Document of The World Bank Report No. 13933-IND STAFF APPRAISAL REPORT INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT APRIL 21, 1995 Agriculture Operations Division Country Department 3 East Asia and Pacific Region CURRENCY EQUIVALENT (As of December 1994) Currency Unit = Rupiah (Rp) USS l.DO= Rp2,193 00 Rp one million = USS456.00 GOVERNMENT OF INDONESIA FISCAL YEAR Apri I - March 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AARD - Agency for Agricultural Research and Development AEZ - Agro-Ecological Zone AIAT - Assessment Institute for Agricutural Technology ARMP - Agricultural Research Management Project ARMP n - Agricultural Research Management U Project BAPPEDA - Regional panning organization in provinces BAPPENAS - National Economic Planning Agency BPKP - Goverwnent Audit Agency BPPT - Agency for the Assessment and Application of Technology BPTP - Batli Pengkajian Teknologi Pertanian (same as MAT) CALREC - Center for Agricultural Library and Research Communication CAMD - Center for Agricultural Machinery Development CARP - Center for Agricultural Research Programming CASER - Center for Agricultural Socio-Economic Research CGLAR - Consultative Group for International Agricultural Research CRlAS - Central Research Institute for Animal Science CR3FI - Central Research Institute for Fisheries CRIH - Central Research Institute for Horticulture CSAR Center for Soil and Agroclimate Research DG - Director General DINAS - Provincial and District Agricultural Support Services GDP Gross Domestic Product GOI - Government of Indonesia HRD - Humian Resource Development IBRD - International Bank for Reconstruction and Development ICB - International Competitive Bidding INTERNET - Internatiorna Information Network IPARD - Indonesian Planters Association for Research and Devekopment IPTEENET - Indonesian Consortium of government agencies nd universities for information exchange ISRI - Indonesian Sugar Research Institute KADIN - Regional Chamber of Commerce KANWIL - Provincal representative of the Ministry of Agriculture LIPI - National Institute of Sciences MIS - Mangement Information System MOA - Munistry of Agriculture MOF - Ministry of Finance MORT - Ministry of Research and Technology NARS - National Agricultural Research System NCB - Nationial Competitive Bidding NGAS - New Government Accounting System O&M Operations and Maintenance PIMPRO - Project Leader (headquarters) PIMBAGPRO - Leader of Subproject PIP - Project Implementation Plan PIU - Project Implementation Unit PiP 11 - Second Long-Term Development Plan PMU - Project Management Unit POM - Project Operational Manual R&D - Research and Development REPELITA - Rencana Pembangunatn Lima Tahun, Five-Year Development Plan RIAD - Research Institute for Animal Diseases RICF - Research Institute for Coastal Fisheries RICP - Research Institute for Coconut and Palms RIFF - Reearch Institute for Freshwater Fisheries RILP - Research Institute for Livestock Production RIMF - Research Institute for Marine Fisheries RISMP - Research Institute for Spices and Medicinal Plants RIV - Research Institute for Vegetables RSI - World Bank Resident Mission in Indonesia SEC - Secretariat SOE Statement of Expenditures SPC4OFP - South Pacific Commission's Oceanic Fisheries Program TA - Technical Asistance TOR - Terns of Reference - i - INDONESIA AGRICULTURAL RESEARCH MANAGEMENT II PROJECT LoAN AND PROJECr SUmmARY Borrower: Republic of Indonesia Poverty: Not applicable. Loan Amount: US$63.0 miflion equivalent Terms: 20 years, including a five-year grace period, at the Bank's standard variable interest rate. Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver. Onlending Terms: Not applicable. Central Government will make the fimds available to the Agency of Agricultural Research and Development through the normal govermnent budgetary process. Financing Plan: See para. 4.4 and Table 4.2. Net Present Value: Not applicable Map: No. IBRD 26593R REPUBLIC OF INDONESIA AGRICULTURAL RESEARCH MANAGEMENT II PROJECT STAFF APPRAISAL REPORT Table of Contents Page 1. INTRODUCTION ..........................................................1 A. Country/Sector Background ..........................................................1 B. Government Agriculture Sector Strategy ..................................................... 2 C. Agricultural Research in Indonesia ..........................................................2 D. Policy Framework for Regional, Location-Specific Research and Development ..........................................................4 2. BANK INVOLVEMENT AND LESSONS LEARNED .. 6 A. Bank Involvement in Agricultural Research .6 B. Lessons Learned ....................................................... 7 C. Rationale for Bank Involvement ....................................... ................. 8 3. T IIE PROJECT ...........................................................9 A. Project Objectives and Components ........................................................... 9 B. Project Description .......................................................... 10 C. Training .......................................................... 15 D. Technical Assistance .......................................................... 16 E. Environmental Inpact .......................................................... 16 F. Social and Gender Issues .......................................................... 17 This report is based on the findings of a mission which visited Indonesia in November- December 1994. The mission was comprised of Dirk M. Leeuwrik (mission leader), Dely P. Gapasin, Anthony N. Byrne, Wiranto Soehendro and Gabrielle J. Persley (part-time). Sofia U. Bettencourt, Cornelis de Haan and Kheng Hoe Yeow also contributed to the appraisal of the fisheries, livestock and horticulture research components, respectively. Task Manager: Dirk M. Leeuwrik; Acting Division Chief: Jon Hitchings; Director: Marianne Haug; Peer Reviewers: Edgardo Quisumbing and Gabrielle J. Persley. -111- 4. PROJECT COSTS, FINANCING, MANAGEMENT AND IMPLEMENTATION .......................................................... 18 A. Introduction .......................................................... 18 B. Project Cost ........................................................... 18 C. Project Financing .......................................................... 18 D. Administration of Project Funds .......................................................... 20 E. Project Management and Implementation .................................................... 20 F. Project Procurement Arrangements .......................................................... 21 G. Disbursements .......................................................... 24 H. Project Audit Reporting .......................................................... 26 I. Project Monitoring and Evaluation .......................................................... 26 J. Status of Preparation .......................................................... 27 S. BENEFITS AND RISKS ............................................. 28 A. Benefits .......................................................... 28 B. Risks .......................................................... 28 6. AGREEMENTS REACHED AND RECOMMENDATION ........................ 30 ANNEXES Annex 1: Project Implementation Plan .......................................................... 33 Appendix 1: Detailed Cost Estimates ....................................... ................... 73 Appendix 2: Detailed Implementation Schedule ..................................................... 87 Annex 2: Guidelines for Implementing the University Research Grant ................... 99 Annex 3: Summary of Education/Training by Project Components ....................... 101 Annex 4: Estimated Technical Assistance Requirements by Component ................ 102 Annex 5: Selected Documents Available in Files ................................................... 106 1. INTRODUCTION A. COUNTRY/SECTOR BACKGROUND 1.1 Agricultural development in Indonesia has been impressive during the past two decades. Agricultural growth averaged about 3.8 percent annually, but fell to an annual rate of about 2.9 percent over the past five years. Self-sufficiency was achieved in rice production and there has been significant reduction in poverty, although many farmers remain close to the poverty line. Agriculture contributes about 18 percent of the overall gross domestic product (GDP), employs some 50 percent of the labor force, and accounts for 26 percent of non-oil exports in foreign exchange earnings. Economic growth is expected to generate a more diversified pattern of food demand, with consumption of traditional staples declining and demand for income-elastic foods, such as meat and other preferred foods, increasing. Shifting world markets for export commodities add a dimension of uncertainty to the direction of future agricultural growth. 1.2 The government's present five-year development plan (Repelita VI) envisages 3.4 percent per annum agricultural GDP growth, which represents an increase of 0.5 percent compared to the previous plan (Repelita V). It will not be easy to achieve this target, since easily-attained gains in production, through expansion of irrigation and introduction of fertilizer and high-yielding varieties, particularly in rice, have already been made. To meet this challenge, a flexible and dynamic agricultural sector will be needed. Repelita VI emphasizes subsectors other than rice, agro-industry and agro-business as a means of achieving product diversification, strengthening linkages to the industrial sector, increasing value added, and providing wider employment opportunities. This will need continued strong investment in agriculture, coming primarily from increased involvement of the private sector, with the Government of Indonesia (GOI) performing a policy and regulatory role and providing public support services. In line with this, a decline is envisaged in the share of agriculture in public development spending. 1.3 The Ministry of Agriculture (MOA) will increasingly focus on fostering private sector development and providing public services such as research, extension, and ural infrastructure. This will require improving its institutional capacity to ensure that public- service functions are client responsive and performed efficiently by the various public agencies, including the Agency for Agricultural Research and Development (AARD). In addition, GOI and AARD need to identify areas where the private sector can take on increasing responsibilities for research and development (R&D). B. GOVERNMENT AGRICULTURE SECTOR STRATEGY 1.4 With the start of Repelita VI and the Second Long Term Development Plan (PJP II) in 1994, the Government's agricultural objectives have shifted from production targets to increasing farmers' productivity, incomes, and welfare. As indicated in para. 1.2, the new strategy focuses on the development of commercial farming, agribusiness, and agro- industries in rural areas, with greater private sector involvement, as a means of increasing farmers' incomes, rural employment opportunities, and augmenting value-added within the region. 1.5 Along with the major goal of poverty reduction, increased emphasis will be accorded to regional development, in particular to the development of the Eastern Islands. This will be supported both through development expenditures carried out by the Central Government and through transfers to regional governments to help finance development programs for which the implementation responsibility rests with local governments. Continued decentralization of development planning, finance, and implementation arrangements will be an important policy thrust supporting regional development. 