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. Document of The World Bank
FOR OFFICIAL USE ONLY
Report No. 39505-ID
PROJECT PAPER
PROPOSED ADDITIONAL FINANCING CREDIT
IN THE AMOUNT OF
SDR 89.55 MILLION (US$135,5MILLION EQUIVALENT)
TO THE
REPUBLIC OF INDONESIA
FOR A
SECOND URBAN POVERTY PROJECT
April 9,2007
Urban Development Sector Unit East Asia and Pacific Region
I 1 This document has a restricted distribution and maybe used by recipients only in the performance of
their official duties. It contents may not otherwise be disclosed without World Bank authorization
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CURRENCY EQUIVALENTS
(EXCHANGE RATE EFFECTIVE DECEMBER 19,2006)
APL BAPPENAS BI BKM BPK BPKP
Bupati CAS CCT CDD CDP CSO Desa DIPA
FMR GO1 HCU IBRD ICR IDA IFR KDP Kelurahan MDF MIS MOF MPW OC PAD PDO Pru
Currency Unit = Indonesian Rupiah IDR 1,000 = US$0.109549
US$1 = IDR 9,128
FISCAL YEAR
January : - December 3 1
ABBREVIATIONS AND ACRONYMS
Adaptable Program Loan National Development Planning Board Bank Indonesia Badan Keswadayan Masyarakat (Community Boards of Trustees) Badan Pemeriksa Keuangan (Supreme Audit Agency) Badan Pengawas Keuangan Pembangunan (Development Finance Controller) District Head Country Assistance Strategy Conditional Cash Transfer Program Community-driven development Community Development Plan Civil Society Organization Rural village Dafter Isian Proyek Pusat (Approved Central Government Detailed Project Budget) Financial Monitoring Report Government of Indonesia Handling Complaints Unit International Bank for Reconstruction and Development Implementation Completion Report International Development Association Interim Financial Reports Kecarnatan Development Project Urban ward Multi-Donor Trust Fund for Aceh and North Sumatra Management Information System Ministry of Finance Ministry of Public Works Oversight Consultant Project Appraisal Do'cument Project Development Objectives Project Implementation Unit
FOR OFFICIAL USE ONLY
PJOK
P M U PNPM
P O M S I L TA UPP
Penanggung-Jawab Operasional Kegiatan (Project Manager at Kecamatan Level) Project Management,Unit Program Nasional Pemberdayaan Masyarakat (National Community Empowerment Program) Project Operational Manual Specific Investment Loan Technical Assistance Urban Poverty Project
Vice President: James W. Adams
Sector Director: Keshav Varma Task Team Leader: George Soraya
Acting Country Director: Joel Hellman
This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not be otherwise disclosed without Wor ld Bank authorization.
... 111
INDONESIA
Second Urban Poverty Project
CONTENTS
A . Introduction ...................................................................................................................... -3
B . C .
Background and Rationale for Additional Financing ....................................................... 3
Proposed Changes ............................................................................................................. 7
D . Consistency with the CAS ................................................................................................ 9
E . Appraisal Results .............................................................................................................. 9
F . Expected Outcomes ........................................................................................................ -11
G . H .
Benefits and Risks ........................................................................................................... 12
Financial Terms and Conditions for Additional Financing ........................................... -12
ANNEXES:
Annex 1 : Revised Project Costs and Financing Plan ................................................... 13
Annex 2: Indonesia’s National Community Empowerment Strategy ................................ 14
Annex 3: Project Results Framework and Monitoring ................................................. 16
Annex 4: Financial Management Assessment. .......................................................... 21
Annex 5: Procurement Assessment ....................................................................... 35
Annex 6:
Annex 7:
Annex 8:
Annex 9:
MAP - JBRD 31828
Anti-corruption Act ion Plan ................................................................... 39
Technical and Operational Issues and Actions .............................................. 46
Statements o f Loans and Credits ............................................................... 48
Country at a Glance., ........................................................................... 51
iv
INDONESIA SECOND URBAN POVERTY PROJECT
PROJECT APPRAISAL DOCUMENT
EAST ASIA AND PACIFIC REGION
* EASUR
Source
Project ID: P072852P0968 13 Lending Instrument: Credit (IDA)
Themes: Infrastructure Services
Total Bank financing: US$: 135.50 mi l l ion Proposed terms: Standard
Local I Foreign] Total
Does the project depart f rom the CAS in content o r other significant respects? Does the project require any exceptions f rom Bank policies?
I s approval for any pol icy exception sought f rom the Board? Does the project include any critical risks rated “substantial” o r “hi eh”?
Have these been approved by Bank management?
Borrower IBRD/ID A
Others
Responsible agency: Ministry o f Public Works (MPW) Address: J1. Patimura 20, Jakarta Selatan, Indonesia
[ ]Yes [ X 3 N o
[ ]Yes [XINO
[ ]Yes [X ]No [XIYes [ ] N o
[ ]Yes [ IN0
has been disbursed to date. Current closing date: June 30,2008
1
Does the project meet the Regional criteria for readiness for implementation? Project development objective: The development objective o f the Second Urban Poverty Project i s to benefit the urban poor by improving services and infrastructure identified and delivered in a more effective and participatory manner.
.)
Project description: The project consists o f four components: (a) Community Planning and Local Government Capacity Building: Support for social intermediation activities, training, workshops, meetings and focus group discussions, and production o f socialization materials and publications. (b) Kelurahan Grants: Block grants for kelurahans to support sub-projects included in the community development plans. (c) Poverty Alleviation Partnership Grant: Encourage partnerships between local governments and communities by providing matching grants for c i ty level poverty reduction activities. (d) Implementation Technical Assistance: Support for project management and oversight through provision o f consultants and technical assistance.
Which safeguard policies are triggered, if any? The project triggers four safeguard policies: Environment assessment, cultural property, involuntary resettlement, and indigenous peoples. Significant, non-standard conditions, i f any: None Board presentation: M a y 2007
[X ]Yes [ ] N o
2
A. INTRODUCTION
Project Phase
UPP 1 UPP 2
1. This project paper seeks the approval o f the Executive Directors to provide additional financing o f US$135.5 mi l l ion to the Indonesia Second Urban Poverty Project (UPP 2) through the use o f the additional financing instrument under OP 13.20. The Government o f Indonesia (GOI) has requested this additional financing to scale-up UPP 2 to support the government’s newly created national poverty reduction program. Changes to the existing project include: (a) geographic expansion to new areas; (b) adoption o f a more rigorous anti-corruption action plan; (c) strengthened financial management, procurement, and disbursement arrangements; and, (d) improved training program for consultants and facilitators, including modules on community-based disaster management. These revisions are consistent w i th the project’s objectives, which will not change, and will improve the effectiveness o f project implementation.
IBRDDDA (US$ million)
Number of Period kelurahans
covered 1999-2004 2,621 100.0 2002-2008 2,059 100.0
B. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING
2. Project background. UPP 2 was approved by the Board for an amount o f USSlOO mi l l ion on June 11,2002 and became effective on November 18,2002. The development objective o f UPP 2 i s to benefit the urban poor by improving services and infrastructure identified and delivered in a more effective and participatory manner. The design o f UPP incorporates several innovative measures, including: (a) matching the needs and demands o f communities with services provided by local governments; (b) building local government capacity to work with and support community organizations; and (c) ensuring continued community ownership o f the facilities or programs.
3. UPP 2 i s part o f a series o f urban poverty interventions supported by the Bank, beginning with UPP 1, which was approved in 1999, followed by UPP 2 in 2002, and UPP 3 in 2005. Total I B R D A D A financing that has been provided to the three UPP operations i s about US$338.7 mi l l ion (Table 1). The program i s one o f the largest urban poverty reduction projects in the world, w i th an established record o f community engagement, participation, and service delivery. The Bank i s also supporting rural poverty reduction through a series o f Kecamatan Development Projects (KDP).
UPP 3
Table 1 - UPP program
2005-201 1 1,726 138.7 TOTAL 6,406 338.7
4. More than 6,400 o f the poorest urban Indonesian wards, or kelurahans, have participated in and benefited f rom the UPP program. The majori ty o f funds have supported small-scale infrastructure construction and maintenance and revolving fund schemes. Technical quality o f infrastructure o f the roads, bridges and water and sanitation schemes constructed under UPP 1 has been assessed by the task team during supervision missions and by the government and found to be satisfactory in over 85 percent o f sub-projects. GO1 also estimates that infrastructure financed
3
through UPP 1 using a participatory approach produced savings o f more than 35 percent o f the total cost o f using contractors. Surveyed communities also indicated their overall quality o f l i f e had improved by over 80 percent due to the implementation o f sub-projects.
5. Lessons learned from UPP 1 have been incorporated into the project design. Bypassing local governments does l i t t le to foster a productive or sustainable relationship with communities. The addition o f the Poverty Alleviation Participation Grants (PAPG) component to UPP 2 encourages local government ownership o f the project. Another important lesson i s the building o f trust and accountability between the community members and Community Board o f Trustees or BKMs. A longer awareness raising process and structured involvement o f communities ensures both the communities and the BKMs are aware o f their rights and responsibilities. Project monitoring has been separated from the project evaluation function to maintain independence and objectivity o f the consultants.
6. UPP 2 project components include:
(a) Community Planning and Local Government Capacity Building - This component funds the cost o f facilitators to carry out social intermediation activities, training, workshops, meetings and focus group discussions, and production o f socialization materials and publications. Outputs under this component include community development plans (CDP), formation o f community boards o f trustees (BKMs), and local government capacity building.
(b) Kelurahan Grants - Sub-projects included in the CDPs are supported by block grants for kelurahans. These sub-projects cover an open menu o f poverty alleviation activities with a short negative l ist. Typical activities are: specific investments pre-identified by communities (bridges, roads, school repair, health facility repair, etc); microcredit loans for community groups, which form the basis o f a revolving fund; and grant assistance to the poorest or most vulnerable individuals (e.g., scholarships, home improvements, health care, etc).
(c) Poverty Alleviation Partnership Grant - This component encourages partnerships between local government and corhmunities. Local governments may access matching grants for city level poverty reduction activities and finance poverty alleviation sub-projects that are too big to be financed by the block grants, or that require local government involvement (e.g., networked infrastructure or operations and maintenance) and that cover more than one ward.
(d) Implementation Technical Assistance - The Project Management Uni t (PMU) has hired consultants and facilitators to assist in project implementation. Technical assistance i s being provided through national management consultants (NMC) at the central level, and oversight consultant (OC) teams at the provincial level, with offices in the participating districts.
7. Project performance to date - UPP 2 i s achieving i ts development objectives in an acceptable manner and implementation progress i s currently satisfactory in spite o f initial start up
4
delays. At the end o f 2006, US$84 mi l l ion out o f US$lOO mi l l ion had been disbursed; remaining UPP 2 funds are h l l y committed. As previously noted, the project has had such a positive development impact o n the poor in urban communities that the government i s scaling it up as a main pi l lar o f i t s new national poverty reduction program. Transparency in decision-making at the community and local government levels has increased substantially. Audit reports have been received in a timely manner and are satisfactory; minor procedural issues identified have been satisfactorily addressed. Compliance with social and environmental safeguards policies has been acceptable. The anti-corruption action plan (ACAP) i s being implemented in a satisfactory manner. The project website and management information system (MIS) have been effective mechanisms for maintaining the transparency o f the project and tracking complaints. Weaknesses in the project ACAP were addressed in UPP 3; this strengthened A C A P wil l be applied under the project.
8. The project's monitoring and evaluation system i s functional and i s tracking progress on the key project performance indicators and milestones, many o f which have been met (see Table 2). As o f December 2006, close to 100 percent o f target areas had completed a l l cycles o f UPP community preparation. A total o f 2,059 BKMs, or Community Boards o f Trustees, have been established (about 3.1 mi l l ion people participated in the election o f the BKMs, and 49 percent o f the voters were women). These BKMs consist o f 25,537 members who work for the poor on a pro bono basis. About 2,000 community poverty plans have been completed. A total o f 86,524 sub- project proposals have been funded.
9. A comprehensive, panel-based quantitative and qualitative impact evaluation o f the project i s currently underway, covering over 15,000 respondents f rom 156 treatment and 108 control wards. The original results monitoring framework has been revised to reflect changes to the project, as elaborated in paragraph 32 below. Additional information o n project results monitoring i s available in Annex 3.
10. Rationale for Additional Financing. In August 2006 GO1 launched the first nationwide poverty reduction program comprising two components: (a) National Program for Community Empowerment (PNPM); and (b) Conditional Cash Transfer (CCT) Program targeting poor communities and households. The PNPM will be implemented in three phases from 2007-2009 and wil l require about US$1.5 b i l l ion per year. During the first phase in 2007, while designing and enhancing the PNPM framework, the Government will scale up two existing poverty reduction models - community empowerment in rural and in urban areas, through the Kecamatan Development Project (KDP) and UPP programs. Details o f the PNPM are outlined in Annex 2.
