
pro
gram
s.
Impl
emen
tatio
n is
expe
cted
to
com
men
ce in
the
last
qu
arte
r of 2
010.
4.2.
Nat
ural
reso
urce
pla
nnin
g an
d m
anag
emen
t pol
icie
s de
velo
ped
by ta
rget
ed
loca
l go
vern
men
ts
Loca
l gov
ernm
ents
ado
pting
po
licie
s and
syst
ems
for
natu
ral r
esou
rce
plan
ning
an
d m
anag
emen
t pol
icy
ACN
10/
2009
on
Stre
ngth
enin
g Lo
cal G
over
nmen
t Nat
ural
Res
ourc
e M
anag
emen
t Cap
abili
ty w
as a
ppro
ved.
A
firm
has
bee
n co
ntra
cted
to su
ppor
t loc
al g
over
nmen
ts in
Pap
ua
and
Sout
h Ea
st S
ulaw
esi t
o de
velo
p im
prov
ed n
atur
al re
sour
ce
man
agem
ent s
yste
ms.
Pro
cure
men
t of t
hese
serv
ices
has
take
n lo
nger
th
an e
xpec
ted
due
to d
elay
s ass
ocia
ted
with
tech
nica
l pro
blem
s w
ith th
e on
-line
pro
cure
men
t sys
tem
. As a
resu
lt th
e ac
hiev
emen
t of
mile
ston
e 1,
impr
oved
nat
ural
man
agem
ent s
yste
ms d
rafte
d in
4 lo
cal
gove
rnm
ents
, is e
xpec
ted
to b
e m
argi
nally
del
ayed
but
ach
ieve
d by
N
ovem
ber 2
010.
4Th
is ac
tivity
seek
s to
impr
ove
the
way
nat
ural
reso
urce
s ar
e m
anag
ed b
y lo
cal
gove
rnm
ents
. The
cap
acity
to
do
this
type
of w
ork
will
be
deve
lope
d in
loca
l go
vern
men
ts in
2 p
ilot t
arge
t pr
ovin
ces a
nd is
inte
nded
to
assis
t loc
al g
over
nmen
ts to
id
entif
y th
e po
tenti
al
Out
put 4
: Pla
nnin
g an
d Pe
rfor
man
ce M
easu
rem
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
t
An a
dden
dum
to A
CN 1
0/20
09 o
n th
e es
tabl
ishm
ent o
f a fa
cilit
y to
su
ppor
t loc
al e
cono
mic
dev
elop
men
t was
app
rove
d in
Mar
ch 2
010.
Th
e cl
ient
is th
e Di
rect
orat
e of
Urb
an a
nd R
ural
Affa
irs (B
appe
nas)
. Pr
ocur
emen
t of s
ervi
ces i
s und
erw
ay. R
eque
st fo
r pro
posa
ls w
as is
sued
in
July
201
0 an
d it
is ex
pect
ed th
at b
y De
cem
ber 2
010
the
conc
ept a
nd
impl
emen
tatio
n pl
an fo
r the
faci
lity
will
be
final
ised.
4
for r
esou
rce
deve
lopm
ent
in a
sust
aina
ble
man
ner.
Less
ons w
ill b
e de
rived
fr
om th
ese
pilo
ts a
nd m
ade
avai
labl
e on
a w
ider
scal
e.
Key
reso
urce
s with
in th
e sc
ope
of th
is ac
tivity
incl
ude
land
for p
lant
ation
s, m
arin
e re
sour
ces f
or fi
sher
ies,
and
re
sour
ces w
ith to
urism
de
velo
pmen
t pot
entia
l.Th
is ac
tivity
has
bee
n de
signe
d in
col
labo
ratio
n w
ith B
appe
nas a
nd
GTZ’
s Reg
iona
l Eco
nom
ic
Deve
lopm
ent p
rogr
am (R
ED).
Impl
emen
tatio
n is
expe
cted
to
star
t tow
ards
the
end
of
the
third
qua
rter
of 2
010.
4.
