Download - DSF Quarterly Report March 2010
March 2010
DSF Quarterly Report
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Table of Contents
Introduction ..................................................................................................................................... 1
Governance and Development Context .......................................................................................... 1
Decentralization in general ......................................................................................................... 1
Legislative councils .................................................................................................................... 2
Competency-based training ........................................................................................................ 2
Planning ...................................................................................................................................... 2
Border areas ................................................................................................................................ 2
Inter-regional cooperation ........................................................................................................... 3
Newly-autonomous regions ........................................................................................................ 3
Minimum service standards ........................................................................................................ 3
Ministry of Home Affairs strategic objectives and performance indicators ............................... 4
Work Programming ........................................................................................................................ 4
Background ................................................................................................................................. 4
Two rounds of programming ...................................................................................................... 4
Progress of second round of programming ................................................................................. 4
The Provincial Government Support Program ........................................................................... 5
Progress of first round of programming ...................................................................................... 6
Work Plan Implementation ........................................................................................................... 10
Legislative councils. ................................................................................................................. 10
Competency-based standards for improved public service delivery ........................................ 11
Data provision to the regional financial information system .................................................... 11
Sub-national government borrowing (municipal bonds). ......................................................... 12
Spatial planning ........................................................................................................................ 12
Border areas .............................................................................................................................. 12
Sub-national business climate ................................................................................................... 13
Donor mapping database........................................................................................................... 13
New local governments............................................................................................................. 14
Delays and Remedies .................................................................................................................... 14
Recipient-execution .................................................................................................................. 14
Commitment to recipient-execution - implications. ................................................................. 15
Implementation of recipient-executed activities. ...................................................................... 15
Capacity building ...................................................................................................................... 15
World Bank and DSF Executive processes .............................................................................. 16
The Future of the DSF .................................................................................................................. 16
DSF Engagement with Local Government ................................................................................... 17
Monitoring Framework ................................................................................................................. 17
Financial Report ............................................................................................................................ 17
DSF Governance ........................................................................................................................... 18
Transfer of co-chair responsibility ............................................................................................ 18
Government membership of SC................................................................................................ 18
Management and conduct of DSF business .............................................................................. 18
Extension of memorandum of understanding ........................................................................... 18
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DSF Executive .............................................................................................................................. 18
Engagement with government. ................................................................................................. 18
Engagement with donors........................................................................................................... 19
Staffing – professional staff appointments. .............................................................................. 19
Risk Management ......................................................................................................................... 19
Annex A: Monitoring Framework ................................................................................................. 21
Annex B: Financial Report ........................................................................................................... 35
Annex C: List of Acronyms ........................................................................................................... 42
DSF Quarterly Report
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Decentralization Support Facility
Quarterly Report (For the quarter ending 31 March 2010)
Introduction
1. In accordance with the DSF Operations Manual, this report is submitted within 30
days following the end of the first quarter of 2010.
2. Based on an up-dated version of the monitoring framework developed for the DSF
Annual Report 2009, the report discusses the progress in the first quarter of 2010 of DSF-
financed activities approved in January and February 2007 and in 2009 and outlines
progress made with the design, execution, and implementation of activities under the
DSF Work Plan 2009-2011 (see relevant sections in the body of the report, Tables 1 and
2, and Annex A).
3. It also discusses delays in programming and implementation; up-dates (very
briefly) certain aspects of the governance and development context and features of the
management and functioning of the DSF Executive; and notes developments concerning
local government engagement and the future of the DSF.
4. A financial report is set out in Annex B and a snapshot of available funds and
formally approved allocations and commitments appears in Table 3.
Governance and Development Context
5. During the first quarter of 2010, the general governance and development context
remained much as outlined in the December 2009 quarterly report, although the economic
outlook from March 2010 is a little better than was expected in that quarter.
6. Otherwise, the general trends that emerged in late 2009 have continued into early
2010. Domestic demand remains relatively strong, although the pace of growth has
moderated somewhat. In the first three months of the year, the trade surplus increased on
the back of higher commodity prices and the strengthening economies of the country’s
major trading partners. The Government’s budget deficit was slightly less than expected.
The 2010 budget predicts a growth in deficit to 2.1% of GDP, mainly due to rising energy
prices and subsidies. The continuing relative robustness of the economy is likely to see
imports grow more rapidly than exports.1
7. In the rest of this section of the report we discuss governance developments that
have a more direct and immediate bearing on different aspects of the DSF work program
(principally changes in relevant legislation; institutions; key positions and associated
authorities; and practices and processes).2
8. Decentralization in general. Two laws that form the basis of decentralization and
local government are under review, namely Law 32/2004 on Local Governance and Law
1 World Bank (2010). Indonesia Economic Quarterly: March 2010. Jakarta, Indonesia. 2 This does not pretend to be a complete account of such matters.
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33/2004 on Fiscal Decentralization. Discussions concerning revisions to Law 32/2004,
which are coordinated by MoHA, have been held over the last three years and have
involved consultations with the general public as well as a number of local governments
throughout the country, including Jakarta. The business of revising this law is stipulated
in the National Legislative Program 2010-2014.
9. Legislative councils (DPRD): In preparation for the 2009 legislative elections, a
revision to Law No.22/2003 - on the Procedures and Structure of DPR, DPD, and DPRD
- was passed in the form of a replacement to law No.27/2009. In discussions leading up to
the revision, the position of the DPRD - as an elected body accountable to local
authorities as opposed to an extension of the central government - was debated but not
decided, and is therefore not addressed in the revision. However, the debate on this issue
continues - in discussions surrounding the proposed revisions to Law No.32/2004 on
local governance. Several studies have indicated that a careful review of the system of
checks and balances is needed, including issues such as the approval of local regulations
(whether by judicial review or MoHA) and the relationship between the DPRD and local
government heads. In addition, discussions surrounding Law No.32/2004 are examining
the role of the governor and whether the position will be an appointment or directly
elected. Resulting decisions will have a significant bearing on a number of aspects of
governance, such as public accountability and political legitimacy.
10. Competency-based training (CBT): The President announced that his number
one priority in the 2010-2014 mid-term development plan is bureaucratic reform,
covering the revision of the system of recruitment, education, appointment, promotion,
and rotation of civil servants. The Government Training and Education Centre (Diklat)
will make an important contribution to this reform program. Diklat’s mission is
formalized in Minister of Home Affairs Decree No.378/2009 on the ‘Formation of a
Reform Team for the Government Education and Training Centres in the Ministry of
Home Affairs and Regional Governments’. Diklat must map competencies, review
systems and procedures, and develop a competency-based training program to transform
the training apparatus into a performance-based system. Diklat continues to be involved
with PAN, BKN, and LAN on issues of consolidation and capacity building related to
bureaucratic reform.
11. Planning: The Medium-term Development Plan for 2010-2014 (RPJM) became
law in January 2010 (Presidential Regulation No. 5, 2010). The RPJM is presented as
three books: Book 1 on National Priorities; Book 2 on Strengthening the Synergies
between Sectors; and Book 3 on Development with a Regional Dimension. This will
clearly be a crucial reference point for all of the support provided in this area, as well as
for many other DSF-supported activities. Investment climate is an important part of the
RPJM and two ministries – the Ministry of Home Affairs (MoHA) and the National
Development Planning Agency (BAPPENAS) – are designated as being responsible for
improving investment climate. The DSF-financed activity will help MoHA to achieve
2010 national targets that have been agreed between the Minister and the President.
12. Border areas. Presidential Regulation 12/2010 on the establishment of a National
Board of Border Areas Management (Badan Nasional Pengelola Perbatasan - BNPP)
defines the positions, roles and responsibilities, and membership of the organization.
BNPP will determine policies for the development of border areas, determine program
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budget allocations, coordinate implementation and monitoring, and evaluate the
management of border areas. The head of BNPP is the Minister of Home Affairs. A
permanent secretariat will be established with three deputies responsible for: state
boundary management; resource potential management; and border area infrastructure
management.
13. Inter-regional cooperation. Several recent pieces of legislation are relevant to
DSF work in this field, namely:
a. Minister of Home Affairs Regulation number 19/2009 that provides guidelines
for capacity building of organisations responsible for the implementation of
inter-regional cooperation – it provides a syllabus for training; and directions
concerning the identification and selection of participants and facilitators,
organization, finance, and so on.
b. Minister of Home Affairs Regulation number 22/2009 provides: guidance for
the establishment of ‘coordinating teams for inter-regional cooperation’ at
both the provincial and local government levels; detailed procedures for
implementing inter-regional cooperation; and a list of options for managing
such cooperation.
c. Minister of Home Affairs Regulation number 23/2009 sets out procedures for
the facilitation and supervision of inter-regional cooperation; and specifies
roles, tasks and responsibilities of the joint secretariat for inter-regional
cooperation in central government (MoHA) and the coordinating team for
inter-regional cooperation, at both provincial and local government levels.
14. Newly-autonomous regions. In relation to the evaluation of newly-autonomous
regions, two ministerial regulations are noteworthy:
a. Minister of Home Affairs Regulation 21/2010 provides guidance on the
evaluation of autonomous regions that were created following the
implementation of Law 22 of 1999 on regional government.
b. Minister of Home Affairs Regulation 23/2010 sets out methods and
procedures for the evaluation of newly-autonomous regions.
15. Minimum service standards. The proper costing and implementation of
minimum service standards is clearly crucial at all levels of government. Law 25/2009
(on public services) sets minimum service standards in health, social services,
environment, home affairs, and women’s empowerment. To date, seven ministries have
formalized MSS legally (health, social services, environment, public housing, home
affairs, and women’s empowerment). Only the Ministry of Health has issued formal
technical guidelines for MSS costing (Minister of Health Regulation 317/2009). The
Ministry of Health has also set up a team to accelerate the implementation of MSS in
health (through Minister of Health Decree 341/2010). In 2010, the aim is to formulate
and implement minimum service standards in health, environment, social affairs, and
home affairs in districts and municipalities in 33 provinces and to have these service
standards reflected in local government budgets.
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16. Ministry of Home Affairs strategic objectives and performance indicators. On
February 12, 2010, Minister of Home Affairs Decree 061-41: 2010 was issued. The
decree sets out 15 strategic objectives and 33 key performance indicators for MoHA as a
whole and does likewise for each directorate general within MoHA.
17. Strategic objectives of particular relevance to the DSF programs include:
a. The enhancement of the development of border areas
b. The enhancement of the quality of the democratization process
c. The enhancement of the implementation of minimum standard services
d. The regularization of the implementation of evaluation processes surrounding
the designation of newly- autonomous region and the development of a
‘grand’ strategy for regional arrangements
e. The enhancement of partnerships between government and the private sector
f. The widening and acceleration of public services reform
g. The harmonization of local regulations with MoHA legislation
h. The establishment of accountable and transparent local financial management
systems
Work Programming
18. Background. In May 2009, a no-cost extension for the DSF to September 2011
was formally approved.3 Pending such approval (that is, up to late May 2009), in
accordance with the wishes of the principal financial donor and so as not to raise
expectations that might not be met, design and development of activities under the DSF
Work Plan 2009-2011 had been put on hold. Commencing immediately upon the granting
of the no-cost extension, in the seven months from May to December 2009, a total of 23
activities, each involving in one way or another one or more of 20 government
directorates in three different government agencies, were designed, subjected to a
thorough process of internal and external review, and formally approved by the DSF
Management Committee (MC). Considering the large number and variety of interested
parties involved, the complexity of the issues addressed, and the relatively short time
within which the work was done, this was a noteworthy achievement.
