Central government administration Lending Instrument. Specific Investment Loan (SIL) Project ID

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB4806 (The report # is automatically generated by IDU and should not be changed) Strengthening the National Statistical System of Indonesia Region EAST ASIA AND PACIFIC Country INDONESIA Sector Central government administration Lending Instrument Specific Investment Loan (SIL) Project ID P {If Add. Fin.} Parent Project ID N/A Borrower(s) Republic of Indonesia Implementing Agency Central Statistics Agency (BPS) Jl. Dr. Sutomo No. 6-8 Indonesia Tel: Fax: bpshq@bps.go.id Environmental Screening { }A { }B {}C { }FI Category Date PID Prepared March 2, 2011 Estimated Date of Appraisal January 11, 2011 Completion Estimated Date of Board March 31, 2011 Approval Decision Project authorized to proceed to appraisal and negotiations upon agreement on any pending conditions and/or assessments. I. Country Context 1. Indonesia is an emerging middle-income country with per capita GDP of $2,230, and its economy proved to be resilient during the recent global financial crisis, weathering its effects relatively well the country s GDP growth rate reached 4.2 percent in 2009, which was one of the highest in the region. However, rate of poverty reduction has not kept pace with economic growth, although poverty rate has been decreasing steadily and is down to 13.33% in Geographically diverse, population of 238 million people are dispersed across six thousand out of more than 17,000 islands that make up this archipelagic country, and regional disparities in economic growth and poverty reduction pose significant development challenges. To address these diversity and disparity, the Regional Autonomy law in 2001 effected big-bang decentralization to bring centers of government closer to its beneficiaries, and devolved many public service delivery responsibilities, such as health and education, as well as corresponding planning and budgeting authorities, to district governments. As a result, Indonesia has one of the most decentralized governments in the region today. 1

2 II. Sectoral and Institutional Context 2. Statistics is a crucial element for informed, evidence-based decision making, and monitoring of national development strategies. The National Statistics System (NSS) of the Republic of Indonesia is highly centralized. BPS-Statistics Indonesia (BPS) is the coordinator of NSS and is responsible for producing a wide range of key social and economic statistics, including poverty, labor, price, trade, production, and national accounts data. Government agencies from Ministry of Planning (Bappenas) to Ministry of Finance to line ministries depend on BPS statistics for planning and budgeting, targeting of policies and programs, as well as outcome monitoring and evaluation. 3. Under more open and decentralized government, demand for relevant, accurate, timely, and disaggregated data is increasing. BPS is a central government agency, which is vertically organized with regional offices in all provinces and districts. After regional autonomy went into effect in 2001, much of the rest of the government has become highly decentralized, which has created a high demand for more geographically disaggregated data. While most of its surveys have been designed to provide statistics representative at national level, there is increasing demand for district and sometimes even lower level data and information from BPS. 4. There is increased public scrutiny and stakeholder demand for transparency, engagement and responsiveness from BPS. As the Indonesian population becomes more aware of the benefits of inclusive economic growth for enhancing their living standards, they are increasingly holding the policymakers to account for delivering better economic performance and demanding concrete evidence to demonstrate progress. Among the four key statistics released by BPS that are being closely watched and scrutinized by politicians and the public alike are economic growth, inflation, unemployment, and poverty. 5. Increased pressure for reform of public service bureaucracy. With increased demand for improved accountability, there is increased pressure for the government to deliver public service more effectively and efficiently. The President has put Bureaucracy Reform as one of the highest priorities of his administration s programs, and has called for the government agencies to provide services better, faster, and cheaper. 6. BPS commitment to reform. The leadership of BPS is keenly aware of the changes in its external environment, and is committed to a reform of the organization to deliver better results for the public. In 2008, the Senior Managers of the organization Echelon I and Echelon II officials, including heads of province offices undertook a strategic planning process, also involving external stakeholders, to determine their vision for future organization. The resulting Strategic Plan for Change and Reform of Statistics (CERDAS which means smart in Indonesian) summarize their agreed priorities for improvements to be undertaken over the next five years. The CERDAS plan focuses on the strategic improvement priorities, and is part of BPS s medium-term strategy (renstra), as well as constitutes the core of its Bureaucracy Reform roadmap. The Chief Statistician has also declared the CERDAS plan as the framework to coordinate and align all donor assistance for BPS. 2