1.6 Consistent with the increasing role of private investment, Repelita VI projects a continuing decline in the share of public investment allocated to directly productive agricultural activities, leaving them increasingly to the private sector. However, despite the projected decline in government development spending, well-focused public expenditure remains important in agriculture, a sector that still provides livelihood to the majority of Indonesians and will continue to play a key role in income generation and poverty reduction. The focus of the Government's investment in agriculture sector will therefore, continue to shift from direct involvement in production to provision of well-designed support services, such as extension and research. R&D will emphasize support for regional activities, especially in lesser developed parts of the country. Emphasis will be on efficient use of resources, income generation, poverty alleviation, and diversification of production. In research, as in other services, the efficiency of planned investment will be crucial to the attainment of Repelita VI's development targets. C. AGRICULTURAL RESEARCH IN INDONESIu 1.7 Following independence, the thrust of agricultural research in Indonesia shifted from export crops to food crops-primarily to the staple food crop, rice, to better meet the nutritional needs of the population. GOI's first five-year development plan (Repelita L 1969-1974) emphasized rice production and mandated research responsibilities to the MOA to be implemented in its Directorates-General of Food Crops, Estate Crops, Forestry, Fisheries, Animal Husbandry, and other agencies. A comprehensive review conducted during this period yielded the recommendation that a national agricultural research system be established. The Guidelines for State Policy (GBHN) of 1973 encouraged the applcation of science and technology to the solution of national development constraints and a Presidential Decree in 1974 authorized the establishment of research and development - 3 - agencies in the several departments and ministries of government. This decree created the Agency for Agricultural Research and Development (AARD). 1.8 To adapt to the changing demands of the Sector, AARD is now undergoing its fourth major reorganization (1994 Ministerial Decree, see para. 1.15) since its establishment in 1974. Prior to this, AARD went through three reorganizations (1979, 1983, and 1990). The Presidential Decree of 1990 established a revised organizational structure consisting of a Secretariat, two centers, two research centers, five research and development centers, and special association with the Indonesian Planters Association for Research and Development (IPARD) and the Indonesian Sugar Research Institute (ISRI). In accordance with Ministry mandates, AARD centers continued to manage the activities of 16 research institutes located throughout the country and to play a coordinating role with another 10 institutes conducting research on estate crops under the auspices of the IPARD and ISRI. 1.9 A subsequent decree by the Minister of Agriculture in 1990 specified the details of AARD's revised mandate and the broad terms for its implementation, whereby AARD was designated to coordinate, manage, and conduct agricultural research and development in accordance with the policies of the Ministry and national development programs. The Ministerial Decree also established an additional center at AARD, the Center for Agricultural Machinery Development. In carrying out its various tasks and functions, AARD is supported by about 40 research establishments, 64 laboratories, 57 substations, and 150 experimental ponds and farms, and has a staff of over 2,400 scientists, of which more than 650 have MSc and 240 have PhD degrees. 1.10 Budgetary support for agricultural research in Indonesia fluctuated in the 1980s and early 1990s. Although research spending has increased since 1989, agricultural research expenditures, as percentage share of agricultural GDP, was 0.28 in 1992, as against 0.38 percent for South East Asia. Indonesia still lags behind other countries in agricultural R&D expenditures (0.21 percent of AgGDP in 1990), such as Japan (with 2.67 percent), Republic of Korea (0.93 percent), India (0.51 percent), Pakistan (0.49 percent), and China (0.41 percent). Total agricultural research funding increased from about US$50 million to about US$66 million from FY1990 to FY1994 and is projected to be about US$82 million in FY1995. The share of AARD's budget from external sources was 49 percent in 1992. With further increases expected during Repelita VI, it is estimated that the Project will fund annually approximately 20 percent of the total expenditures in agricultural research. 1.11 Indonesia's R&D has contributed significantly to the impressive performance of the agricultural sector, the two outstanding benefits being the achievement of self-sufficiency in rice and the development of a strong, competitive tree crop sector. It must now continue to improve its capacity to address the changing needs and evolving national and sector priorities. Particularly, with the limited budgetary resources available, the national R&D system must be more efficient and cost-effective and should continue to be well focused on the highest priority areas which show the greatest potential benefits to farmers and other technology users. Future R&D will have to take into account many changes in the agricultural sector during Repelita VI and beyond. These include: (a) decentralization of governnent services and greater regionalization of R&D to focus on specific agroecological zones (AEZs) and resource-based development, and the generation of location-specific technologies; and (b) emphasis on market-oriented and demand-driven technologies to serve changing needs of consumers for higher quality and diversified products. D. POLICY FRAMEWORK FOR REGIONAL, LOCATION-SPECIFIC RESEARCH AND DEVELOPMENT 1.12 As Indonesia implements its second 25-year national development plan, AARD is reorganizing and has established a number of broad objectives intended to lay the groundwork for the new era of development. These include: (a) development of technology packages that are location-specific and integrated with overall development aims; (b) development of specific agricultural commodities based on regional comparative advantage; (c) increased diversification in the agricultural production system in relation to agro-industrial development and consumer/market requirements; (d) increasing production efficiency in anticipation of the transition to an agricultural system based on more capital investment and reduced labor requirements; (e) encouraging the shift from subsistence to commercial agriculture to achieve greater efficiency of scale; (f) promotion of more balanced development between regions; (g) preservation and protection of the nation's natural resources through the development of sustainable agriculture. 1.13 Policies are guiding planners to base R&D priorities on a number of scientific, social, and economic factors. Generally, research has been directed towards: commodities that are economically and socially important; commodity development that will foster a better economic and resource balance within Indonesia, especially in less developed regions; and more basic research, such as biotechnology and new product development. Now, in addition, AARD will play a significant role in the regionalization effort of the GOI and MOA to attain sustainable diversification of the agricultural sector by enhancing its capacity to manage regional R&D and generate location-specific technologies using a farmiing- systems approach. This process is expected to increase agriculture's contribution to regional economic development, income generation and poverty alleviation. 1.14 The program strategy will consist of five related activity areas which include: (a) regional problem identification, i.e., the status of research-extension-farmer linkages; (b) collaboration between research and extension in adapting and 'iepackaging" technologies; (c) technical demonstrations which bring researchers, extension workers, and farmers together; (d) conduct of farmer field days; and (e) more collaborative publishing of 'liser-friendly" materials and dissemination of information. The emphasis on regional production in accordance with local resources and comparative advantage will involve interaction with provincial governments in collaboration with the Ministries of Home Affairs, and Public Works with the private sector to provide agricultural knowledge and research support to appropriate regional activities. Development of human resources to assist in meeting these responsibilities will involve interaction with the Ministry of Education for linkages with universities in the regions for both research support and training. Delivery of agricultural knowledge and technologies in the regions will be facilitated by stronger intra-sector linkages with extension and other relevant offices in the provinces. 1.15 Through a Ministerial Decree in December 1994, action has been taken to reorient the mandates of 15 commodity research institutes as follows: (a) five in food crops (biotechnology, rice, legumes and tuber crops, maize and cereals, and food crops in swampy areas; and agriculture in swampy areas); (b) three in horticulture (ornamental plants, vegetables, fruit); (c) three in industrial crops (spices and medicinal plants, tobacco and fiber crops, coconut and palms; (d) two in livestock (livestock production and animal diseases); and (e) three in fisheries (fresh water, marine, and coastal fisheries). Most of the former substations of these commodity research institutes have been integrated into the Assessment Institutes for Agricultural Technology (AIATs) (see para. 1.16). The Center for Agricultural Research Programming (CARP), supported by the ongoing ARM Project, and the AARD Secretariat will continue to provide overall management coordination and guidance. 1.16 At the regional level, 17 AIATs will be established under the Center for Agricultural Socio-Economic Research (CASER). The AIATs will be staffed by existing personnel from the former Agriculture Information Centers in the provinces, AARD researchers from existing research stations and substations already deployed in the regions, and AARD staff to be relocated to the regions from the national research institutes. Each AIAT will have a Regional Advisory Committee with the head of BAPPEDA as first chair and the provincial representative of MOA (KANWEL) as second chair, with members from various DINAS, local universities, research institutes, farmer groups, and the private sector. The Regional Advisory Committee will provide guidance to the AIAT on the R&D agenda, priorities, and policies, and will be assisted by a Regional Technical Working Group, chaired by the AIAT Director with representation from various regional agencies. Each AIAT will be headed by a Director and will consist of three units: (a) Technical Services, (b) Administration, and (c) a Group of researchers and technology transfer staff. Each AIAT will have a headquarters and one or more installations in the particular province (support facilities). AIATs will link with various groups in their specific regions including universities, DINAS, planners and policymakers, the private sector, the extension service and the farmers' groups. The Project is based on and will support this reorganization. - 6 - 2. BANK INVOLVEMENT AND LESSONS LEARNED A. BANK INVOLVEMENT IN AGRICULTURAL RESEARCH 2.1 The Bank has strongly supported agricultural R&D in Indonesia since 1975 through three agricultural research projects. As a result, the Government has developed, with Bank assistance, an impressive research infrastructure and human resource capacity under the coordination of AARD. Bank support to AARD began in 1975 with the Agricultural Research and Extension Project (Ln. 1179-IND) for US$21.5 million, including US$16.7 million for research. The project strengthened production-oriented research programs for rice, secondary food crops, highland vegetables, and rubber through the provision of buildings and equipment, training and technical assistance. The Project Completion Report concluded that project objectives have been achieved and that overall, the project was successful in supporting the new institutional system for research and extension. The main benefits listed were: (a) improved capability and increased coverage of research staff through training, which laid the foundation of a professionally competent staff, (b) production of new improved varieties of crops; and (c) development and widespread propagation of new techniques and packages of practices capable of realizing the full potential of the new improved crop varieties. 