19. Two rounds of programming. The 23 activities were separated into two rounds of
programming. The first round, involving 14 full-blown activities (described in 14
separate Activity Concept Notes – ACNs), was largely approved in the third quarter of
2009 (12 out of 14 activities). The second round, involving 9 activities that were designed
and conceived as extensions or developments of those that constituted the first round, was
approved by the MC (by circulation) during November/December 2009.
20. Progress of second round of programming. As indicated in Table 1 below, five
of the nine addenda have now been completed or are covered in an existing ACN or in
other documents referred to in that table. A sixth addendum has been drafted and will be
endorsed formally by government in early April.
3 In December 2009, a further no-cost extension – to 31 March 2012 – was formally approved and the Contribution
Agreement between the Bank and DfID was amended accordingly.
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21. However, progress in relation to proposals 3 (MoHA), 5 (MoF), and 9 (MoHA) has
been slow. There are a number of reasons for this, most of which are discussed in a
separate section below and in the DSF quarterly report for December 2009. There are
also a number of project specific reasons for delay. In relation to proposal 9, the Grand
Design on Implementation of Regional Autonomy, this is clearly a highly complex matter
of considerable moment and political sensitivity for government and involves all three
DSF counterpart agencies. Discussions surrounding the addendum have therefore been
protracted and senior officers from all three agencies have wanted to participate in them,
making organization more difficult. Nevertheless, the aim is to have a final draft of this
addendum completed by the end of April.
22. In relation to proposals 3 and 5, the slow rate of progress is partly due to the
lengthy (and largely unavoidable) delay in appointing a replacement senior economist to
the DSF Executive and the increased load this put on the fiscal decentralisation specialist.
23. The Provincial Government Support Program (PGSP). Following thorough
discussion within the World Bank and, subsequently, between the World Bank and the
UNDP, the Fiscal Agency Agreement (FAA) between the two parties now has the green
light to proceed. Resolution of the issues involved, which was outside of the sphere of
influence of both the DSF MC and the DSF Executive, consumed much of the first
quarter of 2010. A letter designed to enhance communication and cooperation between
the parties in relation to DSF reporting requirements was drawn up during the reporting
period and will be signed on the date that the FAA is signed, which is expected to be
early in the second quarter of 2010.
Table 1: Second Round of Programming under DSF Work Plan 2009-2011
Proposal
(notional budget) Link to ACN Counterpart Addendum status
1 DPRD Orientation
($500,000)
ACN 1/2009 MoHA (Diklat) Addendum completed.
2 Regional Development
Policy
($700,000)
ACN 2/2009 Bappenas
(Pengembangan
Wilayah)
Covered in existing ACN
– no addendum required.
3 Local Government
Evaluation
($300,000)
ACN on EPPD MoHA (PDOK) Activity design, budget,
and mode of execution are
being finalised with
MoHA. Expected
completion date: end of
April 2010.
4 Inter-Regional
Cooperation
($1,000,000)
ACN 2/2009
ACN 4/2009
Bappenas (Otda)
MoHA (PUM)
Agreement on content
reached with Bappenas &
PUM (MoHA) in February.
Draft written in March.
Agreement on final draft to
be reached in first week of
April with Ditjen. Bangda
(MoHA) and the Ministry of
Disadvantaged Areas (key
national stakeholders in
inter-regional cooperation).
5 Regional Finance
($850,000)
ACN 12/2009
ACN 13/2009
MoF (DJPK) 1. PEA-Otsus (600K):
ACN under preparation
with MoF. Expected
completion date: end of
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Proposal
(notional budget) Link to ACN Counterpart Addendum status
April 2010.
2. Regional fiscal
incentives (250K):
discontinued at MoF
request (as similar support
being provided by ADB).
6 Provincial Government
Support Program
(PGSP)
(≤$2,000,000)
ACN 2/2009
ACN 4/2009
ACN 5/2009
ACN 14/2009
Bappenas (KKDT),
MoHA (UPD, PUM)
Province of Gorontalo
and Bangka Belitung
Design completed.
Agreement obtained to
proceed with fiscal
agency agreement (FAA).
Separate letter of
understanding on
performance drafted.
7 Regional & Local
Economic Development
Facility
($600,000)
ACN 10/2009 Bappenas (Perkotdes) Addendum completed.
Awaiting final
confirmation by
government.
8 Sub-national Business
Climate Reform
($1,000,000)
DSF Work Plan
2007-2008
continuation
MoHA (Bangda &
Diklat)
Bappenas (Biro
Hukam)
Addendum discussed with
MoHA and Bappenas and
approved. Method of
Bank execution
(competitive tender or
grant agreement) will be
decided early in the next
quarter.
9 Grand Design on
Implementation of
Regional Autonomy
($700,000)
ACN 13/2009 MoHA (Otda) Draft addendum under
discussion with MoHA,
MoF, & Bappenas. It will
be completed by early
May. Preparations for
recipient-execution
commenced in parallel.
24. Progress of first round of programming. As indicated above, to 31 December
2009, fourteen full-blown activities had been through a thorough process of development,
review, and approval. These activities are now in various stages of execution and
implementation. A summary of progress during the first quarter of 2010 is provided in
Table 2 below.
Table 2: First Round of Programming under DSF Work Plan 2009-2011
ACN # Name
Budget
Estimate
(USD)
Trust Fund
Status Implementation Status
1/2009 Capacity Strengthening
Program for DPRD (Local
Government Legislatures)
500,000 Active Grant Agreement signed by WB
and counter-signed by GOI. Grant
Effectiveness requested by GOI and
declaration issued by WB. GOI
currently registering the grant and
processing DIPA funds.
Implementation schedule on target.
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ACN # Name
Budget
Estimate
(USD)
Trust Fund
Status Implementation Status
2/2009 Capacity Building for
Regional Development
Policy Formulation
Part 1:
142,500
Part 2:
700,000
Active
Funds being
transferred
Policy analysis and data
collection in a number of
sectors underway.
ToR drafted. Procurement to
begin in April; services to
commence by third quarter of
2010.
3/2009 Socialization and Pilot
Implementation of Joint
Circular Letter (SEB) on
Monitoring of Technical
Implementation and
Evaluation of Use of Special
Allocation Funds (DAK)
550,000 Active Formal launch with Bappenas &
finalization of project
implementation strategy;
FGD/socialization on SEB-DAK to
Bappeda Kota Bogor (January
2010).
Modules for field facilitators and
data collecting activities completed
by TKP2E-DAK Secretariat,
Bappenas (February 2010).
SEB data forms tested & assistance
given to Dinas staff that received
DAK in Kabupaten Karawang,
West Java. The event was opened
by Dadang Muchtar, Bupati of
Karawang (March 2010).
4/2009 Management Strengthening
and Institution Building for
Local Public Service
Providers (MSIB-LPSP)
500,000 GFR has
been
submitted
and is
awaiting
grant
agreement
signature for
activation
Awaiting GA signature
5/2009 Institution Building for the
Integration of National-
Regional Development and
Spatial Planning
483,400 Active Data collection and analysis
commenced (Dec 1, 2009 –
June 30, 2010). Contract
negotiation with implementing
agency from 29 March, 2010.
6/2009 Building Capacity for the
Development of Sub-
National Government
Capital Markets for
Municipal Bonds
900,000 Active First round of discussions on
revision of Government Regulation
(GR) 54/2005 on Local Borrowing
between MoF and Ministry of Law
and Human Rights completed
(February 2010).
DKI municipal bond: draft Perda
(local regulation) on municipal
bonds to DKI legislature (DPRD) is
being revised to accommodate
MoF’s inputs/concerns. Preparation
of technical documents—pre-
feasibility studies of projects and
related sections on economic,
financial and environmental
matters, in accordance to MoF
regulations (PMK 147/06)—is
underway.
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ACN # Name
Budget
Estimate
(USD)
Trust Fund
Status Implementation Status
International workshop on
municipal bonds is postponed until
GR 54/2005 has been signed by the
President.
7/2009 Government Training and
Education Centre
Development: Introducing
Competency Based
Standards for Improved
Public Service Delivery
797,0004 Active Grant Agreement signed by WB
and counter-signed by GOI.
Grant Effectiveness requested
by GOI and declaration issued
by WB. GOI currently
registering the Grant and
processing DIPA funds.
Implementation schedule on
target.
8/2009 Institution Building for the
Accelerated Development of
Border Areas
500,000
500,000
Active
GFR
submitted,
awaiting GA
signature for
activation
Evaluation report on technical
proposals submitted for
procurement approval 26
March, 2010.
Awaiting GA signature
9/2009 Capacity Building through
Decentralization Education
and Training (DET) for
Public Service
Delivery
1,593,520 GFR
prepared
Financial management and
procurement assessments
completed and draft grant
agreement finalized for review by
MoF & MoHA.
Advertisement for scholarships
program posted in Kompas in
February. 42 applications received
by deadline of March 17. Selection
Committee meeting held on March
29 to shortlist the candidates for
master degree programs.
NB: owing to exigencies of time,
on 31 March a decision was made
by AKLN to ask the Bank to
assume responsibility for execution.
10/2009 Strengthening Local
Government Natural
Resource Management
Capability
749,500 Active Evaluation of technical
proposals (bids) completed 31
March 2010.
11/2009 Formulation of Norms,
Standards, Procedures and
Criteria (NSPK) for Local
Government
Service Delivery
1,000,000 GFR
submitted,
awaiting GA
signature for
activation
Awaiting GA signature.
For Bank-executed components,
procurement of implementing
agent(s) is underway.
4 In order to finance fully the competency-based training work planned under ACN 7/2009, the Foreign Cooperation
Bureau of MoHA (AKLN) has approved from funds earmarked for governance reform in the DSF Work Plan 2009-
2011 an additional allocation for Diklat, up to a ceiling of $800,000. AKLN sent this recommendation to the MC co-
chair for documentation purposes. The DSF Executive has reviewed the revised budget, currently at $797,000, and
found that it meets the requirements for eligible expenditures.
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ACN # Name
Budget
Estimate
(USD)
Trust Fund
Status Implementation Status
12/2009 Strengthening Data
Provision to the Regional
Financial Information
System by Sub-National
Governments with Stand-
Alone Electronic Data Bases
250,000 Active Preliminary version of software
to translate electronic data from
the regions to MoF’s SIKD was
presented at MoF (March 2010).
Financial data from 3 local
governments in North Sulawesi
province - collected post
scoping mission in December
2009 - were used for trial run of
the software.
Plans for data entry and
capacity building activities were
also discussed with MoF.
13/2009 Grand Design of Fiscal
Decentralization
900,000 Active Two public consultation
workshops to solicit input for
revision of main ideas (the
body) of GDFD conducted in
Pontianak, West Kalimantan
(February 2010) and Makassar,
South Sulawesi (March 2010).
High attendance from local
governments and academicians
within West Kalimantan and
South Sulawesi provinces.
Initial discussions/
brainstorming on input to the
revision of Law 32/2004
(especially to regional finance
chapter) and Law 33/2004 took
place during March 2010.
14/2009 Capacity Building for
Costing and Pilot
Implementation of
Minimum Service Standards
1,200,000 GFR
prepared
Mode of execution decided on
January 13, 2010. TOR and
budget completed. In March,
the Director for CB and Local
Government Performance
Evaluation requested
reallocation of the budget and
tasks between recipient and
Bank execution. Calculation is
being finalized. Procurement
and financial management
assessment scheduled for April.
