World Bank Document · OTO fellowships to Bappenas from previous periods are yielding very substantial long term development benefits to the economy and institutional conditions remain

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 15134

IMPLEMENTATION COMPLETION REPORT

INDONESIA

PROFESSIONAL RUMAN RESOURCE DEVELOPMENT PROJECT(LOAN 3134-IND)

DECEMBER 5, 1995

Population and Human Resources DivisionCountry Department IIIEast Asia and Pacific Regional Office

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

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CURRENCY EQUIVALENT

Currency Unit = Rupiah

At Appraisal in 1989

US$1.00 = Rp 1,770Rp I million = US$565

Annual Average

1990 1991 1992 1993 1994 1995

1,843 1,950 2,030 2,080 2,160 2,237

FISCAL YEAR OF BORROWER

April I - March 31

ABBREVIATIONS

BAPPENAS - National Development Planning AgencyBPPT - Agency for Assessment and Application of TechnologyDRN - National Council for ResearchGOI - Government of IndonesiaHRD - Human Resource DevelopmentICR - Implementation Completion ReportLIPI - Indonesian Institute of ScienceLPND - Non-Departmental Government Research InstituteMOEC - Ministry of Education and CultureMOF - Ministry of FinanceNASTOT - National Steering Team for Overseas TrainingNGO - Non-Government OrganizationNPV - Net Present ValueOTO - Overseas Training OfficePHRDP - Professional Human Resource Development ProjectPHRDP II - Second Professional Human Resource Development ProjectRMPT - Regional Manpower Planning and TrainingS I - Undergraduate Degree Program (Bachelor)S2 - Masters DegreeS3 - Doctorate DegreeS&T - Science and TechnologySAR - Staff Appraisal ReportSTAID - Science and Technology for Industrial DevelopmentTPA - Academic Potential Test

FOR OFFICIAL USE ONLY

TABLE OF CONTENTS

Page No.

Preface ................................................................. i

Evaluation summary ................................................................. ii

Part 1: Project Implementation Assessment

A. Statement/Evaluation of Objectives. IB. Achievement of Objectives. 2C. Major Factors Affecting the Project. 7D. Project Sustainability. 7E. Bank Performance. 8F. Borrower Performance. 8G. Assessment of Outcome. 9H. Future Operations .101. Key Lessons Learned .10

Part 11: Statistical Tables

Table 1: Summary of Assessments .12Table 2: Related Bank Loans .14Table 3: Project Timetable .15Table 4: Loan Disbursements: .15Table 5A: Key Indicators for Project Implementation .16Table 5B: Summary Status of Fellowship Programs by Recipients 17Table 5C: Summary Status of Fellowship Programs .18Table 5D: Status of Consultant Services .19Table 6A: Project Costs .20Table 6B: Project Financing .20Table 7: Economic Costs and Benefits .21Table 8: Status of Legal Covenants .22Table 9: Bank Resources: Staff Inputs .23Table 10: Bank Resources: Missions .24

Appendix A: Mission's aide-memoire ....................... 25

Appendix B: Borrower contribution including Operational Plan 28

Map No. 21853-IBRD

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

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INDONESIA

PROFESSIONAL HUMAN RESOURCE DEVELOPMENT PROJECT(Loan 3134-IND)

Preface

This is the Implementation Completion Report (ICR) for the Professional HumanResource Development Project (PHRDP) in Indonesia, for which Loan 3134-IND in the amountof US$117.5 million equivalent was approved on November 28, 1989 and made effective onFebruary 22, 1990.

The loan was closed on the original closing date of March 31, 1995. Total loandisbursement amounted to US$116.2 million and the last disbursement took place on August 2,1995. It was immediately succeeded by PHRDP II, which: (a) provided continuing financing forfellows still overseas in the midst of their education, as anticipated by the time-slice provisions ofPHRDP; and (b) continued the fellowship programs supported under PHRDP but with substantialchanges.

The ICR was prepared by David H. Clark of the Population and Human ResourcesDivision, Country Department 3 of the East Asia and Pacific Region, and reviewed by Ms.Himelda Martinez, Division Chief, and Mr. Richard Calkins, Project Adviser. The borrower hasreviewed the document.

Preparation of this ICR was initiated in the Summer, 1994, and followed up duringthe Bank's ICR mission in May 1995. It is based on materials in the project files. A summary ofthe borrower's contribution to the ICR prepared by the borrower is attached as Appendix B; thefull report is contained in the Asia Files.

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INDONESIA

PROFESSIONAL HUMAN RESOURCE DEVELOPMENT PROJECT(Loan 3134-IND)

EVALUATION SUMMARY

Introduction

I. The Government of Indonesia has been following a balanced strategy toward educationaldevelopment with the bulk of support going to lower levels of education. As part of the overallstrategy the Government has been carrying out small but significant programs to develop highlevel professional human resources. The long term approach has been to support the developmentof domestic graduate education, to a large extent with Bank funding. The short-term approachhas been to meet specific manpower needs in the civil service with overseas graduate degreefellowships. The Bank has supported this latter effort in Science and Technology Training, FY85(Loan 2599-IND) and with project-specific overseas training in a number of projects withdifferent agencies such as the Ministries of Education and Culture, Public Works, Finance, andManpower.

Project Objectives

2. The objectives of PHRDP were to improve: (a) human resource policymaking and planning;(b) the quality of professional, technical and managerial staff to ensure improved performance inpolicymaking and implementation in critical areas of economic development concerned with growth,with sustainable development, industrialization, increasing private sector participation anddecentralization; and (c) the quality of scientific and technological research and development, enhanceits management and improve the application of research and technology to industrial development.The project had three components: (a) improved planning and management of human resourcedevelopment; (b) professional and managerial staff development; and (c) science and technology forindustrial development (paras. 1-3). A major part of the project were overseas fellowships for theretraining of civil servants, managed by three largely independent PIUs: (a) Science and Technologyfor Industrial Development (STAID), for S&T; (b) Ministry of Finance (MOF), for finance andeconomics; and (c ) the Overseas Training Office (OTO), for other appropriate subjects.

3. The project objectives were consistent with the Government's strategy for economicdevelopment and were in line with the Bank's strategy for assistance in human resourcedevelopment in Indonesia. During implementation it became clear that limiting fellowships to onlycivil servants did not support the need for high level manpower in the rest of the economy. Abalanced strategy for human resource development should probably have included an increasedsupply of high level manpower for both the public and private sectors (paras. 4 and 5), andthrough not only overseas but domestic fellowships as well (para. 40).

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Implementation Experience and Results

4. Estimated project cost at completion is US$159.0 million compared with the appraisalestimate of US$168.8 million, with a cost underun of US$9.8 million (about 6%) which waslargely due to: (a) a renovation of OTO offices was not done; (b) much less equipment/materialswere acquired; and (c) reported costs of regular staff development programs, to be financed100% by the Government, were significantly lower at completion than had been estimated atappraisal. The percentage of Loan financing of the Project was 73%, compared with the appraisalestimate of 70% (Tables 6A and 6B). Other than weak overall coordination among themanagement units, largely because of the inactivity of NASTOT (para 27), there were no majorimplementation problems. The project was well implemented and completed as originallyplanned.

5. The project has attained most of its immediate objectives without major shortcomings.The fellowship components effectively served as a source of high level professional andmanagerial manpower. They used procedures successfully developed previously and madecontinuing improvements throughout the project (paras. 10-1 1). Sustainability of the project'sachievements with respect to overseas fellowships depends largely on the utilization of thereturnees and whether they make substantial contributions to the economy as envisaged in theproject objectives. Efforts have been made to improve utilization of the returnees, such asimproved re-entry arrangements and monitoring returnee performance.

6. It is too soon to ascertain the actual impact of PHRDP fellowships on economic andindustrial development. Fellows have either just returned or are still studying abroad. Estimatesof likely impact were made based on the past history of the agencies in utilizing returnees and theinstitutional arrangements for using high level manpower. Since most MOF fellowships and theOTO fellowships to Bappenas from previous periods are yielding very substantial long termdevelopment benefits to the economy and institutional conditions remain favorable, it is likelythat the long term impact will be substantial for similar PHRDP fellowships. For the other OTOfellowships there is simply no evidence but it is not likely that the benefits are as great. For theSTAID supported S&T fellowships, institutional constraints have prevented previous S&Tfellowships for government research institutes from having much effect on economicdevelopment, particularly private sector development (paras. 15 and 30). PHRDP S&Tfellowships are likely to show a substantial impact only if there are significant institutionalchanges, such as new personnel practices for the LPNDs and complementing changes ingovernment rules that would encourage and reward cooperation between government researchinstitutes and the private sector. Appropriate institutional changes are now in process. Thereseems to be a good chance that the fellowships will have, on average, a large enough effect on theeconomy to yield a positive NPV (paras. 34 - 36).

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Summary of findings, future operations, and key lessons learned

7. The project achieved most of its immediate objectives without major shortcomings.Institutional changes are now in the process of being developed and implemented. There is agood chance that the typical fellowship holder can have a significant effect on the economy(para. 29, 30, 35).

8. The fellowship programs will be continued under PHRDP II. Improvements in S&Tmanagement will be continued under the proposed (Industrial Technological DevelopmentProject) ITDP. ITDP would support further improvements in S&T policy and informationsystems; and core activities to strengthen small and medium scale industries and their linkages tolarge industries (paras 37 and 38).

9. Lessons learned have been: (a) opening fellowships to private citizens would probablyhave increased the impact of the fellowship program (para. 39); (b) more effort should have beenmade to integrate domestic graduate education into the fellowship programs (para. 41); and (c)it would have been useful if the design and m6nitoring of the project would have consideredwhether the expensive overseas fellowship programs would have--or could have--an impactsufficient to warrant the size of the investments (para 42).

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INDONESIA

PROFESSIONAL HUMAN RESOURCE DEVELOPMENT PROJECT(Ln. 3134-IND)

Part I: PROJECT IMPLEMENTATION ASSESSMENT

PROJECT REVIEW

A. Statement/Evaluation of Objectives

1. The project had three major objectives: (a) to improve human resource developmentpolicymaking and planning; (b) to improve the quality of professional, technical and managerial staffto ensure improved performance in policymaking and implementation in critical areas of economicdevelopment concerned with growth with sustainable development, industrialization, increasingprivate sector participation and decentralization; and (c) to improve the quality of scientific andtechnological research and development, enhance its management and improve the application ofresearch and technology to industrial development. These objectives were consistent with theGovernment's strategy for economic development, since improving the capability of professional,technical and managerial staff would be a key factor in successful implementation of developmentprograms; and were in line with the Bank's strategy for assistance in human resource development inIndonesia.

2. The project had three components: (a) Improved Planning and Management of HumanResource Development, which included improvements to the management of overseas training; (b)Professional and Managerial Staff Development, which included the Overseas Training Office (OTO)and Ministry of Finance (MOF) fellowship programs; and (c) Science and Technology for IndustrialDevelopment (STAID), which included S&T policy analysis, improving the management of S&T, andS&T staff development and training, largely through overseas education and training. And theproject had four largely independent project implementation groups: (a) HRD/ BAPPENAS, whichmanaged the HRD policy and planning activities; (b) OTO, which managed improvements in themanagement of overseas training as well a substantial professional and managerial staff developmentfellowship program; (c) MOF, which managed the fellowship program for finance, monetary policy,and related fields; and (d) STAID, which managed the Improvement of Science and TechnologyPolicy Analysis and Management and the Science and Technology Staff Development and Training.