2.2 Continuing support was provided to AARD through the National Agricultural Research Project (Ln. 1840/Cr. 1014-IND), for US$65 million, which supported more broad-based objectives of Repelita m by placing more emphasis on non-rice research, i.e., lowland vegetables, livestock, fisheries, forestry, industrial crops, and estate crops other than rubber. The project continued provision for infrastructure, equipment, post-graduate training, various types of other training, and long-term and short-term technical assistance. Towards the end of this project it was realized that because of the strong emphasis on developing facilities and training staff, insufficient attention had been given to management and planning the research programs for which those staff and facilities were being provided. The rapid build-up of infrastructure and staff was not well-synchronized to ensure their full and efficient use. Budgetary provisions lagged behind the increasing requirements for operation and maintenance of expanded facilities and equipment. The third operation, the ongoing Agricultural Research Management (ARMP) Project (Ln. 303 1-IND) for US$35.3 million which was implemented in 1989 was therefore designed to address these issues and to consolidate and strengthen research planning and management. ARMP addresses the efficient use of research resources, mainly in research institutes at the national level with mandates to carry out more academic, commodity-oriented research. The proposed project would, on the other hand, institutionalize regional, farming-systems R&D in different agro- ecological zones (AEZs) and the transfer and wider application of technology in a much more applied approach. Preliminary data and evaluation indicate that ARNP has assisted - 7 - substantially in increasing the relevance and cost effectiveness of the national R&D system. In addition, AARD has also received Bank support for specific research components included in other projects, particularly in transmigration, swamp development, and upland and area development. B. LESSONS LEARNED 2.3 As economic and agricultural development proceed, demands on the agricultural research system have become more exacting, and it will need to be more efficient, flexible and responsive to sectoral demands. At the national level, an effective research infrastructure has been built up, more effective planning of relevant, focused research programs has been achieved, and the efficient utilization and management of available research resources is improving. This is evidenced by the much more systematic planning and setting of research priorities, and the increased quality and efficiency of research and accountability throughout the system. Provision of operational funds to sustain funding for identified research priorities and maintenance of facilities and equipment has also improved, and gaps in the availability of trained staff in specialized areas, e.g., virology, post-harvest technology, biotechnology, marketing, and socio-econornics are being overcome. Location- specific research has, however, not improved at the same pace as national level research. 2.4 Lessons learned from past operations indicate the need for a better balance between c-ommodity-oriented research programs and regional research on location-specific farming systems in different AEZs, as well as in the location and distribution of, especially, senior research personnel. Efforts should be made to direct a substantially greater and growing share of research resources toward the regions and certain AEZs, while maintaining adequate support for national research. Effective research-extension-farmer linkages and adequate communication with the users of research outputs (farmers, industry, and policy- makers) also have to be improved to ensure wider and more immediate use of research results. 2.5 A major lesson learned during the Bank's long association with research projects is that it takes time to build research capacity and for institutional changes to evolve to improve research efficiency and cost-effectiveness. The successful organization of research for managing technological change depends on flexibility, good communications, small interdisciplinary teams of researchers, rewards for excellence and accommodation of failures, accountability, beneficiary participation, and step-wise innovations. In Indonesia, the lessons show that (a) benefits from research yet to be conducted are uncertain and difficult to quantify but overall the contribution of research to agricultural development has been significant, particularly in rice and tree crops; (b) a decentralized R&D system, with strong linkages to local government and other institutions through improved coordination mechanisms, is needed to fully tap the benefits gained from national research achievements, and to use available local knowledge; and (c) farming systems research, emphasizing location-specific and on-farm activities, should be institutionalized in major agroecological regions, with particular attention to socio-economic conditions in rural communities. - 8 - C. RATIONALE FOR BANK INVOLVEMENT 2.6 Rapid changes in the agricultural sector in Indonesia require significant changes in and upgrading of the current R&D system. The Project would build on the capacity established under previous Bank-assisted projects and introduce new approaches to ensure greater relevance of research to local conditions. The Bank's long and close association with agricultural research in Indonesia, as a major donor, places it in an excellent position to provide further assistance and coordination of other donors' support for the introduction of major organizational changes to make agricultural research more cost-effective, as foreseen under this Project. The Project is consistent with the Bank's Country Assistance Strategy for Indonesia which was discussed by the Board of Executive Directors on March 21, 1995 and focuses, inter alia, on inter-regional equity and enhanced competitiveness, delivery of higher quality public services, especially to the poor, greater decentralization of responsibilities, and improved environmental management. The project would support greater decentralization of responsibilities for agricultural research and technology transfer, strengthen local institutions and human resources in order to effectively develop, disseminate and apply location-specific technologies, thereby enhancing competitiveness, provide improved public services to lower income rural communities, and improve environmental management by developing and promoting sustainable agricultural practices. 2.7 The Bank supports the Government in the following key areas: (a) maintaining growth with macroeconomic stability; (b) improving public sector management; (c) enhancing private sector's role in development; (d) reducing poverty; and (e) improving natural resource and environmental management. In agricultural research, the Bank's strategy is to support the Government's efforts to (i) generate and transfer location-specific technologies through regionalizing the R&D system; (ii) undertake participative planning and priority setting involving farmers and other stakeholders; (iii) strengthen research- extension linkages; and (iv) improve research management considering agroecological, social, economic, cultural, and environmental concerns. Further strengthening of agricultural R&D and increasing its relevance to regional, resource-based development is essential to underpin the Government's efforts in these key areas. -9- 3. THE PROJECT A. PRoJEcr OBJEcrrvEs AND COMPONENTS 3.1 The main objective of the Project would be to strengthen regional agricultural R&D, based on local human and natural resources, by collaboratively developing and transferring location-specific technology which is market-oriented and client-driven to support agro- business and agro-industry development. This would be achieved through the establishment of a network of regional AIATs, improvement of regional research management, expansion of research in priority areas, and strengthened linkages to local, national, and international institutions, thereby facilitating the delivery of research results to end-users. Specific project outcomes for successfully meeting these objectives are included in the Project I nplementation Plan (PIP) as indicated in Annex 1. The Project would consist of the following four components the costs for which are shown in Annex 1, Table 4: (a) Regionalization of Agricultural R&D (estimated total cost US$53.8 million). This component will strengthen on-farm research using farming systems methodology and facilitate technology transfer in eight agroecological regions. The Project will support the establishment and operation of eight priority AIATs in 12 provinces in a new regional network of 17 AIATs being established by the MOA. The capability of staff in the eight AIATs will be increased and their linkages will be strengthened by enhancing collaboration and participation of local institutions, such as the extension service, DINAS, farmer groups, policymakers, provincial universities, the private sector, and community and locally-based organizations in regional R&D activities. The eight AIATs will test and assist in the dissemination of technologies needed in specific farming systems in the selected AEZs. (b) Institutionalization of R&D Management at the Regional Level (estimated total cost US$17.8 million). This component will introduce administrative and management reforms developed under the ARM Project at the regional level and improve AARD's capability to respond to changing needs of consumers and farmers. It will support common administration and management procedures in the 17 AIATs in the network, comprising the eight AIATs under the Project and the remaining nine AIATs which will be established by GOI with possible assistance of other donors. These new procedures would ensure bottom-up planning by characterizing the AEZs, and developing regional R&D master plans; improving priority setting and resource allocation; strengthening of the regional information system; and improving management capabilities of AIAT staff and staff of collaborating - 10- institutions. Special studies will be carried out on social, gender, and cultural issues in collaboration with universities. (c) Support to Priority Commodity and Discipline-Oriented Research (estimated total cost US$22.2 million). This component will help accelerate the development of new technologies and