Preparations for grant
agreement underway.
25. As for the December quarter of 2009, it can be seen in Table 2 that during the
reporting period progress in relation to the finalisation of execution arrangements and
implementation for the majority of the fourteen activities has been satisfactory in the
circumstances. Nevertheless, from a disbursement standpoint, progress is far from ideal.
Trust funds for ten of the activities are now active and are being implemented (up from
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DSF Quarterly Report
five in the December quarter of 2009); one (ACN 11) is at an advanced stage of finalising
the conditions for execution; and ACNs 4, 8 (MoHA component), 9, and 14 are making
slow but steady progress.
26. Examples of work plan implementation and results achieved are discussed below.
Further discussion of reasons for delay in execution and implementation, and associated
remedies, appears immediately thereafter.
Work Plan Implementation
27. The following are some examples of the results achieved during the past quarter;
work in progress; and work under preparation for implementation – for activities
approved in 2007, and in 2009 under the DSF Work Plan 2009-2011. In this quarterly
report, we present some cases in a way that illustrates the range of processes that must be
completed in order for an activity to be executed and implemented. A full account of
activity progress against milestones is set out in Annex A.
28. Legislative councils (approved in 2009). The DPRD strengthening program was
proposed by the Local Government Affairs directorate of the Directorate General for
Regional Autonomy in the Ministry of Home Affairs. This activity seeks to assess the
needs of selected DPRD at the provincial and district/municipality level, develop relevant
materials and modules, and provide capacity strengthening workshops for newly-elected
DPRD members. Following the workshops, action learning/technical assistance will be
provided to assist DPRD members in achieving performance targets.
29. This activity is a GOI-executed activity made possible through a grant agreement
between the World Bank and GOI supported with DSF funds. MoHA prepared the
necessary documents, including: a detailed budget that met both GOI standards and WB
trust fund eligible expenditures; a project operations manual with detailed project
activities; financial management and procurement procedures; anti-corruption measures;
and performance indicators. MoHA also completed detailed financial management and
procurement assessments, and attended World Bank financial management and
procurement training.
30. Once the grant agreement had been signed MoHA submitted the documentation
required for grant effectiveness and researched the process for registering the grant with
MoF and activating DIPA. This was a complicated process, which entailed: preparation
of an annual work plan, procurement plan, and disbursement plan according to MoF
specifications; the issuing of a Perdirjen (Directorate General Regulation) for the project;
opening a special account; and registering for DIPA funds. In a short period of time
MoHA was able to accomplish most of these steps.
31. In the next quarter, the Local Government Affairs directorate plans to proceed with
a road show and signing of MOUs with selected DPRDs. In addition, Local Government
Affairs plans to hire an implementing agency to complete a needs assessment and
develop capacity strengthening modules, and it will hire a monitoring and evaluation firm
for the project. The schedule is currently on target to meet performance indicators and
milestones.
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32. In addition, during the reporting period the ‘DPRD Orientation’ addendum was
developed by the Government Training and Education Centre (Diklat) in the Ministry of
Home Affairs. During the past quarter, Diklat revised the 2004 and 2009 preliminary
DPRD orientation modules in preparation for DPRD orientation roll-out and held a
training of trainers (TOT) course for government instructors (for the revised modules).
This was conducted with assistance from the Democratic Reform Support Program
(DRSP) funded by USAID. The revised Diklat modules and format for TOT will be used
in the roll-out of the Diklat DPRD orientation in four post-conflict provinces, namely,
Papua, West Papua, Maluku, and Aceh (under the DSF work program). With DSF
funding through a grant agreement, Diklat will hold an additional TOT for the remaining
government instructors and will then roll out the orientation in all of the districts and
municipalities of the four aforementioned provinces, thereby reaching a total of
approximately 960 DPRD members.
33. An amendment to the Diklat grant agreement on competency-based standards will
be completed to accommodate this activity. The government budget and World Bank
trust fund eligible expenditures for this amendment have been approved. Financial
management and procurement assessments for the unit within Diklat that is executing this
activity are scheduled for the next quarter.
34. Competency-based standards for improved public service delivery (approved
in 2009). This activity seeks to build the capacity of MoHA to develop competency-based
training for civil servants in key areas of public service delivery as part of the agenda on
bureaucratic reform. This activity will provide training for the assessment and
formulation of competency-based standard training and it will support its implementation
in a number of pilot regions.
35. This activity is GOI-executed. Diklat has made significant progress in preparing
documentation and completing the extensive requirements for the grant agreement, which
was signed this quarter. Diklat has developed the project operations manual and fulfilled
the requirements for registering the grant with MoF; taken the steps necessary to open a
special account; and is processing DIPA funds. The DSF Executive and Diklat have
worked together closely to expedite formal requests, clearances, and approvals of various
documents.
36. DIPA funds are expected to be available in the next quarter. Diklat will proceed
with the refinement of the strategy on competency-based training (CBT) and with setting
up workshops on CBT assessment and formulation. Diklat will also hire consultants in
human resource management, competency-based standards, population administration,
administration, and financial support to assist with implementation of the project through
GOI procurement processes.
37. Data provision to the regional financial information system (by sub-national
governments with stand-alone electronic data bases) (approved 2009). Preliminary
systems for data transfer and new data entry modules are nearing completion (expected
by the end of April). Socialization of the new (electronic transfer) SIKD system will
begin soon thereafter, starting with North Sulawesi province (as the data for developing
the systems came from 3 local governments in North Sulawesi). During the life of the
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DSF Quarterly Report
activity, MoF expects to have around 25 local governments transmitting their financial
data electronically - for easy transfer to its national SIKD system.
38. The system will be made compatible with those being developed with support from
the ADB – in 171 local governments.
39. Sub-national government borrowing (municipal bonds). The formal title of this
activity is ‘Building Capacity for the Development of Sub-National Government Capital
Markets for Municipal Bonds’ (approved 2007). With DSF support, MoF has prepared a
revised draft of Government Regulation (GR) 54/2005 on Regional Government
Borrowing. This piece of legislation is important to the accelerated provision of
infrastructure, regional economic development, and public service delivery – arising from
the availability of alternative sources of financing (municipal bonds). The draft has been
approved by the Ministry of Finance (December 2009) and has been discussed with the
Ministry of Law and Human Rights (February 2010). Further discussions with Ministry
of Law and Human Rights are ongoing – and any issues arising therefrom must be
resolved before approval by the President.
40. There has also been significant progress made in relation to the preparation of DKI
municipal bonds. A draft local regulation on municipal bonds – for submission to DKI
legislature (DPRD) - was completed in January 2010 for review by MoF. The draft is
currently undergoing revisions to accommodate inputs from MoF. In addition,
preparation of technical documents - pre-feasibility studies of projects and related
sections on economic, financial and environmental matters, in accordance with MoF
regulations (PMK 147/06) - is underway. By end of May or early June it is expected that
the draft local regulation and related technical documents will be delivered to the DPRD
for approval.
41. Spatial planning (approved in 2009). This activity seeks to build central and local
government institutional capacity for the better integration of development and spatial
planning. The DSF is helping Bappenas (through the Directorate of Spatial Planning and
Land Affairs) to map the institutional structure of planning; identify integration problems
of development planning and spatial planning at the national level; and make
recommendations as to how better integration can be achieved. During the reporting
period, an analysis of the regulations pertaining to the integration of regional spatial
planning and regional government planning documents was presented to Bappenas.
42. The spatial planning activity will focus on three provinces: West Sumatra, East
Java and Gorontalo. Assistance will be provided through the DSF during the next quarter
to complete the provincial spatial plans and ensure and that they are sufficiently
integrated with the national spatial plan and regional development plans. Similar support
will also be provided to district and city governments in these provinces.
43. Border areas (approved in 2009). The development of border areas is a key
national government policy area, as expressed in the government’s latest Medium-term
Development Plan 2010-2014 (RPJM). This activity brings together Bappenas and
MoHA in a collaborative effort to provide more comprehensive national government
assistance for the development of border areas, both in terms of economic development
and improved service delivery.
DSF Quarterly Report
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March 2010
44. The establishment of BNPP is articulated in Law 43, 2008 on State Territory. This
law mandates the establishment of a cross-ministerial agency to coordinate national
government’s support for the development of border areas. BNPP’s functions and
membership are detailed in Presidential Regulation 12, 2010.
45. The DSF contracted a consultant to assist Bappenas (through the Directorate of
Special Areas and Less Developed Region) with questions of organisational design and
inter-institutional arrangements for this agency. The consultant undertook a mission to
Jayapura (Papua) and Pontianak (West Kalimantan) to assess local versions of border
area management agencies and to seek input from local stakeholders. A paper on
recommendations for institutional arrangements was presented to a cross-ministerial
group comprising representatives from Bappenas, MoHA, the Ministry of Disadvantaged
Areas and the Ministry of Finance.
46. The above builds on work carried out in the last quarter of 2009, which contributed
to the RPJM section on border area development (Book 2, Chapter 9 on Policy Direction
and Development Strategy). This required agreement between relevant ministries on the
identification of border areas and on how to proceed in relation to the preparation of
indicators to evaluate progress towards the attainment of development goals. This will
help to improve consistency between ministries’ border area programs, the quality of
such programs, and to promote more effective coordination.
47. In the next quarter, the DSF will contract an implementing agency to help BNPP,
through Bappenas, to draft a master plan for the development of border areas. Among
other things, this will set out government policy on border areas. The master plan will be
used by MoHA to develop national and regional action plans to improve public service
delivery in border areas.
48. Sub-national business climate (approved in 2009). This activity builds on the
achievements of a previous project of this name (approved in 2007). It responds to
important sections of the government’s medium term development plan (RPJM 2010-
2014). The aim of the activity is to institutionalize capacity within local governments to
implement effective, efficient and accountable regulations and processes for business
licensing. The program will: (i) support the Ministry of Home Affairs (MoHA) in
monitoring the performance of one stop shops (OSS) for business licensing across the
country; (ii) help three selected provincial governments (PGs) with facilitating the
establishment of district-level OSS and improving the performance of existing ones; and
(iii) through support to the National Development Planning Agency (BAPPENAS) and
three selected PGs, assist with the diffusion of regulatory impact assessments (RIA).
49. Procurement will be done either through competitive bidding or a grant agreement.
50. Donor mapping database (third phase – from 2009). In 2006, the Ministry of
Home Affairs commissioned the DSF to create a donor mapping database - for the benefit
of government and the development community. The database development proceeded in
phases. In phase 1, a prototype was created. In phase 2, the design was upgraded to a
web-enabled dynamic HTML database. For all concerned, it was clearly desirable to
maintain an up-to-date map of donor-supported activities, one that provided comparable
data on key dimensions: matters addressed; geographic location; tools and approaches
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DSF Quarterly Report
used; nature of assistance - whether loan/grant/TA; monitoring frameworks; expected
results; and so on.
51. The third phase of the activity is designed to institutionalise the database and its
management in government. A consultant is therefore in the process of being been hired
in order to (in close collaboration with government):
a. Keep the database program information up-to-date (while institutionalization
is being designed and implemented)
b. Suggest further improvements to the system
c. Work towards complete government management of the system and its
sustainability
52. New local governments (‘newly-created regions’ and ‘local government
evaluation’). On 24 February 2010, a DSF-supported meeting was held in Jakarta
involving more than 700 representatives drawn from over 200 newly-created local
governments and more than 40 ‘parent’ local governments. The purpose of the meeting
was to disseminate and ‘socialize’ the Ministry of Home Affairs decree on the
‘Evaluation of Newly-Created Regions’. In collaboration with MoHA, the DSF is in the
process of designing an activity that will help to embed understanding and
implementation of the new decree at the local level.
