Star Report: Indonesia Compact | August 2019

Beyond the Compact

MCC worked over 18 months with the GOI to create the implementing structure of the compact prior to entry-into-force in April 2013. MCA-Indonesia was established as a national trust fund, a new and innovative model for development funding in Indonesia, which has allowed the government to explore the possibility of taking a greater role in managing both donor assistance and its own development funding. One of MCA-Indonesia’s greatest attributes was that despite its status as a government institution, it was permitted to channel donor and central government funding to development projects at the community level. MCA-Indonesia’s design included a public and private sector Board of Trustees, the first of its kind in Indonesia. After the establishment of MCA-Indonesia, the GOI created two more trust funds based on this model, most notably the Indonesia Climate Change Trust Fund, which has made grants to small projects around the country.

This spirit of experimentation and pushing the limits of what the GOI was able to accomplish on its own by way of policy reform in these sectors was advanced within the design of each project and played out during compact implementation in unexpected ways. For example, the Green Prosperity peatland portfolio included several initiatives to build the capacity of the GOI’s newly-established Peatland Restoration Agency. The flexible design and focus of the GP Facility enabled MCA-Indonesia to support the accomplishment of GP objectives as well as supporting a national priority. Another example of how the GP Facility enabled policy changes to quickly be operationalized and brought to scale took place when a new Ministry of Forestry regulation was issued in December 2016 that streamlined the application process for social forestry licenses, changing the time needed from a minimum of two years to as little as three months. In 2017, MCA-Indonesia supported projects assisting dozens of community groups to secure such communal forest rights for over 139,000 hectares.

As described above, the most notable example of a project being implemented to a much larger scale than originally contemplated was the Procurement Modernization Project’s expansion from $50 million to $75 million. For the recruitment of the initial pilot PSUs, MCA-Indonesia took several months to convince local mayors and governors that the project would be worth their time and effort. By the beginning of Phase II, when it came time to select the additional pilots, PSUs from around the country were competing to participate in the project, each trying to outdo the other’s declarations of transparency and commitment to better procurement results. By the conclusion of the project, non-pilot PSUs received training from some of the first PSUs selected, some of which aimed to be accredited as Centers of Excellence.

The graduates of the entire organizational and procurement skills training program, consisting of 30 formal training courses and substantial mentoring, took the initiative to establish their own network for procurement professionals to learn from and support one another. The pilot PSUs are also already serving as mentors and champions to other non-pilot PSUs. As of December 2016, the Yogyakarta city government PSU was mentoring seven non-pilot PSUs and the Special Capital Region of Jakarta was mentoring other PSUs in setting up Framework Agreements. MCA-Indonesia’s innovative Indonesian Procurement Maturity Model was also adopted by LKPP for use in more than 600 other PSUs across the country.

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