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DSF QUARTERLY REPORT SEPTEMBER 2010

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DSF Quarterly Report September 2010

Table of Contents

Table of Contents ................................................................................................................ 1 Introduction ......................................................................................................................... 1 DFID Review of the DSF ................................................................................................... 1 Bases of Work Planning...................................................................................................... 2 Programme Implementation................................................................................................ 2 Decentralization Education and Training Scholarships. ................................................. 2 Training on ‗Intergovernmental Fiscal Relations and Local Financial Management‘: .. 3 Monitoring and Evaluation of Special Allocation Funds (DAK). .................................. 3 LG Borrowing/Municipal Bonds. ................................................................................... 3 Regional Financial Information Systems (SIKD). .......................................................... 4 Grand Design for Fiscal Decentralization (GDFD). ....................................................... 4 Capacity Building for Minimum Service Standards (MSS) Costing and Implementation. .............................................................................................................. 5 Spatial Planning. ............................................................................................................. 5 Border Area Development. ............................................................................................. 5 Government Training and Education Center Development: Introducing CompetencyBased Standards for Public Service Delivery. ................................................................ 5 The Future of the DSF ........................................................................................................ 6 DSF Engagement with Local Government ......................................................................... 6 Monitoring Framework ....................................................................................................... 6 Financial Status Snapshot ................................................................................................... 6 DSF Executive .................................................................................................................... 7 Risk Management ............................................................................................................... 7 Annex A: Monitoring Framework ....................................................................................... 9 Annex B: Financial Report ............................................................................................... 25 Annex C: List of Abbreviations, Acronyms, and Translations .......................................... 29

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DSF Quarterly Report September 2010

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DSF Quarterly Report September 2010

Decentralization Support Facility Quarterly Report (For the quarter ending 30 September 2010)

Introduction 1. In accordance with the DSF operations manual, this report is submitted within 30 days of the end of the third quarter of 2010. 2. The report summarises the outcomes of the DFID review of the DSF that was conducted during the reporting period. It also discusses briefly the bases of detailed work planning that is underway, which takes into account confirmation by the principal financial donor of the finality of the closing date for the DSF of September 2011 (for activity implementation), a set funding ceiling, and speed of disbursement estimates. 3. Discussion of activity implementation progress takes place within the body of the report and (in greater detail) in the monitoring framework in Annex A. 4. A summary of total projected disbursements (programming and operations) against cash held and confirmed transfers is presented in Table 1 in a separate section of the main body of the report below, and a full financial report is set out in Annex B.

DFID Review of the DSF 5. In late August/September, a review of the DSF programme was conducted on behalf of the DSF‘s principal financial donor (DFID) by one independent national consultant and an international (DFID) senior governance adviser. The reviewers interviewed officials from Ministry of Home Affairs (MoHA), Bappenas, Ministry of Finance (MoF), and a number of local governments; DSF Executive and World Bank management and staff; and representatives of a number of donor and implementing agencies. The reviewers also read DSF progress reports and programming documents. 6. The overall rating of the programme by the reviewers was a ‗3‘ - with strong positive qualifications.1 The review found that two of the main DSF milestones are likely to achieve most of their objectives by September 2011, and that two will have a moderate chance of doing so. 7. Based on the review, DFID has confirmed that it will honour the agreed closing date for the DSF programme of 30 September 2011 (for activity implementation) and 31 March 2012 (for payments). It is likely that a letter confirming closure of the DSF in September 2011 and setting a funding ceiling based on the amount and timing of the final financial transfer will be sent by DFID to relevant authorities in the Government of Indonesia during the first half of October.

1

In DFID terms, a rating of ‗3‘connotes the likelihood that programme objectives will be partly achieved by the closing date.

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DSF Quarterly Report September 2010

8. The DSF review recommended that a work plan be drafted through to September 2011 that takes account of realistic disbursement possibilities and the necessity to ensure good quality implementation in the time remaining. 9. Initial discussions with government on the work plan and associated matters were held on 28 September 2010. Such discussions are on-going. 10.

The bases of work planning are discussed briefly in the next section.

Bases of Work Planning 11. As mentioned above, work planning will accommodate speed of disbursement estimates and confirmed closing date constraints and will be designed to optimise good quality in activity implementation. A draft work plan is under discussion with counterpart government directorates. 12. Among other things, activity progress will depend greatly on institutional absorptive capacity, mainly in terms of processing times associated with different forms of procurement and modes of execution (recipient or Bank). Judgements will need to be made about the pace at which different aspects of procurement and associated processes within the World Bank (including the DSF Executive) and within government might proceed. 13. It should be noted that the time taken for a particular form of procurement under the same mode of execution can vary considerably. For example, World Bank experience suggests that, under (government) recipient-execution, procurement of a firm can take up to two years and is rarely less than a year; and that procurement of a firm under World Bank execution can take between 4 months and a year. Likewise, the times required for different internal GoI processes for recipient-execution - which include grant registration, the establishment of a special account, and government budget (DIPA) processing – can vary significantly between agencies and within the same agencies over time. 14. In this context - which is characterised by a large number and variety of variables, high degrees of variation within particular variables, and several independent loci of control - disbursement estimation and its management are less than straightforward. 15. Work plan adjustments may involve one or more of the following: changes to the mode of execution, from recipient to Bank; re-packaging of scopes of work in order to identify discrete steps or phases; and changes to modes of implementation (firms or consultants).

Programme Implementation 16. A detailed up-date of programme implementation during the quarter is set out in Annex A. Noteworthy features of such implementation are discussed briefly below. 17. Decentralization Education and Training Scholarships. In September 2010, twenty-four2 scholars left for the UK to study for master-level degrees at the following 2

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The original quota was 26 scholars. Two scholars withdrew from the programme.


DSF Quarterly Report September 2010

universities: University of Birmingham, University of Bradford, University of Bristol, University of Leeds, University of Newcastle, University of Southampton, and Birkbeck College, University of London. A pre-departure launching ceremony for the programme was held on September 7, 2010, which was attended by, among others, the Ambassador of the United Kingdom of Great Britain and Northern Ireland to the Republic of Indonesia (Mr. Martin Hatfull); Pak Heru Subiyantoro, Secretary General of Fiscal Balance, Ministry of Finance; Pak Muh. Marwan, Head of Education and Training Center, Ministry of Home Affairs; other government officials; and representatives of DFID and the British Council. 18. Training on ‘Intergovernmental Fiscal Relations and Local Financial Management’: In July 2010, 12 representatives from MoF, MoHA and Bappenas attended this course, which was offered by the Central European University in Budapest, Hungary. The course was designed to enhance participants‘ understanding of public sector resource management reform by analyzing mechanisms for the transfer of resources among governments and identifying ways to address questions surrounding regional disparities and local resource mobilization. Participants were particularly impressed with the wide variety of country experiences on intergovernmental transfer policy to which they were exposed; and with learning on local taxation and charge models and local financing policies. The MoF plans to organise a number of focus group discussions so that knowledge and insights gained from the course can be disseminated within the organisation. 19. Monitoring and Evaluation of Special Allocation Funds (DAK). With a view to providing for better-informed policy on DAK, the purpose of this activity is to pilot the implementation of DAK monitoring and evaluation systems, as set out by the ‗joint circulator letter‘ on the subject. A workshop launch of the activity was held in September 2010 in Jakarta that was attended by representatives from more than 60 local governments from Jambi, Central Kalimantan, West Sulawesi, and North Maluku provinces. Arifin Rudiyanto (DG Regional Autonomy, Bappenas) and Mulya Manik (DG Regional Development, MoHA) gave an overview of the monitoring and evaluation system for specific purpose grants (DAK); commented on reporting issues from the regions to the centre (that is, to MoF, MoHA, Bappenas and related line ministries); and emphasised the importance of this to DAK policy formulation and to GoI planning for system improvement. Discussion followed of the difficulties involved from the points of view of local governments. 20. LG Borrowing/Municipal Bonds. During the reporting period, a workshop was held to revise local regulations that set preconditions for proceeding to the domestic capital market for a municipal bond issue and for the establishment of an implementation unit for the management of obligations and reporting requirements related to bonds. In the meeting, a number of technical issues were discussed, including: consistency of terminology used; investor criteria; prospectus preparation; bond registry and subregistry; secondary markets for bond sales; reporting arrangements; and bond minimum values. Discussants included representatives from the Directorate General of Debt Management and the Capital Markets Agency of MoF. These regulations will serve as references for other regions that intend to issue municipal bonds. DSF consultants also helped to prepare ToR and budgets on municipal bond issuance for FY 2011. Good