Table 2 - Key Outputs of the Urban Poverty Project (UPP)
lo Electricity # o f units 5,235 4,567 1,731 1 1,533 Beneficiaries # of households 2,699,395 4,397,523 283,082 7,380,000
‘ Revolving Funds Loan Activities # o f loans 156,628 50,912 n.a. 207,540 inan iiecipient # o f persons 939,768 349,265 n.a. 1,289,033
Repayment rate 5 ’ % 73.5 92.6 n.a. 83.05
” 1
2
(2)
(’)
(4)
5,
Status as of October 10,2006; data source : UPP 2 MIS
Status as o f October 31,2006; data source : UPP 3 MIS
Status as o f September 15,2006; data source : UPP - Mult i Donor Fund MIS
Kcpayment rate o f UPP 2 repicsalts the latest status ofthc first 8 months of thc opcration, as o f October 2006
’
Education and Health I l ea l t l i (health posts builtitcha or supported) # o f units 154 1,509 10 1,673 F.ducation (school rehah or supported) # o f units 56 17 19 92
E 1
2
Social activities Aids for widow, elderly people, and students (Scholarship) # o f beneficiaries 4135 581,925 8,767 594,827 Skills trainings for community employment # o f beneficiaries 11.a 143,766 6,799 150,565
11. The national budget for 2007 does not include sufficient funding to cover the launch o f the PNPM program, leaving a gap o f US$930 million. GO1 has requested the Bank to provide US$258.5 mil l ion in bridge funding to support the implementation o f the PNPM: (a) US$135.5 mil l ion as additional financing for UPP 2; and, (b) US$123 mil l ion as additional financing for the Third Kecamatan Development Project, second phase. The proposed additional financing for UPP 2 wil l support ongoing poverty reduction activities in most o f the UPP and UPP 2 wards and w i l l scale up the program to include about 2,900 new urban wards not covered previously by any of the UPP operations. I t wi l l not support the CCT Program.
12. UPP 2 was chosen for additional financing, because: (a) the funding gap i s in kelurahans covered by UPP 1 and UPP 2; and, (b) the project management staff i s well experienced and has significantly lighter workload than that o f UPP 3. A new investment operation, such as a Specific Investment Loan (SIL), i s not being utilized in this case as it would have increased borrower transaction costs without bringing substantive benefits to the project design. The streamlined appraisal and approval process o f the additional financing mechanism provides the most flexibility for assisting the GO1 in meeting the immediate funding gap in this transition period from UPP to the institutionalization o f the PNPM program, o f which the UPP model i s a Cornerstone.
C. PROPOSED CHANGES
13. The UPP 2 additional financing wil l follow the current project design, while incorporating improvements made in the design o f UPP 3, such as the revised ACAP and simplified disbursement arrangements. The additional financing will only be applied to the following project components: Community Development and Local Government Capacity Building; Kelurahan Grants; and, Implementation Support. The Poverty Alleviation Partnership Grant (PAPG) component i s not included as part o f the PNPM because it focuses on larger infrastructure.
14. The additional financing to UPP 2 will:
Provide block grants to 2,636 kelurahans supported by UPP 1 and UPP 2;
Add 2,911 new kelurahans not covered previously by UPP 1, UPP 2, or UPP 3;
Decentralize budget documents for block grants, the hiring o f the facilitators/individual consultants, and payment o f salaries to the provincial level;
Improve protocols for disbursement o f block grants to the BKMs’ bank accounts;
Build the capacity o f the Project Management Unit (PMU);
Improve the training program for consultants and facilitators, including modules on community-based disaster management;
Implement the revised anti-comption action plan (Le., the UPP 3 ACAP);
Strengthen the UPP website (www.u2k~.orq) for complaint handling, disclosure o f contract information, and for progress reports on payment information;
Improve the Project Management Information System (MIS);
7
0 Strengthen the independent ex post review o f community grants to at least 2 percent by value o f procurement under community grants and village facilitator contracts, according to the audit terms o f Teference (TOR); and,
Undertake an in-depth analysis on the status o f UPP revolving funds. 0
Existing UPP 1 & UPP 2 kelurahans
UPP 3 kelurahans
New kelurahans
TOTAL 2007
15. The additional financing increase UPP program coverage to about 7,273 kelurahans in al l 33 provinces in Indonesia (see Table 3 below). A total o f 2,636 existing and 2,991 new kelurahans wil l benefit f rom the additional financing. The 2,911 new kelurahans to be added through the additional financing, wil l carry out the full, basic cycle o f UPP through June 2008; however, they wil l only be eligible to receive 20 percent, o f the total grant amount to undertake socialization activities because they may not have adequate capacity to manage the full block grant. Existing UPP 1 and UPP 2 areas are already well-versed in UPP procedures and will receive the full block grant amount. Remaining ex-UPP kelurahans not covered by this additional financing will either be addressed by KDP as part o f the PNPM or have been designated as non-performing kelurahans ineligible for funding.
Table 3 - Coverage of the 2007 UPP PNPM
facilitation ;pL
Community facilitation &
Community preparation &
2007 block grants 2,636* 97 97
2007 block grants 1,726 67** 0
Jan. 07 - Dec.08 20% block grants 2,911 *** 38.5 38.5
Jan.07 - Dec.08 7,273 202.5 135.5
16. plan for the project.
Revised project costs and financing plan. Annex 1 shows the project costs and financing
17. Project implementation arrangements. The existing project implementation arrangements will be applied to the additional financing. The special unit in the PMU staffed to operate UPP 2 will be supplemented by new staff and additional consultants to manage the additional financing. The capacity building strategy for the PMU i s presented in paragraph 23.
18. Project Operational Manual (POM). The UPP 3 POM will be used for the additional financing, with a l l changes to the project indicated in paragraph 14 included as an addendum to the manual.
8
19. June 30,2008 to December 3 1,2008.
Revised closing date. The loadcredit closing date will be extended by six months, from
D. CONSISTENCY WITH THE COUNTRY ASSISTANCE STRATEGY
20. The Bank’s latest Country Assistance Strategy (CAS) dated October 2003 identifies two primary constraints to reducing poverty in Indonesia: (a) inadequate productive employment opportunities resulting f rom a weak investment climate; and, (b) lack o f quality service delivery to poor people. Progress in these two areas has been compromised by the underlying problem o f weak governance. The CAS aims to address these constraints through four delivery platforms, including a community-driven development (CDD) platform. Approximately 25 percent o f Bank lending during the CAS period i s expected to be directed through the C D D platform, primari ly through the UPP and KDP programs.
21. The 2006 CAS Progress Report states that the Bank’s program in Indonesia will be expanded through: (a) stronger support for governance reform v ia c iv i l service reform and transparent, nationwide poverty programs; (b) focus on disaster risk management; (c) increase in program financing for the remainder o f this CAS period; and (d) stronger partnerships. The proposed additional financing will primari ly support areas (a) and (b).
E. APPRAISAL RESULTS
22. In December 2006, a Bank team appraised GOI’s request for US$140* mi l l ion as additional financing for UPP 2, using the same procedures as for the original project. The appraisal concluded that additional financing for the project would benefit the urban poor on a larger scale and would have a positive impact on the development and implementation o f the PNPM. K e y results o f appraisal are outlined below.
23. Management capacity o f the PMU. The issue o f capacity to address the increased scale o f the project has been addressed by: (a) hiring additional contract managers (PPK) under the PMU; (b) establishment o f a budgeting unit (satker) in each province; (c) placement o f additional government staff within the PMU; and (d) increasing the number o f project management consultants. The PMU will also decentralize disbursement authority at the provincial level, except for the key consultants. This decentralization has been tested under UPP 3 and has proven to enhance significantly the capacity o f the PMU.
24. Mobilization and training o f facilitators. A second possible scale-up issue i s whether sufficient technical and social facilitators can be rapidly mobilized, trained and deployed. Currently UPP 2 consultants are operating in al l areas covered by this additional financing; however, at the local level, about 3,700 new facilitators must be mobil ized and trained. To address these issues, GO1 has developed consultant mobil ization and training strategies, which include plans for phased recruitment and improvements to the content and delivery o f training modules. Because o f continuity requirements and previous program effectiveness, the existing W P consultants’ contracts (both the National Management ‘ Consultant and the Oversight Consultants) wil l be
’ Subsequently reduced to US$ 135 during negotiations.
9
extended to cover the 2007 PNPM work. Facilitators w i l l be mobilized and trained in stages, beginning with the strengthening o f the existing UPP areas that wil l receive kelurahan block grants through the additional financing.
25. Financial management. The Bank reviewed the financial management assessment for UPP 2 in the context o f the additional financing. A risk assessment carried out by financial management specialists confirms that the project risk rating i s substantial after mitigation measures are put in place. The financial management arrangements and modifications to the disbursement mechanism outlined in Annex 4 wil l satisfy the Bank’s minimum requirements under OP/BP10.02 and 13.20.
26. Targeting of kelurahans. In 2007 the UPP program will target 7,273 kelurahans located in 834 kecamatans. These kelurahans, which contain approximately 3 mil l ion people, were selected based on: (a) their location in urban kecamatans; and (b) their having a poverty rate equal to or exceeding 10 percent o f the population. GOI’s UPP and KDP teams have worked closely to ensure there i s no geographic overlap between the two projects under the PNPM.
27. Revolving funds. Revolving funds will be limited to those kelurahans which have already benefited under the component and which have demonstrated repayment rates o f at least 80 percent. This decision was taken to avoid expansion o f the program, which has not yet undergone a thorough evaluation o f i t s efficacy and impact. Complementary to the revolving fund assessment mentioned in paragraph 14, the Bank wil l undertake a rapid assessment o f the UPP 2 revolving fund program jointly with KDP in May 2007. The result o f these assessments wil l inform the development o f future revolving fund operations under the PNPM.
28. Procurement. Procurement wil l consist o f hiring a number o f management consultants (large value contracts), monitoring consultants, and individual facilitators, in addition to allocation o f some 70 percent o f the project funds for community grants following the existing community participation procedures. Procurement under the community grants wil l follow community participation, using forms and procedures as defined in the existing Project Operational Manual o f UPP 2, with minor revisions to include the additional villages. Based on previous implementation o f UPP, it i s apparent that these procedures greatly increase the transparency o f the procurement process; adherence to these procedures has significantly improved. There were no significant findings during recent missions or audits, except the lack o f availability o f documentation at the community level. This will be part o f enforcement under this additional financing. The overall project risk for procurement i s high, considering the large size o f contracts/loan amount as well as the short implementation period. The revised procurement arrangements are attached as Annex 5.
29. Community-based disaster management. The additional financing will support the execution o f a training module for UPP facilitators to: (a) raise awareness o f existing risks; and (b) engage communities in risk reduction and preparedness activities. The consultants and facilitators may provide technical support to communities that request assistance to incorporate disaster management into their community development plans. Under the multi-donor Java Reconstruction Fund, a grant has been provided to develop these modules.
30. Anti-corruption action plan. GO1 will adopt the comprehensive UPP 3 anti-comption action plan (ACAP), which i s an enhancement o f the existing UPP 2 ACAP. The project wil l build
10
upon the many good governance features already being implemented, including the UPP website, which i s often cited as a best practice example o f information disclosure as we l l as a quick, low-cost way o f gathering feedback f rom the field. Enhancements to the original UPP 2 ACAP include: improved transparency and disclosure provisions; c iv i l society oversight; mitigation o f fraud, collusion and nepotism; an efficient complaint handling mechanism; and, sanctions and remedies. The revised ACAP i s attached as Annex 6.
31. Results monitoring. The UPP 2 results monitoring framework has been revised to track the changes that have been incorporated into the project. Additional outcome indicators (such as the level o f beneficiaries’ satisfaction o f services, the cost-effectiveness o f services provided, and level o f community participation in the project) and output indicators (such as the quality o f infrastructure services, percentage o f CDPs implemented) have been introduced for the three components receiving additional financing. The UPP 2 monitoring system wil l be utilized, with improvements to data collection and verification methods, spot checks, and the complaints handling mechanism. The revised results monitoring framework is attached as Annex 3.
32. Economic and financial analyses. The economic analysis i s consistent with the analysis presented in the UPP 2 PAD. The additional financing wi l l bring UPP coverage to 7,273 kelurahans. The proposed expansion o f UPP 2 in 2007 to existing and new kelurahans wil l cost about US$172.2 mill ion, including the cost o f the block grants, training, and facilitation. The additional financing wil l provide US$135.5 to meet this financing gap; in addition, the government has already allocated US$28 mi l l ion f rom the national budget. Communities are also expected to contribute financial and human resources estimated at US$8.6 mil l ion.
33. Safeguard policies and arrangements. The project will retain the safeguards classification o f Category B. The Social and Environmental Safeguards Guidelines and Frameworks outlined in the UPP 3 Project Operational Manual will be applicable to this project.
F. EXPECTED OUTCOMES
34. Expected outcomes o f the additibnal financing include: (a) targeted poor urban households receive improved services; (b) infrastructure i s o f high quality and i s less costly than non-community based construction; (c) beneficiaries are satisfied with the improved services and infrastructure; (d) the BKMs are representative, effective, and operate in a participatory manner; and, (e) local governments provide support to the program. The Government i s also expected to establish a long term financial framework for i t s poverty reduction program.
35. Sustainability o f the UPP program has been broadly demonstrated: strong community participation ensures bay-in and demand; local government participation ensures additional support and institutionalization o f the process as we l l as increasing scale; and investments have been proven to be o f high quality and more economical under the UPP methodology vis- &vis traditional contracting. In addition, the program has been scaled-up through successive operations that have built upon the successes and expanded the geographic scope o f the previous operations. The model has been adopted by at least 5 1 municipalities that operate independent, complementary programs using the UPP framework. The model has also been successful in leveraging support f rom NGOs and social organizations, which use UPP as a vehicle for channeling financial support to poor urban communities. The success o f UPP has led
Sustainability.
11
to the adoption o f the program throughout the country and i s the basis, as indicated, for the PNPM, with an annual allocation o f US$1.5 b i l l ion f rom 2008-15.
G. BENEFITS AND R I S K S
36. The project will have a positive impact o n the development and execution o f the PNPM. Specifically, the project will benefit poor urban communities in Indonesia through geographic expansion o f UPP to new areas and the provision o f supplemental kelurahan grants.
