The World Bank FOR OFFICIAL USE ONLY · BRI Bureaucracy Reform Initiative CQS Consultants Qualifications ... SOP Standard Operating Procedures SPM Payment request TOEFL Test of English

Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 56720

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$112.65 MILLION

TO THE

REPUBLIC OF INDONESIA

FOR THE

SCHOLARSHIPS PROGRAM FOR STRENGTHENING REFORMING INSTITUTIONS (SPIRIT) PROJECT

February 9, 2011

Poverty Reduction and Economic Management Unit East Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective September 15, 2010)

Currency Unit: Rupiah (IDR) US$1.00 = Rp.8,973

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS AusAID Australian Agency for International Development BKF Office of Fiscal Policy BKN Civil Service Agency BKPM Investment Coordination Board BPK Supreme Audit Institution BPN Land Administration Agency BPPK Ministry of Finance Training Institute BR Bureaucracy Reform BRI Bureaucracy Reform Initiative CQS Consultants Qualifications DA Designated Account DG Directorate General GDP Gross Domestic Product GFMRAP Government Financial Management and Revenue Administration Project HCDP Human Capital Development Plan HRM Human Resource Management IBRD International Bank for Reconstruction and Development IDPL Infrastructure Development Policy Loan IFR Interim Financial Report IT Information Technology IVP Isolated and Vulnerable Peoples LAN National Institute of Public Administration LCS Least Cost Selection MenPAN Ministry for Administrative Reforms MIS Management Information System MoFA Ministry of Foreign Affairs MoHA Ministry of Home Affairs PA Participating agency PCU Project Coordination Unit PHRDP Professional Human Resource Development Project PINTAR Project for Indonesian Tax Administration Reform PIU Project Implementation Unit POM Project Operations Manual PPP Public Private Partnerships QCBS Quality and Cost Based Selection RENSTRA Agency Medium Term Development Plan RPJMN National Medium Term Development Plan

SC Steering Committee SIL Specific Investment Loan SOP Standard Operating Procedures SPM Payment request TOEFL Test of English as a Foreign Language TOR Terms of Reference TPA Test for Academic Potential UKP4 President’s Delivery Unit for Development Monitoring and Oversight ULP Procurement service unit

Regional Vice President: James W. Adams Country Director: Stefan Koeberle

Sector Director Sector Manager: Lead Economist:

Vikram Nehru Ivailo Izvorski Shubham Chaudhuri

Task Team Leaders: Zahid Hasnain and Theo David Thomas

REPUBLIC OF INDONESIA: SCHOLARSHIPS PROGRAM FOR STRENGTHENING REFORMING INSTITUTIONS (SPIRIT) PROJECT

Table of Contents I. Strategic Context ...................................................................................................................1

A. Country Context ..........................................................................................................1

B. Sectoral and Institutional Context ................................................................................2

C. Higher Level Objectives to which the Project Contributes ............................................4

II. Project Development Objectives ...........................................................................................5

A. PDO ...........................................................................................................................5

B. Beneficiaries ...............................................................................................................6

C. PDO Level Results Indicators ......................................................................................6

III. Project Description ..............................................................................................................6

A. Project Components ....................................................................................................6

B. Project Financing ........................................................................................................8

C. Lessons Learned and Reflected in the Project Design ...................................................8

IV. Implementation ................................................................................................................. 10

A. Institutional and Implementation Arrangements ......................................................... 10

B. Results Monitoring and Evaluation ............................................................................ 10

C. Sustainability ............................................................................................................ 11

V. Key Risks .......................................................................................................................... 11

VI. Appraisal Summary ........................................................................................................... 11

A. Economic and Financial Analysis .............................................................................. 11

B. Technical .................................................................................................................. 11

C. Financial Management .............................................................................................. 12

D. Procurement .............................................................................................................. 12

E. Social........................................................................................................................ 12

F. Environment ............................................................................................................. 13

Annex 1: Results Framework and Monitoring .......................................................................... 14

Annex 2: Detailed Project Description .................................................................................... 16

Annex 3: Implementation Arrangements ................................................................................. 24

Annex 4: Operational Risk Assessment Framework (ORAF) ................................................... 34

Annex 5: Implementation Support Plan................................................................................... 37

Annex 6: Team Composition .................................................................................................. 39

PAD DATA SHEET

Indonesia Scholarships Program for Strengthening Reforming Institutions

PROJECT APPRAISAL DOCUMENT

East Asia and Pacific

EASPR

Date: February 9, 2011 Country Director: Stefan Koeberle Sector Director: Vikram Nehru Sector Manager: Ivailo Izvorski Lead Economist: Shubham Chaudhuri Team Leader(s): Zahid Hasnain & Theo Thomas Project ID: P118150 Lending Instrument: Specific Investment Loan

Sector(s): General public administration sector (70%); General education sector (30%) Theme(s): Administrative and civil service reform (60%), other human development (40%) EA Category: C

Project Financing Data: Proposed terms:

US Dollar-demoninated, commitment-linked, variable-spread loan (VSL) based on six-month LIBOR, plus an additional variable spread. Repayment period is 24.5 years, including a 9-year grace period.

[ X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other:

Source Total Amount (US$M) Total Project Cost:

Co-financing: Total Bank Financing:

$112.65 million 0 $112.65 million

Borrower: REPUBLIC OF INDONESIA

Responsible Agency: The National Development Planning Agency Jl. Taman Suropati No. 2 Jakarta Indonesia 10310 Tel: /Fax: (62-21) 314-8551 [email protected]

Estimated Disbursements (Bank FY/US$ m)

FY 2011 2012 2013 2014 2015 2016 2017 2018

Annual 3 17 24 25 21 12 7 3.65 Cumulative 3 20 44 69 90 102 109 112.65

Project Implementation Period: April 30, 2011 – June 30, 2017 Expected effectiveness date: April 30, 2011 Expected closing date: December 31, 2017

Does the project depart from the CAS in content or other significant respects?

○ Yes No

If yes, please explain:

Does the project require any exceptions from Bank policies? Have these been approved/endorsed (as appropriate by Bank management? Is approval for any policy exception sought from the Board?

○ Yes No ○ Yes No ○ Yes No

If yes, please explain:

Does the project meet the Regional criteria for readiness for implementation?

Yes ○ No

If no, please explain:

Project Development Objective The Development Objective of the proposed project is to build participating agencies’ capacity by (a) strengthening their human resources in core functional areas; and (b) enhancing their ability to initiate and manage reforms.

Project description: The Project consists of the following parts:

1.

(a) Competitive selection of candidates, and provision of pre-departure language training to selected candidates.

Degree Scholarships for Ministry of Finance

(b) Award of scholarships for overseas and joint domestic and overseas (Link) degrees to successful candidates in fields relevant to the work of the Ministry of Finance.

2.

(a) Competitive selection of candidates, and provision of pre-departure language training to selected candidates.

Degree and Non-Degree Scholarships for Other Participating Agencies

(b) Award of scholarships for domestic, overseas, and joint domestic and overseas (Link) degrees and overseas and domestic non-degree training to successful candidates in fields relevant to the work of the respective Participating Agency other than the Ministry of Finance.

3.

(a) (i) Scholarship program management, including matching of scholars to institutions and courses, payment of tuition fees to institutions and living and supplies stipends to scholars, and monitoring of scholars.

Program and Project Support

(ii) Provision of support to the Project Coordination Unit and the Project Implementation Units in relation to Project management, implementation, including administrative and financial management, disbursement, and procurement, and monitoring and evaluation.

(b) (i) Carrying out of annual technical audits of scholarships program compliance with scholar eligibility, selection, and implementation procedures as set out in the Project Operations Manual.

(ii) Carrying out of: (A) a scholarships program alumni survey in relation to satisfaction with the program; and (B) a broader Participating Agency staff assessment in relation to program impact on Agency capacity development.

(iii) Development and implementation of a scholar re-entry and career development program for the Participating Agencies.

Safeguard policies triggered? Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waters (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

○ Yes No ○ Yes No ○ Yes No ○ Yes No ○ Yes No ○ Yes No ○ Yes No ○ Yes No ○ Yes No ○ Yes No

Conditions and Legal Covenants:

Financing Agreement Reference

Description of Condition/Covenant Date Due

Article IV Section 4.01 (a) of the LA

The Additional Conditions of Effectiveness consist of the following:

(a) The Project Operations Manual has been adopted by the Borrower in accordance with the provisions of Section I.D.1 (a) of Schedule 2 of the LA.

(b) The National Development Planning Agency Project Implementation Unit has been established by the Borrower in accordance with the provisions of Section I.A.9 of Schedule 2 of the LA.

(c) The Ministry of Finance Project Implementation Unit has been established by the Borrower in accordance with the provisions of Section I.A.11 of Schedule 2 of the LA.

Before effectiveness of the loan.

Section IV The Borrower shall, no later than one (1) year after the Effective Date, adopt, through each of the Participating Agencies, scholar re-entry policies, in form and substance satisfactory to the Borrower and the Bank, for purposes of the scholar re-entry and career development program to be developed and implemented under Part 3 (b) (iii) of the Project.

No later than 1 year after the Effective date

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I. Strategic Context A. Country Context

1. Indonesia has undergone an impressive economic and political transformation in the decade since the Asian financial crisis. Real GDP growth has averaged 5 to 6 percent since 2002, and prudent macroeconomic management has resulted in low budget deficits, a low debt-to-GDP ratio, and manageable inflation. Indonesia’s exports have grown strongly, while the external debt to GDP ratio has fallen. Investment has risen to over 27 percent of GDP, approaching pre-crisis highs. Indonesia was also less affected by the global economic downturn of 2008-09 than most economies, and by late 2009 the economy had recovered to grow faster than pre-crisis averages. This strong economic performance has been accompanied by a remarkably profound yet stable transition from a centralized authoritarian regime to a decentralized democratic polity. 2. Looking at the decade ahead, Indonesia has the potential to build on these gains and become a competitive, inclusive, and resilient middle income country. The key for achieving this goal will be a more effective government and stronger core public sector institutions and processes that govern the functioning of the state and shape state-society interactions.

