Star Report: Indonesia Compact | August 2019

Compact Changes

In May 2016, MCC approved a reallocation from the Green Prosperity Facility Activity to the PLUP Activity, the Procurement Modernization Project, and the Nutrition Project. The ERRs associated with the affected projects or activities had not been calculated (in the case of the PLUP Activity and the Procurement Modernization Project) or were not significantly impacted by the proposed modification (in the case of the Nutrition Project). This reallocation was prompted by several developments in the compact:

  • As a result of the increase in geographic scope of the GP Project to align with GP grantees, the PLUP Activity expanded to cover a total of 45 districts, up from the 26 districts originally envisioned, which required an additional $16.6 million. An additional $1.5 million was requested for mapping peatland hydrology in four priority districts in partnership with the new Peatland Restoration Agency (BRG) established by the GOI in 2016. MCA-Indonesia entered into a partnership with BRG in 2016 to deepen the GP Facility’s engagement with peatland restoration work as part of its existing portfolio and to connect those projects with the GOI’s leading technical experts.
  • As the Procurement Modernization Project entered Phase II, the focus shifted to ensuring replicability and sustainability of the activities. There was a desire by both LKPP and MCC to ensure that Phase II PSUs were strategic and aligned with Indonesian President Widodo’s desire to improve spending for high priority social and physical infrastructure. As a result of this orientation, MCA-Indonesia requested $1.5 million to develop and mentor participants in specialized training modules for the Ministries of Public Works, Transportation, and Finance under the Procurement Professionalization Activity. Due to their large procurement spending (over $10 billion in 2016), these three ministries provided the Procurement Modernization Project with an opportunity to improve the procurement of infrastructure that underpins the GOI’s national economic development objectives. An additional $4 million was provided to support increased training and logistical costs for Phase II PSUs.
  • Approximately $6.2 million in additional funds were used to expand the reach of the PSU mentoring, framework contracting, and procurement management information system (PMIS) sub-activities. Following the successful integration of fraud filters into the PMIS, LKPP requested an additional $1 million to expand the roll out of fraud filters nationwide. Under the Policy and Procedure Development Activity, an additional six pilot model bidding documents were developed for PPPs. The reallocation provided $1.5 million to establish a knowledge and communications center in LKPP to sustain and scale up procurement modernization in Indonesia beyond the compact term. These changes aimed to deepen the Procurement Modernization Project’s engagement with critical GOI entities to expend more of their budget, with greater efficiency, and deliver key public services of greater quality.
  • For the Nutrition Project, an additional $4.7 million was provided to the National Nutrition Communications Campaign in two main areas: 1) a mass media campaign to reinforce and popularize key nutrition and sanitation messages; and 2) a direct interpersonal communications campaign. MCA-Indonesia expanded the mass media effort to include additional TV, radio, and print advertisements and an intensification of the digital media campaign. MCA-Indonesia also funded a program of direct communications at the district and village level, consisting of interpersonal communication skills training, advocacy, and community-based activities and events. These activities were implemented by leveraging community groups, implementing partners, and existing agencies in three selected districts, while the mass media component of the campaign continued at the national level.

In June 2016, MCC approved a further reallocation of $12 million from the GP Facility to the Technical Assistance and Oversight Activity within the GP Project. As the GP Facility portfolio was taking its final shape, MCA-Indonesia anticipated $8.5 million in shortfalls in the budget for the Technical Assistance and Oversight Activity. The first portion of the estimated shortfall was to complete program administration and oversight. The second portion of $3.5 million represented new initiatives to mitigate implementation risks and improve the sustainability of the project by providing targeted resources to key stakeholders to reduce GHG emissions, restore peatland, and expand use of renewable energy in Indonesia.

A second reallocation totaling $7.7 million was also made in June 2016 from the Program Administration and Control Activity to the Procurement Modernization Project’s Procurement Professionalization Activity. Approximately $1.6 million was provided to fund additional workshops to expand socialization of key concepts as well as the development of a competency-based professional certification program. Another $1.6 million was used to improve the security infrastructure of the e-tendering platform and related service centers. Finally, MCA-Indonesia’s implementation experience showed that logistics costs for the Procurement Modernization Project exceeded estimates, and an additional $4 million was used to continue human resources development training.

At the same time, MCA-Indonesia also proposed to utilize $3 million of the Nutrition Project for new initiatives described in an Implementing Entity Agreement with the Ministry of Villages. To successfully implement Indonesia’s Village Law, the Ministry of Villages had a mandate to develop minimum services standards for basic social services related to nutrition, health, and sanitation. These standards aimed to empower and guide village governments as they developed plans and budgets to utilize village funds for these services. To ensure the sustainability of interventions begun under the Nutrition Project, MCA-Indonesia agreed to support the Ministry of Villages to incorporate critical technical information for combatting stunting into the minimum services standards with the goal of properly and consistently including nutrition and sanitation in the regular planning and budgeting system at the village level. 38