3. The major part of the project was directed at improving the quality of civil service staff,largely through overseas fellowships, a continuation of the Government's short-term strategy towardthe development of high level manpower. The long term strategy has been to support development ofdomestic graduate education, to a large extent with Bank funding. PHRDP contained three of thefour major organizations implementing overseas fellowships for civil servants (the other being theMinistry of Education and Culture (MOEC)). The three organizations had all been started in the1980's with donor support, including the World Bank. PHRDP fellowships represented about 20%

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of the overseas fellowship placements during the period of the project (the remainder through MOECand as part of other separate projects).

4. The project was appraised in 1989 and went into effect in 1990, a period when the countrywas moving into a phase of sustained, more rapid growth with a dramatic shift in the respective rolesof the public and private sectors. The fellowship program with almost all of its resources going intothe training of government employees, was perhaps an anachronism. At the time PHRDP was beingdeveloped the government was not prepared to use loan funds on a wide scale to finance overseastraining for private sector staff (para. 2.33, SAR). Limiting fellowships to only civil servants ignoredthe need for high level manpower in the rest of the economy. During implementation it became clearthat a balanced strategy for human resource development should probably have included an increasedsupply of high level manpower for both the public and private sectors--indeed for whatever part of theeconomy that the individual could make the greatest contribution to development.'

5. The project was complex. It involved four largely independent implementation units whichprovided fellowships to individuals from forty-three government ministries, agencies, and non-departmental research institutes (LPND), and a number of public and private universities, strategicindustries, and NGOs, covering a wide range of disciplines in different universities and institutes inmore than ten countries; and carried out a number of other activities not related to overseaseducation. Nonetheless the project was implemented well and completed as originally planned.

6. None of the objectives were changed during implementation.

B. Achievement of ObjectivesFellowships

7. Sixty-nine percent of project cost were to go to fellowships (and their administration). At theend of the project 76 % had gone into fellowships. The largest amount of funds went to overseasdegree education, largely graduate education. The graduate fellowships of STAID and MOF weredirected programs with a specific clientele. OTO had a much more general objective of meetingcritical high level professional and managerial manpower shortages throughout the civil service.According to the SAR, the education provided was to meet the institutional and higher-level staffdevelopment needs of key ministries and agencies, focused on priority sector programs. As it turnedout each of the fellowship components had to deal also with the availability of suitable candidates.MOF had no shortage of qualified staff. In the STAID component there were shortages of qualifiedstaff among some of the planned beneficiaries (notably the strategic industries) and a larger numberthan anticipated in others (notably BPPT). In the OTO the issue of qualified staff among thegovernment agencies to be served was such that OTO became simply a source of overseas fellowshipsavailable largely on a competitive basis to civil servants, including staff in public universities, plus staffin private universities with a few going to individuals from NGOs. Because of new policies from the

I For example, according to 1991 data, virtually the only source of high level S&T manpower to the economy had beenfellowships retraining civil servants. Only 3.8 percent of those outside the higher education system holding a degree in naturalscience or engineering held an MA or PhD degree. Ninety to 95 percent of the non-academic scientists and engineers workedfor government or a state enterprise, and almost all of the MA or PhD scientists and engineers working for govermment hadentered government with only a BA degree.

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Government, focusing on the importance of decentralized decision making, OTO began to specializein fellowships in development planning, policy analysis, and development management.

8. Table 5B contains the number of overseas fellowships supported by PHRDP, according to theoriginal agency or institution of the fellowship holder.2 The major beneficiaries for degree educationwere the Non-departmental Government Research Institutes (LPND), particularly the Agency forAssessment and Application of Technology (BPPT),3 and the Ministry of Finance. Other majorbeneficiaries (receiving more than 30 degree fellowships) were Bappenas, the Financial andDevelopment Supervisory Board, and the Ministries of Industry and Agriculture. Public universitiesreceived 74, private universities received 86, and NGOs received 14. Twenty-nine went to stafffrom the government-owned strategic industries. The rest were spread out throughout a largenumber of other government departments and agencies. The fellowships going to STAID representedmajor changes to the stock of high level manpower in participating agencies.

9. Non-degree overseas fellowships covered more individuals but represented a lower overallcost. Again, the recipients covered a wide range of more than thirty-five government ministries andagencies. More than one-half of the non-degree fellowships went to four ministries, the Ministries ofAgriculture, Industry, Health, and Religion. LPND received only 2% of the non-degree fellowships.

10. Degree fellowships: achievement of INPUT objectives. The fellowship componentseffectively met the objectives of the fellowship programs in terms of inputs--as a source of high levelprofessional and managerial manpower. The project built on procedures successfully developed inprevious projects, relying on fellowship programs that had all built up rigorous procedures forselection of candidates and successful methods by which candidates achieve standards of languageproficiency required by the overseas university system before starting overseas academic training.Out of all fellows who studied for a overseas graduate degree under PHRDP: 61% had finished thedegree by the end of the project; 36% were still studying supported either by PHRDP II or othersources; and 3% had returned without yet finishing the degree.4 Fifteen percent of degree fellowswere women.

11. There were continuing improvements in the fellowship programs throughout the project. Allcomponents carried out longitudinal studies to improve the utilization of returnees. STAIDdeveloped a "Link" program between a foreign and domestic university that not only provided agraduate degree better suited to the needs for some STAID fellows but also helped to further developdomestic graduate school capacity. STAID began to use BPPT returnees to help implement theprogram, replacing international consultants in the process.

2 There is some double counting of individuals in Table 5B. An individual who was first supported for an MA and thensupported for a PhD would be counted twice. The data include individuals who had started their education prior to PHRDPand were continued under the project, individuals who both started and completed their degrees under PHRDP, anld individualswho began under PHRDP and are continiuing their degree under PHRDP 1I or from other sources. The data also include 18 MAand 14 PhD 'pick-ups' by OTO; individuals who had gone abroad under other auspices and whose support was 'picked-up' byOTO.

The LPNDs received 64% of PHRDP placements for PhD fellowships, 25% of MA, and 82% of BA. For those fellowshipsgoing to LPNDs, BPPT received 39% of PhD placements, 56% of MA; and 68% of BA.4 Those who returned to Indonesia without completing their degree are not necessarily 'failures'. The largest number werePhD students. Some returned for family reasons; others because they had spent too much time and had nin out of ftnding.

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12. Degree fellowships: achievement of OUTPUT objectives. The output objectives of thefellowships were to ensure improved economic and industrial development. It is too soon todetermnine the actual impact on economic development of the PHRDP fellowships, since most fellowshave returned for only a short period of time and some have not yet returned. Each component,however, has been in operation for a number of years. The past history of how previous returneeswere utilized, their contributions to economic development, and the institutional arrangements forusing high level manpower should provide important indications about the probable impact.'

13. MOF has a good record about the achievements of its former fellowship holders. It activelyrecruited high quality BA graduates and fellows returned into a Ministry that had a large number of

6staff with overseas education and had grown used to using such people to the fullest extent.According to the MOF almost seventy percent of their officers who had studied abroad underprevious fellowship projects have made a significant contribution to the development of the modernfinancial system and the economic reforms that have contributed to continued economic growth ofIndonesia. In particular the new banking, insurance, pension, income tax, value added, and propertytax laws would not have adequately developed without the contribution of these returnees. In 1994,eight of the fourteen Echelon I officers in the Ministry were returnees from MOF overseasfellowships. There is every reason to expect that MOF returnees will continue to make substantialcontributions to developing a viable and rapidly growing economy.

14. A major recipient of OTO fellowships has been Bappenas where the situation is similar to thatfound in MOF, namely a large stock of overseas educated staff and an appreciation by management ofthe contributions that can be made by returnees from overseas education. Outside observers reportthat the overseas fellowships have resulted in improvements in the planning processes and a changetoward a more problem solving orientation. The effects of other OTO returnees is less clear cut sincethe fellowships are widely disseminated throughout the civil service and OTO has very little leverageabout the utilization of returnees in these agencies or information about the development impacts theyhave made.

15. The STAID fellowship program improved the standards of government scientists but in somecases S&T returnees are not appropriately utilized. The program was a continuation of a four-stagemodel by which GOI began to pursue technological development in the mid-1970's. There are,however, severe institutional constraints preventing high level S&T manpower in governmentresearch institutes from having a significant effect on the economic and industrial growth being led bythe private sector (para. 30). About 10% of LIPI's budget and 5% of BPPT's budget comes fromprivate sector funding. For a major part of STAID fellowships there is little evidence of that theyhave had any direct effect on development in the private sector and only limited evidence abouteffective demand from the private sector for their services.

5 There have been continuing tracer studies of past and present retumees but these studies focused on personal issues: werereturnees having difficulties reentering the civil service; did they have jobs to do; places to work; and career paths; were theyable to use their new training and skills; did their studies contribute to subsequent careers? These studies are useful forimproving the implementation of the fellowship programs but contain little information about the impact of the fellowships oneconomic and industrial development.6 Previous research on utilization of retumees from overseas fellows has stressed the importance of a critical mass andwhether the supervisor of the retumee has experience with fellows trained abroad and/or is a retumee.

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Improving Human Resource Development Policymaking and Planning

16. HRD/Bappenas. HRD/Bappenas was the smallest component, using about two percent of theproject funds. It was executed under the direct supervision of the Deputy Chairman for HumanResources/Economic Affairs. The component contributed to two of the major objectives of PHRDPby both improving: human resource development (HRD) policymaking and planning; and the qualityof HRD policymaking and planning staff. There were two sub-components. One sub-componentoperated at the national level. The focus was on developing ongoing policy relevant analysis. Thework was directed by the Deputy Chairman and involved a foreign consultant and domesticconsultants who worked alongside Bappenas officials. It prepared HRD analytical studies, whichwere a significant input into the development of Repelita VI and the second twenty-five year plan(PJP II), and provided the basic steps and methodology for further implementation of the policies andprograms contained therein, with a focus on total factor productivity of specific programs.

17. The other sub-component was the Regional Manpower Planning and Training Project(RMPT). The objectives of RMPT were to: develop a framework for manpower development policyanalysis and planning at the provincial level; and assess training needs in manpower analysis forregional officials and develop suitable training material for a short in-service training course. RMPTfocused its activities on seven pilot provinces. It brought together data from a number of sourcesincluding new surveys, put together manpower strategy reports, and conducted a number ofprovincial policy seminars. It contributed to a Bappenas staff development program at local levels byproducing a training needs assessment, an introductory course in Manpower analysis and modules forHRD training. Training at the regional level was conducted under the OECF loan. Data and analysisprovided by RMPT also has had an impact on policy dialogue at the national level, being used indiscussions regarding the desirability and efficiency of government programs for vocational educationand training.

18. Improvements in the management of overseas education under OTO. GOI had set up OTO in1982 to advise on national policy on overseas training and to administer a general program ofoverseas training. By the time that PHRDP was implemented OTO had developed effective systemsby which candidates were selected, placed, provided necessary language and academic preparation,and supported while studying. During PHRDP considerable improvements were made, in particularto increase the information available to potential participants, to provide strong guidance on theselection of universities, and to improve 'marketing' of prospective candidates.