37. Risks. There are three main r isks related to the scale up o f UPP 2. The first r isk i s the management capacity o f MPW, which i s sti l l operating both UPP 2 and UPP 3. This additional financing may stretch the capacity o f the agency. This risk wil l be mitigated through the implementation o f the Government’s capacity building strategy for the UPP Project Management Unit (PMU), as discussed above in section E. The second risk i s the recruitment and training o f about 3,700 facilitators and other consultants. This risk wil l be mitigated through the adoption o f the government’s strategy for rapid recruitment and training o f new facilitators and consultants through extension o f existing consultants’ contracts, phased recruitment, and enhanced training programs, an approach that has already been successfully implemented in Aceh and Yogyakarta. The third risk i s the possible delay in the authorization o f the budget and slow processing o f payments through the regional treasury office. T o minimize this risk, a more efficient disbursement mechanism has been agreed with the Government that follows the arrangement currently uti l ized in UPP 3.
H. FINANCIAL TERMS AND CONDITIONS FOR ADDITIONAL FINANCING
38. The terms for the IDA credit wil l be standard for an IDNIBRD blend country. Conditions for the additional financing, which are to be completed prior to negotiation o f the project, include: (a) a draft revised project operation manual that includes additional fiduciary management features noted in Annex 4; (b) an audit terms o f reference (TOR) that i s acceptable to the Bank and includes at least 20% o f project kecamatans w i th a sample o f kelurahans selected based on BPKP criteria; (c) draft Memorandum o f Understanding (MOU) between the PMU and a commercial bank o n banking services arrangements to channel the b lock grants to the BKMs, including remedies acceptable to the Bank for internal control lapses; and (d) a draft MOU between the PMU and a commercial bank on banking services arrangements to channel the funds for the facilitator and individual consultant salaries. Prior to project effectiveness, the fol lowing conditions apply: (a) the revised project manual, acceptable to the Bank, has been duly updated and revised to reflect the impact o f the additional credit and adopted by the recipient; and (b) the PMU shall have entered into one or more MOUs w i th one or more commercial banks o n terms and conditions acceptable to the Bank for banking services arrangements to channel the block grants to the BKMs and the funds for the facilitator and individual consultant salaries.
12
Annex 1: ProjectCosts and Financing Plan
A.
B. C.
Project Costs
Component Prtject Financing Total Community Development and Local Government Capacity Building 17.08 30.1 47.18 Kelurahan Grants 58.82 118.1 176.92 Poverty Alleviation Partnershir, Grant
UPP 2 Original I Additional
D. (PAPG) 35.23 0.0 35.23 Implementation support 9.73 24 33.73
I Unallocated & Front end fee 6.13 I 0 1 6.13 I Total Project Costs
13
126.99* I 172.2 I 299.19
B. Kelurahan Grants
C. Poverty Alleviation
D. Implementation support
Subtotal TOTAL PROJECT COST
Partnership Grant
85.7 0 85.7 23.8 8.6 118.1
0 0 0 0 0 0
19.7 0 19.7 4.3 0 24
135.5 0 135.5 28.1 8.6 172.2
205.97 29.53 235.5 41.38 22.31 299.19
Annex 2: Indonesia’s National Community Empowerment Strategy
1. On August 16, 2006, the President o f Indonesia announced that his government would support a national program for poverty reduction. This wil l be the first national program for sustainable poverty reduction - rather than crisis management -- since the East Asian Crisis plunged nearly 40 percent o f Indonesia’s population into poverty. The program consists o f two main approaches: Conditional Cash Transfer Program and the National Program for Community Empowerment.
2. Approximately USS4.0 bi l l ion would be invested in a conditional cash transfer program (CCT) to improve poor people’s use o f social services. In i t s f irst year the CCT program would target 1.7 mi l l ion poor families, with a plan to rise to 18.0 mi l l ion poor families by 2009.
3. The second wing o f the poverty program i s called the National Program for Community Empowerment. Called PNPM in Indonesian,(Prograrn Nasional Pemberdayaan Masyarakat) the PNPM covers both rural and urban parts o f Indonesia. Both rural and urban areas w i l l be built by scaling-up two World Bank-financed community driven development projects, the Kecamatan Development Project and the Urban Poverty Project. By 2009, all 5,300 rural and urban sub- districts in the county wi l l be covered with one o f these two programs.
4. Indonesia’s PNPM i s an evolving idea that wil l be planned over the course o f 2007 before going national, but i t s main outlines have been provided by the Coordinating Minister o f Social Welfare. PNPM will be part o f a national poverty reduction framework that includes a social safety net, improved asset security, and increased use o f core health and education services.
5. PNPM will be developed over the 2007-2009 period. When fully developed, the program wil l cover al l rural and urban communities in Indonesia. The program will consist primarily o f scaling up the existing Bank-assisted KDP and UPP programs, but the scale-up would be supported by a number o f evaluations to identify improvements or missing elements. Other donor programs will also be evaluated and brought into the national design.
6. A number o f strategic choices must be made as part o f the national scale-up. They include: (a) one national program or many projects united by an umbrella concept; (b) coordination with l ine agency service delivery; (c) management o f the national PNPM given that the existing poverty programs are implemented by different ministries; (d) centralized or decentralized management; and (e) long-term financing framework.
7. A preliminary economic assessment o f PNPM showed that by 2009, when the program would cover all kecamatans at the proposed benefit level o f Rp. 3 bi l l ion per kecamatan, it can potentially benefit nearly 14 mil l ion families, increasing their income by 11 percent by providing an average o f 60 days o f work. Some 7-9 mil l ion households would be pulled out o f poverty.
8. The additional income would benefit primarily workers when they need i t the most. I t will raise the wages o f all unskilled workers significantly, even those that had no contact with the program, by reducing the competition from desperate workers who drive all wages down. By
14
developing economically productive roads, irrigation and drainage works, water supply and sanitation works, PNPM wi l l permanently increase employment and income. Injecting purchasing power into villages and poor urban areas w i l l have an indirect effect in “activating” the village economy.
9. GO1 has already indicated that it anticipates a need for start-up support to help the PNPM program. Estimated financing needs from the World Bank, ADB, and JBIC for the 2008-2009 period are approximately US$600 million. The government plans to use 2007 to discuss with donors the most suitable form o f medium and longer term donor assistance. The government has asked the Decentralization Support Facility, a multi-donor trust fund managed by the World Bank, to promote harmonized dialogue with the government, to coordinate donor engagement on the PNPM.
15
Annex 3: Results Framework and Monitoring of UPP-PNPM
(Indicators that are UI PDO
Urban poor in targeted urban areas benefit from improved services and infrastructure identified and delivered in a more effective and participatory manner
Intermediate Results
Component One: Organized community groups increasingly voice demands
Component Two: BKMs deliver improved services to the poor
d ined have been drawn from the original UPP 2 I Outcome Indicators
1) 30 % o f poor households in 7,273 kelurahans receive benefits and improved services from UPP- PNF'M - 20% of revolving fund recipients have increased
their income level - infrastructure built i s 20% cheaper than that built
by non community based methods & meets the needs of the community (in line with the CDPs) in 80% (5,818) of participating kelurahans
- the provision of grant assistance continues in 35% (2,545) o f participating kelurahans
- 80% satisfaction level of beneficiaries regarding improved services
2) At least 70% (5,092) o f the BKMs are representative, effective, and operate in a participatory manner
3) 30% (78) local governments provide their own resources for project monitering, partnership, channeling program to support the CDPs, etc 4) Central Government establishes a long term financial framework for i t s poverty reduction program
Results Indicators
Component One: a) (I) % o f population participated in series of
communitv discussions during implementation o f UPP-PNPM
(2) % o f female and vYlnerable groups participating
b) # of communitv volunteers are recruited Der kelurahan
c) % of the kelurahan pouulation aware of the uroiect and its obiectives
d) (1) % of the adult population voting in B K M elections at the neighborhood level
o f BKM election (2) % o f adult uouulation voting in the final stage
(3) % of women elected as B K M member
Development Plans (CDPs) completed and ratified (2) % of CDPs implemented (3)% of kelurahan DoDulation aware of CDP
Q % BKM Forums formed as a percentage of participating local governments
Component Two: 3) (1) % o f poor families benefiting from
infrastructure (2) % o f infrastructure works evaluated as high quality
J) (1) % o f poor families with access to revolving fund (2) % of female revolving fund recipients
;) % o f kelurahans with revolving funds having repayment rates over 90%
i) (1) % o f poor families receiving grant assistance
e) (I) % o f kelurahans with Community
iults monitoring framework) Use of Outcome Information
Year 5: determine whether the project needs design improvements; provide inputs into the preparation of national and local poverty alleviation strategies
Use of Results Monitoring
Component One: . Assess whether the design of B K M formation and CDP arrangements need adjustment
reflection gathering should be adjusted . Determine whether the socialization and election processes need to be improved
. Review whether the poverty
Component Two: . Determine if additional technical assistance i s required in specific areas . Determine whether participatory process for formulation o f CDPs needs to be adjusted
16
Component Three: Central and Local governments deliver improved services to the urban poor, including through partnership with BKMs and the private sector
Component Three: . Determine whether the process of preparation needs to be adjusted . Assess whether the process ofjoint preparation o f proposals needs to be improved . Assess whether the format and mechanism of partnership needs to be adjusted
(2) % of female grant recipients e) % of female in communitv ~ O U D S (KSMs) f ) % of BKMs receiving financial assistance from
other agencies Component Three: a) # o f PAPG cities selected b) % of local government staff aware o f PAPG in
c) # o f PAPG selection committees formed d) # of PAPG sub-Droiects comdeted Der city e) % o f local government co-financing in PAPG f ) % o f Door among direct beneficiaries o f services
provided under PAPG/Dercent poor in city
PAPG cities
pomlation
PAPG cities g) % o f kelurahan population aware o f PAPG in
h) Central Government issues a policy paper for long
Component Four: Consultants provide technical assistance and implementation support to the project
term poverty reduction Component Four: Component Four: a) % o f tarpeted areas receiving technical SUUDO~~ b) % of OCs providing timely & accurate data
c) % of BKMs with comdeted annual financial audits
. Gauge whether technical assistance and implementation support needs to be improved or increased Provide timely & accurate data to inform management decisions
through MIS
This i s the only indicator in this section that will be monitored for the additional financing.
17
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E c ! i
j 3 :
9 i G i
g m . s 0 cr
I
Y
x
5 VI
x - - 9 4
fi N
s VI N
8
VI
E
x m - - 9
T
T
0 N
Annex 4: Financial Management Assessment and Disbursement Arrangements
1. In response to the GOI’s request for additional financing o f US$135.5 mi l l ion in IBRDIIDA funds to scale up UPP 2, a financial management assessment o f that program was undertaken. The purpose o f the assessment i s to determine whether the financial management system o f the existing Project Management Un i t (PMU)6 has the capacity- to produce timely, relevant and reliable financial information o n the additional project activities. I t i s also intended to determine i f the accounting systems for the project expenditures and underlying internal controls are adequate to ensure that funds are used only for intended purposes thereby allowing the Bank to monitor compliance with agreed implementation procedures and assess progress towards meeting project objectives. This assessment i s incremental to assessments previously conducted and considers on ly the increased capacity required for the additional activities; the fiduciary experience in implementing the existing project and lessons learned.
2. There are some financial management risks related to the additional financing. The first risk i s capacity o f the community to manage the block grants, particularly with respect to how effectively BKM use and account for the funds. This activity relies heavily on individual consultants and facilitators, and poorly trained individuals or inadequate compliance with operational procedures would create financial risks. The second risk i s the financial management capacity o f the PMU which i s st i l l managing UPP 2 and UPP 3. The additional financing may stretch the capacity o f the agency. The third risk i s a continuous delay in the authorization o f the budget documents that could affect project disbursements. The fourth risk would arise f i o m internal control lapses at the local branches o f the commercial bank uti l ized for community bank accounts.
3. Appropriate measures have been developed to mitigate these risks, primari ly as enhancements o f the control measures already bui l t into the existing UPP projects in the area of financial management. These include: enhanced audit sampling; hiring additional facilitators; and prior review o f formal agreements with the commercial bank being used for local f low o f funds.
4. Overall, the financial management risk for additional financing i s assessed as being high prior to undertaking the risk mitigation plan, and substantial, once the risk mitigation p lan has been implemented. This assessment has concluded that with the implementation o f the recommendations proposed here, the r isks wil l be substantially mitigated, and the proposed financial management arrangements will satisfy the Bank’s minimum requirements under OP/BP10.02 and 13.20.
Project Description
5. The UPP Program i s designed to provide improved services for the urban poor and to strengthen community and government institutions for responsive service delivery using community-driven development (CDD) approaches. Three operations totaling US$338.7 mi l l ion have been approved to date to support the UPP Program. The program provides un-
DG. Human settlements in Ministry o f Public Works ‘(MPW)
21
earmarked block grants that are used to finance economically productive activities that have been planned through facilitated ward (kelurahan) meetings. More than 6,400 Indonesian kelurahans in the poorest urban areas in 33 provinces have participated in and benefited from the program, with the majority o f funds supporting small-scale infrastructure. Typical projects range from kelurahan roads, drainage schemes, housing rehabilitation, and small canals to social funds and revolving funds. The UPP has also proven to be an effective mechanism for post-disaster recovery. In response to the 2004 tsunami, the project has successfully supported community-based housing reconstruction in Aceh. The block grants are disbursed directly from the Special Account through a commercial bank to bank accounts collectively held by community groups (called BJSM).
