RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING PUBLIC FINANCIAL MANAGEMENT AND REVENUE ADMINISTRATION REFORM PROGRAM

Transcription

1 Public Disclosure Authorized The World Bank REPORT NO.: RES31987 RESTRUCTURING PAPER Public Disclosure Authorized ON A PROPOSED PROJECT RESTRUCTURING OF PUBLIC FINANCIAL MANAGEMENT AND REVENUE ADMINISTRATION REFORM PROGRAM APPROVED ON MARCH 1, 2016 TO MINISTRY OF FINANCE Public Disclosure Authorized Public Disclosure Authorized Regional Vice President: Country Director: Senior Global Practice Director: Practice Manager/Manager: Task Team Leader: Victoria Kwakwa Rodrigo A. Chaves Deborah L. Wetzel Arturo Herrera Gutierrez Hari Purnomo, Arun Arya

2 ABBREVIATIONS AND ACRONYMS Bappenas CTO DIPA DG MCM MOF PDO PEFA PFM MDTF PIU PLPSE PSSU PUSINTEK Organta Rocenkeu SPAN National Planning and Development Agency (Badan Perencanaan dan Pembangunan Nasional) Central Transformation Office Government Budget Document (Daftar Isian Penggunaan Anggaran) Director General Management Committee Meeting Ministry of Finance Project Development Objective Public Expenditure and Financial Accountability Public Financial Management Multi Donors Trust Fund Project Implementing Unit 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 Project Secretariat and Support Unit under the Seceretary General of Ministry of Finance Center of Information and Technology (Pusat Informasi dan Teknologi), Ministry of Finance Organization and Business Process (Organisasi dan Tata Laksana), Ministry of Finance Bureau of Planning and Finance, Ministry of Finance (Biro Perencanaan dan Keuangan) Government Financial Management Information System (Sistem Pembendaharaan dan Anggaran Negara)

3 BASIC DATA Product Information Project ID P Original EA Category Financing Instrument Investment Project Financing Current EA Category Approval Date 01-Mar-2016 Current Closing Date 30-Apr-2018 Organizations Borrower Ministry of Finance Responsible Agency Ministry of Finance (Indonesia),Directorate General of Taxes Project Development Objective (PDO) Original PDO To improve the capacity of the Ministry of Finance to undertake more efficient, timely, and transparent public financial management Summary Status of Financing TF Approval Signing Effectiveness Closing Net Commitment Undisbursed TF-A Mar Mar Mar Apr Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No

4 I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. TF0A1903 became effective on March 21, 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 ( ) 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%)

5 Table I: Allocation by Component as of March 14, 2018 (in USD) Component Allocation % Allocation I. Better oversight of PFM Reform Process (PSSU) 575, II. More targeted allocation of public funds to development priorities (Bappenas) 145,000 5 III. Better links between budgetary spending and improvement of public services (DG Budget) 413, IV. Improved budget execution and reporting (DG Treasury) 960, V. Enhanced compliance and value for money in public resources use - PLPSE (e-procurement Service) 55,826 2 VI. Increased fiscal revenue and administration (DG Taxes) 316, 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,

6 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 The rest of the PIUs were only able to start implementation towards the end of the second quarter of 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 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 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, 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, 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

7 process and the activity is planned to start on July 1, 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, DESCRIPTION OF PROPOSED CHANGES 13. The closing date for the will be extended from April 30, 2018 to March 27, 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.