19. The SAR called for OTO, in addition to its role as source of overseas fellowships togovernment agencies, to provide policy advice, coordinate, improve efficiency and establishinformation and monitoring systems about overseas training. As noted above, OTO continued toimprove its own fellowship program. However, with the exception of the Academic Potential Test(TPA),7 little of its expertise was shared with other agencies also placing civil servants in overseastraining.8 Part of the problem was linked to the lack of leadership taken by the National Steering

7 The TPA, developed by OTO, is a test in the Indonesian language to measure academic aptitude. Prior to its developmentoverseas fellowships were awarded on the basis of foreign language ability, not academic aptitude. With the TPA OTOidentifies students with the academic aptitude for overseas graduate education and then arrange language training.8 During the period covered by PHRDP, OTO placements made up less than 10% of all overseas placements by governmentagencies. (Data are not available about privately supported overseas graduate education.)

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Team for Overseas Training (NASTOT) (see next paragraph). OTO points out that they cannotimpose their systems on others, and there is apparently little demand by others for what they have tooffer.

20. It was also expected that NASTOT, formed in 1989, would provide general strategy andpolicy advice to GOI on overseas training as well as coordinate the four project components. Theweak performance of NASTOT was of concern throughout most of the project. NASTOT wasrevitalized in 1993 towards the end of the project and has shown increasing activity. The importanceof maintaining a higher level of activity for NASTOT was discussed at some length by the teampreparing the follow-on project.

Improving quality of scientific and technical research (STAID)

21. The Science and Technology component, in addition to its fellowship program, included twoother sub-components, one for improving the management of S&T and the other for improving andimplementing R&D management systems in LPNDs, particularly BPPT and LIPI. In both casesimplementation consultants were hired.

22. The results of Strengthening S&T Policy Making and Planning have been: (a) an Action Planfor follow-up S&T activities, including such items as recommendations for a component supplierdevelopment program and the need for improving the Indonesian industrial structure by concentratingon small and medium sized industries; (b) the establishment and funding of an S&T policy unit withinBPPT, which produces S&T Indicators, a very useful publication which is the source for most of theS&T manpower data found in this report; (c) a proposal and pilot project for IPTEKnet, an S&Tinformation network linked to Internet; (d) establishment of the Project Analysis Unit (PAU), asystem for analysis and evaluation of S&T projects at the national level; and (e) strengthening theNational Research Council (DRN), which now manages the Competitive Research Grant program(RUT). The results of the Strengthening S&T Management at BPPT and LIPI have been: (a)development, pilot testing and some implementation of a Project Process Management System(PPMS) and a Human Resources Management and Planning System (HRMS); and (b) assessment andevaluation of the finance and budget management and office and logistics management systems atBPPT and LIPI.

23. In addition, there is a visible change in the capacity of the counterpart teams in continuingactivities that were initiated. Some members of the team were very active in the development ofhuman resource interventions and the proposal for the PHRDP II, while the others in the teamconstituted the counterpart group to develop the project design for the proposed IndustrialTechnological Development Project (ITDP) (para. 31).

24. The total cost of the consultant contracts was $12 million. The project team concludes that theinputs were cost effective.. Although some of the outputs needed to be modified because of changesin government rules and regulations the majority of the outputs were applicable and implementableimmediately.

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C. Major Factors Affecting the Project

Factors not generally subject to govemment control

25. All fellowship programs were assisted by consultant services for their management, inparticular, in monitoring, counseling and evaluation of fellows' performance while they were studyingoverseas. The services provided by the consulting firms were often expensive but were effective andmade considerable contribution to a high success rate of the fellowship program.

Factors generally subject to government control

26. Previous project implementation experience and capacity of the three PIUs were valuable andcontributed significantly to effective implementation of the project. The fact that the key PIU staffwere, with few exceptions, retained through the project period was another factor contributing to theproject.

Factors generally subject to implementing agency control

27. NASTOT, which was charged with the responsibility for providing policy advice to theGovernment on overseas training as well as coordinating the four project components, was largelyinactive throughout most of the project. As a result, and until NASTOT's revitalization towards theend of the project, each PIU managed its respective component independently, without sharing itsexperience and knowledge with other PIUs, thus making it difficult to see the overall status ofexpenditures and commitments (para. 20).

D. Project Sustainability

28. Sustainability of the project's achievements with respect to overseas fellowships dependslargely on the utilization of the returnees and whether they make substantial contributions to theeconomy as envisaged in the project objectives. Concerted efforts have been made to improveutilization of the returnees. For example, all components carried out lonrgitudinal studies, improvedre-entry arrangements, and monitored returnee performance. These activities are continuing andbeing expanded and improved which should help to further improve returnee utilization.

29. Important institutional changes are also taking place which should improve the chances thatreturnees will make a substantial impact on the economy. MOF is preparing to implement a poolingarrangement by which fellows upon returning to the Ministry will be allocated within the Ministrywhere their new skills can best be utilized. On a more general level, particularly important to theOTO program, three new government decrees on education and training for professional developmentdesigned to improve the quality of civil service performance have recently been announced.9 Inparticular it is expected that the regulations associated with and implementation of Government

9 Government Decrees, No. 14 on Education and Training for Civil Servants; No. 15 on Appointment of CivilServants to Structural Positions; and No. 16 on Functional Positions of Civil Servants. The decrees have beenmade but the regulations and implementation, which represent the interpretation or meaning of these decrees arestill in process.

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Decree 14, regarding job descriptions and career developments of civil servants, will help agenciesmake better plans regarding the use of highly educated civil servants and permit fellowshipcomponents, such as OTO, to hold government agencies more accountable for the appropriate use offellowship returnees.

30. With regard to the S&T fellows, it was noted above (para. 15) that there are severeinstitutional constraints preventing high level S&T manpower in government research institutes fromhaving a significant effect on economic and industrial growth if that growth is to be led by the privatesector. Official cooperation of the LPNDs with the private sector brings few rewards and is verylimited. To have LPNDs do more with the private sector requires not only stronger incentivesimproving outside funding but also more flexible management, which currently cannot support suchefforts. Efforts to change this situation are in process, in particular to: (a) develop new personnelpractices for the LPNDs to better encourage and reward cooperation with the private sector, so thatthe investments in high level manpower made during the project can have more of an impact onindustrialization and economic growth; and (b) pursue changes in government rules regarding financeand the civil service needed to make the personnel changes work.

31. Follow-up activities to the achievements made in improving the quality of scientific andtechnical research and in strengthening S&T policy-making and planning are expected to besupported by a proposed ITDP appraised in June 1995 (para. 38). PHRDP II is also supportingtraining of Bappeda level II staff in regional development planning and management techniques usingthe modules for HRD training developed under the project.

E. Bank Performance

32. Overall performance of the Bank was satisfactory. During the project preparation andappraisal stages, much attention was paid to implementation arrangements to ensure smooth start-upof the project. Project supervision was very satisfactory. Appropriate skill mix and continuity of thetask manager was an important factor in the satisfactory outcome of the project supervision.Noteworthy was that a cross-sectoral approach taken in supervising the technical assistancecomponent for scientific and technical research contributed greatly to the quality of the technicalassistance.

F. Borrower Performance

33. Project performance for each of the management units was quite satisfactory. Each unit wasconscientious in the implementation of their part of the project. For instance, each of the threefellowship PIUs continued to monitor implementation and progress of its program throughout theproject making appropriate improvements when called for. There were problems regarding overallcoordination among the management units, largely because of the inactivity of NASTOT (para. 27).One of the problems arising out of the lack of coordination was a lack of information about theoverall status of expenditures and commitments, resulting at one time in overspending on fellowshipsby one of the management units.

9

G. Assessment of Outcome

34. The program of overseas fellowships were expensive per person investments. The cost of aMaster's degree, including an estimated opportunity cost to the economy was about US$60,000; thecost of a PhD, including opportunity costs, was about $180,000. To attain a non-negative NPV'° forinvestments of this size, using a discount rate of 10%, would require that each MA returnee, on theaverage, makes a continuing contribution to the economy of an extra or additional $6,000 per year,over and above his or her contribution to the economy as a BA graduate; for each PhD, an extra$18,000 per year. In the Indonesian context these are large amounts, but not impossible to meet.The PHRDP recipients were almost all civil servants their salaries cannot be used to directly measuretheir contribution to the economy. However one can ask whether the PHRDP fellows are likely tohave a large and lasting impact on GDP.

35. The rationale for public support for overseas fellowships is that they are supporting new ideas,new attitudes of openness, and 'agents of development', as well as providing high level skills not yetavailable in-country that are needed to trigger or complement economic development. It is too soonto begin any measurement about the impact of PHRDP fellowships, since most have returned for onlya short period of time and some have not yet returned. However, the past history of the agencies inutilizing returnees and the institutional arrangements for using high level manpower provideimportant indications about the probable impact. MOF fellowships to the Ministry of Finance andOTO fellowships to Bappenas from previous periods are yielding very substantial long termdevelopment benefits to the economy (paras. 12-14); the NPV for similar fellowships under PHRDP,if they could be measured, would probably be positive. For other OTO fellowships, there is simplyno evidence but it is not likely that the benefits are as great. With regard to the STAID supportedfellowships, the institutional constraints preventing high level S&T manpower in government researchinstitutes from having a significant effect on economic growth led by the private sector have beendescribed above. So far there is little evidence that the S&T skills in government research instituteshave had a major impact on private sector development. Without appropriate institutional changes itis unlikely that STAID fellows will have a substantial impact on the economy (para. 15). Officials areaware of this issue and are in the process of developing new personnel practices for the LPNDs andpursuing changes in government rules that would encourage and reward cooperation with the privatesector (para. 30). In addition appropriate changes in government practices are happening elsewhere(para. 29). There seems a good chance that institutional practices will change allowing the S&Thuman resources to have a very substantial long term impact on the economy.

36. The project has attained most of its immediate objectives without major shortcomings (paras.10-1 1). The NPV cannot be directly measured. However, there seems to be a good chance that thefellowships will have, on average, a substantial and long lasting effect on the economy. The ratingfor "assessment of outcome" therefore has been set at "satisfactory".

'0 Under ICR guidelines a minimum requirement for a satisfactory outcome is a NPV that is not negative iv'henfuture flows are discounted at ten percent for a major portion of the investment.

10

H. Future Operation

37. The fellowship programs will be continued under PHRDP II, but with substantial changes(paras. 40-41). The continuation will support: (a) fellows who had started under PHRDP and hadnot completed their studies; (b) new placements; and (c) strengthening of the programs for moreefficient re-integration and better utilization of past, present, andcfuture returnees.

38. Policies and infrastructure to strengthen of S&T management started during the project willbe continued. The proposed ITDP, which was appraised in June 1995, would support furtherimprovements in S&T policy and information systems first started during the project; institutionalstrengthening of LIPI and BPPT to increase their services to help industrial development; and coreactivities to strengthen small and medium scale industries and their linkages to large industries. In themeantime changes in personnel practices and government regulations that would encourage bettercooperation with the private sector are being pursued (para. 30).