3 7. Based on the strategic priorities identified in the CERDAS plan, BPS has developed a BPS Modernization Proposal. Since strategic priorities have been agreed in the CERDAS plan, further diagnostics and analyses for each reform area have been conducted by BPS and external experts, including reviews of statistical methodologies, ICT and HR areas, and the findings and recommendations have been incorporated into the BPS Modernization Proposal. This document contains high level integrated systems descriptions, the current state of processes in BPS, initial diagnostics of issues and problems, and the improvement objectives agreed to in the CERDAS plan. The document was developed by BPS under the coordination of its Project Management Unit (PMU), with the involvement relevant Subject Matter units, as well as corporate services areas of Statistical Information Systems Directorate and HR Bureau. III. Project Development Objectives 8. The development objectives of the Project to Strengthen the National Statistical System of Indonesia (STATCAP-CERDAS project) are to increase the effectiveness and efficiency of the Indonesian National Statistics Office (BPS-Statistics Indonesia) to produce and disseminate reliable and timely statistics in accordance with international standards and best practices, and to be responsive to user needs. 9. The STATCAP-CERDAS project will support the implementation of BPS five-year reform program articulated in its Strategic Plan for Change and Reform for the Development of Statistics (CERDAS). This will be achieved by: streamlining and integrating processes and systems for major product lines; implementing quality assurance system; improving dissemination and user communication; adopting international standards; improving information management systems; strengthening human resources management and development; and aligning organizational structures to business needs. IV. Project Description 10. The STATCAP-CERDAS project supports fundamental reforms and change efforts of BPS to improve the quality of statistics. The scope of project activities under specific project components have been defined based on assessment of current statistical methodologies, business processes and systems carried out by BPS, the Bank and external experts, including those from other National Statistics Offices, such as the Australian Bureau of Statistics (ABS), and US Department of Agriculture-National Agricultural Statistics Service (USDA-NASS). 11. Project activities will focus on: (i) improvements in methodologies; (ii) training activities; (iii) strengthening of quality assurance system; and (iv) improvements in user engagement and dissemination. Investment will also be made to strengthen the institutional backbones, i.e., ICT and information systems, human resources and organizational structure. 12. The Project will have five components: (A) Improved Statistical Quality; (B) Improved ICT Platform and Statistical Information Management; (C) Improved Human Resources Management and Development; (D) Improved Organizational Alignment, and; (E) Project Management. 3

4 Outcome Indicators KPI Improved Quality Accuracy Relevance Timeliness Accessibility Coherence Interpretability Figure 1: The Framework of STATCAP-CERDAS Project Design A. Statistical Quality A.3 Production Statistics A.1 National Accounts A.2 International Trade Statistics A.3a Large & Medium Manufacturing Statistics A.3b Horticulture & Estate Crops Statistics A.4 Price Statistics A.5 Poverty and Labor Statistics A.5a Social Economic Survey (SUSENAS) A.5b Labor Force Survey (SAKERNAS) A.6 Survey Management and Methodological Innovations A.7 Statistical Analysis and Quality Assurance A.8 Dissemination, User engagement and Communications Strategy B. ICT Platform and Statistical Information Management B.1 Data Warehouse Development and Network Improvements [Network, Hardware, Database Platform, Data Warehouse] B.2 ICT Standardization [ICT architecture, procedures, hardware and software] B.3 Corporate Information Systems Management [ICT Infrastructure Mgt, ICT Contract Mgt, ICT Mgt Committee] B.4 IT organization and human resources [management and training of IT staff] C. Human Resources Management and Development C.1 Effectiveness of HR Principles and Policies C.2 Effectiveness of HR training and development, including Education and Training Center C.3 Develop HR Information System D. Organizational Alignment D.1 Alignment of Organizational Structure [institutional framework] D.2 Alignment of Corporate Culture [Change Management] D.3 Effective Corporate Governance [Internal Control System] a. Component A: Improved Statistical Quality. Improvement of Statistical Quality is a major component of STATCAP-CERDAS project. Component A includes the strengthening of Data Collections and Processing, and Statistical Methodology for selected priority product lines. Sub-components A1-A5 correspond to the priority statistical products selected by BPS: National Accounts; International Trade Statistics; Production Statistics (Industry & Agriculture Statistics); Price Statistics; and Poverty and Labor Statistics. These product lines were selected on the basis of user demand, and also to represent the various data collection types in BPS, i.e. (i) compilation of administrative data (e.g. export-import statistics), (ii) household surveys (e.g. National Social Economic Survey, and National Labor Force Survey), and (iii) establishment/ business surveys (e.g. Large & Medium Manufacturing Statistics, and Horticulture & Estate Crops Statistics). b. In addition to the product line areas above, the following cross-cutting areas have been proposed as sub-components: (i) Analysis, Survey Management and Methodological Innovations; (ii) Quality Assurance; and (iii) Dissemination, User Engagement and Communications Strategy. This configuration is closely aligned with the existing organizational structure of BPS to facilitate the assignment of implementation responsibilities and monitoring of project performance and outcomes. E. Project Management 4 -- E.1 Project Governance -- E.2 Monitoring & Evaluation -- E.3 Project Management -- E.4 Project Administration

