Project Number: 42099 Loan Number: TBD September 2012

Republic of Indonesia: Polytechnic Education Development Project

Project Administration Manual

CONTENTS

Page

ABBREVIATIONS 1 

I.  PROJECT DESCRIPTION 1 A.  Impact and Outcome. 3 B.  Outputs. 3 C.  Implementation Strategy 8 

II.  IMPLEMENTATION PLANS 10 A.  Project Readiness Activities 10 B.  Overall Project Implementation Plan 11 

III.  PROJECT MANAGEMENT ARRANGEMENTS 18 A.  Project Implementation Organizations – Roles and Responsibilities 18 B.  Key Persons Involved in Implementation 20 C.  Project Organization Structure 20 

IV.  COST AND FINANCING 25 A.  Project Investment Plan 25 B.  Detailed Cost Estimates by Financier 26 C.  Allocation and Withdrawal of Loan Proceeds 27 D.  Detailed Cost Estimates by Implementation Year 27 E.  Contract and Disbursement S-Curve 29 F.  Fund Flow Diagram for Public Polytechnics 30 G.  Fund Flow Diagram for Private Polytechnics (financed through NSF) 31 

V.  FINANCIAL MANAGEMENT 32 A.  Financial Management Assessment 32 B.  Disbursement 32 C.  Accounting 33 D.  Auditing 33 

VI.  PROCUREMENT AND CONSULTING SERVICES 33 A.  Advance Contracting 33 B.  Procurement of Goods, Works and Consulting Services 34 C.  Procurement Plan 34 D.  Consultant’s Terms of Reference 39 

VII.  SAFEGUARDS 42 

VIII.  GENDER AND SOCIAL DIMENSIONS 42 

IX.  PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 45 A.  Project Design and Monitoring Framework 45 B.  Monitoring 45 C.  Evaluation 46 D.  Reporting 47 E.  Stakeholder Communication Strategy 47 

X.  ANTICORRUPTION POLICY 48 

XI.  ACCOUNTABILITY MECHANISM 48 

XII.  RECORD OF PAM CHANGES 49 

List of Appendices Appendix 1: Design and Monitoring Framework 50

Appendix 2: Quality and Relevance of the Polytechnic System, Public and Private 53

Appendix 3: Strategy for Development of Lecturers 62

Appendix 4: Proposed Strategies for Strengthening Institutional and Management Development 65

Appendix 5: Economic Priority Sectors 69

Appendix 6: Selection Criteria and Profiles of Project Institutions and Summary of Project Support 75

Appendix 7: Guidelines for the National Skills Fund (NSF) 80

Appendix 8: Financial Management Assessment 86

Appendix 9: Procurement Capacity Assessment Agency Questionnaire 89

Appendix 10: M&E Strategy for the Polytechnic Development Project 96

Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The Directorate General of Higher Education in the Ministry of Education and Culture are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by the Directorate General of Higher Education and the selected Project Polytechnics of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreement, the provisions of the Loan Agreement shall prevail. After ADB Board approval of the project's report and recommendations of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

ABBREVIATIONS

ADB = Asian Development Bank BAPPENAS = National Development Planning Agency BAN-PT = National Accreditation Agency for Higher Education CBE = Competence Based Education COSO CTS

= =

Central Operations Service Office (ADB) Credit Transfer System

D1, 2, 3, 4 = Diploma levels 1, 2, 3, 4 DGHE = Directorate General of Higher Education DMF = Design and Monitoring Framework EC = Economic Corridor EMIS = Education Management Information System FMIS = Financial Management Information System GAP = Gender Action Plan GDP = Gross Domestic Product GOI = Government of Indonesia HRD = Human Resources Development IQF = Indonesian Qualifications Framework KADIN = Indonesian Chamber of Commerce LMIS = Labour Market Information System LSP = Organization for Certification of Professional Competences M&E = Monitoring and Evaluation MIS = Management Information System MOF = Ministry of Finance MOI = Ministry of Industry MOMT = Ministry of Manpower and Transmigration MOEC = Ministry of Education and Culture MOU = Memorandum of Understanding MP3EI = Master Plan for Acceleration and Expansion of Indonesia’s

Economic Development 2011-2025 MTR = Midterm Review NSF = National Skills Fund OWG = Occupational Working Group PEDP = Polytechnic Education Development Project PIU = Project Implementation Unit PMIS = Project Monitoring Information System PMU = Project Management Unit PPMS = Project Performance Monitoring System PPP = Public Private Partnership PPTA = Project Preparation Technical Assistance PSC = Project Steering Committee QA = Quality Assurance RENSTRA = National Education Strategic Plan RPJMN = National Mid-Term Development Plan 2010-2014 RPL = Recognition of Prior Learning SMK = Secondary Vocational School SPRSS = Summary Poverty Reduction and Social Strategy TA = Technical Assistance TOR = Terms of Reference TUK = Center for Industry Assessment TVET = Technical and Vocational Education and Training

I. PROJECT DESCRIPTION

1. The Government’s Master Plan for Acceleration and Expansion of Economic Development (MP3EI) 2011 - 20251 aims to achieving higher and more inclusive growth across Indonesia, and expanding development to poorer regions. The MP3EI has three strategic foci: (i) accelerating development in six economic corridors; (ii) improving national connectivity; and (iii) strengthening human resources, science, and technology capabilities, which are prerequisites to sustained, accelerated, and green growth. Within the six economic corridors, the MP3EI prioritized main economic activities2 to achieve a “self-sufficient, advanced, equitable, and prosperous Indonesia”. To generate broad employment and income earning opportunities and improve productivity across the country, the MP3EI highlights the importance of: (i) increasing value adding and expanding value chains for industrial production processes; (ii) advancing efficiency in production and strengthen competitiveness; and (iii) promoting an innovation-driven economy. 2. As a basic principle and prerequisite for development success, proficient human resource development is deemed as a vital driving force for economic growth. Indonesia’s polytechnic education system, which includes 172 public and private institutions, is considered as a significant contributor to accelerate the shift towards a knowledge-based economy and the development of a productive workforce. The proposed Project will support the MP3EI policy objectives by increasing access to and quality and relevance of the polytechnic system to deliver quality skills that will meet the needs of employers and the employment aspirations of graduates. The Project will provide targeted support to strengthen selected polytechnic institutions in all six economic corridors, and support main economic activities in these corridors as identified in the MP3EI, including: (i) manufacturing, (ii) infrastructure, (iii) mining, (iv) agro-industry, and (v) tourism. 3. Based on macroeconomic and political stability Indonesia has performed impressively over the past decade. GDP growth accelerated to 6.5% in 2011; further acceleration is forecasted for 2012-2014. While Indonesia’s economy is becoming more complex, shifting towards a knowledge-based economy, the need for human resources with advanced technological, administration and managerial skills has become more prominent than ever. As a middle-income country, Indonesia is operating in an increasingly competitive global economy. To remain viable and create additional employment opportunities, enterprises need to improve service standards, produce better quality products, improve work organization, technology usage and build value chains that increase production share or capture value throughout the economy. However, it is estimated that some 75% of employment in Indonesia requires improvement in technical skills to increase enterprise productivity. This is a difficult task given that some 90% of workers throughout Indonesia are employed by micro and small enterprises employing fewer than six workers.3 While open unemployment declined to 6.6% (August 2011), it is estimated that a third of the labour force is underemployed, and about 60% of the employed population works in informal establishments performing low skilled jobs. Low competitiveness of firms is considered as a key constraint to growth particularly due to low skills and low productivity of the workforce. The need for advanced skills has been identified by industry 1 Government Economic Master Plan 2011-2025, May 2011. 2 The main economic activities as defined in the MP3EI can be clustered into 8 economic priority areas, including (i) Tourism and

Hospitality, (ii) Agriculture and Fisheries, (iii) Resources and Minerals (Mining), (iv) Oil and Gas, (v) Shipping and Transportation, (vi)Textiles, (vii) Food processing and Beverage Services, and (viii) Manufacturing. The project will work with 5 of these areas – Tourism, Agriculture, Mining, Manufacturing and Infrastructure.

3 ADB, ILO, IDB ‘Indonesia Critical Development Constraints’ Country Diagnostics Studies Series 2010. The lack of quality skills is also identified as a constraint to inclusive economic growth in ‘From Reformasi to Institutional Transformation’ Harvard Kennedy School, April 2010.

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associations in each of the five economic sectors to be supported under the Project as critical to the success of growth plans.4 The government is aware of the need to substantially ‘up-skill’ its workforce to improve competitiveness in the region.5 4. The Government considers expanding and strengthening the polytechnic system as a key strategy for skilling up the workforce to serve knowledge intensive and technology driven industries in the five priority sectors identified by the MP3EI. Currently, the capacity of the 172 polytechnic institutions is limited to serve the growing demand for personnel with advanced skills across the country. Thus, the Government has earmarked additional funds to establish new polytechnics and increase the capacity of existing institutions, and is encouraging the growth of private polytechnics. According to a recent survey by the Ministry of Education and Culture (MOEC)6, applications to enroll in polytechnic education programs outnumber the current capacity of most public institutions. The study also reveals that more than 80% of graduates from the good performing public polytechnics find jobs within 3-6 months after graduation. However, feedback from employers reveals that many graduates need to be retrained as their knowledge and skills do not match with the skills required at the work place. Although the demand for skilled labour is going fast, there are still many graduates from weaker polytechnics (mostly private and some public) who need to wait longer period (up to 12 months) to find employment as training programs delivered are outdated and/or suffer from poor teaching and learning environments. 5. At present, a common challenge of polytechnic education is limited industry involvement7, which results in poor quality and relevance of training courses, and a lack of clear national standards that guide study programs and assessment. Many lecturers of weaker polytechnic institutions have little workplace experience, making it difficult for them to prepare their students for the world of work. Lack of and/or obsolete equipment to simulate a work place for practical demonstration and application hampers quality teaching-learning process in many polytechnic institutions that have been underfunded in the past. To address these challenges, the Project will foster partnerships among polytechnics and employers to jointly develop the skills needed at the work place, create flexible mechanisms with active industry participation to regularly adapt training programs to new business circumstances, and prepare flexible graduates who are able to adjust to changing demands in the labour market quickly. Study programs will be aligned to industry standards to enable industry to judge if graduates have skills needed to standards of practice and quality required by industry. Standards to be adopted in the Project will be registered with the National Agency for Professional Certification (BNSP) and aligned with the outcomes and descriptors within the IQF.8 6. The Project will support Indonesia’s economic development (as detailed MP3EI 2011–2025 by increasing the supply of quality skills in five sectors of the economy. This will be facilitated by improving links between Polytechnics and industry/enterprises. Well educated technicians are essential to enabling the transition to higher technology jobs and increasing value in production. The government has placed increasing emphasis on the development of technical and vocational education, illustrated by its strategy of significantly increasing the number of high school students in vocational programs (Ministry of Education and Culture, Strategic Plan 2010-2014). The Strategic Plan proposes an integrated approach to improving

4 A detailed description of skills identified by employers is provided in Appendix 6 of the PAM. 5 WEF and WTO Competitiveness Reports 2011/2012 in which Indonesia is ranked 46th of 133 countries; in comparison to India

(49), Thailand (36), China (29), Malaysia (24), Korea (19), Taiwan (12), and Singapore (3). 6 Directorate General of Higher Education (DGHE) Study on “Mapping Polytechnic”; 2010.

7 ‘Acceleration and Developing Skills of Human Resources in Industry 2020’ BKSP/BNSP. KADIN March 2011. 8 The Government has approved IQF in January 2012 through a Presidential Decree No. 8/2012.

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the quality of polytechnic study programs and skills development services that involves: (i) ensuring relevance to employers; (ii) increasing access for vocational school graduates and others interested in developing higher level skills; (iii) up skilling teaching staff and administrators; and, (iv) upgrading facilities and equipment to ensure learners have job ready skills. The Project will support DGHE to implement this integrated approach and align access strategies, flexible delivery approaches responsive to industry context, provision of quality skills development services that address industry needs and support job placement in each of the five identified sectors. The Project will also strengthen and implement the IQF to support quality assurance and implement Recognition of Prior Learning (RPL) to increase access to quality skills development services available through selected Polytechnic institutions. 7. The proposed Project is included in ADB Country Operations Business Plan (COBP) 2011–2013 and addresses four outcomes in the results framework. The COBP has identified the core strategy of the education sector as improving the efficiency and effectiveness of polytechnic and higher education to be responsive to the needs of the labor market. The outcomes of the COBP to be addressed through this Project are: (i) Improved efficiency and effectiveness of post-secondary and higher education, which is responsive to the needs of the labor market; (ii) Improved policy coordination and management of Polytechnic Institutions; (iii) Established strategy that develops critical skills for national development; and, (iv) Increased participation by employers in the delivery and assessment of polytechnic training programs. The Project is consistent with ADB's Education Strategies ‘2008 Education and Skills—Strategies for Accelerated Development in Asia and the Pacific’, and ‘Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank 2008–2020’. Project activities also adopt the findings from the ADB ‘Focus on Education: Good Practice Guide for TVET’ 2010. The Project is aligned with the Education ASR 20119 and addresses several sub sector issues. The Project builds upon ADB higher education institution (HEI) loans 1432 Engineering Education Development Project (EEDP) and loan 1792 Technical and Professional Skills Development Project (TPSDP) which strengthened policies and governance arrangements, and upgraded facilities and equipment to 74 HEIs including 12 Polytechnics. A. Impact and Outcome.

8. The expected impact will be to produce graduates responsive to the needs of the labor market and contribute toward increasing productivity in the Priority Sectors. The expected outcome is that polytechnic education will be aligned to the MP3EI strategy in five priority economic sectors. The performance targets are (i) the number of polytechnic students enrolled in study programs in the five priority sectors increases by 25%, with at least 30% of these female; (ii) the number of polytechnic graduates entering the workforce increases by 25% in five priority sectors, with at least a 15% increase of these female, finding relevant employment within six months of graduation.

B. Outputs.

9. The project will deliver four outputs: (i) increased quality and relevance of polytechnic system; (ii) increased and more equitable access to polytechnic institutions; (iii) increased private sector involvement in improving polytechnic graduate competitiveness; and (iv) strengthened governance and management of polytechnic education. These outputs will be achieved through the Project interventions in 13 polytechnics to be pre-selected as centers, and

9 Education Assessment and Sector Roadmap (ASR), 2011.

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through a flexible demand-driven funding mechanism called National Skills Fund (NSF) 10, which are accessible to all polytechnics. The NSF will provide a number of windows in each economic corridor through which polytechnic institutions in collaboration with their industry partners can access resources for upgrading teaching and learning environments and initiate skills development schemes aligned with the regional labor market demand and the objectives of the MP3EI. 10. Output 1: Increased Quality and Relevance of Polytechnic System. The Project polytechnics will work in partnership with industry in five priority sectors to improve the quality and relevance of study programs. The Project will: (i) strengthen standards and learning outcomes in collaboration with industry and align revised study programs onto the Indonesian Qualification Framework (IQF). Industry standards will guide the development of curriculum of study programs to address skills requirements in five priority industry sectors; (ii) upgrade lecturer skills through blended programs delivered in partnership with international polytechnics and industry placements; (iii) revise accreditation, assessment, and quality assurance systems to improve quality and ensure alignment with IQF policies and guidelines; (iv) improve teaching and learning environments and equipment in 13 preselected Polytechnic institutions to reflect industry skill needs; (v) actively engage and partner with industry to improve the quality of skills by implementing skills development activities funded through the National Skills Fund (vi) initiate the development of advanced degree program in applied science and technology. 11. The following activities will be undertaken:

(i) Review, develop and implement industry standards in 5 priority sectors, in collaboration with industry, and aligned to the IQF by 2014. Polytechnic teachers participating in the Lecturer Development Program will revise Study Programs to address the skills needs identified by employers and industry associations in the five priority industries. These programs will be developed with industry and align with BNSP standards and IQF requirements. Formal endorsement by industry will assist DGHE to ensure revised study programs meet industry needs. Study program learning materials and assessment tools can be purchased utilizing the equipment and materials budget in the project and adapted to meeting the needs of employers in the 5 priority industries. Quality study programs that provide learning materials and assessment instruments aligned to BNSP and IQF requirements in each of the five priority sectors will be completed by 2014.

(ii) Revise quality assurance, accreditation and certification systems, including

provision for RPL by 2014. The PMU will engage a consultant to review and revise accreditation and certification systems within DGHE and support Project Polytechnics to be Organizations for Certification of Professional Competences (LSP). This will involve establishing links with the National Agency for Professional Certification and to support Polytechnics to meet requirements. LSP certification for Polytechnic project should be developed and to be a Centers for Industry Assessment (TUK) by 2014. A further consultant will be engaged to assist with the implementation of RPL in the Polytechnic system. Initially a pilot program will be conducted in the project polytechnics through which 12,000 learners will be assessed through the use of an RPL model. Once the program is completed and evaluated an RPL guide will be prepared to support implementation of RPL throughout the polytechnic system.

10 Appendix 7 of the PAM provides the guidelines on the NSF operations.

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(iii) 200 selected staff from the project polytechnics and others that deliver training

responsive to industry needs in the 5 priority industries will be supported to deliver revised study programs. Teaching staff will be supported to be able to implement the revised Study Programs and adopt flexible delivery approaches agreed with industry partners. A major emphasis will be placed on applying revised assessment methods which value applied skills.

(iv) Critical to the success of the project will be the development and implementation

of links with industry to achieve employment and enrolment targets detailed in the project DMF. Polytechnics will need to actively engage with industry to guide the development of study programs that meet industry skills needs and address the objectives of the Economic Master Plan. Project funding is triggered by links with industry. For Polytechnics to gain financial support they will need to demonstrate partnerships with employers and industry bodies.

(v) The project will engage an international polytechnic or university of technology to

conduct a Master and Doctorate Program for 39 lecturers. The Masters and Doctorate program will be blended to involve project work in Indonesia and a short international study assignment through a twinning arrangement. The international provider will mentor lecturers to undertake masteral studies in areas relevant to skills development in either of the 5 priority industries. The program will include teaching and learning (pedagogic) support to assist lecturers to undertake work-based learning, vocational education and standards based assessment. The program will also ensure that teachers are technically up-skilled in one of the selected priority sector. The result will be that a lecturer has both the technical and pedagogic skills to be able to teach and assess one of the five priority industries.

(vi) The project will also develop a master qualification in each of the five priority

industries to support ongoing lecturer development and to create a training pathway for the danced studies of students. This program will draw from the internationally developed master program and adapt and adopt this to meeting the advanced skills of students in each of the five priority sectors. The program will be developed and tested in three Polytechnic providers to be determined by DGHE at the commencement of the Project. The Master program will need to developed and submitted to DGHE for approval and accreditation in 2015.

12. Output 2: Increased and more equitable access to polytechnic education. The Project will: (i) introduce innovative access and equity strategies to increase enrolments in quality study programs through on job training, distance and E-learning modes and other flexibly delivered methods developed by polytechnics relevant to the needs and context of selected industry partners in the five sectors; (ii) review access and equity policies to remove barriers to participation in quality skills development programs and encourage life-long learning approaches to ongoing skills formation; (iii) increase enrollment rates in five priority sectors through the use of 2,000 targeted and project funded scholarships; (iv) develop and apply Recognition of Prior Learning (RPL)11 and assess at least 12,000 applicants; (v) create a seamless educational pathway with multiple entry points which links vocational school (SMK)

11 Government has adopted broad RPL policy on 7 September 2011. Within this framework the project will develop

and test guidelines for the vocational education sector.

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and private provider graduates into a quality polytechnic system for higher level skills acquisition. 13 Polytechnics will be supported to establish links with schools and provide credit transfer for 12,000 students entering the polytechnic system, (vi) fund equity strategies to ensure access by females and other disadvantaged groups through the National Skills Fund. 13. The following activities will be undertaken:

(i) A consultant will be engaged to review access and equity measures to support government efforts to increase enrollments. To support the five priority industries the consultant will develop a strategy to ensure that the number of polytechnic students enrolled in programs in the 5 priority sectors increases (2009: 36,460 2016: 45,575) 25%, with at least 30% of these female (2009: 13,672) by 2016. The revised policies will address current entry policies and requirements that exclude students seeking entry that have come from vocational schools, the workplace or other non traditional or non formal pathways. The results from the review should guide the introduction of open access to Polytechnics for those seeking to develop labor market relevant skills. A policy guide and implementation handbook will be produced for use by Polytechnics to guide their access and equity approaches in meeting their community needs.

(ii) 12,000 students will be assessed at Diploma level 1 from SMK Continuing

Education Program in 5 priority sectors by the project polytechnics by 201. Polytechnics will be supported by the project to develop partnerships with SMKs in their catchment area to create seamless educational pathways for students seeking to gain higher level technical skills. This program has already been implemented by MOEC and will be applied to support skills development in the five industry sectors. A consultant will have responsibility in DGHE to support project polytechnics to implement this program as part of strategy to implement the IQF and increase enrolments in the priority industry sectors.

(iii) In alignment with MOEC BIDIK MISI12 the project will support a minimum of

2,000 scholarship places in the five priority industries. This program will require the development of regulations and guidelines to ensure support for disadvantaged, poor and female students. This initiative will be funded through the NSF and be operational in 2013. It is proposed that should the PMU not have adequate staff to prepare or complete this activity that the NSF could be used to contract a scholarship coordinator to guide the implementation of project scholarships.

(iv) The project will engage a consultant to design and implement Recognition of

Prior Learning (RPL) in 5 priority sectors. This will involve developing an implementation modality for the Polytechnic sector within the policy of MOEC that supports the implementation of RPL. The project will engage a consultant to guide the implementation of government RPL policy in the project polytechnics and manage a pilot program and assess 12,000 students using the developed RPL system by 2015. Once the RPL modality has been implemented and tested by the project polytechnics, the consultant will prepare a handbook and set of guidelines to guide implementation across the polytechnic system.

12 BIDIK MISI Tuition Fee Assistance programs in 2011 (scholarship).

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(v) Project Polytechnics in partnership with industry will design and deliver

responsive short course programs with at least 1,200 students enrolled by 2015. These short programs can be delivered in the workplace and are designed to support meeting skills needs of employers. Programs will enable articulation into the formal polytechnic system. Programs can address content specified by employers and be delivered through a means that is relevant to an industry context. Topics are to be developed with industry and support meeting specified work place needs.

14. Output 3: Increased private sector involvement and promotion of an entrepreneurial culture to strengthen polytechnic graduate competitiveness. The Project will support MOEC in strengthening partnerships between employers and polytechnics to improve system quality and responsiveness. Targeted assistance will be provided to: (i) establish an institutional framework for private sector involvement and partnership; (ii) implement training programs relevant to selected industry skills needs; (iii) enable industry to support delivery and assessment of skills to build confidence in graduate skill levels; (iv) support demand led skills development projects; (v) provide training to strengthen management capabilities; (vi) support instructors to enable them to adjust training programs based on demand assessments and incorporate entrepreneurial skills in curriculum modules; and (vii) develop strategies to foster apprenticeship programs with local industries. 15. The following activities will be undertaken:

(i) Project polytechnics will establish partnerships with employers and industry associations in one or more of the five priority sectors. DGHE will contract a consultant to support polytechnic engagement and to ensure project activities align with and address issues and objectives already identified in the MP3EI. Partnerships serve as a trigger for project funds. Proposed procurement of equipment, development of revised industry supported study programs and lecturer development involve securing support from industry bodies and employers in the five priority industries.

(ii) The project will establish a National Skills Fund in 2013 to create a mechanism

for the funding of skills development initiatives relevant to industry. The initial focus of the fund will be to support initiatives that address the needs of employers in the five priority industries. The fund will operate on a competitive basis. Guidelines for the operation of the fund and the appraisal of proposals are detailed in the Appendix 7 of this PAM.

16. Output 4: Strengthened governance and management of polytechnic education. The Project will support polytechnics to engage with and support the skills development objectives of five priority industry sectors. The Project will: (i) conduct studies that review and revise the regulatory and governance frameworks to support polytechnic development to improve industry responsiveness; (ii) conduct and facilitate assessments of employment, management and financing arrangements to support increased efficiency in the polytechnic system; (iii) strengthen capacity and management and governance systems through rigorous capacity building programs; and (iv) strengthen links with employers and industry associations to more effectively address industry skill needs and Human Resource (HR) development plans, within the framework of the MP3EI.

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17. The following activities will be undertaken:

(i) The project will train 150 polytechnic managers to improve sector management and effectiveness in the project polytechnics. The training will reflect DGHE policies and be guided by the MP3EI. The training will involve a combination of training workshops and work assignments and be undertaken by a specialized management training firm.

(ii) The project will undertake a series of studies to strengthen the polytechnic sector

and guide future government strategy. The assessments are to be undertaken by qualified consultants that have recognized expertise in change management and with supporting engagement between diverse stakeholders to achieve multiple policy objectives. Studies are described in the PAM and scheduled to be undertaken early in the project to guide and strengthen implementation.

(iii) A firm is to be engaged to develop an advocacy strategy to support DGHE and

the Polytechnic system to raise awareness levels of the benefits of vocational education. The advocacy strategy should support project efforts to increase enrolments to improved quality study programs relevant to industry and directed towards gainful employment of graduates.

C. Implementation Strategy 18. The implementation strategy is summarized in Section IIB in the form of an overall implementation schedule. Detailed implementation strategies have been developed for the Project and include: Design and Monitoring Framework (Appendix 1), strategies to increase quality and relevance of polytechnic education (Appendix 2), strategy for development of lecturers (Appendix 3), and strategies for strengthening institutional and management development (Appendix 4). The selection of economic priority sectors for the project is presented in Appendix 5. Appendix 6 provides the criteria used in the selection of Project polytechnics and summary information on Project polytechnics. Appendix 7 defines the guidelines and procedures for the National Skills Fund (NSF) for competitive based funding of project initiatives. Appendix 8 is the Financial Management Assessment, Appendix 9 is the Procurement Capacity Assessment Agency Questionnaire and Appendix 10 is M&E Strategy for the Polytechnic Development Project.