I. Key Lessons Learned

39. During implementation it has become clear that opening fellowships to private citizens wouldhave probably increased the impact of the fellowship Under PHRDP, fellowships were largelylimited to civil servants, which did not include the need for high level manpower in the rest of theeconomy (para. 4). In addition, as the economy has expanded and the private sector has grown thecivil service is no longer the major source employment for university graduates and it is no longernecessarily getting the people who could best benefit from overseas education."

40. The Bank's more recent projects recognize the importance of open competition outside thecivil service. PHRDP II concludes the Bank's program support for a special program of overseasfellowships for civil servants and provides the basis for planning a new type of competitive overseasfellowships to serve the needs of the entire economy. Under PHRDP II the fellowship componentswill provide, on a pilot basis, a total of ninety overseas fellowships to fresh BA graduates,complementing the University Research for Graduate Education Project (U1RGE) which includes over900 merit-based fellowships for domestic graduate programs.

41. The Government's long-term policy of meeting high level manpower needs was by supportingthe growth of domestic graduate education; its short term policy was through overseas education(para. 3). With the exception of STAID, which helped to further develop some domestic graduateprograms, there was no attempt in PHRDP to integrate these two policies. All resources went tooverseas education, even in situations where adequate programs had been developed domestically(often with Bank assistance) . This drew resources and good students away from domestic graduateprograms and probably slowed their development. Under PHRDP II fellows will be sent to adomestic university when an appropriate study program of sufficient quality is available.

42. At the time of appraisal the economic rate of return (ERR) was not estimated for theproposed PHRDP. Estimates of the actual ERR to investments in the retraining of civil servants

" Only the BA fellowships were provided on an open merit-based competition open to any high school graduatein the country.

11

would be very difficult to make because the effects are largely not quantifiable. Nevertheless it wouldhave helpful if the basic economic questions that lie behind the ERR would have been asked at thevery start. In particular: will the program achieve substantial long-term development resultscommensurate with its costs? Application of such a standard at the very start of the project wouldhave very useful, for at least two reasons. It would have provided an economic discipline that did nototherwise exist, particularly among the government agencies about the use of the funds going intofellowships to train their employees. Second, raising such an economic question provides guidelinesto look for during design, implementation, and supervision. To conclude that an expensive overseasfellowship makes economic sense requires a finding that the typical fellow will make a substantialimpact on the economy that will be sustained over a long period of time. The design of the projectshould include how such a lasting impact will be made; monitoring of the project should includewhether the economic and institutional context is such that a large and lasting impact can be made.

12


INDONESIA

PROFESSIONAL HUMAN RESOURCE DEVELOPMENT PROJECT(Ln 3134-IND)

Part II. STATISTICAL TABLES

Table 1: Summary of Assessments

A. Achievement of Obiectives Substantial Partial Negligible Not applicable

(/) ~~~(V) (V) (V)

Macro Policies l E a ESector Policies [ 300

Financial Objectives D [ a EInstitutional Development El l I]Physical Objectives a El [ Poverty Reduction [ [ [ lGender Issues a ] [] E

Other Social Objectives 5 5 El

Envirornental Objectives l El E]

Public Sector Management El El EPrivate Sector Development E E l EOther (specify) El E El

B.Project Sustainability Likelv Unlikelv Uncertain(i) (El) ()

O~~lE

13

HighlyC. Bank Performance satisfacton Satisfacton Deficient

(V) (9') (/1)

Identification lEl C

Preparation Assistance a L =

Appraisal ] L] a

Supervision 1 Q [

HighlyD. Borrower Performance satisfactory Satisfactory Deficient

Preparation C

Implementation El [] L

Covenant Compliance 5 5

Operation (if applicable) L L ]

Highly HighlyE. Assessment of Outcome satisfactory Satisfacton Unsatisfactor unsatisfacton

(9' (9' (' (9'

14

IMPLEMENTATION COMPLETION REPORTINDONESIA


Table 2: Related Bank Loans

Year ofLoan Title Purpose Approval Status

Preceding operations

1. University development 11 To develop Indonesia's capacity to train its own university 1985 Completed(Loan 2547-IND) teachers and researchers through development of new

graduate-level programs in selected fields, initiation of fivespecialized undergraduate fields of study, and strengthen-ing of overall university planning and management.

2. Science and technology To strengthen Indonesia's research and development 1985 Completedtraining (Loan 2599-IND) capacity by developing a nucleus of well-trained

Indonesian scientific and technical manpower, to developeffective policies and procedures for the implementationand monitoring of overseas fellowship programs; todevelop and strengthen collaborative relationshipsbetween Indonesia and foreign universities andresearch institutions.

3. Higher education To assist in implementation of the higher education 1988 Completeddevelopment program through (a) improving sectoral planning, (b)(Loan 2944-IND) improving sectoral and institutional management in

higher education, (c) increasing resource mobilization,(d) improving educational quality and efficiency, (e)strengthening selected fields of study reflecting manpowerneeds, and (f) increasing the contribution of universitiesto regional development.

4. Accountancy The accounting education component aims to raise the 1988 Scheduled fordevelopment quality of accounting faculty and teaching staff, and to completion(Loan 2940-IND) prepare for future expansion of accountancy education in 06/95.

and training.

Following operations

1. Higher education To improve quality and efficiency of higher education, to 1991 Scheduled fordevelopment 11 alleviate human resource shortages, to improve planning completion(Loan 331 1-IND) and management, to increase mobilization of resources in 12/95.

and to strengthen regional development.

2. University research and To improve the quality of graduate education in Indonesia 1994 Undergraduate education by increasing competitive funding for domestic graduate implementation(Loan 3754-IND) education and university research activities, strengthening

the procedures for selecting grant and fellowship proposals,integrating university research with graduate training inuniversities, strengthening research capacity and dis-seminating research findings in universities.

3. Professional human Follow-up of the PHRDP l; and aims to foster economic 1994 Underresource development 11 development and industrialization and facilitate policies implementation(Loan 3825-IND) of deregulation and decentralization by upgrading the

quality of professional, managerial, and science andtechnology staff in key government ministries and agenciesboth at local and national levels.

15



Table 3: Project Timetable

Date actual/Steps in project cycle Date planned latest estimate

Identification 01-1989 01-15-1989

Preparation 11/23-12/09-1989

Appraisal 06-1989 06-07-1989

Negotiations 10-1989 10-04-1989

Board presentation 03-11-1990 11-29-1989

Signing - --12-18-1989

Effectiveness 01-1990 02-22-1990

Midterm review 1992 10-1992

Project completion 03-31-1994 03-31-1995

Loan closing 03-31-1995 03-31-1995

Table 4: Loan Disbursements: Cumulative Estimated and Actual

FY90 FY91 FY92 FY93 FY94 FY95 FY96

Appraisal estimate 3.0 18.0 40.0 65.0 90.0 117.5 ---

Actual 5.6 12.0 41.7 75.8 103.0 115.8 116.2

Actual as % of estimate 186 67 104 117 114 99 99

Date of final disbursement August 2, 1995

16



Table 5A: Key Indicators for Prolect Implementation

I. Key implementation indicators Appraisal Plan Actual at Completionin SAR (Expected Outcome at Completionl (April 1995)

HRD/BAPPENAS component:1. Improvement of HRD policymaking

planning and monitoring at central,provincial and local government levels:

National level - Commissioned policy studies and research -HRD analytical studies were a significant input- Improved HRD policymaking planning and into the development of Repelita VI and PJP II.

monitoring Also, provided basic steps and methodologyfor further implementation of policies andprograms contained therein.

Provincial and local level - Training for BAPPEDA staff in five piovinces -Contributed to staff development programs atthrough five domestic universities local levels by producing a training needs

assessment, introductory course in manpoweranalysis, and modules for HRD training, and carriedout training in seven pilot provinces. The dataand analysis provided also had a major impacton policy dialogue at the national level.

OTO/BAPPENAS component:2. Strengthening OTO - Overseas training policy studies, improved -Considerable improvements were made, in parti-

strategies and procedures for preparation for cular to increase the information available tooverseas training, re-entry and follow-up potential participants, to provide strong guidancestudies on the selection of universities, and to improve

'marketing' of prospective candidates. Reentrystudies were conducted

3. Overseas fellowships for key staff in - Overseas postgraduate fellowships for -1,370 placed: 338 completed degree, 126 stillcentral, provincial, and local gov't, about 1,100 key staff studying under PHRDP II, and 7 returned withoutPTS and NGOs a degree; 899 completed non-degree overseas

fellowship programs.

MINISTRY OF FINANCE component:4. Overseas and domestic fellowships - Fellowships for 300 persons -262 fellows placed: 211 completed degree; 30 still

in finance and monetary policy for studying under PHRDP II, and 6 returned withoutMinistry of Finance and related degree; 15 completed non-degree overseasagencies. program

STAID component:5. Improvement of S&T policy analysis - Strengthening S&T policy making and -The results of strengthening S&T Policy Making and

and management: planning Planning included: la) an Action Plan for follow-upS&T activities: (b) the establishment and fundingof an S&T policy unit within BPPT, which producedS&T Indicators; (c) a proposal and pilot project forIPTEKnet, an S&T information network linked toInternet; & (dl establishment of the Project Analysisunit, a system for analysis and evaluation of S&Tprolects at the national level.

-Improving and implementing R&D manage- - The results of the Strengthening S&T Managementment systems in LPNDs, particularly at at BPPT and LIPI have been: (a) development,BPPT and LIPI. pilot testing and some implementation of a Project

Process Management System and a Human Re-sources Management and Planning System; and(bl assessment and evaluation of the finance andbudget management & logistics managementsystems.

6. S&T staff development Overseas and domestic fellowships -1, 1 90 fellows placed. 509 completed degree,and training for 1,146 persons. 232 are continuing studies funded under PHRDP Il;

358 are continuing funded by other sources;and 54 returned without degree; 37 completednon-degree overseas program.