3. The importance of institutional reform and capacity-building is recognized by the Government. The National Medium Term Development Plan (RPJMN) 2010-2014 identifies bureaucracy and governance reform as one of eleven national priorities. The World Bank’s Country Partnership Strategy (2009-12) is also centered on this agenda of institutional development, and the Bank has been supporting these measures through multiple channels, such as the Development Policy Loan (DPL) and Infrastructure DPL (IDPL) series, the GFMRAP and PINTAR Projects, economic and sector work, and trust funded technical assistance.1

4. Impressive progress has indeed been made in recent years in increasing the capacity and accountability of a number of public sector agencies. At the central government level, these initiatives include measures to improve the investment climate through regulatory reform; measures to improve systems for public financial management, involving reforms in budget preparation, execution, auditing, and procurement; civil service remuneration and management changes in key line ministries; and reforms to improve the key infrastructure institutions. These reforms however, remain incomplete, and over the medium term the focus must remain on improving a number of core systemic processes and institutions for formulating and implementing policy, including the public financial management system, the capacity and accountability of the civil service, the decentralization framework, the control of corruption, and the judicial and legal system.2

5. Improving the skills of government staff involved in formulating and implementing policies is an essential complement to regulatory and process improvements, and a fundamental

1 Key reports include World Bank (2009a), “Support to Civil Service Reform in Indonesia”. Mimeo; World Bank (2009b), Indonesia Development Policy Review: Enhancing Government Effectiveness in a Democratic and Decentralized Indonesia; and World Bank (2008), Investing in Indonesia’s Institutions: Country Partnership Strategy FY09-12 for Republic of Indonesia 2 See World Bank (2009a) for details

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component of institutional capacity building. When effectively anchored in an environment conducive to institutional reforms, individual training can enable a “virtuous circle” to develop, whereby training advances institutional reform and capacity development, which in turn generates the necessary incentives for staff to apply their newly acquired skills for the benefit of the employing agency. The proposed Scholarships Program for Strengthening Reforming Institutions (SPIRIT) project aims to support this agenda through the provision of foreign and domestic degree and non-degree programs for key staff in eligible public sector agencies, thereby supplementing the Bank’s engagement through the above-mentioned operations on regulatory and process improvements. Specifically, the Project attempts to achieve this goal by explicitly embedding this training in the capacity development plans of agencies, a key design feature that distinguishes it from other scholarship programs in Indonesia.

B. Sectoral and Institutional Context 6. In Indonesia, the overall national civil service environment has been an impediment to the country’s development ambitions.3

The problems include weak coordination at the center of government for the management of the civil service, rigidities in staff establishments, and a compensation and personnel management system that renders attracting and retaining high quality staff a challenge. The on-going Bureaucracy Reform (BR) has been attempting to work around these national regulatory weaknesses through advancing reforms at the agency level. While the agency reforms have come at the expense of adding further layers to an already complex institutional framework, they have provided reform-minded leadership in agencies the flexibility to work around these constraints. The agency approach has been possible because although the Indonesian civil service is a career service in which individuals are not hired for a specific job but are recruited only at the entry level into a single national service, it is the agency, rather than the government as a whole, that is the de facto employer of the individual civil servant. Recruitment and career management is the responsibility of the agency, usually managed by the personnel bureau, and horizontal movement of staff between ministries and agencies is rare.

7. BR in participating agencies has focused on reforming organizational structures, streamlining and improving standard operating procedures, increasing public sector pay, and reforming human resource management policies and practices through more stringent recruitment and performance-based career progression. BR began in 2006 in the Ministry of Finance as the Bureaucracy Reform Initiative (BRI), followed by the Supreme Audit Institution (BPK) and the Supreme Court in 2007, and has now expanded to include all central agencies. The most prominent feature of BR has been the introduction of a parallel grading and pay scale in the Ministry of Finance and BPK that has resulted in a significant increase in remuneration for the agencies’ “structural” civil servants.4

3 See World Bank (2009b) for details

While this parallel structure has added to the complexity and non-transparency of civil service remuneration in Indonesia, it has improved the incentives of staff in the concerned agencies. This increase in remuneration is being complemented by on-going efforts within the agencies to improve performance evaluation,

4 The Indonesian civil service consists of “structural”, “functional”, and “non-echelon” positions. Structural positions are key administrative and management positions; functional positions are non-managerial and involve a specialized activity, such as teaching; and non-echelon positions are usually for staff performing clerical duties.

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recruitment and career progression, reorganization to improve the human resource management function, new job descriptions, and streamlining of standard operating procedures.

8. Similar reforms have been implemented in the Ministry of Foreign Affairs (MoFA).5

MoFA’s reforms have focused on more transparent and rigorous recruitment and personnel management, enhanced training focusing on MoFA’s operational needs, and a realignment of the staff structure replacing non-diplomat positions with diplomats thereby increasing the ratio between professional diplomat and non-diplomat staff.

9. Looking ahead, and while recognizing the benefits they have brought to the particular agencies, there is now an increasing recognition in the Government that agency-specific measures that add new layers and structures to the existing regulatory framework are not sustainable. The Government’s new draft Bureaucracy Reform Grand Design and Road Map, which is expected to be approved and issued as presidential regulations will underline the national approach. The Grand Design, which has been prepared by the State Ministry for Administrative and Bureaucracy Reforms (MenPAN), institutionalizes the management set-up for BR and improves the quality assurance and governance structures for managing the reform compared to the initial BRI in MoF, BPK, and the Supreme Court. The institutional responsibility for BR has now moved from the Ministry of Finance to the center of government, with a Steering Committee established in 2010 chaired by the Vice President, and including the State Minister for Administrative Reforms and BR (MenPAN), the Minister of Finance, the Minister of Home Affairs, the three coordinating ministers (economy, welfare and political affairs) and the Head of the President’s Delivery Unit for Development Monitoring and Oversight (UKP4). 10. These are encouraging developments and are indicative of the high level commitment to national civil service reform. However, given that these reforms will be difficult and will take time, for the purpose of this project, and while not losing sight of these objectives as discussed in the next section, the broader civil service institutional context has to be considered as an exogenous “external operating environment” constraint. Given this constraint, the relative autonomy of agencies to initiate reforms and manage their civil servants as de facto employers provides the opportunity for this scholarships program to have an agency-specific approach to capacity development in an otherwise, to date, generally weakly reforming overall civil service environment. 11. The guiding framework for agency capacity development that this scholarship program is based on is depicted in Figure 1. The capacity of a government agency is a function of the resources of the agency — the number and skills (both technical and managerial) of staff, infrastructure, technology, and finances; and the quality of the internal operating environment, as defined by the incentives and reward systems (to the extent that these are within the agency’s control), the organizational climate or culture, organizational structure, business processes and operating procedures, and shared norms and values. From an agency “production function” perspective, the agency’s resources can be considered to be referring to the factors of production (capital and labor) and the internal operating environment as determining the agency’s

5 MoFA’s reforms precede the BRI in the MoF

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“technology” to convert these factors into outputs measured in terms of agency performance, such as improved service delivery.

12. Capacity however, is only partly determined by these internal agency variables. It is also dependent, arguably even more importantly, on the external environment, which consists of the general civil service and other relevant regulatory framework, broader government policies and the political environment, economic conditions, and other factors that are beyond the agency’s control. Improving agency capacity also does not necessarily translate into improved performance (such as improved service delivery) as performance is in turn a function of both agency capacity and the external environment.

Figure 1: A Framework for Capacity Building

13. The objective of the Project is the training of staff for the purposes of impacting the internal determinants of agency capacity. It is expected that agency capacity will be built by: (a) improving the agency’s human resources through the development of the technical, managerial, and leadership skills of civil servants working in the core functional areas of the agency; and (b) improving the internal operating environment through the enhanced ability of these civil servants to implement Bureaucracy Reform within the agency as well as the impact on organizational culture and processes of sufficient numbers (or a ‘critical mass’) of skilled and reform-minded staff in the agency. Ideally these developments would be mutually reinforcing. It is expected that this increased capacity will result in improved performance; however, given the importance of the external environment, improving performance, per se, cannot be the development objective of this project. C. Higher Level Objectives to which the Project Contributes 14. The higher level objective of the Project, and the main rationale for Bank involvement, is to contribute to a new approach to scholarships in Indonesia, one whose objective is institutional capacity development and reform. This approach is a departure from the on-going training

Resources

• Human resources

• Infrastructure • IT systems • Finances

Internal operating environment

• Culture • Incentives • Business processes • Organ. structure

Agency Capacity

Staff Training

Agency Performance (e.g. improved services)

External environment

• Regulatory framework • Political environment • Economic environment

Public Sector Agency

5

programs that are financed by the Government and by bilateral development partners. The numerous bilateral programs’ discussed in more detail below, primarily focus on the capacity development of the individual scholar rather than the employing agency, and therefore focus less on explicitly linking individual training to institutional development. 15. The broader aim is for this scholarships program to become one key component of the Bureaucracy Reform Roadmap that all central government agencies are currently in the process of preparing. There are three concrete ways in which this can happen:

1. The concept of staff training anchored in an agency institutional development

strategy, what in the Project is referred to as agency Human Capital Development Plans (HCDPs), becomes one component of each agency’s Roadmap. This would not be limited to the participating agencies for this project but would extend eventually to all government agencies.

2. Suggested results indicators for the Project become a subset of the key performance indicators to monitor progress of Bureaucracy Reform.

3. The implementation modalities for the Project — selection of scholars, re-entry, monitoring arrangements, quality assurance — become part of the standard operating procedures (SOP) for reforming agencies.

II. Project Development Objectives A. PDO 16. The Development Objective of the proposed project is to build participating agencies’ capacity by: (a) strengthening their human resources in core functional areas; and (b) enhancing their ability to initiate and manage reforms. 17. Achieving the PDO is conditional on several factors that are reflected in the Project’s design. First, the program is located in strategically important central agencies, those that are most important for realization of the Government’s national priority of improving “soft infrastructure”, as detailed in the RPJMN. Specifically, the agreed criteria for inclusion are: (a) key government agencies that are responsible for public sector financial, economic, and human resource management; (b) key agencies responsible for improving the investment climate in Indonesia; or (c) agencies that are responsible for managing and implementing Bureaucracy Reform. Second, the program is limited to a few agencies so as to not dilute the training and to enable the limited resources to develop a critical mass of skilled and reform-minded staff within an agency. Third, the criterion for agency participation in the program is the preparation and implementation of a good quality HCDP. These HCDPs provide the framework for agency capacity development and would:

• Specify the agency’s medium term vision and goals, and its strategy for meeting those goals.