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Table 1: Implementation Arrangements

Aspects ArrangementsImplementation period 2 January 2013−31 December 2017 Project management (i) Oversight body Project steering committee

Deputy minister for human resources and cultural affairs, BAPPENAS (chair); Director general, DGHE (cochair); MOEC, Ministry of Finance, BAPPENAS, Ministry of Manpower and Transmigration, private sector (KADIN & other industry associations as ad hoc members) (members)

(ii) Executing agency DGHE, MOEC (iii) Key implementing agency 13 polytechnic institutions (iv) Project management unit PMU, DGHE: 7 permanent staff and 5 support staff Procurement ICB & NCB Multiple contracts $51.25 million

Shopping & direct contracting Multiple contracts $5.00 million Consulting services QCBS, CQS, and ICS 259 person-months national and

3 person-months international $2.20 million

Social marketing campaign CQS Multiple contracts $0.55 million 3 studies CQS, ICS Multiple contracts $1.40 million Advance procurement action Consultants for the capacity development program, procurement specialist, and

finance expert Disbursement Loan proceeds will be disbursed in accordance with ADB's Loan Disbursement

Handbook (2012 as amended from time to time) and detailed arrangements agreed upon between the government and ADB.

ADB = Asian Development Bank, BAPPENAS = National Planning Development Agency, CQS = consultants' qualifications selection, DGHE = Directorate General of Higher Education, ICB = international competitive bidding, ICS = individual consultant selection, KADIN =Chamber of Commerce MOEC = Ministry of Education and Culture, NCB = national competitive bidding, QCBS = quality- and cost-based selection. Source: Asian Development Bank.

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities

11 12 1 2 3 4 5 6 7 8 9 10 11 12

1Preparation and review of Readiness Documents DGHE, BAPP

2 Loan fact Finding (LFF)ADB, DGHE, BAPP, MOF

3 Signing MOU‐LFFADB, DGHE, BAPP, MOF

4 Preparation for loan negotiation*)ADB, DGHE, BAPP, MOF

5 Loan negotiation ADB, MOF6 Establish  PMU DGHE7 Board Approval ADB8 Loan signing ADB, MOF9 Loan register MOF10 Government legal opinion MOJ11 DG Treasury on  MOF12 Opening special account MOF13 Loan effectiveness ADB, MOF14 Initial Deposit ADB, MOF14 Advance procurement actions DGHE, ADB

*) The loan negotiation can be done only after the "Greenbook" is approved

20122011ResponsibilityMain ActivitiesNo

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B. Overall Project Implementation Plan

.

2013 2014 2015 2016 2017

1 Increased quality and relevance of Polytechnic system

1.2 Revise quality assurance, accreditation and certification systems, including provision for RPL.

Q1

Activities

Q2

1.1 Review, develop and implement industry standards in 5 priority sectors, in collaboration with industry and aligned to the IQF.

1.1.1 Review, develop and implement industry standards in 5 priority sectors, in collaboration with industry and aligned to the IQF.

1.1.2Assist in development of national industry standards with BNSP, aligned with agreed IQF indicators, for 20 study programs in 5 priority sectors. In each priority industry there will be a revised study program.

Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1 Q2 Q3Outputs Q1 Q2 Q3 Q4

1.2.3Establish working group with DGHE, BAN-PT, BNSP and IQF team for the formulation of accreditation policy and guidelines for revised Study Programs

1.2.4Test and certify 10,000 new students from project polytechnics in revised study programs according to standards at diploma level, cognizant of IQF level descriptors

1.1.313 Polytechnic centers meet requirements to commence delivery of revised study programs.

1.2.1Develop and implement quality assurance (QA) system that supports revised outcomes based study programs, including preparation of QA manuals in 13 Polytechnics.

1.2.2 Develop and improve program accreditation of 20 priority programs according to IQF and BNSP requirements.

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2013 2014 2015 2016 2017

1.3Deliver training for 200 selected staff from 13 Polytechnic Centres institutions and others to strengthen quality provision responsive to the 5 priority sectors

1.4Develop quality professional and flexible study programs with learning materials and assessment instruments in 5 priority sectors.

1.5 Develop Centres for Industry Assessment (TUK) and professional certification agencies (LSP) in Polytechnic (Granties)

Activities

Q1 Q2 Q3Outputs Q1 Q2 Q3 Q4 Q1

1.4.2

Develop and implement flexible, modular, tailor made short courses with labour market involvement for 1,200 unemployed and the existing workforce in project polytechnics to BNSP standards and ensure credit towards a qualification registered onto the IQF

1.4.3Internship and work assignment modules developed and implemented in 5 priority sectors and 20 study programs according to DGHE and BNSP requirements

1.5.1Establish links between project polytechnics and BNSP to facilitate registration to be assessment and certification providers in each of the 5 priority industries

Q2

1.3.1Train a minimum of 10 Polytechnic management and teaching staff in each of the project polytechnics to implement revised accreditation requirements, assessment and quality assurance procedures

1.3.2Train and license 80 assessors in accordance with new accreditation system

1.4.1

Convert BNSP standards into 20 study programs within 5 sectors into outcomes based programs and learning materials (module descriptors, instructional materials, assessment resources, teacher’s and participants’ guides).

Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4

13

2013 2014 2015 2016 2017

1.6 Implement partnerships with industry to achieve enrolment and employment targets

1.7 Develop a National Master Program to be delivered in 5 priority sectors

Q1

Activities

Q2

1.6.1

Formalise partnerships in the 5 priority sectors and document skills development services including improving technical skills, addressing identified skills gaps and other needs in the workplace in project MOUs

1.6.2

Prepare workplace skills plans that identify on job training or internship arrangements to support skills acquisition of learners through revised study programs. Identify roles of employers in training delivery and assessment

1.6.3Develop access and equity policies to prescribe industry incentives and training allowances for students to undertake work placements to pilot through the project

Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1 Q2 Q3Outputs Q1 Q2 Q3 Q4

1.7.3120 (minimum of 5 lecturers in 20 study programs in 5 priority industries) lecturers/instructors trained as master trainers on revised study program requirements

1.6.4Enhance work assignments, internships and industry linkages to achieve enrolment and employment targets to deliver revised programs

1.7.1Job descriptions, qualifications and performance criteria of lecturers reviewed based on IQF, DGHE policies and required of revised study programs (including incentives, career progression)

1.7.2 Modular master trainers’ program developed

14

15

16

2013 2014 2015 2016 2017

3Increased private sector involvment in improving Polytechnic graduates competitiveness

Q2 Q3Outputs Q1 Q2 Q3 Q4 Q1

Activities

3.2

National Skill Fund operational which facilitates skills development proposals supported by Polytechnics and employers in the 5 priority sectors. The fund operates as a competitive grant initiative that strengthens the involvement of the private sector and private providers in Polytechnic education

3.2.1Develop and implement scholarship program under the NSF aligned with government program for 2,000 students in revised study programs endorsed by RCs

3.2.2Developed guidelines for accredited work based training, internships and other on job modes of delivery implemented to support meeting industry skills requirements in the 5 priority industries

Q2

3.1 Establish partnerships between project polytechnics and employers and industry associations in the 5 priority industries

3.1.1Establish functioning RC with industry representatives in 5 priority industries

3.1.2Train 50 members of 5 priority industry RCs on project objectives and roles and responsibilities

Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1

17

ADB = Asian Development Bank, CBE=Industry Based Education and Training; DGHE = Department of Higher Education; IQF= Indonesia Qualification Framework; EMIS= Education Management Information System, LMIS = Labor Market Information System, MOEC = Ministry of Education and Culture; RC = Sector Review Committee

18

III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations – Roles and Responsibilities

Project Organizations Management Roles and Responsibilities

MOEC - DGHE

• Approve requests and documents within its jurisdiction (i.e. approval of procurement plans, contract awards for procurement of equipment, staff development and trainings).

• Settlement of complaints during procurement. • Supervise, and guide the project implementation. • Report to the Government and concerned donor agencies as

required. • Mobilize professional staff to support Project implementation. • Review and endorse any requests and documents within its

jurisdiction during Project implementation (e.g. approval of bidding documents, bid evaluation results and contract awards for contracts procured by PMU; approval of overall and detailed implementation plans and cost estimates).

• Submit periodic and ad hoc reports on project performance as required by concerned agencies.

Project Steering Committee

• Provide overall guidance to the Project. • Support cross-agency policy dialogue. • Review project progress and provide strategic advice to support

effective implementation.

Review Committee

The terms of reference for the Sector Review Committee are as follows:

• Provide advice to DGHE on current and future trends within their economical sector/Industry.

• Advise DGHE in validating study programs developed by Project polytechnics and ensure these meet identified industry needs.

• Assist polytechnics with alignment of study programs with BNSP industry standards and the IQF.

• Review, evaluate and recommend proposals to be funded by DGHE through the National Skills Fund.

• Recommend to the DGHE new occupations for the development of study programs or short courses.

• Recommend to the DGHE appropriate industry personnel to be trained as assessors or to provide subject matter advice in the development of revised or new study programs.

• Provide advice and facilitate partnerships between employers and Project polytechnics to implement project activities.

• Provide advice to project Polytechnics on current and future trends within their industry sectors.

• Receive industry comments on the continuing validity of study programs, standards and assessment materials.

• Facilitate technical advice to Polytechnics to inform flexible delivery modalities appropriate to industry context and occupational outcome.

19

Project Organizations Management Roles and Responsibilities Project Management Unit,

DGHE

• Report and review withdrawal applications for endorsement by the MOEC's Finance Department.

• Procure all contracts to be done centrally; coordinate the procurement to be undertaken by the Project Polytechnic institutions.

• Develop implementation plans and financial plans in accordance with Project Document approved by MOEC.

• Act as a contact point with ADB and local concerned agencies, manage and coordinate activities of consultants and concerned agencies and industry during Project implementation.

• Coordinate with the Project Polytechnic institutions. • Coordinate with MOMT, BNSP and BAPPENAS. • Implement activities in accordance with approved plans. • Develop specific norms of expenditure from counterpart funds,

submit these norms to concerned authorities for approval. • Manage and effectively use counterpart funds; to perform

disbursement, accounting, auditing in accordance with regulations of GOI and ADB.

• Monitor and report Project performance. • Liquidate investment cost of the Project in accordance with

applicable regulations. • Prepare and submit periodic and ad hoc reports on Project

performance as required. • Facilitate proposals for DGHE to fund through the NSF and sure

appraisal by the relevant Sector Review Committee. Project Implementation

Units in 13 Project Polytechnic Centers and Other Polytechnics receiving NSF.

Polytechnic Project Implementation Units will be responsible for implementing and supervising Project activities including:

• Closely work with consultants to implement project activities.

• Ensure quality in project activities to meet objectives. • Prepare proposals with employers/industry for consideration

by DGHE for NSF funding. • Prepare procurement plans for submission to the PMU. • Coordinate the activities of the Polytechnic, particularly the

training, procurement, disbursement and project reporting requirements.

• As Centers of Industry Assessment (TUK) and Professional Certification, implement assessment in the Polytechnic.

• Monitor and report on project activities and progress of Project implementation to the PMU.

• Procure equipment in coordination with PMU. • Coordinate the monitoring and evaluation of Project

activities. Ministry of Finance • Manage imprest account

• Facilitate disbursement and withdrawal application

ADB • Supervise project implementation and ensure compliance with the Loan Agreement and PAM Ensure project achieves the expected outputs and outcome

20

B. Key Persons Involved in Implementation

Executing Agency Ministry of Education Prof. Dr. Djoko Santoso

Director General Telephone: +6221 57946101 Fax: +6221 57946104 Email address: dsantoso@dikti.go.id Office Address: D Building, 10th floor, Jl. Jenderal Sudirman

Pintu I, Senayan, Jakarta 10270, Indonesia

Dr. Illah Sailah Director for Learning and Student Affair/Project Director Email address: isailah@dikti.go.id Office Address: D Building, 7th floor, Jl. Jenderal Sudirman Pintu I, Senayan, Jakarta 10270, Indonesia

ADB

Country Director Jon D. Lindborg Indonesia Resident Mission Gedung BRI II 7th Floor Jln. Jend. Sudirman Kav. 44-46, Jakarta

Mission Leader Sutarum Wiryono Project Officer (Education), Indonesia Resident Mission Gedung BRI II 7th Floor Jln. Jend. Sudirman Kav. 44-46, Jakarta Email: swiryono@adb.org

C. Project Organization Structure

19. The Directorate General of Higher Education (DGHE) of the Ministry of Education and Culture (MOEC) will be the Executing Agency (EA) for the Project. The EA will be responsible for the overall implementation of Project, including carrying out and monitoring all policy actions, program administration and maintenance of program records. A Project steering committee (PSC) will be established, chaired by the Deputy Minister for Human Resources and Cultural Affairs of BAPPENAS, and co-chaired by the Director General of Higher Education, MOEC, to provide supervision and strategic guidance for the Project. The steering committee will comprise persons from key sector stakeholders including BAPPENAS, MOF, relevant employer associations, the Ministry of Manpower and Transmigration (MOMT) and representative of the industry. 20. A Project Management Unit (PMU) will be established by DGHE, under the guidance of the Project Director who will be the Director of Learning and Student Affairs in DGHE. The PMU will be headed by a Project Manager and will be responsible for day-to-day Project implementation, planning and budgeting, procurement, disbursement, monitoring, and reporting. The PMU will have at least 7 permanent staff and 5 support staff to handle the procurement, capacity development, academic program quality improvement, financial management, monitoring and reporting, marketing and gender equity promotion. These staff should also manage Project data and record keeping, event organization, and administrative assistance. 21. At each Project supported Polytechnic there will be a Project Implementation Unit (PIU) who will be responsible for implementing the approved Project activities. The respective Polytechnic Director will appoint and supervise a PIU manager, who will be responsible for the

21

day-to-day implementation of project activities. Each project polytechnic institution will assign adequate staff (secretarial, finance, procurement, program coordinator and M&E data officer) to ensure smooth implementation of activities. The PIU Manager will prepare reports to the Polytechnic Director, who will in turn, report to the PMU. The Project will provide capacity building for PMU and PIU members. Section III of this PAM details the terms of reference for the PSC, the PMU, the PIU. The organization chart of overall project management is in Figure 1, the PMU structure is in Figure 1.a, and the PIU structure is in Figure 1.b. 22. To appraise proposals submitted by polytechnics to be financed under the NSF and make recommendations on which proposals should be supported, the EA will establish a Review Committee (RC) not later than three months after loan effectiveness. Membership of the RC which will consist of a pool of at least 20 qualified experts from industries, and industry associations of the five economic areas supported by the Project, and technical experts from MOEC and polytechnics. The terms of reference (TOR) for RC and guidelines for the operation of the NSF and the proposal assessment process are provided in Appendix 8 in the PAM. 23. The RC is also tasked to provide technical and policy advice, including validation of study programs, review standards and delivery approaches, developing skills testing and assessment protocols, and facilitating partnership between Polytechnics and employers in the priority sectors. During implementation, the RC will also support the EA in monitoring and providing technical guidance to the Project Polytechnics to ensure that the agreed programs and activities are properly executed, and the targeted outputs are met. 24. To support the effective functioning of the RC, it is proposed that the following procedures and requirements be implemented to avoid conflicts of interest. This is particularly important when the RC is reviewing and appraising National Skills Fund proposals for approval by the DGHE-MOEC. It is also important when the RC is acting on behalf of DGHE in recommending industry standards and revised Polytechnic Study Programs and in supporting quality control throughout the Polytechnic Education Development Project. 25. Steps to avoid real or apparent conflicts of interest might include, but are not limited to:

(i) Sharing or distributing NSF proposals with any person or organization; (ii) Discussing or distribution materials pertaining to the activities of the RC, the NSF

or DGHE without written approval from the Project Director; (iii) Sharing or distributing cost estimates other than those published by DGHE

concerning, assessment, tuition, scholarships, accreditation or certification of Polytechnic Study Programs;

(iv) Ensuring that there is no pecuniary interest or official responsibility between any RC member and a training provider involved in the PEDP or in receipt of project funding.

(v) Information shared with the RC in relation to its advisory role must be used only for the purpose for which it is intended and not shared, distributed or sold to another third party;

(vi) RC members should be required to sign a declaration and declare any potential conflicts of interest in relation to their performance of the RC role;

(vii) When the RC reviews or appraises an NSF funding proposal members of the RC that have affiliation or association with the employer or industry beneficiary should declare an interest and should not participate in the appraisal process.

22

Figure 1: Project Organization and Management

Project Management Unit

(PMU)

ADB

PIUPIU PIUPIU PIUPIU PIU PIU PIU

Executing Agency (EA) Directorate General Higher Education (DGHE)

Review Committee (RC)

Pool of experts including members from Industry,

MOEC, Polytechnics and Universities

Project Steering Committee (PSC)

1. National Development Planning Agency 2. Ministry of Education and Culture 3. Ministry of Finance 4. Ministry of Transmigration and Man Power 5. Ministry of Industry 6. Private Sector (industry association)

Legend: 1. PSC : Project Steering Committee 2. EA : Executing Agency 3. PMU : Project Management Unit 4. PIU : Project Implementing Unit 5. RC : Review Committee : Command Line : Consultative Line

PIUPIU PIU

23

Figure 1.a PMU Structure

Keterangan: : command line : coordination line

Project Manager

Project Director

Directorate of Learning and Student Affairs

Project Secretary

Project Officer for

Procurement

Project Officer for

Academic Program (NSF, studies, staff

development, workshop)

Project Officer for

Monitoring, Evaluation and Data Processing

Project Officer for

Finance

Staff

Staff

Staff

Staff

Staff

24

Figure 1.b PIU Structure

Sub Project Manager

Sub Project Director (Director of Polytechnic)

Coordinator for Procurement

Coordinator for

Academic Program (NSF studies, staff

development, workshop)

Coordinator for

Monitoring, Evaluation and Data Processing

Coordinator of Finance

Staff

Staff

Staff

Staff

25

IV. COST AND FINANCING

26. The project is estimated to cost $91.70 million, including physical and price contingencies, and taxes and duties of $0.90 million to be financed by the government. The investment plan is summarized in Table 2. A. Project Investment Plan

Table 2: Project Investment Plan ($ million)

Item ADB Government Total Investment Costsa Equipmentb 27.25 0.00 27.25 Capacity Development 0.00 6.50 6.50 Consulting Services 2.20 0.00 2.20 Program and Material Development 1.90 0.00 1.90 Studies and Workshops 1.40 0.00 1.40 National Skills Fund 38.10 0.00 38.10 Social Marketing and Advocacy 0.55 0.00 0.55 Project Management 0.00 5.70 5.70 Taxes and Duties 0.00 0.90 0.90 Contingenciesc 3.60 0.00 3.60 Interest and commitment chargesd

0.00 3.60 3.60

Total

75.00 16.70 91.70

Share of Total 81.80% 18.20% 100.00%

a In 2011 prices

b Equipment and materials to be financed out of loan proceeds include related service costs such as transportation, insurance, installation, commissioning, training, and initial maintenance.

c Physical contingencies are set at 5% for goods and works procurement expenditure categories. National and international inflation rates are set at around 1% and 6%, respectively.

d Includes interest, commitment charges and front end fees. Interest during construction has been computed at the five-year forward London interbank offered rate.

Source: ADB estimates

27. The government has requested a loan not exceeding $75.0 million from ADB’s Ordinary Capital Resources to help finance the project; this is equal to 81.8% of the project cost. The government will contribute $16.70 million, equal to 18.2% of the project cost. Detail cost estimate by financier is presented in Table 3, while allocation and withdrawal of loan proceeds is in Table 4. Table 5 summarizes detailed cost estimates by year of implementation.

26

B. Detailed Cost Estimates by Financier

Table 3. Detailed Cost Estimates by Financier

ADBa Government Total Percent of Percent of Amountb of Cost Category Amount Cost CategoryA. Investment Costs

1. Equipment a. PMU 0.25 100.00 - - 0.25 b.Polytechnic Equipment, materials and consumables 27.00 100.00 - - 27.00 2. Capacity Development a.Overseas degree for up to 36 staff 3.60 100.00 3.60 b.In-Country/Partnership programs for up to 250 polytechnics

staff - - 2.50 100.00 2.50

c.PMU & PIU staff training - - 0.40 100.00 0.40 3. Consulting Services a.International 0.10 100.00 - 0.10 b.Local 2.10 100.00 - 2.10 4. Program and Teaching Learning Material Development 1.90 100.00 - 1.90 5. Studies and Workshops 1.40 100.00 - 1.40

6. National Skills Fund 38.10 100.00 - 38.10 7. Social Marketing and Advocacy 0.55 100.00 - 0.55 8. Project Management b.PMU Salaries and Operating Costs - - 5.70 100.00 5.70 9 Taxes and Duties - - 0.90 100.00 0.90

Subtotal (A) 71.40 85.20 13.10 14.80 83.80B. Contingencies 3.60 100.00 - - 3.60C. Interest and commitment Chargesc - - 3.60 100.00 3.60

Total Project Cost (A+B+C) 75.00 16.70 91.70 % Project Cost 81.8

18.2

ADB= Asian Development Bank. a Amount of ADB loan proceeds allocated to the cost category. b The amounts disbursed by ADB for eligible expenditures under a cost category will be subject to the ceiling set by the allocation of proceeds for such cost category. c Interest and commitment charges will be financed from the Government fund source. Interest is computed based on LBL rates at 2.4% as of May 2011 Source: ADB estimates.

27

C. Allocation and Withdrawal of Loan Proceeds

Table 4. Allocation and Withdrawal of Loan Proceeds

CATEGORY ADB FINANCING

No Item Amount Allocated ($ million)

Percentage and Basis for Withdrawal

from the Loan Account Category Subcategory 1 Equipment for 13

Preselected Polytechnics and PMU

27.25 100 percent of total expenditure

claimed*

2 Consulting Services 2.20 100 percent of total expenditure claimed*

3 Program and Teaching- Learning Materials development

1.90

100 percent of total expenditure claimed*

4 Studies, Surveys and Workshops 1.40 100 percent of total expenditure

claimed*

5 National Skills Fund 38.10 100 percent of total expenditure claimed*

6 Social Marketing and Advocacy 0.55 100 percent of total expenditure

claimed* 7 Contingencies 3.60 Total 75.00

* Exclusive of taxes and duties within the territory of the Borrower. D. Detailed Cost Estimates by Implementation Year

28Table 5. Detailed Cost Estimates by Implementation Year

TOTALCOST 2013 2014 2015 2016 2017 ADB GOI ADB GOI ADB GOI ADB GOI ADB GOI ADB GOI A.InvestmentCosts 1.Equipment a.PMU 0.250 - 0.250 - - - - - - - - - b.PolytechnicEquipment,MaterialsandConsumables 27.000 - 4.000 - 14.000 - 9.000 - - - - - SubtotalEquipment 27.250 - 4.250 - 14.000 - 9.000 - - - - - 2.CapacityDevelopment a.Overseas/BlendedDegreeforupto39staff 3.600 - 1.500 - 1.260 - 0.540 - 0.300 - - b.InCountry/PartnershipProgramsforpolytechnicstaff 2.500 - 0.450 - 1.000 - 0.500 - 0.450 - 0.100 c.PMU/PIUStaffTraining 0.400 - 0.100 - 0.150 - 0.100 - 0.050 - - SubtotalCapacityDevelopment 6.500 - 2.050 - 2.410 - 1.140 - 0.800 - 0.100 3.ConsultingServices a.International 0.100 - - - 0.100 - - - - - - - b.Local 2.100 - 0.434 - 0.874 - 0.432 - 0.234 - 0.126 - SubtotalConsultantServices 2.200 - 0.493 - 0.822 - 0.457 - 0.277 - 0.151 - 4.ProgramandTeachingLearningMaterialDevelopment 1.900 - 0.500 - 0.500 - 0.500 - 0.400 - - - 5.StudiesandWorkshops 1.400 - 0.300 - 0.450 - 0.300 - 0.250 - 0.100 - 6.NationalSkillsFund 38.100 - 4.520 - 14.350 - 14.350 - 4.880 - - - 7.SocialMarketingandAdvocacy 0.550 - 0.100 - 0.250 - 0.100 - 0.100 - - 8.ProjectManagement StaffsalaryandOperatingcosts - 5.700 - 1.110 - 1.310 - 1.350 - 1.100 - 0.830 9.TaxesandDuties - 0.900 - 0.200 - 0.200 - 0.200 - 0.200 - 0.100

TOTALBASECOST 71,400 13,100 10.104 3.363 30.524 3.920 24.682 2.690 5.864 2.100 0.226 1.030 B.Contingencies 3,600 - 0.820 - 0.950 - 0.820 - 0.700 - 0.310 - C.InterestandcommitmentCharges 3.600 - 0.450 - 0.900 - 0.900 0.900 - 0.450 TOTALPROJECTCOST 75,000 16.700 10.924 3.810 31.474 4.820 25.502 3.590 6.564 3.000 0.536 1.480 %OFTOTALPROJECTCOST 16.2%

39.3%

31.7%

10.5% 2.2%

29

E. Contract and Disbursement S-Curve

10.924 

42.398 

67.900 

74.464  75.000 

3.810 

8.630 12.220 

15.220  16.700 

‐

10.000 

20.000 

30.000 

40.000 

50.000 

60.000 

70.000 

80.000 

2013 2014 2015 2016 2017

ADB

GOI

30

F. Fund Flow Diagram for Public Polytechnics

1. Project Polytechnics submits a project proposal to PMU; reviewed by Review Committee (RC). The approved

proposal and work plan become the basis for Annual Budget Plan (DIPA) processing. 2. Based on review results and recommendation of the RC, the Project Director signs a contract (MOU) with each

Project Polytechnic. The PMU review and approve annual budget plan for inclusion in the DIPA based on the overall plan.

3. (a) PMU signs contracts for work and services at the central level; (b) PIU signs contracts for goods and services at the project polytechnics to implement the work plan as agreed in the DIPA.

4. (a) PMU submits Payment Order (SPM) to the treasury office (KPPN) at central to request payments for contractors/suppliers in the central; (b) PIU submit SPM to local KPPN for payment of goods and services to supplier/contractor at project polytechnic.

5. KPPN issued SP2D (remittance order) to request the Operational Bank (BO) to transfer the funds to PMU/PIU or contractor.

6. Transfer of funds from BO to PMU/PIU/contractor 7. PIU submits full financial reports and documents (copy SP2D, receipts, contracts, etc) to PMU for the basis of

preparing withdrawal application (WA). 8. PMU submit WA to DG Treasury for replenishment of imprest account.