8 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 I. Better oversight of PFM Reform Process (PSSU) 575, , , II. Disbursement as % of Commitment More targeted allocation of public funds to development priorities (Bappenas) 145,000 38, , III. Better links between budgetary spending and improvement of public services (DG Budget) 413, , , IV. Improved budget execution and reporting (DG Treasury) 960, , , V. Enhanced compliance and value for money in public resources use - PLPSE (e-procurement Service) 55,826 55, , VI. Increased fiscal revenue and administration (DG Taxes) 316, , , VIII. Strengthening / Transforming Institutional capacity for PFM - PUSINTEK, Organta, and CTO 233, , , Total 2,699,718 1,536, ,351, 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 Change in Loan Closing Date(s) Not Changed Change in Implementation Schedule Change in Implementing Agency Change in Project's Development Objectives Change in Results Framework

9 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE The World Bank 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) LOAN CLOSING DATE(S) TF Status Original Closing Revised Closing(s) Proposed Closing Proposed Deadline for Withdrawal Applications TF-A1903 Effective 28-Feb Apr Mar Jun-2019

10 Annex I: Completed Activities and Outputs Produced (as of December 31, 2017 (in USD) ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME I. Better oversight of the PFM reform process Agency: Project Support Services Unit-PFM-MDTF (PSSU), Secretariat General, Ministry of Finance 1.1 Refer to the Table for Ongoing Activities BUDGET/ DISBURSED in USD COMMENTS II. More targeted allocation of public funds for development priorities Agency: Directorate for the Allocation of Development Funding, Deputy for Development Funding, BAPPENAS 2.1 Support to Bappenas in Building Capacity to Conduct Spending Review (June 17, 2016) 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; Total Allocated 80,000 Total 29, : 15, , Bappenas will use the balance of the allocation for activities. 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.

11 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME 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/ DISBURSED in USD : 22, , COMMENTS Unused funds will be carried over to finance activities. III. Better links between budget spending and improvement in public service delivery Agency: Directorate General of Budget, Ministry of Finance 3.1 In-country Training for DG Budget I (Approved June 17, 2016) This consisted of two sets of training sub-activities. a) Training on Quantitative Method to Formulate APBN 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. 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 Total Allocation: 106,000 Total 81, : 58,494.85

12 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME b) Training on Regulatory Impact Assessments (RIA) 3.2 In-country training for DGB Phase 2 (Approved February 7, 2017): This consisted of 3 set of training activities a) Training Programs on Evidence-Based Planning and Budgeting, Impact Evaluation, and Budget Analysis 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 Same as above Batch 1 was held on May 20-24, 2017 in Bogor with 30 participants. Application of evidencebased planning and budgeting analytical methods by DG Budget staff when reviewing the impact of any policies/ regulations on the Batch 2 was held on November 8-14, 2017 in Depok with 24 participants. 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 with 30 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. 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. 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/ DISBURSED in USD 58, Budget - TOR 32, , Total Allocated 157, Total 140, , , COMMENTS Participants say that they need to know more about valuation processes and other RIA methodologies. Participants say the need more workshops on methodologies and best practices on evidence-based analysis.

13 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME b) Training on the application of the logicmodel based budget proposal evaluation for efficient budget allocation budget formulation and 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. Batch 2 was held on December 4-8 with 30 participants The training was held for 7 days on December 2017 at Hotel University Club UGM-Yogyakarta. A total of 40 participants from DG Budget joined the training. basis for planning and budgeting for the next program. 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/ DISBURSED in USD 49, , COMMENTS 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 Sept by the Institute of Indonesia Chartered Accountants (IAI) with 22 participants. Batch 2 was done in Bandung on 1-13 Oct with 22 participants by Binainsan Konsulindo, Batch 3 was done in Tangerang on Nov 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. 42, , IV. Improved budget execution and reporting Agency: Directorate General of Treasury, Ministry of Finance 4.1 Enhancement of MOF Capacity for Better Cash a. More accurate cash forecasting; Allocated