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DSF Quarterly Report September 2010

progress is being made with the revision of the regulation on local borrowing (PP54/2005). In particular, MoF, Bappenas and Ministry of Law and Human Rights have reached agreement on: the definition of ‗revenue generating‘ terminology; type and sources of local borrowing; borrowing requirements; and administrative issues on local borrowing. It is expected that the remaining changes to the regulation will be completed and agreed by the end of 2010 or early 2011. 21. Regional Financial Information Systems (SIKD). As of September 2010, a total of 26 districts are submitting electronic data to the MoF national SIKD. This has fulfilled Milestone 2(iii) of Output 2.1 of the log frame, which states that: ‗5% of local governments submit data electronically by December 2010‘. Steps are being taken to ensure the sustainability of the system, including the issuance of a Ministry of Finance decree, which should be finalised by the end of 2010. Coordination with the Audit and Development Supervising Agency (Badan Pengawasan dan Keuangan Pembangunan – BPKP) on the preparation of a ‗patch‘ to be installed in computerized regional finance information systems at the regions is currently underway (Note: BPKP has developed and maintains a computerised regional finance information system that is currently being utilised by around half of the regions in Indonesia). In addition, DSF has started to lay the groundwork for the establishment of a similar database at DG Regional Finance, MoHA. 22. Grand Design for Fiscal Decentralization (GDFD). An action plan has been produced for realising four important objectives in the policy matrix, namely: (1) a transfer system that minimises vertical and horizontal fiscal imbalances; (2) efficient and effective regional revenue and financing; (3) efficient and effective cycle and processes for regional spending; and (4) harmonisation of national and regional spending. Part of the action plan will contribute to revisions of Law 33/2004; and could feed in to the National Action Plan for Fiscal Decentralization currently under preparation by Bappenas and MoF. With respect to the revision of Law 33/2004, most of the proposed amendments are based on the GDFD scheme. Among other things, this relates to: the refinement of the general allocation funds (DAU) allocation and process; revision of allocations and management of DAK; regional borrowing (including from the general public in terms of municipal bonds); regional grants; and the strengthening of the governor‘s role in intergovernmental transfers. It is worth noting that the proposed changes have been informed by discussion with the team (at MoHA) in charge of drafting revisions of Law 32/2004 on regional administration, which should be helpful to the alignment of the two laws. 23. A report has been submitted for review that addresses issues connected with intergovernmental transfers, particularly the analysis of DAU, DAK, and revenue sharing (DBH). The report analyses the development of each of the fiscal transfer instruments and provides recommendations on how to improve the utilisation of these funds in the future. Initial findings show that between 2001 and 2010 the DAU had neither improved nor worsened regional per-capita income disparities. It was also found that the current formulation of the DAU is not an effective means for estimating the fiscal needs of the regions. Moreover, the formula appears to incorporate two perverse incentives: one that encourages the proliferation of districts (pemekaran); and a second that supports regional inclinations to increase the numbers of civil servants. The report recommends an alternative DAU formula that addresses these shortcomings, and suggests how the

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formula could be implemented. Simulations using the new formula have been done and the results will be included in the final draft of the report. 24. Capacity Building for Minimum Service Standards (MSS) Costing and Implementation. Regulations have been issued pertaining to MSS in health, education, environment, public housing, social, general public affairs, women‘s empowerment, and family planning (BKKPN). The DSF has helped the Ministry of Health to develop an MSS costing manual and electronic costing system. Testing of the electronic costing system for health in Kota Yogyakarta is underway. DSF is also helping the State Ministry of Environment to develop an electronic costing system for environment MSS, which is being done in parallel to the finalization of the costing manual. BKKBN and the Ministry of Women‘s Empowerment have issued their costing manuals and the Ministry of Public Housing is finalising theirs. The DSF Executive is in the process of compiling all regulations pertaining to MSS. 25. Spatial Planning. Work (that began in May 2010) continues on improving the alignment of national and regional spatial planning and the compatibility of regional spatial plans with regional development plans. In the third quarter of 2010, focus group discussions were held in all three pilot provinces - West Sumatra, East Java and Gorontalo. These events involved provincial government officials and officials from one district and one city government in each province. In the past quarter, the activity has: (1) compiled an inventory of all relevant regional documents - medium-term development plans, annual work plans, spatial plans, sector plans and local regulations; (2) documented strategic issues and challenges in each regional government; (3) made an initial assessment of planning integration and alignment issues; and (4) conducted a training needs analysis in each pilot regional government and developed training modules based on this. 26. Border Area Development. In June 2010, DSF commenced its support to Bappenas and the National Agency for Border Management (BNPP) in relation to (master) planning for the development of border areas. In the past quarter, among other things, the team has: (1) developed a survey instrument for assessing regional governments' own border area management agencies; (2) drawn-up an outline for the master plan; and (3) produced a framework for the compilation of border area profile data. A draft national master plan should be completed by the end of the next quarter. 27. Government Training and Education Centre Development: Introducing Competency-Based Standards for Public Service Delivery. This activity supports government‘s provision of competency-based education and training for improved public service delivery to MoHA and local government officials. The activity is aligned with the President's national bureaucracy reform agenda, which among other things aims to create a competency and performance-based human resource management system. This quarter, the MoHA education and training center (Diklat), along with a team of competency-based standard, human resource development specialists, worked on the strategic framework for competency-based standards and training. Workshops for this purpose - involving representatives from MoHA, BKN (National Civil Service Agency), BNSP (National Professional Certification Agency), Kemenpan (Ministry of Administrative Reform), sectoral ministries, and local governments – were held in August-September 2010. Three outputs have been produced so far: (1) a draft ministerial regulation on the strategic

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framework for local government competency standards; (2) a draft strategic framework that includes an overview of the background and issues related to local government competencies, policy directions, steps for developing standards, operationalisation of standards, and a road map for rolling out competency-based standards in various sectors with local governments; and (3) a draft plan for the standardisation of competency-based standards for population administration and civil registration (the pilot sector included in the DSF support for development of competency-based training). Also in this quarter, Diklat conducted training workshops on assessment, verification, and certification of competency-based standards for various units within MoHA (including the Directorate General for Population Administration, Directorate General for Regional Autonomy, Personnel Bureau, Organizational Bureau, Legal Bureau, Training and Education Centre), BKN, BNSP, Kemenpan, and local governments – in total, some 26 representatives from central government and 24 representatives from local governments (50 total).

The Future of the DSF 28. Further discussions between government members of the DSF MC and the DSF Executive concerning the possible character of a post-September 2011 DSF work programme were held on 28 September 2010. It is likely that during the final quarter of 2010 there will be technical team and higher-level discussions within government about the possibilities and, subsequently, between government and donor members of the DSF. 29. If the outcome of the latter is positive, then design work will need to be done on fleshing-out a new programme and thinking through, and making detailed proposals concerning, funding and institutional and transition arrangements for the DSF.

DSF Engagement with Local Government 30. The DSF Local Government Consultative Group was launched formally by government in August. The general tenor of discussion at the launch was very constructive, open and pragmatic, revealing a genuine interest on the part of all concerned to establish a body that does meaningful and important work in the interests of improved service delivery to citizens. 31. This is an important development for the DSF, and for government, as it establishes a formal two-way channel of communication between central and local government on decentralization. It has considerable potential for making a significant contribution to the development and implementation of a post-September 2011 DSF work programme.

Monitoring Framework 32. Annex A summarises progress made to date according to the agreed monitoring framework.

Financial Status Snapshot 33.

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A detailed financial report is set out in Annex B.