NOTE: At appraisal the fellowship program was designed on a time-slice basis and planned to be continued under follow-on projects; 388degree program fellows are continuing studies overseas supported by PHRDP 11

17



Table sB: Summary Status of Fellowship Programs by Recipients

Agency PhD MA BA non-degree

BPPT LPND Ag'y for Assessment & App of Tech 67 122 279 8BATAN LPND Atomic Energy Authority 52 22 23 4LIPI LPND Inst. of Science 39 24 56 4Dep Finance 19 140 19BAPPENAS 12 38 13LAPAN LPND Aeronautics & Space 7 21 38 1Dep Public Wks 6 16 4BPS LPND Statistics 7 22 4 0BPKP Financial and Dvlpt Sup Board 5 27 27Dep Industry 5 45 77St. Industries 3 26 77 21Depdagri 3 15 170Dep Agriculture 2 29 1BAKOSURANTA LPND Survey & Mapping 2 6 13BPN Nat'l Land Agency 2 4 2BULOG 2 4Dep Defense 2Dep Forestry 1 24 1Dep Trade 1 20 25BKPM Investment Coor Bd 13Dep Mining 11 1Dep Transmigration 10Dep Foreign Affairs 8Dep Health 7 96Dep Tourism & Post 7 21Dep Information 7 20Dep Education 7 8Dep Religion 6 174Dep Hubungan 5 1Dep Cooperatives 2 1Dep Social 2 21MENPAN 1 5Dep Justice 1 2BA KN 1 2Nat'l Archives 1 1Dep Manpower 1Environment 1SEKNEG 1Atty Gen 0 44LAN 0 26SETKAB 0 1SETNEG 0 1MENPERA 0 1

Public Universitie 23 51 62Private Universities 8 78 62NGOs 1 13 14Other 1 1 10

TOTALS 270 840 490 951

18


PROFESSIONAL HUMAN RESOURCE DEVELOPMENT PROJECT (Ln. 3134-IND)

Table 5C: Summary Status of Fellowship Programs

No. of No. ofStatus at project completion (March 1995) fellows fellows

No. of No. of fel- No. of fellows still /P No. of placed completedProgram SAR No. of fellows placed fellows lows compl studying funded by fellows compared compared

target successfull! against PHRDP II Other not with SAR with SARTotal Male Female completed placed (%) (Ln 3825) sources compl. (%) (%)

OTO (Overseas)MA 620 402 311 91 306 76% 95 - 1 65% 49%

PhD 37 69 62 7 32 46% 31 - 6 186% 86%Nondegree 450 899 730 169 899 100% 0 - 0 200% 200%

Total - OTO 1,107 1,370 1,103 267 1 237 90% 126 7 124% 112%100% 89% 22%_

MOF (Overseas) /aMA 120 219 195 24 200 91% 14 - 5 183% 167%PhD 60 28 27 1 11 39% 16 - 1 47% 18%

Nondegree 120 15 14 1 15 100% 0 - 0 13% 13%

Total - MOF 300 262 236 26 226 86% 30 6 87% 75%100% 90% 10%

STAID: Overseas /bBA 171 490 419 71 183 37% 181 105 21 287% 107%MA 305 219 191 28 172 79% 24 17 6 72% 56%PhD 72 173 153 20 70 40% 27 61 15 240% 97%

Nondegree 232 37 31 6 37 100% 0 0 0 16% 16%

Total-STAID (O'seas) 780 919 794 125 462 50% 232 183 42 118% 59%100% 89% 14%

STAID: DomesticBA 921 132 95 37 67 51% 0 57 8 143% 73%MA 181 138 113 25 17 12% 0 117 4 76% 9%PhD 20 1 1 0 0 0% 0 1 0 5% 0%

Nondegree 73 0 0 0 0 0% 0 0 0 0% 0%

Total-STAID (Dom.) 366 271 209 62 84 31% 0 175 12 74% 23%100% 77% 23%

Total STAID 1146 1190 1003 187 546 46% 232 358 54 104% 48%100% 84% 16%

TOTAL: OverseasBA 171 490 419 71 183 37% 181 105 21 287% 107%MA 911 840 697 143 678 81% 133 17 12 92% 74%PhD 169 270 242 28 113 42% 74 61 22 160% 67%

Nondegree 802 951 775 176 951 100% 0 0 0 119% 119%

TOTAL 2053 2551 2,133 418 1,92 75% 388 183 55 124% 94%100% 84% 16%

TOTAL: DomesticBA 92 132 95 37 67 51% 0 57 8 143% 73%MA 181 138 113 25 17 12% 0 117 4 76% 9%PhD 20 1 1 0 0 0% 0 1 0 5% 0%

Nondegree 73 0 0 0 0 0% 0 0 0 0% 0%

TOTAL 366 271 209 62 84 31% 0 175 12 74% 23%l_________I 100% 77% 23%

/a Does not include 8 MA fellows financed partly from Ln. 2472-IND (the Secondary Education Project) at the beginning of the project./b Of the 490 BA fellows 260 were transferred from OFP (Science & Technology Project) in 1992. Thirty MA fellows who proceeded

to PhD programs were counted twice as MA and PhD fellows in the total numbers of fellowships./c Of the 571 fellows still pursuing oversesas degree programs, 388 fellows will be funded under PHRDP II and the remaining 183 by

other sources than PHRDP II. All fellows continuing domestic degree study will be funded by other sources than PHRDP II.


PROFESSIONAL HUMAN RESOURCE DEVELOPMENT PROJECT

lLn. 3134-IND)

Table 5D: Status of Consultant Services

Cost 1$ 0001 Consultant-monthsComponent Purpose/activities Implementing Appraisal Appraisal Outcomes

Agency estimates Actual estimates ActualIF) ILl IF) ILl _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _

I. HRD/BAPPENAS Improving Human Resource Develop- BAPPENAS/ 6.300 3.230 135 408 126 65 Contributed to: (al improving HRD policy-

ment (HRD) policymaking and plann- HRD making and planning as well as the quality

ing; and development of regional of HRD policy making and planning staff;

manpower planning and training and (bl the development of Repelita VI and

(RMPTI PJP II. The RMPT contributed to a BAPP-ENAS staff development program at locallevel, and had a impact on policy

Sub1total 3QQ 3.230 135 408 126 05 dialogue at the national level as well.

II. OTO/BAPPENAS Improving overseas training policy OTO/ 6.100 4.150 196 61 Strengthened OTO capabilityBAPPENAS 168 192 to manage overseas fellowships,

including improved participant

Management of overseas fellowship OTO/ selection, predeparture training,

programs: (language training, academic BAPPENAS 152 126 monitoring and evaluation, and

counseling, testing) re-entry procedures.

Subtotal 6.100 4.150 320 318 196 61

Ill. Ministry of Finance Staft development and training needs MOF 800 0 48 Q Q No consultant employed.

IV. STAID Improving quality of scientific and tech- BPPT/PIU 12.300 12.900 535 513 505 101 Major outcomes of this component include:

nical research by strengthening S&T an Action Plan for follow-up S&T activities

policymaking and planning; and including such items as a supplier develop-

strengthening S&T management at BPPT ment program and the need for improving

and LIPI the Indonesian industrial structure by con-centrating on small and medium sizedindustries; establishment of an S&T policyunit within BPPT; a pilot project forIPTEKnet, a S&T information network

linked to Internet; establishing the ProjectAnalysis Unit, a system for analysis andevaluation of S&T projects at the national level;strengthening DRN; establishment of aproject process management system and ahuman resource management and planningsystem and pilot testing of R&D managementsystems in BPPT and LIPI.

Management of overseas & domestic BPPT/FPIU 2.500 2.120 192 - 147 69 Improved management, monitoring and

fellowship programs evaluation of overseas fellowship programs;developed Link programs.

_____________________ Subtotal ___________14.800 15.020 27 513 652 170 1

____ ___ ___ ____ ___ ___TO T AL _ _ _ _ _ _ 28.000 22.400 1.230 1.239 974 22 _ _ _ _ __ _ _ _ _ _ __ _ _ _ _ _ _

20

IMPLEMENTATION COMPLETION REPORTIN DON ES IA


Table 6A: Project Costs

Appraisal Estimates (US$M) Actual/latest estimate (US$M)Local Foreign Local Foreigncosts costs Total costs costs Total

1. Training ProgramsOverseas fellowships 16.1 64.5 80.6 21.4 85.5 106.9Domestic fellowships 3.7 3.2 6.9 3.0 1.3 4.2Regular staff dev. programs 10.0 4.9 14.9 8.0 0.9 8.9

Subtotal 22 6 1024 32 37. 12021

2. Consultant services, systemsdevelopment & planning studies:

Consultant services 1.8 14.9 16.7 2.8 18.6 21.4Related support activities /a 5.6 5.7 11.3 0.7 0.4 1.1

Subtotal 7.4 268 4 19 22-5

3. Civil works, furniture, equipmentand materialsCivil works and lands 3.0 2.2 5.2 0.0 0.0 0.0Furnitre & office equipment 0.2 0.7 0.9 0.3 0.3 0.6Computers and software 0.2 2.4 2.6 0.0 0.5 0.5

Subtotal 3.4 51 D 3 80a 1 1

4. Project management 5 1 BD Si. 11.5 3 a 15,3

Baseline costs 45.7 101.5 1472 47.6 111.3 159.0

Physical contingencies 0.8 2.3 3.1 -

Price contingencies 4.8 13.7 18.5 - -

TOTAL /b 51.3 117.5 168.8 47.6 111.3 159.0

/a Most of these activities were covered under the consultant services./b The latest estimated cost at project completion was US$159.0 million, compared with the appraisal estimates ofUS$168.8 million, with a cost underrun of US$9.8 million (about 6%). The underrun was largely attributable to thefact that no renovation of OTO offices was undertaken, much less equipment/materials were acquired and fewerconsultant services were used. Some tables do not add up due to rounding.

Table 6B: Project Financing

Appraisal Estimates (US$M) Actual/latest estimate IUS$M) /aSource Local Foreign Local Foreign

costs costs Total costs costs Total

IBRD 0.0 117.5 117.5 4.9 111.3 116.2

Domestic contributon 51.3 0.0 51.3 42.8 0.0 42.8

TOTAL 513 117.5 168.8 4.6 111.3 159.0

/a Some totals do not add up due to rounding.

21


INDONESIA

PROFESSIONAL HUMAN RESOURCE DEVELOPMENT PROJECT(Ln. 3134-lND)

Table 7: Economic Costs and Benefits

An economic rate of return (ERR) was neither estimated for PHRDP at the time ofappraisal nor calculated after its close. Estimates of the ERR to investments in the retraining ofcivil servants would be very difficult to make. In addition it is too soon to begin any measurementabout the impact of PHRDP fellowships, since most have returned for only a short period of timeand some have not yet returned.

However, a more general NPV standard has been applied during preparation of the ICR:are the overseas fellowships likely to produce an economic impact large enough to produce a non-negative NPV (when future flows are discounted at 10%)? Estimated impact was based on thepast history of the agencies in utilizing returnees and the institutional arrangements for using highlevel manpower. Since most MOF and some OTO fellowships from previous periods are yieldingvery substantial long term development benefits to the economy and institutional conditions remainfavorable, it is likely that the NPV will be positive for similar PHRDP fellowships. For the otherOTO fellowships there is simply no evidence but it is not likely that the benefits are as great. Inregard to the STAID supported fellowships, institutional constraints have prevented high levelS&T manpower in government research institutes from having a significant effect on economicgrowth led by the private sector. PHRDP S&T fellowships are likely to yield a non-negative NPVonly if there are substantial institutional changes, such as new personnel practices for the LPNDsand complementing changes in government rules that would encourage and reward cooperationbetween government research institutes and the private sector. Efforts are underway to developand promote such changes (para. 30).



Table 8: Status of Legal Covenants

Original RevisedCovenant Present fulfillment fulfillment Description

Agreement Section type status date date of covenant comment

Loan 4.01 (b) Accounts/ In compliance 12/31 --- Furnish to the Bank a certified copy of In compliance. However,audit each year audit report on records and account of there were some delays in

the project not later than 9 months after early years.end of each fiscal year.

Loan Schedule 5 Project In compliance 03/31/90 --- Establish and maintain a Steeringpara 1 implementaton Committee on finance training and a

arrangements Project Implementation Unit in theMOF, and a Fellowship ManagementUnit and Project Management Unit inthe Agency for Assessment and Appli- Ncation of Technology (BPPT).

Loan Schedule 5 Project In compliance -- --- The borrower maintains existingpara 2 implementaton administrative arrangements with

arrangements respect to the relevant fellowshipand training programs until theabove are in place.