PMU DGHE, MOEC

ADB

Imprest Account,

Bank Indonesia

SPM

7

2 MOU

6

SP2D

REPLENISHMENT

83b

Contractor

1

4

MOFDG Treasury

KPPN

SP2D

PIUPolytechnics

Document flow

Funds flow

5

BO 1(Operational

Bank)

Copy SP2D

Document of

Payments

WA Initial Deposit & WA

Replenishment

SPM

4a

Contractor 3a

8

31

G. Fund Flow Diagram for Private Polytechnics (financed through NSF)

1. Project Polytechnics submits a project proposal to PMU; reviewed by Review Committee (RC). The approved

proposal and work plan become the basis for Annual Budget Plan release of funds through NFS funds. 2. Based on review results and recommendation of the RC, the Project Director signs a contract (MOU) with each

Project Polytechnic. The PMU review and approve annual budget plan for inclusion in the DIPA (PMU). 3. PIU signs contracts for goods and services at the project polytechnic to implement the work plan as agreed in the

Budget Plan. 4. PIU submit request for payment to local KPPN through PMU; and PMU submit SPM to KPPN. 5. KPPN issued SP2D to request the Operational Bank (BO) to transfer the funds to PIU. 6. Transfer of funds from BO to PIU account, and PIU pay to the contractor based of approval of PMU. 7. PIU submits full financial reports and documents (copy receipts, contracts, etc) to PMU for the basis of preparing

withdrawal application (WA). 8. PMU submit WA to DG Treasury for replenishment of imprest account.

PMU DGHE, MOEC

ADB

Imprest Account,

Bank Indonesia

7

2 Contract

REPLENISHMENT

3

Contractor

1

MOFDG Treasury

KPPN

SP2D

PIU Private

Polytechnics

Document flow

Funds flow

5

BO 1(Operational

Bank)

Document of

Payments

WA Initial Deposit & WA

Replenishment

SPM

4a

Copy SP2D

6

8

4

32

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

28. Financial management capacity assessment found that the Directorate General of Higher Education (DGHE), MOEC has extensive capacity to carry out the project, since it has implemented numerous internationally-funded projects during the last four decades. The financial management assessment identifies sufficient capacity and staffing in the accounting and financial section of MOEC's DGHE. All financial reports are prepared in accordance with the Public Sector Financial Management Law. The Integrated Chart of Accounts is consistent with International Accounting Standards. Government financial reports are prepared according to the Government Financial Information System (SAI) by the PMUs and submitted to ADB, MOF, and MOEC. Of particular concern, however, is the lack of standardization in the use of accounting system and software across different Polytechnic institutions. The project will address the capacity issue by providing a financial management consultant to the PMU to support the 13 project Polytechnic institutions, to undertake the necessary financial reporting required under the project’s financial compliance. The Project will provide accounting staff for the project management unit (PMU), and train PMU and PIU staff in financial planning, accounting, auditing, and control; and implement a performance-based planning and budgeting system. The PMU will ensure proper monitoring of the PIU financial staff, particularly the funds to be issued to these institutions for equipment procurement and activities funded under the National Skills Fund. The financial management assessment questionnaire is in the PAM, Appendix 9. B. Disbursement

29. The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2012, as amended from time to time) and detailed arrangements agreed upon between the Government and ADB13. 30. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),14 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB. 31. The Government of Indonesia will establish an imprest account at Bank Indonesia which will be administered by the MOF. The maximum amount to be deposited in the imprest account will not exceed the estimated expenditures to be funded through the imprest account for six months of project implementation or 10% of the loan amount, whichever is lower15. The request for initial advance to the imprest account should be accompanied by an Estimate of Expenditure Sheet setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the imprest account has been duly opened. For every liquidation and replenishment request of the imprest account, the government will furnish to the ADB (a) Statement of Account (Bank Statement) where the imprest account is maintained, and (b) the imprest account reconciliation statement (IARS) reconciling the above mentioned bank statement against the executing agency’s records. 32. Funds for the NSF will be funds for the NSF will be paid from the imprest account to the polytechnics on in tranches based on the approved work plan. The amounts provided to the polytechnics will be liquidated by submitting full supporting documents to the PMU. The ADB statement-of-expenditure (SOE) procedure will be used for liquidation and replenishment of the

13 Disbursement procedures for the NSF are in line with the disbursement procedures for other components as

described under this chapter. 14 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf 15 Bank charges for the imprest account may be financed by the ADB loan.

33

imprest account, and for reimbursement of eligible expenditures not exceeding $100,000 per individual transaction. The payments in excess of the SOE ceiling will be reimbursed, liquidated, or replenished based on full supporting documentation. SOE records should be maintained and made readily available for review by ADB’s disbursement and review mission or upon ADB’s request for submission of supporting documents on a sampling basis, and for independent audit.16 33. Before the submission of the first withdrawal application, the government should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the Borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is $100,000, unless otherwise approved by ADB. The government is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. C. Accounting

34. MOEC will maintain separate project accounts and records by funding source for all expenditures incurred under the project. All polytechnics supported under the Project will maintain separate account and records as well. Project accounts will follow international accounting principles and practices. D. Auditing

35. MOEC will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the imprest account, and the SOE procedures. The audit will also include a review of project accounts managed by PIUs of all polytechnics supported by the Project. The Government and MOEC have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. For revenue generating projects only, ADB requires audited financial statements (AFS) for each executing and/or implementation agency associated with the project.

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting

36. All advance contracting will be undertaken in conformity with ADB’s Procurement Guidelines (April 2010, as amended from time to time)17 and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).18

The issuance of invitations to bid under advance contracting will be subject to ADB approval. The borrower and DGHE have been advised that approval of advance contracting does not commit ADB to finance the Project.

16 Checklist for SOE procedures and formats are available at:

http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls

17 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf 18 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf

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Advance contracting can be used for up to 5% of the loan balance and for expenses up to 12 months before loan signing. All eligible contract packages and eligible expenditures agreed between ADB and the borrower approved for advance contracting. B. Procurement of Goods, Works and Consulting Services

37. All procurement of goods and works will be in accordance with ADB’s Procurement Guidelines (April 2010, as amended from time to time). Under the project, civil works will be procured through international competitive bidding (ICB) procedures for packages exceeding $10,000,000 equivalent, and through NCB procedures acceptable to ADB for packages up to and including $10,000,000 equivalent. Goods will be procured through international competitive bidding (ICB) procedures for packages exceeding $1,000,000 equivalent, and through NCB procedures acceptable to ADB for packages up to and including $1,000,000 equivalent. For packages of $100,000 equivalent or less, shopping or direct contracting (if required equipment is proprietary) may be used. 38. Before the start of any procurement ADB and the Government will review the public procurement laws of the governments to ensure consistency with ADB’s Procurement Guidelines. Should there be any discrepancy between the Government laws and decrees and the ADB’s Guidelines, then ADB’s Guidelines shall prevail. 39. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C. 40. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants (April 2010 as amended from time to time).19

The terms of reference for all consulting services are detailed in Section D. 41. To support project implementation, a firm will be engaged to provide 3 person months of international consultant inputs and 223 person months of national consultant inputs. The Consultant Firm will be selected through Consultants’ Qualification Selection (CQS) and quality and cost-based selection (QCBS) method with a standard quality:cost ratio of 80:20. Full technical proposals (FTPs) will be required for submission; shortlisted consultants are allowed 45 days to prepare FTPs for QCBS. In addition, 36 person months of national consultants will be engaged individually to support the start up phase of the project. It is proposed that ADB will assist DGHE to recruit, through advanced contracting, the Finance Expert, the Procurement Expert and the Monitoring and Evaluation firm to establish procurement, standard bidding documents and disbursement systems for the PMU and PIU, train PMU and PIU staff in procurement and ensure systems are in place which comply with ADB requirements, and to contract a monitoring and evaluation firm to establish PPMS and PPIS systems for use throughout the project. Detailed consulting terms of reference are provided in Section D. C. Procurement Plan

Basic Data Project Name: Polytechnics Education Development Project Country: Indonesia Executing Agency: The Directorate General of Higher

Education in the Ministry of Education and Culture Loan Amount: $ 75,000,000 Loan Number: 42099 Date of First Procurement Plan: Sept’ 2012 Date of this Procurement Plan: __________ 2013 19 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/

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1. Process Thresholds, Review and 18-Month Procurement Plan

a. Project Procurement Thresholds 42. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works. Procurement of Goods and Works Method Threshold International Competitive Bidding (ICB) for Works Above $10,000,000 International Competitive Bidding for Goods Above $1,000,000 National Competitive Bidding (NCB) for Works Beneath that stated for ICB, Works National Competitive Bidding for Goods Beneath that stated for ICB, Goods Shopping Up to $100,000 Direct Contracting (DC) Up to $100,000 Consulting Services Method Threshold Quality Cost Based Selection (QCBS) Above $200,000 Consultant Qualifications Selection (CQS) $200,000 and below Single Source Selection $100,000 and below

b. ADB Prior or Post Review

43. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project. Procurement Method Prior or Post Comments Procurement of Goods and Works ICB Works ICB Goods

Prior Prior Prior review of all bidding documents.

NCB Works NCB Goods

Prior/Post Prior/Post

For NCB/Shopping and Direct Contracting the first draft bidding documents in English Language version should be submitted to ADB for review and approval regardless of the estimated contract amount. The first two contracts in English language version. ADB-approved procurement documents will be used as a model for subsequent ADB financed packages. ADB will review the bid evaluation reports and award of the contract on a post review basis

Shopping for Works Shopping for Goods

Prior/Post Prior/Post

Recruitment of Consulting Firms Single Source Selection Consultant’s Qualification Selection (CQS) Quality-and Cost-Based Selection (QCBS)

Prior Review for all contracts Prior review for all contracts Prior review for all contracts

Recruitment of Local Contractual Staff Local Contractual Staff Prior DGHE/MOEC selects, negotiates and manages the contract. ICB : International Competitive Bidding, NCB : National Competitive Bidding, DGHE : Directorate General of Higher Education, MOEC : Ministry of Education and Culture

c. Goods and Works Contracts Estimated to Cost More than $1 Million 44. The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

General Description

Estimated Contract Value ($)

Number of Contracts

Prequalification of Bidder (y/n)

Procurement Method

Advertisement Date

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General Description

Estimated Contract Value ($)

Number of Contracts

Prequalification of Bidder (y/n)

Procurement Method

Advertisement Date

Program Development

1,250,000 13 or more N Shopping, DC

Q3/Y1, Q1,/Y2,Q1/Y3,

Q1/Y4 Equipment and materials for 13 preselected Polytechnics

27,000,000 13 or more N ICB/NCB/ Shopping

Q1/Y2

Equipment and Works under National Skills Fund

The value will be determined by the NSF proposals from individual polytechnics

25 or more N ICB/NCB/ Shopping

Q2/Y1

d. Consulting Services and Training Contracts Estimated to Cost More

Than $100,000 45. The following table lists consulting services and training contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

General

Description Estimated Contract Value ($)

Procurement Method

Advertisement Date

International or National

Assignment

Comments

Strengthening polytechnic education and project implementation

2,200,000 QCBS (80:20)/CQS

Q4/Y0 International/ National

3 pm of int’l cons’t inputs and 223pm of nat cons’t inputs

Individual recruitment (ICS)

Q4/Y0 National 36 pm national consultant for start up

National Skills Fund – Competitive Grants and Scholarships

The value will be determined by the NSF proposals from individual polytechnics

CQS, ICS Q2/Y1 National

Monitoring and Evaluation, PPMS and PPIS

360,000 CQS Q1/Y1 National Half Yearly Reporting

Study on review regulatory and governance framework

75,000 CQS, ICS Q4/Y1

National

Study on Polytechnic graduate relevance and

110,000 CQS, ICS Q1/Y2 National

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General Description

Estimated Contract Value ($)

Procurement Method

Advertisement Date

International or National

Assignment

Comments

employability Study on Strengthening Polytechnic – Industry linkages

110,000 CQS, ICS Q1/Y2 National

Social Marketing Strategy

550,000 CQS Q4/Y1 National

e. Goods and Works Contracts Estimated to Cost Less than $1 Million

46. The following table groups smaller-value goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description

Estimated Contract Value ($)

Number of Contracts

Prequalification of Bidder (y/n)

Procurement Method

Advertisement Date

Office Furniture and Equipment for PMU and PIUs

250,000 2 or more N NCB, Shopping

Q1/Y1

Teaching Learning Materials Development

650,000 13 or more N Shopping, DC Q1/Y2, Q1/Y3, Q1/Y4

2. National Competitive Bidding

a. General

47. The procedures to be followed for national competitive bidding shall be those set forth in Presidential Decree No.54/2010 of the Republic of Indonesia, dated 6 August 2010, with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the Procurement Guidelines.

b. Registration 48. Bidding shall not be restricted to pre-registered firms and such registration shall not be a condition for participation in the bidding process. 49. Where registration is required prior to award of contract, bidders: (i) shall be allowed a reasonable time to complete the registration process; and (ii) shall not be denied registration for reasons unrelated to their capability and resources to successfully perform the contract, which shall be verified through post-qualification.

c. Prequalification

50. Post qualification shall be used unless prequalification is explicitly provided for in the loan agreement/procurement plan. Irrespective of whether post qualification or prequalification is used, eligible bidders (both national and foreign) shall be allowed to participate.

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d. Joint Ventures 51. A bidder declared the lowest evaluated responsive bidder shall not be required to form a joint venture or to sub-contract part of the supply of goods as a condition of award of the contract.

e. Preferences 52. No preference of any kind shall be given to domestic bidders or for domestically manufactured goods. 53. Regulations issued by a sectoral ministry, provincial regulations and local regulations which restrict national competitive bidding procedures to a class of contractors or a class of suppliers shall not be applicable.

f. Advertising

54. Invitations to bid (or pre-qualify, where prequalification is used) shall be advertised in at least one widely circulated national daily newspaper or freely accessible, nationally-known website allowing a minimum of twenty-eight (28) days for the preparation and submission of bids and allowing potential bidders to purchase bidding documents up to at least twenty-four (24) hours prior the deadline for the submission of bids. Bidding of NCB contracts estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised on ADB’s website via the posting of the Procurement Plan. 55. Bidding documents shall be made available by mail, electronically, or in person, to all who are willing to pay the required fee, if any.

(i) Bidders domiciled outside the area/district/province of the unit responsible for procurement shall be allowed to participate regardless of the estimated value of the contract.

(ii) Foreign bidders from ADB member countries shall not be precluded from bidding.

g. Bid Security

56. Where required, bid security shall be in the form of a bank guarantee from a reputable bank.

h. Bid Opening and Bid Evaluation

57. Bids shall be opened in public, immediately after the deadline for submission of bids.

(i) Evaluation of bids shall be made in strict adherence to the criteria declared in the bidding documents.

(ii) Bidders shall not be eliminated from detailed evaluation on the basis of minor

non-substantial deviations.

(iii) No bid shall be rejected on the basis of a comparison with the owner's estimate or budget ceiling without the ADB’s prior concurrence.

(iv) The contract shall be awarded to the technically responsive bid that offers the

lowest evaluated price.

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i Rejection of All Bids and Rebidding

58. Bids shall not be rejected and new bids solicited without the ADB’s prior concurrence. 59. When the number of responsive bids is less than three (3), re-bidding shall not be carried out without the ADB’s prior concurrence.

j. ADB Member Country Restrictions

60. Bidders must be nationals of member countries of ADB, and offered goods and services must be produced in and supplied from member countries of ADB. D. Consultant’s Terms of Reference

61. The Project provides for 262 person months of consultants (3 person months of international; 259 person months of national consultants). The provision is summarized below:

Table 7. Requirement of National and International Consultants

No. Position Person Months Schedule Years Int’l. Nat’l.

1 Capacity Development Program Manager 24 Y1, Y2, Y3 2 Pool of technical experts in 5 sectors 30 Y1, Y2 3 Master’s Program Development Experts 30 Y2, Y3 4 IQF – Mutual Recognition Specialist 3 12 Y1, Y2 5 Assessment and Certification Experts 25 Y1, Y2, Y3 6 Credit Transfer System Expert 12 Y2, Y3 7 Gender Expert 12 Y1, Y2, Y3, Y4 8 Institutional Governance Expert 12 Y1, Y2, Y3 9 Finance Expert 48 Y1, Y2, Y3, Y4 10 Procurement Expert 42 Y1, Y2, Y3, Y4 11 Information Management Expert 12 Y1, Y2

Total 3 259

62. In addition to the above, the Project will engage firm(s) to provide services for the Monitoring and Evaluation, Auditing, and Social Marketing. All consultants must have (i) good English communication skills, (ii) cross cultural working experience and (iii) good reporting skills. All consultants will (i) assist in writing of reports as required by the PMU20. 63. Position 1: Capacity Development Program Manager (National consultant for 24 months). The consultant must have extensive experience in technical and professional skill education and capacity building expertise, and (ii) demonstrated experience in a donor funded project. The consultant will (i) have the overall responsibility for the development and implementation of project capacity building activities and the achievements of project outcome and outputs, (ii) assist the development, organization and delivery of project activities and ongoing mentoring of DGHE and the Project Polytechnics21, (iii) organize study tour(s) and facilitate twinning arrangement with international institutions, (iv) organize, monitor and assist preparation of project documents, manuals and reports, (v) supervise the inputs of service providers, (vi) assist the project management unit (PMU)/project implementation unit (PIU) as

21 DGHE – Directorate General of Higher Education

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required, and (vii) propose improved capacity building activities based on program evaluation and review. 64. Position 2: Pool of technical experts in 5 Priority Sectors (National consultant(s) for 30 months–6 months for each of the 5 priority sectors). The consultant must have (i) wide experience in implementation of revised demand led study programs and systems, including standard development, module development, and assessment tools development, (ii) experience in training of trainers and managers, (iii) subject and technical expertise to divide the content of revised study programs to be developed by Polytechnic lecturers. The consultant will (i) develop and propose to DGHE the framework for working with industry to review and strengthen study programs, (ii) assist the review committee (RC) in strengthening the study program, (iii) formulate proposals to DGHE on adaptations, further development and dissemination of industry standards and revised study programs, (iv) plan, sequence and monitor the development of occupational profiles, occupational standards, modules, learning material, assessment material and guides in selected 16 programs, (v) advise curriculum developers in consultation with Industry, 65. Position 3: Masteral Program Development Experts. (National consultants for 30 months, one in each priority sector for 6 months). The consultants must have (i) experience in national education including technical and professional skill education, (ii) experience in training of trainers/managers including assessment at a post graduate level, (iii) direct involvement in the development and provision of a master training programs, (iv) experience in developing higher level programs in higher professional education or Polytechnic institutions; (v) be conversant with institutional and legal requirements for developing Masters Degree programs; and (vi) be a recognized professional in one of the subject areas for which Masters Programs will be piloted. The consultant will assist the DGHE in developing master program in applied sciences for polytechnics lecturers. The tasks will include: (i) review the DGHE academic paper outlining plan for master’s degree program, (ii) study literatures on existing applied sciences programs from other countries, (iii) develop a concept paper/policy options for master’s degree program in applied sciences in line with the new laws on Higher Education, (iv) present the concept paper/policy options to DGHE and relevant stake holders to obtain feedback for improvement, (v) assist/guide polytechnics in setting up master’s degree program. 66. Position 4: IQF Mutual Recognition Specialists (International consultant for 3 months, national consultants for 12 months) to address IQF requirements. The consultant must have (i) theoretical and practical experience with standards based assessment, in one of the 5 priority sectors. The consultants will (i) assist the writing groups in developing assessment tools and guides for the revised study programs, (ii) train assessors, (iii) ensure revised study programs are relevant to industry standards and aligned to IQF requirements. 67. Position 5: Assessment and Certification Experts (National consultants for 25 months): to address assessment and certification issues. The consultant must have (i) theoretical and practical experience with standards based assessment. The consultants will assist the DGHE in improving the prototype of RPL and TUK (Assessment Development Center). The Tasks will include: (i) review the existing RPL instrument and mechanism of assessment, (ii) review the result of pilot test of RPL, (iii) advise the DGHE in finalizing the RPL instrument and guidelines, (iv) assist the writing groups in developing assessment tools and guides for the revised study programs, and (v) train assessors. 68. Position 6: Credit Transfer System Expert (National consultant for 12 months). The consultant must have (i) experience in technical and professional skill education, (ii) standards development in technical and professional skill education, and (iii) experience with CTS development and implementation. The consultant will assist in the development of a CTS for the

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12 Project Polytechnic institutions and revised Study programs assuring that students’ previous education achievements are recognized when transferring to another Polytechnic in Indonesia. 69. Position 7: Gender Expert (National expert for 12 months). The consultant must have (i) experience in applying gender strategies, and (ii) experience in teaching adults. The consultant will (i) follow up and monitor the implementation of the GAP22 indicators, (ii) provide training to Trainers on gender issues, (iii) participate in the monitoring of project activities to ensure gender sensitivity, (iv) assist in ensuring gender sensitivity in marketing campaign, (v) provide training to the curriculum developers on gender issues related to learning material, assessment instruments and guides. 70. Position 8: Institutional Governance Expert (National consultant for 12 months). The consultant must (i) have experience with institutional development and (ii) human resource development. The consultant will (i) provide recommendations regarding the setting up of functioning the RC together with the Position 2 consultant, (ii) train/induct the members of the RC; (iii) organize the training of Polytechnic management; (iii) monitor and support the smooth running of the RC, and (iii) together with Position 11 develop and submit proposals to DGHE for greater autonomy of the Polytechnics, including financial self governance over funds generated through running of short courses and PPP23-initiatives. 71. Position 9: Finance Expert (National consultant for 48 months). Support the PMU and train PMU/PIU staff to implement financial management protocols to support project implementation. The consultant must have (i) experience in setting up financial management and disbursement procedures that address DIPA and ADB requirements. The consultant will (i) review existing system and reporting procedures, (i) propose recommendations for FMIS system to address ADB and DIPA requirements, (iii) develop associated templates, platforms and databases, (iv) develop a training plan to include DGHE staff, the PMU and staff of the 13 Polytechnics PIUs on the application of the adopted FMIS-system, (v) conduct the training, (vi) test run the system and make the necessary modifications, (vi) implement the system in all 13 Polytechnics. 72. Position 10: Procurement Expert (National consultant for 42 months). Support the PMU and train PMU/PIU staff to implement procurement management protocols to support project implementation. The consultant must have (i) experience in setting up procurement systems and disbursement procedures that address ADB requirements. The consultant will (i) develop procurement protocols and bidding documents, (i) ensure initial bidding documents are prepared in English language for ADB, (iii) develop associated templates, procurement and bidding documents to support the effective implementation of the Project, (iv) develop a training plan to include DGHE staff, the PMU and staff of the 13 Polytechnics PIUs to use the procurement and bidding documents, (v) conduct the training, (vi) test run the system and make the necessary modifications in the initial procurement activities of the Project, (vi) implement the system in all 13 Polytechnics. 73. Position 11: Information Management Expert (National consultant for 12 months). The consultant must have (i) experience in setting up an institutional MIS24, preferably in an educational institution, (ii) experience in conducting surveys, and (iii) experience in teaching adults. The consultant will (i) review existing EMIS25 system and procedures, (i) propose recommendations for EMIS system to support project activities, (iii) develop associated templates, platforms and databases, (iv) develop a training plan to include DGHE staff, the PMU

22 GAP – Gender Action Plan 23 PPP – Private Public Partnership 24 MIS – Management Information System 25 EMIS – Educational Management Information System

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and the staff of the 13 Polytechnics on the application of the EMIS-system, (v) conduct the training, (vi) test run the system and make the necessary modifications, (vi) implement the system on all 13 Polytechnics, (vii) develop strategy for the collection of information on former students, and (viii) develop and run training program of Polytechnic staff on how to plan, run, analyze and report tracer studies of former students. 74. Monitoring and Evaluation Experts. The consultants must have extensive experience in conducting baseline and evaluation studies on donor funded programs, in the education sector, and exceptionally good reporting skills. The consultants will (i) conceptualize and design three major studies, i.e. baseline study, midterm evaluation and end of project evaluation, (ii) provide an overall strategy for development of data collection instruments, data collection, data analysis and reporting/presentation, (iii) develop data control measures for data collection, (iv) train data collectors as needed, (v) recommend additional/correctives measures based upon findings, (vi) advise on additional surveys as required, and (vii) advise on the design and implementation of a project monitoring system. 75. Auditing Experts. The Auditing experts will be responsible for assisting EA to prepare financial audited reports annually through multi-years contract. 76. Social Marketing Consultants. The Social Marketing Experts will be responsible for assisting EA to: i) design communication strategy; ii) facilitate inputs from relevant stakeholder for an integrated approach on Polytechnic Institution brand strategy; iii) identify target audience for the public awareness campaign and establish baseline for measurable indicators for the monitoring and evaluation of current and future public awareness campaign attainment – specifically to increase enrollment rates and female participation; iv) formulate a coherent long-term public awareness campaign, including identifying means (printed or broadcast media).

VII. SAFEGUARDS

77. The environmental category is C. The Project will supply new equipment and training facilities to selected Polytechnics. Generally construction works are not envisaged. However, in some cases minor modifications of existing buildings might be necessary to accommodate new equipment. The specifications for new equipment will contain criteria for low energy consumption. The involuntary resettlement category is C. The project activities will neither require land acquisition nor resettlement. The indigenous peoples’ category is C. No specific activities will be directly targeted indigenous people. Reaching out to segments of the population who traditionally are not the target group of the Polytechnics through the application of E-learning and through the initiative fund will not specifically target any ethnic groups, but be open to all.

VIII. GENDER AND SOCIAL DIMENSIONS

Project Outcome/Outputs Actions

Output 1: Increased quality and relevance of polytechnic system

• Develop a gender mainstreaming strategy for the Polytechnic sector (The scope of work is outlined in the TOR of national consultant to be recruited to develop the strategy).

• Ensure that study program materials developed based on the revised industry standards, for example, modules, lecture guides, learning materials, assessment instruments and assessment guides, etc., are gender sensitive and include positive images of women working in the priority sectors.