Footnotes
  • 1. Riskesdas 2007 (Riset Kesehatan Dasar – Basic Health Survey). Over one third of children under 5 in Indonesia remained stunted during the 2013 round of the Riskesdas survey, the year that the MCC compact with Indonesia entered into force.
  • 2. Olken, Benjamin A.; Onishi, Junko; Wong, Susan. 2011. Indonesia’s PNPM Generasi Program: final impact evaluation report (English). Washington, DC: World Bank.
  • 3. The Comprehensive Partnership established a formal framework for enhanced bilateral cooperation in several areas. Details at: https://obamawhitehouse.archives.gov/the-press-office/2010/11/09/joint-declaration-comprehensive-partnership-between-united-states-americ . Viewed October 24, 2018.
  • 4. Asian Development Bank (2010), Country Diagnostic Studies, Indonesia: Critical Development Constraints. See page 86, Summary, for a statement of the three identified critical constraints to inclusive economic growth.
  • 5. Asian Development Bank (2010), Country Diagnostic Studies, Indonesia: Critical Development Constraints.
  • 6. http://www.mca-indonesia.go.id/assets/uploads/pubs/PanduanTeknis%20PPB%20Des%20MCA-Indonesia%20Final.pdf . Viewed October 24, 2018.
  • 7. For further detail on the evolution of the GPF Activity, please see the Green Prosperity Facility Evaluation referenced and linked below in this report.
  • 8. The matchmaking process has been somewhat successful. Several letters of agreement were signed and other “process” milestones reached. But, the GOI unit tasked with monitoring these outcomes has not yet delivered any satisfactory reporting covering this information.
  • 9. MCC’s standard practice is to have compacts ratified or approved by the partner country’s legislature.
  • 10. See the MCC Learning section for details about what lessons MCC took from implementing the GPF and how the agency is actively applying them to current and future facilities.
  • 11. FAO’s Data Portrait of Smallholders. http://www.fao.org/family-farming/data-sources/dataportrait/farm-size/en/
  • 12. This refers to the CocoaTrace technology / app which is now being used for Palm Oil as well. Learn more here: https://koltiva.com/#aboutus
  • 13. MCC is waiting for information from the Government of Indonesia to verify this statement.
  • 14. FAO, “Small Family Farms Country Factsheet – Indonesia,” http://www.fao.org/3/i8881en/I8881EN.pdf.
  • 15. It is important to note that because the GP Project funded 66 grants under the GPF Activity, it was not possible to verify the data above in the same way that MCC normally does for a project. The data above were reported by grantees/implementers, which is standard; but the standard of evidence for accepting their reports was lower than for normal MCC projects because it was not possible to closely monitor activities of each grantee.
  • 16. MCC is waiting for information from the Government of Indonesia to verify this statement.
  • 17. POME investments also covered under the renewable energy portfolio section.
  • 18. Brief summaries of the grants can be found at: http://www.mca-indonesia.go.id/en/project/green-prosperity/grant/green-knowledge-grant. Viewed October 24, 2018.
  • 19. The Green Knowledge Management Information System can be accessed at: https://forum-greenknowledge.ipb.ac.id/. Viewed October 24, 2018.
  • 20. For further explanation on the administrative costs associated with the GPF Activity, please see the Green Prosperity Facility Evaluation referenced and linked below in this report.
  • 21. MCA-Indonesia (2018) Policy Study to Promote Economic Opportunities for Women and Vulnerable Groups in Indonesia Low Carbon Economy, Jakarta Indonesia.
  • 22. The Government of Indonesia’s One Map Policy was initiated in 2011 to establish a unified database of geospatial information, including land use and land tenure, to be used to inform government decisions on the allocation and use of land and natural resources.
  • 23. MCC is waiting for information from the Government of Indonesia to verify this statement.
  • 24. Details can be found at: https://www.rspo.org/palmtrace. Viewed October 24, 2018.
  • 25. MCC is waiting for information from the Government of Indonesia to verify this statement.
  • 26. Learning from the experience with the Green Prosperity Facility has been applied to MCC facilities underway in Morocco, Benin, and Niger compacts.
  • 27. As estimated in the cost-benefit analysis at time of signing.
  • 28. Olken, Benjamin A.; Onishi, Junko; Wong, Susan. 2011. Indonesia’s PNPM Generasi Program : final impact evaluation report (English). Washington, DC: World Bank.
  • 29. Asian Development Bank (2010), Country Diagnostic Studies, Indonesia: Critical Development Constraints. This quotation is from the Executive Summary on page 4 but the larger discussion can be found in section 4.2.1 Human Capabilities beginning on page 57.
  • 30. Olken, Benjamin A.; Onishi, Junko; Wong, Susan. 2011. Indonesia’s PNPM Generasi Program : final impact evaluation report (English). Washington, DC: World Bank.
  • 31. During the design stage, the independent evaluator proposed a 5 percent effect size as a reasonable effect size to expect based on the project cost. The power calculations were driven in large part by the number of sub-districts in the three treatment provinces.
  • 32. http://scalingupnutrition.org/
  • 33. This indicator reports total Generasi block grant spending against the target for MCC’s contribution to Generasi’s block grant budget. The percent complete can be interpreted to mean that Generasi distributed block grants in excess of MCC’s contributions, by 28%. MCC’s targeted distribution toward Generasi block grants was met.
  • 34. During compact implementation, MCC approved increasing funding for the Procurement Modernization Project to $75 million.
  • 35. This represents the estimated population of project-affected local governments. Benefits associated with improved procurement within national ministries were not found to be significant.
  • 36. Officials from approximately 80 procurement service units were contacted, including all phase 1 and comparison PSUs.
  • 37. LKPP/Bappenas/MCA Indonesia (2013) Gender in Government Procurement in Indonesia: Survey Findings on Access to Procurement, Key Barriers and Trends, Jakrata Indonesia
  • 38. This new initiative was presented to MCC management for the purposes of transparency; however, the funding came from within the Supply-Side Activity, therefore no reallocation of funds between Activities was required. Funds were made available by MCA-Indonesia from savings projected in the purchase of multiple micronutrients, the use of district consultants, and total awards planned for the private sector response activity.
  • 39. MCC is waiting for information from the Government of Indonesia to verify this statement.
  • 40. As the compact entered the final year of implementation, MCA-Indonesia took seriously its charge to outline these “models” of application and “lessons learned” for its GOI stakeholders as reflected in the large number of studies produced. The best example is the Green Knowledge repository: https://pengetahuanhijau.batukarinfo.com.