• Identify priorities to improve core business and capacity to reform.

6

• Analyze the key competencies and skills needed to achieve these goals of improving core business and of reforming internal processes, and the existing skills gaps (a “needs analysis”).

• Define fields of study relevant for the required capacity building.

• Identify the specific degree and non-degree learning and development programs that would be required.

• Specify the procedures for reintegrating staff into the organization once they have completed their programs through effective implementation of re-entry policies and the development of a sound performance evaluation system so that their newly acquired knowledge can be most effectively utilized.

B. Beneficiaries

18. The direct beneficiaries from the Project will be the 11 participating agencies, and the civil servants who are selected to receive scholarships for degree and non-degree programs. It is anticipated that approximately 2600 civil servants will participate in the program from 2011 to 2017 (details given in Annex 2), with approximately 1000 in degree training (500 overseas, 300 domestic, and 180 Linkage) and approximately 1600 in non-degree training. The inclusion of non-degree and domestic degree programs should in particular encourage more women to participate in the program, given the relatively greater constraints they face on going for longer duration overseas training. The indirect beneficiaries will be the citizens of Indonesia who benefit from the improved capacity of these key central government agencies. C. PDO Level Results Indicators 19. The achievements of the program will be measured by two outcome and several intermediate indicators that are specified in Annex 1. III. Project Description A. Project Components 20. The Project has three components described below (See Annex 2 for a detailed project description). 21. Component 1: Degree Scholarships Program for Ministry of Finance ($34.5 million). This has two sub-components:

• Sub-component 1.1: Competitive selection of candidates and provision of pre-departure

language training to selected candidates.

7

• Sub-component 1.2: Award of scholarships for overseas and joint domestic and overseas (link)6

22. While the HCDPs of the Ministry of Finance identify several non-degree programs, MoF has not proposed any non-degree training to be funded from this loan as it has secured grant funds for this purpose. MoF has also not proposed any domestic degree programs. The twelve echelon 1 units comprising MoF were selected as they fulfilled the agreed criteria as a central reforming agency which acts as: (a) a key government agency responsible for either public sector financial, economic, or human resource management; and (b) a key agency responsible for improving the investment climate in Indonesia.

degrees to successful candidates in fields relevant to the work of the Ministry of Finance.

23. Component 2: Degree Scholarships and non-degree training, for the Bappenas cluster of Participating Agencies ($70.3 million). This has two sub-components:

• Sub-component 2.1: Competitive selection of candidates and provision of pre-departure language training to selected candidates.

• Sub-component 2.2: Award of scholarships for domestic, overseas, and joint domestic and overseas (link) degrees and overseas and domestic non-degree training to successful candidates in fields relevant to the work of the respective Participating Agency.

24. The 10 participating agencies coordinated by the Bappenas PIU are listed below:

1. Bappenas, 2. National Civil Service Agency (BKN) 3. Investment Coordination Board (BKPM) 4. Supreme Audit Board (BPK) 5. Financial and Development Supervisory Board (BPKP) 6. National Land Agency (BPN) 7. Ministry of Foreign Affairs (MoFA) 8. Ministry of Home Affairs (MoHA) 9. National Institute of Public Administration (LAN) 10. State Ministry for Administrative and Bureaucracy Reforms (MenPAN)

25. These particular agencies were selected for participation in the program as they are either: (a) key government agencies that are responsible for public sector financial, economic, and human resource management (Bappenas, MenPAN, LAN, BKN, BPK, BPKP); (b) key agencies responsible for improving the investment climate in Indonesia (MoFA, BKPM, BPN); or (c) agencies that are responsible for managing and implementing Bureaucracy Reform (MenPAN, and MoHA).

6 A link program is a joint or “double Master degree” awarded jointly by a domestic university in collaboration with a foreign university, with the first year of study in Indonesia and the second in the overseas university.

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26. Component 3: Program support ($7.9 million). The third project component provides support to the Government to help implement, monitor, and evaluate the program. There are two sub-components:

• Sub-component 3.1: Program management

o Support for scholar placement, including matching of scholars to institutions and courses, and the payment of living stipends to scholars and tuition fees to institutions.

o Support for project management, including administrative and financial management, disbursement, and procurement, and routine monitoring of scholars.

• Sub-component 3.2: Quality assurance, and monitoring and evaluation

o Carrying out of annual technical audits of the program’s compliance with scholar eligibility, selection, and implementation procedures as set out in the Project Operations Manual.

o Provision of support for the development and implementation of a scholar re-entry and career development program.

o Carrying out of an alumni and Participating Agency staff survey in relation to alumni satisfaction with the program and of a broader Participating Agency staff assessment of program impact on agency capacity development.

B. Project Financing 27. The lending instrument for the project is a Specific Investment Loan (SIL) of $112.65 million for a period of seven years from 2011 to 2017. The costs, by expenditure category, are detailed in Table 1. While there is no requirement for local counterpart funding in the project, each of the participating agencies has allocated funds in the 2011 budget for program implementation, in particular to manage the selection of scholars.

Table 1: Project costs by main expenditure categories (USD Millions) Category US$ Millions 1. Scholarships for degree and non-degree training 102.7 2. Goods and non-consulting services 1.1 3. Consultancies 3.0 4. Training and operating costs 5.8 TOTAL 112.65

C. Lessons Learned and Reflected in the Project Design 28. The design of the Project is based on lessons learned from previous Bank projects and from bilateral scholarship programs. Indonesia has a long history of donor supported learning and development. The Bank funded two scholarship programs through the Professional Human Resource Development Project (PHRDP) I & II in the 1990s, and there have been, and currently are, numerous bilateral programs, most notably those of AusAID, the Netherlands, and Japan.

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29. The main conclusions from the implementation completion reports of the PHRDP I & II, and the evaluations of the bilateral programs7

, can be summarized as follows:

• In general, retention has not been a problem in Indonesia — most scholars returned home after completing their training and re-joined their employing agency.

• The effective re-integration of the scholars in the agency after their return was less than fully satisfactory. Programs should have paid more attention to: the re-entry modalities to ensure that the newly acquired skills were used for the maximum benefit of the agency’s corporate goals; and to the civil service rules and procedures that needed to be amended for both the career development of the individual and the performance improvement of the agency.

• The programs did not pay enough attention to the specific fields of study, with the result that many degree courses undertaken were not aligned to the agency’s requirements. Training in leadership and human resource development was also underemphasized.

• The programs had multiple objectives — good governance, improvements in service delivery, poverty alleviation, regional equity, to name but a few — with the result that the scholarships were spread across a large number of agencies and regions as well as fields of study, rendering significant organizational impact difficult to achieve

30. This Indonesian experience is broadly reflective of the main lesson from the numerous civil service capacity development programs that the Bank has been involved in several countries.8

Training on its own is necessary but not sufficient for capacity building. To be effective, training has to be integrated with changes in systems, organizations, and processes.

31. Drawing on these lessons, the proposed Project is anchored in agency HCDPs which link the individual training to agency capacity development and reform, and is limited to a few key central agencies so as to not dilute the training and to enable the limited resources to develop a critical mass of skilled and reform-minded staff. The lessons also underline the emphasis on re-entry and career development, which will be supported in the Project through the considerable attention paid to degree and in particular non-degree training in human resource management, and technical assistance to support an effective re-entry program.

32. An important caveat is that the proposed Project has a focused objective of agency capacity development, which is narrower than the objectives of many of the bilateral donor programs. These other goals of ensuring regional equity and professional development are equally important and therefore the Project should be viewed as complementary to the bilateral programs.

7 There are a number of evaluations of these programs. See Netherlands Education Support Office (2008) “External Evaluation of StuNed Program”; Ministry of Trade Indonesia & World Bank (2009) “Improving Graduate Management at the Ministry of Trade Indonesia” and “Mapping of Overseas Scholarship Programs in Indonesia: Survey Results”, commissioned by GOI and supported by AusAID and the Netherlands. 8 See Mike Stevens (2005), “Effective States and Engaged Societies: Capacity Development for Growth, Service Delivery, Empowerment, and Security in Africa”. Mimeo: World Bank for an assessment of civil service capacity building programs in Africa

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IV. Implementation A. Institutional and Implementation Arrangements 33. The institutional and implementation arrangements for the Project are provided in Annex 3, and detailed in the Project Operations Manual (POM), available in project files. The administrative arrangements for project implementation will consist of a Steering Committee, a Project Coordination Unit (PCU), two Project Implementation Units (PIUs), and the 11 participating agencies.9

The Steering Committee will establish the overall policy and regulatory framework for the program, review progress and performance, and decide on any reallocations. The PCU would serve as the secretariat to the Steering Committee and perform the operational coordination, overall monitoring and evaluation, and reporting of the project. The two PIUs and the participating agencies would be responsible for program implementation, including selection, pre-departure training, placement, and re-entry of scholars, with the precise division of responsibilities detailed in Annex 3.

34. Ensuring transparency in the selection process is essential to achieving program outcomes and to ensure credibility. Building on many of the procedures already in place in several of the participating agencies, the selection procedures for the program will consist of following stages: eligibility, testing, interviews, pre-departure training, and application to university. 35. The results of the selection process will be publicly available in the agencies, and an annual independent technical audit will evaluate compliance with the procedures. As per the agreed Transparency and Accountability Action Plan, the scholarship program will be advertised broadly, for example in the agency and Bappenas websites, and the Bappenas website will also have the facility for lodging complaints. B. Results Monitoring and Evaluation 36. Results monitoring will consist of three sets of activities: routine monitoring of program implementation to ensure that information pertaining to the scholar selection modalities is maintained, scholars are monitored during the course of their degree and non-degree programs, and returning alumni are tracked with the aid of HR databases; two staff surveys (one midway through the project and the other at project completion) to assess alumni and agency staff satisfaction with the program, and the impact of the degree and non-degree training on agency capacity building; and an independent technical audit, conducted annually, to ensure compliance with the procedures for selection of candidates, and more broadly, compliance with the operating procedures detailed in the POM. The project includes consulting support for each of these three activities.

9 To be precise, given the decentralized arrangements within the Ministry of Finance, each of the 12 Directorate Generals will de facto be a participating agency. Therefore, the total number of participating agencies is 22, and as a result 22 HCDPs have been prepared.

