DSF Quarterly Report December 2010

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DSF QUARTERLY REPORT DECEMBER 2010

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December 2010

DSF Quarterly Report

Table of Contents

Introduction ......................................................................................................................................1

DFID Review of the DSF: Follow-Up .............................................................................................1

Programme Implementation .............................................................................................................1

Local government borrowing (municipal bonds). ........................................................................1

Regional financial information systems (SIKD). .........................................................................2

Monitoring and evaluation of special allocation funds (DAK). ...................................................3

Policy framework (grand design) for fiscal decentralization (GDFD). ........................................3

Evaluation of ‗proliferated autonomous regions‘. ........................................................................3

Costing and implementation of minimum service standards (MSS) ............................................4

Formulation of norms, standards, procedures and criteria (NSPK) .............................................4

Spatial planning. ...........................................................................................................................4

Border area development. ............................................................................................................4

Inter-regional cooperation. ...........................................................................................................5

Sub-national investment climate reform. .....................................................................................5

DPRD orientation .........................................................................................................................5

Government training and education centre development: introducing competency-based

standards for public service delivery. ...........................................................................................6

Quality Assurance ............................................................................................................................6

The Future of the DSF ......................................................................................................................7

Monitoring Framework ....................................................................................................................7

Financial Status Snapshot .................................................................................................................7

DSF Executive ..................................................................................................................................9

Risk Management .............................................................................................................................9

Annex A: Monitoring Framework ..................................................................................................11

Annex B: Financial Report .............................................................................................................29

Annex C: List of Abbreviations, Acronyms, and Translations........................................................33

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December 2010

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December 2010


Decentralization Support Facility

Quarterly Report (For the quarter ending 31 December 2010)

Introduction

1. In accordance with the DSF operations manual, this report is submitted within 30

days of the end of the fourth quarter of 2010.

2. The report discusses implementation progress for a cross-section of activities

within the body of the report and for all activities in the monitoring framework in Annex

A.

3. In Table 1, a summary is presented of total projected disbursements and

commitments (programming and operations) against cash held and confirmed transfers.

Table 2 charts disbursement for 2009/10 and, for October/November 2010, compares it

with projections. A full financial report is set out in Annex B.

DFID Review of the DSF: Follow-Up

4. In late August/September 2010, a review of the DSF programme was conducted on

behalf of the DSF‘s principal financial donor (DFID).

5. Among other things, the reviewers recommended that a detailed DSF work plan be

drafted through to September 2011 – based on realistic disbursement estimates and the

necessity to ensure good quality implementation in the time remaining.

6. Discussions on the work plan and associated matters - within government and

between government and the DSF Executive - were held on several occasions during the

reporting period, notably at a government DSF technical team retreat held in Bandung on

the 18th

and 19th

of November, and – for Ministry of Home Affairs (MoHA) activities – a

meeting chaired by the Head of the Division for International Financial Institutions and

International Organization Cooperation, Center for Administration of Overseas

Cooperation that was held on 1st December 2010.

7. These meetings recommended that, where necessary, activities should be

‗rationalised‘ (meaning reduced in scope and/or complexity or terminated) so as to

accommodate speed of disbursement estimates and confirmed closing date constraints

and so as to optimise good quality in activity implementation. It was suggested that this

be done by government in close collaboration with staff of the DSF Executive.

Programme Implementation

8. 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.

9. Local government borrowing (municipal bonds). Discussions concerning

revisions of the government regulation on local borrowing (PP 54/2005) were completed

during the reporting period. All articles in the revised government regulation have been

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December 2010

agreed by Ministry of Finance (MoF), MoHA, BAPPENAS, Ministry of Law and Human

Rights, and the Secretary of Cabinet. In January 2011, a draft of the revised regulation

will be sent officially by the Minister of Finance to the Secretary of Cabinet for final

approval and sign-off by the President. With regard to the preparation of the (Jakarta

Special Capital Region) DKI municipal bond, DSF consultants have provided technical

assistance to the team responsible for preparing the issuance of DKI municipal bonds.

The assistance, among other things, includes: preparation of a budget for bond issuance;

socialisation of municipal bond underlying principles and issues to the finance

committees of local parliaments; drafting of local regulations required for the issuance

and management of municipal bonds; liaising with underwriters and other agencies; and

communicating with MoF on remaining requirements for bond issuance. In addition, DSF

consultants have drafted two local regulation templates for generic use by DG Fiscal

Balance in the context of municipal bonds. The first such regulation defines procedures

for issuing the bond, while the other is concerned with managing the bond during

disbursement, interest payments, and principal redemption periods. The templates have

been approved by DG Fiscal Balance and the Capital Market and Financial Institution

Supervisory Agency.

10. Regional financial information systems (SIKD). In early November 2010, a mini

application (‗patch‘) that enables local governments to present data in accordance with

the standard requirements of the SIKD database at the MoF was disseminated to more

than 200 local governments that utilise the regional management information system

(SIMDA). This was done during a technical workshop in Denpasar held by the Audit and

Development Supervising Agency (which developed the SIMDA system). During the

event, the electronic data transfer mechanisms were tested using data from 9 local

governments. The result is that to date a total of 35 local governments have now

submitted data electronically in the standardised format. Local governments have

proposed that the request for the submission of regional financial data to the SIKD be

instituted through a regulation that stipulates the level and type of data required. A

Minister of Finance‘s Regulation is therefore being drafted that specifies the format and

requirements of data to be submitted to SIKD by local governments that are using the

‗patch‘.

11. A second group of local governments is using a system known as the regional

financial management system and discussions have been held with the DG Regional

Finance, MoHA about obtaining electronic data from these local governments as well,

and incorporating those data into SIKD.

12. The remaining local governments still employ manual data entry, and a contract for

manual data entry is being drafted. Data to be entered manually comprise budget (APBD)

and budget realisation information for FY 2008-2010.

13. Finally, as follow-up to the capacity building on regional financial analysis

provided to the Directorate for Funding Evaluation and Regional Finance Information

(see September 2010 Quarterly Report), the top four working papers have been finalised

and published on the DG Fiscal Balance website

(http://www.djpk.depkeu.go.id/information/all/).

http://www.djpk.depkeu.go.id/information/all/

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14. Monitoring and evaluation of special allocation funds (DAK). A contract for

the implementation of DAK monitoring and evaluation systems - as set out by the ‗joint

circular letter‘ in the province of D.I. Yogyakarta - was completed in November 2010.