• Ensure that in the revision of guidelines/ procedures for accreditation,

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Polytechnics are required to have access and equity policies in place to promote equal access of females and males in the priority skill areas.

• Ensure female representation amongst 39 lecturers to be trained to international standards and 200 lecturers to be trained to agreed standards (20% will be female)

• Ensure that gender targets are included in the project HRD plan, with at least 20% of female lecturers trained in skill areas with low female representation (infrastructure and manufacturing), 30% in agro-industry and at least 50% of female teachers trained in tourism.

• Of 24,000 students tested and certified to endorse standards in diploma programs by 2016, 20% are female.

• Ensure that at least 30% of the short courses developed through the project target the study programs that benefit females.

Output 2: Increased and more equitable access to polytechnic institutions

• Ensure that selection of project polytechnics targets those institutions with a relatively high number of females in the priority sectors.

• Ensure that the review and revision of entry requirements address access and equity dimensions to increase female enrolment in the priority sectors.

• Implement the RPL system and target 30% female assessment and enrolment into the priority sectors (of total 12,000).

• Ensure that selection of SMK (private and public) and private providers targets those schools with a relatively higher number of poor and female students.

• Of 12,000 students assessed from SMK, 20% are female • To ensure that the National Skills Fund (NSF) contributes to gender

equality outcomes, ensure that the proposals submitted by the Polytechnics are evaluated for their strategies and innovative programs to increase female student and teacher access and representation in the priority sectors.

• Ensure that each proposal submitted to NSF earmarks at least 10% of funds to promote access and equity issues.

• Ensure that at least 20% of the recipients of the 2,000 NSF Scholarships are females.

• Ensure that career information on the priority sectors developed and disseminated by the Project Polytechnics in the secondary and SMK/ private providers have specific components directed at females to familiarize them with the range of subjects, new technologies and employment opportunities that are available to females in the priority skill areas.

• Incorporate within the social marketing campaign components to: (i) promote female participation in the male dominated sectors; and (ii) mobilize the private sector to hire more women in these sectors.

• Encourage Project Polytechnics to ensure that their entrepreneurship development programs and funds provided for business start-up target female students. (NSF can be used for this purpose).

Output 3: Increased private sector involvement in the polytechnic sector

• Ensure that the partnership agreements with the private sector with project Polytechnics addresses access and equity dimensions related to female enrolment and employment in the priority sectors.

• Ensure 20% female representation in the Review Committees. • In industry gatherings, PIUs will showcase female skill development

and participation in the priority sectors and brief private sector/ employers on gender issues and corporate social responsibility (CSR).

• Ensure 30% of internships/ industry placements are female in the 5

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priority sectors of Infrastructure, Manufacturing, Agro-industry, Tourism and Mining to support the Project female employment targets.

• Encourage the private sector to hire more females in the priority skill areas

Output 4: Strengthened governance and management of polytechnic education

• Ensure that studies conducted to review and revise the regulatory and governance frameworks to support polytechnic development, analyses gender, social and equity issues and provide recommendations for mainstreaming gender in the sector.

• Based on above analyses, develop a gender mainstreaming strategy for the Polytechnic sector.

• Ensure that the professional development training program for the 12 project Polytechnic managerial staff has a module on gender issues, including sensitivity training and promotion of girls in nontraditional occupations.

• Ensure 20% of the management and staff in the Project Executing Agency and the Selected Polytechnics Institutions trained on technical and managerial skills that will allow their qualifications to be aligned with industry standards.

• Ensure that Polytechnic information systems report sex disaggregated data on enrolments, scholarships, drop-outs, graduates, etc.

• Encourage that Project Polytechnic tracer studies include sex disaggregated data and report on the results.

Implementation arrangements: The Directorate General of Higher Education (DGHE) of the Ministry of Education and Culture (MOEC) as the Executing Agency (EA) for the Project, will be responsible for the implementation of the Gender Action Plan. One National TVET Gender Specialist will be recruited to provide technical guidance related to GAP deliverables and support the Project Director, PMU: Director of Learning and Student Affairs in DGHE in GAP implementation. The Gender Specialist will coordinate and consult with a wide range of stakeholders, including government officials/ agencies, project polytechnics, public and private vocational schools/ providers, industry/ professional associations, industries/ employers, academicians, etc. The DMF developed for the Project will incorporate M&E for GAP. Project M&E will include sex disaggregated data and all project reports will include analysis on progress against the gender action plan. All project staff will be provided training on gender issues in TVET.

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework

78. The detailed DMF is in Appendix 1. B. Monitoring

79. Project Performance Monitoring. The PMU will establish and complete within the first year of the effective loan date, a comprehensive project performance monitoring system (PPMS) acceptable to ADB. The PPMS will include all levels of PDP activity from the DGHE to sector review committee to the participating Polytechnics and their partners. It will specifically measure the impact, outcome and outputs of the proposed strengthening of Polytechnic institutions, evaluating the specific contributions of the Project to deliver quality and relevant industry-based programs in the four priority sectors that are responsive to the labour market needs and entrepreneurial growth. 80. The comprehensive set of targets and indicators in the design and monitoring framework are at the core of project performance monitoring and evaluation. A baseline study will be undertaken during the first six months after loan effectiveness to establish baseline data for the targets and indicators in the design and monitoring framework. This will update the baseline data in the PAM. All data will be disaggregated by gender and social background where relevant. Data will be collected at each of the 13 Polytechnics, including enrolment and graduation rates in the target study programs, teacher and instructor qualifications and level of industry experience, the Polytechnics level of involvement and partnerships with industry as well as the provision and quality of career counselling and job placement services offered to students. Included in the baseline will be an external survey of employers and Polytechnic graduates in the five sectors to get data on the relevance and adequacy of the Polytechnic training in meeting industry needs. The survey will look at the proportion of graduates entering the workforce or self-employment within six months of graduation and whether these graduates are using the skills acquired on the job. It will also collect data on employer satisfaction with Polytechnic graduate’s skills, knowledge and attitudes and, where relevant, the effectiveness of the work placements and other partnership initiatives with the Polytechnic sector. The baseline study will be used as the basis for the midterm and final impact studies that will be carried out in third and fifth year respectively. The final impact study will be the basis for the project completion report. 81. The M&E task will be outsourced to an agency that will lead the design and development of the three studies (baseline, midterm, final impact study) with the support of a core group of Polytechnic resource persons. The managers and staff in the participating Polytechnics will be responsible for providing access to data at the institutional level. Data collectors will be trained to verify the data and conduct the surveys. The agency will be responsible for data analysis and reporting. 82. Responsibility for internal monitoring of project implementation performance will be with the Project Management Unit. The specific responsibility will lie with the M&E officer in the PMU, shared with staff responsible for M&E in the four COEs and twelve satellite Polytechnics. The M&E staff at each institution will assume a vital role in monitoring project activities and implementation of all aspects of the CBE programs and short-term courses as well as other project initiatives that increase access to Polytechnic education. A project tracking system will

46

be established for monitoring project activities and implementation where existing management information systems are not functioning or do not meet project data requirements. 83. The Project will help strengthen the PPMS by ensuring that all required data submitted from the Polytechnics to the PMU is using standardized formats, procedures, and data collection instruments to enable easy integration of data into the Project progress reports. A user manual for data collection and procedures will be developed to support the process. In addition, training workshops and on-the-job training support will be conducted to build the capacity of those persons responsible for project monitoring, including the heads of the PIUs and deputy heads in the satellites and data officers in order to implement integrated and coherent PPMS. 84. The M&E Agency will take the lead in designing the PPMS, developing the manual and appropriate instruments and reporting structures as well as conducting staff training at all levels. This will be done in close collaboration with the PMU, other project consultants, and participating Polytechnics in order to ensure that existing structures and systems are utilized as much as possible. 85. The monitoring and evaluation strategy is in Appendix 11 86. Compliance Monitoring: All project loan covenants will be monitored regularly by the Project Director and twice a year during ADB loan review missions. 87. Safeguards Monitoring: The involuntary resettlement category is C, as civil works is limited to upgrading of existing Polytechnic facilities, which will not require new land acquisition or resettlement. The indigenous people’s categorization is C. The social marketing campaigns will increase awareness and access to Polytechnic education opportunities among females and members of ethnic groups in the four regions. The environment categorization is C. The project will mainly involve construction or upgrading of workshops or other facilities. During construction, the contractor will need to keep noise and dust within locally acceptable levels, as well as manage, fill, excavated and solid waste in a way that does not create a permanent impact. During operations water supply must meet national drinking quality standards and hazardous wastes will need to properly be disposed. All these aspects will be monitored by the PMU Project Director and senior managers in the respective Polytechnics. 88. Gender and Social Dimensions Monitoring: A summary poverty reduction and social strategy was prepared for the Project based on the social analysis conducted during project preparation. The gender action plan and monitoring aspects are in Appendix 11. C. Evaluation

89. ADB will conduct an inception mission within two months after the project start up, and a review mission every six months thereafter. A joint midterm review (MTR) will be undertaken early in year 3 of implementation. The MTR will focus on overall project strategy and achievements which may require adjustments of targets and processes and reallocation of resources. 90. Specifically the MTR will (i) review the project scope, design, implementation arrangements, human resource development and institutional development; (ii) review changes in Government policies and institutional framework since loan effectiveness, and evaluate their impact on project implementation and sustainability; (iii) assess project implementation against

47

appropriate projections and performance indicators; (iv) review compliance with loan covenants; (v) assess compliance with the gender action plan, the indigenous peoples development framework, and the good governance and anticorruption measures; (vi) identify critical issues, problems, and constraints; and (vii) recommend changes in project design or implementation. The PMU will submit a comprehensive report on each of these issues to ADB at least one month before the MTR. 91. Within six months after physical project completion, the DGHE/ PMU will prepare and submit to ADB a project completion report. The report will describe project achievements against the targets and expected outcomes and impact, details of project costs, compliance with loan covenants, lessons learned and other information requested by the ADB. The results of the Impact Evaluation Study will form the basis for reporting project achievements against the indicators at the output and outcome levels. D. Reporting

92. The DGHE/PMU will provide ADB with: (i) quarterly progress reports within 30 days after each quarter in a format consistent with ADB’s performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicators’ performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for the next 12 months; and (iii) a project completion report within six months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency audited financial statements, together with the associated auditor’s report, should be adequately reviewed. E. Stakeholder Communication Strategy

93. The PMU/DGHE will undertake regular press release and press conferences outlining the purpose of the project and the content to sensitize and popularize the project among the general public and to highlight project achievements during the duration of the project. 94. A project website will be developed and linked to the DGHE. It will publicize and share all key information about the Project. The progress reports will also be posted on the webpage as well as information about the NSF (National Skills Fund) and innovative developments taking place under the project. 95. In addition, regular meetings will be held for key stakeholders to inform them about the project, and project achievements, opportunities and other issues. Activities will include: (i) opening ceremonies to launch PEDP at each of the participating Polytechnics; (ii) inauguration ceremonies for new partnerships in collaboration with industry; (iii) discussion sessions or seminars with local government and other private sector providers to promote project initiatives and (iv) leaflets or news bulletins outlining the project purpose, achievements to date and proposed activities for the next period would be distributed to key stakeholders at the national and local levels, prospective students, local employers, etc. Consideration will be given to including testimonies of students enrolled in the program in the flyers and project website This could be extended to Twitter and Facebook to increase coverage and raise awareness about the Polytechnic’s education programs. Such social mechanisms for sharing information are gaining momentum in the education sector. 96. All communication messages and materials will have the logo of the project for facilitating easy identification and branding of the project.

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X. ANTICORRUPTION POLICY

97. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.26 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.27 98. ADB’s Anticorruption Policy (1998, as amended to date) was also explained to and discussed with the Project Executing Agency and the Project Implementing Agencies. Consistent with its commitment to good governance, accountability and transparency, ADB reserves the right to investigate any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. 99. The MOEC as the Project EA has indicated its commitment to promote good governance and establish a corruption-free environment under the Project. Further to this, a number of good governance and anticorruption provisions have been included in the Loan Agreement. These include the requirements for MOEC to: (i) carry-out periodic inspections of Project contractor’s activities related to fund withdrawals and settlements; (ii) ensure that relevant provisions of ADB’s Anticorruption Policy (1998), as amended to date, are included in all bidding documents for the Project; (iii) incorporate provisions in all ADB-financed contracts specifying the right of ADB to audit and examine the records and accounts of MOEC, contractors, suppliers, consultants, and other service providers as they relate to the Project; (iv) establish a project website to disclose information about various project-related issues, including procurement and other contracts awarded under the Project. 100. The website shall be updated within 1 week of each contract award. On the procurement-related information, the website shall disclose: (a) the list of participating bidders, (b) name of the winning bidder, (c) basic details on bidding procedures adopted, (d) amount of contract awarded, (e) the list of goods and services procured, and (f) the intended and actual utilization of loan proceeds under each contract being awarded. Any bidder may request an explanation from the EA/IA as to why a bid was unsuccessful and the EA/IA should respond within 20 working days; and (v) establish a grievance redress task force to receive and resolve complaints/grievances or act upon reports from stakeholders on possible misuse of funds and other irregularities. The task force shall (a) review and address grievances of stakeholders of the Project, in relation to either the Project, any of the service providers, or any person responsible for carrying out any aspect of the Project; (b) liaise with the relevant law enforcement agencies as relevant; and (c) report immediately to ADB on any malfeasance or maladministration that occurred under the Project.

XI. ACCOUNTABILITY MECHANISM

101. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.28

26 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 27 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp 28 For further information see: http://compliance.adb.org/.

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XII. RECORD OF PAM CHANGES

(Every changes during project implementation will be recorded under this chapter)

Appendix 1

50

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Targets /Indicators

Data Sources / Reporting

Mechanism Assumptions and

Risks

Impact Polytechnic education to produce graduates responsive to the needs of the labor market and contribute toward increasing productivity in the Priority Sectors

By 2020, the Polytechnic sector delivers quality programs and services, which improve the performance of five priority sectors of the Indonesian economy within the framework of the MP3EI.

Employer surveys. MP3EI, LMI and employment data.

Assumptions Government sustains its commitment to developing workforce skills and increasing employment.

Outcome Polytechnic education is aligned to the MP3EI in 5 priority sectors.

The number of public polytechnic students enrolled in study programs in the 5 priority sectors from the MP3EI increases (2009: 36,460 2016: 45,575) by 25%, with at least 30% of these female (2016: 13,672).1 The number of polytechnic graduates entering the workforce increases by 25% (2009: 3,227 2016: 13,600) in 5 priority sectors, with at least 15% of these female (2016: 2,040).

EMIS records (DGHE). NSF Auditor Reports. Graduate employment tracer studies. PPMS.

AssumptionsContinuing commitment of DGHE to polytechnic targets (post RENSTRA 2010-2014). Risks The Indonesian government does not prioritize and fund the polytechnic subsector. Polytechnic training is not valued by employers.

Outputs 1. Increased

quality and relevance of polytechnic system.

13 Project Polytechnics upgraded with facilities and equipment by 2015. Lecturer development program is implemented resulting in 39 lecturers trained to international standard and 200 lecturers trained to agreed standard (20% will be female). Masters Degree program established in 5 priority industries. 24,000 students (20% female) tested and certified to endorse standards in 20 revised diploma programs by 2016, cognizant of adopted IQF and BNSP requirements.

Procurement lists and work completion reports. Certification and assessment records. Standards developed, classified and clustered into accredited study programs. EMIS records.

Assumptions IQF implemented by DGHE. Standards assessment and certification for Polytechnics approved by Government. DGHE accredits lecturer development program. Government funds provided for professional development program and to NSF.

2. Increased andmore equitableaccess topolytechnic institutions.

At least 30 partnership agreements with SMKs (20) and (10) Private Providers that enable direct credit for 12,000 students (30% Female). 12,000 (20% Female) unemployed, SMK students, or others assessed and certified through RPL by 2016. 2,000 NSF Scholarships awarded to poor students and females to complete revised

EMIS reports (disaggregated data). Signed agreements and MOUs. Assessment and Certification records. NSF Audit Reports and

Assumptions Existing EMIS system isoperational andgenerates disaggregatedenrolment information. Advocacy and social marketing campaigns implemented successfully. Polytechnic and employer commitment to achieve access and

1 Public enrolment data is readily available. Private provider data is not. As a result enrolment targets are based on public sector

only.

Appendix 1 51

study programs supported by the Project. 20% Female recipients.

PPMS reports

equity targets are maintained.

Design Summary Performance Targets /Indicators

Data Sources / Reporting

Mechanism

Assumptions and Risks

3. Increased private sector involvement and promotion of an entrepreneurial culture to strengthen polytechnic graduate competitiveness

Industry endorsement of 20 revised curriculum of study programs that address identified needs by 2016. 13 Formal partnerships established between 13 Polytechnics and industry associations/employers to implement skills development services by 2014.

Revised study programs developed and accredited. MOUs with industry partners and employers cited. NSF reports and audits of fund.

Assumptions Employers willing to work with the public polytechnic education system. Risks Private sector show little interest in polytechnic development.

4. Strengthened governance and management of polytechnic education

150 DGHE, Polytechnic management and staff (20% female) trained in project management by Q4/2013. Monitoring and reporting systems in 13 Polytechnics revised and implemented by 2015.

At least 25 demand led skills development proposals appraised, funded and implemented through the NSF by 2016.

Regulation, policy and sector strategy revised and endorsed. Project reports and records (PPMS). NSF reports. PPMS Surveys and studies.

Assumptions Sufficient recurrent funding provided

Activities with Milestones (for the first 18 months of implementation) Input

1. Increased quality and relevance of polytechnic system.

1.1 Review, develop and implement industry standards in 5 priority sectors, in collaboration with industry, and aligned to the IQF by Q4 2014.

1.2 Revise quality assurance, accreditation and certification systems, including provision for RPL by Q4 2014.

1.3 Deliver training for 200 selected staff from 13 Polytechnic institutions and others to strengthen quality provision responsive to the 5 priority sectors2.

1.4 Develop 20 quality professional and flexible study programs with learning materials and assessment instruments in 5 priority sectors by Q2 2014.

1.5 Develop Centers for Competency Assessment (TUK) and Professional Certification Agencies (LSP) in 13 Polytechnic Centers by Q4 2013.

1.6 Implement 13 partnerships with industry to achieve enrolment and employment targets by Q4 2013.

1.7 Develop Master’s programs to be delivered in 5 priority sectors by Q1 2015; using twinning arrangement.

1.8 Program for 39 lecturers to be trained to a Masters/doctorate level by an international polytechnic started by Q4 2013.

ADB: $75 millionGovernment : $16.70million Total: $91.70 million

2. Increased and more equitable access to polytechnic institutions

2.1 Develop and implement access and equity measures to increase enrolments for identified programs in 5 priority sectors by Q2 2013. The number of polytechnic students enrolled in programs in the 5 priority sectors increases (2009: 36,460 2016: 45,575 ) 25%, with at least 30% of these female (2009: 13,672) by 2016

2.2 DGHE to review entry policies and requirements to increase access to quality Polytechnic study programs by Q2 2013.

2.3 12,000 students assessed at Diploma level 1 from SMK Continuing Education Program in 5 priority sectors by Q1 2015.

2 Training specified in HRD Plan in Appendix 5 of the PAM (RRP Linked Document).

Appendix 1

52

2.4 In alignment with MOEC BIDIK MISI3 scholarship program to develop regulations and guidelines for support to disadvantaged students and women through the NSF by Q3 2013. Implement guidelines from Q1 2013 and provide scholarships to 2,000 students.

2.5 Design and implement Recognition of Prior Learning (RPL) in 5 priority sectors and functioning in 13 Polytechnics. Assess 12,000 students using RPL system by Q4 2015.

2.6 Develop flexibly delivered short course programs in project polytechnic with at least 1,200 students enrolled by Q4 2015.

2.7 Gender Action Plans (GAPs) implemented to ensure targets for women participation are achieved by 2016.

3. Increased private sector involvement in improving polytechnic graduate competitiveness

3.1 Establish 13 partnerships between Project Polytechnics and employers and industry associations in the 5 priority sectors in Q2 2013.

3.2 NSF operational in Q2 2013 which facilitates skills development proposals supported by Polytechnics and employers in the 5 priority sectors. The fund operates as a competitive grant initiative that strengthens the involvement of the private sector in polytechnic education by Year 2013. 25 proposals funded by 2015.

4. Strengthened governance and management of polytechnic education

4.1. Train 150 polytechnic managers to improve sector management and effectiveness in 13 Polytechnic institutions by Q2 2014. Training to reflect revised sector priorities in the MP3EI and DGHE policies.

4.2. Design and implement an advocacy strategy to support increased enrollments, quality service provision and employment outcomes for graduates by Q3 2013.

4.3. DGHE to complete a tracer study to monitor graduate employment outcomes from revised study programs in 2016.

ADB = Asian Development Bank; BNSP = National Agency for Professional Certification; BAN-PT = National Accreditation Board for Polytechnics; COE = Centre of Excellence; CTS = Credit Transfer System; DGHE = Department of Higher Education; EMIS = Education Management Information System; FMIS = Financial Management Information System; GOI = Government of Indonesia; HRD = Human Resources Development; IQF= Indonesia Qualification Framework; MIS= Management Information System; LMIS = Labor Market Information System; MOEC = Ministry of Education and Culture; MOU = Memorandum of Understanding; NSF = National Skills Fund; PMIS = Project Management Information System; PPMS = Project Performance Monitoring System; PPP = Public Private Partnership; QA = Quality Assurance; RPL = Recognition of Prior Learning; SMK = Secondary Vocational Education.

3 BIDIK MISI Tuition Fee Assistance programs in 2011 (scholarship).

Appendix 2 53

QUALITY AND RELEVANCE OF THE POLYTECHNIC SYSTEM, PUBLIC AND PRIVATE

Appendix 2: Quality and Relevance of THE Polytechnic System, Public and Private A. National Industry Standards 1. The DGHE has endorsed the introduction of a standards based education and training approach to Polytechnic education in order to improve the quality and relevance of Polytechnic education provision. 2. The endorsement is a significant shift from the previous arrangements governing Polytechnic education in Indonesia. The DGHE will need assistance to develop and issue the operational set of regulations concerning the principles and criteria for guiding the development and awarding of the national standards as required. These regulations will be central to the establishment and implementation of a national industry standards-based Polytechnic education system and are consistent with the policy of the DGHE formulated in the RENSTRA 2010 to 2014. 3. The format and content of a standard shall be detailed in the developed regulations to ensure consistency of approach and to ensure standards have national application. Standards will reflect IQF and BNSP requirements. The purpose of issuing national skills standards is to:

(i) Facilitate employee/employer participation in upgrading of skills and provide a direction for improvement through the attainment of higher level skills needed to attain opportunities for promotion or self advancement;

(ii) Guide employers with recruitment, work organization and allocation, and with the setting of wages;

(iii) Facilitate Polytechnics to develop education and training programs designed to achieve national standards and align with the proposed Indonesian qualifications framework;

(iv) Facilitate program accredited Polytechnics to conduct assessments and issue national diplomas.

