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The World BankPublic Financial Management and Revenue Administration Reform Program (P152551)

REPORT NO.: RES31987

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

PUBLIC FINANCIAL MANAGEMENT AND REVENUE ADMINISTRATION REFORM PROGRAM

APPROVED ON MARCH 1, 2016

TO

MINISTRY OF FINANCE

Regional Vice President: Victoria Kwakwa Country Director: Rodrigo A. Chaves

Senior Global Practice Director: Deborah L. WetzelPractice Manager/Manager: Arturo Herrera Gutierrez

Task Team Leader: Hari Purnomo, Arun Arya

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ABBREVIATIONS AND ACRONYMS

Bappenas National Planning and Development Agency (Badan Perencanaan dan Pembangunan Nasional)

CTO Central Transformation Office DIPA Government Budget Document (Daftar Isian Penggunaan Anggaran)DG Director GeneralMCM Management Committee MeetingMOF Ministry of FinancePDO Project Development ObjectivePEFA Public Expenditure and Financial AccountabilityPFM Public Financial ManagementMDTF Multi Donors Trust FundPIU Project Implementing Unit PLPSE Center for Electronic Procurement Service Unit (Pusat Layanan Pengadaan Secara

Electronik) under the MOF Secretary General but it is now just merged with the Bureau of General Affairs

PSSU Project Secretariat and Support Unit under the Seceretary General of Ministry of Finance

PUSINTEK Center of Information and Technology (Pusat Informasi dan Teknologi), Ministry of Finance

Organta Organization and Business Process (Organisasi dan Tata Laksana), Ministry of Finance

Rocenkeu Bureau of Planning and Finance, Ministry of Finance (Biro Perencanaan dan Keuangan)

SPAN Government Financial Management Information System (Sistem Pembendaharaan dan Anggaran Negara)


BASIC DATA

Product Information

Project ID Financing Instrument

P152551 Investment Project Financing

Original EA Category Current EA Category

Approval Date Current Closing Date

01-Mar-2016 30-Apr-2018

Organizations

Borrower Responsible Agency

Ministry of Finance Ministry of Finance (Indonesia),Directorate General of Taxes

Project Development Objective (PDO)

Original PDOTo improve the capacity of the Ministry of Finance to undertake more efficient, timely, and transparent public financial managementOPS_TABLE_PDO_CURRENTPDOSummary Status of Financing

TF Approval Signing Effectiveness ClosingNet

Commitment Disbursed Undisbursed

TF-A1903 01-Mar-2016 21-Mar-2016 21-Mar-2016 30-Apr-2018 2.70 1.80 .90

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)?No


I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

1. TF0A1903 became effective on March 21, 2016. The Project Development Objective was to improve the capacity of Ministry of Finance to undertake more efficient, timely, and transparent public financial management. The key results of the program were expected to eventually contribute to improved public service delivery in Indonesia. The project beneficiaries included different government offices within and outside the Ministry of Finance. The program aimed to address issues across a broad range of public financial management related areas that emerged from on-going PFM reform dialog and that were reflected in the Medium-Term Strategy Note. The project was envisaged to provide support to government to achieve improved accountability, collection, allocation, usage and transparency of public resources.

2. The project had following components:

Component I. Better Oversight of the PFM Reform Process Component II. More Targeted Allocation of Public Funds Component III. Better Links between Budgetary Spending and Improvement in Public Services. Component IV. Improved Budget Execution and Reporting. Component V. Enhanced Compliance and Value-for-Money in the Use of Public Resources. Component VI. Improved Customs, Tax and Non-Tax Administration Performance Component VII. Improved Public Financial Management at the Sub-National Level. Component VIII. Strengthening / Transforming Institutional Capacity for PFM.

3. During the implementation, the main proponent for Component VII considered all activities were more suitable to be BETF. Therefore, no allocation has ever been added to this component.

4. The project is being implemented by two ministries, namely the Ministry of Finance (MOF) and the National Planning and Development Agency (Badan Perencanaan dan Pembangunan Nasional -Bappenas-). There are four participating Echelon I units under the MOF and one under Bappenas. The 5 Echelon I units are: the Directorate General (DG) of Tax, the DG of Treasury, the Directorate of Budget, the Secretary General of MOF and the Deputy of the Development Funding of Bappenas. All Echelon I units, except for one, have a project implementation unit (PIU) that covers some underneath directorates (Echelon II) as beneficiaries. The MOF Secretary General has two Project Implementation Units (PIUs) - the Project Secretariat and Support Unit (PSSU) and the Center of Information and Technology (Pusat Informasi dan Teknologi -PUSINTEK). In total, there are 15 Echelon II units involved in project implementation. The overall program is under the leadership of the MOF Secretary General, with the minister’s expert staff actively involved in day-to-day oversight. PSSU plays the coordination and oversight role in project implementation with support from the World Bank's team.

5. At the beginning of implementation, progress was slow mainly due to the time needed to include the funding in the Government budget allotment documents (Daftar Isian Penggunaan Anggaran (DIPA)). Furthermore, the program also encountered challenges in the procurement process for consultants, due to government officials’ lack of understanding of World Bank’s procurement guidelines. Most activities were approved by the Management Committee Meeting (MCM) of the Public Financial Management (PFM) Multi Donor Trust Fund (MDTF) a year after effectiveness of the grant. In the initial phase of the project, only activities approved by the MCM (2014-2016) were implemented. The government prepared proposals on a gradual basis following need assessments vis-à-vis the state budget.