improve the relevance of research conducted by commodity research institutes by getting them to backstop the needs of the AIATs. The Project will support research in high priority areas by funding priority commodity and discipline-oriented research, particularly on livestock, horticulture and plantation crops, fisheries, and selected disciplines like biotechnology, agricultural engineering, agribusiness and marketing, post-harvest and processing, and sociology/anthropology. Research will be carried out by commodity research institutes in support to the regional R&D program. The Project will also provide degree and non- degree training for AARD staff and technical assistance on special disciplines on the priority commodities. (d) Strengthening R&D Collaboration (estimated total cost US$8.0 million). This component will improve Indonesia's access to internationally generated technologies, tools and methodologies (i.e., farming systems, social and gender analysis, strategic planning, monitoring and evaluation). It will expand the horizon of its scientists by improving collaboration with Asia- Pacific and international research centers, other Asia-Pacific national research systems, and selected foreign universities. It will also strengthen collaboration between the AARD Work Units and the extension service, the Directorates General of the MOA, DINAS, policymakers, farmers' groups, local governments, the private sector, local universities, and community and locally-based organizations. A University Research Grant, and a Scientific Exchange Program for researchers and managers will be established to promote joint activities between AARD researchers and managers and staff of their collaborating institutions. B. PRoJEcr DEscRiprIoN 3.2 Regionalization of Agricultural R&D. AARD is a highly centralized research system with strong commodity-orientation. Because of the variability of Indonesia's agroecosystems, R&D has to be decentralized to generate, test, and integrate location- specific technologies based on farmers' needs and circumstances. This project will provide the basis for developing strong and effective regional agricultural R&D capacity by supporting the establishment and operation of eight priority AIATs to conduct on-farm verification and adaptive research and to facilitate transfer of best technologies to farmers and other technology users. The Project will assist AARD in establishing and operating, in a phased manner, the following eight priority regional assessment institutes covering 12 provinces: for Phase I (beginning Year 1) - (a) AIAT Ambon (Maluku), (b) AIAT Gedong Johor (North Sumatra), (c) AIAT Kendari (South Sulawesi and Southeast Sulawesi), - Il - (d) AIAT Biromaru (Central Sulawesi and North Sulawesi), and for Phase II (beginning Year 2) - (e) AIAT Banda Aceh (DI Aceh), (f) AIAT Padang Marpoyan (Riau and Jambi), (g) AIAT Pontianak (West Kalimantan), and (h) AIAT Ungaran (Central Java and DI Yogyakarta). Through the AIAT, AARD researchers and extension workers transferred to AARD will be integrated under one structure. The AIAT staff will collaborate with other regional and provincial agencies in planning and implementing a common regional R&D program with active participation of university researchers, farmers' groups, extension workers, DINAS, the private sector, and community and locally-based organizations. A regional forum, to periodically consult with these stakeholders, will be established under the Project. 3.3 The Project will upgrade existing facilities of the former Agricultural Information Centers which were transferred to AARD as a result of the reorganization of the MOA, and selected AARD substations and experimental farms, and construct new R&D support facilities which will be required by the eight priority AIATs, in a phased arrangement. Furniture, office and scientific equipment, vehicles, including boats, field implements, multi- media production equipment, and books and journals will be provided to the AIAT to implement the regional R&D program. Staff capability will be improved by relocating specialized staff from other AARD Work Units, limited recruitment, intensive in-service training of AIAT staff on selected topics, contracting research to local universities, and providing consultants. To give incentives for researchers and managers to move to more isolated AIATs to work on farm-level activities, the current incentive system will be reviewed and innovative methods of rewarding excellence in R&D and management will be introduced. Among others, AARD will consider gender equity in recruitment, promotion, career advancement, staff training, and other personnel matters. 3.4 Using the strategic planning, programming, and priority setting procedures and tools developed under the ARM Project, R&D master plans will be prepared, for the four priority MIATs in Phase I during Year 1 and then the next four priority AIATs in Phase II during Year 2 of the Project. These plans will be based on regional needs and developed using participative and bottom-up planning methods. Refinement of the AEZ characteristics will be carried out by the AMATs, through diagnostic surveys and analysis of existing information. Social and cultural aspects, including gender-related data will be gathered to provide benchmark about the role of women, youth, and distinct cultural groups whose production is primarily subsistence-oriented, as bases for incorporating these special concerns in project activities. Regional MIS databases will be developed, computerized, and periodically updated to be utilized for planning, information sharing, and policy formulation. Financial and administrative reforms will be introduced to improve the cost effectiveness of research, the efficiency of project implementation, and ensure high quality of R&D outputs/products. 3.5 In the past 20 years, AARD research institutes have developed technologies which are ready for further adaptation to specific production systems. The technology showcase, a menu of recommended technological advances ("gelar teknologi") developed under the ARM Project will be continued and expanded to the eight priority regions. Under this Project, the AIATs will identify available technologies and assess their fit to farmers' needs - 12 - in specific areas. As part of the regional R&D program, relevant component technologies generated by the national research institutes will be tested on-station and verified on-farm to suit conditions in local farming systems. Following the methodology developed under the Research-Extension Linkage (REL) Program of the ARM Project, selected pilot activities will be carried out to upscale and integrate the best technologies with the current farm practices involving large number of farmers and extension workers. Linkages with local universities, farmers' groups, policymakers, DINAS, the extension service, the private sector, and community and locally-based oroganizations, will be strengthened to facilitate dissemination of improved technologies and sharing of information. The Project will also provide R&D support services, such as production of multi-media materials needed by extension workers, farmers, and other development workers in the project areas. 3.6 Institutionalization of R&D Management at the Regional Level. In the past five years, under the ARM Project, AARD has developed administrative and management procedures, mechanisms, and tools and introduced management reforms at the national level to improve the quality of research and relevance of research outputs to technology users. Under this Project, these management and administrative reforms will be introduced to the network of 17 AIATs at the regional level. The Project will support common activities to: (a) develop a regional MIS network, (b) strengthen regional research planning and management, including priority setting, monitoring, and evaluation; (c) improve regional financial management and administrative procedures, such as accounting, auditing, and technical audit; (d) improve research station management; and (e) review the current incentive system and introduce innovations to improve it. 3.7 As the GOI, with possible assistance from other donors, will establish and operate the remaining nine AIATs, the Project will assist the AARD to set up common administrative and management procedures in 17 AIATs in the network, to ensure that planning, priority setting, resource allocation, monitoring and evaluation, and financial management procedures are standardized across regions. The remaining nine AIATs and the provinces covered include: AIAT Karangploso (East Java and Bali), AIAT Koya Barat (Irian Jaya), AIAT Lembang (West Java and DKI Jakarta), AIAT Natar (Lampung), AIAT Naibonat (East Nusa Tenggara, West Nusa Tenggara, and East Timor), AMAT Palangkaraya (Central Kalimantan and South Kalimantan), AIAT Puntikayu (South Sumatra), AMAT Samarinda (East Kalimantan), and AIAT Sukarami (West Sumatra and Bengkulu). Under the coordination of AARD Secretariat and the PMU, the AIATs will organize short-term skill-building training seminars and provide technical assistance on specific management topics and provide degree training for selected AIAT staff. Specialized equipment, furniture, vehicles, and consumables will be provided for these activities. The refinement of the AEZ characteristics and development of R&D master plans will be completed in the remaining nine AIATs in a phased manner, including preparation, mass production, and distribution of multi-media materials to support technology transfer activities. 3.8 Using the peer review procedures and criteria introduced under the ARM Project, regional R&D proposals will be evaluated and the outputs of the projects will be reviewed annually in a regional venue. The members of the Regional Technical Working Groups and other regional scientists and development workers will form panels of reviewers to assist the - 13 - AIAT in this activity. An annual planning and review mechanism will be established to ensure consultation with stakeholders and active participation of farmers, extension workers, policymakers, DINAS, the private sector, and community and locally-based organizations in AIAT activities. To justify increased appropriations for agricultural R&D, especially at the regional level, special studies will be undertaken with assistance from consultants and university researchers, on impact of research, economic benefits of R&D interventions, and effect of cultural and gender roles in the farming systems. 