11

C. Sustainability 37. The sustainability of the Project will ultimately be linked to the sustainability of Bureaucracy Reform. The high-level prioritization of Bureaucracy Reform in Indonesia, the considerable ownership of the project design by the main counterparts, and the agency-level reforms that have taken place suggest that the key ingredients for capacity building are in place, although several risks remain. However, the challenge of institutional reform, particularly in areas related to human resource management, is well recognized, and is detailed in the Operational Risk Assessment Framework (see Annex III).

V. Key Risks 38. The potential risks are summarized in the Operational Risk Assessment Framework (Annex III) and are primarily related to the lack of effective re-entry (placement and career development) of scholars upon their return, potential governance problems around candidate selection, and lack of capacity to successfully implement the technical and fiduciary aspects of the project. There is strong agency ownership of this new approach to scholarships and the project will provide continuous support on re-entry modalities, and appropriate mitigation measures are in place in place to ensure transparency and merit-based scholar selection, as well as to address fiduciary concerns. VI. Appraisal Summary A. Economic and Financial Analysis 39. The Project is not amenable to a cost-benefit analysis, or financial analysis, as the principal benefits from the Project are either intangible or qualitative. The design of the Project however, has been based on the principle of cost-effectiveness through: (a) the emphasis on non-degree training, which is a low-cost solution for providing focused, technical training to a large number of civil servants (over 60% of Project beneficiaries); (b) discouragement of new link programs that would entail significant development costs (primarily existing link programs of high quality will be supported); and (c) a mix between lower cost domestic degree programs (of certified quality) and overseas degree programs. B. Technical 40. The Bank, through trust funded resources, contracted a consulting firm to provide assistance to the agencies in developing their HCDPs. At appraisal, all 22 HCDPs (one for each of the twelve Directorates General of MoF, and one for each of the other ten participating agencies) were assessed for quality based on the following weighted criteria, with each criteria scored on a scale of 1 to 5:

1. Basic information on the agency10

2. Established job groupings 15% 5% weight

3. Defined technical competencies 20% 10 Such as vision, mission, the five year institutional development plan (Renstra), etc.

12

4. Skills gap analysis 20% 5. Recommended development program 30% 6. Number and kinds of scholarships per year 10%

41. All agencies were assessed to be above the threshold of 3.0 set by the Government and therefore ready to participate in the program. There is considerable ownership of the HCDPs among agencies, and these are being viewed as the main strategy documents to guide human resource development that would be annually updated, and to form a sub-component of future agency medium term plans (RENSTRA). Re-entry policies, while prepared as part of the HCDPs, require further work. Degree and non-degree training in human resource management, which is part of several agency HCDPs and will be supported by the project, will help to this end. In addition more technical assistance will be required, and will also be financed by the project in the form of consultancy support. C. Financial Management 42. A financial management (FM) assessment has been conducted by the Bank and details of the flow of funds, budgeting, disbursement, and auditing mechanisms agreed. The project financial management arrangements follow the government system, especially on budgeting, flow of funds, and the auditing mechanism. The project has two major FM risks: limited experience of PCU/PIU staff to manage the Bank financed project; and weaknesses in internal controls, especially on soft expenditures, e.g., consultants and expenditures related to the scholarships. These risks will be mitigated by: (a) providing financial management training to project financial management staff; (b) providing technical assistance to PCU/PIUs on financial management; (c) putting in place additional financial control procedures (e.g., additional supporting documentation, so that all activities are supported by relevant documents, reports and third-party invoices); and (d) involving the Inspectorate General to ensure that the project internal control system works satisfactorily. D. Procurement

43. A procurement assessment has been conducted, procurement risks identified and mitigation measures agreed to. Procurement will consist primarily of: individual consultants to assist the PIUs on initial start up of the project; firm consultants for program management, audit, and surveys; and non-consulting services for the payment of tuition and living allowances, and for pre-departure training. These are relatively simple and Bappenas, which will conduct the major procurements, is familiar with Bank procurement procedures through its experience in implementing past Bank projects. The main risk is the selection of the consulting firms, which will be mitigated through the initial hiring of individual consultants to assist the PIUs. The procurement plan is acceptable to the Bank. It will be updated at least annually (or as required) to reflect project implementation needs. E. Social 44. The beneficiaries of the scholarships program will be staff of the agencies of the central government; the project does not have any specific regional component and therefore will not be

13

directed towards any particular community. The inclusion of shorter non-degree programs and domestic degree programs should in particular benefit women given the relatively greater constraints they face on going for longer duration overseas training. No social safeguards are triggered by the project as it does not involve land acquisition, involuntary resettlement, or target communities of Isolated and Vulnerable Peoples (IVPs). F. Environment 45. The Project will support degree and non-degree training in environmental sciences and natural resource management for relevant participating agencies, such as Bappenas and BPN, which should contribute to strengthening the Government’s capacity in this area. The project will not finance any civil works and is not expected to have any adverse environmental impacts; therefore it has been categorized as an Environmental Category 'C' program.

14

Annex 1: Results Framework and Monitoring

INDONESIA: SCHOLARSHIPS PROGRAM FOR STRENGTHENING REFORMING INSTITUTIONS Results Framework

Project Development Objective (PDO)

: The Development Objective of the proposed project is to build participating agencies’ capacity by: (a) strengthening their human resources in core functional areas; and (b) enhancing their ability to initiate and manage reforms.

PDO Level Results Indicators* C

ore Unit of

Measure Baseline Cumulative Target Values**

Frequency Data Source/ Methodology

Responsibility for Data

Collection

Description (indicator definition

etc.) YR 1 YR 2 YR3 YR 4 YR5

Increase in percentage of staff with the relevant competencies in the core priority areas of the participating agency, as based on needs and gap analysis

%; gap

analysis score

N/A

5% increase

10% increase

15% increase Annual

HCDPs; HR database; tracer studies

PA

Percentage of respondents in the agency expressing satisfaction with the impact of the program on building agency capacity

% N/A

75% expressing satisfaction

Periodic Staff Survey PCU

INTERMEDIATE RESULTS

Intermediate Result

Technical competencies and gap analysis conducted Human Capital Development Plans (HCDPs) prepared that identify key competencies required, and staff skill gaps in core priority areas

Report 22

HCDPs prepared

All 22 HCDPs updated





Annual HCDPs PA

Scholarships in priority areas % N/A >90% >90% >90% >90% >90% Annual HCDPs;

project PA, PCU

15

Percentage of scholars participating in degree and non-degree programs that were identified through the gap analysis in HCDPs

monitoring reports; HR

database

Scholar selection transparent and merit-based Percentage of scholars selected (in each year) as per procedures specified in Project Operational Manual, as verified by independent technical audit

% N/A >95% >95% >95% >95% >95%

Annual

Independent Technical

Audit PCU

Successful completion of studies Percentage of scholars completing their programs of study with GPA’s >3.0 (annual targets)

% N/A 80% 80% 80% 80% 80% Annual

Project

monitoring reports, HR databases

PCU, PA

Effective scholar reintegration Re-entry, placement, and career development policies in place Database and tracer studies used for tracking placement and career progression of returned scholars

Decree

None

Limited

Re-entry and

placement policies in

place

Re-entry placement, and career

dev. policies in

place


dev. policies in

place

Database used for tracking alumni


dev. policies in

place



dev. policies in

place


Annual

Project

monitoring reports

PA

Program evaluation Percentage of staff expressing satisfaction with the program based on staff survey

% N/A

75% expressing satisfaction

Periodic Staff Survey PCU

*Please indicate whether the indicator is a Core Sector Indicator (see further http://coreindicators) **Target values should be entered for the years data will be available, not necessarily annually.

http://coreindicators/�

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Annex 2: Detailed Project Description 1. The development objective of the proposed project is to build participating agencies capacity by: (a) strengthening their human resources in core functional areas; and (b) enhancing their ability to initiate and manage reforms. The Project has three components with a total investment cost estimated at $112.65 million, all of which will be financed by IBRD. Each component is described below. Component 1: Degree Scholarships Program for Ministry of Finance ($34.5 million) 2. This component has two sub-components:

• Sub-component 1.1: Selection and Pre-departure training. • Sub-component 1.2: Scholarships, which will provide overseas and link degree

scholarships for each of the twelve echelon I units within the Ministry of Finance.

3. Each echelon I unit’s scholarship program has been derived from its HCDPs, with the specific degree and non-degree programs detailed in Table 2. Each of the echelon I units in MoF has the flexibility to determine annual targets for degree programs for PhD and Masters, either foreign, or link programs. MoF chose not to avail itself of project support for non-degree training — which is specified in its HCDP, and listed in Table 2 — as it has already secured grant funding for this. There is considerable ownership of the HCDPs, and these are being viewed as the main human resource strategy documents that will be a sub-component of the future agency medium-term plans (RENSTRA), and will also provide the basis for funding training from other financing sources, such as the government budget and other donor programs. 4. In contrast to the ten participating agencies coordinated by the Bappenas PIU, the aggregate budget provision for MoF has not been allocated across individual echelon I units. For each year of project implementation (from 2011 to 2014) the twelve units will compete for scholarships with all echelon I units and a list of the highest ranking applicants will be prepared. Candidates who fulfil the selection requirements will undertake pre-departure language training. Those candidates who successfully complete the language training will be offered a scholarship, starting with the highest ranked candidate until either: (a) the number of qualified candidates is exhausted; or (b) the budget prepared for the particular round of competition (cohort) is exhausted, whichever occurs first. The fluid nature of appointments in MoF makes this a more practical approach as candidates are likely to be deployed and redeployed across any of the twelve MoF units.

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Table 2: Core priority areas and identified fields of study for MoF Echelon I units

Agency Core priorities Fields of study Degree Non Degree

DG Taxes Broad areas including fiscal policy, tax policy and administration, budget, and treasury functions, HRM policies and practices in the civil service.