DSF Quarterly Report September 2010

34. Table 1 below sets out the cash position of the DSF as of 30 September 2010 and total projected disbursements (programme and operations) to March 2012, the final date for programme payments. 35. It is evident from Table 1 that the DSF will have sufficient funds to cover its projected disbursements through to the confirmed closing date for activities of 30 September 2011 and the final date for programme payments of March 2012. Table 1: Snapshot of Financial Status Funds pledged Funds received Investment income Other receipts Total income Disbursements

(USD) 44,672,489 29,000,052 1,463,009 24,753 30,487,814 19,815,690

Total cash held (including 1.87 million of commitments)

10,672,124

Additional funds to be transferred (November 2010)

1,000,000

Funding ceiling

11,672,124

Total projected disbursements (to March 2012)3 Balance

11,615,525 56,599

DSF Executive 36. The confirmation of the closure of the DSF in its current institutional location in September 2011 (for activities) and March 2012 (for wind-up and payments) and the intention to manage staffing levels (partly) through natural attrition were explained to all staff of the DSF Executive in late September 2010. The latter means that staff who find alternative employment and choose to resign from their positions may not be replaced. Any staff reductions are likely to be gradual and are not expected to affect adversely programme progress through to closure. All steps will be taken to optimise programme quality, including where necessary short-term appointments to assist with implementation supervision for particularly demanding activities and/or reallocation of responsibilities among staff.

Risk Management 37. The main risks associated with closure of the Facility have to do, first, with the need to accelerate speed of disbursement4 in the time remaining; and second, under these conditions, with the heightened challenges to maintaining implementation quality control. In order to mitigate these risks, and in addition to normal quality control measures, 3

Includes all programming and overhead costs (DSF Executive staff and office, and some operations costs). Activities must end by 30 September 2011, but a certain amount of overhead will be required during the (financial) wind-up period, October 2011 – March 2012. 4 Historical levels of disbursement have been depressed by the extent of pre-implementation preparatory work that has had to be done over the last 18 months - in terms of programme and activity design and approval; and establishing necessary and sufficient conditions for different forms of execution.

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DSF Quarterly Report September 2010

detailed work and disbursement plans will form the basis of DSF Executive bi-weekly internal portfolio review meetings and the basis of regular discussion with relevant stakeholders; and, where it is warranted, additional short-term technical specialist and /or monitoring support will be given to the supervision of the implementation of activities.

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DSF Quarterly Report September 2010

Annex A: Monitoring Framework Project Name

Decentralization Support Facility (DSF) Phase 2

Goals

Indicators

Improved socio-economic development and reduced poverty

Indonesia's Human Development Index (HDI)

Purpose Equitable, accountable and high quality public services provided by national and local governments

Progress

Rating

Comment

Indicators

Progress

Rating

Comment

Local government expenditure and local government performance in basic public service delivery

Further contributions to the development and dissemination and implementation of legislation and procedures governing functional assignments; minimum service standards including costing; institution and capacity building of service providers; and identification and diffusion of good practices.

2*

* Target 1 – Likely to be completely achieved. The outputs/ purpose are well on the away to completion (or completed). 2 – Likely to be largely achieved. There is good progress towards purpose completion and most outputs are likely to be achieved, particularly the most important ones. 3 – Likely to be partly achieved. Only partial achievement of the purpose is likely and/or achievement of some outputs. 4 – Only likely to be achieved to a very limited extent. Purpose unlikely to be achieved with only a few outputs likely to be achieved. 5 – Unlikely to be achieved. No progress on outputs or purpose.

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DSF Quarterly Report September 2010

Output 1: Public Service Delivery Objectives

Indicators

Progress

1.1. Guidelines (norms, standards, procedures and criteria-NSPK) for service delivery in selected sectors formulated

Number of new guidelines (norms, standards, procedures and criteria) for service delivery completed/issued

Phase 1: Consultations held with regions in July 2009 for formulation 1 of 26 norms, standards, procedures and criteria (NSPK) in health. This resulted in confirmation that 10 out of 26 NSPK were defined as eligible for further action. Presently 5 out of the 10 NSPK have been issued by the Minister of Health as regulations including: hospital licensing; foreign health workers in Indonesia; and hospital classification. Assessment on the conformity of the 26 draft NSPK in health with Government Regulation 38/2007 resulted in prioritisation of at least 5 health functions for NSPK formulation. Brief assessments were also made of NSPK in other fields i.e. agriculture, trade, land management, energy and mineral resources. A key product of this activity is a paper on ―Exploring Reform Options in Functional Assignments,‖ which was completed in March 2008. The final report on the NSPK assessment was submitted in August 2009, marking the end of phase 1. The discussion process provided inputs for developing the Activity Concept Notes for phase 2. Phase 2: The Grant Agreement for ACN 11/2009 on Formulation of 2 Norms, Standards, Procedures and Criteria (NSPK) has been countersigned. The budget implementation document (DIPA) registration for 2011 is ongoing. Project adjustments will be finalised in the next quarter and procurement of NSPK specialists will commence. With regard to the Bank executed component, the contract for assessment of NSPK status with University of Gadjah Mada (UGM) has been signed. UGM is developing the methodology and activity implementation schedule, and a draft questionnaire and matrix for data collection are being prepared. Milestone 1. This activity is expected to be achieved in January 2011

1.2. Minimum Service Standards (MSS), in targeted sectors budgeted and implemented in selected district governments

Implementation of MSS in selected sectors in selected districts and municipalities

Rating

Comment

The Local Government Affairs directorate within the Directorate General of Regional Autonomy has been restructured resulting in NSPK being managed by two directorates. The positioning of the NSPK activity within the directorate is under discussion. Staff in the project implementing unit have provided continuity for activity implementation.

Phase 1: A Manual for Minimum Service Standards (MSS) Costing 2 based on field testing of regional data was prepared by the Ministry of Health (MoH) in cooperation with MoHA and DSF. The manual was formalised by Minister of Health Decree 317/2009. DSF supported the printing of 1000 copies of the manual which was distributed to the regions by MoHA and MoH. An electronic instrument for MSS costing in health has been developed with assistance from DSF. After first testing the costing instrument Yogyakarta is now uploading MSS related data. MoHA, in cooperation with DSF, organised a seminar in commemoration of Regional Autonomy Day titled ―Creativity of

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DSF Quarterly Report September 2010

Output 1: Public Service Delivery Objectives

Indicators

Progress

Rating

Regions in Improving Public Services‖, which was opened by the Minister of Home Affairs. A television dialogue on the same theme was also organised. These events recognised regions and heads of regions for their creativity and innovative ideas as well as actions for improving public services. Regions were encouraged to be more creative and innovative in implementing their functions, and to more effectively document and disseminate experiences from service delivery and community improvements. It was also suggested that a revision of Law 32/2004 should encourage innovation by regions. 2 Phase 2: ACN 14/2009 on Capacity Development for Minimum Service Standards Costing and Implementation has changed method of execution from Recipient execution to Bank execution. Preparation for procurement of individual consultants for the revised activity is underway. A national seminar on ―Implementation of Minimum Service Standards Towards Achievement of Millennium Development Goals (MDGs)‖ was conducted in June 2010. The objectives of this seminar were: (a) disseminate the issued MSS to regions to increase commitment of regions in MSS achievement; (b) launching of the capacity building programme on MSS costing and implementation; and (c) announcement of MSS as a national priority and effort in MDG achievement. The seminar was followed by discussions with pilot regions in preparation for Capacity Development for Minimum Service Standards Costing and Implementation activity. Several pilot regions confirmed their participation, others are likely to follow. The final report on application of MSS in the health sector was completed in August 2010. The activity report for the electronic data based system for costing minimum service standards in the health sector and the e-copy manual book and report were also completed in August 2010. Milestone 1. MSS implementation in health in 5 selected districts is expected to be on schedule and underway by December 2010. 1.3. Alternative service delivery schemes established in selected sectors and districts and municipalities with better access for women (ACN title: Management Strengthening and Institution Building for

Number of selected district governments developed pilot alternative schemes in service delivery and number of women reached by these pilot schemes

Phase 1: Assessment of Legal and Regulatory Framework report completed in October 2009. Regional Workshop was conducted in August 2009. The progress reports of each selected pilot region (district Serang, Lebak and city Cilegon) were presented at the workshop. National Workshop on Alternative Mechanisms for Service Delivery (AMSD) was held in November 2009. Representatives from 3 regions in Province Banten presented preparation for the pilot implementation

Comment

Due to the complex nature of this activity and limited timeframe, GoI has reduced the scope of work.