6. Following the approval from the MCM held on March 14, 2018, new allocations have been added to the grant. The summary of allocations by component is presented below. The largest shares were allocated to Component IV (36%), Component I (21%) and Component III (15%)


Table I: Allocation by Component as of March 14, 2018 (in USD)

Component Allocation % Allocation

I. Better oversight of PFM Reform Process (PSSU) 575,375 21II. More targeted allocation of public funds to

development priorities (Bappenas) 145,000 5III. Better links between budgetary spending and

improvement of public services (DG Budget) 413,400 15IV. Improved budget execution and reporting (DG

Treasury) 960,000 36V. Enhanced compliance and value for money in public

resources use - PLPSE (e-Procurement Service) 55,826 2VI. Increased fiscal revenue and administration (DG Taxes) 316,412 12

VIII. Strengthening / Transforming Institutional capacity for PFM (Center of Information and Technology (PUSINTEK), Bureau of Organization and Business Process (Organta), and Center of Transformation Office) 233,704 9

Total 2,699,718 100


7. As the coordinator of the PFM-MDTF on the government side, the PSSU was the only unit to start implementation on time in mid-2016. The rest of the PIUs were only able to start implementation towards the end of the second quarter of 2017. Most of the planned activities were initiated after being endorsed by the MCM. Out of 24 activities that were approved, 10 have been completed, 2 have been cancelled, and 12 remain ongoing. The detailed status of activities is presented in Annex I (completed activities) and Annex II (ongoing activities) respectively. The ongoing activities are currently on hold pending effectiveness of the new closing date. Once the closing date is extended, the activities will be included in the DIPA and the procurement process will be started.

8. Major outputs delivered thus far include reports from several trainings and study visits of DG of Taxes, Central Transformation Office, DG of Treasury, and MOF Procurement-Unit; report on findings and recommendations from Operations and Security Management Specialists of PUSINTEK; and, the monitoring and evaluation report of the PSSU. In the remaining period, the project is expected to deliver the PFM Roadmap and the technical assistance on the Oracle E-Business Suite.

9. The progress towards achievement of the Project Development Objective (PDO) and overall implementation progress is rated Moderately Satisfactory. As of December 2017, targets under all the following four PDO indicators have been achieved: (i) reduction in the time lapsed of financial reporting on public expenditures after the fiscal year; (ii) percentage of trained SPAN users staff able to fully understand the conceptual framework of accrual accounting and to use the system in producing the accrual based accounting system at minimum require; and (iii) Improved the quality of sub-national governments data that is available in digitalized format, as well as (iv) Number of trained staff in forensic investigation unit able to use forensic methods and tools to investigate tax criminal cases. The only Intermediate Result indicator set for this Grant - percentage of major capacity building activities are successfully completed as planned - is also showing progress towards achievement of the project-end target. The detailed progress report as per the Result Framework is placed at Annex III.

10. Reasons for Extension: Following are the key reasons for seeking extension of the closing date.

a. It took six (6) months for the project to become effective after it was approved on October 2015. Government took a longer time to prepare and sign the grant agreement. Then, it took another several months after the effectiveness date for the government to officially establish all PIUs and assign staff to work in each of those PIUs. Hence, there were only a few activities that could be implemented in FY 2016.

b. Due to the longer time needed by government’s officials to be familiar with project implementation manual, few activities were delayed and cannot be completed by February 28, 2018. The government wants to complete ongoing activities.

c. Given the unfamiliarity of government staff with the Bank procurement guidelines, some activities that were to be implemented through hiring consulting firms encountered delays.

d. During project implementation, the PIU faced procurement challenges, especially in selecting qualified consultants causing delays in some activities. With close supervision of the Bank’s Procurement team, government has now improved their procurement capacity. At the end of 2017, they were ready to initiate their procurement activities; however, they did not initiate because the closing date was due on February 28, 2018.

e. The Trust Fund has sufficient funds available to complete the pending activities and no additional funding is required. Now the PSSU staff has enhanced procurement capacity and familiarity with World Bank procurement guidelines. They are well equipped to do the procurement activities now.

f. One major activity that is yet to be delivered is the development of the PFM Roadmap. This activity was ready for implementation last year but the selected consultant cancelled the assignment due to personal reasons. This TA is very critical and strategic for the future of PFM reforms in the country. The procurement of new consultant is in


process and the activity is planned to start on July 1, 2018. It is very important that the project is extended to develop the PFM Roadmap.

g. Another major activity is the enhancement of the budget preparation and the Oracle EBS to optimize the effectiveness of FMIS (SPAN). Despite the successful launch of SPAN in 2015, there is a need to continue enhancing the application in coping with the changed regulations. DG Treasury had planned to hire a consulting firm to support them in enhancing SPAN for more effective budget preparation and treasury management. This activity was planned to be implemented in 2017, but was postponed since DG Treasury wanted to complete the SPAN Information System Audit (funded under BETF) that has helped them to understand the system weaknesses, risks and deficiencies.

11. During the extension period, PSSU - functioning as the Project Management Office for this grant - will continue to be under the office of MOF's Secretary General which will work closely with the Bank’s team to supervise the implementation during the extended period. PSSU will play a critical role to ensure remaining activities will be fully implemented by March 27, 2019.