4. The regulations to be developed shall prescribe that industry standards are to be developed for defined occupations within the proposed qualification levels and according to BNSP requirements. Skill qualification levels promote career progression through development of logical pathways within an occupationally relevant skills set. Initially the DGHE is aiming to create logical pathways relevant at an occupational/industry level, as opposed to generic skill or cross sector approaches. This enables the creation of practical training and educational pathways and enables the system to be implemented quickly to address immediate needs. Industry standards need to be developed in a consistent format and be capable of alignment with regional and international occupational standards. The DGHE will adopt the proposed Indonesian qualifications framework model for this purpose. The framework prescribes four levels of qualification within the Polytechnic sector however, level descriptors prescribed for each level is still pending. 5. Progression between levels shall be based on achievement and demonstration of skills tested. In essence the regulations developed by the DGHE shall prescribe the development of a Polytechnic training pathway. Skills development and Polytechnic education involve linking the MOEC and BNSP. But this is not the immediate concern of the Project or of the government. The immediate concern is to develop industry standards relevant to the labor market and to

Appendix 2

54

revise Polytechnic programs accordingly to meet these needs in order to increase skills levels. And to compel responsible industries to work cooperatively in order to address the nations skill needs at technician and engineering level. This focus removes many of the contestations experienced in many economies when seeking to develop equivalency between secondary school institution certificates and a vocational diploma qualification. This will enable DGHE to move quickly ahead with the development of industry standards and improve training provision to meet the requirements of the labor market. It also allows the system to be responsive to the needs of employers and to more quickly address their priorities through the revised system. 6. Central to the success of this system will be the roles and responsibilities ascribed to industry. A key feature of the approach is that the industry standards have to meet the specified needs of employers, enterprises and industry. To facilitate this, the DGHE shall adopt a model that brings industry and DGHE together through the formation of a Review Committee (RC) in each of the five priority industries. The regulations developed by Polytechnic Education Development Program and endorsed by the DHGE will prescribe the establishment, role and operation of the RC. This body will provide oversight for the DGHE and will provide high level policy advice, endorse standards, certify skills, testing and assessment protocols, certification of qualifications, and coordinate the efforts of public and private provision. 7. In setting industry standards, the DGHE shall establish technical committees when required and undertake task and skills analysis through which industry skill standards can be identified, developed and adopted. These shall then be packaged into qualifications and proposed for alignment into a qualification level. The RC shall have the authority to establish Occupational Working Groups (OWGs) for the identification of occupational profiles. It is proposed that 5 national consultants, one for each priority sector, facilitate the establishment of Occupational Working Groups and facilitate the development of occupational profiles and industry skills standards with lecturers for the identified priority sectors of the economy in agreement with the MP3EI. (The selected priority sectors are Agro Industry, Manufacturing, Infrastructure, Energy, Tourism and Mining.) This will serve as a model that can be adopted for use in other sectors by the DGHE. 8. The necessary funds to enable the development and implementation of the proposed Polytechnic development system are to be sourced through the Project. These funds will be provided to the DGHE to undertake its functions in the project. In turn the DGHE will report on its activities and report on meeting government plans and targets. International expertise can be sought through the NSF to support this process particularly in areas where there is an absence of local skill to build upon or in cases where DGHE might choose to purchase materials from abroad to adapt and adopt in the Polytechnic system. 9. To support improved quality in the Polytechnic system, the DGHE shall with project support establish testing and quality assurance provisions. The combination of these activities is designed to verify the occupational profiles that are developed through the working group process. Based on the occupational profiles, industry standards and testing instruments are to be developed by lecturers attached to the occupational working groups and assisted by the consultant - technical expert, then validated by the RC and then endorsed by DGHE. The requirements for development of standards and their testing shall be described in a standard guide, which will detail the requirements to be applied in the appraisal process. Procedures will need to be developed to support this process which can be tested through the Project to inform the DGHE for future development or application to the remaining sectors of the economy. DGHE are charged with responsibility for endorsement and assigning of a national standard in collaboration with BNSP and the IQF implementation team. Final endorsement is then made by

Appendix 2 55

MOEC. The project emphasis is to develop revised study programs to industry standards which support students to achieve job ready skills as quickly as possible. The system infrastructure is expected to emerge as a result of experience gained through direct implementation and not as a precursor to implementation. 10. DGHE is seeking support to bolster the establishment of RCs and their operations to develop national industry standards, the associated testing instruments and the training packages to guide Polytechnic education and training provision. The standards provide the trigger for improving the quality and relevance of current Polytechnic TVET provision and are the necessary ingredient for improving the skills base of the workforce and current Polytechnic programs. The selected project polytechnics shall remain the responsible agents within the DGHE to develop training outcomes, curriculum products and for lecturer development. The project will contract project polytechnics to facilitate, with consultants, the process of developing training packages to enable project implementation. The project polytechnics will work closely with DGHE and the RC to effectively support the creation of the emergent system identified through the project. The project polytechnics will work as enabling and implementation agencies for the project in order to support DGHE to establish its Polytechnic skills development system. The project polytechnics have not yet recognized skills and capacity to undertake this assignment. The Project will provide the following to support the establishment of national industry skills standards:

(i) Assist DGHE to establish industry standards for five economic priority sectors – construction, manufacturing, agro industry, tourism, energy and mining. These economic priority sectors and the initial indicated occupational programs (Agro industry: Food processing technician, Laboratory technicians, Agricultural mechanical engineering. Manufacturing: Automotive engineering, Motor vehicle technician, Machinery technician, Machinist technician, Tool and dye technician, Megatronic technician/Engineering. Infrastructure: Civil engineering for construction and infrastructure, Electric technician/Engineering, Plumbing technician and Wood working technician. Energy and Mining: Electrical Machinery technician/Engineer, Electrical Machinery Maintenance and Repair technician, Engineer Mining Equipment/tool maintenance and repair, Heavy Equipment technician, Heavy Equipment Maintenance technician) have been identified as priorities through the Labor Market Assessment undertaken through the PPTA process aligned with the Economic Master Plan. Five RCs will be established, one for each sector and supported by the project to assist and advice the project polytechnic in the development of standards for the indicated occupational areas and consultants with recognized expertise will be engaged to support the initial development and provide training to working group members to be able to successfully undertake job and task analysis activities required to develop standards and revised study programs. The standards should be developed through use of prescribed criteria and DGHE should be kept informed of issues and progress. The development of standards will address both the occupationally specific requirements of the identified occupation and also develop the hierarchy of skills from diploma levels 1 to 4 to achieve the broader requirements of the shift towards the IQF and a standard based system. Full set of standards comprising a Polytechnic program must be developed, appraised and issued within the first two years of the Project. It is also noted that the business skills are critical cross cutting skills in many industries and occupations. The range of skills to be addressed in basic business skills could support both direct employment in service and retail industries. Skills identified include

Appendix 2

56

marketing, book-keeping, administration, purchasing, customer service and computer skills. These skills are also necessary to support the establishment of self employed contractors or SME businesses that are likely to result from project activities in the other three economic priority sector areas.

(ii) Five national technical experts will be contracted through the Project. The

national consultants will provide executive officer support for the effective and timely functioning of the RC and Working Groups established to revise study programs that relate to industry standards. They will facilitate the standard development processes between government, Polytechnics and the relevant industries. The Working Groups will not be limited to the development of occupational profiles for one occupation so it is proposed that an integrated approach be adopted by the Project to complete requirements quickly to enable training program development and implementation to commence. It is anticipated that Diploma level 1 programs with SMKs will be available for delivery within 12 months of assignment commencement.

Specific Activities:

(i) National standards developed, appraised and issued by DGHE and BNSP. A

standard template developed to ensure consistency and which provides clear and concise description of skills, tasks and underpinning requirements. This template will be adopted by the Project to support the 5 identified economic priority sectors.

(ii) Standards aligned with each of the 4 levels of the Indonesian qualifications framework by year 2 of the project. Emphasis in the development process is placed upon entry programs to enable implementation of these whilst higher levels continue to be developed.

(iii) Industry standards developed and aligned to revised study programs capable of BNSP certification by end of year 3 of the Project.

B. Assessment and Certification 11. The project shall in collaboration with DGHE define assessment and certification requirements. Regional study tours can be undertaken under the NSF to support DGHE to better appreciate and address the policy implications of adopting a standards based assessment model and other key challenges in building a Polytechnic skills development system. The project will support a review of assessment arrangements and develop a system that can be located and managed in the Polytechnic system of Indonesia. Assessment policies and procedures need to be strengthened to ensure that Polytechnic students are assessed on the basis of industry standards to the levels required through the Indonesian qualifications framework. Previously assessments were conducted by the lecturers who delivered the programs. The project shall in collaboration with BNSP/LSP provide for testing of workers not in training programs and require assessment to be conducted by qualified testers/assessors that have recognized occupational skills in the areas in which they conduct assessments. 12. The project will provide for the establishment of testing centers to conduct assessments against national industry standards, which trigger the issuance of a national diploma. An accredited assessment center can be an enterprise, a Polytechnic, a stand-alone assessment service center or other organizations approved by the DGHE, BNSP and BAN-PT. To ensure consistency and reliability in assessment of skills, the DGHE will require an assessment

Appendix 2 57

procedure that it can monitor and quality assure. Assessment results can then be tracked and recorded through the Polytechnic EMIS and through the PPMS to be developed through the project. A national record of standards will be available to enable DGHE to track its progress in meeting the skills needs and requirements of industry as set through the BNSP and other proposed MOEC processes. 13. Certification of student’s achievements can only occur through DGHE which has an inspection function to ensure that Polytechnic education and training responds to the labor market. In effect, however, it appears that there will be a shared quality assurance function as the DGHE also endorses standards and will issue qualifications. The procedures for certification to be developed by the Project will need to reflect the existing provisions adapted by the DGHE and the Polytechnics. The project can indicate that program accredited Polytechnics can issue qualifications. The provisions enshrined in these rules enable the delegation of the issuing of a qualification or a statement of attainment to a broad range of stakeholders. However the certification of industry standards will require approval from BNSP and DGHE. The project will engage with BNSP to attempt to meet requirements, but can still proceed to deliver programs that are in the process of being certified. Delivery is not conditional for certification. It is more likely that certification will occur as a result of implementation through which systems and teaching materials can be tested and reviewed prior to submission to DGHE and BNSP for endorsement. 14. A quality assurance and accreditation system will be developed through the Project that is cognizant of these requirements. The development and implementation of the revised Polytechnic TVET system in the five economic priority sectors gives DGHE and other key stakeholders the chance to test and strengthen the system before it rolls out the new requirements to all economic sectors and occupations. It is recognized that many of the systems developed through the Project will have national significance and will be able to guide a Polytechnic education and training reform and improvement across the system. Many of the Polytechnic products will be replicable to other occupational programs and economic sectors and will enable other Polytechnics to deliver programs in the selected areas. This will significantly reduce the time involved in transforming and improving the quality and relevance of the Polytechnic TVET system to meet workforce development and labor market requirements. It is proposed that the project will facilitate the following activities with support from national consultants:

(i) Conduct a review of the assessment and certification arrangements adopted by the DGHE and facilitate a policy dialogue within and between key stakeholders to develop a nationally consistent and integrated model of assessment or testing. This review will be completed within the first 12 months of the Project.

(ii) Develop principles and procedures to support assessment and certification of

Polytechnic programs and industry standards resulting from the review undertaken in the first year of the project. This should include the development and adoption of assessor/tester standards and a model training program that can be used to train assessors/testers. This qualification should also be registered in the Indonesian qualification framework. This program should be completed within 14 months of project commencement. Lecturers will likely undertake assessor training within revised in-service programs to be developed by the Project. But, and subject to DGHE approval, there may be a need for a specific certificate to enable workplace assessment to occur.

Appendix 2

58

(iii) Through the project, train assessors from Industry in the five economic priority sectors to pilot and review the developed system and procedure. These assessors should be selected to undertake assessments in the five priority sectors supported by the Project. The training of assessors will be undertaken in year 2 of the project and be evaluated to ensure it meets DGHE and BNSP requirements. Assessors need to have recognized skill in the occupational areas for which they will be conducting assessments. Assessor training shall also be included in the lecturer development program to upgrade the skills of lecturers in Project institutions.

(iv) A national register of qualified assessors will be developed and located within the

responsible department in DGHE by year 3.

(v) Develop a bank of assessment tools, aligned to national industry standards, for each of the five economic priority sectors that can be utilized by trained assessors and approved by national Polytechnic assessment centers. This activity can be integrated with the development of revised curriculum (training packages) and should be completed by end of year 3. It is envisaged that the consultants developing standards, assessments tools and training packages will be the same consultants. A specialist in assessment, certification and accreditation will be contracted (assessment and accreditation specialist) to develop the assessment and certification procedures, the assessor standards and the assessor training course and support the DGHE with system wide policy development. A private entity may be contracted to support this development process and deliver the assessor training program.

Specific Activities: (i) Review assessment and certification arrangements and facilitate adoption of

revised or strengthened policy options within first 12 months of the project including standards for workplace assessors. In addition to revised procedures, a proposed fees and charges policy should be adopted to regulate the cost of assessment for students and existing workers seeking skills recognition and certification within the framework of the project.

(ii) Develop procedures for assessment and certification of industry standards within

year 2 including assessor standards and a training course to be completed by selected candidates to become recognized assessors.

(iii) Develop revised study programs and assessment tools in the five economic

priority sectors areas that will ensure occupationally relevant, nationally consistent and reliable assessment processes and outcomes are achieved for each of the five areas by year 3.

(iv) The project or private entity to train assessors and mentor their initial work in

conducting assessments which conform with revised and adopted study program requirements and DGHE policies and procedures in year 2.

(v) Design and develop a national register of assessors for use by DGHE and the

broader Polytechnic TVET system by year 2.

Appendix 2 59

(vi) Ensure that assessment procedures, assessor training and reporting requirements are included in lecturer development programs and ensure that assessment tools are provided to lecturers selected to be assessors in the three economic priority sector areas.

(vii) Develop a set of assessment tools by year 3, aligned to national industry

standards, in each of the 5 economic priority sector areas. C. Quality Assurance and Program Accreditation 15. Current Polytechnic requirements for training program content and assessment are described through Curriculum statements. The Polytechnics prepare curriculum for education and training programs. Given the shift to developing and adopting standards that are recognized by industry and certified through the NAB and the DGHE, Polytechnic programs will need to be substantially revised to align them more closely in meeting the needs of workplaces and supporting Polytechnic students into gainful employment. 16. Revised quality assurance and program accreditation requirements need to be developed to enable both industry and DGHE to be assured that Polytechnic providers have the necessary tools to deliver and assess revised training programs to the requirement of national industry standards. Accreditation is the formal approval process adopted by government to ensure quality and compliance of educational programs with government policy. Quality assurance is the ongoing monitoring of education and training programs to ensure they remain relevant and that they are delivered according to the accredited package specifications. The Project will work with the DGHE and BAN-PT to strengthen these systems to improve the relevance and quality of Polytechnic providers and the programs they deliver. It is necessary to work with the BAN-PT and other responsible departments within and outside the MOEC to develop a revised system to ensure programs developed through the ADB Polytechnic development project are of high quality and address requirements of all stakeholders involved in Polytechnic education. The result of this assistance is to have a quality assurance system that satisfies all system stakeholders and assures that Polytechnic providers can and do deliver programs successfully and meet the revised requirements of a industry standards based system being adopted and introduced in Indonesia. The TL, the key expert in industry standards and the assessment and accreditation development specialist will coordinate activities to develop a system implemented through the COEs and their satellite institutions and the programs being developed by the project. 17. Currently Polytechnic programs are curriculum based in which Institutions determine the content of a program and specify requirements for entry and completion. Program content is not industry based or directed towards industrial or occupational outcomes. General education subjects tend to dominate the content of current programs with limited teaching and learning of technical or vocational skills or required underpinning technical theory. Whilst workshop instruction does occur in some skill areas this is not prioritized within the current Polytechnic program. There are some Polytechnics who strive to link their programs to the workplace through work place experience (on job training in the 4th or 5th semester) and through production activities in the Polytechnics. There are requirements for students to complete a work placement for 20 weeks, but it is unclear if this is consistently applied in all Polytechnic programs or between Institutions. Unfortunately there is no structured work based learning modules or on job training modules in which students undertake work based projects or are assessed on work performance. There are no requirements to develop a learning plan which enables a student the opportunity to practice and apply skills. There are no set rotations to learn different skills on the

Appendix 2

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job or throughout the workplace. There are no requirements for formal training and learning on the job once a student is in a workplace and little support service to assist students to secure job placement. Current assessment requirements that measure student industry is not linked to demonstration of skills. Institutions do have varying systems to support students with travel or food but there is no consistent approach applied. The Project will develop minimum requirements for work based training and assessment in each of the three economic priority areas to be supported as well as develop a consistent approach to support students to meet revised training program requirements. 18. In many respects the current model of Polytechnic education and training tends to favor theoretical approaches to teaching and learning with content not linked to the occupational outcomes that arise from gaining a mix of skills. The practical demonstration of a mastery over skills through successful application in a number of contexts is limited. Classroom management does not provide many opportunities for students to practice and apply skills in fitted workshops or production units, in real workplaces or through simulation methods. Many classrooms are poorly fitted for higher vocational education and training with limited equipment or equipment not being used as well as a lack of consumables for student projects. Few institutions have inventory control or secure storage of tools, machinery or consumables. Student assessment is not through successful demonstration and explanation. Few lecturers have practical experience in the technical areas they are assigned to teach. These factors contribute to an overall view within industry and communities that Polytechnic education and training is not valuable or important and that current provision is not preparing students adequately for employment. 19. The adoption of a industry standards based approach allows both the DGHE and industry to ensure that delivery and assessment practices are revised to better achieve the more clearly defined outcomes that should directly result from the development of industry standards. The development of standards is addressed in section A above. The purpose of the shift towards the attainment of broad based industry skills is to support students into the labor market. This ought not to preclude progression or access to higher academic educational levels but the focus of the project is towards clearer workplace and industrial technical requirements not as a preparation for higher academic education. Polytechnic TVET Institutions should be measured on achieving these revised requirements through a program quality assurance and accreditation system administered by DGHE and industry. To ensure that Polytechnic education and training programs are developed and delivered for the purpose of gaining access to meaningful employment and in meeting the identified needs of employers. 20. It is proposed that the Project support the DGHE to develop and implement a clear and concise quality assurance system which includes accreditation procedures for Polytechnic programs. This system should acknowledge the introduction of industry standards and develop minimum requirements for on and off job training, assessment, facilities and equipment. This can trigger the development of educational packages that are aligned to industry standards and provide some minimum rules to support quality delivery. The DGHE will be supported to better monitor facilities and the delivery of accredited programs. The role of the DGHE shall be strengthened to better monitor quality. 21. The Project will assist the DGHE to develop and implement a quality assurance and accreditation system that supports efforts to improve the quality of programs. A standardized Polytechnic program format will be introduced utilizing a consistent approach and be packaged and aligned with the prescribed levels according to the proposed Indonesian Qualification Framework. The Project will develop and pilot a quality system for the four priority economic sector areas in which it will operate.

Appendix 2 61

22. The development of a quality assurance and accreditation system enables the DGHE to effectively implement a revised system and be able to monitor the impact of revised Polytechnic programs in meeting government plans and priorities, as well as meeting those requirements identified by industry through industry standards. The DGHE and the NAB shall be aware of the change management issues and the amount of work to be undertaken to achieve policy prescriptions. The activities to be undertaken through the Project will be limited to:

(i) The development of a program accreditation policy and procedure for DGHE and BAN-PT. Implementation will commence through trial of the developed system in the four selected priority economic sector areas – Construction, Manufacturing, Agro Industry, and Energy and Mining. The development of revised systems will be completed in Year 3 of the Project.

(ii) Review and revise quality assurance arrangements, if any, within the Polytechnic

educational system of the DGHE and BAN-PT and strengthen monitoring tools, procedures and reporting formats to better monitor implementation of revised Polytechnic programs.

(iii) By the end of Year 3 the Project will have assisted the DGHE and BAN-PT to

prepare necessary program accreditation documentation with the development of standardized templates for program accreditation. The system will include a curriculum or training package maintenance model to ensure ongoing program relevance and to support Polytechnics to improve practice and quality in the development of study programs. The system will in future apply to both public and private providers.

(iv) DGHE/BAN-PT Staff involved in monitoring Polytechnics to be trained through

piloting of the accreditation system in the 4 selected centers of excellence and their satellites in the programs developed to support the four priority economic sector selected. This training will be a total of 10 days over year 2 and 3.

(v) The Project will engage an international consultant to develop the system and to

guide initial implementation with the selected Polytechnics supported by the Project.

(vi) Revise the format for future Polytechnic programs along with the tools needed by

the DGHE and BAN-PT to audit compliance with these requirements. The minimum requirements for teaching and assessment, work shop layout, equipment and consumables will be specified within the training package which shall be monitored and reported through a program accreditation and quality assurance system.

(vii) The quality assurance model developed will also need to monitor the impact and

effectiveness of accredited Polytechnic programs in meeting their objectives and purposes. This methodology will need to be developed and applied through DGHE and BAN-PT but will also have to involve industry to ensure endorsed industry standards have been achieved and remain central to the purpose and design of programs. Monitoring tools will be prepared and provided to the consultants developing a revised enrolment and information management system for inclusion.

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STRATEGY FOR DEVELOPMENT OF LECTURERS Appendix 3: Strategy for Development of Lecturers A. Current situation 1. Traditionally, in Polytechnics teaching has been shared between two staff categories: lecturers and instructors, the lectures being responsible for the theory part, and the instructors being responsible for the practical part of the training. The academic requirement of the lecturers is minimum S2. This should ensure that the lecturers have the theoretical knowledge required to teach Polytechnic students. However, this does not ensure that the theoretical area in which the lecturer is trained is relevant for teaching in the various vocational areas at a Polytechnic. Nor does it ensure that the lecturers have the pedagogical skills needed, since the majority of lecturers did not receive any pedagogical skills training. 2. A characteristic feature of a progressive Polytechnic Education institution is that the pedagogical staff – whether lecturers or instructors - have a close professional cooperation. Lecturers must be able to tailor theoretical elements towards the vocational area, and instructors must be able to demonstrate the theoretical elements through concrete activities. Only if that happens, will the learners get a holistic experience from the teaching process. Consequently, in the PDP lecturers and instructors will be considered as one pedagogical entity, “lecturers” 3. In modern institutions like the Polytechnics, a number of specialist functions need to be catered for, like curriculum development, career guidance and counseling, contact with industry and entrepreneurship training. Functions for which, the lecturers at present are not adequately prepared. B. Constraints 4. The following lists the challenges/problems faced by the Indonesian Polytechnics in relation to the qualifications of lecturers and management as stated in the Problem Tree developed by the PPTA-project:

(i) Lack of qualified lecturers/instructors, with limited career progression, opportunities and staff incentives

(ii) Lack of a system for upgrading technical, pedagogical and other skills of teaching staff

5. According to Government Regulation #37 2009, before year 2014 lecturers must have a Master degree in order to teach at level 4, Diploma programs. But for 2009 the number of lecturers in the Polytechnics with a Masters degree is only at 33%1. The need for upgrading of lecturers in their technical fields is therefore evident. 6. The challenges facing the lecturers in the Indonesian Polytechnic system can be summarized in three clusters:

(i) the technical skills of the lecturers are not always at a sufficiently updated high level, enabling them to teach effectively to Diploma level

(ii) the lecturers do not sufficiently apply a variety of modern teaching methodologies

1 DGHE - MOEC Administration Data

Appendix 3 63

(iii) the understanding and application of industry standards and methodology is absent, although the terminology is sometimes used by individuals and institutions alike; however inappropriately to describe the present system.

7. The project will undertake initiatives to upgrade the lecturers in all of the three clusters mentioned above C. The Project Interventions 8. Through the project interventions 13 Polytechnics will be selected to act as Centers to drive the development in the sector. Each project polytechnic should act as hubs for development, supporting other polytechnics. In order to reach out to as many lecturers as possible, the Project will ensure the training of selected lecturers, who in return will train some of their colleagues. This cascading approach will be applied for two types of training to be undertaken: 1) Training in teaching methodology and pedagogy and 2) Training in specific technical areas. 9. Technical upgrading. Some 39 nominated teachers currently employed within the 13 project polytechnics and teaching in the five selected skills areas under the Project, will be provided with international training to Masters Degree level in their technical area for a period of two years. The international training will include training in standards based terminology and methodology. The program will be blended and involve overseas training as well an project based training in Indonesia. Upon completion the 39 will be expected to run courses on specific topics for their colleagues from the 13 institutions in order to cascade the knowledge and the skills they have acquired. In order to ensure that the lecturers have an updated knowledge of what the requirements are in the industries for which they train their students, a total of approximately 200 lecturers will undergo attachment in a relevant industry for 6 months. The Project will develop: (i) enterprise reporting mechanisms for each involved teacher; (ii) formal self-assessment procedures for each participating teacher, and (iii) conduct on-site reviews for a sample of trainees during the internships 10. Generic teacher training with inclusion of industry specific elements is proposed. Lecturers, approximately 4 lecturers from each of the 20 study programs will be trained by the Project as so called Master Trainers in essential elements related to the well functioning of a lecturer in a industry responsive polytechnic education system. The training will include elements like module development, contact with industry, development of short courses as well as the ability to apply a variety of instructional methods. The specific content and the specific outputs of the training will be developed by the Consultants and their counterpart(s). After completion of the training, the Master Trainers will in groups of two run training sessions for a total of 200 lecturers from the project Polytechnics as trainers of trainers (ToT). Further, specific training will be offered to selected lecturers in guidance and counseling. 11. Lecturer development through development work. Besides from the specific training activities described above, a group of lecturers, approximately 10 from each of the 13 project polytechnics, will get a substantial knowledge through active participation in the development of occupational profiles, modules, assessment guides, and teacher and learner material for the revised 20 study programs. The activities will be facilitated by project experts. 12. In summary the project will implement lecturer development activities in the following areas:

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(i) Selected lecturers will be upgraded to Masters/doctorate level abroad in their technical field

(ii) Training of Trainers (ToT), so called Master Trainers in work-based learning methodology, including student centered approaches

(iii) Training of lecturers in the COEs and satellites in the application of a variety of the student centered pedagogical methods

(iv) Training of lecturers in CBE implementation, including QA revision, assessment procedures, and accreditation system

(v) Development of 20 study programs within the five selected priority areas, including development of modules, lecturer guides, learning material, assessment instruments and assessment guides

(vi) Training of lecturers in Career Guidance and Counseling (vii) Training of lecturers in development of industry occupational standards (viii) Training of lecturers in creation of linkages with employers, including short

course development 13. In order to support the trained staff to work more closely with industry and to facilitate ongoing and further development after the completion of the project, a number of facilities and structures will be developed, implemented and left behind once the project is ended. Such structures and facilities include:

(i) Developed templates for industry occupational standards, modules, learning material and lecturer guides

(ii) Program packages for the 20 programs, selected within the five priority sectors (iii) Assessment tools (iv) In-service courses for lecturers on work place learning and pedagogy (v) Trained Master Trainers (vi) Lecturers upgraded to Master degree level in their technical areas (vii) Lecturers upgraded up to Masters degree in work based learning methodologies

(pedagogic) (viii) Developed short courses, targeting identified needs with employers (ix) Installed equipment at project polytechnics (x) Developed Student and Career Guidance material (xi) Developed system to monitor students into gainful employment.

14. The development and training activities described above should be implemented under full respect of the participants` past experience as adults under the application of a variety of teaching methods. The application should further focus on the practical applicability of the items presented. Prior to each development activity a set of Terms of Reference (ToR) should be developed, approved and communicated to the participants of the development activity. ToR should clearly state objectives, content, and expected contribution from the participants. Following each completed activity evaluation should be carried out and relevant adaptations made for future similar activities.

Appendix 4 65

PROPOSED STRATEGIES FOR STRENGTHENING INSTITUTIONAL AND MANAGEMENT DEVELOPMENT

Appendix 4: Proposed Strategies for Strengthening Institutional and Management Development A. Current Situation 1. Polytechnics in Indonesia initially emerged as the application and production arm of some of the established universities, particularly those with significant initiatives in engineering. Some of these Polytechnics are now well known as national and regional models of excellence for industry training and industry service provision. They have effective links with enterprises and cooperative procedures for trainee work experience and for program planning, design and review. Entry to such Polytechnics is currently highly competitive and graduate employment virtually assured. Some of these Polytechnics also record high levels of entrepreneurial activity by alumni after a few years of employment. These institutions will serve as models for transformation in the sector this project supports. 2. Other public Polytechnics show considerable variation in operation, performance and outcomes. In many, there appears to be a lack of any real links with industry. This applies in (i) the management of the institutions; (ii) the setting of training outcomes; (iii) program delivery, including trainee work placements; and (iv) the employment of graduates. 3. The current variation in the quality of the public Polytechnics is reinforced by the relative absence of central professional support. Each Polytechnic has essentially direct responsibility for program and training materials development and delivery; assessment systems and standards, and for industry and enterprise links. Institutes directly recruit teachers, and manage student admissions, finance, buildings and facilities. Pedagogic and professional development training for staff is almost totally an institutional responsibility. 4. Institutional Capacity Assessment. Indonesia’s National Medium-Term Development Plan 2010-2015 stresses the need for improvement of the quality and relevance of vocational education to enhance its international competitiveness and reduce unemployment. The proposed Project initiatives will aim to improve the quality of Polytechnic training to meet enterprise skills needs through the introduction of a national industry-based education and training system focused in four identified priority sectors and to industry determined standards aligned with proposed IQF. 5. Institutional assessment in the Polytechnics indicated the need for significant capacity development in order to ensure effective involvement in Project implementation as outlined. Implementation will commence with central development with specialist industry input of industry endorsed industry standards based training modules, materials and assessment in three agreed priority skills sectors. The Project will support a cluster of 12 selected Polytechnics, (six Polytechnic centres and six sister institutions each aligned to one of the sic Economic Corridors of the MP3EI) to introduce industry-based education (CBE) in the five selected sectors. 6. Implementation will take place directly through the 12 project polytechnics following local industry review and adjustment to meet identified local needs of each priority industry area. 7. Constraints. The PPTA problem tree summarises the present problems faced by the Polytechnic sector, in addressing the challenges faced by introducing a industry responsive vocational and technical education. In terms of managerial capacity the problem tree notes a:

Appendix 4

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Lack of employer engagement and graduate competitiveness, insufficient management systems, capacity development and performance incentives B. The Project Interventions 8. Institute Leadership. To facilitate timely, effective, and sustainable adoption and implementation of the key technical development initiatives of the Project through the selected institutes, the directors and vice-directors of the project polytechnics will undertake negotiate customized training to support the development, management, implementation, monitoring and supervision of revised study programs and linkages with selected industries.