1

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DSF Quarterly Report September 2010

Output 1: Public Service Delivery Objectives

Indicators

Local Public Service Providers (MSIB-LPSP))

Progress

Rating

of: Management Strengthening and Institution Building for Local Public Service Providers. The ‗Alternative Mechanisms for Service Delivery‘ (AMSD) activity was successfully completed in December 2009. A final report containing a blueprint for promoting AMSD was prepared and submitted to DSF. Phase 2: The Final Report for the preparation for SMS-AMSD pilot Implementation in target local governments in the Province of West Java completed Milestone 1 The Final Report on development of baseline data: Women‘s Access to Selected Public Services (Population Administration, Regional hospital and water provision services) has been completed.

2

1.4. Improved public service delivery by selected local governments in border areas

Action plans for improved public service delivery completed by selected local governments in border areas

Consultant is expected to begin assignment in October 2010 Development of standard operating procedure for newly established National Agency for Border Management (BNPP); drafting implementing regulations of Law 43/2008 on state jurisdiction; and formal determination of border area will begin in November 2010. Milestone 1 Public Service assessment in selected border areas expected to be completed by 2nd quarter 2011

2

1.5. Local governments adopt effective, efficient and accountable regulations and processes for business licensing

Local government Phase 1: The project has successfully delivered all outputs stipulated 1 performance in implementing in the contract, with regard to both One Stop Shops (OSS) for business OSS for business licensing licensing and use of Regulatory Impact Assessments (RIA). A presentation of project achievements to all key stakeholders, including the DSF Management Committee, was held in January, 2010. This meeting reflected on lessons learnt and discussed national strategies to scale up the pace and performance of sub-national business licensing reforms in order to improve the overall business and investment climate in the regions. The Sub-National Business climate Reform activity was successfully completed in January 2010. Final report was submitted. Phase 2: To ensure the momentum of this work, a follow-on project 2 was approved by the DSF Management Committee in late 2009. The project will: (i) support MoHA in monitoring the performance of the OSS for business licensing across the country; (ii) support three selected provincial governments (PGs) to facilitate establishment of

Comment

Activity to be fully Bank executed Due to the complex nature of this activity and limited timeframe, GOI has reduced the scope of work.

Activity to be fully Bank executed. Due to the complex nature of this activity and limited timeframe, GoI has reduced the scope of work. MoHA and Bappenas are seeking to strengthen cross-ministerial support for border area development. Activity 4.3 provides support to Bappenas for the production of a master plan for border area development.

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DSF Quarterly Report September 2010

Output 1: Public Service Delivery Objectives

Indicators

Progress

Rating

Comment

Rate

Comment

district-level OSS and improve the performance of the existing ones; and (iii) support the National Development Planning Agency (Bappenas) and three selected PGs in disseminating and utilising the RIA method. The grant agreement justification and summary proposal was drafted and submitted to the World Bank Country Leadership Team for ‗no objection.‘ The proposed recipient of the grant is The Asia Foundation (TAF). ‗No objection‘ from the World Bank Country Leadership Team was issued. The procurement and financial management assessments of TAF are in process. The grant agreement is drafted and is expected to be signed in the next quarter. Milestone 1 (i) 10% increase in OSS operating under revised guidelines is expected to be met in January 2011. (ii) Target provinces and districts apply RIA to evaluate draft local regulations are expected to be achieved in April 2011.

Output 2: Fiscal Decentralization and Capacity Development Objectives

Indicators

Progress

2.1. The Ministry of Finance Regional Financial Information System recording local government budgets is upgraded

Number and process of data entry of local government budgets recorded in the Ministry of Finance Regional Financial Information System

Phase 1: DSF supported data entry of MoF‘s Regional Financial 1 Information System (SIKD) for Fiscal Year 2007 Support duration: May-August 2009. Data entered and verified in Phase 1: Budget data (APBD, 2009): 481 districts and municipalities (94 percent of total) Realisation data (LRA, 2007): 351 districts and municipalities (75 percent of total). Two user manuals were prepared: data entry procedure intended for data entry operators; and a guide for users to access the data. Phase 2: ACN 12/2009 on Strengthening Data Provision to the 1 Regional Financial Information System by Sub-National Governments with Stand-Alone Electronic Data Bases, approved by DSF MC in October 2009. Scoping mission to 4 local governments in North Sulawesi and 2 in East Java to review regional financial information systems carried out in December 2009, January and June 2010. Electronic data from the regions is available for 8 districts as of June 2010. The development of computer application/software intended for

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DSF Quarterly Report September 2010

Output 2: Fiscal Decentralization and Capacity Development Objectives

Indicators

Progress

Rate

Comment

transferring electronic data from the regions to the MoF SIKD systems was completed in June 2010. In addition to transferring the data, the software is also designed for data entry purpose; the latter is an additional request from Directorate for Funding Evaluation and Regional Finance Information (EPIKD). After some revisions, the application was handed over to the Directorate of EPIKD, and installed at the Directorate‘s server in August 2010. A video manual was developed to provide guidance to regions on the procedures to submit the electronic data to the Directorate of EPIKD. The video manual was distributed to the districts in a workshop held in Semarang in September 2010. At the workshop a total of 18 districts submitted their electronic data. The workshop was also intended to socialise a new Government Regulation on sanction for districts that fail to submit financial reports in a timely manner. 

2.2. Improved fiscal decentralization policy

Implementation of ‗Grand Design of Fiscal Decentralization‘ across government ministries and local governments

Data entry for LRA 2007 was suspended by the government in order for it to focus on LRA 2008 instead. The current LRA 2007 data is thus, in effect, 100 percent complete (Milestone 1 and milestone 2 i).  For security reasons data entry for 2008 will be conducted by the government in-house. As a result DSF cannot be responsible for the completion of LRA 2008 data entry (Milestone 2 ii).  The goal of having 5 percent, or 25 districts, submit data electronically to the EPIKD by December 2010 has been surpassed. By the end of this reporting period, a total of 26 districts had submitted financial data electronically. (Milestone 2 iii) Capacity development in conducting regional financial analysis for Directorate of EPIKD staff completed. Short term training was held for 20 staff members in Bandung July 2010. Subsequent to the training, the participants completed a group paper on regional finance analysis. Eight short papers were produced and the four best presentations were presented to an audience including staff from other Directorates within DG Fiscal Balance.

In September 2010, EPIKD indicated its intent to outsource data entry for 2008; details on outsourcing arrangement are yet to be finalised between EPIKD and the DSF. Between October 2010 and June 2011, EPIKD intends to undertake 1-2 socialisation sessions at the provincial level to solicit additional local government‘s financial electronic datasets. These four papers will undergo another round of revisions prior to being posted on the DG Fiscal Balance website.

ACN 13/2009 ACN on Improving the Policy Framework for Fiscal 2 Decentralization (‗Grand Design of Fiscal Decentralization‘ - GDFD) approved by DSF MC in November 2009. Project implementation plan for the whole support completed in January 2010 Three workshops/public consultations were conducted in Pontianak (West Kalimantan), Makassar (South Sulawesi) and Surabaya (East Java). The purpose of these workshops was to gain insights from a wide range of stakeholders in Indonesia, regarding the appropriate strategy to

The DSF will provide support to MoF team in charge for the revision of Law 33/2004. In the absence of a decent draft on GDRA as well as MoF and MoHA immediate needs to synchronise an array of substantive issues related to the revision of Law 32/2004 and 33/2004, efforts should be redirected to

14


DSF Quarterly Report September 2010

Output 2: Fiscal Decentralization and Capacity Development Objectives

Indicators

Progress

Rate

improve the current GDFD. Inputs to the revision of Law 33/2004 are being provided through implementation of studies related to intergovernmental transfers, in particular on the general allocation funds (DAU), special allocation funds (DAK) and revenue sharing (DBH). Initial draft has been submitted for MoF review. Efforts to harmonize the GDFD (and respected inputs to the revision of Law 33/2004) with the revision of Law 32/2004 and, therefore, Grand Design for Regional Autonomy (GDRA) are currently underway. Draft for the revision of fiscal decentralization policy framework was submitted for MoF approval in July 2010. Preparation for workshop on legal status for GDFD is underway. Milestone 1 expect to be achieved in November 2010. 2.3. National policy on local government borrowing, including issuance of municipal bonds, adopted