HRM; Law/International Law; MIS/IT/Information Security; Public Policy; Tax Policy & Management; International Tax; Management/Business Administration; Fiscal Administration; Accounting/Forensic Accounting; PR/Communication; GIS/Geomatic/Land Studies; Economics

Business Forensic; Computer Forensic; Business Analysis; Project Risk Management

DG Customs & Excise

HRM; Public Administration; Law/Customs Law; International Law; Accounting; International Relations; Economics; IT; Public Finance

Public Procurement; Goods Classification & Identification; Customs Valuation; Narcotics & Dog Handler; Intellectual Property Rights; Ship Search; Forensic Audit

DG Treasury Public Finance; Accounting; Public Policy; Public Expenditure Management

Quantitative Analysis; Strategic Management; International issues related to Treasury; Intergovernmental Fiscal Policy

DG Budget Public Finance/Fiscal Risk Management; Economics; Accounting; Public Policy/Administration; MIS/IT; HRM; Law

DG Debt Management

Law; HRM; Finance; Business Administration; Commerce; Economics; Accounting

Database; Networking; Programming; Web Design; Planning & Organizing; Psychology/Counselling; Legal Drafting; Risk Management; Marketing Management

DG State Asset Management

Asset Management; Accounting; Business Valuation; Law

Financial Analysis; Business Planning & Forecasting; Investigation/Asset Tracing, Laundering & Recovery; Performance Auditing; Advocating; IT/Programming; PR; OD

Office of Fiscal Policy (BKF)

Industrial Psychology; Management; Economics; Islamic Economics; Insurance/Actuarial; Accounting/Forensic Accounting; Islamic Finance; Law

HRM; Public Speaking; Certified Security Management; CIA; CRM; Investigation; Syaria Insurance; Investigation; Legal Drafting; Syaria Capital Market; Arabic Language; Property Evaluation

BPPK Public Administration; Law; Management; HRM; Office Management; Service Excellence; Talent

18

Public Finance; Asset Management; MIS/IT; Fiscal Policy; Accounting; Business Valuation; Economics; Education

Management; Training Management/Certification; BSC; PR; Strategic Planning; Legal Drafting; Negotiation; Communication; Problem Solving; Innovation

Inspectorate General

Public Administration; Public Accounting; Finance Management/Public Finance; Research Methodology/Operation Management; Criminology; HRM; Computer Science

Professional Certifications (CIA, CFA, CMA, CHRP, CISA, CPA, CFE, PM)

Secretariat General

Management, Industrial Psychology; OD; Public Administration; Law (Business/Commerce/Criminal); Economics; MIS; Taxation; Communication; Business Administration; Communication; Accounting

Performance Management; Competencies; Arbitrage; PPP; Business Analysis; Legal Drafting

Abbreviations: BSC : Balanced Scorecard GIS : Geographic Information System CFA : Certified Financial Analyst HRM : Human Resources Management CFE : Certified Fraud Examiner IT : Information Technology CHRP : Certified Human Resources Professional MIS : Management Information System CIA : Certified Internal Auditor OD : Organizational Development CISA : Certified Information System Auditor PM : Project Management CMA : Certified Management Auditor PPP : Public Private Partnership CPA : Certified Public Accountant PR : Public Relation CRM : Certified Risk Management

19

Component 2: Degree Scholarships and Non-degree Training for the Bappenas Cluster of Participating Agencies ($70.3 million) 5. This component has two sub-components:

• Sub-component 2.1: Selection and Pre-departure training. • Sub-component 2.2: Scholarships and Non-degree Training, which consists of

scholarships for overseas, domestic, and link degrees; and overseas and domestic non-degree training programs.

6. The 10 participating agencies coordinated by the Bappenas PIU are:

1. Bappenas 2. National Civil Service Agency (BKN) 3. Investment Coordination Board (BKPM) 4. Supreme Audit Board (BPK) 5. Financial and Development Supervisory Board (BPKP) 6. National Land Agency (BPN) 7. Ministry of Foreign Affairs (MoFA) 8. Ministry of Home Affairs (MoHA) 9. National Institute of Public Administration (LAN) 10. State Ministry for Administrative and Bureaucracy Reforms (MenPAN)

7. These agencies were selected for participation as they are crucial for improving the “soft infrastructure” identified as a key national priority in the National Medium Term Development Plan (2010-2014). The specific priority areas for scholarships identified by the agencies in their HCDPs are specified in Table 3. Component 3: Program Support ($7.9 million) 8. Component 3 provides support to the Government to help implement the program. It has two sub-components:

• Sub-component 3.1: Support for scholar placement, including matching of scholars to institutions and courses, and the payment of living stipends to scholars and tuition fees to institutions; and support for project management, including administrative and financial management, disbursement, and procurement, and routine monitoring of scholars.

• Sub-component 3.2, which will focus on quality assurance and studies. The three clusters of activity funded under this sub-component are annual technical audits to ensure compliance with the agreed scholar selection modalities; an alumni survey to gauge alumni satisfaction with the program, and broader participating agency staff assessment of impact of the program on agency capacity development; and consultancy support for the design and implementation of a scholar re-entry and career development program.

20

9. Table 4 and Table 5 provide details of the component breakdowns and the expected number of scholars who will be financed by the project. Of the approximately $103 million for training, $90 million are for degree training and $13 million for non-degree training; $83 million are for overseas programs and $20 million for domestic and link programs. In terms of staff numbers, approximately 1650 civil servants will partake in non-degree training and 950 in degree programs.

21

Table 3: Core priority areas and identified fields of study for the ten participating agencies

Agency Core priorities Fields of study Degree Non Degree

Bappenas Broad set of sectoral and economic analysis expertise

Social Welfare; Politics, Law & Defense; Environmental Science & Engineering; Spatial Planning; Economics; Public Policy; HRM; Auditing

Change Management; Leadership; Performance Management; Planning; Quantitative & Qualitative Analysis & Method; Econometrics; HRM; Impact Analysis; Procurement Auditing

BKN Improvement of HRM policies and practices in the civil service

HRM; Law; Public Policy Management; Psychology; MIS; Finance & Accounting; Communication

Manpower Planning, Training & Development; Legal Drafting; Labour Law; Compensation; Document & Filing Management; Leadership; Problem Solving & Decision Making; HR certifications; Communication; IT; Internships with similar organizations in the Netherlands/Australia

BKPM Investment promotion, improving the investment climate, and managing the investment licensing regime

MIS/IT, Law, Communication; Public Administration; HRM; Economics; Statistics; Agricultural Economics; Engineering; Infrastructure Management; Urban & Regional Planning; Business Administration

Auditing; IT; Training Need Analysis; Program & Budgeting; Legal Drafting; Communication; Archiving; Graphics & Product Design; Negotiation; International Law; Project Appraisal & Evaluation;

BPK Core audit functions: analytical policy, performance audit, financial audit, and investigative audit

Accounting/Forensic Accounting/Public Sector Accounting; Performance Auditing; Public Policy; Asset Valuation; Economics; Law/International Law; International Relations; Strategic Management; OD; HR; Education Studies; Psychology; IT; Business Administration

Professional certifications (like CFE, CMA, CFA, CGAP, PSAK, CerIFR, CISA and CIA), Performance Management for Public Sector, Business Process Analysis; SOP; Change Management; IT; Leadership; Knowledge Management; HRM; Project Management; and staff exchanges with other supreme audit institutions

BPKP Government internal audit and control; public policy; risk management

HRM; Public Policy; Strategic Management; Public Sector Accounting, Financial Accounting; Forensic Accounting; Auditing; Marketing Management, Economics, Risk Management; Education Management; MIS/IT

Professional certifications (CHRP, CGAP; CISA, CRP, CRMP, CCSA, CFA, CFSA, CPA, IFRS, CFE, CFF); short courses in Asset Management, Internal Control, Public Relations, HRM, ICT

BPN Improving the regulatory framework and processes for land acquisition and administration

Geomatic; Geographic; Coastal Marine Resource Mapping; Land Studies/Administration/Politics; Economics; Sociology; Law; Regional Planning; Statistics; Agriculture; Psychology

Surveying and Mapping; Legal; Land Administration; Regional & Spatial Planning; Leadership; Informatics

LAN Improving public administration policies and strengthening civil service training

Government Studies; Public Policy/Administration, Economics; Business Administration; Technology Management; Communication; Sociology; International Relations; MIS/IT; Politics; Education; Financial Management; Nursing; Medical; Accounting; Law; Auditing

Change management; leadership; HRM/OD/Training; Management; Performance Management; Communication; Regional Planning; Politics; Negotiation; Decision Making; Policy Analysis; MIS; Economic Development; Strategic Management; Research Methodology; Planning & Budgeting; Archiving; Legal

MenPAN To reform the national regulatory framework to accommodate

Public Policy/Administration/Management; Law; Government Studies; Organization; HRM; Finance;

Legal Drafting; Communication/PR; Public Policy; Presentation; Leadership; M&E; Negotiation; Decision

22

bureaucracy reform outcomes; and to monitor reform implementation in all central institutions

Management; Communication Making; Program & Budgeting; Archiving; Report Writing; HR Certification; ISO Certification; Service Excellence; IT;

MoHA Improving civil service regulations and capacity building of local governments

Defence Study; Sociology; Economics; Environmental Science; Politics; Public Administration; Regional Autonomy; Regional Finance; Statistics; Entrepreneurship; Agriculture and Agro business International Law; Urban Study; International Relations; Regional Planning/ Planology; Development; HRM/OD; IT; Accounting; Taxation

Public Policy Analysis, Performance Management for Regional Government; Disaster Management; Deconsentration & Decentralization; Urban & Rural Study; HRM; Leadership; Performance Audit; Financial Audit; English Course; Database; Web Design

MoFA Promotion of foreign direct investment

International Relations; Regional Studies; International Security; Peace Studies; Law (Sea, Air & Space, Environment, Energy); Human Rights; Diplomatic Studies; Economics; Policy Sciences; Business Administration; Public Policy/ Administration; Accounting; HRM; Education & Training Management; Finance Management

Abbreviations: BSC : Balanced Scorecard CMA : Certified Management Auditor IFRS : International Financial Reporting

Standard CCSA : Certified Control Self-Assessment CPA : Certified Public Accountant ISO ; International Organizationf for

Standardization CFA : Certified Financial Analyst CRM : Certified Risk Management IT : Information Technology CFE : Certified Fraud Examiner CRP : Certified Reliabilit Professional MIS : Management Information System CFF : Certified Financial Forensic CRMP : Certified Risk Management

Professional M & E : Monitoring and Evaluation

CFSA : Certified Financial Services Auditor CerIFR : Certified International Financial Reporting

OD : Organizational Development

CGAP : Certified Government Auditing Professional

GIS : Geographic Information System PM : Project Management

CHRP : Certified Human Resources Professional HR : Human Resources PPP : Public Private Partnership CIA : Certified Internal Auditor HRM : Human Resources Management PR : Public Relation CISA : Certified Information System Auditor ICT : Information, Communication &