Delays and Remedies
53. In the December 2009 quarterly report, we discussed a number of factors that were
contributing to delays in programming and implementation. Below, we extend this
discussion to other considerations, primarily as a means for recording our experience of
implementing the processes involved, so that we – and others – can learn from it.
54. Recipient-execution. In order for GOI-execution to work – that is, in order that
government may commence procurement for the implementation of activities – three
conditions must be satisfied:
a. A grant agreement between government and the World Bank must be signed.
This requires that budgets, together with financial management and
procurement systems, have been developed by government to standards
considered to be satisfactory by the Bank (on the basis of assessments the
Bank carries out).
b. Conditions for ‘grant effectiveness’ must be established. Such conditions
depend primarily on the production of an acceptable project operations
manual, and the conduct of financial management and procurement training.
The satisfactoriness of such conditions is assessed by the Bank.
c. Grant activation must be instigated by government. As the term implies, this
requires that government take the steps necessary to allow for procurement to
commence. These steps comprise internal GOI processes that include grant
registration; the establishment of a special account; and DIPA processing.
55. Directorates in government naturally vary in their capacities (and eagerness) to
satisfy these conditions, which in turn affects the pace of progress. For example, some
DSF Quarterly Report
15
March 2010
parts of MoHA have shown considerable energy and commitment in relation to the
above; have sought advice and other forms of assistance when they were needed; and
have been prepared to follow through on clearances and approvals in order to keep
projects moving ahead. The Local Government Affairs directorate of the Directorate
General for Regional Autonomy and the Government Education and Training Centre
(Diklat), both in the Ministry of Home Affairs, have exhibited these qualities and are well
advanced in relation to the above (see Table 2 and Annex A).
56. Commitment to recipient-execution - implications. In the MoHA there has been
laudable commitment to the idea of recipient-execution, premised on a desire to acquire
necessary skills and knowledge as a basis for creating lasting institutional capability. For
the reasons we have given, this can threaten to take longer than the current lifespan of
activity implementation under the DSF (September 2011) or other implementation
deadlines will comfortably accommodate (e.g., for scholarships, university admission
deadlines and degree program lengths). This has meant that in at least one case (DET), a
final decision as to whether to proceed with recipient or Bank execution has been left to
the very last minute (the last week of March), with a decision being taken to make the
activity Bank-executed.
57. Of course, recipient-execution also slows down disbursement (for financial donors
and for the Bank disbursement is regarded as an important performance measure).
Balancing these competing claims is not easy, partly because judgements about what to
do and when are subject to individual and institutional idiosyncrasies that are not
amenable to any formal control that can be exercised either by the DSF’s governance
structure5 or by the DSF Executive.
6
58. Implementation of recipient-executed activities. Government-executed projects
can also take longer to implement, partly because of the DIPA processing schedule and
partly because of the need to follow government procurement procedures. However, the
DPRD and CBT projects have anticipated these possible delays and taken a number of
steps to minimise them. Both of these activities are therefore on-track to meeting project
objectives.
59. Nevertheless, delays in DIPA disbursement and/or procurement processes are
likely to arise in government-executed activities and could create delays in project
implementation and the attainment of project objectives.
60. Capacity building. In all cases, however, it is clear that government capability for
doing this type of work needs to be, and is being, improved. The importance of such
capacity building is recognised by DSF’s counterparts in government. To date such
capacity building has comprised:
a. A training and orientation workshop for government staff; and
5 It has some formal authority in relation to such matters, but it is not clear how far this extends, particularly when it
comes to institutional boundaries. The MC and the government technical team have done their best to influence these
matters, primarily through exhortation. But this can only go so far. 6 The DSF Executive has no formal authority in relation to such matters and must rely exclusively on rational argument
and exhortation, with all of the attendant limitations for getting things done efficiently and effectively.
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DSF Quarterly Report
b. Day-to-day interactions between professional staff of the DSF Executive and
government counterparts; coaching; and what amounts to action learning in
relation to different aspects of execution and procurement.
Further workshops for government are planned that address different points in the critical
paths for recipient-executed activities. For example, in April, a workshop will be held
with staff of MoHA that attempts to produce in one sitting drafts of all or most of the
documents (including letters) needed for recipient-execution.
61. World Bank and DSF Executive processes. The DSF Executive has taken a
number of steps to help ensure that Bank and DSF Executive processes – for both
recipient and Bank-executed activities - work as expeditiously as possible. These steps
include:
a. The reconfirmation of internal service standards between units in the Bank for
the turnaround of approvals and the conduct of financial and procurement
assessments, and so on;
b. The clarification of lines of authority and communication between the DSF
Executive and relevant sections of the Bank;
c. Meetings between the DSF Program Manager and Deputy Program Manager
and relevant heads of units in the Bank (accounting and procurement) to
explain underlying rationales for modes of execution and the number of
transactions and to discuss ways of clearing bottlenecks on the Bank side and
building capacity and maintaining momentum on the government side;
d. Within the DSF Executive, at least bi-weekly portfolio review meetings
between the Program Manager and Deputy Program Manager and portfolio
managers to examine progress and devise means for addressing obstacles to it;
and
e. Among staff of the DSF Executive continuous review of work processes,
including working lunches on critical paths related to Bank and recipient-
execution.
62. Even so, there have been some avoidable (as well as some unavoidable) delays on
the Bank side.
The Future of the DSF
63. At a breakfast meeting held in March 2010, government representatives of the MC
requested that the DSF Executive produce for their consideration a discussion paper on
the future of the DSF. Work on this has begun and will be completed in the second
quarter of 2010.
64. At the same time, the World Bank is examining its own strategic positioning in
relation to decentralisation and how best to organise and manage relevant Bank units and
activities to contribute to whatever strategic direction it adopts. Significant progress in
relation to these matters should be made in the second quarter of 2010. The DSF is likely
to be integral to these developments.
DSF Quarterly Report
17
March 2010
65. The discussion paper to be produced for (initial) consideration by government
members of the MC will take any such developments into account.
DSF Engagement with Local Government
66. In late October 2009, a paper outlining a number of possibilities for DSF
engagement with local government was put to the MC for its consideration. The MC
agreed that the idea of a ‘local government consultative group reporting to the DSF MC
be endorsed and recommended to the DSF Steering Committee for its consideration.’ The
relevant minute of the meeting also states that: ‘subject to Steering Committee approval
of the recommendation, a MC task force be established comprising members drawn from
the government technical team and the DSF Executive, whose job it would be to make
detailed recommendations concerning terms of reference for the consultative group;
membership; and forms of logistical and other support to be provided.’
67. Work on a discussion paper on these matters – initially for consideration by
government members of the MC - commenced in the reporting period and will be
completed in the second quarter of 2010.
Monitoring Framework
68. Annex A provides a summary of progress made to date according to the agreed
monitoring framework. Activities are organised according to: (1) Public service delivery;
(2) Fiscal decentralisation; (3) Accountability; and (4) Planning and performance
measurement.
Financial Report
69. A detailed financial report is provided separately as Annex B and a summary of the
Facility’s cash position and of projected cash flow to 2011 is set out in Table 4 of Annex
B.
70. Table 3 below provides a snapshot of available funds and formally approved
allocations7 and commitments
8 that takes into account a reduction in available funds of 2
million pounds sterling in the current financial year. The difference between total
allocations and commitments and total funds available leaves the DSF with a small
negative balance, in the amount of - $127,766. This comes about as a result of exchange
rate fluctuations. It is expected that there will be sufficient savings from under-spending
on some approved activities to cover this shortfall.
Table 3: Snapshot of Financial Status (USD)
Budget (USD)
Total pledges 44,243,625
Other receipts 24,836
Investment income 1,383,065
Disbursements 16,285,241
Fund balance (a) 29,366,285
7 The word ‘allocations’ is used to denote financial amounts (budgets) formally approved by the DSF governance
structure for a DSF activity or operation. It does not entail any legal obligation. 8 A ‘commitment’ signifies that a legally-binding obligation exists to pay the amounts for the purposes described.
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March 2010
DSF Quarterly Report
Budget (USD)
Less GBP 2 million 3,060,000
Fund balance (b) 26,306,285
Total allocations & commitments
Balance of allocations approved January 2007 5,105,026
First round project allocations - approved 2009 10,890,520
Second round project allocations - approved 2009 7,650,000
DSF Executive (to March 2012) 2,788,505
Total allocations & commitments 26,434,051
Uncommitted and unallocated funds: fund balance (b) less total allocations
& commitments -127,7669
Total cash held (funds received – disbursements & commitments) 13,297,536
DSF Governance
71. Transfer of co-chair responsibility. The government-held positions of co-chair of
the MC and the SC are in the process of being transferred formally to the Ministry of
Home Affairs.
72. Government membership of SC. There has been discussion in government
concerning government representation on the SC. Adjustments to such membership are
likely to be mooted formally during the second quarter of 2010.
73. Management and conduct of DSF business. During this transition period, the
business of the DSF has continued uninterrupted under the guidance of informal breakfast
meetings held from time to time between the DSF Executive and government members of
the DSF MC (principally, the first government co-chair of the MC, from Bappenas; the
outgoing co-chair, from the Ministry of Finance; and the incoming co-chair, from the
Ministry of Home Affairs).
74. Extension of memorandum of understanding. The end date for the
memorandum of understanding between the Government of Indonesia and the World
Bank (on behalf of donors) has been extended to December 2011.
DSF Executive
75. Engagement with government. Such engagement continues to strengthen and, as
in the past, to rest on:
a. Meetings - called by government – with government members of the DSF
MC.
b. Breakfast meetings – as described above.
c. Day-to-day interactions with government counterparts responsible for
particular activities.
9 To reiterate, the reduction in uncommitted and unallocated funds from the figure reported in the December 2009
Quarterly Report is due to exchange rate fluctuations. It is expected that there will be sufficient savings from under-
spending on some approved activities to cover this shortfall.
DSF Quarterly Report
19
March 2010
d. Day-to-day interactions with the government technical team assigned to
support government’s management of DSF-related work.
e. Workshops with the government (DSF) technical team.
76. Engagement with donors. Work will commence in the second quarter of 2010 on
establishing ways for institutionalizing reporting by donors of their the interaction with
the DSF MC and a short note containing recommendations concerning this is likely to be
produced for consideration by the MC by the end of the June 2010 quarter.
77. Also during the second quarter of 2010 donors associated with the DSF will
discuss with government work they are doing on the standardization of systems of
monitoring and evaluation for projects that they support outside of the DSF.
78. Staffing – professional staff appointments. For (a) and (b) below, the
appointments made are to existing positions. The national position is newly-created and is
designed to further the DSF Executive’s policy of nationalization.
a. Senior Economist (international). The appointee – Mr. Soren Nelleman –
took up his position formally on 1 March 2010.
b. Senior Governance Adviser (international). The appointee - Mr. Henrik
Lindroth – will take up his position formally on 5 April 2010.
c. Decentralisation Adviser (national). The appointee - Mr. Widjono Ngoedijo
– took up his position formally on 9 February 2010.