Municipal bond issuance, including credit worthiness assessments

Phase 1: Review of Indonesian Civil Code on issues relating to debtor, 2 creditor, and bankruptcy/insolvency completed May 2009. Review of Regulatory Framework and Best Practices Study on Local Government Financial Emergency Procedures completed in December 2009. Support for revision of Government Regulations GR 54/2005: Local Government Borrowing and GR 57/2005: Local Government Granting, is complete. Draft revisions have been signed by the Ministry of Finance and are currently being discussed with the Ministry of Law and Human Rights (MLHR). Phase 2: Analysis and preparatory work for issuance of DKI Jakarta 2 and City of Bandung bonds:  Prefeasibility studies and draft terms of reference (kerangka acuan kegiatan/KAK) documents for the four projects to be funded by the proposed municipal Jakarta bond were completed in June 2010.  These four projects are: o provision of improved sewage facilities in the central business district and jalan Casablanca areas; o construction of an inter-city bus terminal at Pulo Gebang; o low-cost housing rehabilitation at Tanah Pasir; and o addition of a trauma wing at Pasar Rebo hospital. (total estimated value of the four projects is Rp 1.7 trillion in 2011 prices)  Two draft Perda (local regulation) to i) authorize a municipal bond issue and ii) establish a Satker (implementation unit) within the local government‘s financial unit to manage and administer the Jakarta bond were completed in June 2010. To accommodate inputs from various stakeholders (in particular those from Directorate General of

Comment the harmonisation between the revision of Law 33/2004 (which is based on GDFD) and that of Law 32/2004.

Implementation is expected by November 2010.

Directorate of Regional Financing and Capacity-MoF has submitted request to expand the scope of activities to the Province of Riau Islands and City of Surabaya Scoping mission to City of Surabaya will take place after the inauguration of the new mayor of City of Surabaya in August 2010. MoF and DSF have decided to focus their efforts on ensuring the issuance of DKI Jakarta municipal bonds; Assistance for City of Surabaya and Province of Riau Islands have therefore been dropped at the request of the GoI. To finalise these Perda, a workshop will take place in November 2010.

15


DSF Quarterly Report September 2010

Output 2: Fiscal Decentralization and Capacity Development Objectives

Indicators

Progress

Rate

Comment

Debt Management (DJPU) and the Capital Market and Financial Institution Supervisory Agency (Bappepam-LK) of MoF, a workshop to revise these Perda was implemented in August 2010.  Analysis on DKI Jakarta‘s ability to pay back municipal bonds completed in June 2010.  The DSF team has supported the preparation of a presentation on the municipal bonds within DKI Jakarta.  A Nota Dinas (official memo) has been prepared which must be signed by the Governor of Jakarta to formally authorise municipal bonds preparation for DPRD approval in June 2010.  Preparation for DKI budget for FY 2011 related to municipal bond issuance is underway.  Capacity building has been provided to the government of city Bandung, but their project, a theme park, requires considerable technical definition and may be beyond the level of assistance which the DSF can reasonably provide. Two rounds of discussions on revision of GR 54/2005 on local borrowing between MoF and MLHR took place in February, May and August 2010. Additional meetings are warranted to complete revision. Milestone 1. Credit worthiness assessment of two pilot municipalities for issuance of municipal bonds will be completed by an independent credit rating company by December 2010. Milestone 2. Dates for future discussions to finalise the GR will be determined by MLHR. It is expected that the revised GR will be signed by the President by late 2010 or early 2011. 2.4. Improved public financial management of special allocation funds (DAK) by local governments

Public financial analysis of DAK completed by selected local governments as a basis for local government planning and budgeting

Phase 1: Empirical analysis of regional government surpluses based on 1 data from 27 provinces and 220 districts and municipalities resulting in report with recommendations completed in June 2008. Empirical analysis on regional government investment in public infrastructure based on audited financial data for 2004-2007 completed in June 2009. Phase 2: A scoping mission was conducted in August 2010. Main issues and challenges related to the implementation of special autonomy 2 fund in Aceh were identified. Findings from the mission were discussed with DG Fiscal Balance counterpart. Agreement was reached to follow up the mission with a focus group discussion between central government and stakeholders in Aceh (provincial and districts) in November 2010.

Phase 2 was on hold until government approval was received in May 2010. Due to time constraints, MoF and DSF have agreed to limit the coverage of the study to only one province, Aceh. Implementation in the remaining 2 provinces, Papua and West Papua, as time permits. Consequently milestone 1, which mandates the activity to be completed in 3 provinces, may not be achieved and may need to be modified.

2.5. Government pro-poor

Monitoring and evaluation

ACN 3/2009 on Socialisation and Pilot Implementation of Joint

Implementation will be split into two

1

16


DSF Quarterly Report September 2010

Output 2: Fiscal Decentralization and Capacity Development Objectives special allocation funds (DAK) monitored and evaluated

Indicators

Progress

reports completed on expenditures of pro-poor government fund in selected local governments

Circular Letter (SEB) on Monitoring of Technical Implementation and Evaluation of Use of Special Allocation Funds (DAK) approved by DSF MC in July 2009. Project implementation plan for the entire activity completed in January 2010. In order to obtain initial feedback on SEB-DAK focus group discussions and socialisation on SEB-DAK conducted for Bappeda, City of Bogor in January 2010. Modules for field facilitators and data collecting activities completed by DAK Coordination, Planning, Monitoring and Evaluation Team (TKP2E-DAK) Secretariat, Bappenas, February 2010. These documents comprise (a) DAK general comprehension (pemahaman umum tentang DAK); (b) DAK monitoring (pemantauan DAK); (c) DAK evaluation (evaluasi DAK); (d) DAK reporting system (sistem pelaporan DAK); (e) organization of DAK monitoring and evaluation (organisasi pelaksanaan monitoring dan evaluasi DAK); and (f) guidelines on data and information collecting in the field (pengumpulan data dan informasi di lapangan). SEB data forms tested and technical assistance to fill out these forms provided to officials in Karawang, West Java in March 2010. Workshop conducted in September 2010 for representatives from 60+ local governments from Jambi, Central Kalimantan, West Sulawesi and North Maluku provinces. Target (i) ―Government designed monitoring and evaluation system for DAK will be implemented in the district of the province of Yogyakarta by February 2011 while in the other four provinces implementation will be completed by July 2011. Target (ii) A seminar on lessons learned from the implementation in Yogyakarta as well as early results from the four provinces is planned for March 2011. Preliminary results on capacity strengthening strategy for central and local government will be presented at the seminar.

Rate

Comment phases: the first phase in the Yogyakarta Special Region, followed by a second phase consisting of 4 provinces (Jambi, Central Kalimantan, West Sulawesi and North Maluku). The purpose of this separation is to obtain lessons learned on how to properly implement DAK monitoring and evaluation These inputs will be utilized in the execution in the other four provinces.

A number of districts expressed their commitment to participate in the pilot project during the workshop.

17


DSF Quarterly Report September 2010

Output 3: Increasing Accountability Objectives

Indicators

Progress

3.1. Effective legislative processes, resource allocation and oversight functions demonstrated in selected local legislatures

Number of provincial and district MPs, including women MPs, trained in legislative processes, budgeting and oversight

The DPRD Capacity Strengthening programme managed by the Local 1 Government Affairs section of the Directorate General of Regional Autonomy in MoHA progressed with the procurement of the implementing agency for training delivery. They reviewed the expressions of interest, developed the evaluation report for the short list, developed the draft Request for Proposals and obtained a No Objection Letter (NOL) from the World Bank. In the next quarter they will review the proposals, write the evaluation report, and submit their recommendation for NOL. The road show and MoU signing of local governments for this activity was postponed to the fourth quarter due to a re-shuffle in MoHA. The DPRD Capacity Strengthening program is now managed under the Local Government Affairs II (it has split into two sections) directorate with a new director. Initial coordination meetings are promising and the program is moving forward. A meeting with the Setwan (local legislature secretariats) of targeted regions is scheduled for October so that local legislatures can plan for participation in the training in their 2011 APBD budgets. The DPRD Orientation program managed by the MoHA Training and Education Center (Diklat) is moving forward as well. The Amendment to the Grant Agreement to accommodate this program has been signed and Diklat is working hard to include it in the DIPA revisions for 2010. Pending this attempt, the activity implementation will progress either in the fourth quarter of 2010 or first quarter of 2011 with a Training of Trainer and training in one of the four provinces included in the program. Milestone 1 150 local parliament representatives in 5 provinces with 30% women trained is expected to be met by the second quarter 2011

Changes in MoHA have led to some delays in activity implementation but overall the new leadership of both the DPRD capacity strengthening and DPRD orientation programs has managed the transition well.