Loan Schedule 5 Monitoring/ In compliance 12/31 --- On December 31 each year,para 3 reviews each year commencing December 31, 1990,

report on implementation of fellow-shiptraining, including programs,costs, selection, placement, reentryand allocation of fellowship withrespect to academic qualificatonsand domestic and overseas training.

Loan Schedule 5 Monitoring/ In compliance 09/30/92 --- Carry out a mid-term review onpara 4 reviews implementation and furnish to the

Bank its report on findings andrecommendation of the review.

23


INDONESIA


Table 9: Bank Resources: Staff Inputs /a

Planned Revised ActualStage of

project cycle Weeks US$ Weeks US$ Weeks US$

Preparation to appraisal 35 _ 35 44.4 124,100

Appraisal 20 17 10.7 32,000

Negotiations through 10 10 5.8 18,700Board approval

Supervision 51.5 76.5 71.5 218,700

Completion 12.0 12.0 13.7 38,700

TOTAL 128.5 150.5 146.1 432,200

/a Data on US dollar amounts for other than Actual is not provided by the MIS.

24


INDONESIA

PROFESSIONAL HUMAN RESOURCE DEVELOPMENT PROJECTILn. 3134-IND)

Table 10: Bank Resources: Missions

Performance ratingNumber Specialized Implement- Develop-

Stage of month/ of Days in staff skills tation ment Types ofproject cycle year persons field represented status objectives problems

Through appraisal Nov 1988 3 1 7 technical leducator

manpowereconomist

assistantMar 1989 4 29 Same as l

above plusS&T policy

Jun-Jul 3 32 technical l1989 educator

S&T policy sp.research asst.

Appraisal throughBoard approval .Supervision Jan-Feb 1 35 technical 1 1

1990 educatorMay-Jul 1 46 technical 1 1 potential over-1990 educator commitment for

finance trainingSep-Oct 1 30 technical 1 1 distribution of1990 educator fellowships

placement bycountry

May-Jun 1 20 economist - 1 1 monitoring of1991 expenditures

Nov-Dec 3 /b 29 economist 1 1 quality control1991 opn officer of TA

Jul-Aug 4 19 economist 1 1 project1992 tech educator management

S&T spec. coordinationlabor market among agencieseconomist

Feb 1993 3 12 economist 1 2 re-integrationopn officer of returningtech educator fellows

Apr 1994 2 10 trng spec. 1 1 monitoring ofproj assist expenditures

Completion May 1995 2 12 economist HS SI__ _ _ _ _ _ _ _ _. opn analyst

/a In conjunction with other activities.

/b Support was provided by EA31E in supervising the S&T studies component.

25

INDONESIA

Professional Human Resource Development Project (Loan 3134-IND)Aide Memoire'

May 22 - June 1, 1995

1. A World Bank mission consisting of Mr. D. H. Clark (mission leader/economist) and Ms.M. Masuda (operations analyst) visited Indonesia from May 22 to June 1, 1995 for the preparationof an Implementation Completion Report (ICR) of the Professional Human Resource DevelopmentProject (Loan 3134-[ND). The mission held discussions with officials from: (a) the four projectimplementation groups of PHRDP, namely the Ministry of Finance (MOF), the Overseas TrainingOffice (OTO/BAPPENAS), HRD/BAPPENAS, and Science and Technology for IndustrialDevelopment (STAID); and (b) the Coordinating Team for Overseas Funds of Optimalization Planfor Education and Training (COTOFOPET). A list of people met with during the mission is givenin Annex 1. The mission would like to express its sincere appreciation for the cooperation andhospitality extended by the officials of the Government of Indonesia.

2. One purpose of the mission was to provide advice to the project for preparing its owncontribution to the ICR. Draft reports were received from OTO, STAID, and HRD/BAPPENAS.Final reports along with a summary not to exceed ten pages are to be transmitted to the Bank. Thereports and the summary should be independent evaluation reports by the Borrower on the project'sexecution and initial operation, cost and benefits, the Bank's and borrower's performance of theirrespective obligations under the Loan Agreement, and the extent to which the purposes of the loanwere achieved. The summary will be attached unedited to the ICR. If reports from each ofcomponents are submitted but without a summary the ICR will simply note the existence of the fullreports but they will not be made a part of the ICR. The mission strongly encourages that anoverall summarv be submitted to the Bank to ensure that the Borrower's views are fully reflected inthe ICR.

3. The mission also reminded the various components that thev are to submit a plan for the'operational phase' of the project, including performance indicators to monitor operations anddevelopment impact. The 'operational phase' is the period after the project has been completed.An example of such a plan would be STAID's intention: (a) to introduce new personnel practicesfor the LPNDs to ensure that the high level manpower--the investments made during the project--can have a major impact on industrialization and economic growth; and (b) and to pursuenecessarv changes in government rules regarding finance and the civil service needed to make thepersonnel changes work.

4. The other purpose of the mission was to make the final review of project implementationprior to final preparation of a draft ICR. During a previous mission each component had beengiven a copy of the new ICR procedures and had been requested to provide certain information andcomplete various tables about project activities and accomplishments to assist the Bank in its ICRpreparation. The requested materials were provided to the mission prior to or during its visit andwere discussed at separate meetings with each of the management components. The rmissionreviewed project implementation covering, inter alia, aspects of project design, implementation

1 This Aide-Memoire is subject to management review before finalizatton.

26

planning, organization and costs; loan disbursements; project developmental impact, economicbenefits and sustainability. Special attention was paid bv the Bank to estimating the likelyeconomic benefits of the various project activities, particularlv the fellowships.HRD/BAPPENAS, OTO/BAPPENAS, MOF, STAIDIBPPT were appn'sed of the preliminarvfindings of this review which are summarized below:

* the project substantially achieved two of its main objectives, namely ofimproving human resource development policy making and planning and ofimproving the quality of professional, technical and managerial staff in thecivil service. The fellowship components, building and improving onprocedures successfullv developed in previous projects, ran effective andefficient overseas fellowship programs:

* there was almost no brain drain and the success rate of fellowship participantswas very high,

* in spite of the complexity of the project design involving four largelyindependent management units, project implementation was completed asoriginally planned;

* if the project fellowships are to result in substantial development results in linewith the size of the investments, returnees must make very sizeable, continuingcontributions to the economy. It is too soon to deternine the impact of thefellowship retumees under this project, since most have retumed for only ashort period of time and some have not yet retumed. However, the pasthistory of the agencies in utilizing returnees and the institutional arrangementsfor using high level manpower should provide important indications about theprobable impact;

5. The agreed upon schedule of activities and submissions is as follows:

The project will provide the Bank with its plan for the operational phase theproject and the final draft of the Borrower evaluation report by June 30, 1995.

The Bank will provide the project with the Bank's draft ICR for comments byJuly 31, 1995.

The project will provide comments on the Bank's draft ICR and a finalSummnary of the Borrower evaluation by August 14.

27

Annex 1GOI individuals who contributed to the ICR mission

STAID

Trulyanti Sutrasno. Deputy Chairman for Adminstration, BPPTRony Bishrv, Head, Center for Training and Education, BPPTArdito M. Kodijat, Center for Education and Training, BPPTDewi Odjar Rahardja, Head of Personnel Bureau, BPPTFalatehan SiregarJumain AppeErlangga PribadiSri KusmaningsihBony BenyaminLatief Nurbana

OTO

Bambang Pumomo, ChairmanSoewarto, SecretaryMoch. Ichwanuddin, Head Bureau 4Sri Mulvani, Department of Economics, UTISupadiLilly WidayatiAsyraf NazirKunia IdfiGuspikaEsther Zonny

MOF

Marzuki Usman, Principal, BPLKNoor Fuad, Head of Personnel Educatin and Training CentreWidjanarko, Project DirectorZulkarnaen

HRD/BAPPENAS

Sayuti Hasibuan, Deputy for Economic Affairs, BappenasMaman Setiawan, Head, Manpower BureauLucky F. Majanto

COTOFOPET

Benny Hoed, SecretaryUu Supratrnan

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PROFESSIONALHUMAN RESOURCE DEVELOPMENT PROJECT

PHASE 1 (1989-1995)(PHRDP I)

Implementation Completion Report(ICR)

SUMMARY

Components:

OTO-BappenasSTAID-BPPT

MOFHRD-Bappenas

Prepared byCOTOFOPET

Jakarta, June 1995

29

TABLE OF CONTENTS

Page

1. INTRODUCTION 1

2. PROJECT OBJECTIVES 1

3. PROJECT COMPONENTS 1

4. IMPLEMENTATION EXPERIENCE AND RESULTS OF 1EACH OF THE FOUR COMPONENTS

A. OTO-Bappenas I

B. STAID-BPPT 4

C. MOF 6

D. HRD-Bappenas 8

30

SUMMARYIMPLEMENTATION COMPLETION REPORT (ICR)

Professional Human Resource Development Project Phase I(PHRDP I)

INDONESIA1995

1. INTRODUCTION

The Indonesian Professional Human Resources Development Project(PHRDP), funded through IBRD Loan 3134-IND, is a comprehensive projectinvolving technical assistance and training through Indonesia's NationalDevelopment Planning Agency (Bappenas), Ministry of Finance (MOF), andvarious scientific and technical non-departmental research institutes (LPND's). Theproject is oriented towards a general management improvement of the GOI's(Government of Indonesia's) policy planning, policy making as well as generalmanagement skills through an intensive resources development program. As thisPHRDP has been followed by a second phase. it will be called PHRDP 1.

2. PROJECT OBJECTIVES

The objectives of the project are to (a) improve human .. resourcesdevelopment policy making, planning and implementation; (b) improve the qualityof professional, technical and managerial staff to ensure improved performance inpolicy making and implementation in critical areas of economic developmentconcerned with growth, sustainable development, industrialization, increasingprivate sector participation and decentralization, and (c) improve the quality ofscientific and technological research and development, enhance its managementand improve the application of research and technology to industrial development.

3. PROJECT COMPONENTS

The PHRIDP I consists of four components, i.e. the Overseas TrainingOffice (OTO-Bappenas), the Science and Technology for Industrial Development(STAID), BPPT, the Ministry of Finance (MOF); and the Human ResourceDevelopment (HRD-Bappenas) components. Each component is autonomous inimplementing the project, but the general policy is coordinated by the NationalSteering Team for Overseas Training (NASTOT).

4. IMPLEMENTATION EXPERIENCE AND RESULTS OF EACH OF THEFOUR COMPONENTS

A. Overseas Training Office-Bappenas (OTO-Bappenas) Component

There are two kinds of training being evaluated: the degree training andthe non-degree training. For the degree training, placement success rate isabove 95% of candidates entered in the program. The timely availability ofnecessary documents is a crucial matter in the placement; and OTO responds torequests for rnissing scores in a timely fashion. OTO and Support Offices' staff

31

have worked together and established a solid relationship with admissionsofficers and departmental admission committees at many universities to securesuccessful admissions. Over the course of the project, there has also been anoticeable improvement with regard to the systematization of transfer ofneeded documents between OTO and the Support Offices. The continuingemphasis on TOEFL preparation by OTO has had a positive effect in the formof increasing the average TOEFL scores and decreasing the number ofparticipants who required to take intensive English.