5 c. Component B: Improved ICT Platform and Statistical Information Management. This is one of the key enabling strategies which supports the ultimate goal of improving statistical quality and plays a significant role in modernizing the BPS office. BPS has developed an integrated Enterprise Architecture (EA) based on UNECE s Generic Statistical Business Process Model (GSBPM), and an Information Systems Governance framework. This EA model seeks to standardize and centralize IT operations and resources, moving towards increased use of common tools and methodologies, shared systems and pooled resources. The Project will support the development these tools and systems, based on the agreed EA. This component will also address specific HR issues related to IT skills and IT governance management for the new environment, such as applications and database development, procurement and contract management. d. Component C: Improved Human Resources Management and Development. This component addresses the critical support function of Human Resources Management and Development, especially in view of impending changes and the need for highly qualified staff to support the new systems. Capacity of the HR Bureau needs to be upgraded to sustain changes induced under the Project, and changes are needed in HR policies, to introduce performance-based management, incentive schemes and improve areas such as staff placement, rotation and promotion policies. The Project will address HR Development needs, focusing on strengthening training policies, programs and capacity. The Project will upgrade the existing HR information system (SIMPEG) to enable managers with information required to make decisions on HR planning and development. e. Component D: Improved Organizational Alignment. This component will ensure that the organizational structure and arrangements are strategically aligned with the changes induced by business process reengineering, introduction of new technologies and systems, and changes in HR requirements. Any changes to legal and regulatory framework (Statistics Law and related government regulations) that may be necessary as a result of changes to institutional arrangements and organizational structure will also be addressed. This component also addresses the Effectiveness of Corporate Governance, which includes work on strengthening the Internal Control System, i.e. the capacity of the Inspectorate to conduct internal audit, and effective management policies and procedures for taking actions on audits and quality reviews. f. Component E: Project Management. Component E is a key project component which defines the governance structure and allocates project resources in a strategic manner to ensure achievement of project development objectives. The component is structured with two key bodies the Project Steering Committee and the Project Management Unit (PMU). The Steering Committee is made up of the highest leadership of BPS and will be asked to make key decisions on issues and matters which have strategic significance for the success of the project. 5