6. UPP 2 (US$lOO mil l ion as IBRD/IDA funds) i s currently providing block grants and technical assistance to 2,059 kelurahan in 13 Provinces. In addition, the operation i s providing basic technical assistance to 2,621 kelurahan that were covered by UPP 1 to enhance their sustainability after completion o f block grant activities by facilitating BKM collaboration with the local governments. UPP 3 (US$138 mil l ion as IBRD / IDA funds) i s providing financing to 1,726 kelurahan in 15 Provinces. Additional financing i s not needed for these 1,726 kelurahan in 2007 as there i s funding available from UPP 3. The proposed additional financing will provide "bridge funding" to continue activities in most o f the kelurahan supported by UPP 1 and UPP 2 and to scale up the program to include 4,464 new kelurahan not covered previously by any o f the UPP operations. The additional financing wil l only be applied to the following project components: Community Development and Local Government Capacity Building (22%), Kelurahan Block Grants (63%), and Implementation Support (15%). In calendar year 2006, UPP, as a program, disbursed approximately US$lOO million; the scaled-up program under the new PNPM will disburse approximately US$135.5 mil l ion over the next 18 months.
Country Issues
7. Based on the Country Financial Management Assessment (CFAA) and other analytical work by the Bank and other donors, there are acknowledged deficiencies in the country's Public Financial Management (PFM) area that have been accepted by the government. These include:
e
0
0
e e
e
Inefficiencies in the budget formulation process. Separation o f recurrent and development budgets. Fragmented cash management and government banking arrangements Unreliable accounting and reporting systems. Unclear roles and responsibilities in external and internal audit arrangements Capacity constraints in audit institutions.
8. Recent PFM reforms in Indonesia have been part o f a broader reform agenda o f macroeconomic stability set out in the Government Whi te Paper o f 2003. The Government has formulated a reform plan and a target to have a sound PFM system in place by 2008. The Indonesia PFM reform agenda i s being led by the Government, with technical support being provided by many donors, including the World Bank.
22
9. In recent years there has been steady, though slow, progress in implementing these reforms. In particular, the regulatory instruments needed to initiate reforms have been issued, including the State Finance L a w no. 17/2003, State Treasury L a w no. 1/2004 and the Public Accountability L a w no. 15/2004, which provide a legal basis for improvements in the country’s public financial management. Other reforms in the areas o f budgeting and treasury management are ongoing. This situation impacts the financial management arrangements for this project to the extent that this project relies on Government financial management and project implementation systems.
Institutional Arrangements
10. The project management unit (PMU) wil l continue to be located at the (DG Cipta Karya) Ministry o f Public Work (MPW), which manages a l l UPP activities. The project management unit i s staffed by c iv i l servants and assisted by a team o f individual consultants and facilitators. Project Implementation Units (PIU) at the provincial level wil l be under MPW provincial offices. At the sub district level, there will be sub-PIUs (PJOK) that wil l administer the block grant agreements and proposals from the BKMs. The implementation o f the block grant program wil l be executed by community groups (BKMs) and wil l apply the community- driven development (CDD) social control mechanisms established through the existing UPP framework. There wil l be financial management units under each BKM comprised o f community members or professional staff.
11. The PMU will hire a large number o f additional individual consultants and facilitators to assist the BKMs in the block grant implementation. Technical assistance wil l be provided through the national management consultants (NMC) at the central level, and oversight consultant (OC) teams at the provincial level, with offices in the participating districts. There are 224 PJOK in UPP2; 229 PJOK in UPP 3 and additional new 381 PJOK under the PNPM.
Strengths and Weaknesses
12. The existing project has strengths and weakness in several areas. The project design has strengths that derive f rom using a CDD mechanism to work with communities that i s we l l documented in manuals and has been appl ied in several CDD projects. Some o f the strengths are as follows:
0
0
The BKM receives the block grant directly in i t s community-operated bank account from the Govt Treasury offices and manage local payments themselves. The community has stronger ownership, which creates incentives for community control over funds. External monitoring unit are hired through the PMU. The C D D management tools and systems used under existing ongoing CDD programs in Indonesia such as UPP, K D P are proven to be effective on f low o f funds mechanism, reporting and project monitoring.
13. weaknesses. Among them are:
Based o n supervision missions and audit reports o f the existing projects, we note
23
e
e
e
e
e
14.
A. Inherent Risks Country Level Budget
The capacity o f BKM to manage and implement the block grants i s weak at some locations. The capacity o f local governments to supervise and assist community groups i s weak at some locations. The capacity o f facilitator kelurahan to provide financial management assistance could be weakened if trained facilitators cannot be selected and retained.. A continuous delay in the authorization o f the budget documents that could affect project disbursements. Instances o f weak internal controls at the commercial bank could arise, resulting in illegitimate diversion o f community funds.
H Government i s gradually reforming PFM N
The project’s weaknesses create some risks to project implementation. The Bank recommends several mechanisms to mitigate these risks. Among them are:
To provide intensive training program to staff and individual consultants at the PIU, PJOK and BKM levels. Establish FM control at the central level for the consolidation and classification o f the expenditures; To hire additional individual financial management consultants at the national, provincial, district and community levels. There will be 1,295 FM consultants for all levels; To increase the BPKP audit sampling to at least 20% o f the participating sub-districts (kecamatans), with a sample o f kelurahans selected based on BPKP criteria. The auditor wil l also conduct an operational audit at the community level, including sub- project implementation at the community level, and for this purpose use the audit program that has been specifically developed for CDD operations. Use o f a commercial bank to channel the block grant, which has significantly enhanced the disbursement capacity in Aceh. Formal agreements with the commercial bank w i l l be reviewed and strengthened to allow remedies to communities for internal control lapses at local branches o f the bank.
Risk Assessment Summary
15. A detailed analysis o f financial management r isks arising from the country situation, the existing project entities, additional project features and related internal controls has been completed during this additional assessment. This analysis i s summarized below. These r isks have been rated on a scale from High, Substantial, Moderate and Low.
,,24
execution ineflciencies and delays
Civi l Services
Entity Level Implementing Entity Organization
Accounting & financial reporting capacity constraints Project Level Using CDD design
Control Risk Budget
Accounting
Staff capacity
H
M
S
procedures. The Bank assists the government through GFMRAP project.
Poor c iv i l service payment structures & lack o f sanction. The government has started c i v i l services reform. However, payment structure remains inadequate and needs hr ther enforcement to exercise sanction.
Clarity o f implementing entity. P M U i s under Ministry o f Public Works (MPW) structure. M P W has long experience managing the Bank financed projects, including UPP.
The Ministry follows the government's accounting system and uses the government accounting software (SAK), though implementation o f new government accounting standards remains a challenge. The P M U has adequate staff under i t s financial department.
Project location is'nation wide and decentralized; and will comprise a large number o f small transactions. C D D mechanisms are in place, incl. community plan, execution and accountability mechanisms.
There will be 7,273 kelurahan with 2,911 new kelurahans. The project wil l provide TA to kelurahans and local governments that j o i n the project. The existing project systems and structures to supervise implementation wil l be strengthened and extended to cover additional areas o f this project.
Budget preparation i s wel l defined, but delay in execution may arise. Decree on budget execution should be issued ,right after budget documents issued Government accounting standards are not followed for GO1 reporting, but for the Bank reporting purposes, separate accounting and reporting procedures for the project expenditures will be applied, identical to existing UPP projects. Risks o f getting timely aggregate financial reports arise f rom geographic distribution o f PIUs, and will be mitigated by hiring additional tiained consultants.
Limited staff capacity, especially for new local P I U and community group. The project will provide technical assistance to the local PIU and community group. Existing FM consultant will
N
Y, a draft o f revisions to project manual for uPP2 -Additional Financing, to be submitted to Bank before negotiations N
N
,25
Internal controls
Bank reconciliation
Procurement
F low o f Funds
Financial Reporting
Auditing External Audit
Internal Audit
Community Audit
H
H
be extended to provide FM support to this project also. Risks may arise from weak payment verification. Internal controls' are documented in the operations manual but compliance i s generally weak. An independent unit wil l verify and certify the Community Group reports.
Bank reconciliation i s adequate at the P M U level, but not at the community level. Facilitators w i l l also review and check the community books, including the bank reconciliations on a monthly basis.
T o Select and hire quality consultants w i l l be a challenge, especially for the field consultants (facilitators), The community may not receive the grant in a timely manner, or there may be internal control lapses at local branches o f the commercial bank resulting in misuse o f community funds. T o mitigate this risk, the block grant wil l continue to be directly transferred to communities through the commercial bank. But the existing MOUs with these banks will be reviewed to help build in stronger remedies against poor service. Risks arise if the project does not produce reliable and timely financial reports. At the national level, P M U wil l prepare a separate financial monitoring report assisted b y financial consultants in preparation o f the report. A t the kelurahan level, . BKM will prepare simple financial reports assisted by facilitators in preparation o f the report.
BPKP will be assigned to conduct annual audits o f project financial statements under the existing audit TOR for UPP 2 developed for CDD projects. The Bank requires BPKP to take at least 20% samples o f sub-district.
Limited capacity o f the Inspector General and local internal auditor wil l enhance risks. BPKP wil l be requested to provide training programs to the internal auditor Bawasda under the project activities.
Limited capacity o f supervisory board. The project wil l introduce and train Badan Pengawas (Supervisory Board) and make them as communitv auditors.
N
Y , A signed M O U between P M U and Commercial Bank before effectiveness
N
26
Accounting and Reporting
16. All financial transactions for the project wil l be recorded in the government accounting system and included in the government accountability reports. In addition, the P M U wil l prepare a separate set o f project financial reports suitable for project monitoring purposes. The specific accounting procedures for the project financial report will be included in the project Operations Manual. The PMU and PIUs will maintain separate accounting records, on a cash basis. BKM i s required to have simple accounting and financial reports. Facilitators will assist BKM to prepare simple financial reports.
17. The PMU in MPW will be responsible for preparation o f aggregated Interim Financial Reports (IFR) and submit this to the Bank*on a quarterly basis. Special purpose financial statements for this project will be prepared annually for audit purposes. The IFR format will fol low an agreed format under existing UPP2.
Internal Controls
18. The block grant will be executed by an implementation team under BKM at the kelurahan level where communities wil l monitor and check the project progress. The facilitators wil l countersign the BKM reports. The BKM cannot withdraw funds without a countersignature from the facilitator. In order to obtain the approval o f the facilitator, the BKM has to produce an acceptable fhds uti l ization plan or progress report. The frequency o f withdrawals depends in part o n physical proximity to the bank f rom the kelurahan, but in principle the amount o f cash kept in the kelurahan i s as small as practical. Other internal controls procedures fo l low the project Operations Manual.
19. There wil l be verification and reconciliation o f the project expenditures at the local as we l l as national level. The PIUs prepare two reconciliation reports. The f i rst reconciliation report wil l be based on payment orders (SP2D) issued by the Treasury Office. The second reconciliation report wil l be based o n payments f rom the main account to the UPK account. At the community level, UPK will reconcile UPK books and i t s bank statements. The last reconciliation takes place at the PMU level and wil l reconcile a l l SP2D and S A statements. The facilitator will assist PJOK and UPK in conducting the reconciliation. The central management consultant wil l assist P M U o n the SA reconciliation.
Project Transparency
20. The PMU has established a project web site (http://www.p2kp.org). The web site i s considered as the most active project web site o f Bank financed projects. Over 100 people may access the web on a daily basis. The public may find almost a l l project information, and can use the site for the filing o f complaints. The PMU as we l l as the Bank use a l l information in the web site as data input from the field. The information in the web i s faster than formal reporting in most o f the cases.
27
Audit Arrangements
21. There i s no outstanding audit report due under any UPP project. Over the last three years, a l l audit reports were received before or on the due date. However, the latest audit report o f UPP2 for fiscal 2005 has a qualified opinion due to significant differences in aggregate financial expenditures as reported and those actually spent. Further analysis by the project financial management team identified the main reason for such differences to be the exclusion from project financial statements expenditures that were funded init ial ly f rom government funds and subsequently reimbursed from the special account. The project FM staff misunderstood that such reimbursable amounts were not to be included in annual financial statements since these were pre-financed by the government and used a different W/A (withdrawal application). The audit also reported some internal control weaknesses at the PMU and kelurahan level. The PMU has taken fo l low up actions while the PMU requested a l l facilitators to monitor fol low up actions at the kelurahan level.
22. The PMU will be responsible for preparing a special purpose financial statement. The audit for the financial statement wil l be carried out by government auditors (BPKP) acceptable to the Bank. The annual audit report will be h i s h e d to the Bank no later than six months after the end o f the government’s fiscal year. BPKP will use existing audit terms o f reference (TOR) for UPP 2 and take into account specific audit methodologies that are needed to audit widely dispersed community based activities, as has been established under other on-going CDD projects in the country.
23. The TOR will basically include an assertion on the reliabil i ty o f the project financial statements, and wil l also include a verification o f accounting information at the community level on a sample basis. The annual audited financial statements wil l include a review and reconciliation o f Special Account transactions and quarterly interim financial reports. The audit reports will be made accessible to the public.
24. In addition, the auditor i s required to conduct an operational audit at the BKM level. The auditor will use the audit program that has been developed for CDD projects. The audit sampling coverage wil l be determined based o n kecamatan numbers and a minimum o f 20% o f kecamatans should be included in the audit samples.
Disbursement Arrangements
25. UPP 2 was approved by the Board on June 11, 2002 and became effective o n November 18, 2002. As o f November 10, 2006, US$84 mi l l ion has been disbursed, out o f the loan amount o f US$lOO mil l ion. The remaining loan amount i s fully committed. Progress o f disbursements i s considered satisfactory.
26. M ino r adjustments wil l be made in the project (see below) to further strengthen disbursement arrangements. In the adjusted disbursement arrangements, execution o f budget documents (DIPA) for b lock grants and facilitatorshndividual consultants wi l l be decentralized to the provincial Satker (Le., MPW’s work unit at the province level designated for project execution). The Province Satker will administer and prepare reports on project activities in the
28
respective provinces. These reports wil l be submitted to the P M U and used as the basis for preparing the consolidated IFR (interim financial report) for the project. The submissions o f IFRs under UPP2 have been satisfactory. The same P M U for UPP2 at the Ministry o f Public Works (MPW) wil l be responsible for consolidating and preparing the IFR for this project.