ACN No. 9/2009 on Capacity Building through Decentralized 2 Education and Training approved for a total budget of USD 1.593,520. The activity has 3 components that aim to enhance the professional capacity of local and national officials to provide, and CSOs to monitor, improved public service delivery:  Short courses in Indonesia and the Region

ACN 9/2009 has been divided into 2 grants: 1) scholarships and 2) short courses and study tours. In view of the tight timeline for the execution of the scholarships project, on 31 March 2010 AKLN/MoHA asked that the Bank assume responsibility for the execution of the scholarship component of the project.

3.2. Effective and accountable public service delivery by local government officials and effective monitoring by CSO leaders demonstrated in selected local governments

Number of national and local government officials and CSO leaders professionally trained in effective and accountable public service delivery

 Study tours  Scholarships for Master degree programs in decentralization related studies in the UK.

Rate

Comment

This program moved to a different section within Diklat (Management and Leadership of Local Government) and is now under different leadership. Initial coordination meetings indicate that the program will be well integrated into the Diklat operations.

Following a ‖no objection‖ by the Country Leadership Team of the grant justification and summary proposal, the grant agreement was signed in May 2010 by the Bank, and the British Council which will be

18


DSF Quarterly Report September 2010

Output 3: Increasing Accountability Objectives

Indicators

Progress

Rate

Comment

the implementing party of the scholarship program. 26 candidates achieved the required International English Language Testing System score necessary for scholarship award selection. Based on the positive result, the Selection Committee increased the number of scholarship awards from the initial 20 to 26 central and local government officials.

Implementation of study tours and short courses will be Bank executed. Discussions on the destination countries and program details are underway.

In September 2010 twenty-four5 scholars departed for the UK to pursue their studies at the following universities: University of Birmingham, University of Bradford, University of Bristol, University of Leeds, University of Newcastle, University of Southampton, and Birkbeck College University of London. The British Council will follow-up with the scholars on the development of action plans for the application of knowledge and skills acquired under the program upon return to their jobs in Indonesia. Milestone 1. 30 national, local government officials and CSO leaders expected to be trained by February 2011. 3.3. Local training and education centres demonstrated improvement in conducting training programmes for local government officials

Competency-based training programmes on decentralized public service delivery developed by local government training centres

In the past quarter, Diklat mobilised 3 competency based standard/human resource management consultants (international and national) and 1 training/capacity building specialist to assist the core Diklat team with implementation of the activity. They also hired 2 support staff to help with administration and finance. With a full team on board, Diklat commenced work on the development of a strategic framework for the formulation of national policies on local government competency standards. This involved MoHA, BKN (National Civil Service Agency), BNSP (National Professional Certification Agency), Kemenpan (Ministry of Administrative Reform), sectoral ministries, and local governments.

1

Although there has been restructuring within Diklat and the competency based training program has moved to a newly created unit of Diklat on standardization of training and education for government officials, the technical management of the program has continued without delay and Diklat is preparing for a second withdrawal of funds for implementation of the next phase of the activity.

Under Government Regulation 38/2007, the substance of the competency standards strategic framework for local governments should include: a. Mapping of the 31 integrated local government functions; b. Competency standardization framework for local governments; c. Roadmap for standardization of local governments‘ integrated competency; The strategic framework‘s initial concept was formulated through a series of intense, in depth workshops in August-September 2010 with 5

Two scholars withdrew from the program.

19


DSF Quarterly Report September 2010

Output 3: Increasing Accountability Objectives

Indicators

Progress

Rate

Comment

the aforementioned agencies. Three outputs have been produced so far: 1) draft ministerial regulation on the strategic framework for local government competency standards, 2) draft strategic framework including an overview of background and issues related to local government competencies, policy directions, steps for developing standards, issues regarding operationalization of standards, and a road map for rolling out competency based standards in various sectors with local governments, 3) draft plan for the standardisation of competency based standards for population administration and civil registration (the pilot sector included in the DSF supported program for development of competency based training). Also in this quarter, Diklat implemented 8 training workshops of 25 participants each covering assessment, verification, and certification of competency-based standards for various units within MoHA (including the Directorate General for Population Administration, Directorate General for Regional Autonomy, Personnel Bureau, Organizational Bureau, Legal Bureau, Training and Education Centre), BKN, BNSP, Kemenpan, and local governments (East Java, West Kalimantan, West Nusa Tenggara) with equal representation from central and local governments. Milestone 1 Capacity building needs assessments for local government competencybased training are expected to be completed by fourth quarter 2010.

20


DSF Quarterly Report September 2010

Output 4: Planning and Performance Measurement Objectives

Indicators

Progress

4.1. Provincial and district/municipal spatial plans produced which are in line with national spatial plan and integrated with provincial and district/municipal development plans

Provincial and district/municipal spatial plans completed and approved by respective parliaments

ACN 5/2009 on Institution Building for the Integration of National1 Regional Development and Spatial Planning approved. Initial work was implemented by a consultant between December 2009 and March 2010. Paper prepared on: ―Identifying the Connections between Regional Spatial Plans with Regional Development Plans.‖ This activity was designed to support three provincial and six district/ city governments to draft spatial plans. Three provinces are close to finalising their plans. In line with evolving needs and at the government‘s request DSF will focus more on the district/city level A firm has been contracted to draft spatial plans and to strengthen the National Agency for the Coordination of Spatial Planning (BKPRN). The firm has begun work in cities/districts in all three provinces: West Sumatra, Gorontalo and East Java. Milestone 1 (i) should be amended to focus on district/city level instead of provincial level and three district/city plans will be submitted to parliament during the first quarter of 2011. (ii) capacity building plans were developed for targeted district/cities in September 2010

Activities under ACN 5/2009 are designed to improve the consistency between regional government planning documents (spatial plans and development plans) and also the consistency between spatial plans at different levels of government. A key component of the activity is to develop the capacities of the 3 provincial governments and 3 district/city governments in each to produce spatial plans that are aligned with the national spatial plan and integrated with regional development plans. The implementing agency will focus on providing capacity building support to district and city governments to draft spatial plans.

4.2. Capacity building for Regional Development Policy Formulation

Regional development strategies created at island region level, endorsed by both the relevant provincial government and Bappenas

An addendum to ACN 2/2009 on capacity building for regional 2 development policy formulation is linked to objective 4.1. Part 1 was implemented by 5 consultants between September 2009 and July 2010. The main outputs are an input paper for the RPJMN 2010-2014 (for book 3 on development with a regional dimension) and the report: ―Study on regional development in Indonesia.‖ Part 2 of this activity will develop selected island based development strategies to be implemented by a firm. Procurement is underway; contract negotiations will be held in November. Contract award is expected in November 2010. Milestone 1 Data and policy assessment completed by March 2011

ACN2/2009 is an additional activity requested by Bappenas‘ Directorate of Regional Development. It is linked to activity 4.1 but not listed in the Log Frame.

An addendum to ACN 2/2009 covers inter-regional cooperation and addresses issues of concern to both Bappenas (Directorate of Special Regions and Less Developed Areas) and MoHA (Directorate for Deconcentration and Cooperation).

Activity to be fully Bank executed. Due to the complex nature of this activity and limited timeframe, GoI has reduced the scope of work.

4.3. Strengthening Capacity for Regional management Inter-Regional forums have medium term Cooperation plans and annual action plans approved by relevant local

Rate

2

Comment

The first part of the activity has produced a substantial review paper on regional development policy that draws on lessons learned from past experiences and builds upon the RPJMN for 20102014 to provide key input into government‘s approach to regional development policy. Bappenas is the client. The second part builds upon this work by formulating development strategies for the major island groups, with a focus on eastern Indonesia.