Technology

23

Table 4: Component Cost Breakdown (US $ Millions)

Degree

Programs

Non-Degree

Programs

Selection and pre-

departure training

Program Support Total

Component 1: Ministry of Finance PIU 33.4 0 1.1 34.5 Component 2: Bappenas PIU Participating Agencies 56.4 13.0 0.9 70.3

Ministry of Home Affairs 4.7 1.3 6.0

Ministry of Foreign Affairs 7.5 0.5 8.0

Bappenas 8.0 2.0 0.9 10.9

State Ministry for Administrative Reforms (MenPAN) 4.5 1.5 6.0

Supreme Audit Board (BPK) 5.9 1.1 7.0

Civil Service Agency (BKN) 4.9 1.6 6.5

National Institute of Public Administration (LAN) 4.5 1.5 6.0

Financial and Development Supervisory Board (BPKP) 5.3 1.7 7.0

Land Administration Agency (BPN) 6.6 0.4 7.0

Investment Coordination Board (BKPM) 4.5 1.5 6.0 Component 3: Program Support

Program management Quality assurance, staff survey, and re-entry

7.9 4.1 3.8

7.9

TOTAL 89.8 13.0 2.0 7.9 112.65

Table 5: Expected Number of Scholars 2011 2012 2013 2014 2015 2016 2017 Total

Degree Programs Bappenas PIU Master (S2)

Master overseas 48 56 63 54 44 0 0 265 Master domestic 41 70 57 49 44 0 0 261

Master linkage 5 8 16 14 6 0 0 49 Doctorates (S3)

PhD Overseas 8 24 21 0 0 0 0 53 PhD Domestic 3 20 17 1 0 0 0 41

Non-Degree Training Internship 19 35 35 31 33 16 0 169

Non-Degree Overseas 126 189 182 159 107 71 0 834 Non-Degree Domestic 121 106 151 108 94 84 0 664

Ministry of Finance PIU Master (S2)

Master Overseas 0 35 35 35 35 0 0 140 Master linkage 26 26 26 26 26 0 0 130

Doctorates (S3) PhD overseas 0 10 10 0 0 0 0 20

Non-degree training 0 Grand total 397 579 613 477 389 171 0 2626

Of which, degree 959 Of which, non-degree 1667

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Annex 3: Implementation Arrangements Project institutional and implementation arrangements

1. The main implementation modalities, and the institutional arrangements to support those modalities, are detailed in the Project Operations Manual (POM) available in the project files. The POM was agreed by the Bank at Appraisal and its adoption as standard operating procedures for the project is a condition for effectiveness. Project administration mechanisms

2. A Steering Committee (SC) will be established to provide policy oversight and strategic direction to the implementation of the project. The SC will be chaired by the Vice Minister PPN, Bappenas, with Deputy Program, RB MenPAN as SC Vice-Chair, the First Secretary Bappenas as Secretary, and the Head of Education and Training, Ministry of Finance as Deputy Secretary. Other members will include officials from the Ministry of Finance, Ministry of National Education, and Bappenas. The SC will convene as required, but at a minimum of twice a year during the life of the project. 3. The principal duties of the Steering Committee include:

• To determine annually the level of readiness (based e.g., on the implementation of

HCDPs) and therefore the level of participation authorized for each participating agency.

• To approve the annual work plan of all participating agencies, including proposed technical assistance, overseas and domestic scholarships, non-degree training, and the selection and pre-departure activities of the Bappenas and Ministry of Finance PIUs.

• To decide on any reallocations from one agency to another, based on performance, and in consultation with the World Bank.

• Based on annual reviews of the performance of participating agencies, and in collaboration with the Bank, to authorize the removal of an under-performing participating agency and/or the inclusion of additional agencies. Where the development objectives of the project are impacted by the decision of the SC, the project may be restructured to facilitate better alignment with the revised institutional development goals.

• In collaboration with the Bank, to authorize the addition, removal or revision of articles in the POM to facilitate the smooth operation of the project and/or enhance its efficiency or effectiveness.

4. A Project Coordination Unit (PCU) will be established and will be responsible for the day-to-day coordination and oversight of the project, consolidating reports from the two Project Implementation Units, acting as the secretariat of the SC, and serving as the point of contact between participating agencies, the SC and the World Bank. The PCU is envisaged to convene frequently, on a weekly basis during the initial stages of project implementation, and later as required, but not less than monthly during the life of the project. The PCU is an implementing

25

rather than executive body in that it proposes / recommends change but does not have decision–making authority which rests with the Steering Committee. The PCU will be chaired by the First Secretary, Bappenas with the Head of Education and Training, Ministry of Finance as Vice-Chair. 5. The principal duties of the PCU include:

• Drafting policy and strategic planning documents for consideration by the Steering

Committee. • Acting as Secretariat to the Steering Committee. • Monitoring of the PIUs (both Bappenas and MoF). • Coordination and arbitration of project issues which transcend the work of the PIUs. • Consolidation of reports to the World Bank, including quarterly financial reports and

half yearly and annual implementation progress reports aligned to agreed project indicators and synchronized with half yearly World Bank review missions.

• Contracting and coordination of a consultant firm retained to conduct the annual technical audits.

6. Day to day project implementation will be under the control of two Project Implementation Units PIUs. The Pusbindiklatren Bappenas PIU will handle implementation for all the participating agencies except MoF; the Pusdiklat PPSDM, Ministry of Finance PIU, will handle implementation for the twelve Directorates General under MoF. 7. The principal duties of the PIUs include:

• Dissemination of information about the scholarship program within the respective clusters of participating agencies to ensure that all eligible candidates are aware of the call for application and all interested, eligible, staff have a fair and equal opportunity to apply.

• Assessment of eligibility of all applicants within the respective clusters of participating agencies against the agreed eligibility criteria detailed in the POM.

• Testing of potential scholarship recipients against the agreed selection criteria. • Pre-departure training, with a focus on achieving a level of English language

proficiency and fulfilling the entry requirements of target universities. • Placement of scholarship recipients in appropriate university programs as defined in

the POM. • Payment of tuition, and living allowances and stipends for scholars during studies

abroad. • Contracting and coordination of the consultant firm to conduct the alumni and staff

survey.

8. Final selection of scholarship recipients will be the responsibility of individual participating agencies by interview of the candidates short-listed by the independent testing process. The participating agencies would be responsible for:

• Preparing and implementing HCDPs.

26

• Announcing the scholarship program in the agency. • Reviewing applications and undertaking the first round of screening based on the

administrative eligibility criteria. • Organizing the interviews for selection of candidates. • Coordinating and supervising the placement of candidates. • Regular and routine monitoring of staff undertaking study and/or short term training. • Re-entry placement and career development.

9. The Bappenas PIU has elected to outsource the testing component of the selection process (TOEFL, or test of English language proficiency, and TPA, the test of academic potential); pre-departure training; the placement of scholars; and the payment function for tuition and stipends. The MoF PIU will manage these tasks in-house.

Selection procedures for degree programs

10. The selection procedures for the program will consist of the following steps11

:

• Meeting specified eligibility criteria: Candidates will need to satisfy the following requirements in order for their application to be accepted and to advance to the selection process: (a) nomination by their employing unit for a degree program in an eligible field of study as identified in the agency HCDP; (b) meeting the age requirements (below the age of 40 for PhD and 37 for Masters, as established by an existing MenPAN regulation); (c) greater than two years service; (d) a minimum grade point average of 3.5 for entry to a foreign PhD program, 3.25 for a domestic PhD program, and 2.75 for entry to the Masters program (domestic or foreign).

• Testing: All applicants will undergo a test of academic potential and an English

language test. The passing thresholds for the tests will be a TPA score of 565 or greater, and a TOEFL score of greater than 500 for entry to a PhD and 450 for entry to a Masters program. The conduct of the testing will be the responsibility of the PIU.

• Interviews: All applicants who are above the minimum test thresholds would be

interviewed. The interview would be conducted by the respective participating agency. The interview panels will consist of a minimum of three officials, including senior officials from the personnel bureau, from the training center, and from internal control. The interviews will be conducted using a standardized format and standard

11 There are slight differences in the selection modalities between Component 1 and Component 2. For example, under Component 2 the responsibilities for testing and interviews are divided between the Bappenas PIU and the participating agencies, while in Component 1 they are both with the MoF PIU. Under Component 2 only candidates who have passed a test will be interviewed, while under Component 1 all candidates will be interviewed and the combined score of the test and interviews will be used as a basis of selection. These differences are reflective of different organizational circumstances of the two components. Specifically, since all the DG units in MoF will be competing with each other for the scholarships, whereas the other 10 agencies have fixed allocations (subject to performance), the interview and testing process is more centralized in MoF. The details are given in the POM.

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scoring matrix acceptable to the Bank so that comparisons can be made within and across participating agencies.

• Pre-departure training: Following selection, successful candidates will undergo pre-

departure training in “English for Academic Purposes” (EAP). The length of the EAP program will depend on the individual’s TOEFL score: a score of 450 – 490 will imply up to nine months of training, 491 – 525 up to six months, 526 – 549 up to three months, and 550 or greater will not require language preparation. In parallel to the EAP, candidates will be provided assistance and practice in undertaking GRE/GMAT testing in order to fulfill standard conditions of entry as required by foreign universities.

• Application to university: Successful candidates — those who have passed the

selection process and completed pre-departure training — will apply to universities which meet the quality assurance standards detailed in the POM which include, but would not be limited to, a top category of accreditation by the respective national accreditation agency. The Government will bear the costs for each candidate applying to up to four universities.