12. DESCRIPTION OF PROPOSED CHANGES

13. The closing date for the Public Financial Management and Revenue Administration Reform Program (P152551) will be extended from April 30, 2018 to March 27, 2019. This extension is in line with Government’s projection for completing all planned activities and represent no extra cost. The request for extension has also been endorsed by the donors and it is aligned with the extension of the overall program as recently approved by the RVP. The proposed extension of the closing date will help enhance impact of the overall PFM reform agenda of the government.

14. As of March 14, 2018, out of the USD2.7 million approved by the last MCM, USD1.5 million was allocated across all components. Of the allocated amount, 88 percent has been disbursed. Component V (100%), Component III (93%) and Component IV (90%) have the highest disbursement rate.


Table 2: Table I: Allocation, Commitment and Disbursement by Component as of March 14, 2018 (in USD)

Component

Allocation Commitment

Commitment as % of

Allocation

Disbursement

Disbursement

as % of Commitment

I. Better oversight of PFM Reform Process (PSSU) 575,375 280,194 49 233,807 83

II. More targeted allocation of public funds to development priorities (Bappenas) 145,000 38,492 27 29,255 76

III. Better links between budgetary spending and improvement of public services (DG Budget) 413,400 238,953 58 221,559 93

IV. Improved budget execution and reporting (DG Treasury) 960,000 459,565 48 411,435 90

V. Enhanced compliance and value for money in public resources use - PLPSE (e-Procurement Service) 55,826 55,826 100 55,826 100

VI. Increased fiscal revenue and administration (DG Taxes) 316,412 306,683 97 252,101 82

VIII. Strengthening / Transforming Institutional capacity for PFM - PUSINTEK, Organta, and CTO 233,704 156,540 67 147,373 94

Total 2,699,718 1,536,254 57 1,351,356 88

The full extension will enable satisfactorily completion of all activities.

15. Last month, an interim extension up to April 30, 2018 was processed considering that the extension of closing date of the parent TF (TF071375) was not completed. Now that the extension of the parent TF has been approved by the Regional Vice President, the Grant can be extended until March 27, 2019 with a 3-month “grace period” for submitting withdrawal applications.

II. SUMMARY OF CHANGES

Changed Not Changed

Change in Loan Closing Date(s) ✔

Change in Implementation Schedule ✔

Change in Implementing Agency ✔

Change in Project's Development Objectives ✔

Change in Results Framework ✔


Change in Components and Cost ✔

Cancellations Proposed ✔

Additional Financing Proposed ✔

Reallocation between Disbursement Categories ✔

Change in Disbursements Arrangements ✔

Change in Disbursement Estimates ✔

Change in Overall Risk Rating ✔

Change in Safeguard Policies Triggered ✔

Change of EA category ✔

Change in Legal Covenants ✔

Change in Institutional Arrangements ✔

Change in Financial Management ✔

Change in Procurement ✔

Other Change(s) ✔

IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE

LOAN CLOSING DATE(S)

TF StatusOriginal Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

TF-A1903 Effective 28-Feb-2018 30-Apr-2018 27-Mar-2019 30-Jun-2019


Annex I: Completed Activities and Outputs Produced (as of December 31, 2017 (in USD)

ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME BUDGET/DISBURSED in USD COMMENTS

I. Better oversight of the PFM reform processAgency: Project Support Services Unit-PFM-MDTF (PSSU), Secretariat General, Ministry of Finance1.1 Refer to the Table for On-

going Activities

II. More targeted allocation of public funds for development prioritiesAgency: Directorate for the Allocation of Development Funding, Deputy for Development Funding, BAPPENAS2.1 Support to Bappenas in

Building Capacity to Conduct Spending Review (June 17, 2016)

Total Allocated

80,000

Total Disbursed

29,255.16

Bappenas will use the balance of the allocation for 2018-2019 activities.

a) Local Consultant for Spending Review

a. Increased understanding of public spending efficiency and effectiveness concepts and processes by the BAPPENAS staff;

b. Increased capacity among BAPPENAS staff to conduct spending review and develop evidence-based expenditure policy recommendations

The consultant in collaboration with the staff of Directorate of Development Funding Allocation (DDFA) produced 16 (sixteen) mini papers which related to national budget priority and others related budget issues, focusing on 3 areas: Priority Allocation Concept; Priorities Alternative Financing; National Budget Priority.

a. The hands-on training received by DDFA staff during the conduct of spending reviews has enhanced the analytical and budget planning capability of the staff, leading to improve allocation of resources to national budget priorities;

b. The result from the development of national budget priority concept will be used for the preparation and implementation of RKP 2019;

Budget-TOR:

15,789.47

Disbursed

15,458.22

DDFA plans to hire another Consultant for FY 2018 to continue to undertake more in-depth spending reviews on 2018 to improve planning process and the quality of the RKP 2019.



b) Workshops and Field Surveys

a. Guidelines for conducting spending reviews

b. Database of data collected from surveys.

Workshop: 3 separate workshops to present the 16 mini-papers were held on Nov. 13, 2017 with 35 participants; Nov. 20, 2017 with 43 participants and Dec. 14, 2017 with 35 participants

Field Surveys; 3 field surveys were done in NTB and Flores to assess several major infrastructure development projects.

a. Better quality of national budget prioritization for Bappenas primarily at the DDFA.

b. More effective and efficient allocation of funds to K/L’s for national priorities through the distribution in the regions, the compositions of K/L spending, and coordination between governments levels, among others;

c. More adequate funding for national priorities through adoption of alternative financing schemes.