However, due to the Mt. Merapi eruption, facilitator training sessions had to be

postponed to the beginning of January 2011. With a view to undertaking more strategic

and cost-effective activities related to the management of DAK, the implementation of

similar activities in the provinces of Jambi, Central Kalimantan, West Sulawesi and

North Maluku is currently on hold. Further discussions between the DSF and the National

Development Planning Agency (BAPPENAS) on the possibility of reducing activity

coverage and/or starting a new activity related to the DAK are to take place in January

2011.

15. Policy framework (grand design) for fiscal decentralization (GDFD). An

external review of the current draft of GDFD calls, among other things, for the document

to incorporate important societal trends that are now occurring and/or that are likely to

occur within the next 20 years. Such trends include: accelerated urbanisation, which will

create a significant need for more and better infrastructure to support service delivery;

and the continued growth of the working age population, which will require substantial

job creation and economic growth (at national and local levels). The intergovernmental

fiscal system will clearly need to be designed with such developments in mind.

Moreover, the review indicated the need for discussing the trade-offs between growth and

equity in the design and implementation of an intergovernmental fiscal system. The

Assistance Team will revise the GDFD accordingly. The DSF is lobbying for the

elevation of the significance of GDFD discussions among, first, various DGs within MoF

and, second, among related Deputies in BAPPENAS and DGs in MoHA. This is designed

to prepare the ground for serious consideration of a revised GDFD at the national level.

16. During the reporting period, revisions were made to the draft analysis of the

general allocation funds (DAU), the special allocation funds, and the revenue sharing

instrument (DBH) (see September 2010 Quarterly Report). The revisions give particular

attention to the refinement of an alternative DAU formula.

17. Evaluation of ‘proliferated autonomous regions’. DSF has enabled the

socialisation of MoHA Regulation 21/2010 on Guidelines to Evaluate Local Government

Performance (in support of Law 22/1999 on Regional Autonomy) in Jakarta; and has

financed five workshops whose purpose was to ‗clean‘ and validate evaluation data

supplied by local governments. During the reporting period, a technical evaluation team -

comprising experts from universities, Indonesian Institute of Sciences, Indonesia

Chamber of Commerce and Industry, NGOs and the mass media – was established by the

Directorate for Capacity Development and Evaluation of Regional Performance, MoHA.

The job of the team was to review critically the evaluation work done to date, and the

resulting report, and to suggest improvements. DSF staff also provided substantive

inputs, particularly on methodological issues (such as the use of improved composite

indices and proper classification of results). The Director General of Regional Autonomy,

MoHA, has indicated that the revised report will inform discussions concerning the

revision of Law 32/2004 and, in particular, those parts of the law that deal with the

proliferation regions.

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18. Costing and implementation of minimum service standards (MSS)1. Testing

results for an electronic costing system for health in Kota Yogyakarta were presented to

the Ministry of Health (MoH) on 13th

December 2010. The meeting recommended

improvements to methods of data entry and other adjustments to the system. A follow-up

workshop was held on 29-30th

December 2010 in Kota Yogyakarta, which finalised the

costings. These will be presented to MoH and MoHA soon and later will be disseminated

to other pilot regions in the province of D.I. Yogyakarta, probably by the end of January

2010. DSF is also helping the Ministry of Environment to develop an electronic costing

system for environment MSS based on a draft costing manual developed by the ministry.

Important parts of the system (those that apply at the provincial level) should be

completed in January 2011. Other ministries that have developed their costing manuals

are the National Family Planning Coordinating Board (BKKBN), the Ministry of

Women‘s Empowerment, and the Ministry of Public Housing.

19. Formulation of norms, standards, procedures and criteria (NSPK)2. Inception

and mid-term reports for this activity – the latter incorporating changes recommended by

government and the DSF Executive on the basis of the inception report – were submitted

on time (in November and December, 2010 respectively). The mid-term report is being

evaluated. A manual for helping MoHA to assess NSPK formulated by sectoral ministries

is being drafted. Preparations (under recipient execution) are underway for NSPK

implementation impact assessments.

20. Spatial planning. Work continues on improving the relationship between regional

spatial and development planning and the alignment of regional and national spatial

plans. In the last quarter of 2010, training was provided to officials from three provincial

governments and officials from two local governments in each province – West Sumatra,

Gorontalo and East Java. Structured planning formats have been developed that are

designed to improve horizontal integration between regional planning documents as well

as between spatial planning documents at regional and national levels. Training was

provided on how to use the formats by applying them to current plans in each province.

BAPPENAS will disseminate the final planning document formats to other regional

documents in 2011. In the next quarter, training will be provided to staff from the

National Agency for the Coordination of Spatial Planning (BKPRN). This agency is

tasked with reviewing all draft regional spatial planning documents before they can be

passed into law. Also in the next quarter, two local governments will receive intensive

support to revise their spatial pans following BKPRN‘s review.

21. Border area development. In December 2010, a draft master plan for the

development of border areas was presented to the National Agency for Border

Management (BNPP). BNPP has officially endorsed the plan, which constitutes a

significant achievement in a relatively short time. The plan covers the period 2011-2014

1 Minimum service standards specify the minimum type and quality of basic services to which citizens have

entitlement by law (Ministry of Home Affairs Regulation No. 79/2007). To date, MSS have been issued in

13 sectors, namely: health, education, social, family planning, environment, public works, public housing,

women‘s empowerment, culture, food security, manpower, population and civil registration, and

communication and information. 2 These are formulated by sectoral ministries as guidance to provincial and district/city governments in the

implementation of their functions.

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December 2010


and includes the vision, mission, basic principles, policy direction, strategies, and

programs for BNPP. A monitoring and evaluation framework will be developed during

the next quarter to support the implementation of the master plan. A national action plan

for 2012 will then be developed, which will focus on border area development priorities

for the 12 border provinces. At the same time, in a parallel and related activity led by

BNPP, guidelines for the preparation of action plans by local governments in border areas

have been drawn up. The guidelines promote a new approach to border area planning

and budgeting, including the use of kecamatan as loci of development; better

participation in plan preparation; and provincial forums for discussing programs and

projects proposed for border area development. Draft action plans based on the guidelines

are expected by the first quarter of 2011.

22. Inter-regional cooperation. In the fourth quarter of 2010, with support from the

DSF, an analysis was conducted of inter-regional cooperation in Indonesia. The resulting

report pays particular attention to the roles and functions of the 12 Regional Management

Forums (RMF) located across Indonesia. In the next quarter, work will begin in four

RMF to provide capacity building support - by helping with the development of annual

and medium-term planning documents. This is a joint venture between BAPPENAS and

the Ministry for the Development of Disadvantaged Regions. At the same time, a parallel

activity led by the Directorate De-concentration and Cooperation of MoHA will begin to

develop road map of inter-regional cooperation; strengthen inter-ministerial coordination

for inter-regional cooperation; provide guidelines and good practice models to regional

governments; and help MoHA with policy and regulation development.