3.9 Through the ARM Project, CALREC has strengthened the national communication network and scientific literature service, providing a communication service for scientists in the national research system. This service will now have to be linked to the 17 AIATs in the regional R&D network to improve commnunication between the commodity research institutes and the ALATs and across regions. The linkage of CALREC and AIATs to other national databases (i.e., through IPTEKNET) and to international databases (i.e., through INTERNET) will be established under the Project. The MIS databases will be streamlined to conform with AIAT information needs and the type of survey data gathered from the AEZ characterization activities. Short-term training and technical assistance on information technology fields, including the New Government Accounting System (NGAS), will be provided to strengthen the capability of AIAT staff, which is currently very weak. Training will emphasize capability building on management of integrated R&D programs and team building, use of management tools and mechanisms, effectiveness of rural organizational models, social and gender analysis methods, applied communications methods, and strengthening research-extension-farmer linkages. In addition, the Project will support a regional soil fertility and fertilizer use program to be implemented in three regional locations in Medan (North Sumatra), Yogyakarta (D.I. Yogyakarta) and Maros (South Sulawesi) which will provide soil and plant analysis services to provide farmers with location-specific fertilizer recommendations in collaboration with existing agencies. CSAR will coordinate the soils service laboratories network and provide training and support services to the AITs. 3.10 The Project will also support the exchange of scientists and managers across regions (among AIATs) and between AlATs and the commodity research institutes and centers. To ensure an effective project implementation, support will be provided to CARP, AARD Secretariat, and the PMU to coordinate overall project implementation and the activities under Components 3 and 4 of the Project. Support will also be provided to CASER and the eight PIUs to coordinate the activities of the AIATs at the regional level (Components 1 and 2). The Project will provide office equipment (computers, typewriters, calculators), office furniture, vehicles, books and journals, technical assistance, and training. 3.11 Priority Commodity and Discipline-Oriented Research Programs. One of the major components of the ARM Project is the support for research in commodity research institutes, including a university grant scheme involving scientists outside AARD. This Project will continue to support commodity research institutes in selected high priority areas, including the University Research Grant, focusing on fisheries, livestock, horticulture and tree crops, and selected disciplines, such as biotechnology, agricultural engineering, agribusiness and marketing, postharvest and processing, and sociology and anthropology. - 14 - An important criterion in selecting research proposals is that the research will support the regional R&D programs under the AIATs. The selected priority topics include: (a) animal feeding and nutrition, (b) animal breeding emphasizing selection and preservation of indigenous breeds; (c) control of major diseases of chickens, goats and cattle; (d) tuna stock assessment and formulation of a management plan; (e) diversification of marine and fresh water finfish aquaculture; (f) environmental management for aquaculture, including management of diseases; (g) development of superior hybrids/clones of horticultural and tree crops; (h) integrated management of diseases and pests and soil fertility management of horticultural and tree crops; (i) development of post-harvest and processing management systems for fruit, vegetables, and tree crops; (j) biotechnology research; (k) improvement of appropriate tools and implements; (1) market studies; and (m) socio-cultural studies including gender-related topics. 3.12 Research proposals from commodity research institutes will be evaluated by CARP based on existing peer review methods and criteria developed under the ARM Project. The national research program component should be flexible to consider other areas to be identified during the preparation of the regional R&D master plans and spin-off projects identified during project implementation. In selected commodity research institutes, some existing specialized laboratories will be rehabilitated and scientific equipment will be provided to make them operational. The Project will support very limited new construction, such as the bio-containment facility for the Research Institute for Food Crops Biotechnology in Bogor, which will serve relevant institutes in the agricultural biotechnology network. The Project will also provide furniture, vehicles, consumables, technical assistance, and training on selected scientific topics. 3.13 The National Human Resource Development (HRD) Program is a continuation of the past efforts, funded through earlier Bank-supported research projects (National Agricultural Research I, II, and ARM Project), which developed a strong national agricultural research system for Indonesia. With the regionalization of R&D, new disciplines covering both technical and management fields will have to be put in place. The emphasis of degree and non-degree training under the National HRD Program are the fields included in the priority commodity and discipline-oriented research programs described in para. 3.11. Focus will be given to capability-building in areas which are still limited in AARD, such as agricultural economics and marketing, sociology and anthropology, postharvest and agroprocessing, applied communication, agricultural extension, and research management. Short-term technical assistance will be provided based on specific needs of the research programs to assist in the conduct of special studies where expertise is still limited. Long- term consultants will mainly be involved in research management areas to assist in project implementation. 3.14 Strengthening R&D Collaboration. Collaborative R&D and management activities will be strengthened at two levels: (a) at the national level among national agencies and AARD research units especially with universities, the private sector, and community and locally-based organizations; and (b) at the regional (Asia-Pacific) and international levels between international agricultural research centers under the Consultative Group for International Agricultural Research (CGIAR), selected Asia-Pacific national agricultural - 15 - research systems and foreign universities. Collaboration with external groups will be demand-driven, considering priority needs of Indonesia in both technical and research management fields. These collaborative activities will enhance Indonesia's access to new scientific information, improved technologies, and standard research methodologies. The Project will support (i) joint research, (ii) hands-on training, (iii) technical assistance; (iv) scientists/managers exchange; and (v) information sharing. Joint proposals by AARD Work Units and collaborating institutions will be prepared and evaluated by CARP and the PMU using criteria and procedures to be established by AARD and concurred with by the Bank. 3.15 The competitive research grant program for universities (the University Research Grant), which was started in the ARM Project, will be continued, emphasizing the role of local universities and twinning arrangements between a provincial university, a more advanced university elsewhere, and AARD Work Units. The Project will also strengthen R&D linkages with the extension service, policymakers, the Directorates General under the MOA, DINAS, the private sector, community and locally-based organizations, and other development projects, in the areas of comparative advantage in the region. Joint proposals will be reviewed by a special AARD Research Grant Board using criteria and methods used under the ARM Project, which will be modified, as needed (Annex 2). Agreements were obtained at negotiations that the first five subprojects considered under the University Research Grant will be provided to the Bank for review before final approval by the Research Grant Board. Collaboration on research and training with international and regional research centers, will be encouraged, emphasizing the contributions from other national agricultural research systems in the Asia-Pacific region. The exposure of Indonesian scientists and managers to international and regional fora will be enhanced by providing them with the opportunity to spend time in collaborating research centers, supporting a scientists/managers exchange program, and encouraging the publication of AARD scientists in international journals in partnership with staff of collaborating institutions abroad. The Project will also support the conduct or joint sponsorship of international or regional conferences, seminars, and workshops to be held in Indonesia. Particular attention will be given to ensuring the participation of scientists in AIAT activities. Special studies will be conducted with universities on selected topics related to environmental, social, cultural, and gender issues to monitor the impact of research outputs on these special groups and to the environment. C. TRAINING 3.16 Human resource development and training are an important part of the project components described above. The new regional R&D approach will require considerable reorientation and retraining of staff who, up to now, have been working mainly in commodity-oriented component research. A training schedule has been proposed which would enable about 25 percent of newly appointed AIAT staff, including scientists, technical, and administrative support staff, to participate in appropriate overseas or local degree and diploma training over the six-year project period. In addition, significant - 16 - funding has been provided for short-term, non-degree/diploma training, including overseas but mainly local, to strengthen staff capability in specific skills required to effectively carry out the regional R&D programs. About 80 percent of the total training funds will be provided for training staff at regional level. The remaining 20 percent of total training funds would be provided for training national level scientists and managers working in priority research areas. The criteria for selecting trainees will include gender equity to give equal opportunities for women to enhance their roles as scientists and managers in AIATs and in commodity research institutes. D. TECHNICAL ASSISTANCE 3.17 The technical assistance required to implement the four project components, comprising both international and local consultants, will assist in strengthening the capability of AIAT staff at the regional level in research management, technical, and technology transfer fields (see Annex 4). Recognizing that AARD has well qualified and experienced staff, the level of technical assistance required in the proposed project is less than 10 percent of the total project cost. The Project will provide funds for a total of 60 staff-months of long-term intemational consultants for research management as well as 92 staff-months of short-term intemational consultants. About 22 staff-months of the intemational short-term consultancies will be devoted to the refinement of the AEZs and implementation and monitoring of the soil testing/soil fertility programs. The balance of 70 staff-months will be for 22 different specialists in various disciplines. In addition, the Project will provide funds for 96 staff-months of long-term local consultants for a financial specialist (60 staff-months) and civil works specialist (36 staff-months). About 183 staff- months of short-term local consultants will be provided in various areas of research management and project programs such as MIS, technology transfer, development communication, technical disciplines, sociology/anthropology including gender and cultural issues, and architectural/civil works supervision. All areas for which consultants are required have been identified and details of the requirements by project component are shown in Annex 4. Brief terms of reference (TORs) were prepared and submitted to the Bank. AARD has prepared detailed terms of reference for the long-term consultants to be hired during Year 1 of the project. Detailed TORs, including draft letters of invitation, and a proposed short-list of consultants have been furnished to the Bank, as well as details of both degree and non-degree training to be implemented during Year 1. E. ENvIRONmENTAL IMPAcT 3.18 The Project is rated as Category C: "No appreciable environmental impact." The completed project should have a positive effect on