Budget-TOR:22,703.00Disbursed13,796.94

Unused funds will be carried over to finance 2018-2019 activities.

III. Better links between budget spending and improvement in public service deliveryAgency: Directorate General of Budget, Ministry of Finance3.1 In-country Training for DG

Budget I (Approved June 17, 2016)

This consisted of two sets of training sub-activities.

The overall outcome indicator will be increased capabilities of DG Budget and/or MOF staff so they can play more strategic and analytical roles in budget formulation and preparation.

Total Allocation:

106,000

Total Disbursed

81,331.54

a) Training on Quantitative Method to Formulate APBN

Same as above For basic level – Batch 1 was held on April 25-19, 2017 with 25 participants. Batch 2

a. The result of these training has resulted in a more in- depth and comprehensive

Budget-TOR:

58,494.85Disbursed



was held on May 15-19, 2017 with 30 participants.

For executive level – Batch 1 was held on September 11-13, 2017 with 27 participants. Batch 2 was held on September 18-20, 2017 with 27 participants.

For advance level –This was held on October 23-25, 2017 and November 2-3, 2017 with 28 participants

understanding by DG Budget staff on quantitative statistical methods and the application of the tools and knowledge gained in their day to day office work.

b. There is improvement in DG budget policy reviews and reports that make them easier to understand and more direct to the point.

58,494.85

b) Training on Regulatory Impact Assessments (RIA)

Same as above Batch 1 was held on May 20-24, 2017 in Bogor with 30 participants.

Batch 2 was held on November 8-14, 2017 in Depok with 24 participants.

The result of these workshops is reflected by the frequent use of RIA and cost benefit analysis when DG Budget staff review the impact of any policies/ regulations on the budget formulation and allocation.

Budget - TOR

32,188.65

Disbursed

22,836.69

Participants say that they need to know more about valuation processes and other RIA methodologies.

3.2 In-country training for DGB Phase 2 (Approved February 7, 2017): This consisted of 3 set of training activities

Total Allocated157,400.00

Total Disbursed140,227.36

a) Training Programs on Evidence-Based Planning and Budgeting, Impact Evaluation, and Budget Analysis

Application of evidence-based planning and budgeting analytical methods by DG Budget staff when reviewing the impact of any policies/ regulations on the

The 2 batches of training for DG Budget staff by Faculty of Economics, University of Gajah Mada in Yogyakarta.

Batch 1 was held on November 20-24 with 30 participants.

This workshop is expected to enhance the ability of DG Budget officials to conduct analysis and program evaluation, in accordance with the government work plan established by the president. Then, the evaluation results serve as a

Budget-TOR

65,686.32Disbursed61,821.19

Participants say the need more workshops on methodologies and best practices on evidence-based analysis.



budget formulation and allocation

Batch 2 was held on December 4-8 with 30 participants

basis for planning and budgeting for the next program.

b) Training on the application of the logic-model based budget proposal evaluation for efficient budget allocation

In depth and comprehensive understanding by DG Budget staff of the application of logic model when doing budget proposal evaluation, resulting in more efficient budget allocation.

The training was held for 7 days on 10-16 December 2017 at Hotel University Club UGM-Yogyakarta. A total of 40 participants from DG Budget joined the training.

a. Participants have increased understanding of Application of the Logic-Model Based Budget Proposal Evaluation.

b. It is expected that knowledge of the tools, and awareness of the importance of measuring outcomes, deter-mining quality indicators and evaluating performance will help improve the quality of state expenditure for Efficient Budget Allocation.

Budget-TOR

49,700.00

Disbursed

41,767.31

c) Training on monitoring & evaluation of investment management and the performance of state budget for financing the civil service pension scheme

Sharpened analytical skills of DG Budget staff in performing their supervisory role over the civil service pension fund, including drafting related regulations.

Batch 1 was done in Bogor from 27-29 Sept. 2017 by the Institute of Indonesia Chartered Accountants (IAI) with 22 participants. Batch 2 was done in Bandung on 1-13 Oct. 2017 with 22 participants by Binainsan Konsulindo, Batch 3 was done in Tangerang on 25-27 Nov. 2018 with 22 participants.

By understanding all of the pension fund business processes and financial statement analysis, monitoring and evaluation of accumulated pension fund the staff of DG Budget will be more effective and efficient in the conduct of their day-to-day work, and in the end will contribute towards national budget saving.

Budget-TOR

42,000.00Disbursed36,638.86

IV. Improved budget execution and reportingAgency: Directorate General of Treasury, Ministry of Finance4.1 Enhancement of MOF

Capacity for Better Cash a. More accurate cash

forecasting; Allocated



Management (Dec. 16, 2015)

b. Lower cost of idle funds/

150,000

Total Disbursed77,629.74

a. Training on the Operationalization of Treasury Dealing Room

More prudent operationalization of the Treasury Dealing Room (TDR)

Training was held on November 06-10, 2017 in Bogor, West Java by trainers from IMF with 25 participants from DG Treasury

It is too soon to tell but this activity is expected to enhance the capacity of the MOF staff to effectively manage the operations of the Treasury Dealing Room (TDR).