23. Sub-national investment climate reform. The activity builds on the

achievements of the original program, which was to institutionalize capacity within local

governments (LGs) to implement effective, efficient and accountable regulations and

processes for business licensing. The program: (i) supports MoHA in monitoring the

performance of ‗one stop shops‘ (OSS) for business licensing across the country; (ii)

helps three provincial governments (PGs) to establish district-level OSS and improve the

performance of existing ones; and (iii) supports BAPPENAS and three PGs in

disseminating and utilising regulatory impact assessment methods.

24. The follow-on activity was proposed for execution through a grant agreement. The

grant agreement was signed by the World Bank and The Asia Foundation in November

2010. Subsequently, meetings were held with government counterparts to update the

implementation timeframe. Implementation of project activities will start early in the first

quarter of 2011.

25. DPRD orientation. This activity was proposed by the Government Education and

Training Center (Diklat) of MoHA. It provides general introduction to DPRD roles and

responsibilities for all DPRD members in targeted provinces and kabupaten/kota based on

the Ministry of Home Affairs Circular Letter No.161/3229/SJ regarding

Orientation/Introduction to Duties of DPRD Members at the Provincial, Kabupaten, and

Kota level. The activity also addresses fundamental issues related to nationalism and state

responsibilities.

26. The program is managed by Diklat through an amendment to an existing grant

agreement (signed in January 2010 and effective in March 2010). Diklat registered the

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December 2010

grant, and obtained budget implementation entry list (DIPA) approval from MoF in

November 2010.

27. Following DIPA approval, Diklat conducted two training courses for DPRD

members in November-December 2010. The training addressed basic concepts, values,

and relevant regulations and laws governing aspects of state affairs, local government,

and basic duties and functions of DPRD members. Sixty-eight DPRD members attended

the training courses.

28. Diklat has revised the implementation plan to take account of the fact that newly-

elected local legislatures have been working for almost a year. This will allow Diklat -

through an orientation course - to obtain input from DPRD members regarding their first

year of operation and issues they have been dealing with while performing their duties.

Based on the input received, Diklat will update the training program and conduct training

of trainers early in the first quarter of 2011, which will be followed by the remaining set

of orientation courses for DPRD members.

29. 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. The

following outputs have been produced so far: (1) a draft ministerial regulation on the

strategic 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; (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); (4) a draft competency certification scheme on population administration

and civil registration; and (5) draft competency testing materials for 10 competency units.

Diklat has also implemented 10 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, and Training and Education Centre), the National Civil Service Agency

(BKN-Badan Kepegawaian Nasional), the National Agency for Professional Certification

(BNSP-Badan Nasional Sertifikasi Profesi), the Ministry of State Apparatus Empowerment

and Bureaucracy Reform (Kemenpan-Kementerian Pendayagunaan Aparatur Negera &

Birokrasi Reformasi), the State Ministry for Administrative Reform, and a number of

local governments (East Java, West Kalimantan, West Nusa Tenggara) - with equal

representation from central and local governments.

Quality Assurance

30. Several problems have arisen in relation to the activity ‗Strengthening Local

Government Natural Resource Management Capability‘. These include late submission

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and unsatisfactory quality of the inception report. Formal 30-day notice of rectification

requirements has been given to the implementing agent.

31. In addition to normal quality control and reporting requirements, where recipient

and/or Bank-executed activities are extremely complex or are deemed to pose significant

quality and/or speed of implementation challenges, implementing agents will be invited

to make workshop presentations of plans and progress to government and/or to the DSF

Executive.

32. The following activities are among those that will be making such presentations

early in the New Year: (1) Institution Building for the Integration of National-Regional

Development and Spatial Planning; (2) Capacity Development for Minimum Service

Standards Costing and Implementation; (3) Formulation of Norms, Standards, Procedures

and Criteria for Local Government Service Delivery; and (4) Management Strengthening

and Institution Building for Local Public Service Providers.

The Future of the DSF

33. This matter was raised at the government DSF technical team retreat held in

Bandung on the 18th

and 19th

of November 2010 and a proposed results-based programme

was considered. It was determined that the questions involved merited further discussion

by government. To consider these and related matters, it is likely that a retreat involving

government and members of the DSF Executive will be held early in the first quarter of

2011.

34. If there is to be a smooth transition, decisions will need to be taken soon so that a

new programme can be designed, and detailed proposals can be made concerning,

funding and institutional and transition arrangements for the DSF.

Monitoring Framework

35. Annex A summarises progress made to date according to the agreed monitoring

framework.

Financial Status Snapshot

36. A detailed financial report is set out in Annex B.

37. Table 1 below sets out the cash position of the DSF as of 31st December 2010 and

total projected disbursements (programme and operations) to March 2012, the final date

for programme payments.

38. 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 30th

September 2011 and the final date for programme payments of March 2012.

Table 1: Snapshot of Financial Status (USD)

Funds pledged 44,775,547

Funds received 29,000,052

Investment income 1,465,262

Other receipts 24,753

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December 2010

(USD)

Total income 30,490,067

Disbursements and commitments 22,986,171

Total cash available 7,503,896

Additional funds to be transferred 1,000,000

Funding ceiling 8,503,896

Total projected disbursements (to March 2012)3 8,439,634

Balance 64,262

39. An historical account of disbursements and commitments is set out in Table 2 and

depicted graphically in Figure 1. Table 2 also contains a breakdown of disbursements and

commitments against projections for the months of October and November 2010, and

disbursement and commitments projections through to the end of September 2011.

Table 2: DSF Program Disbursements & Commitments (USD) - to 30th

November

2010

Actual Disbursements

and Commitments

(average per month)

Projections

(average per month)

%

Actual

vs

Projections

Total

Projections

Feb. - March 2009 338,082

Apr. - May 2009 388,176

Jun. – Jul. 2009 397,448

Aug. – Sept. 2009 240,525

Oct. – Nov. 2009 413,357

Dec. 2009 – Jan. 2010 386,456

Feb. - March 2010 857,933

Apr. - May 2010 792,132

Jun. – Jul. 2010 867,337

Aug. – Sept. 2010 925,786

Oct. – Nov. 2010 1,030,010 857,000 120% 1,714,000

Dec. 2010 – Jan. 2011 574,250 1,148,500

Feb. – Mar. 2011 1,066,750 2,133,500

Apr. – May. 2011 619,500 1,239,000

Jun. – Jul. 2011 912,500 1,825,000

Aug. – Sept. 2011 556,888 1,113,775

Total Disbursement Projections Oct 2010 - Sept 2011 9,173,775

3 Includes all programming and overhead costs (DSF Executive staff and office, and some operations

costs). Activities must end by 30th

September 2011, but a certain amount of overhead will be required

during the (financial) wind-up period, October 2011 – March 2012.