11. To maximize transparency, the scores of the candidates would be made public in the agency so that there are no questions around the credibility of the process. 12. These selection modalities are illustrated in Figure 2 below:

Figure 2: Selection modalities for degree programs

13. This selection process will take a specified amount of time with the first cohort of scholars realistically commencing their degree programs in the 2012 academic year. However, the Project will be able to fund staff from the target participating agencies that are already attending a university for Masters or PhD program (referred to as Pick-up Student), thereby

Eligibility Testing Interview Pre-departure training

Apply to university

1. Applications for specific priority areas identified by HCDPs

2. Age requirements 3. Length of service 4. GPA

1. Test of academic potential (TPA)

2. English language (TOEFL)

3. Psychological assessments (optional)

Responsibility of Bappenas and MoF

PIUs

1. Interview panel of at least 3

2. Interview results made public in agency Responsibility of PAs

for Component 2; responsibility of MoF PIU, for Component 1

1. Centralized pre-departure training for TOEFL and GRE/GMAT for passing candidates

Selection procedures

1. Limited to 4 universities meeting accreditation and quality standards

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enabling the project to disburse immediately upon effectiveness. The criteria for funding existing students would be as follows: the scholar is proposed by the employing agency; is currently studying in a university which meets the quality standards for eligible universities in the Project; is in a field of study that is specified in the agency’s HCDP; and has satisfactory academic performance in the university. Selection procedures for non-degree programs 14. Selection procedures for non-degree programs will be more streamlined than for degree programs. Candidates would need to be nominated by their employing unit for a non-degree program in an eligible field of study as identified in the agency HCDP; be below the maximum age limit as specified in the POM (50-55 years); and meet the requirements specified in the POM for length of service and minimum grade point average. Selected candidates meeting these conditions would then be eligible for English language training if required. Financial Management, Disbursements and Procurement

Financial Management

15. The project FM arrangement follows the government system, especially on budgeting, flow of funds, and the auditing mechanism. Overall, the financial management has moderate risk. The project has two major risks: limited experience of the PCU/PIU staff to manage the Bank financed project, and weaknesses in internal controls, especially on soft expenditures, such as consultants and expenditures related to scholarships. These risks will be mitigated by: (a) providing financial management training to the project FM staff on the Bank’s procedures and requirements, especially on disbursement and reporting; (b) providing technical assistance to the PCU/PIUs on financial management; (c) putting in place additional financial control procedures, such as additional supporting documentation, so that all activities are supported by relevant documents, reports and third-party invoices; and (d) involving the Inspectorate General to ensure that the project internal control system works adequately.

16. Budgeting

. The project budgeting system will follow the existing government budgeting system. The project budget will be included in the annual government budget and line ministry budget document (DIPA). There is a risk on the issuance of DIPA which can result in project implementation delays. Delays in the issuing and effectiveness of DIPA may be minimized through prior circulars on the working unit (Satker) decree, and revision of documents when the approved DIPA differs from the proposal.

17. Flow of Funds. The agreed flow of funds mechanism (depicted in the figure below) will follow existing government procedures. The project working unit (Satker) in both PIUs will manage the project budget. All invoices will be submitted to the commitment officer (PPK) under the Satker. The officer will review and verify the invoices and relevant supporting documents, and then submit these to the verification officer. The verification officer will review and verify the invoices and documents before issuing the payment request (SPM) to the treasury office (KPPN). KPPN will issue the payment order (SP2D) to its operational bank, which will arrange for remittance of funds from the designated account to the respective contractor or consultants’ accounts. Project expenditures will be maintained at both PIUs.

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18. Accounting and Reporting

. All financial transactions will be recorded in the government accounting system and included in government accountability reports. The PIU will prepare a separate set of project financial reports that are suitable for project monitoring purposes. The specific accounting procedures are set out in the Project Operations Manual.

19. Internal Control

. Each PIU will incorporate additional financial control procedures into the existing financial management procedures, including the requirement for accounting evidence for student-related expenditures. The PIU may hire a payment agent to manage disbursements related to student expenditures. Apart from stipends, other expenditures will be transferred directly to the third party account, such as tuition fee (university) and insurance expenses (insurance company). Stipends will be transferred directly to the student. There may be other expenditures that follow a reimbursement mechanism. The PIUs or the payment agent will be responsible for maintaining all supporting documents for the purposes of review and audit.

20. Audit Arrangements

. The PCU is responsible for preparing general purpose financial statements. The audit of these statements will be carried out by external auditors acceptable to the Bank. The annual audit report will be furnished to the Bank no later than six months after the end of the Government fiscal year. The auditor will use agreed audit terms of reference. The PCU will develop a monitoring system to ensure that adequate follow-up action takes place in respect of audit findings.

21. FM Implementation Review

World Bank

IFR & W/A

Central Bank DG TreasuryDesignated Account DA statement MOF

IFR

5) DM 3) SP2D

Operational Bank Treasury Offices PCU/PIUs3) SP2D (KPPN) 2) SPM

4) Fund 1) invoices

Transfer Students/UniversityConsultants/Suppliers

Flow of Fund & W/A Mechanism

Reimbursement/Advance

. An FM implementation review will be conducted at least twice a year on a risk basis. It will entail a review of the project financial management system, including project expenditures, accounting, reporting and internal control. In addition, the review will also include the review of internal and external audit reports and the follow-up of

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these audit findings. The review will be conducted by a financial management specialist and/or Bank consultants. Disbursement Arrangements 22. Eventually, the advance, reimbursement and direct payment methods will be used. However, at the time of this document, Indonesia has an unpaid amount owed from another Bank project. Consequently, there may be a delay in being able to use the advance method on this loan. When the advance method is authorized, the Designated Account (DA) will be used to finance eligible project expenditures. The DA will be under the name of DG Treasury in the Ministry of Finance. The PCU will be responsible for reconciling the DA and preparing applications for the withdrawal of additional advances, duly approved by DG Treasury, before their submission to the Bank. Copies of the designated bank account statements will be provided to the PCU by the Directorate for Cash Management in DG Treasury, MOF. 23. The ceiling of the advance to DA will be variable, and the advance(s) will be made on the basis of the six month projected expenditures. The reporting of use of the DA and for requests for reimbursement will be based on the quarterly IFR (Interim Financial Report). Applications for the advance to the DA shall be submitted together with the reporting on use of DA funds which will consist of: (a) Interim Financial Reports (IFRs), and list payments for contracts under the Bank’s prior-review, covering both block grants and others; (b) projected expenditures for consultants and technical assistances for six months; and (c) the DA reconciliation statement. Applications for reimbursement will be supported by these same IFRs, and additional evidence that amounts to be reimbursed have actually been paid. Applications for direct payments will be supported by records evidencing eligible expenditures, such as copies of receipts and invoices. 24. All documentation for expenditures submitted for disbursement will be retained by the implementing unit and be made available to the auditors for the annual audit, and to the Bank and its representatives if requested. Procurement 25. Procurement for the proposed Project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated May 2004 (revised October 2006 and May 2010), and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated May 2004 (revised October and May 2010); and the provisions stipulated in the Legal Agreement. The applicable procurement procedures along with the thresholds for Bank review are determined in the Procurement Plan. The Procurement Plan will be updated regularly, at least annually, and for each update Bank prior approval is required. 26. Organization. Procurement under the project will be carried out by the Bappenas PIU and the Ministry of Finance PIU. There is a procurement service unit (ULP) under the Bappenas structure which carries out all procurement for Bappenas. In the case of MOF, a special procurement committee under PPSDM will be responsible. This special procurement committee is established to regularly carry out all procurement under PPSDM, MOF. Both PIUs have

31

experience in carrying out simple competitive procurement for goods and works under national procedures. However, they may need further assistance and guidance on the selection of consulting firms. 27. Consulting Services

. A number of individual consultants will be hired to assist the PIUs during the start up of the project for duration of less than 6 months: a project management specialist, a procurement specialist, a financial management specialist, an assistant project manager, and an assistant financial management specialist. An education specialist & a HRD Specialist will be hired during project execution. Selection of individual consultants will follow Part V of the Bank Consultant Guidelines, i.e. through a comparison of at least 3 CVs. A number of experts/teachers will be hired under MoF to deliver pre departure training in certain areas of expertise, e.g., English teachers (both local and international), GMAT/GRE teachers, economics teachers, statistics and mathematics teachers. These experts will be hired as service delivery contractors as per para 3.21 of the Bank Consultant Guidelines. The job descriptions, minimum qualifications, terms of employment, and the selection procedures will be agreed with the Bank.

28. In addition, there are a number of consulting firms to be hired:

• A Project management firm to assist the PIUs on overall project management, as well as on complaint handling, will be selected under QCBS procedures.

• A Technical Auditor to ensure compliance with agreed scholar selection procedures under well defined TOR and professional standards. The selection will follow either QCBS, with cost as a substantial selection factor, or Least Cost Selection method (LCS).

• A consulting firm to conduct alumni and participating agency surveys, with an estimated contract value of less than US$ 200,000, will be selected based on Consultant’s Qualification (CQS).

• A firm to provide technical assistance in the development of a re-entry program for participating agencies will be selected under CQS procedures.

Bank Standard RFP will be used for the selection of all consulting firms. 29. Non-Consulting Services

. Non-consulting contracts will consist of a firm to assist the Bappenas PIU in scholar placement, payment of tuition and living allowances, and scholar monitoring. As a payment agent, the firm will be responsible for transferring money to participants during their course of study. In addition, there will be a multi-year contract with a firm for pre-departure training, with a mandatory annual review of performance, and price adjustment clauses. Procurement for both packages will follow ICB procedures for non consulting services, using sample Bank bidding documents for non consulting services.

30. The scholarships (tuition and stipends for living expenses and supplies) would not be subject to the Bank’s procurement guidelines, but would be subject to the overarching requirements of efficiency and economy. 31. Procurement Risk Assessment. Due to the issuance of the new national procurement regulation (referred to as “Perpres 54/2010”), there is a systemic countrywide concern on the

32

mandatory use of Perpres 54/2010 over the Bank Guidelines for Bank financed projects. This has been discussed at the country level, and will be resolved for all projects in the portfolio. With regard to the particular procurements under this Project, the main risk is of delays. The hiring of a procurement specialist at the start up of the project will facilitate advance procurement for the selection of major consultancy and non consulting services contracts. The ULP Bappenas and the procurement committee of PPSDM MOF have the requisite experience in carrying out procurements under national procedures. Therefore, the overall procurement risk is “medium”.

32. An annual Bank supervision is proposed to facilitate resolution of pending procurement actions. Governance and Anti-corruption

33. The main corruption risks in the project are that: (a) scholars will not be selected in a fair and transparent manner; (b) scholarship recipients are unaware of their rights and obligations; and (c) there is collusion and corruption in the procurement process. 34. A Transparency and Accountability Action Plan has been developed and agreed with the Government to mitigate fraud and corruption risks. The Plan outlines the actions that will be undertaken by the Executing and Implementing Agencies to reinforce project governance, enhance transparency of project administration and activities, ensure fairness in the selection and award of scholarships, and reduce opportunities for corruption, collusion or fraud. 35. The POM specifies the definition of corrupt practices based on Bank Guidelines (On Preventing and Combating Fraud and Corruption in Projects) and Indonesian laws. The main mitigation measures in the POM are:

• Criteria of scholarship recipients.