21


DSF Quarterly Report September 2010

Output 4: Planning and Performance Measurement Objectives

Indicators

Progress

governments

Bappenas has contracted a consultant to conduct a detailed review of the existing regional management forums across Indonesia; procurement is underway for a firm to provide capacity strengthening in 4-6 of the forums. MoHA has approved the plan for: (i) development of Road Map Guideline for Inter-regional Cooperation and; (ii) establishment of the new Joint Secretariat for Coordination of Inter-regional Cooperation to be completed by March 2011. Selection of consultants is expected to be completed by November 2010.

Rate

Comment This activity highlights the importance of cross-ministerial cooperation in activity development and implementation, which is likely to yield positive results in terms of greater coordination between related interregional cooperation programs.

4.4. Natural resource planning and management policies developed by targeted local governments

Local governments adopting policies and systems for natural resource planning and management policy

ACN 10/2009 on Strengthening Local Government Natural Resource 2 Management Capability was approved. A firm has been contracted to support local governments in Papua and South East Sulawesi to develop improved natural resource management systems. Procurement of these services has taken longer than expected and the initial project launch was further delayed. Activities have now been launched. The achievement of milestone 1, improved natural management systems drafted in 4 local governments, is expected to be achieved by February 2011.

This activity seeks to improve the way natural resources are managed by local governments. The capacity to do this type of work will be developed in local governments in 2 pilot target provinces and is intended to assist local governments to identify the potential for resource development in a sustainable manner. Lessons will be derived from these pilots and made available on a wider scale. Key resources within the scope of this activity include land for plantations, marine resources for fisheries, and resources with tourism development potential. This activity has been designed in collaboration with Bappenas and GTZ‘s Regional Economic Development program. Implementation is expected to start towards the end of the third quarter of 2010.

4.5. Local and Regional Economic Development Support Facility (LRED)

Strategic plan for the LRED completed and endorsed by the inter ministerial LRED coordination team

An addendum to ACN 10/2009 on the establishment of a facility to 2 support local economic development was approved in March 2010. The client is the Directorate of Urban and Rural Affairs (Bappenas). Procurement of services is underway. It is expected that a contract will be awarded by December 2010.

This activity has been designed in collaboration with Bappenas, GTZ‘s Regional Economic Development program and CIDA.

4.6. Local governments in border regions have improved capacity in economic development planning

Action plans for improved economic development planning completed by selected local governments in border areas

ACN 8/2009 on Institution Building for the Accelerated Development of Border Areas approved. This ACN covers activities related to border area development, prioritized by both Bappenas and MoHA. This objective is linked to activity 1.4 on service delivery in border regions. The activities are closely inter-related and both involve Bappenas,

Through this activity, MoHA and Bappenas are seeking to strengthen cross-ministerial institutions and to improve the policy framework for the development of border regions. The

2

22


DSF Quarterly Report September 2010

Output 4: Planning and Performance Measurement Objectives

Indicators

Progress

Rate

MoHA and the Ministry of Disadvantaged Regions. A firm has been contracted from June 2010 – September 2011 to support Bappenas drafting a national master plan and to pilot activities in several border areas. Milestone 1 Profiles of 38 border regions are expected to be completed by November 2010. Milestone 2 National master plan for border area development is expected to be completed by December 2010. 4.7. Evaluation of Proliferated Autonomous Regions

Map of newly-created regions capacity as set out by Minister of Home Affairs Regulation 21/2010 completed by March 2011

DSF has supported the socialization of MoHA Decree 21/2010 on Guidelines to Evaluate Local Government Performance created post Law 22/1999 (on Regional Autonomy) in Jakarta in February 2010. Five workshops to clean, verify and validate data sent by the local governments and to be utilized in the evaluation during AugustSeptember 2010. In addition, data analyze and report preparation is currently underway. These workshops are led by Technical Evaluator Team—comprising experts from universities, Indonesian Institute of Sciences (LIPI), Indonesia Chamber of Commerce and Industry (KADIN Indonesia), NGO as well as mass media—established by the Directorate for Capacity Development and Evaluation of Regional Performance (PKEKD), MoHA.

Comment implementing agency is also providing capacity support in 3 provinces: West Kalimantan, East Kalimantan and Riau.

1

4.8. Local Government Indicator to be determined Evaluation and Support for EPPD-EDOB

Scope of activity agreed upon and mode of execution to be determined

4.9. Provincial Governance Strengthening Programme (PGSP) under third party (UNDP Fiscal Agency Agreement)

Indicators to be determined

The Fiscal Agency Agreement became effective in May 2010 and the 3 initial allocation of US$1 million was deposited in July. The project was officially launched in August and the proposed work plan endorsed in September.

4.10.Formulation of Grand Design for Regional Autonomy

Implementation of GDRA The project objective is to support MoHA formulate the Grand Design across government ministries for Regional Autonomy (GDRA) by clarifying and improving: and sub national governments functional assignments between central-, provincial-, and district/city level governments as well as to reform personnel policies at local administrative levels.  Draft addendum to ACN 13/2009 has been completed.

Efforts will be undertaken to coordinate these provincial based activities with related DSF activities.

1

23


DSF Quarterly Report September 2010

Output 4: Planning and Performance Measurement Objectives

Indicators

5. Knowledge Management for Aid Effectiveness

Publicly accessible data base on support to sub-national government developed.

Progress

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, analyze and prioritize aid rendered to Indonesia by the international donor community, and thereby serve as a valuable DSF knowledge management planning and monitoring tool for the government and members of the strategy formulated donor community. For the government and donors alike, it is clearly desirable to maintain such an up-to-date map of donor-supported activities, one that provides comparable data on key dimensions: matters addressed; geographic location; tools and approaches used; nature of assistance - whether loan/grant/Technical Assistance; monitoring frameworks; expected results; and so on. The database is 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 final phase of the activity is designed to institutionalise the database and its management in government. A consultant has been hired to: upgrade design features, increase and refine data content, and provide technical maintenance support; transfer responsibility for updating information online to individual donor agencies; and identify and hand over administrator rights and responsibilities to the ―owner‖ entity in MoHA A draft DSF knowledge management strategy has been formulated and the DSF web page has been upgraded.

Rate

Comment

1

GoI is keen to incorporate the tool in a government system for monitoring and reporting on development assistance in decentralization. DSF will support MoHA to update and administer the DMD

24


DSF Quarterly Report September 2010

Annex B: Financial Report Summary  Donor Pledges: Three donors have pledged a total of USD 44.67 million (exchange rate September 30, 2010).  Receipts: USD 29 million or 64.92% of total pledges have been received.  Disbursements: USD 19.82 million or 68.35% of total pledges received.  Cash Held: USD 10.67 million, including USD 1.87 of outstanding signed contracts/commitments. Cash available is therefore USD 8.8 million. I. Donor Contributions DSF has 9 donor partners, 3 of whom are financial contributors: DFID, AusAID, and CIDA. Total pledges amount to USD 44.67 million (30 September 2010 exchange rate). About 96.6% of the total amount (USD 43.17 million) has been pledged by DFID. As of 30 September 2010, DSF had received USD 29 million or 65% 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 DFID AusAID CIDA

Contribution Currency GBP USD CAD

Total

Contribution Amount 24.36 1 0.5

USD equivalent

Cash Received in USD million

43.17 1 0.5

27.5 1 0.5

44.67

29

II. 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 September 30, 2010, USD 19.82 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). Table 3: Disbursement Status of the DSF as of September 30, 2010 Actual (USD)

Commitments (USD)

Receipts Paid in Contributions Investment Income Other Income Total Receipts Disbursements Focal Area 1

29,000,052 1,463,009 24,753 30,487,814 2,266,479

13,309

25


DSF Quarterly Report September 2010

Actual (USD) -

Commitments (USD) -

90,754

-

Borrowing

596,853

88

Surplus and Reserves

183,105

-

Data for Monitoring and Evaluation

371,032

-

Assessing and Revising the System for Setting Territorial Boundaries Fiscal Agency Intergovernmental Framework Fund