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December 2010


Figure 1: Disbursements & Commitments

DSF Executive

40. In relation to staffing, the following developments took place during the reporting

period: first, the Deputy Programme Manager resigned and her responsibilities were

absorbed by other professional staff. Handover and transition arrangements were

managed smoothly and with minimum disruption to activities. Second, two project or

activity support positions were created and filled by well-qualified internal staff

(nationals who are Master degree holders). These positions will help with day-to-day

aspects of project implementation and quality control.

41. Subject to natural attrition, it has been determined that staffing levels will be

maintained at full strength through to 31st December 2011. Thereafter there will be

significant reductions through to the closing date for disbursements of 31st March 2012.

Risk Management

42. The main risk associated with closure of the facility remains that outlined in the

September 2010 quarterly report, namely, the maintenance of implementation quality

control. In order to mitigate this risk, and in addition to normal quality control measures,

during the reporting period detailed work and disbursement plans formed the basis of

DSF Executive bi-weekly internal portfolio review meetings and the basis of regular

discussion with relevant stakeholders(government, Bank, and principal financial donor).

This will continue through to the closure of the facility. In addition, as mentioned above,

two (national) programme support positions have been created for this purpose (through

the re-design and upgrading of existing positions).

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December 2010

Annex A: Monitoring Framework

Project Name Decentralization Support Facility (DSF) Phase 2

Goals Indicators Progress Rating Comment

Improved socio-economic

development and reduced

poverty

Indonesia's Human

Development Index (HDI)

Purpose Indicators Progress Rating Comment

Equitable, accountable and

high quality public services

provided by national and local

governments

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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December 2010

Output 1: Public Service Delivery

Objectives Indicators Progress Rating Comment

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

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. 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.

Phase 2: The Grant Agreement for ACN 11/2009 on Formulation of

Norms, Standards, Procedures and Criteria (NSPK) has been

countersigned. The special account has been issued and the adjusted

budget implementation document (DIPA) for 2011 is being finalized.

The procurement plan and annual plan were updated.

8 sectors were proposed for NSPK formulation and presented to

sectoral ministries for confirmation (expected in the 1st quarter of

2011).

For the Bank executed component, a contract for assessment of NSPK

status with University of Gadjah Mada-Centre for Economic and

Public Policy Study (UGM-CEPPS) has been signed.

An Inception Report was submitted to MoHA; recommendations were

accommodated in the Mid Term Report of December 2010. Collection

of NSPK status has begun.

A manual to assist MoHA with the assessment of NSPK formulated by

sectoral ministries, has been drafted and is expected to be finalized in

the 1st quarter of 2011.

Milestone 1.

NSPK status collected, mapped for all sectors, and database developed

in the 1st quarter of 2011

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2

The Local Government Affairs

directorate within the Directorate

General of Regional Autonomy has

been restructured resulting in

NSPK being managed by two

directorates: UPD 1 and UPD 2.

UPD 1 is responsible for project

management. The officer in charge

remains the same.

1.2. Minimum Service

Standards (MSS), in

targeted sectors budgeted

and implemented in

Implementation of MSS in

selected sectors in selected

districts and municipalities

Phase 1: A Manual for Minimum Service Standards (MSS) Costing

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

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December 2010



selected district

governments

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

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 would encourage innovation by regions.

Phase 2: ACN 14/2009 on Capacity Development for Minimum

Service Standards Costing and Implementation has changed method of

execution from Recipient executied to Bank executedConsultants have

been contracted to implement the activities.

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. 5 provinces,

8 kabupatens and 5 kotas of pilot regions confirmed their participation.

Uploading data for MSS of Health costing using local budget (APBD)

2011 was presented by Dinas Kesehatan Kota Yogyakarta and

discussed with the Ministry of Health.

Improvement of the electronic system and the uploading of data was

completed in December 2010. The costing for MSS Health Kota

Yogyakarta is available. The electronic system for costing MSS for the

environment sector was developed based on the draft Environment

MSS Costing Manual. It includes provincial and district level MSS.

The provincial component has been discussed with the Ministry of

Environment.

2

Due to the complex nature of this

activity and limited timeframe, GoI

has reduced the scope of work.

14


December 2010



Milestone 1

MSS implementation in Health in 5 selected districts is expected to be

underway by the 1st quarter of 2011. MSS implementation for

Environment is expected in the 2nd quarter of 2011.

Women‘s empowerment was

replaced by the Environment sector

1 province has withdrawn.from the

activity.

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

Local Public Service

Providers (MSIB-LPSP))

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

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 SMS-AMSD pilot Implementation in

target local governments in West Java completed

Progress in the 4th quarter of 2010 was constrained by the change in

management structure and counterpart staff in MoHA.

This resulted in the need to obtain approval from the new

PUM/MoHA counterparts to continue the MSIB-LPSP) project.

A workshop was held in mid-December to present the project content

and objectives to the new PUM management while also seeking

renewed commitment from provincial and local government

representatives. The discussion resulted in joint approval of reduced

project scope and revised time schedule.

Consequently, implementation of the pilot alternative schemes has

been delayed.

An action plan for improved service delivery in the areas of population

administration, regional hospital services and water supply services for

six local government service providers is expected to be finalized in

the second quarter of 2011

Milestone 1

The Final Report on development of baseline data: Women‘s Access

to Selected Public Services (Population Administration, Regional

1

2

Activity to be fully Bank executed


activity, change in management

structure and limited timeframe,

GOI has reduced the scope of

work.

15


December 2010



hospital and water provision services) has been completed.

Milestone 2

As a result of the management changes and reduced project scope

milestone 2 and the target will need to be adjusted accordingly in the

1st quarter of 2011.

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

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 areas are largely finalized.

Progress in the 4th quarter of 2010 was constrained by the change in

management structure, counterpart staff and counterpart institution

from PUM to BNPP. This resulted in the need to obtain approval from

PUM to continue the ―Institution Building for Accelerated Border

Area Development‖ project under BNPP management

A workshop was conducted to present the project content and

objectives to the BNPP management. The discussion resulted in joint

approval of reduced project scope and a revised time schedule.

A socialization meeting was held with representatives from regional

governments to discuss the preparation of an action plan based on the

master plan for State Border Management and Border Area

Development 2011-2014.

Guidelines for Border Area Action Plan Preparation to be used by

sectoral Ministries and Provinces/Kabupaten/Kota have been drafted

and submitted to BNPP.