Budget-TOR18,368.00Disbursed16,363.06

b. Training on Cash Management and Forecasting

Improved Ministry of Finance Staff’s capability to do cash management and forecasting

Training was held July 31-Aug.5, 2017 in Bandung with trainers from IMFA total of 46 people was trained: 40 from MOF, 3 from Bank Indonesia and 3 from commercial banks.

Increased staff capacity to conduct the stages of TSA model, active cash management, and forming the optimal cash balance related to government needs and market development.

Budget-TOR

19,213.00Disbursed

18,860.23

c. Training on Cash Planning For KPPN

Improved capacity of KPPN to do cash planning in the KPPN and to assist in upgrading the quality of cash planning in the spending units.

Training was held in Jakarta from October 2-5, 2017 with trainers from DG Treasury. Participants included 80 staff from various KPPNs and 2 Help Desk staff

Enhanced capacity of KPPN staff to improve internal cash planning and assist in upgrading the quality of cash planning in the spending units

Budget-TOR

52,678.00Disbursed

42,406.47

4.2 Support the SAKTI (Financial Application System for Spending Units) Roll-out and Training of Selected Users (June 17, 2016)

a. An improved version of SAKTI that is ready for wider-scale implementation;

b. Trained DG Treasury IT staff who can undertake SAKTI

Functional Application Design

Application Technical Design

Current Functionality

M&E Tools

The enhancement of SAKTI application has satisfied the new requirements for various financial business processes at the Line Ministries. Modules enhanced included the budget, asset, reporting, payment and treasury modules. The enhanced SAKTI has

Budget-TOR

360,000.00Disbursed

333,805.16

The contract covered the period July 3 to December 31, 2017



maintenance in the future.

Assessment on Current & Future Infrastructure Needs

Trained SITP staff with hands-on experience om application maintenance.

been rolled out to other units of MOF starting in January 2018.\

V. Enhanced compliance and value-for-money in the use of public resources

Agency: Electronic Procurement Services Center (PLPSE), Ministry of Finance

5.1 In-country Training and Capacity Development for the Staff of the Regional Procurement Service Unit (ULPD) (February 7, 2017)

ULPDs are ad-hoc units composed of non-full-time procurement staff who perform routine functions in other branches of MOF

a. Better coordination between the ULPDs and the PLPSE.

b. Enhanced under-standing of the MOF’s procurement modernization program.

c. Better appreciation of technical/procedural aspects of procurement, and broader insight on various procurement related issues.

a. 120 staff (66 from the ULPDs and 54 from PLPSE Central Office) were trained in Bogor on the following dates:Batch 1 was held on 10 - 14th September 2017;Batch 2 was held from 25-29 September 2017, Batch 3 was held from 26-30 September 2017.

b. Identified future training needs for PLPSE and ULPD.

It is too soon to gauge the full impact of this training on the quality of procurement work done by the ULPDs and the quality of supervision done by the PLPSE Head Office teams but the training has given both ULPD and Head Office staff the opportunity to upgrade their capabilities and learn from the experience of other regional units in dealing with various types of procurement issues in their regions.

Allocated and Budget -TOR

64,000Disbursed55,826.46

VI. Increased fiscal revenues through improved customs, tax and non-tax administration performance

Agency: Directorate General of Taxes, Ministry of Finance



6.1 Training and Certification for Digital Forensic Investigator (February 7, 2017)

Total Allocated

64,975.00

Total Disbursed

58,802.59

Improved ability of staff to: a. Handle various types

of incidents, perform risk assessment related to information system incident handling.

Certified Information Systems Auditor (CISA) Training: 5 DG Tax staff participated in the training held on 28th -31st August 2017 by Inixindo

CISA training has enhanced the skills of digital forensic personnel on information systems matters. Participants are more confident in performing their duties and have started implementing knowledge acquired, thereby enhancing the quality of digital forensics activities.

Budget-TOR9,745.00

Disbursed8,249.88

One participant will undergo refinement certification in 2018.

b. Create policies and handle various types of computer security incidents.

c. Assess information system vulnerabilities and control.

Cisco Certified Network Associate Routing & Switching (CCNA): 6 staff staff participated in the training held on 25th September – 6th October 2017 by PT Duta Kuningan

CCNA training activities have broadened the digital forensic personnel’s skill set and ability to manage and optimize network systems. Participants become more confident in performing their duties.

Budget –TOR9.592.00

Disbursed7,663.17

4 participants will undergo refinement certification in 2018.

d. Provide comprehensive report on information system compliance and security

Certified Fraud Examiner (CFE): 7 staff participated in the training held on 28th – 31st August 2017 by Lembaga Pengembangan Fraud Auditing

CFE training activities have broadened the digital forensic personnel’s skill in understanding fraud and the techniques in investigation of fraud. Participants became more confident in performing their duties.

Budget-TOR16.755

Disbursed15,068.99


EC-Council Certified Incident Handler (ECIH): 5 staff participated in the training held on 30-31st October2017 by Inixindo

CIH training activities have enhanced the skills of digital forensic personnel in incident response and handling. They have broadened understanding of the processes for incident response and handling, risk assessment,

Budget-TOR5,914

Disbursed5,053.26



providing good network security, various types of threats and its solving, incident report and recovery, and security laws and policies.

Oracle Database: 5 staff participated in the training held on 6th – 24th November 2017 by Inixindo

Oracle Database training activities have enhanced the skills of digital forensic personnel in interacting with Oracle database. Participants could utilize the skills when doing analysis with database or formulating database design for tax crime data science which would be initiated in 2019.