14 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME Management (Dec. 16, 2015) a. Training on the Operationalization of Treasury Dealing Room b. Training on Cash Management and Forecasting c. Training on Cash Planning For KPPN 4.2 Support the SAKTI (Financial Application System for Spending Units) Roll-out and Training of Selected Users (June 17, 2016) b. Lower cost of idle funds/ More prudent operationalization of the Treasury Dealing Room (TDR) Improved Ministry of Finance Staff s capability to do cash management and forecasting 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. a. An improved version of SAKTI that is ready for wider-scale implementation; b. Trained DG Treasury IT staff who can undertake SAKTI Training was held on November 06-10, 2017 in Bogor, West Java by trainers from IMF with 25 participants from DG Treasury Training was held July 31- Aug.5, 2017 in Bandung with trainers from IMF A total of 46 people was trained: 40 from MOF, 3 from Bank Indonesia and 3 from commercial banks. 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 Functional Application Design Application Technical Design Current Functionality M&E Tools 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). 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. Enhanced capacity of KPPN staff to improve internal cash planning and assist in upgrading the quality of cash planning in the spending units 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/ DISBURSED in USD 150,000 Total 77, , , , , , , , , COMMENTS The contract covered the period July 3 to December 31, 2017

15 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME maintenance in the future. 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 understanding of the MOF s procurement modernization program. c. Better appreciation of technical/procedural aspects of procurement, and broader insight on various procurement related issues. Assessment on Current & Future Infrastructure Needs Trained SITP staff with hands-on experience om application maintenance. 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 September 2017, Batch 3 was held from September b. Identified future training needs for PLPSE and ULPD. VI. Increased fiscal revenues through improved customs, tax and non-tax administration performance Agency: Directorate General of Taxes, Ministry of Finance been rolled out to other units of MOF starting in January 2018.\ 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. BUDGET/ DISBURSED in USD Allocated and Budget -TOR 64,000 55, COMMENTS

16 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME 6.1 Training and Certification for Digital Forensic Investigator (February 7, 2017) Total Allocated 64, Total 58, Improved ability of staff to: a. Handle various types of incidents, perform risk assessment related to information system incident handling. b. Create policies and handle various types of computer security incidents. c. Assess information system vulnerabilities and control. d. Provide comprehensive report on information system compliance and security Certified Information Systems Auditor (CISA) Training: 5 DG Tax staff participated in the training held on 28th -31st August 2017 by Inixindo 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 Certified Fraud Examiner (CFE): 7 staff participated in the training held on 28 th 31 st August 2017 by Lembaga Pengembangan Fraud Auditing 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. 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. 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/ DISBURSED in USD 9, , Budget TOR , , COMMENTS One participant will undergo refinement certification in participants will undergo refinement certification in participants will undergo refinement certification in EC-Council Certified Incident Handler (ECIH): 5 staff participated in the training held on st 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, 5,914 5,053.26

17 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME Oracle Database: 5 staff participated in the training held on 6th 24 th November 2017 by Inixindo providing good network security, various types of threats and its solving, incident report and recovery, and security laws and policies. 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 BUDGET/ DISBURSED in USD , COMMENTS 3 participants will undergo refinement certification in 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. 27,935 20,543.85

18 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME 6.3 Capacity Building to Enhance Internal Investigation and Strategic Planning (February 7, 2017) Total Allocated 147, Total 127, 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. Certified Fraud Examiner Training: A total of 8 (eight) participants from Subdirectorate of Internal Investigation. Held on July 31 - Sept 7, 2017 by Lembaga Pengembangan Fraud Audit (LPFA) Encase Training and Certification: A total of 8 (eight) participants from Subdirectorate 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. 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. 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. BUDGET/ DISBURSED in USD 21, , , , COMMENTS

19 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME 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. BUDGET/ DISBURSED in USD 58, , COMMENTS 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, 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 61, ,393.00

20 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME d. Successful implementation of tax intelligence structuring program that is in line with international best practice. 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 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 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. 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/ DISBURSED in USD 54, , COMMENTS

21 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME Services for DC/DRC operation Management 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. BUDGET/ DISBURSED in USD COMMENTS 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. 54, ,113.01

22 ACTIVITIES RESULT INDICATORS OUTPUT OUTCOME 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. 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. 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. Six (6) officials from Pusintek, CTO and Organta participated in the 4-day benchmarking with the Digital Transformation Agency in Canberra Australia. 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. 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/ DISBURSED in USD 26, , ,080 15, COMMENTS

23 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) 1.2 PFM-MDTF Program Management Technical Assistance to PSSU [Approved December 16, 2015 and Virtual Approval (VA) on December 13, 2016] a. Program Management Advisor Better planned and sequenced PFM activities based on clearly defined government priorities, and endorsed by stakeholders; 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 Allocated 120,000 Total Allocated 455, , Contract Ceiling USD284, , Procurement of consultant is on-going. Activity is planned to start on July 1, Total Allocated includes additional funds allocated on March 14, The Program Management Advisor was hired starting April 11, 2016 and consultancy service is still on-going.