3. L
ocal
gov
ernm
ents
in
bord
er re
gion
s hav
e
impr
oved
cap
acity
in
econ
omic
dev
elop
men
t pl
anni
ng
Actio
n pl
ans f
or im
prov
ed
econ
omic
dev
elop
men
t pl
anni
ng c
ompl
eted
by
se
lect
ed lo
cal g
over
nmen
ts
in b
orde
r are
as
ACN
8/2
009
on In
stitu
tion
Build
ing
for t
he A
ccel
erat
ed D
evel
opm
ent
of B
orde
r Are
as a
ppro
ved.
Thi
s ACN
cov
ers a
ctivi
ties r
elat
ed to
bor
der
area
dev
elop
men
t, pr
ioriti
zed
by b
oth
Bapp
enas
and
MoH
A. T
his
obje
ctive
is li
nked
to a
ctivi
ty 1
.4 o
n se
rvic
e de
liver
y in
bor
der r
egio
ns.
The
activ
ities
are
clo
sely
inte
r-rel
ated
and
bot
h in
volv
e Ba
ppen
as,
MoH
A an
d th
e M
inist
ry o
f Disa
dvan
tage
d Re
gion
s.DS
F co
ntra
cted
a c
onsu
ltant
to p
rovi
de in
put f
or th
e RP
JMN
201
0-20
14
(Boo
k 2
on S
tren
gthe
ning
the
Syne
rgie
s bet
wee
n De
velo
pmen
t Sec
tors
; Ch
apte
r IX
on R
egio
ns a
nd S
patia
l Asp
ects
). A
pape
r on
suita
ble
insti
tutio
nal a
rran
gem
ents
for t
he n
ation
al b
orde
r are
a ag
ency
(BN
PP)
was
pre
sent
ed a
t an
inte
r-min
ister
ial f
orum
in M
arch
201
0. A
firm
ha
s bee
n co
ntra
cted
from
June
201
0 to
Sep
tem
ber 2
011
to su
ppor
t Ba
ppen
as d
raft
a na
tiona
l mas
ter p
lan
and
to p
ilot a
ctivi
ties i
n se
vera
l ke
y bo
rder
are
as. A
ctivi
ties t
o re
ach
mile
ston
e 1
are
in p
rogr
ess a
nd
the
mile
ston
e w
ill b
e ac
hiev
ed b
y Se
ptem
ber 2
010.
3Th
roug
h th
is ac
tivity
, MoH
A an
d Ba
ppen
as a
re se
ekin
g to
st
reng
then
cro
ss-m
inist
eria
l in
stitu
tions
and
to im
prov
e th
e po
licy
fram
ewor
k fo
r th
e de
velo
pmen
t of b
orde
r re
gion
s. T
he im
plem
entin
g ag
ency
is a
lso p
rovi
ding
ca
paci
ty su
ppor
t in
3 pr
ovin
ces:
Wes
t Kal
iman
tan,
Ea
st K
alim
anta
n an
d Ri
au.
86
Out
put 4
: Pla
nnin
g an
d Pe
rfor
man
ce M
easu
rem
ent
Obj
ectiv
esIn
dica
tors
Prog
ress
Rate
Com
men
t4.
4. I
mpr
oved
qua
lity
and
avai
labi
lity
of su
b-na
tiona
l st
atisti
cs fo
r loc
al d
ecisi
on
mak
ing
Stud
y of
sect
oral
dat
a sy
stem
s at c
entr
al a
nd
regi
onal
leve
l with
pol
icy
reco
mm
enda
tions
ado
pted
by
BPS
(Cen
tral
Sta
tistic
s Ag
ency
)and
par
ticip
ating
lo
cal g
over
nmen
ts
“Im
prov
ing
the
Qua
lity
and
Avai
labi
lity
of S
ub-N
ation
al S
tatis
tics f
or
Loca
l Dec
ision
Mak
ing
& S
trea
mlin
ing
the
Flow
of S
tatis
tics b
etw
een
Regi
ons a
nd th
e Ce
ntre
” st
udy
com
plet
ed in
supp
ort o
f BPS
and
loca
l go
vern
men
ts, J
anua
ry 2
009.
Nati
onal
and
loca
l lev
el se
ctor
al d
ata
syst
em a
naly
sed
for 1
9 go
vern
men
ts (6
pro
vinc
es, 4
citi
es, 9
dist
ricts
), Ja
nuar
y 20
09.