27. The same Designated Account (DA) for UPP2 in Bank Indonesia wi l l be used for this project. Application for the advance shall be submitted together with the reporting on use o f DA which will consist of: (i) IFR, (ii) forecasted project expenditures for six months and (iii) DA reconciliation statement
Flow of Funds to Community Groups’
28. Under UPP 2, block grants were remitted to BKM accounts by submission o f payment orders (SPMs) to the KPPN each time funds were required to be released. Under the restructured project, block grants wil l be channeled to BKM community group accounts through a commercial bank (CB), which has a real-time online banking system and extensive branches in the target areas. MPW will s ign master contract agreements with the CB’s headquarters to provide banking services for channeling grant funds; two CBs have been selected for this purpose. Each province satker wil l select a CB and wil l open a dedicated master account at the provincial level.
29. In accordance with Government procedures, the provincial satker wi l l submit payment requests (SPM) to the Treasury Off ice (KPPN), which will issue payment orders (SP2D) to Bank Indonesia’s branch office, which wil l arrange for remittance o f funds f rom the DA to the respective provincial master account in the provincial levels. The C B wil l provide monthly statements to the province satker for control and monitoring purposes to ensure that funds are only withdrawn by eligible beneficiaries.
30. With assistance from facilitators, eligible BKMs would sign a standard format o f grant agreement with sub-district’s subproject manager (PJOK) that i s certified by the Oversight Consultants (OC), and approved by the district project manager (PPK), When releases o f funds under the b lock grants are due, the BKM with assistance f rom facilitators wi l l have to complete a standardized form o f payment requests (SPP) which wil l need be approved by sub-district’s PJOK, certified by OC and approved by City level’s PPK. Once approved, a standard format o f payment instruction (SPB) wil l be submitted to the CB branch office at the relevant city, which will verify if the claims match the approved l is t o f eligible BKMs provided by the province satker through the C B provincial office and arrange for a real-time direct debit to the dedicated master account and credit the beneficiaries’ bank account. Release o f funds to the existing BKMs will be made in two tranches (40% and 60%), whereas funds to new BKMs will be releases in three tranches (20%, 50% and 30%) same as UP P2 and UPP 3. The f i rst payment i s made upon signing o f the b lock grant agreement, and the subsequent payments wi l l be made based on satisfactory progress reports as certified by OC (see Figure 1).
’ Additional controls have been added for revolving funds: (i) only those BKMs having at least 80% repayment rates will be eligible; (ii) no new kelurahans wil l receive revolving funds; and (iii) an assessment study wil l be carried out o f the revolving fund component to assess and improve the current methodology.
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Facilitators and Individual Consultant Payroll System
3 1. The management o f facilitators and other individual consultants (city coordinators and assistants) wil l be handled by the province satkers, following the standards set by the PMU. There wil l be 3,683 additional facilitators to be hired individually by the province satkers. Their performance wil l be monitored and evaluated by the OCs who report to province satkers. In order to facilitate the payment o f salaries and operational costs, the province satker wil l enter into a service agreement with a selected CB to provide banking services for the payroll. The province satker will maintain an account at the CB’s branch office with sufficient deposits from which salaries and the related operational costs would be remitted to each personnel/facilitator account on a monthly basis.
Allocation of the Additional Credit Proceeds
Category
(l)(a) Kelurahan Grants and Sub-loans
(l)(b) Special Kelurahan reconstruction Grants (2)Poverty Alleviation Partnership Grants (3) Consultants’ services under Parts A and D o f the Project (4) Fee (5) Unallocated TOTAL
Supervision Plan
Amount o f the Additional Credit Allocated (Expressed in SDR Equivalent) 56,610,000
-0-
-0-
32,940,000
-0- 89.550.000
% of Expenditures to be Financed 100% o f Grant or Sub-loan amount disbursed 100% o f Grant or Sub-loan amount disbursed 100% o f Grant amount disbursed 100%
32. Supervision o f project financial management will be performed on a risk-based approach at least twice a year. The supervision wil l review the project’s financial management system, including but not limited to sub-grant expenditures, accounting, reporting and internal control. The financial management supervision wil l be conducted by a financial management specialist and Bank consultants.
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Financial Findings U P P 2 & 3
Findings 1. Inadequate capacity o f community organization (BKMAJPK) staff
2. Financial report complexity in BKM/UPK level
3. Weak facilitator to supervise and monitor financial management (FM) aspect in BKM/UPK
4. Weak capacity on micro credit management in UPK level
5. Inadequate supporting documents in BKM/UPK level
6. Weak payment verification and reconciliation in BKM/UPK level
7 . Poor compliance with project operation manual
8. Disbursement time delay
Action Plan Provide FM training program to BKMAJPK staff and provide FM consultant to assist BKMAJPK
Simplification o f the financial report: cash f low for BKM and full financial report for U P K who manage the revolving f ind Provide FM trainingprogram to facilitator and assign FM consultant in district level.
Provide FM consultant in district level to assist U P K on micro credit management
Facilitator should assist BKMAJPK on book keeping & remind them o n adequacy o f sumortinp documents Provide training program and establishment o f community control and involvement o f facilitator to review and verify the community book
Facilitator should ensure that B K M N P K comply with the operation manual
Use a commercial bank to speed up the disbursement
Status Done, H i g h turn over o f staff. BKMAJF’K staff should be re-trained when there i s new staffs j o i n in. Risk of inadequate new staff capacity s t i l l exists. Done
Done, due to inadequate financial background o f the facilitator, risk o f weak facilitator to supervise and assist the FM aspect s t i l l exists. For PNPM: there will be facilitator with FM background and specially assign to supervise and monitor FM aspect in BKMAJPK level. Done, due to geographic constraint, UPK has not adequate assisted by the consultant. For PNPM: there will be additional facilitator with FM background and specially assign to supervise and monitor FM aspect in BKMKJPK level. Done, Facilitator assistance and dissemination o f required supporting document should be keDt remindine. Done, due to turn over o f B K M N P K staff and facilitator, refresh training program i s needed. For PNPM, FM consultant wil l assist P M U P I U and facilitator will assist B W P K on bank reconciliation. Done, For PNPM, There wil l be monitoring system to ensure that BKM/WK comply with the operation manual. Done, Aceh i s a pi lot and shows significant improvement
31
Procurement
33. The kelurahans follow simple procurement procedures approved by the Bank’s procurement team. The procurement risk i s higher in the PMU that selects the project consultant, including field consultant (facilitators). Besides regular supervision, there i s no performance audit o f the consultant to date.
Action Plan
Action 1. A draft revised project operation manual for the additional financing that includes some specific additional features noted in this assessment. 2. Recruitment o f additional consultants / facilitators, including FM consultants
3. Training and socialization for field consultant and local government
4. A signed M O U between the PMU and a Commercial Bank on banking services arrangement to channel the block grant to BKMs, including some remedies acceptable to the Bank for internal control lapses. 5. A signed M O U between the PMU and a Commercial Bank on banking services arrangement to channel the funds for facilitatodindividual consultant salaries 6. An Audit TOR acceptable to the Bank, which includes at least 20% o f Droiect kecamatans
Responsibility P M U
PMU
P M U
P M U
P M U
P M U
Due Date Before negotiation
First quarter after project effectiveness First quarter after project effectiveness Before effectiveness
Before effectiveness
Before negotiation
32
Figure 1: Flow of Funds for Block Grants
I..r(l,l*
I I 4c
A/w - 5c ........................................
Bank Indonesia
I I I .
r
CB L o c a l ................ ...............
BKM Master List - 2d
I I I
Frl (Satker Province)
Proposed List 2c
BKM Master List
2e 3 -- Notice of authorized
PPK and OC
Instruction to 4 Pay 4b .......................................
Proposed +-ti List
q-l., Sub-District
I On-line
Transfer I 4d I
Request I I I I I ......................... I
I 11111111111111~
for payment 4a
f f
f
i Facilitators I ............., t........................
33
Notes for Figure 1: l a l b
2a
2b 2c 2d
2e
3
3a 3b
4a
4b
Memorandum o f understanding on the fund channeling mechanism Project manual from MPW to the Province Satkers and PPK
After community preparations are completed, SPPB (grant agreement) between BKM and PJOK i s signed PJOK to submit the proposed l i s t (grantee, address, amount) through the OCs to the PPK PPK to submit the proposed l is t (grantee, address, amount) to the Province Satker Province Satker issues the “approved master l ist” (id. No, grantee, address, amount) to C B at the provincial level The provincial CB to distribute the approved master l is t to the relevant C B Branches (paying bank) at local/district/city level PPK to submit the names and signatures o f PPK and OC to Local CB Branch
Based on the MOU, Province Satker issues a request for payment (SPM) to W P N KPPN issues a payment order to Bank Indonesia to arrange payments f rom Designated Account (DA) to A/C Induk
When payment i s due, BKM submits a request for payment (SPP) to PJOK and i f approved he/she will forward it to the OC Once OC verif ied and approved i t wil l forward to PPK and if approved, he/she forwards the payment instruction (SPB) to the Local CB Branch
4c/d After verifications at the C B Branch, i t arrange an on-line transfer funds crediting the BKM account and debit the A/C Induk at the CB Branch Province
5a
5b
C B branch province to provide the Province Satker with reports and bank statements regularly The Province Satker reports i t s IFR to PMU Jakarta, which wil l consolidate and reconcile with the DA bank statements from BI, prepare the consolidated IFR and submit it through the DG Treasury DG Treasury forwards the F R and N W to WBOJ WB replenishes the hnds to the Designated Account
5c 5d
34
Annex 5: Procurement
General 1. As this i s additional financing to the Second Urban Poverty Project (LN 4664), the existing organizational set up and management will be used for this Project. The idea i s to expand the existing UPP 2 to include several other villages throughout the country and to implement using the existing mechanism and system. Procurement will consist o f hiring a number o f management consultants (large value contracts), monitoring consultants, and individual facilitators, in addition to allocation o f some 70 percent o f the project funds for community grants (following the existing community participation procedures).
2. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated May 2004; and “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers,” dated May 2004, and the provisions stipulated in the Legal Agreement. General descriptions o f various items under different expenditure categories are outlined below. For each contract to be financed by the Loadcredit, specific procurement methods or consultant selection methods, estimated costs, prior review requirements and timeframe are agreed between the Borrower and the Bank project team in the Procurement Plan. The Procurement Plan wil l be updated at least annually, or as required, to reflect the actual project implementation needs and improvements in institutional capacity.
Community Grants
3. Community grants include the Kelurahan Grants (USS85.7 mil l ion equivalent). The additional financing wil l disburse community grants in various kelurahans in al l provinces. Procurement under the community grants wil l utilize community participation, using forms and procedures (i.e. comparison o f three prices by at least three community members, and announce the procurement report at the community meeting) as defined in the existing Project Operational Manual o f UPP 2, with minor revision to include the additional villages. Based on previous implementation under the UPP 1, 2, and 3, i t is apparent that these procedures greatly increase transparency o f the procurement process, and adherence to these procedures has significantly improved. N o significant findings are evident from supervision missions and audits, except the lack o f the availability o f documentation. This wi l l be part o f enforcement under this additional financing.
Selection o f Consultants
4. Consultant services required under this project include the following:
o 48 management services as follows: 0 Two contract packages for management services providing assistance at the
national level to the P M U in the overall management, including project supervision, coordination, monitoring and reporting (referred to as the National Management ConsultantNMC, total contract amount i s between
35
US$ 0.9 up to US$2.4 mil l ion equivalent for 16 months up to the end o f the project, subject to performance evaluation by the end o f 12 months);
0 36 contract packages for technical assistance (TA) for managing the district teams, including village facilitators. (This TA i s referred to as the Oversight Consultants/OC). The contracts vary from US$0.05 mil l ion to US$1.5 million’ and will be for 22 months, up to December 2008. The tasks o f the OCs include: supervision, coordination, monitoring and support o f kota coordinators; consolidation o f reports from city coordinators into OC reporting; and sub- project verification and oversight. The OC’s wil l also play a key role in involving provincial governments in the project. This wi l l involve: acting as the conduit for information that !he provincial government may request on all aspects o f the project; and being responsible for sharing information on the project on a regular basis with the provincial government. 0 There wil l be one package o f an Evaluation Consultant (US$0.5 million equivalent), which wil l carry out the major evaluation study o f the project and monitoring. In addition, there will be nine evaluation studies which may be assigned to a firm, NGO or individual consultants, to be identified during implementation depending on the needs. Each contract for a firm /NGO and individual consultants i s expected to be small (less than US$lOO,OOO).
o A large number o f individual consultants (including city coordinators, assistant coordinators, and facilitators) a total o f 6,000 consultants, for a total amount o f US$28 mil l ion equivalent), to supervise and facilitate 7,273 villages.
5. I t i s the government’s policy (endorsed by the Bank country management) to reduce poverty by escalating community based projects to become a national program, to be implemented starting January 2007. This decision was not made, however, until September 2006. Therefore, there i s an urgent need that this program be implemented in a timely manner in early 2007. The on-time availability o f consultant f i rms to assist the project i s highly required to support this operation. Furthermore, the areas (villages/districts) that this additional financing wil l cover will coincide with the existing UPP 2 & UPP 3 areas, in which consistency o f approach and on timely assistance to community i s predominant, and therefore, the existing consultants may be awarded on single source basis. This would include 38 management services (i.e. the National Management Consultants, and the Oversight Consultants), with the understanding that a new selection process for similar contract packages will be carried out if the project will be expanded fbrther in 200S9, as wi l l later be developed and defined in the new separate Loan/Credit/Grant. Each o f the above contract packages will go through normal SSS processes with prior review by the Bank.