Risk Management
79. The main risks remain as set out in the DSF Annual Report 2009.
80. The most significant operational risk continues to be speed of execution,
implementation and disbursement - particularly certain (not all) activities that are
recipient-executed. As in the past, risk management on the part of the DSF Executive will
continue to concentrate on the striking of a reasonable balance between government need
and priority, quality of design and implementation, and speed of disbursement; and will
rely on continuous process and management improvement on the part of the DSF
Executive and the World Bank; on further capacity building in government; and on the
maintenance of open and continuous dialogue with government and with the principal
financial donor on the basis of the best available information.
DSF Quarterly Report
March 2010
21
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.
3*
* First milestone/ target 1 – Fully achieved
2 – Largely achieved
3 – Partially achieved
4 – Achieved to a very limited extent
March 2010
DSF Quarterly Report
22
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
Consultations held with regions in July 2009 for formulation of 26
norms, standards, procedures and criteria (NSPK) in health. This
resulted in confirmation that up to 10 out of 26 NSPKs can now be
further processed and formalized by the Minister of Health.
Assessment of 26 NSPK in health and preliminary assessment of
NSPK in agriculture, trade, mining and land administration sector
completed further clarifying the role and authority of each level of
government (refer to Government Regulation 38/2007) and providing
technical guidance for implementing service functions..
ACN 11/2009 on Formulation of Norms, Standards, Procedure and
Criteria (NSPK) was approved in October 2009. Financial
management and procurement assessments done and reports
completed. For recipient-executed components, the grant agreement
has been cleared within the WB and will be signed upon receipt from
MoHA of a letter confirming internal and external audit requirements.
For Bank-executed components an assessment of NSPK status is out
to tender; requests for expressions of interest made; short list drawn
up; and preparation of technical and financial proposal requests is
underway.
3
1.2. Minimum Service
Standards (MSS), in
targeted sectors budgeted
and implemented in
selected district
governments
Implementation of MSS in
selected sectors in selected
districts and municipalities
The Manual for MSS Costing (Minister of Health Decree 317/2009)
has been printed and is ready for distribution by Ministry of Health &
MoHA to all districts and municipalities.
The first draft of the electronic system for costing health MSS has
been produced. The system is being pilot tested in Kota Yogya and is
expected to be ready in April 2010.
ACN 14/2009 on Capacity Development for Minimum Service
Standards Costing and Implementation was approved in November
2009. In January, 2010 MoHA (finally) decided that the activity
should be part recipient-executed (US$ 1,050,000) and part WB
Executed (US$ 150,000). Further prevarication then ensued in MoHA
over budget allocation between Bank and recipient execution. A final
decision is expected in April.
3
1.3. Alternative service
delivery schemes
established in selected
sectors and districts and
municipalities with better
Number of selected district
governments developed
pilot alternative schemes in
service delivery and number
of women reached by these
Phase 1: Assessment of Legal and Regulatory Framework report
completed October 2009.
National Workshop on Alternative Mechanisms for Service Delivery
(AMSD) was held in November 2009. Representatives from three
1
DSF Quarterly Report
March 2010
23
Output 1: Public Service Delivery
Objectives Indicators Progress Rating Comment
access for women (Phase
1)
Management
Strengthening and
institution building for
local public service
providers ( Phase 2)
pilot schemes
regions in Province Banten presented preparations 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. Final report submitted.
Phase 2: The follow-on activity commissioned by GOI was
formalized in ACN 4/2009 on Management Strengthening and
Institution Building of Local Public Service Providers. This is a
recipient-executed activity. TOR and budget have been finalized.
Financial management and procurement assessments completed and
report produced. Draft grant agreement under preparation.
For WB executed component, three TORs prepared: (1) development
of baseline information on women’s access to selected public services;
(2) preparation for the pilot implementation of AMSD in West Java
Province; and (3) project management support. Recruitment of
consultants is underway.
4
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
The ToR have been finalized for this government-executed (MoHA)
activity. A procurement and financial management assessment has
been scheduled for early in the second quarter of 2010.
This links to activity 4.3 on border area development. This is a Bank-
executed activity on behalf of Bappenas. ACN 2/2009 covers activities
1.4 and 4.3 and represents the DSF’s integrated support for the
development of border areas..
4 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. This will
constitute the basis for activity 1.4,
which is concerned with the
development of national and regional
action plans.
1.5. Improved local
government systems for
dissemination and
replication of good
practices in service
delivery
National policy on good
practices issued
Comparative analysis of good practice programs in Indonesia
completed in April 2009.
MoHA has held several rounds of consultations on a draft
permendagri (ministerial regulation) on best practices.
The project implementation consultants presented a mid-term report to
MoHA in August 2009. In spite of DSF efforts to rectify the situation,
it was noted that progress was disappointing. The consultants had not
submitted an inception report in Bahasa Indonesia, nor completed the
pilots and database work as stipulated in the ToR.
4 Project implementation was
handicapped by key members of the
selected consultancy team not being
available as proposed and poor
compliance to TORs.
MoHA (Directorate for Capacity
Building and Local Government
Performance Evaluation) expressed
dissatisfaction with activity
March 2010
DSF Quarterly Report
24
Output 1: Public Service Delivery
Objectives Indicators Progress Rating Comment
In order to enable the consultants to meet with GOI and rectify the
deficiencies, a one month no-cost extension was allowed beyond the
project closing date of 30 September 2009. As the consultants failed to
comply, the project was closed on 31 October 2009.
performance. As a consequence, the
project was closed on 31 October
2009.
1.6. 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
by 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
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 submitted.
Phase 2: To ensure the momentum of this work, in late 2009 a follow-
on project was approved by the DSF Management Committee. An
activity addendum was designed in consultations with MoHA and
Bappenas to: (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 utilizing
the RIA method.
1
4
For Phase 2, the DSF has started the
procurement process, which will be
either through competitive bidding or
a grant agreement.
1.7. Improved understanding
of international best
practices, social political
dimensions, costs and
benefits and alternatives
for territorial reform
Evidenced based research
on territorial reform adopted
by three key ministries:
MoF, Bappenas and MoHA
for policy input
Six analyses completed for Bappenas, MoF, MoHA, DPD, DPR, and
local government, with information on lessons learned from
international, national, and local experience of territorial reform:
Experiences in Territorial Reform: Implications for Indonesia
Territorial Restructuring: Country Case Studies
Process and Implications of the Social-Political Dimensions of
Territorial Reform: Case Studies from Sambas and Buton.
Costs and Benefits of Proliferation of Regions (Pemekaran)
analysis completed for MoF with key findings for fiscal transfer
formulas related to pemekaran, November 2007
Evaluation of the Proliferation of Administrative Regions in
Indonesia 2001-2007
Territorial Reform and People’s Welfare: Finding Alternatives
1 A Fiscal Agency Agreement (FAA)
with UNDP for coverage of work
under territorial reform, disaster
management, and sub national data
was operational until June 30, 2009.
UNDP submitted the final report
covering the entire body of work
under the FAA in December 2009.
However, the work that formed the
basis of the report was carried out by
RTI International, UNDP, and a
freelance consultant. The trust fund
for the FAA has been closed.
DSF Quarterly Report
March 2010
25
Output 1: Public Service Delivery
Objectives Indicators Progress Rating Comment
Consultations and dissemination workshops with national and local
multi-stakeholder forums were held during preparation, finalization,
and outreach for the analyses. Parts of the reports have been used in
presentations and seminars by senior GOI central and local
government officials. The research also informed policies related to
fiscal, administrative, and social-political aspects of territorial reform.
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)
Realization 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.
Scoping mission to 3 local governments in North Sulawesi to review
regional financial information systems carried out in December 2009.
Preliminary version of software used to transfer electronic data from
the regions to MoF’s SIKD was presented to MoF. The software uses
data from the above districts and municipalities (March 2010). In
addition to the data transfer module, at the request of MoF, the
software will also include (new and expanded) modules for data entry.
1
3
Results from this exercise will form
the basis for determining how best to
transfer electronic data from local
governments to central government.
2.2. Improved fiscal
decentralization policy
Implementation of ‘Grand
Design of Fiscal
Decentralisation’ across
government ministries and
local governments
Feasibility assessments of possible incentives for the grants system
including revenue-sharing intercepts as sanctions for poor
performance completed September 2008.
ACN 13/2009 ACN on Improving the Policy Framework for Fiscal
Decentralisation (‘Grand Design of Fiscal Decentralization’ - GDFD)
approved by DSF MC in November 2009.
Project implementation plan for the whole support completed (January
4 In addition to clarifying and
specifying in more detail the policy
framework for fiscal decentralisation,
the support will also provide
analytical inputs for the revision of
Law 33/2004 on fiscal balance
between central government and local
governments.
March 2010
DSF Quarterly Report
26
Output 2: Fiscal Decentralization and Capacity Development
Objectives Indicators Progress Rate Comment
2010).
Two public consultation workshops to solicit input for revision of
main ideas (the body) of GDFD took place in Pontianak, West
Kalimantan (February 2010) and Makassar, South Sulawesi (March
2010). The event was well attended by local governments and
academicians from both provinces.
Initial discussions on input to the revision of Law 32/2004 (especially
to regional finance chapter) and Law 33/2004 took place during March
2010.
Final public consultation workshop is
scheduled for April 2010 in Surabaya,
East Java.
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
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.
Phase 2: Analysis and preparatory work for issuance of Jakarta and
Bandung bonds:
Technical assistance to the governments of Provinces DKI
Jakarta and Kota Bandung is underway
Team for preparation of DKI Jakarta municipal bonds (Tim
Persiapan Obligasi Daerah - TPOD) established in July 2009.
The team is discussing selection of project(s) to be financed by
the bonds.
Draft local regulation on municipal bonds for submission to DKI
legislature (DPRD) is being revised to accommodate MoF’s
concerns.
Preparation of technical documents - pre-feasibility studies of
projects and related sections on economic, financial and
environmental matters, in accordance with MoF regulations
(PMK 147/06) - is underway.
First round of discussions on revision of Government Regulation (GR)
54/2005 on Local Borrowing between MoF and Ministry of Law and
Human Rights completed (February 2010).
2
3
Rating refers to Phase 1 activities.
Future reports will be rated according
to achievement of milestones/target
phase 2.
Directorate of Regional Financing
and Capacity-MoF has submitted
request to expand the scope of
activities to the Province of
Kepulauan Riau and Kota Surabaya.
Consultations among members of
DSF MC are underway to
accommodate the request.
Scoping mission to Kota Surabaya is
scheduled for April 2010. The
purpose of the mission is to review
local government readiness for
preparation of municipal bond
issuance.
International workshop on municipal
bonds is postponed until GR 54/2005
has been signed by the President.
DSF Quarterly Report
March 2010
27
Output 2: Fiscal Decentralization and Capacity Development
Objectives Indicators Progress Rate Comment
2.4. Improved public financial
management of special
allocation funds (SAF) by
local governments
Public financial analysis of
SAF completed by selected
local governments as a basis
for local government
planning and budgeting
Empirical analysis of regional government surpluses based on data
from 27 provinces and 220 districts and municipalities resulting in
report with recommendations completed June 2008. Empirical analysis on regional government investment in public
infrastructure based on audited financial data for 2004-2007
completed June 2009.
1
Rating pertains to Phase 1.
Phase 2 is currently on hold pending
further discussions with GOI.
2.5. Government pro-poor
special allocation fund
(DAK) monitored and
evaluated
Monitoring and evaluation
reports completed on
expenditures of pro-poor
government fund in selected
local governments
ACN 3/2009 on Socialization 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 09.
Project implementation plan for the whole support completed (January
2010).