Milestone 1

Public Service assessment in selected border areas expected to be

completed by 1st quarter of 2011.

Milestone 2

Draft Action Plan for public service delivery is expected to be

completed in the 2nd quarter of 2011.

The Final National Action Plan is expected to be produced and

integrated into the Government Annual Work Plan (Rencana Kerja

Pemerintah Kementrian/Lembaga) by the 3rd quarter of 2011.

2 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.

Activity to be fully Bank executed.


activity and limited timeframe, GoI

has reduced the scope of work.

1.5. Local governments adopt

effective, efficient and

accountable regulations

and processes for business

licensing

Local government

performance in implementing

OSS for business licensing

Phase 1: The project has successfully delivered all outputs stipulated

in the contract, with regard to both One Stop Shops (OSS) for business

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

1

16


December 2010



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

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

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 project is being implemented by the Asia Foundation (TAF) who

signed a Grant Agreement with the World Bank in November 2010.

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 in target provinces and districts are expected to be

achieved in April 2011.

2

Output 2: Fiscal Decentralization and Capacity Development

Objectives Indicators Progress Rate Comment

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

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

Regional Financial Information System by Sub-National Governments

with Stand-Alone Electronic Data Bases, approved by DSF MC in

October 2009.

1

1

17


December 2010



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 has been available for 8 districts as of June 2010.

The development of computer application/software intended for

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

in 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 sanctions for districts that

fail to submit financial reports in a timely manner.

In November 2010, a mini application (‗patch‘) that enables local

governments to present data in accordance with the standard

requirements of the SIKD database was disseminated to 200+ local

governments that utilize the Regional Management Information System

(SIMDA). During the event, the electronic data transfer mechanisms

were also tested using data from 9 local governments.

A second group of local governments is using a system known as

Regional Finance Management Information System (SIPKD) and

discussions have been held with the DG Regional Finance (DJKD),

MoHA about obtaining electronic data from these local governments as

well, and incorporating the data into SIKD.

A contract for manual data entry is being drafted. Data to be entered

manually comprises Budget Data (APBD) and Realisation Data (LRA)

for FY 2008-2010.

Capacity development in conducting regional financial analysis for

Directorate of EPIKD staff completed. Short term training was held for

20 staff members in Bandung in July 2010. 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. The

top four working papers have been finalized and published on the DG

Fiscal Balance website (http://www.djpk.depkeu.go.id/information/all/)

Local governments have proposed that

the request for the submission of

regional financial data to the SIKD be

instituted through a regulation that

stipulates the level and type of data

required. A Minister of Finance Decree

(PMK) is therefore being drafted that

specifies the format and requirements

of data to be submitted to SIKD by

local governments using the ‗patch‘.

18


December 2010



Milestones 1 and 2

Data entry for LRA 2007 was suspended by the government to

focus on LRA 2008 instead. The current LRA 2007 data is thus, in

effect, 100 percent complete

Data entry for 2008 will be conducted starting January 2011

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 35

districts had submitted financial data electronically.

2.2. Improved fiscal

decentralization policy

Implementation of ‗Grand

Design of Fiscal

Decentralization‘ across

government ministries and

local governments

ACN 13/2009 ACN on Improving the Policy Framework for Fiscal

Decentralization (‗Grand Design of Fiscal Decentralization‘ - GDFD)

approved by DSF MC in November 2009.

Project implementation plan completed in January 2010

Three workshops/public consultations were conducted in Pontianak

(West Kalimantan), Makassar (South Sulawesi) and Surabaya (East

Java) to gain insights from a wide range of stakeholders, regarding the

appropriate strategy to 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. Revisions, in particular, the refinement of an

alternative DAU formula, were completed in December 2010.

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. An external review

recommends incorporation of current and future social trends

Preparation for workshop on legal status for GDFD is underway

Milestone 1

Expected to be achieved in August 2011.

2 The DSF will provide support to MoF

team in charge for the revision of Law

33/2004.

In the absence of a finalized draft of

the Grand Design for Regional

Autonomy (GDRA) as well as MoF

and MoHA immediate need to

synchronise an array of substantive

issues related to the revision of Law

32/2004 and 33/2004, efforts should be

redirected to the harmonisation

between the revision of Law 33/2004

(which is based on GDFD) and that of

Law 32/2004.

The DSF promotes discussion of the

GDFD among various MoF DGs and

among relevant Bappenas and MoHA

officials.

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,

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

2

19


December 2010



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

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) have been issued. The first defines

procedures for issuing the bond, while the other is concerned with

managing the bond during disbursement, interest payments, and

principal redemption periods. The templates have been approved by

DG Fiscal Balance and the Financial Institution Supervisory Agency

(BAPEPAM)

Analysis on DKI Jakarta‘s ability to pay back municipal bonds was

completed in June 2010.

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.

DSF consultants have provided technical assistance to the team

responsible for preparing the issuance of DKI municipal bonds. The

assistance, among other things, includes: preparation of a budget for

bond issuance; socialization of municipal bond underlying principles

and issues to the finance committees of local parliaments; drafting of

local regulations required for the issuance and management of

municipal bonds; liaising with underwriters and other agencies; and

communicating with MoF on remaining requirements for bond

issuance.

Capacity building was provided to the city government 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. Do we know by now the status?

Two rounds of discussions on revision of GR 54/2005 on local

borrowing between MoF and Ministry of law and Human Rights

2

Directorate of Regional Financing and

Capacity-MoF submitted a request to

expand the scope of activities to the

Province of Riau Islands and City of

Surabaya

MoF and DSF have decided to focus

their efforts on ensuring the issuance of

DKI Jakarta municipal bonds.

Assistance for Surabaya city and

province of Riau Islands has therefore

been dropped at the request of the GoI.

20


December 2010



(MLHR) took place in February, May and August 2010.

During September-December 2010, additional meetings concerning

revisions of the government regulation on local borrowing (PP54/2005)

took place. The revision was completed in December 2010. All articles

in the revised government regulation have been accepted by MoF,

MoHA, Bappenas, Ministry of Law and Human Rights, and the Cabinet

Secretary.

Milestone 1

Credit worthiness assessment of two pilot municipalities for issuance of

municipal bonds will be completed by an independent credit rating

company by 2nd quarter 2011.

Milestone 2

Dates for future discussions to finalise GR 54 will be determined by

Ministry of Law and Human Rights (MLHR). It is expected that the

revised GR will be signed by the President in the 1st quarter of 2011.

In January 2011, a draft of the revised

regulation will be sent by the Minister

of Finance to the Cabinet Secretary for

final approval and signature by the

President.