The choice of universities where participants will apply has often beenmade haphazardly and with insufficient information about selected universities.Over the life of the project, OTO and the Support Offices have workedtogether to increase the information available to potential participants and toprovide stronger guidance on the selection of universities. The results havebeen quite positive in terms of increasing the percentage of participants beingadmitted to one of their four university choices. The application processrequires a certain amount of "marketing" of prospective candidates. Most ofthe better universities have many more qualified applicants than can possibly beadmitted; therefore, it is imperative that OTO candidates have advocates whoaggressively speak for the application through the entire process.

Currently (as of March 28, 1995), candidates have earned 306 mastersdegree, and 32 Ph.D. degree programs have been completed with 126continuing in the program (95 Master's, 31 Ph.D). The average length of studyprograms has been 23.99 months for that Master's degree and 45.33 months forthe Ph.D. programs. The overall participant failure rate (defined as percentageof participants who return to Indonesia permanently without completing theprogram) is 2.03% (i.e. 7 participants -- 6 doctoral students and a Master's).The reasons for failure vary but often relate to personal problems which arise inthe course of study.

The general target established by OTO for completion of the degreeprograms was 24 months for Master's students and 36 months for doctoralstudents. In actual operation over the life of the project and among alumni todate, 63.52% of Master's participants have completed the program in 24months or less (0.33% failed and 5.86% pick-up); and 7% of doctoralparticipants completed their degree in 36 months or less (16% failed and 16%pick-up). However, 30.29% of Master's students have received more than 24months of funding (they received extension of their funding), and 61% doctoralstudents have received more than 36 months of funding. Numerous factorswere identified as possibly leading to the need for extension of funding:inadequate English language preparation, academic deficiencies, universityadministration and regulation (such as cancellation of courses required in thestudents program), lack of availability of advisors, breakdown in participant/advisor communication, failure of experiments or other data gatheringactivities, delayed or disrupted manuscript preparation, and health and otherpersonal problems.

An evaluation of the impact of degree training conducted by OTO usingUSAID funds shows significant effect of the training especially on the alumni

32

career path, the benefit is in terms of increasing job responsibility, enhancingskills, and other institutional benefits.

Among those significant impacts of degree programs are the returnees'ability to introduce new ideas and techniques with high degree of acceptancefrom colleagues (above 75%), changing procedures, and developing programsand projects. The impacts mentioned above are more significant for returneesholding PhDs than for those holding only Master's degree. Among importantobstacles facing returnees in trying to utilize their knowledge in theirinstitution are lack of research funds, lack of scientific information, andbureaucracy procedures and policies.

As to the non-degree training programs, they have become increasinglyimportant as a part of the OTO's overall human resources developmentstrategy. Such programs offer several important advantages, such as the shortertime period required which is particularly important in attracting higher levelofficials who cannot leave office for the long period necessary for degree work,and who have difficulties in returning to "a student's mentality". Non-degreeprograms can also take on a very specific focus, tailor-made of specialists of alltypes. Non- degree programs can reach many more individuals than would bepossible with degree programs.

Under PHRD-1, a total of 899 participants have completed short-termtraining. Participants have ranged from senior officials at the director level tojunior staff with only a few years of government service. The unique value ofnon-degree training is that it can meet the needs and interests of this wide-ranging clientele. Training topics have included various management courses(including strategic management, personnel management, project monitoringand evaluation, hospital administration, research management and planning, anduniversity administration); regional and local government development issues,narcotic addiction and rehabilitation, and tourism. Training sites have beenvaried within the U.S. and outside the U.S., including in the third countries.The number of individuals participating in the non-degree programs is expectedto increase rapidly over the next few years. Some evaluation studies of theimpact of non-degree training programs have generally been quite successful.

Future plans for OTO-Bappenas are outlined in the documents relatingto PHRD Phase II, key issues of which are: (1) expansion of linkages tovarious ministries to provide a broader range of services to them for humanresources development; (2) further refinement of training strategies among allgovernment agencies, (3) better research and analysis concerning theeffectiveness of training programs in improving productivity amonggovernment staff.

As to the operational plan, OTO has a long-term plan to make effectiveuse of as well as to strengthen its alumni. The plan consists of a number ofactivities comprising the following: (1) OTO will require that each beneficiarysending participants overseas submits commitment letters to OTO guaranteeingthat appropriate jobs will be made available to returning participants; (2) OTOwill conduct a tracer's study, that is tracing the where about of the participants

33

and monitoring the optimization of the returnees' knowledge in the sendingagencies/work unit; (3) Based on the result of the tracer's study as mentioned inpoint 2 above, OTO will conduct a seminar and take bilateral resolutions withMENPAN, BAKN, LAN, and Bappenas on the returnees' future career pathseither in the sending agencies or other agencies including private companies;(4) OTO is prepared to offer its beneficiary organizations assistance instrengthening their personnel management systems to better accomodatereturning degree participants; (5) OTO will also establish with institutionsbenefiting from OTO fellowships the possibility of establishing a standardsystem for re-integrating returning degree and non-degree participants.

B. Science and Technology for Indlustrial Development-BPPT (STAID-BPPT)Component

The specific objectives of the STAID program are concerned with: (I)Improvement in Science and Technology Policy; (2) Improving themanagement of science and technology; (3) Developing Science andTechnology Manpower Resources.

The implementation of the above objectives are in the context of thesecond long-term strategy of the national development (PJP-II) as stated in theGuidelines of State's Policy (GBHN), in which case the 1993 GBHN stated thatthe development and application of science and technology must be supportedby highly qualified human resources obtained through education and training,good institutional system, and availability of Research and Developmentfacilities. Furthermore, GBHN also stated that in order to achieve newindustrial countries like Singapore, Taiwan, Korea and other industrialcountries in the Pacific area, the need for scientists and engineers wouldincrease by 15,000 a year in the beginning of PJP-I1 and 65,000 a year at theend of PJP-II.

On the basis of these objectives and context, the implementation ofSTAID I project, especially the fellowship program, has supported, and is inline with, the long-term S & T manpower development strategy. Suchimplementation has been carried out through two units: STAID ProjectsImplementation Unit (SPIU) and the Fellowship Project Implementation Unit(FPIU). In general terms, project achievements obtained through suchimplementation are: (1) The total number of overseas bachelor degreefellowships (SI) far exceeded the original SAR (Staff Appraisal Report) target(490: 171), especially for the BPPT (Agency for Assessment and Applicationof Technology). A major reason for such excess was due to the large numberof bachelor degree fellows (260) transferred from the OFP (OverseasFellowship Program) to STAID. As well, candidates for training programswere far less than originally anticipated, thus creating possibilities for morebachelor candidates, (2) The total number of overseas Master's degreefellowship within the LPNDs were reasonably close (193: 188) for mostLPNDs, except for the BPPT. Among the Strategic Industries, the actualnumber fell short (26:97) of the original target, which was primarily due to alack of eligible candidates; (3) The total number of doctoral degree fellowshipfar exceeded the original SAR targets (173 : 72). This was in large part due to

34

the large number of OFP fellows who continued their doctoral program underthe STAID scheme, or who, after receiving their Master's degree during theOFP, continued to a doctoral program under STAID sponsorship scheme; (4)The actual number of overseas industrial training fellows was considerably lessthan that targeted. This was not due to lack of candidates, but was primarilydue to the problems in identifying the proper training program and trainingneeds with institutions abroad. The preparation, implementation, andmanagement of such programs proved to be a monumental problem; (5) Thetotal number of domestic bachelor degree (SI) fellowship exceeded the SARtarget, but this was only a case for one agency (i.e. BPS- the Central Bureau ofStatistics). This excess was a result of the special SI program in statistics thatwas developed for BPS employees, who held only an associate degree (S0); (6)The slight excess of domestic Master's degree program (S2) target wasprimarily due to the special Master's program developed at the ITB (theBandung Institute of Technology) for BATAN (the National Agency forAtomic Energy) employees; (7) The lack of Master's and doctoral programs inS&T at the domestic universities presented a problem in fulfilling targets forthese programs; (8) Problems related to the identification of appropriateoverseas and domestic training programs persist.

The above achievements met the objectives or expected outcomesregarding S&T policy and management in that they: (I) provide technicalassistance to the secretariat of the DRN (the National Research Institution) invarious important activities and products, such as in the preparation of manualsand policymaking; (2) establish IPTEKnet (the network of Science andTechnology), comprising the establishment of Science and TechnologyInformation System design, Micro-IPTEKnet System, BPPT Information andData Clearing House, BPPT Gateway and Internet; (3) determine S&Tpriorities for industrial development, comprising an Action Plan for IndustrialDevelopment; (4) establish S&T indicators; (5) establish the Project AnalysisUnit (PAU), comprising proposal criteria and guidelines for project analysisand selection; (6) establish an information system for planning, managementand human resource development, which covers the design and implementationof Project and Human Resource Information System and a Manual for ProjectProcess Management System; (7) establish an Assessment of Finance andBudget Management System (FBMS) and Office and Logistics ManagementSystem (OLMS), comprising the Assessment and Recommendation Report forFBMS and OLMS.

The impacts of the fellowship program on the various agencies/LPNDsare in four ways: increased research financing, increased projects, increasedpublications and improved capability in performing quality research; strongerpartnership among the public and private sectors, the industrial sector, andresearch institutions; increased relationship between Indonesian researchinstitutions and overseas universities and research institutions; dissemination oftechnological information through scientific publications and joint projects withother institutions, domestic and overseas. The returnees will continue tocontribute to the overall improvement and strengthening of the infrastructure ofthe LPNDs.

35

As to the operational plan of the STAID, the two implementation units(FPIU and SPIu) will be involved. Within the FPIU, the sustainability of thefellowship program will be ensured through: the STAID II follow-on programfor continuing fellows; award of new fellowships through STAID 1I for furtherincreasing the quantity and improving the quality of scientists and engineers;continuously strengthening the domestic university systems through STAID,thus improving science and technology manpower; strengthening the returneeprogram and better utilization of returnees during STAID-II to ensure thetransfer of technology.

Within the SPIU, the STAID Project activities become an importantinstrument in the strengthening of S&T management in Indonesia. Itssustainability is ensured by the establishment of several policies and thecontinuation of the project through: (1) establishment of government policiesduring and immediately after the STAID project, such as the establishment ofone-gate policy for coordinating and selecting S&T activities, announcement ofCompetitive Research Grants (called RUT --i.e. Integrated CompetitiveResearch-- and RUK --i.e. Cooperative Competitive Research), identificationof S&T priorities, policy direction for implementation of programs withindustrial direct links; (2) establishment of infrastructure for strengthening S&Tmanagement systems; (3) support by STAID Project to the Indonesian researchinstitution and Ministry (DRN and MNRT) secretariats.

In addition to these, a project called Industrial TechnologyDevelopment project (ITPD) will be implemented for following-up certainactivities and programs, aimed at developing future technology-basedcompetitive advantages. The ITPD is conducted through a cooperation withMinistry of Industry, LIPI (Indonesian Institution of Sciences), Bappenas, andMinistry of Finance. Three main programs will be implemented in STAID-II:S&T Management Policy and Information System; Management and BusinessIntegration Service; Core activities designed to improve and strengthen small-and medium-scale industries and their linkages to large industries.