6 V. Financing ($m.) Source: Borrower/Recipient $18 IBRD $65 Total $83 VI. Implementation 13. Implementation arrangements include the following: a. An External Project Advisory Board consisting of representatives from MOF, Bappenas, BPS, the Bank and selected key stakeholders, such as the Statistical Council (FMS) will be established before project effectiveness. The Project Advisory Board shall meet bi-annually to formally monitor project progress, outputs, outcomes and impacts. b. A high level Project Steering Committee chaired by the Chief Statistician, will ensure the strategic decisions, progress and drive issues that affects other directorates in BPS, problem solve any project related matters. The Steering Committee will meet monthly and will consist of all seven Echelon I Deputy Director Generals. The Steering Committee is also responsible for resolving any issues involving coordination across the agency, or with other agencies, or responding to feedback from key users. Responsibility for each component of STATCAP-CERDAS project: Statistical Quality, Information Communication and Technology, Human Resources Development and Institutional Arrangements have been delegated to an Echelon I Deputy DG by the Chief Statistician. The four Deputy DGs are responsible for ensuring the implementation progress of the Project components and being a champion for that strategic area. They report directly to the Chief Statistician. c. User Groups/ Technical Advisory Group. Under Project sub-component A8, BPS will also establish User groups or Technical Advisory Groups for key statistics to foster improved communication with data users. How frequently these groups will meet depends on the product line for example, national accounts group may meet quarterly, just after the release of quarterly GDP statistics. d. The current Project Management Unit (PMU) will be expanded to become a Directorate of Statistical Integration and Transformation (DoSIT), which will be a new structural unit headed by an Echelon II Director and supported by full time structural and functional staff. This Directorate will be responsible for day-to-day management and administration of project implementation. The Directorate will also be responsible for the integration and cross-cutting issues of the STATCAP-CERDAS project, and implementation monitoring and control of the project. The Directorate will have four structural sub-units led by an Echelon III staff responsible for: 1) Statistical Integration and Quality Assurance; 2) Data Management and Systems Integration; 3) Strategic HR Development and Corporate Change Management; and 4) Project Implementation, Monitoring and Control. 6

7 This Directorate will also oversee the implementation of the BPS Bureaucracy Reform Roadmap, and it is important that it will be staffed by those who have credibility within the organization as change agents, and can serve as role models of reform. e. Financial Management and Procurement will be undertaken jointly between the DoSIT and the relevant units, such as the Program Development Bureau (planning and budgeting) and the Finance Bureau. Staff from DoSIT will also serve in the Procurement Committee for Foreign Assistance Projects. Staff from budget and finance units will be assigned to manage project-related issues, and will be provided with targeted and ongoing training throughout the project by World Bank financial management and procurement specialists. f. Donor Coordination will also be undertaken by the new Directorate to ensure donor support to BPS is directed towards the strategic priorities identified by the Executive Management Team (Echelon I officials). 14. Change Management. Embedded within each of the components of the Project is new ways of doing business and changes of organizational culture. There is strong emphasis on the soft skills, such as communication, collaboration and integration which will require significant change management. For example, components A and B will require training and development of new skills to adopt the new business processes and use of new ICT applications. Although institutional reform is a long-term objective, short-term successes are essential for gaining credibility of the reform and maintain momentum. Like any major reform and transformation project, resistance is unavoidable and often in change management paradigm, friction is necessary to effect change. Managing the resistance and frictions becomes the key to successfully managing the change process. Some of the resistance will be more of a personal nature, while the benefits of the reform will be a collective outcome, not just for BPS but the country as a whole. Understanding the political economy of reform has been integrated into project preparation and will be incorporated in Bank supervision. 15. Owner s Agent (OA) services. BPS will also acquire an Owner s Agent to provide support services for the duration of the Project, in monitoring and controlling project implementation process, quality assurance, change control, database development, organizational change management, statistical product line integration, procurement, financial management, testing and evaluation of contract deliverables before acceptance, and risk management and mitigation. Early OA tasking is expected to include: assisting in the bid evaluation process, monitoring critical project schedule and budget compliance, ensuring compliance with quality standards outlined in the Project Operations Manual (POM), and reviewing contractors' applications for payments. 7

8 VII. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10) Forests (OP/BP 4.36) Safety of Dams (OP/BP 4.37) Projects in Disputed Areas (OP/BP 7.60) Projects on International Waterways (OP/BP 7.50) VIII. Contact point at World Bank and Borrower World Bank Contact: Vivi Alatas Title: Senior Economist Tel: Fax: Location: Jakarta, Indonesia (IBRD) Borrower/Client/Recipient Ministry of Finance, c/o Directorate General of Debt Management Jl. Lapangan Banteng Timur No 2-4, Jakarta, Indonesia Tel: Fax: Implementing Agencies Central Statistics Agency (BPS) Jl. Dr. Sutomo No. 6-8, Jakarta, Indonesia Tel: Fax: I. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web: 8

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