Resources For

A Partnership to Support Development Priorities

Available in: Bahasa (Indonesian)

www.worldbank.org/id/mitraindonesia

By leveraging Indonesia’s own institutions, the CPS aims to help the country to move to the next phase of its ongoing and incomplete transformation — a phase that once complete will allow Indonesia to take its place among Southeast Asia’s most successful economies. The World Bank Group will engage as Mitra Indonesia in these areas:

The World Bank Group aims to help Indonesia complete its institutional transition. Thus far, this process has produced a number of noteworthy achievements. Decentralization has largely put local governments in charge of service delivery. The Government has beefed up a number of anti-corruption institutions and continues to intensify its crackdown on corruption. In line with this, the Government is also seeking ways to become better, cleaner managers of public finances. The drive to run the country in more efficient, effective ways is very much in place. Now the World Bank Group seeks to match this drive with greater capacity. In doing this, the World Bank Group will engage with institutions that are committed to change, identify committed reformers, and provide them with the support needed to realize their vision of change.

The World Bank Group aims to help make Indonesia’s private sector a driver in broad-based growth, and in turn increase Indonesia’s competitiveness regionally and globally. The key to achieving this goal is to make the public sector a smooth facilitator – not an obstacle – in the business environment. To this end, the Government has overhauled its policies on taxes, customs, investment frameworks, and other issues of concern to investors. However, implementation of these policies remains uneven. Poor infrastructure and “institutional capture” (whereby some institutions succumb to the business interests of powerful people) are also impeding growth in the private sector. To help Indonesia overcome these remaining challenges, the International Finance Corporation – the World Bank Group’s private sector arm – and the World Bank will build on its strong relationships with the Ministry of Trade, the Coordinating Ministry for the Economy, Bank Indonesia, and other key partners that shape the investment climate. These partnerships will be based on analytical, advisory and monitoring work, as well as institutional capacity-building.

The World Bank Group will continue to support the Government in the design and expansion of programs that promote more inclusive growth and social protection, while also ensuring greater accountability of elected officials and service providers. Like many developing countries, Indonesia still has much work to do in order to meet its MDG targets, especially in terms of improving public service delivery at the district level. However, in terms of fostering inclusive growth with low risks of corruption, Indonesia is virtually unrivalled thanks to the National Community Empowerment Program (PNPM Mandiri) – a consolidation of over 50 community-driven development programs and scaled up to cover all 70,000 villages and urban poor communities by 2010, on a government budget of US$ 2 billion a year. The World Bank Group will support the expansion of PNPM Mandiri and other social protection programs, like conditional cash transfers, by offering a mix of co-financing and analytical and advisory work. The CPS support for improved institutional effectiveness will be mainly focused on the Coordinating Ministry for People’s Welfare.

The World Bank Group aims to help the Government build a bigger and better Indonesia by mobilizing the financial and human resources needed to support Indonesia’s infrastructure plans. The development of large-scale infrastructure is crucial to Indonesia’s progress on almost every front and the Government recognizes that in moving forward, the private sector is the most logical business partner. Focusing on roads, energy and water (including irrigation, as well as water and sanitation services), the World Bank Group will mediate between public and private institutions to help bridge the financing gap for infrastructure in these sub-sectors. At the same time, the World Bank Group will help strengthen the accountability and capacity of government agencies to deliver better infrastructure outcomes. The four agencies with which particularly strong partnerships are currently envisaged are the Directorate General of Highways (DGH), the Directorate General of Water Resources (DWR) and the Directorate General of Human Settlement (DHS) — all at the Ministry of Public Works — as well as the state-owned electricity utility (Perusahaan Listrik Negara, or PLN). The World Bank Group will provide financial and advisory support for the Government’s own infrastructure financing plan as set out in the current Rencana Pembangunan Jangka Menengah (RPJM).

The World Bank Group aims to help the Government complete its transformation of the education sector by zoning in on key areas of the Government’s education reform agenda, like building mechanisms for social accountability, promoting external transparency and access to information, and enhancing monitoring and evaluation systems. One example of this support is the System Improvement through Sector Wide Approaches (SISWA) program, which builds on government initiatives to manage education funds in a more effective and transparent manner.

In the first phase of SISWA, the World Bank Group will co-finance the Government’s School Operational Assistance (BOS) program, which empowers school administrators to make important expenditures and thus giving them a greater sense of ownership. At the central level, the new BOS KITA program also aims to manage education funds in a more effective and transparent manner, by raising the awareness of parents and the local community, and opening the system to independent monitors, information flows and democratic decision-making. The World Bank’s support for the education sector will continue to be based on its close partnership with the Ministry of National Education (MoNE) and the Ministry of Religious Affairs.

The World Bank Group aims to help Indonesia become a model for developing countries in adapting to climate change. This includes benefiting from new international investment instruments designed to help countries address climate change, such as climate investment funds, the Adaptation Fund, and global carbon markets. The World Bank Group will also support coordination and facilitate partnerships with the private sector and civil society for the implementation of the National Action Plan for Climate Change, as well as support the Government in developing a pilot framework and program to Reduce Emissions from Deforestation and Degradation (REDD).

The World Bank Group will also continue with its major role in rebuilding and rehabilitating Aceh, Nias and Yogyakarta , while helping to reduce Indonesia’s vulnerability to natural disasters. A key upcoming disaster risk reduction initiative is the Jakarta municipality’s (DKI Jakarta) three-year river-dredging program, the Jakarta Urgent Flood Mitigation Project, in which the World Bank Group will assist DKI Jakarta locate grant financing for the effective operation and management of the flood-management system. The World Bank Group’s engagement around environmental sustainability and disaster mitigation involves partnerships with the Ministries of Environment, Forestry, Finance, Trade and Bappenas on climate change issues, and Bappenas and the National Disaster Management Agency (Badan Nasional Penanggulangan Bencana, or BNPB) on disaster mitigation and recovery. The World Bank Group will draw from an active network of civil society organizations to continue fostering social accountability and participatory mechanisms.

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