Budget-TOR24.135

Disbursed22,767.29


6.2 Development of CRM Framework - Workshop with Neighboring Countries (February 7, 2017)

A well-managed and reliable CRM frame-work implemented considering successful experience of neigh-boring countries which will be useful for roll-out plan in 2018

A total 29 people from DGT participated in CRM workshop held on July 17 - 21, 2017 with resource persons from the Inland Revenue Authority of Singapore and The Revenue Dept of Thailand.

Through this workshop, there is an increase in the capacity of the participants related to the CRM framework, implementaton of CRM, and also practices executed in both countries.

Budget-TOR27,935

Disbursed20,543.85



Certified Fraud Examiner Training:

A total of 8 (eight) participants from Sub-directorate of Internal Investigation. Held on July 31 - Sept 7, 2017 by Lembaga Pengembangan Fraud Audit (LPFA)

This program increased the competencyy, skills, and knowledge of the Directorate of Internal Compliance and Apparatus Transformation (KITSDA) of DGT, in particular the Sub-directorate of Internal Investigation officers. KITSDA can improve its capacity to prevent, detect, investigate and analyze indication of fraud and violation of code of conduct.

Budget-TOR 21,548.87

Disbursed20,327.94

6.3 Capacity Building to Enhance Internal Investigation and Strategic Planning (February 7, 2017)

Total Allocated

147,382.00

Total Disbursed

127,672.24

CFE and EnCE training will enhance the staff ability to (i) prevent and detect fraud related to risk assessment; (ii) investigate and collect data and information from the suspect; (iii) use the forensic software to acquire digital data in support of investigation; and provide comprehensive report on internal compliance. Encase Training and

Certification:A total of 8 (eight) participants from Sub-directorate of Internal Investigation, held July 31 – Spetmeber 8, 2017, provided by Bounga Solusi Informatika . Six have been certified and two are still waiting for the result.

The training has provided the staff with the following skills, among others:a. Ability to investigate and

collect data and information from the suspect.

b. Ability to use the forensic software to acquire digital data in support of investigation.

c. Ability to provide comprehensive report on internal compliance for better organization.




CSEP training will develop the staff’s ability to: (i) analyze, develop and conduct strategic mapping to align with the on-going reform. (ii) create operational planning and organizational alignment to support revenue optimization; (iii) conduct monitoring and evaluation toward the implementation of strategic planning.

Certified Strategy Execution Professional (CSEP) Training

There were 25 participants joined the training held on August 24 – October 20, 2017 and received certification as Strategy Execution Professionals.

There is a better understanding of the roles and relationship among related counterparts, such that those who have roles in budgeting, personnel planning, performance management, have greater awareness about how their work should relate with DGT’s strategic plan. This will result in better coordination particularly in executing DGT’s strategy.


6.4 Benchmarking Study to IRS on Tax Intelligence Technique and Methodology, Standard Operating Procedure (SOP) and HR Management, United States (February 7, 2017)

a. Improved tax intelligence officer's skills

b. Better management of forensic digital cases

c. Improved DIT's capability in delivering prompt, timely, and accurate information to optimize strategic decision-making process that lead in maximizing tax collection,

A total of 12 officials and staff participated in the benchmarking study held at the Internal Revenue Service (IRS) and the World Bank Headquarters, USA. held on Oct 23-26, 2017.

The benchmarking study at the IRS in the United States has provided many inputs related to the development of organizations and policy formulation in Directorate of Law Enforcement and Directorate of Tax Intelligence. This is very beneficial for the DJP which is currently conducting bureaucratic reform. DLE and DTI have been formulating policies, respectively Circular Letter toward digital forensics and Minister of Finance Regulation on whistleblowing

Budget-TOR61,705.00

Disbursed60,393.00



d. Successful implementation of tax intelligence structuring program that is in line with international best practice.

system. With the adoption of inputs from the IRS is expected to create an effective whistleblowing system and the implementation of more standardize digital forensic activities. Not only in formulating policies matter, DLE plans to build a digital forensics laboratory by 2018. Learning of laboratory facilities and SOPs at CI and TOIS provides an overview for DLE on how laboratory standards and task implementation standards in the field of digital forensics, to be more efficient.

VIII. Strengthening/ transforming institutional capacity for PFM

Agency: Information and Technology Center (Pusintek), Ministry of Finance

8.1 Consultancy for Data Center Operations Management Specialist

a) Improved quality, availability, and reliability of the Data Center operations,

b) Improved capability of DC/DRC operations staff.

The Consultant’s outputs included: A framework for DC/DRC

Operations and Monitoring across MOF

Assessment of Echelon 1 applications and supporting systems hosted at Pusintek’s DC/DRC

Configured existing DC/DRC operation management scenarios

Technical requirements for increasing the capacity and capability of Pusintek’s IT

1. Better planning for Data Center certification to enhance the quality, availability, and reliability of the Data Center operations to achieve the Tier 4 standard of Data Center classification (which means with 99.99% availability).

2. During the period of consultancy, the staff that has been involved with the activity had learned from the consultant about the standard

Budget-TOR54,135.34

Disbursed53,003.53



Services for DC/DRC operationManagement

Assessment of existing DC’s facility and infrastructure,

Framework for DC/DRC operational management and related annual work programs

and best practice of data center operational.

8.2 Consultancy for Security Specialist

Improved performance and quality of security services provided by PUSINTEK.