* Under the existing UPP 2 and UPP 3 arrangements, the facilitator salaries are included as part o f the OC contracts. This cost component wil l be removed f rom the extended contracts under this additional financing project, as facilitators will be hired directly by the Provincial Satkers, and the facilitator costs under the contract w i l l be reallocated for the required additional activities.
If necessary, the selection o f new consultants for the next coming project in 2008 will be initiated 6-8 months ahead before the loan negotiation.
9
36
6. Village facilitators (including city coordinators, and assistant coordinators, annual contract range from US$3,000 up to US$8,000 equivalent) will be hired directly and their salaries wil l be paid by the Provincial Satker". However, the management o f day to day operations o f the facilitators (including their quality o f outputs) wi l l be done by the respective OC firms. Since the Provincial Satker has Gery limited capacity to handle a large number transactions related to facilitator contracts, a maximum o f two OC staff wil l be specifically assigned to assist the Provincial Satker in preparing the contract documents and payment certificates for the facilitators.
7. The thresholds for prior review and the revised procurement method w i l l be determined in the procurement plan, taking into account inputs from the Bank's supervision missions. At the current stage, all contracts (f irms) for more than U S $ 100,000 and all sole sourced contracts are subject to prior review by the Bank. Ail consultancy contracts (f irms) less than USD$ 400,000 equivalent may have shortlist o f all national f i r m s .
Assessment of the agency's capacity to implement procurement
8. Procurement activities will be carried out by the Ministry o f Public Works through the Directorate General o f Human Settlement (DG-CK). The existing staff, organization structure, and system that are running the UPP 2 will be used to run this proposed Project. Due to urgent implementation and the need for maintaining 'the existing capacity, and natural continuation o f services for existing management consultants within the same areas/villages/districts, single sourcing the existing management consultants may be followed.
9. There i s no major risk related to procurement under the community grants with the current project design. Bank supervision missions and audits only found deficiency on record keeping, as community members normally work based on trusts. The major risks for the project remain corruption and efficiency o f the project management in administering contracts. For this purpose, the following actions have been agreed and costed into the project design:
(a) The Project Operational Manual wil l be revised to include the additional villages.
(b) The existing practices o f providing access for people to raise any complaints and disclosure o f contract information on the P2KP website (www.p2kp.orq) will continue and strengthened.
(c) Samples for independent ex post review will cover at least 2% by value o f procurement under community grants and village facilitator contracts. The independent ex post review wil l be conducted by the internal state auditor (BPKP). BPKP has experience in dealing with CDD type projects, and i t has offices throughout the country. A special addendum to the current TOR o f BPKP will also be made to include end use checks and to spot check the integrity o f information and expenses o f the large value consultancy contracts.
10. makes the overall project risk for procurement high.
However, the size o f contracts/loan amount as well as the short implementation period
lo The Provincial Satker i s part o f the provincial government structure; however, i t i s established by a decree by MPW and reports directly to the PMU.
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Procurement Plan
11. The Borrower procurement plan was agreed between the Borrower and the Project Team o n December 30, 2006. I t wil l be available in the Project’s database and in the Bank’s external website. The Procurement Plan will.be updated in agreement with the Project Team annually o r as required to reflect the actual project implementation needs and improvements in institutional capacity.
Frequency of Procurement Supervision
12. In addition to the previously reviewed supervision to be carried out f rom Bank offices, the capacity assessment o f the Implementing Agency includes recommended annual supervision missions to carry out post review o f procurement actions. The ex post procurement review will re ly on BPKP’s audit. BPKP wil l carry this out for the community grants and individual facilitators ’ contracts,
38
Annex 6: Anti-corruption Action Plan
1. The objective o f this Anti-corruption Action Plan for UPP 2 additional financing i s to identify corruption risks and mitigation measures beyond the standard control systems employed by the Bank. While more detailed, program-specific control systems are outlined in Annex 4: Financial Management & Disbursement Arrangements and Annex 5: Procurement Arrangements, this Action Plan (a) maps the potential r isks o f corruption; and (b) presents program activities to address these risks in the form o f an Action Plan.
2. This action plan also builds upon the many good governance features already being implemented, including the UPP website. The project follows a learning approach and implementation experiences wil l be incorporated continually in to implementation processes. The Anti-corruption Act ion Plan should therefore be seen as a starting point and not an all- inclusive l i s t o f mitigation measures.
Corruption Mapping
3. The matrix included in this action plan identifies some potential risks o f corruption and specifies some appropriate mitigation measures that have been agreed to by the Ministry o f Public Works (MPW) (see table below: Corruption Mapping Matrix). The mapping exercise i s repeated during the l ifetime o f the project to incorporate innovations and lessons learned.
The Action Plan
4. The anti-corruption strategy has been developed for two separate entities: one at the central level (with MPW as the executing agency) and one at the community level (focused o n project beneficiaries as we l l as implementing units o f the sub-projects). Community level participation and empowerment are crucial to the success o f the project. Together, these factors will encourage greater accountability and better governance.
5. This project empowers the community to manage the sub-projects and be responsible for the technical quality o f deliveries and outputs at the kelurahan level. The design o f the project incorporates careful socialization and transparent management techniques to enable necessary participation and empowerment. Active participation f rom members o f the community i s required in planning and developing sub-projects. In addition, the program provides funds channeled directly to the community, i.e. to the BKM account. Once the beneficiaries fulfill the drawdown conditions, the funds are remitted f rom the special account within a few days. Simple, standard formats'are used for recording and reporting the use o f funds. This simplification reduces the need for special ski l ls whilst making the system more transparent and accountable. Through active participation there i s a greater l ikelihood for communities to demand services o f the urban local governments and ensure transparent accounting o f resources earmarked for effective management and livelihood improvement.
6. Some o f the most important aspects o f the anti-corruption action plan can be summarized into the f ive key elements that follow. Underpinning each o f these elements i s the consultative process that ensures participation'and empowerment.
39
A) Enhanced Disclosure Provisions and Transparency. The program will involve the Bank's new disclosure provisions, further simplifying disclosed materials and making them readily available through public information centers. Salient information will be made available to communities by a range o f means, including public meetings and notice boards. Specific disclosure measures will include, but not be l imited to:
Public disclosure o f annual procurement plans and schedules (and their updates), bidding documents and requests for proposals.
Disclosure to a l l bidders o f the summary o f the evaluation and comparison o f bids, proposals, offers, and quotations, after the successful bidder i s notified.
Disclosure o f audit reports.
B) Civil Society Oversight. The program recognizes that greater oversight by c iv i l society i s l ike ly to reduce the risk o f corruption and misuse o f power. The program involves a high degree o f formal participation by community groups, such as beneficiaries, the private sector, and traditionalladat and religious leaders, through mechanisms such as the monitoring o f the projectdend results, memberships o f the tender committee, and the evaluation o f the quality o f delivery procured services/products. Existing NGOs and other c iv i l society organizations will be involved in a variety o f ways, inter alia: a) through participation in the regional workshops; b) as key resource persons for the development o f Community Development Plans (CDPs) where possible; c) as evaluators on an ad-hoc basis; and d) as training providers in particular sk i l l areas.
C) Mitigating Collusion, Fraud & Nepotism. Opportunities for collusion and fraud exist in any project. However, since the central theme o f this project i s improved and more responsive governance, many o f the possible r isks are mitigated through project design. Collusion, fraud and nepotism will be reduced through transparent and well-advertised procurement activities. Additional auditing and procurement procedures are proposed, such as oversight by technical assistance (TA) and capacity building, with TA procurement and financial management specialists mapped to each region. At the central level, a committee will be formed to regularly evaluate the performance o f the consultants who are hired under the project. This committee wil l circulate results to relevant technical parties. Cases o f collusion, fraud and nepotism will be reported directly to the attorney general office, as mandated by Indonesian law. In the instance o f intra-community collusion, fraud and nepotism, cases wil l be reported and deliberated at the community meeting (Rembug Warga) prior to their submission to the attorney general office. Experience in other C D D projects indicates that many r isks can be mitigated by the threat and use o f community- based sanctions (such as those used under UPP 3).
D) Complaints Handling Mechanism. Complaint handling procedures, as currently defined in the Keppres 80/2003, wil l be strictly followed by assigning authorized officials to be responsible for maintaining a database o f complaints and follow-up actions. This program i s designed to encourage local complaint resolution through formal channels as we l l as public pressure. In some cases. local elites might misuse power and program activities. For these cases, an alternative system has been established through a feedback
40
mechanism at the national-level. A special unit designated for handling o f complaints wil l be made available in the NMC and OCs. The complaint-handling unit wil l investigate and facilitate the resolution o f complaints and problems. The database o f complaints, follow- up actions, and applied sanctions wil l be publicized to increase participants’ involvement and likelihood to lodge protests. This mechanism also increases the social cost o f misuse o f funds. Complaints wil l be acted upon in a professional and t imely fashion, and without risk o f reprisal to ‘whistleblowers’ in the publiq. Wider access for community input i s provided through the establishment o f an address to ma i l complaints. This address wil l be posted to the kelurahan’s signboards.
E) Sanctions & Remedies Clear sanctions and remedies are important f inal steps in the effort to fight corruption. As already demonstrated in UPP 1 and 2, this program has a l o w tolerance for corruption. Communities are encouraged to impose reasonable sanctions o n citizens who abuse the power that has been entrusted to them. There i s an increasing wealth o f anecdotal evidence suggesting that such sanctions can be more easily and effectively applied than protracted legal proceedings, especially in smaller cases o f Corruption. The project does not endorse vigilantism or extreme community sanctions, but in many cases the communities can reach amicable resolutions without resorting to the slow and over-burdened legal system (see box for example). That said, formal sanctions may also be applied. For example, any official (government, non-government, etc.), community members, or private sector entity participating in the project can be prosecuted if sufficient evidence i s available. In al l procurement contracts, evidence o f corruption, collusion or nepotism will result in termination o f the relevant contract, with additional penalties potentially imposed (such as fines, blacklisting, etc.) in accordance with Bank and Government regulations. Drawdown o f funds from the project special account to BKMs will be suspended in cases where significant misuse o f funds i s suspected. At a larger scale, entire kota(s) may be excluded from participation in the subsequent phase if misuse o f funds i s widespread. Information regarding successful cases, where lessons are learned and funds are retrieved, wil l be widely disseminated.
Box 1: Typical example of community action against corruption In one recent case, the community decided to ho ld a motorcycle, owned by the local treasurer, as collateral until missing funds (Rp. 3 million, or $375) were accounted for and returned. The treasurer was given a week to return the funds. This was far faster than entering into a legal battle that might wel l cost far more than the missing amount and take months to resolve.
Corruption Mapping Matrix
7. Limi t ing the occurrence o f corruption in this project starts with identifying potential risk areas - this i s called corruption mapping. This corruption incentive mapping and identification o f opportunities for corruption wil l be repeated at least every six months as the project progresses and lessons are learned.
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Corruption Mapping Area
PROCUREMENT Capacity o f the Project Manager and Tender/Evaluation Committee
Proposal evaluation
Award o f Contract
Quality o f delivered services
Level of Risk
MEDIUM (Central)
MEDIUM
MEDIUM
MEDIUM
Opportunitx for Corruption
Non-independent judgment of the consultant evaluation process. The decisions tend to bias towards consultants as “instructed” by the higher level officials or other parties.
Delay in evaluation process that would benefit exclusive consultants
Proposals are rejected due to reasons unrelated to the capacity o f consultants in carrying out o f the contracts/services
Significantly high technical scores allocated to the “preferred” consultants, such that no other consultants can effectively beat their proposals regardless o f the prices, which could result to significantly high prices
False information about the information provided by the consultants
The committee may call the prospective winner and negotiate the contract amount
Collusion and nepotism in awarding the contract - The delivered services are o f lower quality than the ones specified in the TOR, and the officials may take kickback through the difference
Significant changes o f key staff o f consultants at the early stage o f the assignment
Intentionally low qualit; of supervision o f contracts, and kickback fiom the consultants
Mitigation Action
Independent professionals included as part o f the consultants’ proposal evaluation team.
Capacity building for all actors involved in procurement, including certification o f staff in accordance with Keppres 8012003.
Development o f project management manual to streamline al l procedures and sanction/complaint handling mechanisms.
The procurement plan, with detailed timeline, will be binding in the legal agreement, and will set as the basis for any procurement actions.
The Bank would declare misprocurement for any unjustified extension o f validity o f proposals.
QCBS procedures
The estimated budget for each contract package will be based on actual experience determined through the extensive survey o f similar packages that are currently underway in UPP 1 and 2.
The TOR will be designed to be quite rigid.
Mandatory disclosure o f contract awards.
Involvement o f civil society oversight and supervisory consultants (for example: NMC in the case o f OC, and EC in the case o f NMC) in the inspection of the delivered services.
Enhanced complaint handling mechanism.
hvolvement of community groups in monitoring the quality o f the consultants’ deliverables.
Enforce reward punishment system as defined in Keppres 8012003.
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Corruption Mapping Area
Procurement Planning, including sub-projects
Overall Procurement
PROJECT - ‘ . a 4 ‘
MANAGEMENT The final list o f CPMU, PMU and PIU staff with their (a) experiences in handling donor financing project and (b) history o f project management and or treasury training taken
Audit Report Publication
Local Accountability Mechanisms
Level of Risk
MEDIUM
MEDIUM
MEDIUM
MEDIUM
MEDIUM
Opportunitg for Corruption
Risk of kickback, and budget markup
Risk of kickback, collusive practices to “award” the contract to “preferred” consultants, and lower quality o f services
Risk o f insufficient capacity o f CPMU, PMU and PIU staff
Risk of unavailability o f information on the progress and results of project implementation (including misuse, collusion and nepotism, if any). Lack o f local experience may result in communities missing cases o f abuse.