the environment by encouraging the sustainable use of localized resource mixes and by facilitating the generation and wider adoption of more sustainable and environment-friendly technology, including available conservation farming techniques, in different agroecological regions. - 17 - F. SociAL AND GENDER ISSUES 3.19 In addition to the technical aspects of R&D, the Project will introduce steps to address the social and cultural dimensions, where relevant, including gender-related issues, and the use of tools (i.e., social and gender analysis of the farming systems, participatory planning) in determining the research and technology transfer agenda and in implementing project activities. This will ensure that women, youth, and distinct cultural groups whose production is primarily subsistence-oriented will directly benefit from project interventions because activities are based on their specific needs and role in the household and in the agricultural production systems. Benchmark information on social and cultural aspects will be gathered during diagnostic surveys as part of the AEZ characterization. This will be used in regional R&D planning and in integrating specific social, cultural, and gender- related concerns in project activities, especially in areas traditionally the prerogative of women such as fruit and vegetable processing, fish handling and marketing, home gardens, etc. Special gender and cultural studies will be carried out in collaboration with universities to determine their specific needs and the effect of technological innovations on these special groups. The active participation of women, youth, and distinct cultural groups will be sought in relevant project activities and their representation in regional fora and project- related committees. Issues of participation of women staff in training, recruitment of women staff in the AIATs, equity in promotion of staff, and other gender-related management issues will be incorporated in the research management component of this Project. Social and gender issues will be included in the periodic monitoring of on-farm utilization of improved technologies through special studies conducted with universities. - 18 - 4. PROJECT COSTS, FINANCING, MANAGEMENT AND IMPLEMENTATION A. INTRODUCTION 4.1 This chapter gives a summary of the PIP which was prepared in conjunction with the Borrower and reviewed and deemed satisfactory by the Bank. The PIP is presented as Annex 1 and gives detailed information on project description, costs, financing, management and implementation arrangements, disbursement, progress reporting, and status of implementation. B. PROJECT COST 4.2 Total cost of the ARM II Project is estimated at US$101.8 million, about Rp 223.3 billion equivalent, including contingencies, taxes, and duties. Total base cost is estimated at US$86.7 million. Physical contingencies amount to about US$4.6 million and price contingencies about US$10.5 million over the project implementation period. Total contingencies amount to 17 percent of base cost. The foreign exchange component is estimated at US$23.9 million, including contingencies, or about 23 percent of project costs. Taxes and duties are estimated at US$3.8 million equivalent. 4.3 Total base costs are divided between: (a) Investment Costs (49 percent) comprising Civil Works; Furniture, Equipment; Computers, Journals; Boats and Vehicles; Training; Technical Assistance, Research Collaboration; University Research Grants; and Scientists/Managers Exchange Program; and (b) Incremental Operating Costs (51 percent) directly attributable to the Project, comprising Research Management Costs; Operating and Maintenance Costs; Research Operations Costs; and Technology Transfer Costs. The level of incremental operating costs is considered justified in view of the additional management, research, and technology transfer activities at the AIATs required under the regionalization program of AARD. Overall, about 70 percent of total base costs will be incurred at the regional level mainly to support the eight priority AIATs (Components 1 and 2) and 30 percent of the costs will be incurred at the national level (Components 3 and 4). The estimated cost distribution among project components is shown in Table 4.1 below. Further summary cost tables are shown in Tables 2, 3 and 4 of Annex 1. C. PROJECT FINANCING 4.4 The Bank will provide loan funds equivalent to US$63.0 million equivalent or 62 percent of total project costs, comprising 93 percent of foreign exchange cost - 19 - Table 4.1: TOTAL COST BY PROJECT COMPONENT - Rupiah billion - - USS million - % Foreign % Total Local Foreign Total Local Foreign Total Exchange Base Cost Regionalizaton of Agric. R&D 80.2 18.5 98.7 36.6 8.4 45.0 19 52 InstitutializationofR&DMgmt 25.2 8.6 33.8 11.5 3.9 15.4 25 18 Priority Commodity and Discipline- 29.7 12.5 42.2 13.5 5.7 19.2 30 22 Oriented Research Program StrngtheningR&DCollaboration 7.4 8.1 15.5 3.4 3.7 7.1 52 8 Total BseIDne Cost 142.5 47.7 190.2 65.0 21.7 86.7 25 100 Physical Cotingencies 7.8 2.4 10.2 3.5 1.1 4.6 23 5 PriceCoatingencies 20.6 2.3 22.9 9.4 1.1 10.5 10 12 Total Project Costs 170.9 52.4 223.3 77.9 23.9 101.8 23 117 (USS22.3 million) and 55 percent of local costs, excluding taxes (US$40.7 million). GOI will finance approximately US$38.8 million or 38 percent of project costs, including taxes and duties (estimated at US$3.8 million). The financing of project costs would be divided between IBRD and GOI as follows: (a) IBRD will finance 70 percent of Civil Works including some construction of new buildings where necessary at the AIAT headquarters to accommodate transferred staff but also for the rehabilitation and expansion of existing buildings where appropriate; 80 percent of Furniture, Equipment, and Journals (including computers); 100 percent of Overseas Training; 75 percent of Local Training; 80 percent of Foreign and Local Technical Assistance; 80 percent of Research Collaboration; 75 percent of University Research Grants; 80 percent of Scientists/Managers Exchange Program; and 50 percent of Incremental Operating Costs based on a three-stage reducing scale of funding starting at 60 percent in Years 1 and 2, and declining to 50 percent in Years 3 and 4 and to 40 percent in Years 5 and 6. An indicative forecast of the respective funding shares of incremental operating costs is shown in Appendix 1 of Annex 1. GOI will maintain levels of operational expenditures at or above those projected in this Staff Appraisal Report as loan funds for this purpose are reduced. A schedule of the Loan categories for disbursement is shown in Appendix 1 of Annex 1. (b) GOI will finance 30 percent of Civil Works; 20 percent of Furniture, Equipment and Journals; 25 percent of Local Training; 20 percent of Foreign and Local TA; 100 percent of Boats and Vehicles; 20 percent of Research Collaboration; 25 percent of University Research Grants; 20 percent of Scientists/Managers Exchange Program; and 50 percent of Incremental Operating Costs and all taxes and duties based on the current 10 percent value added tax on contracts for Civil Works, Furniture, Equipment and other goods and materials. - 20 - The financing plan for the project is set out in Table 4.2 below: Table 4.2: FINANCING PLAN BY EXPENDITURE CATEGORY AND FINANCIER (US$ Million) GOI IBRD Total Civil Works 3.5 8.1 11.6 Equipment/Furniture/Books, etc.. 2.7 10.7 13.4 Vehicles 2.0 - 2.0 Overseas Training - 3.4 3.4 Local Training 1.4 4.1 5.5 Technical Assistance 1.0 3.8 4.8 Research Collaboration 0.5 2.1 2.6 University Research Grants 0.5 1.7 2.2 Scientists/Managers Exch. Program 0.6 2.6 3.2 Incremental Operating Cost 26.6 26.5 53.1 Total Project Costs i.O.U % Share 38% 62% 100% /a Including taxes and duties equivalent to US$3.8 million. D). ADMINISTRATION OF PROJECr FUNDS 4.5 The Bank Loan of US$63.0 million equivalent will be made to GOI, which would make the funds available to AARD through the normal government budgetary process. As approximately 70 percent of project costs will be incurred at the regional level, funding from GOI will flow directly, through the provincial PIMBAGPRO, to the AIATs based on budgets which will be agreed and approved by the respective Regional Advisory Committees. Any funds provided by provincial governments to assist in the financing of AIAT operations will be considered part of counterpart funds provided by GOI. Incremental Operating Costs will be financed by IBRD on a reducing scale starting at 60 percent in Year 1 and reducing to 50 percent in Year 3 then to 40 percent in Year 5. To ensure adequate funding for the new network of 17 AIATs as well as for the existing national research network, assurances have been obtained that GOI will increase AARD's R&D expenditures by a minimum of 3 percent per annum in real terms over the six-year project period (FY1996-FY2001). E. PROJECT MANAGEMENT AND IMPLEMENTATION 4.6 The project will be implemented over six years by AARD and its work units. Component I would be implemented in two overlapping five-year phases, with each phase covering four AIATs. At the regional level, the AIATs will be staffed by existing personnel from the former Agricultural Information Centers (BIPs), AARD researchers already - 21 - deployed in the regions in existing research centers and substations, additional AARD staff to be relocated to the AlATs from national research institutes, and extension workers who will be reassigned to the AIATs. An overall plan for the development of the entire network of 17 AIATs, including staffing, and detailed annual work programs for the four AIATs in phase one and the priority R&D areas for the first project year have been furnished to the Bank. Participatory research management mechanisms will be introduced to the regions to ensure high quality and relevance of technology to local conditions and to strengthen the linkages of the AIATs to farmers, local governments, universities, the private sector, community and locally-based organizations, and other development projects. A Regional Advisory Committee, supported by a Technical Working Group, will provide guidance to the AIATs on the R&D agenda, technology dissemination, and training. Farmers and other stakeholders will be well represented in these regional bodies. Assurances have been obtained that annual work programs, approved by the Regional Advisory Committees and processed in accordance with GOI procedures, will be submitted to the Bank by December 31 each year. Project management/implementing units at both national and regional levels will utilize existing structures and procedures of the agencies in which they reside to carry out project operations, including fund releases, accounting, and auditing. Emphasis will be given to local participation to ensure commitments of local agencies and their active participation in decision-making at that level. Back-stopped by AARD at the national level, provincial governments would be expected to take increasing responsibility in managing regional R&D, including its funding. 4.7 The organizational set-up of the Project is shown in Chart 3 (in Annex 1) of the PIP. Implementation will be at two levels: (a) regional, through the AIATs under CASER, for Components 1 and 2, and (b) national, through the AARD Headquarters (CARP and AARD Secretariat) and various research centers/mstitutes (for Components 3 and 4). A Project Management Unit (PMU) has been established in the AARD Headquarters to coordinate overall project implementation, including the implementation of Components 3 and 4. A National Advisory Committee will provide guidance to the AARD Director General on ARMP II matters. At the regional level, a small Project Implementing Unit (PIU) has been established within each priority AIAT, to implement project activities. Assurances have been obtained that Regional Advisory Committees and Regional Technical Working Groups for the four AIATs in Phase II, as weli as all key AIAT staff will be appointed by October 1, 1995. 