The Consultant’s output are as follows:

a. Project Charter b. Vulnerability Assessment

and Penetration Test report,

c. Security Integration and Dashboard Report

d. Analysis and Suggestion Report

e. Security Operation Center Report

f. Information Security Assessment Report in Disaster Recovery Center (DRC) at Kantor Pengelolaan Pemulihan Data (KPPD) Balikpapan and Kantor Pengelolaan TIK dan BMN Medan, Semarang, Surabaya, and Makassar

The impact of the consultant’s services has been observed in the following: a. Hardening of security for

server, database, network, and web application in DC and DRC, KPPD, and KPTIK BMN.

b. Improved Dashboard security. c. Concept of SOC Framework

Architecture.

Budget-TOR54,135.34

Disbursed53,113.01



Agency: Organization and Management Bureau (Organta), Ministry of Finance

8.3 Training & Coaching in Development of SOP & Business Process Mapping with RASCI (Responsible, Accountable, Support, Consulted, Informed) (February 7, 2017)

a) The creation of efficient, fast and accountable administrative services;

b) Increased level of stakeholder satisfaction.

25 personnel from all Echelon I units of the MOF participated in the training held from May 15 – 18, 2017 in Bali, provided by MDF ASIA Training and Consultancy.

Participants are now able to prepare SOP using new format and new tools with better understanding of business process by RASCI Method and using Bizagi for Business Process Model and Notation. In some units, trained staff become the key person for rearranging the SOP process relevant to the provisions in PMK 131/2015.

Budget-TOR

26,189.16

Disbursed26,189.16

Agency: Central Transformation Office, Ministry of Finance

8.4 Benchmark Study of Government Enterprise Framework and Implementation in Australia

The benchmark is expected to assist the participants in the development of MoF EA framework and implementation governance. EA artifacts will be well documented in the repository tools prepared by MoF.

Six (6) officials from Pusintek, CTO and Organta participated in the 4-day benchmarking with the Digital Transformation Agency in Canberra Australia.

The benchmarking has provided MOF with better under-standing and new insights on the utilization of EA to improve the governance of organization solutions.

Budget-TOR22,080

Disbursed15,066.90


Annex II: On-Going Activities and Outputs Produced (as of December 31, 2017 (in USD)

ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTS

I. Better oversight of the PFM reform process

Agency: Project Support Services Unit-PFM-MDTF (PSSU), Secretariat General, Ministry of Finance

1.1 Support for the Development of Road Map for the Implementation of PFM and Revenue Administration Reforms (Approved April 29, 2014)

Better planned and sequenced PFM activities based on clearly defined government priorities, and endorsed by stakeholders;

Allocated120,000

Procurement of consultant is on-going. Activity is planned to start on July 1, 2018.

1.2 PFM-MDTF Program Management Technical Assistance to PSSU [Approved December 16, 2015 and Virtual Approval (VA) on December 13, 2016]

Total Allocated455,375

Disbursed233,807.18

Total Allocated includes additional funds allocated on March 14, 2018.

a. Program Management Advisor

a) Program activities are carefully planned and implemented;

b) Program activities and costs are monitored and controlled.

c) Smooth and efficient coordination with WB.

d) PIUs receive timely and adequate support and supervision

Reviewed and finalized the Project Operations Manual

Prepared Activity Proposals, TORs, Requests for NOL, Work Plan and Budget (WP&B), Activity Reports for PSSU

Reviewed and edited Activity Proposals, WP&B, TORs, Requests for NOLs, and Activity Reports of other PIUs.

Prepared notes and briefing materials for GOI-MCR. MC, and PAC Meetings

Contract CeilingUSD284,622

Disbursed222,648.23

The Program Management Advisor was hired starting April 11, 2016 and consultancy service is still on-going.


ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTS Draft Speeches for GOI

PFM MDTF Officials Draft letters to be signed

by MOF PFM MDTF Officials

Cost Tables Coordination with PIUs and

WB on management and technical matters.

b. Bilingual Secretary a) Timely and well-prepared draft letters/translations.

b) Timely dissemination of communications within PSSU and with the PIUs and the World Bank.

c) Well planned and coordinated meetings within PSSU and with external parties

Draft letters in and Bahasa Indonesia

Translations of documents Finalized official letters for

distribution Meetings organized Supervised maintenance of

official records. Coordination with PIUs and

WB on secretarial and administrative matters

Contract Ceiling7,218.04

Disbursed3,605.62

Two bilingual secretaries have been hired. The first served from Jan 13 -July 21, 2017; the second was on the job starting December 1, 2017.

c. Administrative Assistant a) Well organized and maintained project files.

b) Properly maintained office logs.

c) Timely delivery of written communications from the PSSU to the intended recipients.

Project files maintained Logbooks maintained Assisted in organizing

meetings. Assisted in facilitating

distribution of letters/ documents from PSSU to PIUs.

Contract Ceiling9,924.81

Disbursed7,553.23

The Administrative Assistant was hired starting in July 2016 and is still on the job up to the present.

II. More targeted allocation of public funds for development priorities

Agency: Directorate for Development Funding Allocation, Deputy for Development Funding, BAPPENAS



2.1 Support to Bappenas in Building Capacity to Conduct Spending Review (June 17, 3016)

Allocated115,744.84

This represents the original allocation of US$80,000 less disbursements in 2017 of USD29,255.16. (See Table 1) plus new allocation of USD65,000 approved March 14, 2018

a) Benchmarking Study on Spending Review

Improved knowledge on public finance process and issue represented by having a concise brief/summary on the result of training and presenting to other team in BAPPENAS

Bappenas has not finalized its TOR for this activity.