In order to obtain initial feedback on SEB-DAK, focus group
discussions and socialization on SEB-DAK conducted for Bappeda
Kota Bogor (January 2010).
Modules for field facilitators and data collecting activities completed
by TKP2E-DAK Secretariat, Bappenas (February 2010).
SEB data forms tested & assistance given to Dinas staff that received
DAK in Kabupaten Karawang, West Java. The event was opened by
Dadang Muchtar, Bupati of Karawang (March 2010).
3 Socialization workshop on the project
is scheduled for May 2010.
Output 3: Increasing Accountability
Objectives Indicators Progress Rate Comment
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
DSF II Capacity Strengthening for DPRD (Local Government
Legislatures) TF 095584 Grant Agreement was signed by the World
Bank on January 25, 2010 and countersigned by the Government of
Indonesia (represented by the Ministry of Finance) on February 3,
2010. MoHA submitted a request for grant effectiveness with
supporting evidence on March 10, 2010 and the Grant Effectiveness
Declaration letter was signed by the World Bank on March 23, 2010.
After the Grant Agreement was signed in January, MoHA took the
steps necessary to register the Grant Agreement with MoF; to open a
special account which required preparation and approval of an annual
work plan and issuance of a Perdirjen for the project; and to complete
4 The Local Government Affairs
(UPD) directorate of the MoHA was
proactive in completing the steps for
grant activation according to internal
GOI processes. The documents
prepared by UPD will be used by
other directorates as examples for
upcoming grant agreements. UPD-
MoHA demonstrated the ability to
access knowledge of internal GOI
processes, work across ministries
(MoHA and MoF), and diligently
March 2010
DSF Quarterly Report
28
Output 3: Increasing Accountability
Objectives Indicators Progress Rate Comment
DIPA registration.
DIPA funds are expected to be available in May 2010. MoHA will
begin the road show and MOU signing with local DPRDs at that time.
In the meantime, MoHA will proceed with a request for expressions of
interest for the implementing agency and monitoring and evaluation
firm, in line with Perpres 8/2006.
The addendum for the DPRD orientation activity approved by the
Management Committee as an addition to ACN 1/2009 on DPRD
Strengthening has been completed. The RAB (government budget) for
this activity has been approved and the financial management and
procurement assessments are scheduled for April 2010. The Grant
Agreement amendment (to TF 095995) is anticipated in May 2010 and
the first activities are planned for June 2010. The DPRD orientation
activity will use the same special account set up for the competency
based standard Diklat activity (ACN 7/2009) and will require an
amendment to the Diklat operations manual to accommodate
requirements for the DPRD orientation program.
prepare and revise documents. UPD-
MoHA should be commended for its
excellent work. In addition, MoF
(Debt Management, Treasury, and
Fiscal Balance) and the MC support
team should be recognized for their
advice and cooperation.
The DPRD orientation activity
executed by Diklat will cover
provincial and district/municipality
DPRD in four provinces (Aceh,
Papua, West Papua, and Maluku).
This is an orientation for DPRD
members based on a government
curriculum. This will complement the
DPRD strengthening program
executed by Local Government
Affairs/Regional Autonomy- MoHA,
which provides tailor made capacity
strengthening workshops to selected
DPRDs and follow up action
learning/TA to achieve DRPD
performance targets.
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 (DET) approved for a total budget of USD
1.593,520. The activity has 3 components that aim to enhance the
professional capacity of local and national officials to provide - and
CSOs to monitor - improved public service delivery:
Short courses in country and the region
Study tours
Scholarships for Master degree programs in decentralization-
related studies in the UK.
MoHA, MoF and Bappenas held a meeting on February 9, 2010, to
agree on: the schedule of the scholarships program implementation;
the criteria for the selection of candidates for Master degree programs;
and the composition of the selection committee.
An advertisement for the scholarships program was posted in the
national newspaper Kompas; on DSF, AKLN and Diklat websites; on
the BaKTI online portal; and was sent to local government
4 ACN 9/2009 has been divided into 2
grants: 1) scholarships and 2) short
courses and study tours.
In view of the tight timeline for the
execution of the scholarships project,
on 31 March 2010 AKLN/MoHA
asked that the WB assume
responsibility for the execution of the
scholarship component of the project.
Short courses and study tours will
still be GOI-executed.
DSF Quarterly Report
March 2010
29
Output 3: Increasing Accountability
Objectives Indicators Progress Rate Comment
associations. By the deadline of March 17 forty-two applications had
been received by MoHA/Diklat.
On March 29, 2010, a meeting of the selection committee was held to
shortlist candidates. The committee rejected two applications received.
40 will be invited to interview. April 8 and 9, 2010 are scheduled
interview days.
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
DSF II Government Training and Education Centre Development:
Introducing Competency-Based Standards for Improved Public
Service Delivery TF 095995 Grant Agreement was signed by the
World Bank on January 25, 2010 and countersigned by the
Government of Indonesia (represented by the Ministry of Finance) on
February 3, 2010. Diklat submitted a request for grant effectiveness
with supporting evidence on March 17, 2010 and the Grant
Effectiveness Declaration letter was signed by the World Bank on
March 30, 2010.
After the Grant Agreement was signed in January, MoHA took the
appropriate steps to register the Grant Agreement with MoF; open a
special account which required preparation and approval of an annual
work plan and issuance of a Perdirjen for the project; and completed
DIPA registration.
DIPA funds are expected to be available in May 2010. Diklat will
begin with the first training and workshops at that time. Diklat will
proceed with a call for curriculum vitae for consultants in the area of
HRM/competency based standards, population administration, and
administration and financial support - in line with Perpres 8/2006
(contracting based on availability of funds).
4
Diklat has been proactive in fulfilling
the requirements for grant activation
and is one of the lead directorates
within MoHA in terms of project
preparation and implementation.
Diklat is bringing on another project
(DPRD Orientation as part of
Objective 3.1) and has taken the
necessary steps for a grant agreement
amendment to accommodate this
activity.
3.4. Improved public
accountability of local
governments delivered by
CSOs
Public accountability
mechanisms developed and
implemented by CSOs
Task force established and commenced operation. Discussion paper
will be produced by May.
N/A Activity pending
In order to meet the objectives stated
in 3.4. it is recommended that an
activity addressing public
accountability mechanisms is added
to the DSF Work Plan 2009-2011
3.5. Improved knowledge
sharing on support to
local governments
Publicly accessible data
base on support to local
government developed and
A donor mapping database created and made available online in
English and Bahasa Indonesia at
http://www.dsfindonesia.org/apps/dsf-dm/cgi-bin/dw.cgi. Presented to
1 This project is complete and has met
its objectives. The database is well
received and commended as a useful
March 2010
DSF Quarterly Report
30
Output 3: Increasing Accountability
Objectives Indicators Progress Rate Comment
number of development
forums and harmonization
activities facilitated
(i) Director PK-EKD in MoHA in August 2008 (ii) the donor
community in the Donor Working Group in March, 2009 (iii) AKLN
in MoHA in May, 2009, and (iv) Bappenas team from Aid for
Development Effectiveness Secretariat (A4DES) in September 2009.
The Bureau of Foreign Cooperation (AKLN) in MoHA was identified
as the host institution to administer and maintain the data base. In
March 2010, AKLN and DSF selected a consultant to update the
database content and transfer management to GOI. This will work will
commence in April 2010.
tool for coordination and monitoring
of donor support to decentralization.
GOI is keen to incorporate the tool in
a government system for monitoring
and reporting on development
assistance in decentralization.
DSF will continue to work with
AKLN to update and upgrade the
system.
Output 4: Planning and Performance Measurement
Objectives Indicators Progress Rate Comment
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. Part 1 commenced
December 2009 and completed March 2010. Paper produced on
‘Identifying the connections between regional spatial plans with
regional development plans’. During Part 1 an event to introduce the
activity and seek input was held for representatives from each of the
three pilot provinces (including heads of Bappeda).
Part 2 to be implemented by a firm. Evaluations completed and
contract negotiations scheduled for first week of April 2010.
ACN 2/2009 on Capacity Building for Regional Development Policy
Formulation is also linked to Objective 4.1. Part 1 commenced
September 2009, implemented by a team of five consultants.
Completion by end April 2010. A number of interim reports have been
4
3
Activities under ACN 5/2009 are
designed to improve the consistency
between regional government planning
documents (spatial plans and
development plans) and also the
consistency between spatial plans at
different levels of government. A key
component of the activity is to develop
the capacities of three provincial
governments (West Java, Gorontalo
and West Sumatra) and three
district/city governments to produce
spatial plans that are aligned with the
national spatial plan and integrated
with regional development plans.
Part 1 provided input to the Directorate
of Spatial Planning and Land Affairs
(Bappenas) on the legal aspects of
regional planning documents and
provided recommendations on how to
improve alignment.
This is an additional activity not listed
in the Log Frame.
The first part of the activity will
produce, by end April 2010, a
DSF Quarterly Report
March 2010
31
Output 4: Planning and Performance Measurement
Objectives Indicators Progress Rate Comment
submitted, including policy papers for each major island region, a
literature review on Indonesian development policy and an input paper
for the RPJMN 2010-2014 (for Book 3 on Development with a
Regional Dimension).
Part 2 to be implemented by a firm. Draft terms of reference provided
by Bappenas in February 2010. ToR developed through March 2010,
with finalisation expected in April 2010.
An addendum to ACN 2/2009 is under preparation that is designed to
strengthen inter regional cooperation, and addresses matters that are
the responsibility either of Bappenas (Directorate of Special Regions
and Less Developed Areas) or MoHA (Directorate for
Deconcentration and Cooperation, PUM). In February 2010, the two
directors discussed how best to combine the activities into a single
addendum, with follow-up discussions within each directorate. An
inter-departmental meeting, involving Bangda (MoHA) and the
Ministry for the Development of Less Developed Regions (which also
run projects on inter-regional cooperation), is scheduled for the first
week of April, whereupon the addendum will be finalised.
substantial review paper on regional
development policy that will draw on
lessons learned from past experiences
and build upon the RPJMN for 2010-
2014 to provide key input into
government’s approach to regional
development policy. The Directorate of
Regional Development (Bappenas) is
the client and has led the consultant
team proactively through regular team
meetings. The second part will build
upon this work by formulating
development strategies for the major
island groups, with a focus on eastern
Indonesia. One of the components will
address questions surrounding the
stimulation of inter-island trade, a key
policy area for the government. The
Directorate of Regional Development
has provided important input for the
ToR and an inter-directorate meeting
(within the Deputy for Regional
Autonomy and regional Development)
is planned for April to finalise the
ToR.
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
government programs.
4.2. 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. All activities to be completed through a
single contract by a firm or association of firms. Technical proposals
reviewed jointly by DSF/Bappenas on 31 March 2010.
Implementation to commence in the second quarter of 2010.
An addendum to ACN 10/2009 has been written that is designed to
4 This activity seeks to improve the way
natural resources are managed by local
governments, thereby contributing to
local economic development. The
capacity to do this type of work will
start to be developed in local
governments in two target provinces
March 2010
DSF Quarterly Report
32
Output 4: Planning and Performance Measurement
Objectives Indicators Progress Rate Comment
develop a local economic development facility. The client is the
Directorate of Urban and Rural Affairs (Bappenas). The addendum
has been submitted for approval.
(Papua and South East Sulawesi), and
should help local governments to
identify the potential for resource
development; and manage the
resources in a sustainable manner with
the involvement of entrepreneurs and
communities. Lessons will be derived
from these pilots and made available
on a wider scale to local governments
with similar resources and challenges.