Asse
ssm
ent o
f hea
lth d
ata
for 1
1 di
stric
ts/m
unic
ipal
ities
and
as
sess
men
t of e
duca
tion
data
for 1
2 di
stric
ts/m
unic
ipal
ities
com
plet
ed
in Ja
nuar
y 20
09.
Fina
l rep
ort w
ith 2
1 po
licy
reco
mm
enda
tions
gro
uped
in th
e ca
tego
ries
of:
•sy
stem
des
ign,
setu
p an
d m
aint
enan
ce;
•pr
omoti
on o
f dat
a qu
ality
; app
licati
on o
f inf
orm
ation
and
co
mm
unic
ation
tech
nolo
gy;
•hu
man
, phy
sical
and
fina
ncia
l res
ourc
es; s
tren
gthe
ning
of d
ata
shar
ing,
ana
lysis
, and
util
izatio
n; a
nd
•le
gisla
tion
and
regu
latio
n, M
ay 2
009.
BP
S is
usin
g th
e re
sults
of t
his a
ctivi
ty in
neg
otiati
ons w
ith th
e Ba
nk
conc
erni
ng a
nati
onal
stati
stics
cap
acity
bui
ldin
g pr
ogra
m (S
TATC
AP)
loan
.
1Th
is pr
ojec
t is c
ompl
ete
and
has m
et it
s obj
ectiv
es.
The
findi
ngs f
rom
this
proj
ect a
re re
leva
nt to
man
y ot
her D
SF p
roje
cts,
sinc
e th
ese
rely
on
the
avai
labi
lity
of g
ood
qual
ity su
b-na
tiona
l se
ctor
al d
ata.
A fo
llow
-on
to th
is pr
ojec
t cou
ld in
clud
e ex
tens
ion
of th
e w
eb-b
ased
sy
stem
for t
rans
mitti
ng d
ata
from
tech
nica
l age
ncie
s at
the
sub-
natio
nal l
evel
to
rele
vant
min
istrie
s in
Jaka
rta.
Cap
acity
bui
ldin
g re
com
men
ded
for l
ocal
go
vern
men
ts in
rela
tion
to u
se o
f inf
orm
ation
te
chno
logy
.
ANNEX C: MONITORING FRAMEwORK
ANNUAL REPORT 2010
87
ANNEX D: LIST OF ACRONYMS, AbbREVIATIONS, AND TRANSLATIONS
ACN: Activity Concept NoteADB: Asian Development BankAIDS: Acquired Immune Deficiency SyndromeAKLN: Administrasi Kerjasama Luar Negeri (Bureau of Foreign Cooperation)AMSD: Altenative Mechanisms of Service DeliveryAusAID: Australian Agency for International Development Badiklat: Badan Pendidikan dan Pelatihan (Government Education and Training Centre)Bappenas: Badan Perencanaan dan Pembangunan Nasional (National Development Planning Agency)BKN: Badan Kepegawaian Negara (National Civil Service Agency)BKPRN: Badan Koordinasi Penataan Ruang Nasional (National Agency for the Coordination of Spatial Planning)BNPP: Badan Nasional Pengelola Perbatasan (National Agency for Border Management) BPK: Badan Pemeriksa Keuangan (Audit Board of the Republic of Indonesia)BKN: Badan Kepegawaian Negara (National Civil Service Agency)CBT: Competency-Based TrainingCIDA: Canadian International Development AgencyCSO: Civil Society OrganizationDAK: Dana Alokasi Khusus (Special Allocation Fund)DAU: Dana Alokasi Umum (General Allocation Fund)DCG: Donor Consultative GroupDepdagri: Departemen Dalam Negeri (Ministry of Home Affairs)DET: Decentralization Education and Training DfID: Department for International DevelopmentDG: Director GeneralDiklat: Pendidikan dan Pelatihan (Education and Training)DIPA: Daftar Isian Pelaksanaan Anggaran (Budget Implementation Document / Issuance of spending authority)Ditjen Bangda: Direktorat Jenderal Pembangunan Daerah (Directorate General of Regional Development)DI. Yogyakarta: Daerah Istimewa Yogyakarta (Yogyakarta Special Region)DJPK: Direktorat Jenderal Perimbangan Keuangan (Directorate General of Fiscal Balance)DKI: Daerah Khusus Ibukota (use in DKI Jakarta, Special Region of the Capital of Jakarta)DMD: Donor Mapping DatabaseDOHP: Daerah Otonom Hasil Pemekaran (Newly Autonomous Regions)DPRD: Dewan Perwakilan Rakyat Daerah (Provincial Legislative Council)DRSP: Democratic Reform Support ProgramDSF: Decentralization Support FacilityEPIKD: Evaluasi Pendanaan dan Informasi Keuangan Daerah (Directorate for Funding Evaluation and Regional Financial Information)EPPD: Evaluasi Penyelenggaraan Pemerintahan Daerah (Guidelines for Regional Government Evaluation)FA: Focal AreaFAA: Fiscal Agency AgreementFMA: Financial Management AssessmentFY: Financial Year GA: Grant Agreement
88
GDFD: Grand Design of Fiscal DecentralizationGDP: Gross Domestic ProductGFR: Grant Funding RequestGOI Government of Indonesia GTZ: Gesellschaft für Technische ZusammenarbeitHIV: Human Immunodeficiency Virus HTML: Hyper Text Markup LanguageIELTS: International English Language Testing SystemIMD: International Institute for Management DevelopmentKemenpan: Kementerian Pendayagunaan Aparatur Negara (State Ministry of Administrative Reform) KKDT: Kawasan Khusus dan Daerah Tertinggal (Directorate of Special Regions and Less Developed Areas)LAN: Lembaga Administrasi Negara (National Institute of Public Administration)LGCG: Local Government Consultative GroupMC: Management CommitteeMG: Management GroupMoF: Ministry of FinanceMoHA: Ministry of Home AffairsMOU: Memorandum of UnderstandingMSIB-LPSP: Management Strengthening and Institution Building for Local Public Service ProvidersMSS: Minimum Service StandardNGOs: Non Governmental OrganizationsNRM: Natural Resource ManagementNSPK: Norma, Standar, Prosedur, dan Kriteria (Norms, Standards, Procedures and Criteria)OSS: One Stop ServicesOtda: Otonomi Daerah (BAPPENAS: Directorate of Regional Autonomy; MoHA: Directorate General of Regional Autonomy)Otsus: Otonomi Khusus (Special Autonomy)PAN: Pendayagunaan Aparatur Negara dan Reformasi Birokrasi (State Ministry of Administrative Reform)PDOK: Penataan Daerah dan Otonomi Khusus (Directorate of Regions Management and Special Autonomy) PEA: Public Expenditure AnalysisPerda: Peraturan Daerah (Local Regulation)Perdirjen: Peraturan Direktur Jenderal (Director General Regulation)Perkotdes: Perkotaan dan Perdesaan (Directorate General of Urban and Rural Development)Permendagri: Peraturan Menteri Dalam Negeri (Ministry of Home Affairs Regulation)PGs: Provincial GovernmentsPGSP: Provincial Governance Strengthening ProgramPMK: Peraturan Menteri Keuangan (Ministry of Finance Regulation)PUM: Pemerintahan Umum (Directorate General for General Governance)RAB: Rencana Anggaran Biaya (Government Budget Estimation)RPJM: Rencana Pembangunan Jangka Menengah (Medium-Term Development Plan)RPJMN: Rencana Pembangunan Jangka Menengah Nasional (National Medium-Term Development Plan)SC: Steering CommitteeSIKD: Sistem Informasi Keuangan Daerah (Regional Financial Information System)
ANNEX D: LIST OF ACRONYMS, AbbREVIATIONS, AND TRANSLATIONS
ANNUAL REPORT 2010
89
STC: Short-Term ConsultantTAF: The Asia FoundationTF: Trust FundToR: Terms of ReferenceTOT: Training of TrainersUK: United Kingdom UNDP: United Nations Development ProgrammeUPD: Urusan Pemerintahan Daerah (Directorate of Local Government Affairs) USAID: United States Agency for International DevelopmentUSD: United States Dollar WB: World Bank
ADB
ADB