III. Better links between budget spending and improvement in public service delivery

Agency: Planning and Finance Bureau (Rocankeu), Ministry of Finance

3.2 Training, Consultancy, Advisory and Analytical Training, Consultancy and Analytical Activities (VA. Dec. 13, 2016)

Allocated150,000

This allocation is for 3 sub-activities.

a) Business Process Consultancy Services

a) Improved business processes within ROCANKEU, and between ROCANKEU and the MOF units;

b) Better alignment of MOF’s 5-year strategic plan, annual plans, annual budget and disbursement performance;

Budget-TOR36,000

WB has issued NOL for the TOR. Will be implemented in 2018

b) Organization and Human Resource

a) More effective organization

Budget-TOR24,000

WB has issued NOL for the TOR. Will be implemented in 2018


ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTSDevelopment Consultancy Services

structure, work arrangements and functions at ROCANKEU;

b) Improved HR management in ROCANKEU

c) Overseas and In-country Training

Improved capacity of ROCANKEU staff to perform their tasks

Budget90,000

TORs will be developed by the two above consultancies.

IV. Improved budget execution and reporting

Agency: Directorate General of Treasury, Ministry of Finance

4.1 Consultancy to Enhance the Budget Preparation and EBS to Optimize Effectiveness of the SPAN Investment and System Sustainability (Dec. 26, 2015)

Allocated350,000

This activity will be implemented in stages. Only the TOR for the first activity on the enhancement of the EBS database management had been finalized as described below.

a) Enhancement of EBS Database Management Consultancy Services

a) Improved SPAN performance;

b) Improved SPAN database processing by accelerating the posting process after the cut off,

c) Decreasing transaction data information problems.

Budget-TOR254,000

Original Request for NOL for the TOR and single source selection (SSS) of consultant was not approved by the WB. A revised TOR was prepared. The WB issued its NOL on September 29, 2017 recommending the CQS method of consultant selection. Activity will be implemented in 2018.



4.2 Consultancy for Developing a Data Warehouse to Optimize Use of SPAN (Dec. 16, 2015)

a) Enhanced sharing of data within the Ministry and beyond;

b) Reduced redundant cost/duplicated resources

Allocated100,000

Budget-TOR 0

This activity will not be implemented anymore because subject was covered in one of the recent projects of PUSINTEK.

4.3 Enhancement of MOF Capacity for Better Cash Management (Dec. 16, 2015)

c. More accurate cash forecasting;

d. Lower cost of idle funds managed by the Directorate of Cash Management.

Balance of Allocation

72,370.26

3 of 4 training sub-activities have been completed.

VI. Increased fiscal revenues through improved customs, tax and non-tax administration performance

Agency: Directorate General of Taxes, Ministry of Finance

6.1 Forensic Training and Certification for Digital Forensic Investigator (February 7, 2017)

Improved ability of trained staff to: e. Handle various types

of incidents, perform risk assessment related to information system incident handling.

f. Create policies and handle various types of computer security incidents.

g. Assess information system vulnerabilities and control.

Budget-TOR5,535

Certification for some participants who attended training in 2017 will be completed only in 2018. These are:

Course/Program No of Participants

Cost in USD

CISA 5 8,924

CCNA 6 10,651

CFE 7 15,337


ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTSh. Provide

comprehensive report on information system compliance and security

6.2 Benchmarking Study to IRS on Tax Intelligence Technique and Methodology Standard Operating Procedure (SOP) and HR Management, United Kingdom (February 7, 2017)

This activity will contribute to the achievement of the following (i) a well-documented CRM framework; (ii) a well-designed end-to-end risk based CRM strategies to be implemented to mitigate compliance risks, (iii) a clear roadmap of a DGT’s Compliance Model and Strategy aligned to its overall strategy.

Allocated/20,320.00

Budget-TOR11,920.00

The country to be visited for this NOL for the TOR had been approved by the WB.

VIII. Strengthening/ transforming institutional capacity for PFM

Agency: Information and Technology Center (Pusintek), Ministry of Finance

8.1 Consultancy for Data Center Infrastructure Management Specialist (Carry-over from Phase I)

Budget50,000

Revised TOR will be prepared for FY2018 implementation

Agency: Central Transformation Office, Ministry of Finance

8.2 In-Country Capacity Building Program in Support of Human Capital Management, Transformational Leadership and Public Private Partnership

Availability of concise analysis on the HCM, Leadership and PPP

Budget32,054

TOR for this activity still needs to be prepared.


ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTSDevelopment (June 17, 2016)


Annex III: Result Framework and the Progress

Indicators Baseline Target ActualReduction in the time lapsed of financial reporting on public expenditures after the fiscal year (in month)

2 0.5 0.5

Percentage of trained SPAN users staff able to fully understand the conceptual framework of accrual accounting and to use the system in producing the accrual based accounting system at minimum require (in %)

40 100 100

Improved quality of sub-national governments data that is available in digitalized format (number of Local Governments)

0 400 500.

Number of trained MOF staff passed the minimum requirement to manage Data Center and Recovery Data Center under ICT integration agenda as part of the MOF’s overall institutional transformation (in %).

20 30 80

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