Mitigation Action
Mandatory review by the Bank of procurement planning and disclosure o f procurement plan in public domain, including disclosing the contract amount.
Enhanced disclosure, complaint handling, and sanctions as defined in Keppres 8012003. Enhanced capacity for the officials involved in procurement decision, including hiring o f consultants.
Enhanced control system (internal and external) including involvement o f professional members o f civil society in the procurement decision actions.
Development of Project Manuals.
Tighten Bank supervision.
The criteria and performance indicators o f Project Manager, Treasurer, planning staff, procurement staff, financial staff and monev. Staff o f CPMU, PMU and PIU agreed by the Bank have been incorporated in the PMM and will be used as the basis o f the annual performance review o f the relevant staff.
Requirement o f POM as a guideline for project implementation.
Requirement o f Government Project Management, Treasury and POM training for CPMU, PMU and PIU staff.
Annual Training agreed by the Bank on CPMU, PMU and PIU staff.
The implementing agency will (and the Bank can) make final audit reports publicly available, along with formal government response, promptly after receipt.
The project design includes oversight and supervision to minimize risks.
BKMs will meet regularly to make collective decisions on strategic issues, and to review the UPK’s accounts regarding the use o f funds. The BKM will also hold annual meetings with the general community to account for its activities during the year.
BKM finances will be audited each year by local accountants. Audit results will be reported to the community at the end-of-year BKM accountability meeting. Ideally, each BKM should be visited at least twice per annum by the NMC.
In order to enhance the quality o f consultants’
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Corruption Mapping Area
Limited dissemination o f information related to the Program
Selection o f BKM members
Channeling of funds
[mplementation of the sub-project investments
Level of Risk
LOW
LOW
MEDIUM
MEDIUM
Opportunity for Corruption
Information i s kept limited to certain circulation or group of people only such that non- qualified proposals could be expected
Non-transparent process o f B K M members selection resulting in low integrity
Kickbacks for government officials
Misuse o f funds by the BKM and KSM
Mitigation Action
supervision under the project, facilitators are required to regularly check the B K M and UPK books. They wil l also need to sign and f i l e a “representation statement” regularly, confirming that they have checked the books and found them satisfactory. T h e OCs at higher level would randomly check the facilitators’ statements and wil l also be required to sign and f i l e similar representation statements. A mechanism for checking and applying sanctions will be developed for those filing false statements (sanctions may include job separation).
Socialization wil l be carried out through meetings, workshops and focus group discussions at the kelurahan, kecamatan, kota and provincial levels. I t wil l also include a campaign through newspaper spots and radio programs. The socialization strategy i s geared towards making communities aware o f the project’s goals, and i ts ru les and regulations. These are aimed to ensure that stakeholders know what their respective roles and responsibilities are, and how to hold each other accountable for their actions. The selection process o f BKM members will be conducted through a transparent and fair election process, with significant participation from the members of the community. UPP-PNPM funds go directly to communities, Le. to the B K M account. &e the beneficiaries fulfill the drawdown conditions, following a request from the PJOK (after verification by the Oversight Consultants), the funds are remitted from the Special Account within a few days.
The procedures, size and criteria for defining grants, eligibility criteria for beneficiaries, and conditions for drawdown are all simplified and defined upfront to ensure easy understanding for stakeholders. For the Kelurahan Grants, conditions for drawdown o f funds to BKM are linked to performance rather than inputs, with the first drawdown of 20% based on satisfactory completion of the BKM’s Community Development Plan; the second 50% based on indicators o f satisfactory utilization o f funds and financial management, and the third 30% based on indicators of BKM sustainability. Since communities know how much they should be receiving, it should be harder for officials to engage in rent seeking behavior.
KSMS are required to prepare and submit reports on progress and their use o f project funds to the BKMs.
Al l financial information i s made public and displayed in the kelurahans. Minutes o f meetings, BKMs’ monthly financial status, and names and amounts for funded proposals are posted on signboards that are displayed around the kelurahan. Discretion o f actors i s limited by setting ru les that all financial transactions
.44
Corruption Level of
Risk Mapping Area
Opportunity for Corruption
Mitigation Action
require at least three signatures, two from the elected BKM members and one from the project’s OC. For purchases above Rp. 15 million each, the project requires the BKM to conduct a limited bid whereby quotations must be read out in public. For smaller purchases, local shopping must be carried out by two persons seeking quotations from local suppliers.
BKM finances will be audited each year by local accountants. Audit results will be reported to the community at the end-of-year BKM accountability meeting.
45
Annex 7: Technical and Operational Issues and Actions
PNPM financing strategy Capacity of MPW
Project Operational Manual Strategy for Mobilizing Facilitators and Consultants Capacity Building
Local Government Procurement
Financial Management and Disbursement
Revolving Funds Monitoring
Recommendations ’. . . . ;
Submit to the Bank a formal request for financing. Provide policy direction delineating the Government’s vision for the PNPM. Hire additional contract managers (PPK) under the Project Management Unit
Establish a budgeting unit (satker) in each province Placement o f additional government staff within the PMU Increase the number of project management consultants Complete the addendum outlining modifications of POM from UPP 2 for the
Print versions o f the amended POM ready for distribution Extend existing UPP conhltants’ contracts (both the NMC and the OCs) to cover 2007 PNPM work Conduct a new selection process for the (ECs)
Complete revisions to the training modules Prepare the community socialization kits Issue a letter on UPP requirements to a l l local governments Justification for Single Source Selection for management services consultants, consistent with paragraph 3.10 o f the Bank Consultant Guidelines (including the TOR, detailed amount, and the assessment o f the proposed consultant firms’ capacity and performance) Revise the POM for the additional financing Recruit additional consultants, including FM consultants Training and socialization for field consultants and local government Draft MOU between the PMU and Commercial Bank on banking services arrangement to channel the block grant to BKMs Draft MOU between the PMU and a Commercial Bank on banking services arrangement to channel the hnds for facilitators/ individual consultants salaries Draft DG Treasury’s circular letter on disbursement mechanism DG-CK’s letter to the prospective banks (where BKMs may open their accounts) requesting them to alert their branches with regard to project governance e.g. BKM bank accounts must be under the name of the BKV and cannot be individual accounts; the requirement of having the BKM accounts signed by three persons. Conduct in-depth analysis on the status of revolving funds Improve capacity o f the team of MIS, website, and complaints management working for the UPP/PhTM at the national level Improve training modules, applications, SOPS (standard operating procedures)
PMU)
PNPM
o f MIS, complaints management, as well as website for consultants, facilitators, and local government
Develop SOP for data verification procedure and utilization at a l l levels (facilitator team, city coordinator, OC, and NMC as well as BKM and Local Government)
Ensure that the MIS and complaints management applications address the additional data and include performance indicators for the PhTM Develop guidelines for MIS audit to cover a minimum o f 30/0 during each
project cycle to ensure data accuracy, validity, and timely reporting Develop guidelines for iimely and systematic random checks and increase percentage o f kelurahans to be checked by the h N C Improve the PMU’s capacity to manage the project MIS, complaint handling,
46
Impact Evaluation
Disaster Management at the Community Level
Mobilization of consultants Revolving Funds Training
Socialization
and website Conduct the final phase o f data collection for impact evaluation Complete the midterm impact evaluation Establish a research and development unit, hire independent ECs and mobilize NGOs andor individual consultants to conduct research o n the effectiveness o f the additional financing Deliver the training module on community-based disaster management during a training o f trainers (TOT) Ro l l out training program for UPP facilitators in areas covered b y the additional financing and scale up to existing UPP 2 and UPP 3 areas Review open menu l i s t for block grants and ensure disaster management investments are eligible for inclusion in the CDP Incorporate community based disaster management into the P O M
Extend UPP consultant contracts
In-deDth analvsis on the status o f revolving funds
participatory monitoring and evaluation, web based information mgmnt, complaint handling, disaster mitigation.
Develop & produce:
Strengthen training specialist with staff and form a training unit at the N M C Revise training modules for facilitator training to include; women participation,
- training kit - refresher training modules for existing NMC and OC staff
- training specialists at OC level - new facilitators in two stages
training modules for facilitator
- existing trainers (refresher training - 100 prs) - new N M C & O C staff - new facilitators - local government
Mobil ization of:
Conduct training for:
Expert group meeting among O C training specialists to discuss modified
Conduct orientation workshops
National Launching o f the P N P M First talk show prior to launching o f the P N P M followed by others socialization activities through electronic, printed media and other activities
- at the central level - at the provincial and kotdkab level - kecamatan level
Draft MOU for collaboration between UPP and KDP for socialization at national level using printed, electronic media (TV, Radio, others), and others activities Draft M O U with National TV stations Broadcast in PSA, talk-show, and ad clips on P N M P in electronic media:
- at national level (collaboration with KDP) - provincial kotdkabupaten level
Produce & disseminate socialization kits & all printed media, including guidelines & VCDs for a l l stakeholders Hyperlink UPP website wi th other CDD projects. Mobil ize socialization specialists at the NMC and O C levels Conduct a group meeting for experts with al l OC socialization specialists Coach al l facilitators on socialization activities (advanced facilitation skills, use
o f various medias at the community level, development o f community media) at oc
47
Annex 8: Statement of Loans and Credits Indonesia: Second Urban Poverty Project
Project ID FY Purpose
~~
Difference between expected and actual
disbursements Original Amount in US$ Millions
IBRD IDA SF GEF Cancel Undisb Orig. Frm Rev’d
PO79906 2007 PO83742 2007 PO89479 2006 PO85375 2006 PO77175 2006
PO76174 2005 PO78070 2005
PO84583 2005 PO71296 2005 PO85133 2005 PO85374 2005 PO92019 2005 PO84860 2004 PO74290 2004 PO64728 2004
PO71316 2004 PO71318 2004 PO59931 2003
PO63913 2003 PO73772 2003 PO76271 2003 PO79156 2003 PO73970 2002 PO72852 2002 PO73025 2001
PO49539 2001 PO59477 2000 PO49545 2000
ID-STRATEGIC ROADS INFRA ID-Farmer Empower. Agric.Tech.&Info ID-Early Childhood Education and Dev ID-WSSLIC III (co-TTL=Claudia Rokx) ID-Domestic Gas Market Development Proj . ID-Initiatives for Local Govern. Reform Support for Poor and Disadvantaged Areas ID-WP3 ID-USDRP Govt Fin1 Mgt & Revenue Admin Project ID-HIGHER EDUCATION Kecamatan Development Project 3B ID-PCF-Indocement Cement ID-E. IND REG TRANSPT 2 ID-LAND MANAGEMENT &POLICY DEVT PROJECT ID - Coral Reef Rehab and Mgmt Prog II ID - Coral Reef Rehab and Management I1 ID-Water Resources & 1rr.Sector Mgt Prog ID-Java-Bali Pwr Sector & Strength ID-Health Workforce & Services (PHP 3) ID-PPITA ID Third Kecamatan Development Project ID-GLOBAL DEV LEARNING (LIL) ID-UPP2 ID-SECOND KECAMATAN DEVELOPMENT PROJECT ID-PROVTNCIAL HEALTH I1
ID-WSSLIC I1 (co-TTL=Claudia R o b )
14.50 69.00
67.30 45.00 55.00 50.00 80.00 0.00
200.00 32.80
33.20 0.00
45.00
141.00 31.10 17.10
204.30 2.66
29.50 208.90
63.20 0.00
208.00 0.00 32.80 60.00 0.00 67.50 0.00 137.50
80.00 . 0.00
ID-PROVINCIAL HEALTH I 0.00
15.00 3 5 .OO
71.40 0.00 5 .oo
30.00 80.00 0.00 0.00
32.80
23.00 0.00
25.00
0.00 74.50 0.00
45.50 0.00
70.50 11 1.30
40.00 77.40 38.00
0.00 0.00
0.00 0.00 0.00
0.00
0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 7.50 0.00
0.00 0.00 0.00
0.00 0.00
0.00
0.00
0.00 0.00
0.00 208.00 0.00 92.34 0.00 69.88 0.00 138.32 0.00 73.32
0.00 38.03 0.00 101.58
0.00 94.51 0.00 42.76 0.00 55.06 0.00 75.63 0.00 88.85 0.00 10.73 1.00 169.16 0.16 44.43
0.17 44.35 0.00 6.89 0.00 64.51
0.00 115.51 0.00 79.87 0.00 4.52 0.00 13.46 0.00 1.30 0.00 23.33 0.00 16.85
32.00 6.54 0.00 26.08
0.00 0.00 0.00 2.00 6.65
12.33 11.36
-18.34 0.26
17.14 14.48 32.70 0.00
94.83 6.28
8.41 2.22
55.22
96.75 53.26 4.52
-0.78 1.30 1.45 2.18
32.27 19.89 9.53
0.00 0.00 0.00 0.00
0.00
0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 8.77
1.01
0.00 -0.01 0.00 0.00 0.00 0.00
0.00 0.00 9.53 0.00 0.00 3.17 8.86
Total: 1,710.36 1,039.40 0.00 7.50 36.50 1,714.67 465.91 19.30
48
INDONESIA STATEMENT OF FC’s
Held and Disbursed Portfolio In Millions o f U S Dollars
Committed Disbursed
IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic
2006 2004 2006 2006 2004 2002 1989 1997 1989 1994 2003
2005 2000 2002 2004 1997 1993 1996 2004 2005
1991 1995 1999 2001 2004 I992 1996 1995 1997
2006
2000 2006 1998
Bank Danamon
BonaVista School Buana Bank Centralpertiwi Medan NP School
P.T. Gawi PT Agro Muko PT Alumindo PT Astra PT Astra PT Astra PT Astra Otopart PT Astra Otopart PT Bank NISP PT Bank NISP PT Bank NISP PT Berlian PT Bina Danatama PT Bina Danatama PT Ecogreen PT Ecogreen PT Grahawita PT Indo-Rama PT Indo-Rama PT Indo-Rama PT Indo-Rama PT Indo-Rama PT KIA Keramik PT KIA Keramik PT KIA Serpih PT Kalimantan PT Karunia ( U S )
PT Karunia (KAS) PT Makro PT Makro PT Mako PT Megaplast
155.00 1 .oo 5.00 45.00 1.75 11.05 0.00 2.73 0.00 0.00 0.00 0.00 24.00 0.00 0.00 35.00 0.00 0.05 0.00 30.00 25.00 0.00 0.00 0.00 0.00 20.00 48.00 0.23 1.65 4.50 9.38 16.45 20.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 2.20 0.00 0.20 0.19 0.12 0.70 0.00 2.85 2.04 0.00
3.3s 0.00 0.00 0.00 0.00
0.00 3.82 1.57 0.81 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.34 1.21 0.66 2.50
49
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.86 0.00 0.00 0.00 0.00 2.58 0.00 0.00 3.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00
0.00 0.00 0.00 0.00 3.49 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 4.81 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.00
53.49 49.50 0.00 3.56 0.00 0.00 0.00 0.00 0.00
0.00 1 .oo 0.00 0.00 0.00 4.90 0.00
2.73 0.00 0.00 0.00 0.00
24.00 0.00 0.00
35.00 0.00 0.05 0.00
30.00 20.00 0.00 0.00 0.00 0.00 0.33
41.00 0.23 1.65 4.50 9.38
16.45 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 2.20 0.00 0.20 0.19 0.12 0.70 0.00 2.85 2.04 0.00 0.00
0.00 0.00 0.00 0.00 0.00 3.82 1 .57 0.81 0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00 2.34 0.71
0.66 2.50
0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 2.83 0.00 0.00 0.00
0.00 2.58 0.00 0.00 3.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 3.49 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00
4.81
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.00
53.49 49.50 0.00 3.56 0.00
0.00 0.00 0.00 0.00
1993 2004 1997 2001 2006 1995 2004 1997 2001 2005 2006 2004
PT Nusantara
PT Prakars (PAS) PT Sayap
PT Sigma PT TAS PT Viscose
PT Viscose PT Wings Sunson
WOM
WOM
Wilmar
Total portfolio:
0.00 0.00 10.16 7.90 0.00 0.00 10.16 7.90
15.36 0.00 0.00 3.20 15.36 0.00 0.00 3.20 0.83 0.00 0.00 0.00 0.83 0.00 0.00 0.00 0.00 1.03 0.00 0.00 0.00 1.03 0.00 0.00
7.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7.81 0.00 0.00 0.00 7.81 0.00 0.00 0.00
8.31 0.00 0.00 0.00 8.31 0.00 0.00 0.00
0.72 0.00 0.00 0.00 0.72 0.00 0.00 0.00 11.62 0.00 0.00 7.35 11.62 0.00 0.00 7.35
0.00 15.82 0.00 0.00 0.00 15.74 0.00 0.00
20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 33.33 0.00 0.00 0.00 33.33 0.00 0.00 0.00
560.77 41.41 19.35 135.30 269.20 37.48 19.32 135.30
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic.