C. Ministry of Finance (MOI) Component

The PHRDP-I MOF component would support a program of about 300(SAR target) fellowships for postgraduate overseas training, managed by theMinistry of Finance (MOF), in finance and monetary policy and related fieldsfor MOF's staff, associated agencies and relevant staff of other Ministries,including the Ministry of Trade, of Industry and of Foreign Affairs. Annually,about 45 fellowships would be provided for postgraduate degree training,focused on young middle level managers in finance, public and monetarypolicy, public and business administration, accounting, and economics. As well,about 30 fellowships would be provided annually for shorter duration non-degree courses in these fields as well as in specialist subjects, such as taxation,auditing, asset valuation, customs and excise procedures and data management.In addition, about 30 staff years of domestic training would be provided inrelated fields.

Overall, the project has gone well, particularly in the implementation of

36

the degree program, The overseas short-term training has not achieved thetargeted figure, due to the lirmited fields of study and the availability- of fundsused to support the degree program. The domestic short-term training couldnot be implemented, due to the limited programs offered by the domesticinstitutions and the various demands of the associated agencies.

However, the limited staff of the PIU (Program Implementation Unit)and the frequent change of the project managers (three times) have becomeone of the problems during the implementation of the PHRDP-I MOFcomponent. In addition, the project has no consultancy services to do theprogramming and the related administrative tasks. The project has only hiredone EEO to do the placement and monitoring of the students, while also partlymanaged the students in terms of sending monthly allowances, book allowance,and other related expenses. As a result, there was a cost overrun in the amountof US$1.3 million which has already been identified in the project during themidterm review of 1992.

Apart from these, the project has generally been consistent with thebroader policies carried out by the beneficiary agencies. The MOF componenthas trained qualified staff from some key Ministries, and it has been indicatedthat the retumees have contributed their expertise to develop a new strategy toachieve long-term development goals (see below). Thus the project hascontributed to the country development strategy, particularly in theglobalization era, as a result of GATTS/WTO. In this case, the role ofretumees in each Ministry is very important, especially in the efforts ofreducing subsidies, protection, monopoly and other similar distortions.

The project achievement can be observed through certain quantitativeindicators: The total number of overseas fellowship provided under the projectis 219 for Master's program, 28 for PhD program, and 15 for non-degreprograms, making a total of 262 (as compared to the target of 300). Of these,the failure rate is 5 (five) for the master degree and I (one) for PhD. It can beseen from this figure that the rate for the Master's degree is very high, but onlya small percentage (15%) of the returnees manage to undertake the PhDdegree, due to the budget constraint. The financing of a six to seven-year PhDdegree program is felt to be very expensive. Moreover, the number of womenofficials sent abroad is relatively small, due to personal or family reasons,impossibility to leave her family for the length of study time.

As to the subjects offered, the PHRDP-I MOF Component underWorld Bank loan No. 3134-IND only sent the students to the USA, with anemphasis on the study subjects of Business Administration, Economics, PublicPolicy, International Relations, Law, Accounting. These fields have proved tobe relevant to the MOF component and its associated agencies.

During its implementation, the project is divided into in- country pre-graduate training and overseas pre-graduate training. In-country programs arebasically in the form of English preparation courses, and overseas pre-graduatetraining is the preparation of fundamental thories (economic and quantitativemethods) at the Economics Institute, Boulder-Colorado, USA. The Master's

37

degree program in the USA required the completion time of about 24 months.The ratio of completed versus incompleted training for the MOF componentwas 213 to 5. The average cost is US$50,000 for the Master's program andUSS87,000 for the PhD.

In its project management, the MOF component has a ProgramImplementation Unit (PIU), i.e. a Center for Finance Education and Training. Ithas a steering committee consisting of five sub- components: Ministry ofFinance (MOF), Ministry of Trade (MOT), Ministry of Industry (MOI),Ministry of Foreign Affairs (MOFA), and the Investment Coordinating Board(ICB).

The PHRDP-I provided positive impacts for each Ministry in terms ofthe returnees' participation and contribution in the development strategy. In thecase of MOF, the returnees participated in the development of capital market,financial sector development (notably a package of new tax law, new insurancelaw, new pension law), as well as in producing related ministerial anddirectorate general decrees and regulations. The returnees in MOI, MOT andICB contributed in the real sector deregulation, and those in MOFA alsocontributed in the development of diplomacy and international relations.

Since PHRDP-I has given positive impacts on the improvement of thequality of government officials in Indonesia, the project will continue its role inthe second phase of PHRDP-11. PHRDP-II will be designed to reach morespecific targets, such as specific fields of study, to meet the needs of theMinistries involved.

D. Human Resource Development-Bappenas (HRD-Bappenas) Component

There are two sub-components in this project: The Human ResourcesPolicy Studies and Research (HRD) and the Regional Manpower Planning andTraining (RMPT) Project.

Within the HRD sub-component, the project comprises four strategicelements: Policy and Comparative Studies Program, System Development andImplementation, Training Development, and Training Implementation. The firstelement, i.e. Comparative Studies Program, is concerned with the developmentof human resources policy initiatives to achieve overall output and employmenttargets and to ensure balanced provincial economic development.

The second element, i.e. System Development and Implementation, isfor supporting the first component, in that it will provide strategic informationand analysis on national and provincial labor markets. Such information,required in decision- making process with regard to human resourcesutilization, includes, among other things: (1) economic growth prospects foreach province; (2) model development and projections of future trends inoutput and employment growth by occupation- by sector- by province; (3)model development and projections of future supply of skilled manpower; (4)model development and projections of future supply of high level manpowerfrom the university system by field of study and by province; (5) model

38

development and projections of the impact of export growth on occupationaldemand and human resources policy; (6) employment absorptive potential inthe provinces; (7) education and skills training requirements and the capacity orcapability of institutions to meet demands; (8) development of incentive systemto enhance creativity and innovation in both the public and private sectors.

The third element, i.e. Training Development, is concerned withdesigning appropriate programs and with developing the curriculum, whichmainly includes: Human Resources Development Planning, Manpower Supplyand Demand Models, Economic Growth and Employment Projections/Prospects, Regional Manpower Planning System, Sectoral and Sub-sectoralProgram Analysis, Economics of HRD.

The fourth element, i.e. System Development and Implementation, isconcerned with effective implementation of training programs, involving anumber of organizational consideration, one of which would be to establish acommittee responsible for operational requirements, training programscheduling and monitoring.

The main thrust over the longer term of government's economicdevelopment strategy is to enhance productivity and efficiency of theworkforce and elimination of underemployment and poverty throughappropriate development of human resources, technology and relatedsocioeconomic programs. For Repelita VIl, analysis needs to focus onimplementing policies and programs with particular focus on total factorproductivity of specific programs for the ultimate purpose of determiningprograms of utmost importance, to reduce underemployment and alleviatepoverty. This involves an examination of: the present situation, challenges andobjectives, the present weakness, the total productivity growth, the efficiencyat the industrial level.

As to the implementation process for Repelita VI and the Second Long-termn Development (PJP-1I), there are five steps to follow: (I) Definition ofobjectives and identification of major factors influencing underemployment andpoverty; (2) Mapping of specific government programs to the factorsdetermining or influencing underemployment and poverty alleviation, andarticulation of government programs in relation to economic issues; (3)Development and implementation of research agenda and methodology forpolicy and program implementation, including an analysis of total factorproductivity at the industrial level in relation to the determiningunderemployment and poverty and associated analysis of programs and theirefficiency, assuming a given institutional environmnent; (4) Determiningeconomic and labor market signals; (5) Given all the four steps above, it isnecessary to implement policies and programs involving recommendations,budget requirements, operational guidelines and institutional c4ange.

The above sub-component has been complemented with the secondsub-component, i.e. the Regional Manpower Planning and Training (RMPT)project, which constitutes a technical assistance project to the Bureau ofManpower and Employment Promotion-Bappenas (i.e. the first sub-component

39

above). The objectives of the RMPT sub-component were: (a) to develop aframework for manpower development policy analysis and planning at theprovincial level; and (2) to assess training needs in manpower analysis forregional officials, and to develop suitable training materials for short in-servicetraining courses.

There are two broad kinds of output, namely for the areas of: (a)Regional Manpower Development Policy and Planning; and (b) Training inManpower Analysis. In (a), the specific objectives were to provide policyrecommendations for regional manpower development: (i) as inputs in theformulation of Repelita VI, and (ii) as inputs in the design and implementationof specific prograns and projects during the course of Repelita VI. The RMPTproject focused its activities in the seven pilot provinces of North Sumatra,West Sumatra, West Java, Central Java, East Java, North Sulawesi, and EastNusa Tenggara. The outputs were: (1) Provincial productivity/ HRDManpower Data Bases; (2) Provincial Manpower Surveys; (3) Tracer Studies;(4) Provincial Labor Market Studies; (5) Provincial Manpower DevelopmentStrategy Reports; (6) Provincial Policy Seminars.

In (b), i.e. Training in Manpower Analysis, the following outputs wereproduced: (1) Training Needs and Assessment and Syllabus; (2) IntroductoryCourses in Manpower Analysis; (3) Training Modules for the Bappenas/ OECFtraining Course.

As to the follow-up activities in the operational phase, the Bureau ofManpower and Employment Promotion, Bappenas, intends to undertake thefollowing concrete steps to support the high priority the Government attachesto human resources development for PJP-I: (a) Provincial Productivity/ HRDManpower Data Bases, to be regularly updated, expanded and improved by theprovincial Bappeda offices and the seven project provinces; (b) ProvincialManpower Surveys, based on the establishment questionnaire developed in thisproject; (c) Provincial Labor Market Studies, which will be undertaken by theBappeda in cooperation with provincial research institutions; (d) ProvincialManpower Development Project Proposal, which will be prepared by Bappedaon the basis of suggestions contained in the provincial manpower developmentstrategy reports; e) Manpower Analysis Course Modules, containing eleventraining modules prepared by the RMPT project, will be used to train additionalprovincial and district level staff from various line Ministries; (f) Coordinationof Regional Manpower Analysis Activities, undertaken in the pilot provinces,and the Bureau will promote methodologies and training materials by providingassistance and support to the remaining provinces.

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I_______________________I____________ STRATEGFCIINDUSTRIES

NON-DEPARTMENTAL RESEARCH INSTITUTES IPD SjST IGCNDTRE

0BAKOSURTANAL. N.tionof Coordinating Agency for S.r-y and MOPPMng * PT INKA: Railr-od Industry

AL BATAN: Nolio,ol Atooic Energ3y Age...y U PT INTI: Telecommunications Industry

02 BPPT, Agen-y for As.s.tsnet and Applicoto,- of Technology -- Pr-inc. Boundaries A PT IPTN: Aircraf Industry

0 BPS: C.ntrol B-reo of Stati,tics - I.t.rnotOO... Boondories C) PT KRAKATAU: Stee Ind..try

* LAPAN: Noti ... l Inshtole of Aero.ootics and Space El PT PAL: Shiphoil4ing Industry

A LIPI: fodonesion Institute of Sciences 4 PT PINDAD: Heac Eogie.-rin Industry

0D PEPUM DHtANA: Eoplosines Iodustry

PUSAT LENLIPI: Notion1 Engineering Lo6orolory

OCtO&SAB 890

IMAG TI NG

Peport No: 1-51 34Type- ICP

World Bank Document · OTO fellowships to Bappenas from previous periods are yielding very substantial long term development benefits to the economy and institutional conditions remain

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