Contract to conduct credit worthiness

assessment for Surabaya and Bandung

have been signed. The assessment will

be undertaken by S&P 500. [NOTE:

the DSF will not fund the assessment]

2.4. Improved public financial

management of special

allocation funds (Dana

Otsus) by local

governments

Public financial analysis of

Dana Otsus completed by

selected local governments as

a basis for local government

planning and budgeting

Phase 1: Empirical analysis of regional government surpluses based on

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

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 (provinces and districts) in the 1st quarter of 2011.

Milestone 1

The activity has been significantly reduced in scope (see note). It was

also delayed as a consequence of other urgent MoF priorities and to

avoid heightened political tensions during the process of revision of a

local regulation pertaining to Otsus. Discussions between DSF and MoF

concerning the status of this activity are ongoing.

1

2

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.

The activity has been reduced in scope

and now consists of a Focus Group

Discussion (FGD) on the management

of Dana Otsus followed by an

expenditures tracking study

21


December 2010



2.5. Government pro-poor

special allocation funds

(DAK) monitored and

evaluated

Monitoring and evaluation

reports completed on

expenditures of pro-poor

government fund in selected

local governments

ACN 3/2009 on Socialisation and Pilot Implementation of Joint

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.

A contract for the implementation of DAK monitoring and evaluation

systems - as set out by the ‗joint circulator letter‘ in the province of D.I.

Yogyakarta - was completed in November 2010.

Target i

Government designed monitoring and evaluation system for DAK will

be implemented in the district of the province of Yogyakarta by April

2011. Implementation in the other four provinces is under discussion

(see note)

Target ii

Pending discussions with Bappenas target ii may not be achieved as

planned

1 Implementation was split into two

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.

Due to the Mt. Merapi eruption,

facilitator training sessions had to be

postponed to the beginning of January

2011.

With a view to undertaking more

strategic and cost-effective activities

related to the management of DAK, the

implementation of similar activities in

the provinces of Jambi, Central

Kalimantan, West Sulawesi and North

Maluku is currently on-hold until

further discussion between the DSF

and Bappenas have been held in

January 2011.

22


December 2010

Output 3: Increasing Accountability


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

Component 1: Capacity Strengthening of DPRD

The DPRD Capacity Strengthening programme managed by the Local

Government Affairs section of the Directorate General of Regional

Autonomy in MoHA completed the technical evaluation of the six

proposals pertaining to the delivery of the DPRD training.

The Road Show to present the program and secure participation from

the provincial and district level DPRDs was also carried out in this

quarter.

The contracting of the implementing agency for training delivery, as

well as the singing of the MoUs with participating DPRDs is scheduled

to be completed in February 2011.

Component 2: Introducing Competency based Standards for

Public Service Delivery

The DPRD Orientation program managed by the MoHA Training and

Education Center (Diklat) is moving forward..The Amendment to the

Grant Agreement to accommodate this program has been signed and

Diklat included it in the DIPA revisions in November 2010.

Two training courses were conducted in November-December for

DPRD members to refresh and enhance their understanding of basic

concepts, values, and relevant regulations and laws governing aspects of

state affairs, local government, and basic duties and functions. Sixty

eight local parliamentarians attended.

The remaining set of training courses are scheduled to be completed in

the first quarter of 2011.

Milestone 1

150 local parliament representatives in 5 provinces with 30% women

trained is expected to be met by the 3rd quarter of 2011

1 Staff changes in MoHA have led to

some delays in activity implementation

This program moved to a different

section within Diklat: Management

and Leadership of Local Government..

Initial coordination meetings indicate

that the program will be well integrated

into Diklat operations.

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

ACN No. 9/2009 on Capacity Building through Decentralized

Education and Training 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

Study tours

Scholarships for Master degree programs in decentralization related

studies in the UK.

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

the implementing party of the scholarship program.

2 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,

in March 2010 AKLN/MoHA asked

that the Bank assume responsibility for

the execution of the scholarship

component of the project.

23


December 2010



26 candidates achieved the required International English Language

Testing System (IELTS) 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. 24 accepted the offer.

In September 2010 244 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.

Discussions on the destination countries and program details pertaining

to the study tours and short courses are underway.

Milestone 1

30 national, local government officials and CSO leaders are expected to

be trained in the 2nd quarter of 2011.

Implementation of study tours and

short courses will be Bank executed.

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.

Under Government Regulation 38/2007, the substance of the

competency standards strategic framework for local governments will?

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

1

Although there has been restructuring

within Diklat and the competency

based training program has moved to a

newly created unit within Diklatt 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.

4 Two scholars withdrew from the program.

24


December 2010



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 operationalisation 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 competency-

based training are expected to be completed by the 4th quarter of 2010.

Output 4: Planning and Performance Measurement


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 National-

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. In line with evolving needs and

at the government‘s request DSF will focus on the district/city level.

A firm is supporting the drafting of spatial plans as well as

strengthening the National Agency for the Coordination of Spatial

Planning (BKPRN). The firm is working in cities and districts in three

provinces: West Sumatra, Gorontalo and East Java.

Milestone 1

i) Three district/city plans are expected to be submitted to parliament

during the 1st quarter of 2011.

ii) Capacity building plans were developed for targeted districts/cities

in September 2010.

1

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. The

implementing agency will focus on

providing capacity building support to

district and city governments.

25


December 2010



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

The ACN 2/2009 on capacity building for regional 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

provincial level analytical papers focused on inter-regional connectivity

and from these, island-based development strategies will be derived.

Contract award for part 2 of this activity is expected in January 2011.

Milestone 1

Data and policy assessment will be completed by March 2011.

2 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.

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 2010-

2014 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.

4.3. Strengthening Capacity for

Inter-Regional

Cooperation

Regional management

forums have medium term

plans and annual action plans

approved by relevant local

governments

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).

A detailed review of existing regional management forums across

Indonesia is underway. A firm has been selected to provide capacity

strengthening in four of the forums.

MoHA has approved the workplan for development of an action plan

and guidelines for Inter-regional Cooperation.

Mapping /Needs Assessment was initiated this quarter and is expected

to be completed in February 2011.

2 Activity to be fully Bank executed.


activity and limited timeframe, GoI has

reduced the scope of work.

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 inter-

regional 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

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.

Milestone 1

Activity implementation is behind schedule.

2

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.

26


December 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

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.

A contract will be awarded in February 2011.

2 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,

MoHA and the Ministry of Disadvantaged Regions.

A firm has been contracted to support Bappenas drafting a national

master plan, as well as to support capacity building in several border

areas. At the request of the client this activity has been reorganised and

the first stage of the activity focused entirely on the development of the

master plan.

Milestone 1

Profiles of 38 border regions are now expected to be completed by 2nd

quarter of 2011.