Key resources within the scope of this
activity include land for plantations,
marine resources for fisheries, and
resources with tourism development
potential.
This activity has been designed in
collaboration with the Directorate of
Urban and Rural Affairs and with
GTZ’s RED program (which will also
be supporting the development of the
local economic development facility).
4.3. 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. This ACN covers activities related to border area
development, prioritized by both Bappenas and MoHA. Bappenas
activities are WB-executed and MoHA activities are GOI-executed.
This objective is linked to activity 1.4 on service delivery in border
regions. The activities are clearly closely inter-related and both
involve Bappenas, MoHA and the Ministry of Disadvantaged Regions.
Bappenas activities are divided into two parts. Part 1 was implemented
by a consultant contracted from November 2009 to March 2010. Input
was provided for the RPJMN 2010-2014 (for Book 2 on Strengthening
the Synergies between Development Sectors; Chapter IX on Regions
and Spatial Aspects). A paper on suitable institutional arrangements
for the national border area agency (BNPP) was presented at an inter-
ministerial meeting hosted by the Directorate of Special Areas and
Disadvantaged Regions (Bappenas) in March 2010. Part 2 will be
contracted to a firm or association of firms. An evaluation report on
the technical proposals was submitted to WB for approval on 25
March 2010. Implementation is expected to commence by May 2010.
4 Through this activity, the MoHA and
Bappenas seek: first, to strengthen
cross-ministerial institutions,
particularly
the National Agency for the
Management of Border Regions,
which manages and develops border
regions; and second, to improve policy
for the development of border regions.
DSF Quarterly Report
March 2010
33
Output 4: Planning and Performance Measurement
Objectives Indicators Progress Rate Comment
4.4. Improved quality and
availability of sub-
national statistics for
local decision making
Study of sectoral data
systems at central and
regional level with policy
recommendations adopted
by BPS (Central Statistics
Agency)and participating
local governments
‘Improving the Quality and Availability of Sub-National Statistics for
Local Decision Making & Streamlining the Flow of Statistics between
Regions and the Centre’ study completed in support of BPS and local
governments, January 2009.
National and local level sectoral data system analysed for 19
governments (6 provinces, 4 kota, 9 kabupaten), January 2009.
Assessment of health data for 11 districts/municipalities and
assessment of education data for 12 districts/municipalities completed
in January 2009.
Final report with 21 policy recommendations grouped in the categories
of:
System design, setup and maintenance;
Promotion of data quality; application of information and
communication technology;
Human, physical and financial resources; strengthening of data
sharing, analysis, and utilization; and
Legislation and regulation, May 2009.
BPS is using the results of this activity in negotiations with the WB
concerning a national statistics capacity building program
(STATCAP) loan.
1 This project is complete and has met
its objectives.
The findings from this project are
relevant to many other DSF projects,
since these rely on the availability of
good quality sub-national sectoral data.
A follow-on to this project could
include extension of the web-based
system for transmitting data from
technical agencies at the sub-national
level to relevant ministries in Jakarta.
Capacity building recommended for
local governments in relation to use of
information technology.
DSF Quarterly Report
September 2009
DSF Quarterly Report
March 2010
35 35
Annex B: Financial Report
Summary
Donor Contributions: Three donors have pledged a total of USD 44.24 million
(exchange rate March 31, 2010).
Commitments: USD 42.33 million or 96% of total pledges has been allocated to 58
projects, the approved DSF Work Plan 2009 – 2011, and DSF operations.
Disbursements: USD 16.28 million or 36.80% of total contributions pledged or
38.46% of allocations.
Remaining Funds: Shortfall of USD -127,766 owing to exchange rate fluctuations
and after taking into account probable postponement or withholding of GBP 2
million from DfID pledged funds.
I. Donor Contributions
DSF has 9 donor partners, 3 of whom are financial contributors: DFID, AusAID, and
CIDA. Total pledges amount to USD 44.24 million (31 March 2010 exchange rate).
About 96.6% of the total amount (USD 42.74 million) has been pledged by DFID. As of
31 March 2010, DSF had received USD 29 million or 65.55% of total pledges (see Table
1): USD 27.50 million from DFID, USD 1 million from AusAID, and USD 500K from
CIDA.
Table 1: Pledges Received on the Basis of Signed Contribution Agreements
Contributors Contribution
Currency
Contribution
Amount USD equivalent
Cash Received
in USD million
DFID GBP 24.36 42.74 27.50
AusAID USD 1.00 1.00 1.00
CIDA CAD 0.50 0.50 0.50
Total
44.24 29.00
II. Fund Allocations and Commitments
The projects and allocations set out in Table 2 were approved by the MC at its meetings
of 24 January 2007, 16 February 2007, 12 February 2009, and 28 October 2009 and by
circulation in November 2009.
Table 2: Fund Allocations and Commitments to 31 March 2010
Budget (USD)
Total Pledges 44,243,625
Investment income (as of March 31, 2010) 1,383,065
Projected Administration fee (1% of total pledges) (442,436)
Other Income (as of March 31, 2010) 24,836
Total Available Funds 45,209,090
DSF Quarterly Report
September 2009 March 2010
DSF Quarterly Report
36 36
Budget (USD)
Fund Allocations approved in January 2007 21,298,513
Focal Area 1 2,968,714
Tax Assignment and Own-source Revenue -
Transfer 350,000
Borrowing 600,000
Surplus and Reserves 275,000
Data for Monitoring and Evaluation 480,000
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 55,000
Supporting the Establishment of Financially Feasible Minimum Service Standards 305,000
Alternative Mechanism of Service Delivery 200,000
Focal Area 2 1,808,059
Local Government Performance Measurement 187,174
Identification and Replication of Good Practice 478,000
Appraisal : Sub national Investment Climate Reform 600,000
Knowledge Management for Effective Local Government Support Programs 375,500
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 5,413,244
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 419,000
MIS Improvement for PNPM 106,000
Short Term Monitoring and Evaluation 710,385
Medium / Long Term Monitoring and Evaluation 399,926
CCT Baseline Survey 1,669,665
Support Office for Eastern Indonesia (SOfEI) 3,310,588
Quick starts 97,908
Project Operations thru March 31, 2010 7,700,000
Staff costs 4,200,000
Operations costs 3,500,000
DSF Quarterly Report
September 2009
DSF Quarterly Report
March 2010
37 37
Budget (USD)
Approved Work Plan 2009 - 2011 (1st round) 10,890,520
ACN 1/2009: Capacity Strengthening Program for DPRD (Local Government Legislatures) 500,000
ACN 2/2009: Capacity Building for Regional Development Policy Formulation 150,000
ACN 3/2009: Improving and Piloting the Implementation of Monitoring and Evaluation
System of Special Allocation Funds Utilization
550,000
ACN 4/2009: Management Strengthening and Institution Building for Local Public Service
Providers (MSIB-LPSP)
500,000
ACN 5/2009: Institutional Building for the Integration of National Regional Development and
Spatial Planning
500,000
ACN 6/2009: Building Capacity for the Development of Sub-National Government Capital
Markets for Municipal Bonds
900,000
ACN 7/2009: Government Training and Education Centre Development: Introducing
Competency Based Standards for Improved Public Service Delivery
797,000
ACN 8/2009: Institution Building for the Accelerated Development of Border Areas 500,000
ACN 9/2009: Capacity Building through Decentralization Education and Training (DET) for
Public Service Delivery
1,593,520
ACN 10/2009: Strengthening Local Government Natural Resource Management Capability 750,000
ACN 11/2009: Formulation of Norms, Standards, Procedures and Criteria (NSPK) for Local
Government Service Delivery
1,000,000
ACN 12/2009: Strengthening Data Provision to the Regional Financial Information System by
Sub-National Governments with Stand-Alone Electronic Data Bases
250,000
ACN 13/2009: Improving the Policy Framework for Fiscal Decentralization 900,000
ACN 14/2009: Costing and Pilot Implementation of Minimum Service Standards 1,200,000
Service Delivery in Border Regions 500,000
Support for EPPD 300,000
Approved DSF Work Plan 2009 - 2011 (2nd round) 7,650,000
DPRD Orientation 500,000
Regional Development Policy 700,000
Local Government Evaluation 300,000
Inter-Regional Cooperation 1,000,000
Regional Finance 850,000
Provincial Government Support Program 2,000,000
Regional & Local Economic Development 600,000
Sub-National Business Climate Reform 1,000,000
Grand Design on Implementation of Regional Autonomy 700,000
Approved additional DSF Executive Operations Work Plan 2009 - 2011 2,788,505
Knowledge Management for Aid Effectiveness 700,000
DSF Executive Operations 1,502,043
Additional donor contribution for DSF Operations 586,462
Total allocations to programming & DSF Executive staffing & operations 42,627,538
Total Unallocated and Uncommitted Funds1 2,581,552
1 Fund balance for unallocated and uncommitted funds fluctuates according to the prevailing exchange rate and return
on investment.
DSF Quarterly Report
September 2009 March 2010
DSF Quarterly Report
38 38
III. Disbursement Status
To date, DSF has received USD 30.40 million, consisting of USD 29 million of donor
contributions and USD 1.38 million of investment income. As of March 31, 2010, USD
16.28 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).
Focal Area 1 (Strengthening Inter-Governmental Framework) has disbursed USD
2.15 million or 72% of the total approved budget of USD 2.97 million.
Focal Area 2 (Support to Sub-National Entities) has disbursed USD 1.26 million or
57% of the total approved budget of USD 2.21 million.
Focal Area 3 (Strengthening Accountability, Participation and Civic Engagement) has disbursed USD 5.37 million or 99.26% of the total approved budget of USD 5.41
million.