227,500

-

Tax Assignment and Own-source Revenue Transfer

-

476,214

-

47,467

3,140

73,799

10,082

199,755 1,394,890 187,174

-

Identification and Replication of Good Practice

382,392

-

Appraisal : Sub national Investment Climate Reform

599,116

-

58,823

-

49,703

-

117,682 5,380,245 1,072,961

-

421,705

-

Policy Development for PNPM

58,666

-

Cost Accounting Review for CDD Programmes

16,512

-

Technical Assessment for CDD Programmes

53,685

-

Information, Education and Communication for PNPM

484,739

-

User Fee Assessment for CDD Programmes

391,302

-

MIS Improvement for PNPM

100,701

-

Short Term Monitoring and Evaluation

710,385

-

Medium / Long Term Monitoring and Evaluation

399,925

-

CCT Baseline Survey

1,669,665

-

Decentralization Support for Eastern Indonesia (SofEI)

2,972,226

-

97,908

-

5,430,918

101,190

906,541

1,723,897

45,916

58,788

53,776

20,478

Exploring Future Reform Options in Functional Assignment Supporting the Establishment of Financially Feasible Minimum Service Standards * Alternative Mechanism of Service Delivery Focal Area 2 Local Government Performance Measurement

Knowledge Management for Effective Local Government Support Programmes Mapping and Analysis of Local Planning and Budgeting Processes Improved Evidence Base of Good and Bad Local Perda Focal Area 3 National Programme for Community Empowerment CDD Summit

Quick starts Project Operations Approved Work Plan 2009 - 2011 (1st round) New projects approved and registered in FY09 (1st round) Support to Public Service Delivery * Strengthening Data Provision to the Regional Financial

26


DSF Quarterly Report September 2010

Actual (USD) Information System by Sub-National Governments with Stand-Alone Electronic Data Bases Improving and Piloting the Implementation of Monitoring and Evaluation System of Special Allocation Funds Utilisation Improving the Policy Framework for Fiscal Decentralization Building Capacity for the Development of Sub-National Government Capital Markets for Municipal Bonds Decentralization Support Facility II Capacity Strengthening Programme for Local Government Legislatures Government Training and Education Center Development: Introducing Competency Based Standards for Improved Public Service Delivery Institutional Building for the Integration of National Regional Development and Spatial Planning Capacity Building for Regional Development Policy Formulation Institution Building for the Accelerated Development of Border Areas Strengthening Local Government Natural Resource Management Capability Capacity Building through Decentralization Education and Training Scholarships for Public Service Decentralization Support Facility II Formulation of Norms, Standards, Procedures and Criteria (NSPK) for Local Government Service Delivery

Commitments (USD)

9,967

4,334

220,143

195,993

135,951

279,579

75,000

-

100,000

-

60,617

339,326

85,680

-

52,906

247,481

66,584

577,918

-

-

-

-

1,000,000

-

1,000,000

-

Regional & Local Economic Development

-

-

DPRD Orientation

-

-

Capacity Building for Regional Development Policy Formulation (addendum) Regional Development Policy Knowledge Management for Aid Effectiveness

-

-

76,483

30,476

Approved Work Plan 2009-2011 in process of registration (1st round) Approved DSF Work Plan 2009 - 2011 (2nd round) Approved DSF Work Plan 2009 - 2011 (2nd round) registered Provincial Government Support Programme

Total for Project Activities Administration fee Total Outstanding commitments Total Cash Available (= receipts - disbursements commitments)

19,525,690 290,001 19,815,690 1,868,871 8,803,253

1,868,871

27


DSF Quarterly Report September 2010

* Capacity building for minimum service standards costing and implementation activities are included in these projects.

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DSF Quarterly Report September 2010

Annex C: List of Abbreviations, Acronyms, and Translations ACN: AKLN: AMSD: APBD: AusAID: BAPPEDA: BAPPENAS: BAPPEPAM-LK: BKKBN: BKPRN: BNPP: BPKP: BPN: CCT: CDD: CIDA: CSO: DAK: DAU: DBH: DFID: DG: Diklat: DIPA: DJPU: DKI: DMD: DPRD: DSF: EPIKD: FY: GBP: GDFD: GDRA: GoI: GR: HDI: KADIN: KAK: Kemenpan: LIPI: LG: LRA: LRED:

Activity Concept Note Administrasi Kerjasama Luar Negeri (Centre for Foreign Cooperation Administration) Alternative Mechanisms for Service Delivery Anggaran Pendapatan Belanja Daerah (Regional State Budget) Australian Agency for International Development Badan Perencanaan Pembagunan Daerah (Regional Development Planning Agency) Badan Perencanaan Pembangunan Nasional (National Development Planning Agency) Badan Pengawas Pasar Modal dan Lembaga Keuangan (Capital Market and Financial Institution Supervisory Agency) Badan Koordinasi Keluarga Berencana Nasional (National Family Planning Coordinating Board) Badan Koordinasi Penataan Ruang Nasional (National Agency for the Coordination of Spatial Planning) Badan Nasional Pengelola Perbatasan (National Agency for Border Management) Badan Pengawasan dan Keuangan Pembangunan (Audit and Development Supervising Agency) Badan Pertanahan Nasional (National Land Agency) Conditional Cash Transfer Community Driven Development Canadian International Development Agency Civil Society Organisation Dana Alokasi Khusus (Special Allocation Funds) Dana Alokasi Umum (General Allocation Funds) Dana Bagi Hasil (Revenue Sharing) Department for International Development Director General Pendidikan dan Pelatihan (Education and Training) Daftar Isian Pelaksanaan Anggaran (Budget Implementation Entry List) Direktorat Jenderal Pengelolaan Utang (Directorate General of Debt Management) Daerah Khusus Ibukota (Special Capital District of Jakarta) Donor Mapping Database Dewan Perwakilan Rakyat Daerah (Provincial Legislative Council) Decentralization Support Facility Direktorat Evaluasi Pendanaan dan Informasi Keuangan Daerah (Directorate for Funding Evaluation and Regional Finance Information) Financial Year Pound Sterling Grand Design of Fiscal Decentralization Grand Design of Regional Autonomy Government of Indonesia Government Regulation Human Development Index Kamar Dagang dan Industri (Chamber of Commerce and Industry) Kerangka Acuan Kegiatan (Terms of Reference) Kementerian Negara Pendayagunaan Aparatur Negara dan Reformasi Birokrasi (State Ministry of Administrative Reform) Lembaga Ilmu Pengetahuan Indonesia (Indonesian Institute of Sciences) Local Government Laporan Realisasi Anggaran (Budget Realisation Report) Local and Regional Economic Development

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DSF Quarterly Report September 2010

MC: MDGs: MIS: MLHR: MoF: MoH: MoHA: MoU: MP: MSIB-LPSP: MSS: NGO: NOL: NSPK: OSS: Perda: PGs: PGSP: PKEKD: PNPM: PP: RIA: RPJMN: SEB: Setwan: SIKD: SMS: SoFEI: TAF: TKP2E: TF: ToR: UGM: UK: UNDP: USD: WB:

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Management Committee Millennium Development Goals Management Information System Ministry of Law and Human Rights Ministry of Finance Ministry of Health Ministry of Home Affairs Memorandum of Understanding Member of Parliament Management Strengthening and Institution Building for Local Public Service Providers Minimum Service Standards Non-Governmental Organisation No Objection Letter Norma, Standar, Prosedur, dan Kriteria (Norms, Standards, Procedures and Criteria) One Stop Shops Peraturan Daerah (Local Regulation) Provincial Governments Provincial Governance Strengthening Programme Direktorat Pengembangan Kapasitas dan Evaluasi Kinerja Daerah (Directorate for Capacity Development and Evaluation of Regional Performance) Program Nasional Pemberdayaan Masyarakat Mandiri (National Program for Community Empowerment) Peraturan Pemerintah (Government Regulation) Regulatory Impact Assessments Rencana Pembangunan Jangka Menengah Nasional (National Medium-Term Development Plan) Surat Edaran Bersama (Joint Circular Letter) Sekretariat Dewan (local legislature secretariats) Sistem Informasi Keuangan Daerah (Regional Financial Information System) Strategic Management Systems Support Office for Eastern Indonesia The Asia Foundation Tim Koordinasi Perencanaan, Pengawasan, dan Evaluasi (Coordination, Planning, Monitoring and Evaluation Team) Trust Fund Terms of Reference University of Gadjah Mada United Kingdom United Nations Development Programme United States Dollar World Bank

DSF Quarterly Report September 2010  

DSF Quarterly Report September 2010