•

Criteria and procedures to select eligible candidates for the scholarship program would be established in the form of a Bappenas decree. Defined and well communicated procedures

•

. Selection criteria and procedures will be depicted in the form of simplified flow chart and will be communicated to participating agencies prior to the deadline of program application. Rights and obligations of scholarship recipients

•

. Detailed rights and obligations of selected candidates will be established by decree. Each selected candidate will sign an agreement with their agency accepting the rights and obligations. Transparency and Resolution of complaints

•

. Bappenas will develop a special page on its website to display information on the scholarship program and upload all relevant documents and information. Designated addresses or numbers for complaints would be made available in the website as well as in all communication materials produced by Bappenas and participating agencies. Mechanisms for quality assurance.

A technical audit will be conducted annually by an independent consultant to ensure compliance with the procedures for selection of candidates. The consultant report would be provided to the Steering Committee for necessary action as required.

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Environmental and Social

36. As specified in the appraisal stage Integrated Safeguards Data Sheet there are no safeguards triggered by the project.

Monitoring and Evaluation

37. The arrangements for results monitoring are detailed in the POM. Results monitoring will consist of three sets of activities, all of which will be aided with consultancy support from the project. First, routine monitoring of project implementation to ensure that HCDPs are annually updated, that scholars are sent for programs that are prioritized in the HCDPs, that information pertaining to the scholar selection modalities is maintained, scholars are monitored during the course of their degree and non-degree programs, and returning alumni are tracked with the aid of HR databases. Second, an independent technical audit, conducted annually, to check, on a sample basis, compliance with the procedures for the selection of candidates, and more broadly, compliance with the operating procedures detailed in the POM. Third, periodic assessments through two alumni and staff surveys (one midway through the project and the other at project completion) to assess alumni and agency staff satisfaction with the program, and the impact of the scholarships program on agency capacity building.

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Annex 4: Operational Risk Assessment Framework (ORAF)

Project Development Objective(s)

To build participating agencies’ capacity by: (a) strengthening their human resources in core functional areas; and (b) enhancing their ability to initiate and manage reforms.

PDO Level Results Indicators:

Increased percentage of staff with the relevant competencies in the core priority areas of the participating agency, as based on needs and gap analysis Percentage of respondents in the agency expressing satisfaction with the impact of the program on agency capacity and internal operating environment, based on staff survey

Risk Category

Risk Rating Risk Description Proposed Mitigation Measures

Project Stakeholder Risks

MI

Government agencies excluded from the scholarship program and individual civil servants not selected to participate would oppose and attempt to undermine the program.

Agency selection was based on clear transparent criteria: (a) key government agencies responsible for public sector and financial management, improving the investment climate, and for implementing BR; and (b) preparation and implementation of a good quality HCDP. Candidate selection will be based on rigorous and transparent criteria that will be well publicized. An independent technical audit will review compliance with these procedures.

Implementing Agency Risks

ML

Lack of ownership of the new concept of HCDPs. Agencies will not have the ability to select, manage, and monitor scholars. Financial management and procurement capacity may be

Technical assistance has been provided to agencies in preparing HCDPs. Bank dialogue with agencies on this new concept during preparation and implementation. Technical assistance is a component of the project and will support implementing agencies with selection, placement, monitoring and evaluation, as

35

lacking. Nepotism in the award of scholarships; collusive practices and other forms of corruption, e.g., in the selection of consultants; over-charging for customized domestic degree and linkage programs.

well as financial management and procurement. Standardized selection procedures are specified in the agreed Project Operations Manual. Results of the selection process will be made public in the websites of the agencies. Bappenas will develop a special page on its website to display information on the program, and to handle complaints. An agreed Anti-corruption Action Plan is part of the POM and its implementation will be monitored. Technical audits will verify compliance with the procedures relating to selection.

Project Risks

• Design

L

Implementing arrangements (Steering Committee, Project Coordination Unit, two Project Implementing Units, and 11 participating agencies) will be too complicated. Bappenas PIU will attempt to take over some of the responsibilities of the participating agencies.

Implementation modalities (with the specific roles and responsibilities of the Steering Committee, PCU, PIUs, and the participating agencies) have been specified in the Project Operations Manual (POM). Regular project implementation support will review implementation of the POM.

• Social and Environmental

L

No safeguards are triggered by the project. None.

• Program and Donor L The project is not dependent on other activities

or programs for its success. None.

• Delivery Quality

MI

Loss of momentum in Bureaucracy Reform. Re-integration of scholars into the agency upon their return may be difficult.

There is on-going Bank dialogue with concerned stakeholders on implementing Bureaucracy Reform. The project includes considerable technical assistance, through both degree and non-degree training and consultancy support, to help further develop and implement effective scholar re-entry and career development.

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Overall Risk Rating at Preparation Overall Risk Rating During

Implementation Comments

ML ML

Overall preparation and implementation risk ratings are based on Indonesia’s long history with scholarship programs and the project’s use, wherever possible, of existing institutional arrangements. Risks identified relate primarily to governance risks around candidate selection, and design risks given this new approach to scholarships anchored in institutional development. However, there is now strong agency ownership of the HCDPs, and appropriate mitigation measures are in place to address governance risks. These will be carefully monitored throughout implementation.

Abbreviations: L: Low ML: Medium Likelihood MI: Medium Impact

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Annex 5: Implementation Support Plan Implementation Strategy 1. The strategy for implementation support (IS) has been developed based on the nature of the project and its risk profile. It will aim at making implementation support to the client more flexible and efficient, and will focus on addressing the principal risks identified and the agreed risk mitigation measures described in the ORAF. These risks relate to stakeholder risks, implementing agency capacity risks, and the difficulties of successfully re-integrating scholars. 2. The main areas for implementation support are as follows:

• Technical support. Technical inputs to the participating agencies and PIUs will be required to regularly update and implement the HCDPs, to ensure compliance with agreed modalities for scholar selection, to ensure appropriate pre-departure training, and to have effective scholar re-integration into the agency. The team’s field-based training specialist and public sector specialists will provide regular inputs to the agencies in each of these activities.

• Procurement. Implementation support will include: (a) providing training to members of the Procurement Committee and related staff in the regional project offices, as well as the services of a project management consultant; (b) reviewing procurement documents and providing timely feedback to the Procurement Committee; and (c) providing detailed guidance on the Bank’s Procurement Guidelines to the Procurement Committee; and (d) monitoring procurement progress against the detailed Procurement Plan.

• Financial management. Support will include the provision of training to the concerned financial management consultants in the PIUs, and reviewing the project financial management system (on a semi-annual basis), including accounting, reporting, and internal controls.

• Anti-Corruption. The Bank team will support the implementation of the agreed Governance and Anti-corruption Plan, and provide guidance in resolving any issues identified.

• Other Issues. Sector level risks, specifically those posed by the overall civil service regulatory environment, will be addressed through the broader engagement on civil service reform.

• Overall project management. The two co-TTLs and two public sector specialists, based in the country office, will provide regular supervision of all operational aspects, as well as coordination with the client and among Bank team members.

3. Most of the Bank team members, including the co-TTL, will be based in the Indonesia country office to ensure timely, efficient and effective implementation support to the client. Formal supervision and field visits will be carried out semi-annually; however, given the strength

38

of the Bank team in the Jakarta office, supervision will be ongoing as per the demands of the project. Detailed inputs from the Bank team are outlined in the Implementation Support Plan.

Implementation Support Plan 4. The main focus of implementation support is summarized in the table below.

Time Focus Skills Needed Resource Estimate

Partner Role

First twelve months

Preparation of HCDPs HR consultancy support Already contracted through trust fund

Scholar selection Training specialist 6 SWs

Pre-departure training

Institutional arrangement and project supervision coordination

Public sector specialist(s) 8 SWs

FM training and supervision FM specialist 2 SWs

Procurement training & review Procurement specialist 2 SWs

Task leadership Co-TTLs 8 SWs

12-48 months

Scholar selection Training specialist 2 SWs

Pre-departure training

Scholar monitoring Training specialist Public sector specialists

2 SWs

Scholar re-integration Training specialist Public sector specialists

4 SWs

Independent technical audit Training specialist Public sector specialists Procurement specialist

2 SWs

Financial management, disbursement, and reporting

FM specialist 2SWs

Procurement review Procurement specialist 2 SWs

Task leadership Co-TTLs 6 SWs

5. Staff skill mix required is summarized in the table below:

Skills Needed Number of Staff Weeks Number of Trips

Comments

Public sector specialist 8 (4 + 4) SWs annually N/A Country office based

Training specialist 6 SWs annually N/A Country office based

Financial management specialist 2 SWs annually N/A Country office based

Procurement specialist 2 SWs annually N/A Country office based

Governance specialist 2 SWs annually N/A Country office based

Task team leaders 8 (4+ 4) SWs annually Two HQ and country-office

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Annex 6: Team Composition

World Bank staff and consultants who worked on the project are listed in the table below.

Name Title Unit

Zahid Hasnain Task Team Leader, Senior Public Sector Specialist

EASPR

Theo David Thomas Co-TTL, Senior Public Sector Specialist EASPR

Sameena Dost Senior Counsel LEGES

Staffan Synnerstrom Lead Public Sector Specialist EASPR

Erwin Ariadharma Senior Public Sector Specialist EASPR

Susiana Iskandar Senior Education Specialist EASHE

Indira Dharmapatni Social Development Specialist EASIS

Andrew Sembel Senior Environmental Specialist EASIS

Christopher Smith Senior Education Specialist EASHE

Rajat Narula Senior Financial Management Specialist EAPFM

Unggul Suprayitno Senior Financial Management Specialist EAPFM

Rizal Rivai Senior Procurement Specialist EAPPR

Eka Zarmen Putra Operations Officer EACIF

Dayu Amurwanti Operations Analyst EACIF

Lieke Riyanti Program Assistant EACIF

Lynn Yeargin Program Assistant EASIN

Marina Marpaung Program Assistant EASIN

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