9. The proposed programs will include formal specialist information sessions, workshop activities, discussions/information sharing and activities where participants are requested to develop specific material/input.

10. The specific program content will be developed to ensure that key senior system personnel develop basic understanding of the aims and procedures for more responsive study program development and the objectives of the EMP and needs of employers and industries in the five sectors, including:1

(i) Determination of industry standards (ii) Industry based training program formats, organization and development (iii) Modular training organization (iv) Accreditation of programs and links to qualifications frameworks (v) National assessment procedures and introduction and supervision of skills testing

systems (vi) Industry bodies, enterprise links, internships, work placements, private provider

and other training partnerships (vii) Lecturer and instructor work organization, duties and instructional procedures (viii) Academic supervision, program monitoring and quality assurance systems (ix) Flexible entry, RPL, alternative short course industry based training and

upgrading programs (x) Access to facilities, special equipment and training materials (xi) Articulation arrangements and defined professional pathways (xii) Strengthen industry participation in Polytechnic sector through establishment of

MOUS (xiii) Management and recording systems for work based learning (xiv) Managing and upgrading training staff and training methods for work based

learning (xv) Data management (staff, students, finance training and materials) records and

reporting (xvi) Planning and adjustment of training to meet local labor market needs and

opportunities (xvii) Analysis of specialist training needs and development/adaptation of training

programs (xviii) Student career guidance and information systems (xix) Graduate tracer and follow up.

1 Outlines of training programs summarized here are based on PPTA preliminary training needs analysis and will

require review by implementing Consultant before finalization and contracting of actual programs.

Appendix 4 67

11. Each study program group will be required to make formal presentation to the DGHE Project personnel and selected colleagues of their findings concerning the introduction and supervision of an industry based training system. 12. Follow up programs will be reviewed and modified on the basis of the review of the initial program experiences.

13. Institutional Mentoring Assistance. The Project will assist each of the nominated institutions for implementation though ongoing on-the-job assistance and performance mentoring by national consultants. The consultants will work closely with Project Team Leader and the concerned Polytechnic personnel to determine detailed agreed implementation tasks, schedules and targets consistent with the planned and agreed overall Project implementation schedules.

14. Mentoring instruments and schedules will be developed and agreed to ensure regular review against the agreed implementation plans in each participating Polytechnic. Capacity building for implementation of the agreed quality assurance initiatives will be provided for key staff in the project polytechnics. Quality assurance will be regularly mentored and procedures will be reviewed to ensure that individuals and areas of maximum need can be prioritized for direct and more intensive assistance. 15. The Project consultants will assist and mentor the project polytechnics with the implementation of the following Project initiatives: 16. Review Committees (RC). Institutional review indicated apparently high correlations between the effectiveness of Polytechnic/enterprise linkages and student employment outcomes and employee satisfaction. RC with industry association nominated representatives in the five selected priority industry areas will be established with Project support to advise on industry standards and revision of study programs and testing in each of the five nominated skills areas, and to provide continuing institute-industry linkages. Additional long term RC activities may include: (i) links to relevant enterprises for ongoing program review and program development support; (ii) internships and graduate employment; (iii) possible training partnerships, and (iv) potential formal entrepreneurial associations and/or contracted services, facilities sharing and financing. The developed Terms of Reference (ToRs) detail the composition, roles and responsibilities of the RC. 17. At local level, the project will support implementation through linking with local industry stakeholders at each of the 13 project polytechnics. These linkages will be documented in MOUs between the industry/employer and the polytechnic institution. The Polytechnic with the relevant RC shall have the authority to establish Occupational Working Groups (OWGs) for the identification of occupational profiles and the development of revised study programs. The developed ToRs detail the roles and responsibilities of consultants that will be mobilized to support study program revision and the effective operation of RCs and established working groups. 18. In order to prepare the employer representatives for their new roles as defined by the revised polytechnic system, the Project will undertake training/information to the selected employer representatives, covering areas like:

(i) Cooperation between industry and educational sector nationally and locally

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(ii) Operation and guidelines for the NSF (iii) Roles and responsibilities of the RC and any established working groups (iv) Formulation of standards (v) Revising study programs (vi) Flexible delivery opportunities that support industry participation –work based learning, internships, on job training, project driven learning, E-learning and other methods. (vii) Assessment (viii) Request for short courses

19. Training Organization and Delivery. The introduction of industry driven approaches in each of the institutions will be monitored and supported on a regular basis by national consultants as required. Specific program issues will be referred to the specialist consultants as required. 20. Polytechnic Training Information and Student Support Systems. Introduction of standards based approaches in the Polytechnics will require the development and systematic maintenance of highly specific trainee and training skills assessment record tracking systems and enhanced student support systems. Mentoring assistance will be available to assist the development of effective, relevant procedures for:

(i) Recording and tracking individual student progress against attainment of defined standards

(ii) Industry based testing and certification systems (iii) Effective results monitoring systems across all programs (iv) Teacher and student enterprise internship placement services and outcomes (v) Student job information, advisory and employment services; entrepreneurial

training; graduate follow-up/tracer and employer satisfaction reviews (vi) RPL’, continuous vocational education, informal and non-accredited training data (vii) Teacher employment, training, work placements and performance reviews. (viii) Developing and implementing tracer studies of former students

21. Alternative Program and Service Delivery. Introduction of work based and related testing and services for Recognition of Prior Learning (RPL) will create opportunities for wider training and more flexible skills training provision and industry assessment services in the five priority areas aligned to the MP3EI. The Project will support the development of continuous vocational training and education models, and the provision of training to different client groups – industry personnel, the unemployed, those requiring updated or additional skills, or who wish to change occupation. 22. Training modalities and skills assessment services organized through the industry relations units (IRU) in the institutions may involve links with SMKs, or formal partnerships (PPPs) with enterprises and/or private training organizations. They may also involve adaptation of study programs to flexible modular short courses to stated industry standards and outcomes, and with alternative structures and timing, including workplace based, evenings, and weekends. Mentoring assistance will be available to assist the review and adaptation of revised study programs and the development of appropriate training organization.

Appendix 5 69

ECONOMIC PRIORITY SECTORS

Appendix 6: Economic Priority Sectors A. Selection of Priority Sectors 1. In most middle income and developing countries decision making is hampered by the lack of accurate and valid data. In contrast, in Indonesia there is a vast amount of data on the performance of the economy and the status of the labor market. However, what is missing is a comprehensive understanding of how to use this data in order to inform policy making, particularly with regard to identifying priority sectors, how they are changing over time and their impact on the demand for skills. 2. The objective of the current research is to develop a methodology that will help identify priority sectors that should be supported under the ADB supported Polytechnic reform program. This piece of research was carried out from December 2010 to the end of January 2011. Specific attention was given to identifying those economic sectors that offer the most significant employment opportunities for Polytechnic graduates. Attempts were also made to signal what type of technician or associate technician skills are in highest demand (see technical report for specific details). By the end of February 2011, the Government announced its Economic Master Plan (EMP) with a long term vision and strategy to speed up the economic development of Indonesia in the period 2011-2015 and beyond. The EMP identifies 6 main economic corridors or key areas for development in each region based on existing economic strengths. Overall, the EMP identifies 8 economic priorities, which are (i) manufacturing; (ii) agriculture; (iii) fisheries; (iv) mining; (v) tourism; (vi) telecommunications; (vii) energy; and (viii) industrial zones. A precondition for the development of these sectors is the development of (a) key infrastructure (airports, ports, roads, etc.); (b) energy; and (c) human resources. In discussing the intended PDP with BAPPENAS, it indicated that the project should be aligned with and support the EMP. The selection of economic priority sectors therefore has taken into account both the results of the PPTA study on promising employment opportunities in the Indonesian labour market and economy, and the sector priorities identified in the EMP, as presented in sections G and H below. 3. The research investigated the increasing importance of the changing demand for technician level skills in the domestic and international labor markets. The government of Indonesia is now deliberately attempting to form bilateral agreements with governments in other countries in order to improve the conditions and pay of those Indonesians working overseas. This influenced the decision to look at international demand. When looking at the domestic market emphasis was given to identifying those sectors experiencing the highest growth and the possible impact on the demand for Polytechnic graduates. Nevertheless, the research also recognized that markets cannot alone determine priorities. Therefore, the research analyzed government and stakeholder’s perception towards what are strategic sectors. Together these approaches help provide a valid justification for the selection of three sectors. B. Background to the Study

4. The overriding objective of the proposed Polytechnic project is to ensure that graduates have the skills, knowledge and competencies to successfully enter the labor market and meet the skill requirements of employers. Against this background one of the first tasks that have to be performed is to identify what economic sectors should be supported by the project, including signals on which occupations are in highest demand.

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5. The current summary outlines (a) why it is important to adopt a sector based approach, (b) the methodological approach adopted to identify those sectors viewed as providing important employment opportunities to Polytechnic graduates, (c) the international demand for Indonesian workers overseas and in which sectors this occurs, (b) the sectors in the domestic economy which offer employment opportunities for Indonesian workers, (c) government and stakeholder’s perception of priority sectors including the recent EMP priorities, and (d) recommendations on which sectors should be supported by the Polytechnic project.

C. The Importance of Adopting a Sector Based Approach

6. A sector based approach to development attempts to ensure that alignments are achieved with policies for economic development and those for human resource development. In a global market place most middle income countries target particular sectors for economic development, normally based on their comparative or competitive advantage. This has a number of potential advantages. For one, it enables a government to support those sectors of the economy viewed as most strategic to the countries development. Second, it helps improve the efficiency or competitive advantage of organizations operating in that sector. There is a recognized consensus that skills represent one of the key ingredients for improving organizational competitiveness, especially at the technicians and middle management level where skills are in short supply. Third, and perhaps most important to the proposed project, it provides a means of linking skills development at the mid level occupations to changing sector economic priorities, helping to ensure that Polytechnics play an important part in structural changes by adjusting the type and content of learning programs to new technology, innovative management practices and other changes occurring in the labor market

D. Methods and Approaches Used in the Study

7. An elective approach was adopted involving the use of three different approaches. The first approach involved looking at the possible demand for Polytechnic graduates overseas. The research analyzed data produced by the National Board for Placement and Protection of Indonesian Overseas Workers. Adopting such an approach enabled the research to identify where a demand existed for skilled Indonesian, in what type of occupations and industrial sectors this occurred. 8. The second approach analyzed government statistical data produced by the country’s bureau of statistics to trace market trends and to identify what are the domestic priority sectors and occupations. The use of statistical data was also supported by interviews with government officials and stakeholders, especially those working in sectors identified as having good favorable opportunities for Polytechnic graduates. Through an analysis of this information it was possible to obtain signals on economic and labor market changes, and to make interpretations about the demand for different types of Polytechnic graduates. This involves a method that ‘reads-off signals about economic and labor market trends’, rather than exact data from econometric or statistical models 9. The third approach for identifying priority sectors investigated government and stakeholder’s perceptions. Specific attention was given to the BAPPENAS (the government’s central planning agency), the Ministry of Industry (the government line Ministry responsible for encouraging manufacturing output) and the country’s chamber of commerce (in order to obtain employer’s perception of possible priorities). Of special importance is the recent Economic Master Plan of the Government of Indonesia for 2011-20125 and beyond.

Appendix 5 71

10. Using the three different approaches the research produced a list of priorities. Subsequently, the research was able to identify sectors that were viewed as important by all approaches and to make recommendations of three possible sectors for support, based on their potential to support employment and also their perception as strategic by government and stakeholders.

KEY FINDINGS

E. International Demand for Technicians/Associated Technicians

11. Traditionally, Indonesia has been a net exporter of unskilled labor, but recently a number of government departments are in the process of implementing strategies to support the export of more skilled labor. Given these changes in government policy the research attempted to obtain signals on the nature of global demand for mid level skilled Indonesian workers. 12. The table 1 provides signals on the current and anticipated future vacancy for Indonesian workers overseas. The Philippines has traditionally been an exporter of skilled workers overseas, but now they can no longer respond to the rising demand and Indonesian workers are being seen as alternative. The data show there is a large demand for health workers overseas, highlighting the demographic shift towards an older population in the west. Unfortunately, this is outside the remit of the Polytechnics. Other sectors which offer potential employment for Polytechnic gradates include construction and transportation. Those occupations in highest demand appear to be: nurses/care givers, welders and other associated construction professions.

Table 1: Signals on the demand for skills Indonesian workers overseas

Region Current Vacancies and Sector Occupational Areas and Anticipated Future Vacancies

Asia Pacific

225,484 – health, building and construction and mining

Japan (Nurse, Care workers 500,000 until 2015), Korea (welder, fishing, technicians) Hong Kong (hospitality, construction workers, spa therapist) and Singapore/Malaysia (construction, welder, oil driller and chemical technicians500,000 until 2015)

Australia & New Zealand

210,000 – food processing, health, building and construction

Fruit picker, butcher, nurse(200,000 until 2015), welder(10,000 until 2015),, plumber, mechanic, automotive, construction

America & Canada

1,600,000 - –, health, building and construction and transportation

Paramedic, Nurse caregiver(1.2m until 2020), construction worker (220,000 until 2015),, spa therapist, carpenter, seafarer, warehouse manager

Middle East

400,000 - health, building and construction and transportation

Oil Driller Officer, Welder, Fitter, Automotive, Mechanics, Nurse, Caregiver(112,000 until 2015),, construction (100,000), airline crew

Europe 600,000 – transportation, health and building and construction

Seafarer, crew cruise, welder, fitter, nurse, 500,000 until 2020) spa therapist, mechanic, hospitality, construction

Africa 1,000,000 building and construction, automotive and communication

Construction workers, automotive, IT, telecommunication and hospitality

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F. Domestic Demand for Technicians/Associated Technicians 13. There is no doubt that manufacturing, followed by agriculture, and trade, hotels and restaurants are the most important contributors to economic output, contributing around 26%, 13% and 16% respectively to the country’s GDP. Nevertheless, those sub-sectors experiencing the highest growth rates over the 2004 to 2009 period, include: telecommunications (up by a massive 200%), construction (45%), transport equipment (41%), real estate (40%), wholesale and Retail (35%) and the food, beverage and tobacco sectors (31%). Within each of these sectors the research attempted to unpack these figures and through reference with other studies and discussion with employers identify the employment potential for Polytechnic graduates. 14. Telecommunications is one of the largest untapped markets within Indonesia.1 In relation to fixed phone lines there are an estimated 6.5 phone lines per 100 people, which is very low compared to levels in the region. Similarly, the penetration of mobile phones is around 45% of the population. Utilization rates for PCs and the internet is also low by regional and international comparisons. The government and the private sector are supporting a lot of capital investments in this area, especially in the following: transport networks, access networks and common services. The impact on the demand for skills can be expected to be large, particularly for the following types of occupations: civil engineers, electrical engineers/technicians, computer technicians, electronic technicians, systems analysts and supervisors. 15. With regard to construction, the Centre for Industry and Construction estimates that just over 2 million skilled jobs will be created in the sector in 2011, with demand being highest for the following: architects, civil engineers, quantity surveyors, mechanical engineers, electrical engineers and environment engineers. According to those working in the sector occupations most difficult to recruit are: civil engineers and quantity surveyors 16. For transportation equipment Indonesia has one of the large markets for vehicles in South East Asia, with sales predicted to reach 1 million per annum by 2013. The annual production of motor cycles is expected to reach 7 million by the end of 2011. There is no doubt that this will increase demand for technician and supervisor type skills. However, major producers do not always have a positive image of Polytechnic graduates and instead prefer to recruit SMK graduates and upgrade their skills through in-house training. Similarly, companies found that for supervisory positions Polytechnic graduates lack basic management foundation skills or a good understanding of the sector, and so they prefer to recruit university graduates for such positions. This suggests that if Polytechnics want to take advantage of this sector they need to improve the quality of their graduates. 17. Within the real estate sector the majority of skilled personnel working in the sub-sector is concerned with the sale and rental of property, and to a lesser extent the maintenance of such properties. Once again according to large employers in the sector there is a high demand for middle level managers, especially for those with good customer skills who could speak English or Chinese. While on the technical side good civil engineers were difficult to find. This sector is also expected to grow considerable over the next five years. 18. In relation to the food and beverage sector output will increase significantly in this sector over the next five years, particularly in the light of recent land reforms and the current emphasis given to food security. These changes will result in significant employment opportunities for operators and technicians associated with the processing, production and transportation of food 1 See: http://www.lirneasia.net/wp-content/uploads/2009/07/TRE_Indonesia_2009Mar18.pdf -

Appendix 5 73

products. This sector is viewed as very strategic by the government because of its strong backwards and forward linkages with the agriculture and whole sale and retail sector. 19. According to the largest employers working in the wholesale and retail sector sales have increased by 20% over the past 12 months, with significant opportunities to be found at the higher end of the market and in the demand for luxury goods2. It is estimated that around 40 new stores will open each year to cope with rising demand and over the next five years around 100,000 operational managers will be required G. Government and Stakeholder’s Perception of Priority Sectors

20. Most of the government’s priorities for sector development are guided by the country’s National Long-Term Development Plan (RPJMN 2010-2025), of which the country’s National Medium Term Development Plan (RPJMN 2010 to 2014) is an elaboration of how to make Indonesia a more advanced and prosperous, self-reliant, secure and peaceful, and democratic and just country. In order to achieve this vision BAPPENAS identifies a number of activities that have to take place and indicative sectors that need to be supported. In the recent Economic Master Plan of February 2011, the Government of Indonesia unfolds its strategy to realize its vision on the future economic development of the country. This vision includes a per capita income of US$ 2,600 by 2030 and a strategy that relies heavily on the private sector for its realization. The MP3EI further identifies 6 economic corridors (EC) and their potential for sector development:

(i) EC 1. Sumatra: agriculture and national energy centre. Sector focus is on palm

oil, rubber and coal. (ii) EC 2. Java: industry and services. Sector focus is on manufacturing of food

products, textiles, and transportation industries. (iii) EC 3. Kalimantan: mining and energy. Sector focus is on gas, coal and palm oil.

Future focus will also be on fisheries, wood and rubber. (iv) EC 4. Sulawesi: agriculture and fisheries. Sector focus is on food crops,

plantations, fisheries, mining of nickel. (v) EC 5. Bali-Nusa Tenggara: tourism and national food self-sufficiency. Sector

focus is on tourism, agriculture, and livestock. (vi) EC 6. Papua and Maluku: natural and human resources. Sector focus is on

mining (copper and gold), agriculture and plantations. 21. Overall, the MP3EI identifies 8 economic priorities, which are (i) manufacturing; (ii) agriculture; (iii) fisheries; (iv) mining; (v) tourism; (vi) telecommunications; (vii) energy; and (viii) industrial zones. A precondition for the development of these sectors is the development of (a) key infrastructure (airports, ports, roads, etc.); (b) energy; and (c) human resources. 22. Through an analysis of these plans and extensive discussions with senior officials the research was able to signal which sectors are being given priority for strategic or political reasons. Similarly, through discussions with Kadin, the country’s chamber of commerce, it was possible to obtain evidence of employer’s perceptions towards priority sectors. The following common sectors were identified as important by all three organizations: manufacturing (transportation), construction, telecommunication, and agro-processing. Based upon the EMP,

2 This includes the following Carrefour, Lotte Mart, Matahari, Hero Group, Giant, Guardian, and Lion,

Appendix 5

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energy and mining has also been identified as an important sector, as it is a focal sector in 4 of the 6 Economic Corridors. H. Recommended Sectors for Selection

23. The selection of sectors had to take on board the signals from the market, along with the perceptions of government and stakeholders and the priorities of the recent MP3EI. It proved a difficult task balancing the competing perspectives and different political imperatives. Nevertheless, after extensive discussions the following four sectors were selected: manufacturing, construction, agro-processing, and energy and mining. The justification can be summarized as follows:

(i) Manufacturing - this is where significant employment opportunities can be found and is also a government priority, especially for transport equipment. There is clear evidence that the market for vehicles is one of the largest outside China and the country has the capacity to respond to rising demand. In the EMP manufacturing is one of the 8 key economic priorities, also in manufacturing food products and textiles.

(ii) Agro-processing - politically this is high on the government agenda and it is expected to result in a significant number of employment opportunities in the field of agro-processing, storage and transportation. The agro-processing or food and beverage sector provides a strategic links between the agriculture and wholesale and retail sector. Moreover, in the light of the increased emphasis given to food security and increased agriculture output this sector will experience considerable growth in the near future. Agriculture is also one of the 8 key economic priorities in the EMP.

(iii) Infrastructure - outside of services and manufacturing this is where the largest number of technician and associate professional jobs can be found. The construction boom has yet to peak in Indonesia and the government anticipates that over 2 million jobs will be created over the next year. In the EMP the development of key infrastructure is mentioned as one of the required preconditions for the development of the 8 key economic priorities in the economic corridors. The construction sector has a central role in infrastructure development (airports, ports, roads, railways, etc.)

(iv) Energy and Mining – in 4 of the 6 Economic Corridors, energy and mining is a focal sector in the EMP. The project will align with the EMP in supporting skills development for the energy and mining sector including natural resources and coal mining.

(v) Tourism - this is where significant employment opportunities can be found and is also a government priority area in the EMP. Tourism development is linked to infrastructure and inclusive growth initiatives to support regional tourism hubs.

Appendix 6 75

SELECTION CRITERIA AND PROFILES OF PROJECT INSTITUTIONS AND SUMMARY OF PROJECT SUPPORT

1. Aligned to government’s Master Plan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), 2011–2025, 13 Polytechnic centers to be supported under the Project have been selected based on the following rationale. The main economic activities as defined in the MP3EI for each economic corridor have been clustered into 8 economic priority areas, including (i) Tourism and Hospitality, (ii) Agriculture and Fisheries, (iii) Resources and Minerals (Mining), (iv) Oil and Gas, (v) Shipping and Transportation, (vi)Textiles, (vii)Food processing and Beverage Services, and (viii) Manufacturing. The project will work with 5 of these areas – Tourism, Agriculture, Mining, Manufacturing and Infrastructure. 2. The selection of the 13 Polytechnic institutions was based on the following considerations: (I) Relevance of study programs offered by the polytechnic in relation to the main economic

activities identified by the MP3EI for each corridor. (II) Results of a comprehensive performance evaluation carried out by DGHE in 2010,

whereby polytechnics were rated into good, fair, and poor based on agreed indicators. (III) Qualification and competence of human resources at the polytechnics (management,

lecturers and staff); (IV) Enrollment data of students ( the higher the enrollment, the higher the score) (V) Accreditation results of BAN-PT (VI) Amount of funds received from other sources (primarily APBNP) during the last 2 years (VII) Evidence of strong partnership arrangements with industry (VIII) Experiences in implementing foreign-assisted loan projects (IX) Tracer information of graduates, evidence that graduates are absorbed by the labor

market (X) Ability to demonstrate premium examples for improving the quality and relevance of

study programs and industry partnerships to be replicated countrywide.

3. The distribution of polytechnics supported under the project across the six economic corridors followed the actual demand and supply patterns, considering (i) the unequal demand for skilled labor and different levels of main economic activities at each economic corridors as identified by the MP3EI, and (ii) the number of existing polytechnics at each economic corridors, and subsequent diverse enrollments levels at the six economic corridors. 4. Hence, three polytechnics have been selected for Corridor 1 (Sumatera) and corridor 2 (Java); two polytechnics have been chosen for corridor 3 (Kalimantan), corridor 4 (Sulawesi), and corridor 5 (Bali, Nusa Tenggara), while in corridor 6 (Papua, Kepulauan Maluku) one polytechnic institution was selected. Table 7.1 provides an overview of the economic focus at the six corridors and the selected center polytechnic institutions, and Table 7.2 provides information indicative program development relevant with the focus of economic development in each corridor:

76 Appendix 6

Table 7.1. Focus of Industry in the Six Economic Corridors and the Proposed Polytechnic Centers to be assisted by the Project.

Corridor & Focus Selected Polytechnic Center Number

of lecturers

Number of students

1 Sumatera Mining (coal) Polytechnic Padang 254 2,566 Agro-industry (palm oil and

derivative products) Polytechnic Pertanian Payakumbuh

126 497

Agro-industry (Rubber and derivative products)

Polytechnic Lampung 127 977

2 Java Manufacture (transportation

industry) Polytechnic Manufaktur Bandung

119 697

Infrastructure (roads, bridges, irrigation, airports)

Polytechnic Bandung 464 3,476

Manufacture (food industry) Polytechnic Jember 156 1,906 3 Kalimantan Agro-industry (Rubber and

fishery products) Polytechnic Pontianak 228 1,883

Mining (coal) Polytechnic Samarinda 236 2,301 4 Sulawesi Manufacture (agro-industry-

based) Polytechnic Manado 302 1,639

Mining (nickel) Polytechnic Ujungpandang 248 2,516 5 Bali, NTB and NTT (West and

East Nusa Tenggara)

Tourism Polytechnic Bali 333 1,476 Agriculture/agroindustry Polytechnic Agriculture Kupang 135 792 6 Papua and Maluku Manufacturing to support

Mining, Agriculture, Plantation Polytechnic Ambon 221 1,666

Table 7.2 Selected Polytechnic Institutions: Programs and Support under the Project

Corridor 1: Sumatra Public Polytechnic: Padang Program Area: Mining (Coal) Project Provision: Program development related to mining in supporting coal exploration, coal processing, production and maintenance of equipment for exploration and processing of coal; Equipment: Laboratory equipment for center of technology to support mining industry including primary and secondary processing; and supporting industry. Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for related competencies of the focus sector Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials. Public Polytechnic: Lampung Program Area: Agro Industry (Rubber and/or Palm Oil and derivative products).