Milestone 2

National master plan for border area development was completed in

December 2010.

2 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

implementing agency is also providing

capacity support in 3 provinces: West

Kalimantan, East Kalimantan and Riau.

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, verify and validate data sent by the local

governments and utilized in the evaluation during August-September

2010. Data analysis and report preparation is currently underway. The

evaluation workshops were led by a Technical Evaluation Team—

comprising experts from universities, Indonesian Institute of Sciences

(LIPI), Indonesia Chamber of Commerce and Industry (KADIN

Indonesia), NGOs as well as mass media—established by the

Directorate for Capacity Development and Evaluation of Regional

Performance (PKEKD), MoHA.

During the last quarter of 2010 DSF facilitated three workshops to

continue analysis of the above mentioned data. DSF staff also provided

substantive inputs, including improvement of composite indices and

classification of results.

1

The Director General of Regional

Autonomy, MoHA, used the report to

support the discussion of revision of Law

32/2004, on the proliferation of regions.

27


December 2010



4.8. Local Government

Evaluation and Support for

EPPD-EDOB

Development of Criteria and

Index to administratively

assess EPPD-EDOBs

Discussions between DSF and MoHA regarding project continuation

and mode of execution are on going

3

4.9. Provincial Governance

Strengthening Programme

(PGSP) under third party

(UNDP Fiscal Agency

Agreement)

Enhanced policy and

regulatory framework and

application of regional

economic development and

governance innovations

The Fiscal Agency Agreement became effective in May 2010 and the

initial allocation of US$1 million was deposited in July. The project

was officially launched in August 2010 and the proposed work plan

endorsed in September.

During the quarter the PGSP continued the work on finalizing

provincial workplans.

The PGSP supported several workshops in support of the finalization of

draft Law 32, including revisions to specific chapters: Chapter III,

Article 18 of regional authority in maritime management; and Chapter

II regarding Special Areas/Regions. Work has been initiated to support

the planning and budgeting process and linkages to the Human

Development Report /Human Development Index (HDR/HDI)

including: draft policy papers on the Musrenbang Revitilization Process

and Implementation for 2011of PP38/2007. In the provinces of

Gorontalo and Bangka Belitung initial workshops on local economic

development have been launched with the Pepper Export Association,

universities and pepper farmers. In support of PUM MoHA three

consultants have been hired for the implementation of MSS in selected

provinces.

3 Efforts will be undertaken to coordinate

these provincial based activities with

related DSF activities. Following initial

slow start-up of activities, significant

disbursement has been made as reported

in the Financial Management Report

(FMR)

4.10.Formulation of Grand

Design for Regional

Autonomy

Implementation of GDRA

across government ministries

and sub national governments

The project objective is to support MoHA formulate the Grand Design

for Regional Autonomy (GDRA) by clarifying and improving:

functional assignments between central, provincial, and district/city

level governments, as well as to reform personnel policies at provincial

and district/city level governments in West Java, Eastern Kalimantan

and Nusa Tengara Barat.

Four consultants have been recruited and they have completed two draft

concept papers on Functional Assignments and Personnel Management

Reforms.

Stakeholder consultation missions to the three pilot provinces are

underway and expected to be completed in March 2011.

1

28


December 2010



5. Knowledge Management for

Aid Effectiveness

Publicly accessible data base

on support to sub-national

government developed.

DSF knowledge management

strategy formulated

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

planning and monitoring tool for the government and members of the

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.

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.

http://www.dsfindonesia.org/apps/dsf-dm/cgi-bin/dw.cgi

September 2010

DSF Quarterly Report DSF Quarterly Report

December 2010

29

Annex B: Financial Report

Summary

Donor Pledges: Three donors have pledged a total of USD 44.78 million (exchange

rate December 31, 2010).

Receipts: USD 29 million or 64.76% of total pledges have been received.

Disbursements: USD 20.87 million or 72% of total pledges received.

Cash Held: USD 9.62 million, including USD 2.12 million of outstanding signed

contracts/commitments. Cash available is therefore USD 7.5 million.

I. Donor Contributions

DSF has 9 donor partners, 3 of whom are financial contributors: DFID, AusAID, and

CIDA. Total pledges amount to USD 44.78 million (31 December 2010 exchange rate).

About 96.6% of the total amount (USD 43.28 million) has been pledged by DFID. As of

31 December 2010, DSF had received USD 29 million or 64.76% 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 43.28 27.5

AusAID USD 1 1 1

CIDA CAD 0.5 0.5 0.5

Total

44.78 29

II. Disbursement Status

To date, DSF has received USD 30.49 million, consisting of USD 29 million of donor

contributions and USD 1.47 million of investment income. As of December 31, 2010,

USD 20.58 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 2: Disbursement Status of the DSF as of December 30, 2010

Actual

(USD)

Commitments

(USD)

Receipts

Paid in Contributions 29,000,052

Investment Income 1,465,262

Other Income 24,753

Total Receipts 30,490,067


September 2010 December 2010


30

Actual

(USD)

Commitments

(USD)

Disbursements

Focal Area 1 2,312,008 155,987

Tax Assignment and Own-source Revenue(1)

- -

Transfer 90,754 -

Borrowing 596,853 -

Surplus and Reserves 183,105 -

Data for Monitoring and Evaluation 400,595 -

Assessing and Revising the System for Setting Territorial Boundaries 227,500 -

Fiscal Agency Intergovernmental Framework Fund 476,214 -

Exploring Future Reform Options in Functional Assignment 47,467 -

Supporting the Establishment of Financially Feasible Minimum

Service Standards(4)

89,765 155,987

Alternative Mechanism of Service Delivery(2)

199,755 -

Focal Area 2 1,394,890 -

Local Government Performance Measurement 187,174 -

Identification and Replication of Good Practice 382,392 -

Appraisal : Sub national Investment Climate Reform 599,116 -

Knowledge Management for Effective Local Government Support

Programs

58,823 -

Mapping and Analysis of Local Planning and Budgeting Processes 49,703 -

Improved Evidence Base of Good and Bad Local Perda 117,682 -

Focal Area 3 5,380,224 -

National Program for Community Empowerment 1,072,961 -

CDD Summit 421,705 -

Policy Development for PNPM 58,666 -

Cost Accounting Review for CDD Programs 16,512 -

Technical Assessment for CDD Programs 53,685 -

Information, Education and Communication for PNPM 484,739 -

User Fee Assessment for CDD Programs 391,280 -

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 -

Quick starts 97,908 -

DSF Project Operations 5,989,718 108,365

Staff costs 3,644,865 8,800

Operation costs 2,344,853 99,565

September 2010


December 2010

31

Actual

(USD)