4.8 The Project will require an average of about 17 staff-weeks per annum of Bank supervision during the six-year implementation period. Project supervision will be linked to the cluster supervisions to be undertaken by the Bank's Resident Mission in Indonesia. A mid-term review of the Project's progress of implementation is planned during the third year of the Project (para. 4.25). F. PROJECT PROCUREMENT ARRANGEMENTS 4.9 The AARD Secretariat and the PMU will be responsible for the overall coordination of procurement activities and the International Competitive Bidding (ICB) and National Competitive Bidding (NCB) procurement processes. The progress of procurement - 22 - activities will be monitored by the AARD Secretariat and the PMU, and periodic reports on procurement progress, including variations in schedules and work plans will be reported to the Bank on a regular basis. 4.10 The procurement arrangements are summarized in Table 4.3 below: Table 4.3: PROCUREMENT ARRANGEMENTS /a (US$ Million) Non Bank Category of Expenditure ICB NCB Other /b Financed Total Civil Works 11.6 11.6 (8.1) (8.1) Equip/Fum./Books, etc. 10.0 2.0 1.4 13.4 (8.0) (1.6) (1.1) (10.7) Vehicles 2.0 2.0 Training 8.9 8.9 (7.5) (7.5) Technical Assistance 4.8 4.8 (3.8) (3.8) Research Collaboration 2.6 2.6 (2.1) (2.1) University Research Grants 2.2 2.2 (1.7) (1.7) Scientists/Managers Exchange Program 3.2 3.2 (2.6) (2.6) Incremental Operating Costs 53.1 53.1 (26.5) (26.5) Total Financing Requirement 10.0 13.6 76.2 2.0 101.8 (8.0) (9.7) (45.3) (-) (63.0) /a Figures in parenthesis are the respective amounts financed by the Bank Loan. /b Includes national shopping, direct contracting (books and journals purchased directly from publishers) and, consultancy serviceslTA/training following the Bank guidelines for the use of consultants, and incremental costs. 4.11 Civil Works (US$11.6 million). These are for about 18 small packages of civil works scattered through 12 provinces in which international contractors will not be interested, and therefore, would be procured in individual contracts valued at less than US$1.5 million up to an aggregated amount of US$11.6 million using NCB procedures and standard bidding documents acceptable to the Bank. The civil works under the Project will concentrate on renovating existing facilities for the AIATs, with some additional new construction, where necessary, to accommodate the new mandate and additional staff to be transferred to the AIAT headquarters and their support facilities. About 70 percent of the civil works will be undertaken at AIAT headquarters and 30 percent for renovation or construction of installations. Contracts in excess of USS750,000 in value will be subject to - 23 - the Bank's prior review and contracts at or below this level will be subject to SOE disbursement procedures and post procurement review on a random check basis. A summary of the packages and schedule for procurement of civil works is presented in Annex 1, Table 5. 4.12 Goods (US$13.4 million). Equipment including computers and scientific equipment (for AIATs, Livestock, Fisheries, Horticulture, Soils Laboratories, and Post Harvest Equipment) will be procured through ICB procedures using the Bank's standard bidding documents. Local manufacturers would be given a margin of preference of 15 percent CIF price or actual import duties whichever is lower. Items including office furniture and equipment (desks, cabinets, typewriters, etc.), farm and field equipment (tractors, tillers, harrows, etc.) guest house furniture and equipment (chairs, beds, etc.) and scientific consumables (test tubes, flasks, etc.), and small items of equipment up to US$500 packaged in contracts valued at less than US$200,000 up to an aggregated amount of US$2.0 million would be procured through NCB procedures acceptable to IBRD. Some items in packages valued at less than US$25,000 up to an aggregate amount of US$0.7 million would be procured through shopping procedures obtaining quotations from at least three suppliers. Books and Journals would be procured directly from reputable publishers in packages valued at less than US$10,000 up to an amount of US$750,000. GOI has indicated that vehicles totaling US$2.0 million will be reserved for local manufacturers. Assurances have been obtained that the budget is allocated for this procurement based on a schedule acceptable to the Bank. All ICB contracts will be subject to prior review and those contracts less than US$200,000 subject to NCB and National Shopping (NS) procedures will be subject to SOE disbursement procedures and a post procurement review on a random check basis. A summary of the packages and schedule for the procurement of goods is presented in Annex 1, Table 6. 4.13 Training (US$8.9 million). Foreign and local training costs currently estimated at about US$8.9 million will be procured by AARD in accordance with procedures established during the ARM Project, namely on the basis of the relevance and quality of the programs offered in accordance with GOI administrative procedures acceptable to the Bank. All training would be subject to the Bank's SOE disbursement procedures. 4.14 Technical Assistance (US$4.8 million). Consultants services for implementation and specialist technical assistance, management support and special studies totaling some US$ 4.8 million will be awarded according to Bank Guidelines for the use of consultant services. Detailed timetable, work program, and terms of reference of consultants will be prepared by the PIUs concerned and submitted to the PMU for coordination purposes and for submission to the Bank for prior review. Contracts for consultant services will be entered into by the AIATs responsible for supervising the consultants' activities. TA contracts for firms of US$100,000 or less and for individuals of US$50,000 or less will be subject to SOE disbursement procedures. 4.15 Research CoBaboration (US$2.6 million). Research and development collaboration is the cost involved in establishing relationships and carrying out selected R&D projects with national agencies, Asia-Pacific and international research organizations, - 24 - foreign universities, and the private sector, and community and locally-based organizations. Collaborative research will be undertaken utilizing GOI procedures and criteria acceptable to the Bank. 4.16 University Research Grants (US$2.2 million). Grants to Universities for research will be undertaken on a competitive basis and be reviewed by an AARD Research Grant Board in accordance with GOI procedures developed during the ARM Project which are acceptable to the Bank. 4.17 Scientists/Managers Exchange Program (US$3.2 million). The exchange program will be undertaken utilizing GOI procedures and criteria acceptable to the Bank. 4.18 Incremental Operating Costs (US$53.1 million). Incremental recurrent costs consisting of Research Management, Operations and Maintenance, Research Operations and Technology Transfer costs which include many small items of expenditure such as office expenditure, travel, farmers field days, planning meetings, monitoring activities, hired labor, etc. would be paid following GOI administrative procedures acceptable to the Bank and the procedures developed under the ARM Project. Such expenditure would be subject to the Bank's SOE disbursement procedures. 4.19 Procurement Review Civil Works. Ten NCB contracts (out of 18) which equal or exceed USS750,000 in value, and aggregating USS10.4 million would be subject to prior review by the Bank. Goods. Fourteen ICB contracts which equal or exceed USS200,000 and aggregate approximately US$10.0 million and the first six contracts other than ICB regardless of their value would be subject to Bank's prior review. Consultancy Services. Contracts for companies at or above US$100,000 and for individuals at or above US$50,000 aggregating an estimated US$2.0 million would be subject to prior review by the Bank Collaborative Research, University Research Grants, Scientists/Managers Exchange Program and Incremental Operating Costs would not be subject to prior review but together with other items not subject to prior review would be subject to selective post award review on a samnple basis during supervision missions by the Bank. Prior review items will total some US$24.4 million or 24 percent of total project cost and 39 percent of the Bank's financed program. G. DISBURSEMENTS 4.20 The Bank loan of US$63.0 million equivalent is expected to be disbursed over a six- year period. This is considered consistent with the strong implementation capacity of - 25 - AARD as shown by the ARM Project experience and takes into account the complexity of the Project in reaching out to the regions. A summary of estimated disbursements by year is presented in Table 4.4 below. Table 4.4: DISBURSEMENTS BY YEAR FY Annual Cumulative Cumulative % 1995/96 7.0 7.0 11 1996/97 14.0 21.0 33 1997/98 15.0 36.0 57 1998/99 14.0 50.0 79 1999/00 7.0 57.0 90 2000/01 6.0 63.0 100 4.21 The Bank Loan will be disbursed as follows: (a) 70 percent of expenditure on Civil Works; (b) 100 percent of foreign expenditure on Equipment (including computers), and Fnumiture, Books and Joumals; 100 percent of local expenditures (ex. factory cost) for locally manufactured items; and 65 percent of other locally procured items; (c) 100 percent of expenditure on Overseas Training; 75 percent of expenditure on Local Training; (d) 80 percent of expenditure on Foreign and Local Technical Assistance; (e) 80 percent of expenditure on Research Collaboration; (f) 75 percent of expenditure on University Research Grants; (g) 80 percent of expenditure on Scientists/Managers Exchange Program; (h) Incremental Operating Costs (including Research Management, Operations and Maintenance, Research Operations, and Technology Transfer costs) for the life of the loan based on the following declining percentages: 60 percent of expenditures incurred in FY1996 and FY1997; 50 percent of expenditures incurred in FY1998 and FY1999; and 40 percent of expenditures incurred thereafter. 