Table 3: Disbursement Status of the DSF as of March 31, 2010
Budget
(USD)
Actual
(USD)
Commitments
(USD)
Receipts
Paid in Contributions 44,243,625 29,000,052
Investment Income 1,383,065
Other Income 24,836
Total Receipts 44,243,625 30,407,953
Disbursements
Focal Area 1 2,968,714 2,152,400 59,547
Tax Assignment and Own-source Revenue * - - -
Transfer 350,000 90,754 -
Borrowing 600,000 554,616 42,615
Surplus and Reserves 275,000 179,505 3,600
Data for Monitoring and Evaluation 480,000 322,413 -
Assessing and Revising the System for Setting Territorial
Boundaries
227,500 227,500 -
Fiscal Agency Intergovernmental Framework Fund 476,214 476,214 -
Exploring Future Reform Options in Functional Assignment 55,000 47,467 4,301
Supporting the Establishment of Financially Feasible Minimum
Service Standards
305,000 54,176 9,031
Alternative Mechanism of Service Delivery 200,000 199,755 -
Focal Area 2 1,808,059 1,265,098 227,117
Local Government Performance Measurement 187,174 187,174 -
Identification and Replication of Good Practice 478,000 382,392 95,598
Appraisal : Sub national Investment Climate Reform 600,000 469,325 129,791
Knowledge Management for Effective Local Government Support
Programs
375,500 58,823 1,728
Mapping and Analysis of Local Planning and Budgeting Processes 49,703 49,703 -
Improved Evidence Base of Good and Bad Local Perda 117,682 117,682 -
Focal Area 3 5,413,244 5,372,315 11,985
National Program for Community Empowerment 1,072,961 1,072,961 -
CDD Summit 421,705 421,705 -
DSF Quarterly Report
September 2009
DSF Quarterly Report
March 2010
39 39
Budget
(USD)
Actual
(USD)
Commitments
(USD)
Policy Development for PNPM 58,666 58,666 -
Cost Accounting Review for CDD Programs 16,512 16,512 -
Technical Assessment for CDD Programs 53,685 53,685 -
Information, Education and Communication for PNPM 484,739 484,739 -
User Fee Assessment for CDD Programs 419,000 390,395 -
MIS Improvement for PNPM 106,000 93,676 11,985
Short Term Monitoring and Evaluation 710,385 710,385 -
Medium / Long Term Monitoring and Evaluation 399,926 399,926 -
CCT Baseline Survey 1,669,665 1,669,665 -
Decentralization Support for Eastern Indonesia (SofEI) 3,310,588 2,972,544 46,472
Quick starts 97,908 97,908 -
Project Operations 7,700,000 4,333,221 99,747
Staff costs 4,200,000 2,654,384 26,400
Operation costs 3,500,000 1,678,837 73,347
Approved Work Plan 2009 - 2011 (1st round)
New projects approved and registered in FY09 (1st round) 6,163,576 91,755 90,307
Support to Public Service Delivery 366,000 - -
Strengthening Data Provision to the Regional Financial Information
System by Sub-National Governments with Stand-Alone Electronic
Data Bases
250,000 680 8,318
Improving and Piloting the Implementation of Monitoring and
Evaluation System of Special Allocation Funds Utilization
550,000 7,886 10
Improving the Policy Framework for Fiscal Decentralization 900,000 22,655 -
Building Capacity for the Development of Sub-National
Government Capital Markets for Municipal Bonds
900,000 9,274 7,586
Decentralization Support Facility II Capacity Strengthening
Program for Local Government Legislatures
500,000 - -
Government Training and Education Center Development:
Introducing Competency Based Standards for Improved Public
Service Delivery
797,576 - -
Institutional Building for the Integration of National Regional
Development and Spatial Planning
500,000 10,106 3,568
Capacity Building for Regional Development Policy Formulation 150,000 32,547 70,825
Institution Building for the Accelerated Development of Border
Areas
500,000 8,607 -
Strengthening Local Government Natural Resource Management
Capability
750,000 - -
Approved Work Plan 2009-2011 in process of registration
(1st round)
4,726,944
Approved DSF Work Plan 2009 - 2011 (2nd round) 7,650,000 Approved additional DSF Executive Operations Work Plan
2009 - 2011
2,788,505
Total Project Disbursements 42,627,538 16,285,241
Administration fee 442,436 290,001
Total Disbursements 43,069,974 16,575,242
Outstanding commitments 535,175 535,175
Total Cash Available (= receipts - disbursements -
commitments)
13,297,536
DSF Quarterly Report
September 2009 March 2010
DSF Quarterly Report
40 40
Support Office for Eastern Indonesia (SOfEI) has disbursed USD 2.97 million or 90%
of the total USD 3.31 million approved budget. Signed commitments amounting to USD
46K for activities completed before December 31, 2009 will be paid in the next quarter.
For DSF operations, USD 4.33 million has been disbursed. This includes office and
project operations as well as staff costs.
Outstanding commitments: as indicated in footnote 8 above this refers predominantly to
formal contractually-based financial commitments. Such commitments amount to USD
6.4 million in DSF operations, including staff contracts over the life of the DSF plus the
existing programmatic contracts of USD 535,175.
Total cash available as of March 31, 2010 is USD 13.29 million. These funds are fully
committed, that is, either in the process of being allocated to child TF or earmarked for
such allocation – for programming and for DSF Executive staffing and operations.
Outlook
Table 4 shows expected cash receipts and disbursements for the current and projected
portfolio of projects. The Fund expects to disburse USD 21.35 million to project accounts
through to the end of fiscal year 2010.
Table 4 is based on total project funds committed, as set out in the current Contribution
Agreement and Administrative Agreement. The current DSF TF closing date is March
31, 2012.
Table 4: Projection of Cash Receipts and Disbursements 2007 – 2011
Actual per
March 31,
2010
Year ended
June 30, 2010
(USD
million)
Year ended
June 30, 2011
(USD
Million)
Projections as
of Apr. 30,
2012 (USD
million)
Expected Receipts
Projected Cash Remaining from prior period 0 13.3 14.46 12.57
Paid in Contributions
DFID 27.5 6 9.24 0
AusAID 1 0 0 0
CIDA 0.5 0 0 0
Cash Receipt during current period 29 6 9.24 0
Investment Income 1.38 0.29 0.44 0
Other Income 0.03 0 0 0
Expected Cash Available to DSF TF 30.41 19.59 24.14 12.57
Disbursements
Focal Area 1 2.15 0.82 0 0
Focal Area 2 1.27 0.94 0 0
Focal Area 3 5.37 0.04 0 0
Eastern Indonesia projects (SoFEI) 2.97 0.34 0 0
Quick starts 0.1 0 0 0
Project Operations 4.33 0.3 3.3 3.04
DSF Quarterly Report
September 2009
DSF Quarterly Report
March 2010
41 41
Actual per
March 31,
2010
Year ended
June 30, 2010
(USD
million)
Year ended
June 30, 2011
(USD
Million)
Projections as
of Apr. 30,
2012 (USD
million)
Priority Area per FY09
Public Services 0 0.25 2.95 1.5
Fiscal Decentralization 0.04 0.55 2.01 0.85
Planning and Performance Measurement 0.05 1.625 0.525 3.6
Governance Reform 0 0.2 2.69 1
Total Project Disbursements (Projections) 16.28 5.065 11.475 9.99
Administration fee 0.29 0.06 0.09 0
Total Disbursements (Projections) 16.57 5.125 11.57 9.99
Outstanding commitments 0.54 0 0 0
Total Cash Available for subsequent
year(s)
13.3 14.46 12.57 2.58
DSF Quarterly Report
September 2009 March 2010
DSF Quarterly Report
42 42
Annex C: List of Acronyms
A4DES: Aid for Development Effectiveness Secretariat
ACNs: Activity Concept Notes
ADB: Asian Development Bank
AKLN: Administrasi Kerjasama Luar Negeri (Bureau of Foreign Cooperation)
AMSD: Altenative Mechanisms of Service Delivery
APBD: Anggaran Pendapatan dan Belanja Daerah (Regional Government Budget)
BAPPEDA: Badan Perencanaan Pembangunan Daerah (Regional Planning & Development Agency)
BAPPENAS: Badan Perencanaan dan Pembangunan Nasional (National Planning & Development
Agency)
BKN: Badan Kepegawaian Negara (National Civil Service Agency)
BNPP: Badan Nasional Pengelola Perbatasan (National Border Management Agency)
BPS: Badan Pusat Statistik (Central Statistics Agency)
CB: Capacity Building
CBT: Competency-Based Training
CSO: Civil Society Organization
DAK: Dana Alokasi Khusus (Special Allocation Fund)
DET: Decentralization Education and Training
Diklat: Pendidikan dan Pelatihan (Education and Training)
DIPA: Daftar Isian Pelaksanaan Anggaran (Budget Implementation Entry List)
Ditjen Bangda: Direktorat Jenderal Pembangunan Daerah (Directorate General of Regional
Development)
DJPK: Direktorat Jenderal Perimbangan Keuangan (Directorate General of Fiscal Balance)
DKI: Daerah Khusus Ibukota (use in DKI Jakarta, Special Region of the Capital of Jakarta)
DPD: Dewan Perwakilan Daerah (House of Regional Representatives)
DPR: Dewan Perwakilan Rakyat (House of Representatives)
DPRD: Dewan Perwakilan Rakyat Daerah (Provincial Legislative Council)
DRSP: Democratic Reform Support Program
DSF: Decentralization Support Facility
EPPD: Evaluasi Penyelenggaraan Pemerintahan Daerah (Guidelines for Regional Government
Evaluation)
FAA: Fiscal Agency Agreement
FGD: Focus Group Discussion
GA: Grant Agreement
GDFD: Grand Design of Fiscal Decentralization
GDP: Gross Domestic Product
GFR: Grant Funding Request
GOI Government of Indonesia
GR: Government Regulation
GTZ: Gesellschaft für Technische Zusammenarbeit
HDI: Human Development Index
HRM: Human Resources Management
HTML: Hyper Text Markup Language
KKDT: Kawasan Khusus dan Daerah Tertinggal (Directorate of Special Regions and Less
Developed Areas)
LAN: Lembaga Administrasi Negara (State Administration Agency)
LRA: Laporan Realisasi Anggaran (Budget Realization Report)
MC: Management Committee
MoF: Ministry of Finance
MoHA: Ministry of Home Affairs
MOUs: Memorandum of Understanding
MP: Member of Parliament
MSIB-LPSP: Management Strengthening and Institution Building for Local Public Service Providers
MSS: Minimum Service Standard
DSF Quarterly Report
September 2009
DSF Quarterly Report
March 2010
43 43
NSPK: Norma, Standar, Prosedur, dan Kriteria (Norms, Standards, Procedures and Criteria)
OSS: One Stop Shop
Otda: Otonomi Daerah (BAPPENAS: Directorate of Regional Autonomy; MoHA: Directorate
General of Regional Autonomy)
Otsus: Otonomi Khusus (Special Autonomy)
PAN: Pendayagunaan Aparatur Negara (State Ministry of Administrative Reform)
PDOK: Penataan Daerah dan Otonomi Khusus (Directorate of Regions Management and Special
Autonomy)
PEA: Public Expenditure Analysis
Perda: Peraturan Daerah (Local Regulation)
Perdirjen: Peraturan Direktur Jenderal (Director General Regulation)
Permendagri: Peraturan Menteri Dalam Negeri (Ministry of Home Affairs Regulation)
Perpres: Peraturan Presiden (Presidential Regulation)
PGs: Provincial Governments
PGSP: Provincial Government Support Program
PK-EKD: Pengembangan Kapasitas dan Evaluasi Kinerja Daerah (Directorate of Capacity Building
and Regions Performance Evaluation)
PMK: Peraturan Menteri Keuangan (Ministry of Finance Regulation)
PUM: Pemerintahan Umum (Directorate General of Public Administration)
RAB: Rencana Anggaran Biaya (Government Budget Estimation)
RED: Regional Economic Development
RIA: Regulatory Impact Assessments
RPJM: Rencana Pembangunan Jangka Menengah (Mid-Term Development Plans)
RPJMN: Rencana Pembangunan Jangka Menengah Nasional (Mid-Term National Development
Plans)
SAF: Special Allocation Fund
SC: Steering Committee
SEB: Surat Edaran Bersama (Joint Circular Letter)
SEB-DAK: Surat Edaran Bersama Dana Alokasi Khusus (Special Allocation Fund Joint Circular
Letter)
SIKD: Sistem Informasi Keuangan Daerah (Regional Financial Information System)
SSS: Single Source Selection
STATCAP: Statitical Capacity Building
TA: Technical Assistance
TAF: The Asia Foundation
TF: Trust Fund
TKP2E-DAK: Tim Koordinasi Penyusunan Kebijakan Perencanaan Pemantauan dan Evaluasi Dana
Alokasi Khusus (Coordination, Planning, Monitoring and Evaluation Team for Special
Allocation Fund)
ToR: Terms of Reference
TOT: Training of Trainers
TPOD: Tim Persiapan Obligasi Daerah (Municipal Bonds Preparation Team)
UNDP: United Nations Development Programme
UPD: Urusan Pemerintahan Daerah (Directorate of Local Government Affairs)
USAID: United States Agency for International Development
WB: World Bank