Commitments

(USD)

Approved Work Plan 2009 - 2011 (1st round)

New projects approved and registered in FY09 (1st round) 1,321,645 1,730,240

Support to Public Service Delivery(3)

66,534 57,638

Strengthening Data Provision to the Regional Financial Information

System by Sub-National Governments with Stand-Alone Electronic

Data Bases

71,350 50,349

Improving and Piloting the Implementation of Monitoring and

Evaluation System of Special Allocation Funds Utilization

25,701 54,678

Improving the Policy Framework for Fiscal Decentralization 273,140 190,704

Building Capacity for the Development of Sub-National Government

Capital Markets for Municipal Bonds

184,340 222,397

Decentralization Support Facility II Capacity Strengthening Program

for Local Government Legislatures

75,000 -

Government Training and Education Center Development:

Introducing Competency Based Standards for Improved Public

Service Delivery

100,000 -

Institutional Building for the Integration of National Regional

Development and Spatial Planning

183,381 222,242

Capacity Building for Regional Development Policy Formulation 85,680 -

Institution Building for the Accelerated Development of Border

Areas

182,782 271,317

Strengthening Local Government Natural Resource Management

Capability

73,737 577,918

Capacity Building through Decentralization Education and Training

(DET) Scholarships for Public Service(5)

- -

Management Strengthening and Institution Building for Local Public

Service Providers (MSIB-LPSP)(2)

- 82,996

Capacity Development for Minimum Service Standards costing and

Implementation(4)

- -

Decentralization Support Facility II Formulation of Norms,

Standards, Procedures and Criteria (NSPK) for Local Government

Service Delivery(3)

- -

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 1,008,312 111,316

Provincial Government Support Program 1,000,000 -

Regional & Local Economic Development - -

DPRD Orientation(5)

- -

Capacity Building for Regional Development Policy Formulation

(addendum)

8,312 60,427

Sub-National Business Climate Reform(5)

- -

Regional Development Policy - 50,889

Approved DSF Work Plan 2009 - 2011 (2nd round) in process of

registration




32

Actual

(USD)

Commitments

(USD)

Approved additional DSF Executive Operations Work Plan 2009

- 2011

98,169 15,163

Knowledge Management for Aid Effectiveness 98,169 15,163

Approved additional DSF Executive Operations Work Plan 2009 -

2011 in process of registration

- -

Total Project Disbursements 20,575,099

Administration fee 290,001

Total Disbursements 20,865,100

Outstanding commitments 2,121,071 2,121,071

Total Cash Available (= receipts - disbursements - commitments) 7,503,896

⁽¹⁾ The project was cancelled

⁽²⁾ Registered as the same Trust Fund (see listing in Focal Area 1)

⁽³⁾ Under Bank Executed TF, assessment of NSPK status is being conducted

⁽⁴⁾ Registered in the same TF (see listing in Focal Area 1)

⁽⁵⁾ Project activities had been on going, withdrawal application / invoicing had been

received and still in process

September 2010


December 2010

33

Annex C: List of Abbreviations, Acronyms, and Translations

ACN: Activity Concept Note

AKLN: Administrasi Kerjasama Luar Negeri (Centre for Foreign Cooperation

Administration)

APBD: Anggaran Pendapatan Belanja Daerah (Regional State Budget)

AusAID: Australian Agency for International Development

BAPPENAS: Badan Perencanaan Pembangunan Nasional (National Development Planning

Agency)

BAPPEPAM-LK: Badan Pengawas Pasar Modal dan Lembaga Keuangan (Capital Market and

Financial Institution Supervisory Agency)

BKKBN: Badan Koordinasi Keluarga Berencana Nasional (National Family Planning

Coordinating Board)

BKN: Badan Kepegawaian Negara (State Personnel 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)

BPKP: Badan Pengawasan dan Keuangan Pembangunan (Audit and Development

Supervising Agency)

CCT: Conditional Cash Transfer

CDD: Community Driven Development

CIDA: Canadian International Development Agency

DAK: Dana Alokasi Khusus (Special Allocation Funds)

DAU: Dana Alokasi Umum (General Allocation Funds)

DBH: Dana Bagi Hasil (Revenue Sharing)

DFID: Department for International Development

DG: Director General

Diklat: Pendidikan dan Pelatihan (Education and Training)

DIPA: Daftar Isian Pelaksanaan Anggaran (Budget Implementation Entry List)

DJKD: Direktorat Jenderal Keuangan Daerah (Directorate General of Regional Finance)

DKI: Daerah Khusus Ibukota (Jakarta Special Capital Region)

DPRD: Dewan Perwakilan Rakyat Daerah (Provincial Legislative Council)

DSF: Decentralization Support Facility

EDOHP: Evaluasi Daerah Otonom Hasil Pemekaran (Evaluation of Proliferated

Autonomous Regions)

FY: Financial Year

GBP: Pound Sterling

GDFD: Grand Design of Fiscal Decentralization

GDRA: Grand Design of Regional Autonomy

GR: Government Regulation

KADIN: Kamar Dagang dan Industri (Chamber of Commerce and Industry)

LIPI: Lembaga Ilmu Pengetahuan Indonesia (Indonesian Institute of Sciences)

LGs: Local Government

LRA: Laporan Realisasi Anggaran (Budget Realisation Report)

MoF: Ministry of Finance

MoH: Ministry of Health

MoHA: Ministry of Home Affairs

MSS: Minimum Service Standards

NGO: Non-Governmental Organisation

NSPK: Norma, Standar, Prosedur, dan Kriteria (Norms, Standards, Procedures and

Criteria)

OSS: One Stop Shops

PGs: Provincial Governments

PKEKD: Direktorat Pengembangan Kapasitas dan Evaluasi Kinerja Daerah (Directorate for

Capacity Development and Evaluation of Regional Performance)




34

PMK: Peraturan Menteri Keuangan (Minister of Finance‘s Regulation)

PNPM: Program Nasional Pemberdayaan Masyarakat Mandiri (National Program for

Community Empowerment)

PP: Peraturan Pemerintah (Government Regulation)

RMF: Regional Management Forums (RMF)

RIA: Regulatory Impact Assessments

SIKD: Sistem Informasi Keuangan Daerah (Regional Financial Information System)

SIMDA: Sistem Informasi Manajemen Daerah (Regional Management Information System)

SIPKD: Sistem Informasi Pengelolaan Keuangan Daerah (Regional Financial Management

System)

SoFEI: Support Office for Eastern Indonesia

ToT: Training of Trainers

USD: United States Dollar

DSF Quarterly Report December 2010

Documents

Transcript of DSF Quarterly Report December 2010