Appendix 6 77

Project Provision: Program development related to agro industry for palm oil and/or rubber and its derivative industry, production and maintenance of related equipment. Equipment: Laboratory equipment for center of technology to support the primary, secondary and supporting industry related to agro industry Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for teaching methodology; Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials. Public Polytechnic: Payakumbuh Program Area: Agro-industry (Palm oil and/or rubber, and derivative products) Project Provision: Program development to support agro-industry for palm oil, rubber and its derivative products, production and maintenance of related equipment; Equipment: Development of laboratory and center of technology to support the primary, secondary, and supporting industry for agroindustry. Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for teaching methodology; Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials Corridor 2: Java Public Polytechnic: POLMAN-Bandung Program Area: Manufacturing (Transportation Industry) Project provision: Developing center of technology, upgrade and extension for workshops/laboratories of: Machine Tools Workshop, Design Laboratory, Maintenance Workshop, Mechatronic Workshop, Electrical Workshop. Equipment: Manufacturing packages for: Production Machine Tools and its accessory/tool, Maintenance Equipment, Designing Software and Hardware. Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for teaching methodology; Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials. Public Polytechnic: Bandung Program Area: Infrastructure (Road, Bridges, Irrigation, Airport Construction) Project provision: Program development related to engineering design, construction, management and supervision of construction work, production of equipment for construction work; Equipment: Laboratory equipment for center of technology to support primary industry, secondary industry, and supporting industry for infrastructure. Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for teaching methodology; Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials Public Polytechnic: Jember Program Area: Manufacturing to support agroindustry (Food Products) Project Provision: Program development to support agro-industry for processing food products, packaging; Equipment: development of laboratory and center of technology to support the primary, secondary industry, and supporting industry for food industry. Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for teaching methodology; Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials Corridor 3: Kalimantan

78 Appendix 6

Public Polytechnic: Pontianak Program Area: Agro-industry (Fisheries and/or Rubber/Palm Oil) Project Provision: Program development to support agro-industry for fisheries, rubber industry, production of related equipment; Equipment: development of laboratory and center of technology to support the primary, secondary industry, and supporting industry for fisheries/rubber. Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for teaching methodology; Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials Public Polytechnic: Samarinda Program Area: Mining (Coal) Project Provision: Program development related to mining in supporting coal exploration, coal processing, production and maintenance of equipment for exploration and processing of coal; Equipment: Laboratory equipment for center of technology to support mining industry including primary and secondary processing, and supporting industry; Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for related competencies of the focus sector Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials. Corridor 4: Sulawesi Public Polytechnic: Manado Program Area: Manufacturing to support Agro Industry (Fisheries, Plantation, Food Crop) Project Provision: Program development related to agro industry for fisheries and/or plantation and/or food crop processing; Equipment: Development of laboratory equipment and center of technology to support agro industry in fisheries and/or plantation and/or food crop processing; Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for teaching methodology; Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials. Public Polytechnic: Ujung Pandang Program Area: Mining (Nickel) Project Provision: Program development related to mining in supporting nickel exploration, nickel processing, production and maintenance of equipment for exploration and processing of nickel; Equipment: Laboratory equipment for center of technology to support mining industry including primary and secondary processing, and supporting industry; Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for related competencies of the focus sector Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials. Corridor 5: Bali, NTB and NTT Public Polytechnic: Bali Program Area: Tourism Project Provision: Program development to support tourism industry including development of tourism objects, services in tourism-related industry, production and marketing of tourism; Equipment: laboratory equipment to support tourism industry

Appendix 6 79

Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for related competencies of the focus sector Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials. Public Polytechnic Agriculture Kupang Program Area: Agro Industry (agriculture and animal husbandry) Project Provision: Program development to support agro industry (agriculture and animal husbandry) Equipment: Development of laboratory and center of technology to support the primary, secondary industry, and supporting industry for agro industry (agriculture and/or animal husbandry) Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for related competencies of the focus sector Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials. Corridor 6: Papua and Maluku Public Polytechnic: Ambon Program Area: Manufacturing to support agriculture, mining, and plantation Project provision: Program development to support product design of equipment for mining, plantation, agroindustry; service/maintenance of equipment; Equipment: laboratory equipment and center of technology for both primary and secondary industry to support mining, agriculture, and plantation. Training: Management Training for Top Management and Head of Departments/Divisions. Lecturer Training for related competencies of the focus sector Further study (Magister) in the related competencies. Training materials: Training for composing modular training materials.

80 Appendix 7

GUIDELINES For the National Skills Fund (NSF)

Appendix 8: Guidelines for the National Skills Fund (NSF) A. Objectives 1. A National Skills Fund (NSF) fund will be established under the project. The funding for individual Project polytechnic will be channeled through the imprest account at the Bank of Indonesia. The funds flow is described in Section IV.F and IV.G; disbursement arrangements are described under Section V.B. The NSF will provide a number of windows through which Polytechnic Institutions in collaboration with their selected Industry Partners can access funds for skills development initiatives aligned with meeting the objectives of the MP3EI in five sectors. The NSF aims to:

(i) Provide polytechnic institutions with resources to revise and implement study programs that meet identified industry skills needs;

(ii) Support polytechnic institutions to improve quality of skills development relevant to industry demand;

(iii) Upgrade equipment and materials to ensure learners are equipped with job ready skills;

(iv) Improve access and equity to skills development - aligned with the objectives of the MP3EI 2011 – 2025 to create jobs and expand development to poorer regions.

(v) Improve lecturer and management skills of the project polytechnics; (vi) Support applied research initiatives relevant to the 5 priority sectors being

supported by the Project. B. Principles 2. The following principles will guide the operation of the National Skills Fund. The Application Process and the Selection Criteria require applications to:

(i) Align proposed support/activities with Government of Indonesia policies, priorities and operational plans for education, skills development and employment, and promote the industry growth objectives of the MP3EI 2011-2025;

(ii) Work through and strengthen existing polytechnic Institutions to build local capacity to better service the skills development needs of employers;

(iii) Give particular focus to gender equality; (iv) Take a long-term perspective and demonstrate how the proposed activity will

develop partnerships between polytechnics, employers and industry groups to achieve sustainable outcomes.

Appendix 7 81

C. Application Process 3. To be eligible for funding, proposals must:

(i) Be aligned with or support GOI policies, priorities and operational plans for education, including support for access and equity, skills development and employment;

(ii) Address specific requirements of the MP3EI and details how the project responds to identified employer needs in the priority industry sectors;

(iii) Ensure that the specific social and economic needs of both men and women are addressed and that opportunities for women to participate as decision makers in determining objectives and types of activities, are increased;

(iv) Provide good value for money; (v) Create quality skills for Indonesian citizens to contribute towards industry

development and which increases employment and income earning opportunities;

(vi) Indicate the level of counterpart support (employer and polytechnic institution) – financial, administrative, logistical, human resource, on job training and in-kind;

(vii) Produce sustainable, measurable benefits consistent with the Objectives and Principles of the DGHE sector policies.

(viii) Indicate the outcomes, outputs and activities, together with the annual targets, related costs, and implementation mechanisms.

(ix) Provide detailed terms of reference, budget amounts, for the proposed activities to be undertaken with NSF funds.

(x) Establish a PIU to ensure the timely and accurate implementation and monitoring of the NSF funded project.

4. Proposal can include:

(i) Procurement of equipment and materials, funding of scholarship, capacity building for staff and lecturers, and research activities in the five economic sectors supported by the project.

(ii) Promotion of the innovations introduced by the Project, including CTS, RPL, Continuing Vocational Education (PVB), short courses for adult, and enhancing entrepreneurial skills;

5. Support will NOT be provided for proposals that seek funding for:

(i) Activities that are determined reasonably to be contrary to the interests of the Government of Indonesia;

(ii) Activities that support independence movements; (iii) Evangelism or missionary outreach, or similar activities by political organizations; (iv) Welfare activities (welfare is defined as care and maintenance or social support); (v) Emergency relief activities; (vi) The provision of administrative support services that exceeds 10% of the total

project costs; (vii) Proposed activities that are funded through other government or development

partner projects. (Organizations seeking NSF must declare all other proposals or sources of funding which may impact on the activity);

(viii) Retrospective activities; (ix) Travel expenses that exceed 10 % of total project costs, or;

82 Appendix 7

(x) The provision of equipment exceeding 50% of the total project costs. (xi) Civil work and building materials;

D. Eligibility of Recipient Organizations 6. All accredited public and private polytechnics offering study programs in the five priority sectors supported by the project are eligible for applying the NSF. E. Funding 7. Total amount available for NSF is $38.10 million. NSF will be allocated for polytechnics in all six corridors, the allocation per corridors will be defined in relation to the number of polytechnics and the enrollment of polytechnic student in each corridor as shown in Table A.8.1. Polytechnics from each corridor will compete among each other within the corridor. Table A.8.1. Indicative Allocation of NSF among Corridor of the MP3EI

Corridor Total 1 2 3 4 5 6

Student Enrollment 24,045 59,449 8,804 5,522 2,813 3,038 103,671 23% 57% 8% 5.3% 2.7% 3.8% Number of Polytechnics 40 92 15 9 7 9 172(public and private) 23% 53% 9% 5% 4% 5% Share of NSF allocation per corridor (%)

23% 55% 9% 5% 3% 5%

Indicative amount of NSF per Corridor ($.000)

8,763 20,955 3,429 1,905 1,143 1,905 38,100

8. When applying for funds, applicants should note the following:

(i) Projects can be of either a short term intervention or for a longer term (up to 3 years).

(ii) All proposals will be assessed against the set criteria. (iii) Recipient polytechnic needs to have clear management roles and systems to

account for funds received. (iv) Each proposal should include at least 5% for scholarship provision for poor

students; Each Polytechnic institution may receive the funds up to $2,500,000. (v) Unit costs for scholarships per student are estimated to amount to $1,200 per

annum to cover tuition, stipend, transport, and books. (vi) Research activities can range from $20,000 to $100,000, depending on the focus

of the research. (vii) For public polytechnics, NSF funds will be channeled through the DIPA

mechanism.

Appendix 7 83

(viii) For private institutions, DGHE will transfer the NSF allocation to a commercial bank which will be accounted for separately from any other funds the institutions may have.

F. Application submission 9. The applicant must complete the Application Form that will be developed by the PMU. G. Application assessment 10. Funds are limited, so only the best activity proposals are selected. The proposal will be reviewed by a review committee (RC) which consists of a pool of at least 20 experts from respected industry and MOEC/polytechnic/higher education. The committee will be appointed by the Project Director within 3 months after loan effectiveness. Proposal will be reviewed based on:

(i) Relevance to the economic priorities of the MP3EI (ii) Demand driven, based on industry needs (iii) Support employment creation (iv) Strengthening quality of teaching and learning environment (v) Partnerships with private sector/cooperation with industries (vi) Fostering entrepreneurship creation (vii) Supporting technology innovation (viii) Contribution to the achievements of the project outputs and DMF indicators (ix) Demonstrate the sustainability of the proposed investments; operation and

maintenance expenditures are covered (x) Increase enrollment rates (xi) Good governance arrangements are in place (xii) Polytechnics students will find employment after graduation (within 6 months),

reduced waiting time to find the first job H. Application selection

(i) Detailed formats for proposals will be prepared by the PMU and approved by the EA, at least 3 months after loan effectiveness

(ii) The agreed proposal format and the guidelines of the NSF will be communicated to all public and private polytechnic institutions, at least 3 months after loan effectiveness

(iii) Proposals from public and private polytechnics will be submitted to the PMU, who will initially classify the proposals in relation to the economic corridors and create a short-list of applications that are completed correctly, provide required documentation and meet these guidelines.

(iv) Within three weeks of close of submission date, the Review Committee (RC) will meet to select the best proposals from a short-list. The RC will review and appraise proposals and make recommendations to the DGHE through the PMU.

(v) Recommendations of the RC are submitted to the PMU in DGHE MOEC. The PMU and the DGHE will consider within 10 Working Days, and be guided by, the recommendations of the RC and approve the proposals to be funded through the National Skills Fund.

84 Appendix 7

(vi) The PMU will then engage with the successful applicant to prepare a contract for the disbursement of funds.

(vii) Applicants can contact and engage with the PMU and DGHE for information and advice on the preparation of submissions, the operations of the National Skills Fund, the outcomes of the assessment and approval process through making an appointment with the PMU Project Manager.

(viii) The PMU will keep all records of the operations of the National Skills Fund including rejected proposals and any associated documents.

I. What happens if a proposal is selected for funding?

(i) Successful applicants will be contacted and invited to discuss the implementation plan before receiving funds. This plan will also detail the monitoring and evaluation process that will be applied to the project/activity.

(ii) An Agreement or other such Contract of Service will be signed between the head of the organization (the recipient of NSF funds) and DGHE. The specific form of agreement or contract of service will be determined by DGHE according the ADB requirements and notified to the successful applicant within 10 working days of the formal notification that a proposal has been approved.

(iii) Funding will be transferred to the organization bank account. The money must go into the organization’s bank account, not into a private bank account. DGHE will determine payment schedules based on funding amount and project duration.

(iv) The organization will receive regular visits from the PMU who will monitor and evaluate the activity, receive progress reports and to see how funds are being used (including administration). The PMU will discuss progress in meeting objectives and assess the satisfaction level of stakeholders/beneficiaries.

(v) At the end of the Activity the PIU will provide an Activity Completion Report including financial acquittal to be submitted to the PMU.

(vi) Reports have to be submitted one month after the activity is finished, and include original receipts for all expenditures.

J. Successful applications will require the following actions to be undertaken prior to the disbursement of funds:

i. Each polytechnic supported by the NSF will be required to establish a PIU. PIU duties and responsibilities are described in Section III of the PAM.

ii. The polytechnic recipient of the NSF will need to sign a performance contract with DGHE.

iii. Each polytechnic institution will identify disadvantaged student applicants (from unemployed, informal sector, SMKs) and declare these students to be eligible to receive funding. Each student will receive funding with a value not to exceed $1,800 a year as access support to diploma programs. (funding support to be reviewed by DGHE each year)

iv. All financial transactions shall be recorded by the PIU accountant for submission to the PMU and be in compliance with government procedures.

v. Subsequent NSF tranches will be released based on the submission of approved financial records, including supporting documents (i.e. receipts, attendance list, equipment list, etc.) to liquidate the previous tranche.

Appendix 7 85

K. Audit, monitoring and reporting. 11. Each PIU will prepare the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to PMU within 3 months of the end of the fiscal year by the executing agency. 12. The PIU Manager of the Project polytechnic who signed the Agreement Letter must:

(i) Coordinate and monitor the whole process of activity implementation. (ii) Manage and process NSF funds in a transparent and accountable way. (iii) Communicate to the PMU and Project Manager regularly during the

implementation process. (iv) Participate in the monitoring and evaluation activities of the PMU. (v) Prepare and submit an Activity Completion Report (see Appendix 4) to the PMU

based on the Agreement within one month of the activity finishing, including all original receipts reconciled against the approved budget.

13. The PMU will establish grievance mechanism which will allow to report possible misuse of funds or any other regularities. The guidelines for grievance mechanism will be approved by the EA within six months after loan effectiveness.

86 Appendix 8

FINANCIAL MANAGEMENT ASSESSMENT Appendix 9: Financial Management Assessment 1. A Financial Management Assessment (FMA) has been carried out for the Directorate General of Higher Education (DGHE), Ministry of Education and Culture (MOEC) of Indonesia. This assessment includes a review of the executing agencies’ (EA) systems for financial and management accounting, reporting, auditing and internal controls. In addition, the FMA involves a review of the disbursement and cash flow management arrangements. It is a review designed to determine whether or not the EA’s financial management arrangements are considered capable of an adequate for recording all transactions and balances, supporting the preparation of regular and reliable financial statements, safeguarding the entities’ assets, and are subject to audit. Use has been made of ADB’s Financial Management Assessment Questionnaire (FMQ) and the Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB. In line with the ADB’s new processing procedures for loans, a financial management assessment was completed for the project taking into account country level issues and the EA’s long experience in the management of ADB financed projects. MOEC has adequate accounting staff equipped with appropriate financial accounting and reporting system and procedures on flow of accounting, financial, and project physical progress related to their current project activities. A. Review of Previous Reports 2. Several documents were consulted prior to undertaking the financial management assessment of the Ministry of Education and Culture (MOEC): ADB, Guidelines on Financial Management Assessment (FMA); Indonesia: Good Governance and Anticorruption: The Road Forward for Indonesia, ADB; Public Financial Management (PFM) Performance Report, World Bank 2007; Public Expenditure and Financial Accountability, World Bank 2007. There have however not been previous financial management assessments undertaken for MOEC. B. Key Findings 3. The FMA found that: (i) there will be a need to improve coordination of management, inspection, and monitoring of financial management procedures between DGHE and the PMU/PIU; (ii) financial management systems in DGHE need to be integrated into a fully-functioning performance-based system (planning, budgeting, monitoring and control); (iii) effective financial performance monitoring system is required, particularly at the COEs and satellite institutions, to measure the impact and utilization of funds; (iv) a financial management operational procedures manual and related training should be provided to these institutions; (v) the financial unit in DGHE needs to be expanded, with clearly defined duties, responsibilities, lines of supervision and limits of authority and (vi) a computerized financial management reporting system (user friendly software) at the COEs and satellites is required for improved efficiency and effectiveness. 4. To address these issues, financial management specialists under the Project will build capacity within MOEC in financial planning, accounting, reporting, auditing and control. The consultants will develop and install a performance-based planning and budgeting system, in consonance with the modernized accounting system of the government. They will enhance the computerized financial management system in the PMU, PIUs in the COEs and satellite institutions, consistent with the national FMIS designed by MOF. HEI finance staff will be trained in financial planning, preparation of budgets, financial analysis and reporting, and internal controls. The consultants will also ensure that the financial management information system (FMIS) used by the PMU/PIU is better integrated with the MOEC and MOF system. The key findings are as follows:

Appendix 8 87

5. Accounting Policies and Procedures. The chart of accounts is adequate to properly account for and report on project activities and disbursement categories. Cost allocations to the various funding sources are made accurately and in accordance with established agreements and the General Ledger and subsidiary ledgers are reconciled and in balance. All accounting and supporting documents are retained on a permanent basis in a defined system that allows authorized users easy access. The accounting system of DGHE allows for the proper recording of project financial transactions. There is already an established procedure for recording the transactions, record keeping and reports, and cost accounting (including cost control and analysis). MOEC follows a modified accrual-based accounting system. The accounting policies are found consistent and the reporting framework of its financial performance is in accordance with project requirement. The Government, through the PMU/PIUs, will set up and maintain separate project accounts and record by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices. 6. Segregation of Duties. Functional responsibilities are segregated between the various functions of recording and cash management. The finance head in DGHE has authority in executing transaction of goods and services, recording of transactions are carried out by account officers at PMU/PIU level and the cashier is the custodian of assets obtained through the transactions. Ordering, receiving, accounting and paying functions are segregated. Hence, there is proper accounting control between the recording and cash disbursement functions. DGHE, MOEC has implemented 8 projects by international financial institutions during the last 4 decades. MOEC has full control on overall projects activities. 7. Budgeting System. The current budgeting system of the EA and related PMUs/PIUs is mandatory and follows the financial regulation specified by MOF. Improvements in budget execution processes have been evidenced since the introduction of the Public Financial Management (PFM) laws, which included unified budgeting, Medium Term Expenditure Forecasting (MTEF), performance-based budgeting, single treasury account. Key strengths pertain to transparency and comprehensive budget documentation, a well defined budget process with both executive and legislative adhering to the schedule, a classification which complies with international standards and a strengthened external audit function. The government has implemented performance based budgeting.. However, the execution of performance-based budgeting has been limited, losing its effectiveness as a management tool. Key weaknesses were identified across various dimensions of the budget execution such as financial reporting and internal controls. There is a need for the Polytechnic education sector to convert its strategic plan into medium term action plans to allow the RENSTRA to naturally incorporate sector strategies into the medium term resource allocations. Polytechnic sector medium term expenditure framework is not currently prepared. The COEs and satellite institutions likewise need to conform to the MOF FMIS, and enhanced towards performance based budgetary system. Currently, ADB’s existing PMUs prepare its own budget plan according the given MOEC guidance and present to MOEC management for approval. Government funded budgets will need to be included in the respective institution’s budgets and this will require coordination between MOEC, participating Polytechnics and MOF to ensure completeness. 8. Safeguard over Assets. There are systems of adequate safeguards to protect assets from fraud, waste and misuse. However, asset values are not regularly updated, and physical verification of assets and reconciliation with records is not being done on a regular basis. Consistent with government accounting, assets are not depreciated. 9. Financial Reporting. The accounting and reporting requirements of the DGHE are maintained in accordance with government rules and regulations. Financial statements are

88 Appendix 8

prepared regularly as required by MOF by DGHE. Based on the financial management assessment, the reporting system is already fully adapted to report on the Project outputs. Separate accounting records are maintained for projects in parallel to the government accounting system. The financial management reporting responsibilities, required content of financial report and how to use it are specified in government FMIS and guidelines issued by MOF. The financial management system is computerized, with financial reports generated automatically. There is need, however, to improve the current information plans to incorporate the project accounts of the Project and ensure that these are reflected accurately in the financial reporting system of the EA and selected Polytechnic institutions. Likewise, Polytechnic institutions’ FMIS need to be strengthened to conform to both ADB and GOI requirements. 10. Management of accounting information has adequate levels of safeguards, with sufficient confidentiality, integrity, and availability of data. The primary control over expenditure is the budget allocation. Another point of internal control is the Treasury that ensures that the payment is genuine and within budgetary limits. However, the financial function of the DGHE still needs further modernization to ensure adequate financial recording and reporting. 11. Internal audits. The internal audit function is sufficiently strong across the Government of Indonesia and there is currently an internal audit (inspector general) function in the MOEC. The internal audit function, however, is focused only on legislation compliance rather than financial performance and internal controls. It is recommended that external audits by qualified auditors will be conducted to identify financial weaknesses and irregularities for the project. 12. External audits. The final or external audit at the end of each fiscal year is conducted by the external audit institution Badan Pemeriksa Keuangan (BPK). There is no delay in the audit of MOEC. Audit is conducted as per the GOI’s rules and regulations, which are as based on Indonesia’s auditing standards set by the Government. These are also in compliance with international auditing standards. However, external audit reports indicate that further work is needed to ensure the reliability of financial statements. 13. Staffing. DGHE has extensive experience in administering donor funded projects. With the current workload and complexity of the accounting system, the numbers of accountants and their qualifications can be considered sufficient for successful implementation of the project. Adequate financial procedures and controls already exist. However, there is no planning unit in MOEC. The finance department needs to strengthen the capacity of staff to perform the proposed improvement in the planning and budgeting system under the project. 14. Recommendations. The EA’s capacity to undertake the financial management function for the project is adequate. The financial departments of the DGHE and related PMUs/PIUs are capable and experienced for financial management of the annual operation and maintenance of the system with additional training and software improvement. Some PIUs have had experience in management of disbursements from international funded projects/programs. The Polytechnic institution’s financial management capacity however still need to be assessed further, and capacity and financial systems have to be developed under the project. Hence, it is necessary to organize a training course on financial management as well as project accounting and disbursements from ADB for the new PMU/PIU staff. Strengthening capacity of the PIUs on ADB and Indonesia procedures in bidding, procurement and finance are necessary to mitigate the potential delays in release of ADB funds for the project. Further, the consultants will support the project planning processes for the Polytechnic institutions reducing the risk that their budgets are not incorporated. The project monitoring systems will be upgraded, to support the performance and compliance monitoring required under the Project.

Appendix 9 89

PROCUREMENT CAPACITY ASSESSMENT AGENCY QUESTIONNAIRE

Appendix 10: Procurement Capacity Assessment Agency Questionnaire Risk Ratings Extremely High High Average Low

I. Specific Assessment and Ratings

Question Answer/Finding Risk A. ORGANIZATIONAL AND STAFF CAPACITYA.1. How many years experience does the head of the procurement department/unit have in a direct procurement role?

The procurement expert in the core team has more than 10 years in a direct procurement role.

A.2. How many staff in the procurement department/unit are:

Normally 4 to 6, with about 3 or 4 full time staff.

i. Full Time? ii. Part Time? iii. Seconded?

A.3. Does the procurement staff have English language proficiency?

Yes

A.4. Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project?

Yes with limited number of packages

A.5. Does the unit have adequate facilities, such as PCs, internet connections, photocopy facilities, printers, etc., to undertake the planned procurement?

Yes

A.6. Does the agency have a procurement training program?

Yes

A.7. Does the agency have a Procurement Committee that is independent from the head of the agency?

No

A.8. Does the agency have a procurement department/unit, including a permanent office that performs the function of a Secretariat for the Procurement Unit, and which serves as the main support unit of the Procurement Committee??

Minister of National Education recommended that higher educational institutions to establish a procurement unit. Some of institutions have had a permanent procurement office. If not, under the Project, the institution is required to establish one.

A.9. If yes, what type of procurement does it undertake?

Mostly procurement of goods.

A.10. At what level does the department/unit report (to the head of agency, deputy etc.)?

Dean or Rector.

A.11. Do the procurement positions in the agency have job descriptions, which outline specific roles, minimum

Yes, but no career routes.

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Question Answer/Finding Risk technical requirements and career routes? A.12. Is there a procurement process manual for goods and works?

For the established one, yes.

A.13. If there is a manual, is it up to date and does it cover foreign-assisted projects?

No.