24 ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTS b. Bilingual Secretary a) Timely and wellprepared 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 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. II. More targeted allocation of public funds for development priorities 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. 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 Project files maintained Logbooks maintained Assisted in organizing meetings. Assisted in facilitating distribution of letters/ documents from PSSU to PIUs. Agency: Directorate for Development Funding Allocation, Deputy for Development Funding, BAPPENAS Contract Ceiling 7, , Contract Ceiling 9, , Two bilingual secretaries have been hired. The first served from Jan 13 -July 21, 2017; the second was on the job starting December 1, The Administrative Assistant was hired starting in July 2016 and is still on the job up to the present.

25 ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTS 2.1 Support to Bappenas in Building Capacity to Conduct Spending Review (June 17, 3016) 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 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) a) Business Process Consultancy Services b) Organization and Human Resource 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; a) More effective organization Allocated 115, Allocated 150,000 36,000 24,000 This represents the original allocation of US$80,000 less disbursements in 2017 of USD29, (See Table 1) plus new allocation of USD65,000 approved March 14, 2018 Bappenas has not finalized its TOR for this activity. This allocation is for 3 sub-activities. WB has issued NOL for the TOR. Will be implemented in 2018 WB has issued NOL for the TOR. Will be implemented in 2018

26 ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTS Development Consultancy Services c) Overseas and Incountry Training IV. Improved budget execution and reporting structure, work arrangements and functions at ROCANKEU; b) Improved HR management in ROCANKEU Improved capacity of ROCANKEU staff to perform their tasks 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) Budget 90,000 Allocated 350,000 TORs will be developed by the two above consultancies. 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, 254,000 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 c) Decreasing transaction data information problems.

27 ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTS 4.2 Consultancy for Developing a Data Warehouse to Optimize Use of SPAN (Dec. 16, 2015) 4.3 Enhancement of MOF Capacity for Better Cash Management (Dec. 16, 2015) a) Enhanced sharing of data within the Ministry and beyond; b) Reduced redundant cost/duplicated resources c. More accurate cash forecasting; d. Lower cost of idle funds managed by the Directorate of Cash Management. 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. Allocated 100,000 0 Balance of Allocation 72, ,535 This activity will not be implemented anymore because subject was covered in one of the recent projects of PUSINTEK. 3 of 4 training sub-activities have been completed. Certification for some participants who attended training in 2017 will be completed only in These are: Course/Program No of Participants Cost in USD CISA 5 8,924 CCNA 6 10,651 CFE 7 15,337

28 ACTIVITIES INDICATORS OUTPUT/OUTCOME TO DATE Budget in USD COMMENTS 6.2 Benchmarking Study to IRS on Tax Intelligence Technique and Methodology Standard Operating Procedure (SOP) and HR Management, United Kingdom (February 7, 2017) h. Provide comprehensive report on information system compliance and security This activity will contribute to the achievement of the following (i) a welldocumented CRM framework; (ii) a welldesigned 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. 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) 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 Allocated/ 20, , Budget 50,000 Budget 32,054 The country to be visited for this NOL for the TOR had been approved by the WB. Revised TOR will be prepared for FY2018 implementation TOR for this activity still needs to be prepared.

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

30 Annex III: Result Framework and the Progress Indicators Baseline Target Actual Reduction in the time lapsed of financial reporting on public expenditures after the fiscal year (in month) 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 %) Improved quality of subnational governments data that is available in digitalized format (number of Local Governments) 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 %)