2005 Bank NISP SELF 0.03 0.00 0.00 0.00 2006 Bank NISP Swap 0.00 0.00 0.00 0.00 2006 Orix Indonesia 0.08 0.00 0.00 0.00
~~~~~ ~~ ~
Total pending commitment: 0.1 1 0.00 0.00 0.00
50
Annex 9: Country at a Glance INDONESIA: Second Urban Poverty Project
Life expectancy
T
POVERTY and SOCIAL
I East Lower-
As ia & rnlddle- Indonesia Pac i f i c Income
Access to improvedwatersource
2005 Population, mid-year (mllllons) 220.6
1280 GNI (Atlas method, US$ billions) 282.3
Average annual growth, 1998.05
Population (%) 1.3
M o s t recent es t imate ( latest year available, 1999.05)
GNI per capita (Atlas method, US$)
Labor force (sld 1.9
Poverty (%of population below natlo nal PO verfy line) Urban population (%of totalpopulation) 48
Chiid malnutrition (%ofchlldrenunder5) 28 Access to an improvedwater source (%ofpopulation) Literacy (%ofpopulation age #+J 90 Gross primaryenroliment (%of school-age population)
27
Life expectancyat birth (pars) 67 infant mortality(per lOOOllve blrfhs) 30
77
ll7 Male 118 Female 115
KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1985 1995
GDP (US$ billions) 87.3 202.1 Gross capital formation/GDP 28.0 3t9 Exports of goods and ServicesiGDP 22.2 26.3 Gross domestic savingslGDP 29.7 30.6 Gross national savings1GDP 24.6 28.1
Current account balancelGDP -2.2 -3.2 Interest paymentslGDP 2.3 2.4 Total debtlGDP 42.0 615 Total debt servicelexports 28.6 29.9 Present value of debt1GDP Present value of debtlexports
I
1,885 1,627
3,067
0.g 13
41 70 29 25
79 91
,116 1 8 114
2004
254.3 23.1 31.3 25.8 22.8
12 ' 16 55.3 22.1 53.6 117.0
2,475 1,918
4,747
10 14
50 70 33 P
82 89 l l 4 115 10
2005
287.2 23.4 37.7 32.5 29.8
0.9
1985.95 1995-05 2004 2005 2005-09 (average annual gro Mh) GDP 7.7 2.2 5.1 5.6 6.3 GDP percapita 5.9 0.8 3.6 4.2 5.2 Exports of goods and services 9.3 2.5 8.5 11.5 w.0
3evelopment diamond' I Life expectancy
Gross primary
enrollment El capita
Access to improvedwatersource
Gross primary
capita
I -----Indonesia __ Lo wer-middle-income wouD
Indebtedness
-Indonesia
STRUCTURE Of the ECONOMY
(%ofGDP) Agriculture Industry
Services
Household final consumption expenditure General gov't final consumption expenditure imports of goods and services
Manufacturing
(average annual gro Mh) Agriculture industry
Services
Household final consumption expenditure General gov't final consumption expenditure Gross capital formation imports of goods and services
Manufacturing
1985 1995
23.2 l7,l 35.8 41.8 18.0 24.1
40.9 411
59.1 61.6 112 7.8
20.4 27.6
1985-95 1995-05
3.4 2.5 9.7 2.1 112 3.0 7.9 2.1
6.5 3.2 4.6 3.2 110 -3.1 8.5 0.1
2004
16.6 44.3 28.7 414
64.6 8.3
27.3
2004
4.1 3.9 6.2 7.0
4.3 1.9
30.6 24.9
2005
14.0 40.7
45.3
63.9 7.5
32.6
2005
2.8 6.0
6.7
2.7 4.1
w.5 15.1
Growth o f capi ta l and GDP (YO) PO T
20 I.*: -GCF -GDP -
/ G r o w t h o f exports and Impor ts (Oh) 1
-Exports - 0 - l n l I O r i S
Note: 2005 data are preliminaryestimates. This table was produced from the Development Economics LDB database. 'Thediamonds showfour keyindicators in the country(in bold)comparedw?h its income-groupaverage. If dataare missing,thediamondwili
be incomplete.
51
Indonesia
PRICES and GOVERNMENT FINANCE
Domestlc p rkes (% change) Consumer prices Implicit GDP deflator
Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overaii surpiusldeficit
TRADE
(US$ mllions) Total exports (fob)
Fuel Estate crop Manufactures
Total imports (cif) Food Fuel and energy Capital goods
Export price index (2000=100) Import price index (2000=100) Terms of trade (2000=100)
BALANCE of PAYMENTS
(US$ millions) Exports of goods and services Imports of goods and services Resource balance
Net income Net current transfers
Current account balance
Financing items (net) Changes in net reserves
Memo: Reserves including gold (US$ millions) Conversion rate (DEC. local/US$)
EXTERNAL DEBT and RESOURCE FLOWS
(US$ millions) Total debt outstanding and disbursed
IBRD IDA
Total debt service IBRD IDA
Official grants Official creditors Private creditors Foreign direct investment (net inflows) Portfolio equity (net inflows)
World Bank program Commitments Disbursements Principal repayments Net flows interest payments Net transfers
Composition of net resoulce flows
1985 1995
4.7 9.4 4.3 9.7
19.8 15.6 -2.3 7.8 -1.0 1.9
1985 1995
18,527 45,418 .. 10,465 .. 2,916 .. 18,312
10,259 40,629 .. 3,022 .. 3,007 .. 16,290
24 .. 26 .. 95
1985 1995
19,371 52,923 17,840 54,461 1,531 -1,538
-3,542 -5,874 86 981
-1,923 -6,431
2,433 6,004 -510 -1,573
5,680 14,787 1,110.6 2,248.6
I985 1995
36,715 124,396 3,590 12,503
844 756
5,823 16,416 364 1,875
12 26
137 250 980 1,129 154 2,303 310 4,346
0 1,493
1,068 1,312 777 1,045 133 975 644 69 262 926 382 -657
2004
6.2 6.3
17.6 . 7.4 -1 .o
2004
71,585 15,803 2.845
22,063 45.425
3,786 1 1,797 12,175
101 109 93
2004
69,763 79,116 10,667
-8,704 1,139
3,103
-3,079 -24
36,194 6,938.9
2004
140,649 8.943
996
20,464 1.938
35
290 -2,667
-947 1,023 2,129
* 773 659
1,390 -731 584
-1,314
2005
10.5 13.7
17.9 5.0
-1 .o
2005
88,845 20,195
1,141 27,011 62,195
3,863 14,521 16,536
102 113 90
2005
108,239 93,521 14,718
-13,058 1,031
2.691
11,320 -14,011
47,088 9.504.0
2005
8,132 1,001
1,871 36
652 1,417 -765 489
-1.254
Inflation (%) 125 I
W 01 02 03 04 1 -'--GDPdeflator -CPI
99 W 01 02 03
Expcrts Imports
Current account balance to GDP (%)
7
I 98 W 01 02 03 04 05
Composition of 2004 debt (US$ mill.)
A 8,943 r. 745nn B 996
A - IBRD E. Bilateral B . IDA D . Other mltilateral F ~ Private C ~ IMF G - Short-tern
Note: This table was produced from the Development Economics LDB database. 8/13/06
52
Gulf ofThailand
Gulf ofCarpentaria
CelebesSea
J a v a S e a BandaSea
Arafura Sea
SuluSea
AndamanSea
P A C I F I C
O C E A N
I N D I A NO C E A N
Bogor
Surakarta
Malang
Amahai
Parepare
Baubau
Tarakan
Raba
Ende
Waingapu
Pematangsiantar
Balikpapan
Cilacap
Sorong
Merauke
Fakfak
Cirebon
Timika
Palu
Ambon
Gorontalo
Jambi
Medan
Kupang
Padang
Manado
Mataram
Bandung
Kendari
Denpasar
Surabaya
Semarang
Bengkulu
Jayapura
Palembang
SamarindaPontianak
Pekanbaru
Yogyakarta
Banda Aceh
Bandjarmasin
PalangkarayaPangkalpinang
Makassar
Ternate
BandarLampung
Serang
Manokwari
Mamuju
Tanjungpinang
JAKARTA
19
21
22
26
29
20
23
25
24
2827
30
32
31
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12
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I N D O N E S I A
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BRUNEI
PHILIPPINES
MA
L A Y SI
A
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TanimbarIs.
Halmahera
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Morotai
Misool
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Peleng Obi
Muna
Ceram
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SULAWESI Sula Is.
Timor
FloresAlor
WetarMoa
Babar
Sumba
SumbawaLombok
JAWA
NatunaBesar
Belitung
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S U M A T E R ABangka
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Enggano
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Bali
K A L I M A N T A N
Anambas
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105°
15°
0° 0°
120°
120°
135°
INDONESIA
NANGGROE ACEH DARUSSALAMSUMATERA UTARARIAUSUMATERA BARATJAMBIBENGKULUSUMATERA SELATANLAMPUNGBANGKA-BELITUNGBANTEND.K.I. JAKARTA
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1011
PROVINCES:
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JAWA BARATJAWA TENGAHD.I. YOGYAKARTAJAWA TIMURBALINUSA TENGGARA BARATNUSA TENGGARA TIMURRIAU KEPULAUANKALIMANTAN BARATKALIMANTAN TENGAHKALIMANTAN SELATAN
KALIMANTAN TIMURSULAWESI UTARAGORONTALOSULAWESI TENGAHSULAWESI BARATSULAWESI SELATANSULAWESI TENGGARAMALUKU UTARAMALUKUIRIAN JAYA BARATPAPUA (IRIAN JAYA)
2324252627282930313233
This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other information shownon this map do not imply, on the part of The World Bank Group, anyjudgment on the legal status of any territory, or any endorsement oracceptance of such boundaries.
IBRD 31828R
APRIL 2007
0 200 400
0 100 200 300 400 Miles
600 Kilometers
PROJECT TARGET PROVINCESMAIN ROADSSELECTED CITIES AND TOWNSPROVINCE HEADQUARTERSNATIONAL CAPITALPROVINCE BOUNDARIESINTERNATIONAL BOUNDARIES
INDONESIAADDITIONAL FINANCING FOR
SECOND URBAN POVERTY PROJECT
![PROCESS CHANGE NOTIFICATION - Mouser Electronics · Nch Vth[V] Nch Idr[μA/μm] Pch Vth[V] Pch Idr[μA/μm] Nch Tr. Vth-Idr Characteristic Pch Tr. Vth-Idr Characteristic Characteristic](https://img.pdfslide.us/doc/110x75/5ea9208bddcafa7fcd4fe0ba/process-change-notification-mouser-electronics-nch-vthv-nch-idram-pch.jpg)