A.14. Is there a procurement process manual for consulting services?

Yes, following prespres 54/2010.

A.15. If there is a manual, is it up to date and does it cover foreign-assisted projects?

No.

A.16. Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects?

There is standard documents in use, but have not been approved for use on ADB funded projects.

A.17. Does the ToR follow a standard format such as background, tasks, inputs, objectives and outputs?

A.18. Who drafts the procurement specifications?

The user unit and the committee.

A.19. Who approves the procurement specifications?

Normally, the user unit.

A.20. Who drafts the bidding documents?

Normally, the committee

A.21. Who manages the sale of the bidding documents?

Normally, the committee

A.22. Who identifies the need for consulting services requirements?

Normally, the user unit.

A.23. Who drafts the terms of reference (ToR)?

Normally, the user unit.

A.24. Who prepares the request for proposals (RFPs)?

Normally, the user unit in cooperation with the committee

B. INFORMATION MANAGEMENT B.1. Is there a referencing system for procurement files?

Don’t know.

B.2. Are there adequate resources allocated to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the agency?

Don’t know.

B.3. For what period are records kept? Don’t know. B.4. Are copies of bids or proposals retained with the evaluation?

Don’t know.

B.5. Are copies of the original advertisements retained with the pre-

Don’t know.

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Question Answer/Finding Risk contract papers? B.6. Is there a single contract file with a copy of the contract and all subsequent contractual correspondence?

Don’t know.

B.7. Are copies of invoices included with the contract papers?

Don’t know.

C. PROCUREMENT PRACTICES Goods and Works C.1. Has the agency undertaken foreign-assisted procurement of goods or works recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.)

No, foreign assistance is in form of physical grants.

C.2. If the above answer is yes, what were the major challenges?

N.A.

C.3. Is there a systematic process to identify procurement requirements (for a period of one year or more)

Yes, mostly for state university that has state budget subsidiary.

C.4. Is there a minimum period for preparation of bids and if yes how long?

Normally following Perpres 54/2010.

C.5. Are all queries from bidders replied to in writing?

Yes

C.6. Does the bidding document state the date and time of bid opening?

Yes

C.7. Is the opening of bids done in public?

Yes

C.8. Can late bids be accepted? Yes C.9. Can bids be rejected at bid opening?

In some cases yes

C.10. Are minutes of the bid opening taken?

Yes

C.11. Who may have a copy of the minutes?

The user unit and bidders

C.12. Are the minutes free of charge? Yes C.13. Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)?

Both

C.14. What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation?

Usually, engineer or management

C.15. Is the decision of the evaluators final or is the evaluation subject to additional approvals?

Subject to additional approvals.

C.16. Using at least three real examples, how long does it normally

3-4 months.

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Question Answer/Finding Risk take from the issuance of the invitation for bids up to contact effectiveness? C.17. Are there processes in place for the collection and clearance of cargo through ports of entry?

Yes

C.18. Are there established goods receiving procedures?

Yes

C.19. Are all goods that are received recorded as assets or inventory in a register?

Yes

C.20. Is the agency/procurement department familiar with letters of credit?

Yes

C.21. Does the procurement department register and track warranty and latent defects liability periods?

Yes

Consulting Services C.22. Has the agency undertaken foreign- assisted procurement of consulting services recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.)

No.

C.23. If the above answer is yes, what were the major challenges?

N.A.

C.24. Are assignments and requests for expressions of interest (EOIs) advertised?

N.A.

C.25. Is a consultants’ selection committee formed with appropriate individuals, and what is its composition (if any)?

N.A.

C.26. What criteria is used to evaluate EOIs?

N.A.

C.27. Historically, what is the most common method used (QCBS, QBS, etc.) to select consultants?

N.A.

C.28. Do firms have to pay for the RFP document?

N.A.

C.29. Does the proposal evaluation criteria follow a pre-determined structure and is it detailed in the RFP?

N.A.

C.30. Are pre-proposal visits and meetings arranged?

N.A.

C.31. Are minutes prepared and circulated after pre-proposal meetings?

N.A.

C.32. To whom are the minutes distributed?

N.A.

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Question Answer/Finding Risk C.33. Are all queries from consultants answered/addressed in writing?

N.A.

C.34. Are the technical and financial proposals required to be in separate envelopes?

N.A.

C.35. Are proposal securities required?

N.A.

C.36. Are technical proposals opened in public?

N.A.

C.37. Are minutes of the technical opening distributed?

N.A.

C.38. Do the financial proposals remain sealed until technical evaluation is completed?

N.A.

C.39. Who determines the final technical ranking and how?

N.A.

C.40. Are the technical scores sent to all firms?

N.A.

C.41. Are the financial proposal opened in public?

N.A.

C.42. Are minutes of the financial opening distributed?

N.A.

C.43. How is the financial evaluation completed?

N.A.

C.44. Are face to face contract negotiations held?

N.A.

C.45. How long after financial evaluation is negotiation held with the selected firm?

N.A.

C.46. What is the usual basis for negotiation?

N.A.

C.47. Are minutes of negotiation taken and signed?

N.A.

C.48. How long after negotiation is the contract signed?

N.A.

C.49. Is there an evaluation system for measuring the outputs of consultants?

N.A.

Payments C.50. Are advance payments made? Yes, according to the regulation of

Perpres 54/2010

C.51. What is the standard period for payment included in contracts?

30 days

C.52. On average, how long is it between receiving a firm’s invoice and making payment?

1-2 months

C.53. When late payment is made, are the beneficiaries paid interest?

No.

D. EFFECTIVENESS D.1. Is contractual performance Yes

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Question Answer/Finding Risk systematically monitored and reported? D.2. Does the agency monitor and track its contractual payment obligations?

Yes

D.3. Is a complaints resolution mechanism described in national procurement documents?

Yes

D.4. Is there a formal non-judicial mechanism for dealing with complaints?

Yes (National Arbitrary Agency)

D.5. Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment?

Yes

E. ACCOUNTABILITY MEASURES E.1. Is there a standard statement of ethics and are those involved in procurement required to formally commit to it?

Yes, Integrity Pact

E.2. Are those involved with procurement required to declare any potential conflict of interest and remove themselves from the procurement process?

Yes

E.3. Is the commencement of procurement dependent on external approvals (formal or de-facto) that are outside of the budgeting process?

Yes

E.4. Who approves procurement transactions, and do they have procurement experience and qualifications?

Normally, the head of unit. Usually they have procurement experience and qualifications.

E.5. Which of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval?

a) Bidding document, invitation to pre-qualify or RFP

Usually the unit head

b) Advertisement of an invitation for bids, pre-qualification or call for EOIs

Usually the unit head

c) Evaluation reports Usually the unit head d) Notice of award Usually the unit head e) Invitation to consultants to

negotiate

f) Contracts Usually the unit head E.6. Is the same official responsible Usually yes

Appendix 9 95

Question Answer/Finding Risk for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets? E.7. Is there a written auditable trail of procurement decisions attributable to individuals and committees?

Usually yes

II. General Ratings

Criterion Risk A. Organizational and Staff Capacity B. Information Management C. Procurement Practices D. Effectiveness E. Accountability Measures OVERALL RISK RATING

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M&E STRATEGY FOR THE POLYTECHNIC DEVELOPMENT PROJECT Appendix 11: M&E Strategy for the Polytechnic Development Project A. Introduction 1. Effective monitoring and evaluation systems will play a critical role in ensuring that the Polytechnic Development Project (PDP) will contribute to a more accessible and relevant Polytechnic education system that is responsible to labor market needs and entrepreneurial growth at the outcome level. This will involve implementing a robust performance monitoring system (PPMS) in the sixteen Polytechnics to monitor project performance across the four outputs. These are: (i) increased quality and relevance of Polytechnic programs; (ii) increased and equitable access to Polytechnic institutions; (iii) increased private sector involvement in the Polytechnic sector; and strengthened governance and management of Polytechnic education. 2. The objectives of the M&E strategy are three fold: i) to monitor PDP’s progress towards its developmental goal and its expected outputs and outcomes; ii) to provide a mechanism for continuous monitoring to improve performance as the project rolls out; and iii) to build the capacity of participating Polytechnics to implement an effective project performance monitoring system (PPMS) that will monitor progress towards the expected results and targets set out in the design and monitoring framework (DMF). 3. The first two objectives have to do with assessing how well PDP interventions are contributing to increasing access, strengthening industry based programs and fostering systemic change that leads to improved quality, relevance, and delivery of Polytechnic education. The third objective is related to building the capacity of the Polytechnic staff to effectively monitor project interventions and address shortfalls in the pursuit of improved project planning, implementation and reporting. 4. This third objective is important given that the output and effectiveness of the Polytechnics programs are not adequately monitored and the capacity of Polytechnics to provide accurate and reliable data varies greatly across the sector, resulting in incomplete data at the DGHE level. B. Baseline Study 5. A key characteristic of the M&E Strategy is an increased emphasis on results-based approach to M&E as one of the basic principles of development effectiveness. The comprehensive set of targets and performance indicators in the DMF will drive the monitoring and evaluation process and will be the starting point for the baseline study and subsequently the midterm and end of project evaluation studies. 6. The baseline survey will be undertaken during the first 12 months of the project to establish baseline data for the indicators and targets set out in the DMF. The design and development of the study will be led by the International M&E Consultant. 7. Disaggregated data will be collected at each of the sixteen participating Polytechnics. The focus would be on collecting data specifically related to the performance indicators. This would include, for example: (i) admission ratios, enrolment, graduation rates for each of the target study programs; (ii) teacher qualifications and industry experience in those programs; (iii) the extent of partnerships, joint initiatives and work placements with industry and the quality; (iv) the number and kind of joint programs with SMKs or other service providers to increase

Appendix 10 97

access to Polytechnics; and (v) the provision and quality of career counseling and job placement services offered to students or graduates. 8. In addition, external surveys of the employers and Polytechnic graduates in the first three identified sectors and later two to be added in 2013 will be carried out to provide data on the relevance and adequacy of the Polytechnic training in meeting industry needs. Specific data would be collected on the percentage of graduates entering the workforce or self-employment within six months of graduation and whether or not they are using their skills acquired on the job. For employers, data will be collected on their level of satisfaction with the specific skills and attitudes of the Polytechnic graduates and, where relevant, their level of satisfaction with existing industrial attachments or work placements and other initiatives (e.g. applied research) being carried out with the Polytechnic sector. 9. In developing these surveys, consideration will be given to using electronic survey formats, where possible, to reduce the cost of data collection and analysis (see www. monkeysurvey.com as an example). Some indicative indicators to consider for baseline data are in Appendix 1. C. Project Monitoring 10. Internal project monitoring will be the responsibility of the PMU under the DGHE. The specific responsibility will lie with the M&E officer in the PMU, shared with staff responsible for M&E in the participating Polytechnics. The staff will assume a vital role in monitoring implementation of all aspects of the CBE programs, short-term course and initiatives in relation to timely implementation and generation of data for the monitoring system. It is expected that each institution would have a core team of three persons’ part time, including the heads of the PIUs and deputy heads in the satellites who would have overall responsibility for project monitoring. 11. Project monitoring will take place at two distinct but closely connected levels: (i) monitoring implementation and ii) monitoring results; i.e. progress towards the project outputs and outcomes. 12. Implementation Monitoring: This will focus on monitoring timely implementation and completion of activities that have been agreed to against planned targets (e.g.800 teachers trained in CBE by 2012). The monitoring process will include identifying what the management and implementation issues are and taking steps to resolve them. This kind of monitoring is continuous. It requires aligning monitoring processes with each output’s annual work plans that have defined timelines and targets. 13. Much of the data for monitoring implementation at the activity level will come from internal mechanisms that have been built into the design of the project interventions. This would include collecting quantitative data on the number of managers, teachers, and students (diploma and short-term) trained across all project interventions, the kind of equipment procured and facilities upgraded; the number of revised diploma programs implemented, the number of competitive grants disbursed for innovative initiatives, and so on. 14. Qualitative data will also be collected on an on-going basis from training workshops, implementation teams, mentor reports, and International and National Consultants who are supporting implementation. Data could include, for example, the status of sector advisory

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boards, the CBE curriculum being developed or revisions to the assessment procedures, etc. 15. This data would be integrated into quarterly and annual progress reports along with training data. 16. Trainee Databases: To support the monitoring process, three trainee databases would be developed to track all project training: (i) Student Diploma Database for those enrolled in CBE programs; (ii) Database for Short-Term Courses to track participants enrolled in project-funded initiatives; and (iii) Database for Staff Development to track managers, teachers, advisory member boards and industry partners benefiting from project training. 17. These trainee databases would be developed by the PMU where existing management information systems (MIS) in the Polytechnics cannot meet project data requirements. The databases would be simple and user friendly. All data will be disaggregated by gender, education and social background, and other relevant data fields specific to the kind of training being offered. Data on the diploma students in the target study programs will require comprehensive student profiles in order to link to the databases being developed for graduate tracer studies and job placement services under Output 4. 18. Data would be collected at each training event using standardised forms. Each Polytechnic will appoint a dedicated data officer to manage the data collection; data entry, storage, and production of tables. Summary tables of the number trained by output and activity will be produced every three months and forwarded to the PSU M&E officer who will consolidate the data from all the Polytechnics for the project progress reports. 19. Feedback on Project Training: All short-training courses will evaluated by participants to provide insights into the quality and effectiveness of the training inputs. The evaluation forms will be developed and standardized to enable data to be easily aggregated and summarized for reporting purposes. 20. For CBE diploma programs, semester evaluations will be completed by students to get their feedback on different as aspects of the programs. This could be done through electronic or hard copy questionnaires using assessment categories of strongly agree, agree, disagree etc. The evaluation should cover program content, capability of the lecturers and instructors, facilities and equipment; training delivery methods, training duration and industrial attachments. A survey of enterprises involved in industrial attachments with Polytechnic students would also be carried out at the same time. 21. All participants’ responses would be aggregated at the Polytechnic level and summarized for the quarterly and annual progress reports. The results would inform what needs to be improved in the subsequent programs or courses as well as provide data on the participants’ perception of what is going well and what is not as the project rolls out across the sixteen Polytechnics. 22. Results-based Monitoring: The second level of monitoring has to do with monitoring progress towards expected results. This kind of monitoring will entail periodic assessments (i.e. semi-annually, annually, at mid-term) to assess the extent to which project inputs are contributing towards achieving the expected outputs and outcomes in the DMF. The focus is on moving beyond simple description of project activities completed (e.g. 80 senior managers trained) to gathering evidence of ‘change’ or ‘improvements’ as a result of the project interventions. Student feedback on the diploma programs over a three year period would be one source of data for monitoring ‘change’.

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23. The purpose of results-based monitoring is to show how project interventions are contributing towards improving the quality and relevance of diploma programs, increasing access to Polytechnic education, strengthening partnerships with the private sector, and improving institutional governance and management. It is this kind of data that is often missing in routine monitoring. 24. During the monitoring process, close attention will be paid to social and equity indicators outlined in the Social and Gender Equity Action Plan developed for this project. This would include monitoring professional training opportunities for female managers and teachers, access of females to diploma and short-term courses and to job in the workforce after graduation as well as the extent to which instructional materials and assessment procedures are gender sensitive to name a few. 25. It is expected that a wide variety of data sources will provide evidence of change or improvement across the various project interventions. Some examples relevant to the project are:

Monitoring Change

Data Source

An increase in the number of females enrolling in diploma or short-term courses

Trainee Database

More learner-centered methods being used to deliver CBE programs

Classroom Observations; Student Feedback by semester

An increase in the number and quality of formalized internships and industrial attachments

# of student with formal industrial attachments per semester Employer and Student Feedback

An increase in the number of students finding a job through the Polytechnic’s job placement service

Quarterly reports from the Job Placement service

The increase in the percentage of graduates finding relevant jobs within six months of graduation

Graduate Survey (tracer studies) carried out annually

26. One of the key data sources for monitoring change at the outcome level will be the graduate tracer studies that Polytechnic institutions will be required to undertake annually. Their purpose would be to trace the number graduates entering the workforce within six months after graduation and finding jobs relevant to their level of skills. For baseline data, it may be possible to collect data only in those few Polytechnics that have already institutionalized such tracer studies. For others institutions, baseline data would need to be updated by the end of 2013 when all institutions are expected to have such a system operating. 27. In terms of internal project monitoring described above, the M&E National Consultant will take the lead in designing the system and conducting staff training at all levels. The system will take into account the need for standardized formats, procedures and data collection instruments to enable easy integration of data into the project progress reports. A user manual will be

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developed with roles and responsibilities and details of data collection, entry and analysis to support the process. This will be done in close collaboration with PMU, project consultants and participating Polytechnics in order to ensure that existing structures and systems are utilized as much as possible. D. Evaluation Studies 28. There are four external data sources that will provide further data and evidence of progress towards the expected project results. These are: (i) the midterm evaluation study; (ii) the final impact study; (iii) DGHE school mapping data; and (iv) policy studies 29. Midterm Evaluation Study This evaluation is a critical part of the M&E process. It will be carried out in the first quarter of the third year prior to the midterm review by the ADB. Its purpose is to validate what results were achieved by measuring how far the project has progressed towards the targets set out in the DMF and by identifying factors which were contributing to or impeding progress. The study will repeat those aspects of the baseline survey that were implemented in the first two years of the project. . 30. In addition structured interviews with key stakeholders and beneficiaries would be included to collect qualitative data from project beneficiaries. This would be done through visits to participating Polytechnics to interview a random sample of 30% of the senior managers trained and teachers and 10% of the diploma students. Data would include evidence of perception of ‘change’ in the teaching and learning environment, work placements, student attitudes, etc. It would also look for evidence of change’ in the way key managers and teachers are applying new knowledge and skills on the job at the various levels and how the mentoring process benefited them. Such qualitative methods are a ‘value added’ contribution that is often overlooked in results-based monitoring and reporting. The advantage of this approach is that data collection can be flexible and take on themes to provide insights into discrete aspects of the project as it rolls out. 31. Final Impact Evaluation: The end-of-project evaluation study will be carried in the same Polytechnics as the baseline study during the last quarter of the Project. The study will be a repeat of the key indicators in the baseline study to assess the extent to which the Project has reached its targets in the DMF. It will include a repeat of the employer and graduate surveys as well as structured interviews with Polytechnic managers and teachers and graduates to assess the extent to which the project interventions have contributed to improving the delivery of Polytechnic programs and systematic change. 32. An international M&E Consultant will be responsible for the design and development of all three studies (baseline, midterm evaluation, and impact study) including overseeing the data analysis and reporting. The Consultant will ensure that the studies meet international standards and that data relevant to the performance indicators is being collected. He/she will be supported by a National M&E Consultant and a small core group of resource experts from Polytechnics, government and industry to develop the instruments. During the development of each study, decisions will need to be made on whether to contract individuals to support the data collection and analysis process or whether to hire a local firm to support part or all of the process. 33. School Mapping of Polytechnics. In 2010, an institutional mapping exercise was carried out in the 29 public Polytechnics to assess each institution’s capacity in four broad areas: (i) finance; ((ii) teacher and student development; (iii) the teaching process; and (iv) customer perspective. Data was verified in twelve of the Polytechnics but not all of 29 provided complete

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data. Each institution was given a weighted balanced score card that rated its capacity on over 50 aspects using 2009 data. Many of these aspects overlap with the baseline data required for this project; e.g. ratio of applicants to enrollees; % of students graduating within 3 years, % of graduates finding work within six month, etc. As such, the Project should closely monitor the DGHE’s plans to implement school mapping as a routine requirement for all Polytechnics in mid or late 2011. If this is realized, it would provide a valuable source of data that would complement the project’s evaluation studies and provide continuous feedback for the annual reviews 34. Policy Studies: The periodic policy studies will provide another valuable source of data at the national level on issues and recommendations related to financing of Polytechnics and regulations governing lecturers and instructors. Such studies funded by the Project will service as an independent review of the Polytechnic system and provide data that will inform management and policy decisions on the future direction of the Polytechnic sector. E. Reporting 35. Project reports will play a valuable role in demonstrating accountability and in influencing program adjustments based on evidence of the findings. The heads of the PIUs and the deputy heads in the satellites will have overall responsibility for preparing all required project reports for their respective institutions (i.e. quarterly, annual, mid-term and completion reports). 36. These technical reports will focus on reporting progress towards outputs, including details of inputs and activities completed. They will include a summary table of the number of persons trained against planned targets, the findings of the training evaluation reports, and key milestones achieved during that period. The reports will be transparent in reporting successes and difficulties in achieving targets accompanied with reasons and proposed solutions. Where relevant, results of structured interviews, special reviews or policy studies will be summarized and included in the reports. 37. To ensure a consistent and smooth flow of information, a simple report template by output will be developed by the PMU to guide the process and direct attention to key areas of importance. The reporting format will be standardized to enable technical reports from the Polytechnics to be complied into one project report for the ADB. All reports will be submitted electronically to the Project Director in the PMU. The Project Director will have overall responsibility for compiling the project reports with the support of the M&E officer and inputs from the project consultants. F. Annual Review and Evaluation Workshops 38. The PMU, under the direction of the Project Director, will bring together a cross-section of stakeholders and beneficiaries from the Polytechnics, industry, sector advisory boards and the National Ministries of Education, Industry, and Manpower and Transmigration to participate in the annual projects reviews and the midterm and end of project evaluation workshops.

39. The national workshops will provide a means to review progress and achievements within and across all regions and Polytechnics as well as foster synergy, exchange ideas and build on lessons learned. The starting point would be the project progress reports, the findings of the midterm or end of project evaluation studies and other relevant documents. 40. Key questions that will guide the M&E process and reporting of results are:

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i. How far has the combined set of activities contributed towards the intended outputs and

outcomes? ii. What key milestones have been achieved? How were they achieved? What evidence is

there to support these achievements? How was this evidence collected (e.g. progress reports, structured interviews, surveys, case study, trainee databases)?

iii. What factors contributed to progress and key achievements. What factors impeded progress? What lessons were learned?

iv. What risks need to be better managed? v. What program adjustments need to be made to improve performance and achieve the

desired results? 41. The outcomes of the annual review will be incorporated into the Annual Progress Report for the ADB and the outcomes of the midterm evaluation study into the MTR Report. The final impact study results will form the basis of the project completion report which will be submitted within six months after the completion of all project activities.

G. Dissemination of Findings 42. Dissemination of the project findings will be done horizontally and vertically to encourage organizational and institutional learning and exchange of ideas across the various stakeholder groups. This will be done through the project website and through news bulletins (electronic and hard) that highlight project achievements. They will be distributed to Polytechnics, industry partners and communities. The news bulletin idea could extend to social websites such as Twitter and Facebook to increase coverage and raise awareness of Polytechnic education programs. Such social mechanisms for sharing information are gaining momentum in the education sector. H. Capacity Building for Project M&E 43. The DGHE recognizes that successful monitoring and reporting of PDP will require increased attention to building the capacity of staff responsible for project monitoring in the participating Polytechnics and at the national level.. 44. During implementation, a series of training activities and on-the-job mentoring are planned to support an integrated and coherent approach to M&E. Designated persons responsible for and accountable for project M&E activities will be the target beneficiaries. The core team from each Polytechnic institution would include three persons for the regional training workshops with the option of adding two more persons depending on the focus of the M&E training. Additional persons could also be added for on-the-job training at each institution where there is an identified need for support. 45. The approach to capacity building within the Polytechnic institutions is to build a small but strong team through annual training and follow-up mentoring support in each institution. 46. At the national level, a workshop will be held for the M&E Units in the DGHE and other project stakeholders (i.e. technical working groups) to familiarize them the project’s performance monitoring system and user manual. 47. All the training workshops will be led by the National M&E Consultant. On-the-job mentoring sessions will be led by M&E Officer from the PMU under the guidance of the National M&E Consultant. The proposed HRD activities are as follows:

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(i) Understanding Results-based M&E– Regional Workshop (2 days in Q3,Year 1)

The focus of this training is on understanding results-based M&E concepts and approaches and linking these concepts to the DMF in terms of the project’s goal, development objectives, expected outcomes and outputs. Training will help participants understand the overall project goals and objectives, what needs to be monitored and the different between monitoring activities results and monitoring results. A review of monitoring systems within the Polytechnics will be done as well to identify how best to implement the PPMS within existing structures. The four training workshops will be conducted; one at COE with 20 participants (5 from each Polytechnic). Total: 80 persons

(ii) National Training Workshop in Proposed Project Performance Monitoring System

(1 day in Q4 of Year 1) Once the PPMS system and manual have been drafted, a workshop will held in Jakarta to familiarize DGHE staff and other project stakeholders with the proposed project’s performance monitoring system and how the system links to the DMF. Their views on the system and integration of project data into the DGHE database will be sought. 20 participants in total (1 day in Q4 in Year 1).

(iii) Regional Training in PPMS and User Manual ( 3 days in Q1 of Year 2)

Following the development of the PPMS and User Manual, regional training will be conducted to familiarize M&E staff with the system. Training will cover data to be collected, data collection procedures, analysis and summary tables as well as reporting mechanisms and their roles and responsibilities. Familiarization of the project trainee databases and course evaluation forms will be done as well. Four training workshops will be conducted; one at each COE with 20 participants (5 from each Polytechnic. Total: 80 persons

(iv) Annual Refresher Training to Upgrade Skills in Project Monitoring and Reporting

(Q1 in Years 3, 4, and 5) To ensure smooth and effective monitoring, annual training will be conducted once a year. The focus of the training would vary from year to year. The purpose would be to upgrade their skills in data analysis, data reporting -- summarizing course evaluations, writing clear and concise progress reports, preparing for evaluation studies, etc. These annual sessions will also provide opportunities to build on lessons learned, solve problems and refine processes and instruments. The training will be conducted regionally; one at each COE in order to tailor the training content to each region’s needs. Again, there would be 20 participants (5 from each institution). Total: 80.

(v) On the Job Mentoring for Project Monitoring and Reporting (Years 2, 3, 4, 5) Annually from Year 2, the PMU will provide on-the-job mentoring to each participating institution in order to address problems that departments, units or individuals are experiencing and/or strengthen procedures for data and reporting requirements, both on and off-campus. Up to five days per year have been allocated for each institution. This would mean that the Project M&E Officer would spend approximately two months per year in the field.