4.22 For disbursement purposes, full documentation will be required for all contracts at or exceeding the following amounts: (a) for civil works, US$750,000; (b) for goods US$200,000; (c) for technical assistance contracts with firms US$100,000, and (d) for contracts with individuals USS50,000. For all expenditure in those categories below the - 26 - limits specified and for expenditure on training, research collaboration, university research grants, scientists/managers exchange program, and incremental operating costs, disbursements will be made on the basis of certified Statements of Expenditure (SOEs). This documentation will be available for the required audit and also to Bank supervision missions, and will be retained by the PMU for at least one year after receipt by the Bank of the audit report for the year in which the last disbursement was made. 4.23 In order to facilitate disbursements, the Government would establish a Special Account in the amount of US$3.5 million in Bank Indonesia, or at a commercial bank acceptable to the Bank. This account should be maintained by the Directorate General of Budget, MOF. The Special Account would be used for all eligible foreign and local expenditures under all categories. Replenishment to the Special Account will be made on a monthly basis, or when 20 percent of the initial deposit has been used on the basis of replenishment requests with supporting documents satisfactory to the Bank. H. PROJECT AUDIT REPORTING 4.24 Project Accounts, the Special Account, and SOEs will be audited in accordance with the Bank's 'Guidelines for Financial Reporting and Auditing of Projects Financed by the World Bank" for East Asia and Pacific Region (July 1992). The PIP contains details of project auditing, including technical audit. L PROJECT MONITORING AND EVALUATioN 4.25 A monitoring and evaluation scheme will be established for periodically assessing the progress of implementation of the proposed activities in terms of attainment of objectives. Agreed performance indicators for the four components and major subcomponents are indicated in Section 5 of the PIP (Annex 1) and will be used as a basis for project reporting. Systems for monitoring accounting and auditing will be implemented by the PMU and all PIUs. The PMU will audit quality through spot checks on various activities throughout the project period. Each will prepare a semi-annual progress report on the project performance (physical and financial) using GOI internal accounting and reporting systems and procedures, and submit these to the PMU. The PMU will compile the AIAT reports and prepare a summary in English to be submitted to the Director General of AARD who will arrange to send a copy to the Bank. A detailed schedule for project review and reporting is given in the PIP (Annex 1). The performance indicators indicated in the PIP will be reviewed during supervision missions conducted jointly by GOI and the Bank. Assurances have been obtained that a joint mid-term evaluation would be undertaken about three years after the start of project implementation or by about September 30, 1998, to assess the progress of the Project. Assurances have also been obtained that arrangements will be made for technical audit of project activities, on a sample basis in accordance with agreed terms of reference, by the Inspectorate General of Agriculture with technical audit reports submitted annually by July 3 1, to the Bank for review and comments. - 27 - J. STATUS OF PREPARATION 4.26 The Project was prepared entirely by AARD itself in conjunction with representatives of regional and provincial agencies using a participatory, bottom-up approach, ensuring a high degree of project ownership at all levels. An AARD Project Preparation Team, with a core group of full-time members was formed which visited all project provinces to interact with regional and provincial authorities and staff and to collect precise local data and establish a provincial regional R&D agenda based on local resources, priorities, and constraints. Provincial preparation teams, consisting of core teams (three members), were organized and were responsible for compiling and analyzing essential information and data, together with representatives of the provincial agricultural services, local government, AARD research institutes and substations, and universities. The tuna research proposal was prepared with input from the South Pacific Commission's Oceanic Fisheries Program (SPC-OFP). During preparation, the following documents were prepared by AARD: (a) an Agricultural Research Policy Statement (1994-1999); (b) a Strategic Plan for Agricultural Research and Development for the period 1995-2005; (c) an Economic Impact Assessment of AARD's research programs in vegetables, estate crops, fruit, livestock and fisheries; and (d) a Project Operational Manual including a project implementation plan, a Soil Fertility and Fertilizer Use Study and Proposed Program, and a number of working and background papers, as well as provincial profiles. These documents are in the project file. 4.27 Implementation and coordination responsibilities within AARD and between AARD and other agencies and regional authorities have been defined. The organizational structure to be implemented under the project, requiring the reorganization of AARD to establish a network of AIATs as proposed, has been approved by the Ministry of Administrative Reform and a Ministerial Decree officially establishing the new organization has been issued by the Minister of Agriculture in December 1994. For the four AIATs to be established in Phase I, detailed design for the civil works to be constructed/rehabilitated in the first project year, including soil testing laboratories, and detailed annual work programs for Year 1 have been prepared and furnished to the Bank. For the additional four AIATs in Phase II, detailed designs for the civil works will be prepared during Year 1 of the project and completed by March 31, 1996. AARD is in the process of making arrangements for suitable staffing of the AIATs, , using AARD staff already deployed in the regions, and has been considering various incentive schemes to attract additional experienced staff to move to regional locations. These include strengthened and priority budgetary support and enhanced training opportunities. Other schemes under consideration include allowances and increased opportunities for promotion through rotational (or zig zag) assignments between AIATs and commodity research institutes and part-time teaching assignments at local universities. - 28 - 5. BENEFITS AND RISKS A. BENEFTs 5.1 The benefits of the Project would be wide-spread throughout the agriculture sector, as reflected in more effective and efficient management and use of R&D resources, especially at the regional and provincial levels. A focus on agribusiness and agro-industry would broaden the beneficiaries of research outputs to include those involved in the postharvest, processing, and marketing end of the agricultural production spectrum. With the regional focus on R&D, there will be greater capacity to generate and test location- specific technologies, package appropriate technologies, and transfer them to more farmers and create diverse production systems. Stronger research-extension-farmer linkages will ensure that technology is demand-driven and clients' needs and circumstances are the basis for planning and design of R&D projects. Improved linkages to policy-makers would facilitate faster and wider application of new technology and ensure that the R&D system effectively supports national and sectoral objectives, through more responsive policies. B. RisKs 5.2 In addition to the normal risks associated with any research undertaking, where results can not be guaranteed, the main risks of the proposed project are associated with unsatisfactory implementation of project actions in regionalizing the R&D system due to: (a)possible resistance to policy and institutional changes and continued institutional weakness in carrying out the required reforms at the lower levels; (b) scientists and technical support staff may not agree to move to regions and provinces and less developed areas, which was apparent in the implementation of the ongoing ARM Project; (c) resistance by provincial agencies to provide their full support and participation to a regional R&D system, especially where AARD capacity is low; and (d) continued inadequate funding for O&M expenditures. The latter could become a major risk if funds from domestic and other sources would not be available during the project period and beyond to increase the current research funding level and would threaten the sustainability of the R&D system. 5.3 The Project includes a number of actions to minimize the above risks. In the first place, there is a strong focus on human resource development through the provision of training and technical assistance to overcome present institutional weakness, particularly at regional level, in implementing the required administrative and management reforms and implement the new R&D programs. At the national level, GOI and MOA appear to be strongly committed to institutional change and regionalization of applied research activities. With the increasing regional institutional capability as a result of the Project, it can be - 29 - expected that policy and institutional changes will be phased in over a reasonable time frame. 5.4 At the regional level also, the increased role of provincial and local authorities, as well as farmers' groups and other stakeholders in planning and decision making in determining the R&D programs will give them increasing ownership of the more locally relevant R&D outputs. AARD has initiated a number of workshops and discussions at provincial level to fully familiarize local authorities and institutions with details of the intended regionalization of agricultural research and will continue this process as the network of AIATs expands. Response at provincial and local level has been strong so far. Some provinces are already providing funds for local research and others have pledged to contribute when research is implemented in their area. Since the provinces have limited revenue raising capacity, their contributions are and will remain small for some time to come in relation to the national funds provided for this purpose. Sustainability of project activities will, therefore, depend on continued strong national funding through AARD and donor assistance. GOI has planned a significant increase in research funding during Repelita VI. An assurance has been obtained under the Project that GOI will increase funding for agricultural research by a minimum of 3 percent annually, in real terms, over the six-year project period. The major incentives to attract staff to the regions will be the deflection of considerably larger budgetary resources to the new regional R&D network and the increased provision of training opportunities for regional staff. Other incentive schemes are also under consideration as explained in para. 4.27. - 30 - 6. AGREEMENTS REACHED AND RECOMMENDATION 6.1 The following actions are required to assure the successful implementation of the project and attainment of its major objectives. 6.2 During negotiations the following assurances were obtained from Government: (a) Key AIAT staff would be appointed by October 1, 1995 (para. 4.7); (b) Regional Advisory Comnmittees and Regional Technical Working Groups for the four AIATs in Phase HI will be established by October 1, 1995 (para. 4.7); (c) Detailed designs, cost estimates, draft tender documents for the construction/rehabilitation of buildings and procurement of equipment for the four AIATs in Phase II would be prepared by March 31, 1996 (para. 4.27); (d) GOI would continue to increase AARD's total R&D allocation by a minimum of 3 percent per anmum, in real terms, to ensure adequate funding for the AIAT network as well as for the existing national research network (para. 4.5); (e) GOI would maintain levels of total operational funding for all activities financed under the project at or above those projected in this Staff Appraisal Report by increasing GOI funding as Loan financing for incremental operating costs are scaled back in accordance with the schedule in para. 4.4; (f) Annual work programs and detailed budgets, approved by the Regional Advisory Committees and processed in accordance with GOI procedures, would be submitted to the Bank by December 31 each year (para. 4.6); (g) Arrangements would be made for technical audits of project activities, on a sample basis, by the Inspectorate General of Agriculture. Each AIAT and Components 3 and 4 would be covered at least twice during the project period and the technical audit reports submitted annually by July 31, to the Bank for review and comment (para. 4.25); (h) Monitoring and evaluation reports on physical and financial project progress based on agreed performance indicators would be submitted to - 31 - the Bank semi-annually by the Project Management Unit to coincide, as much as possible, with Bank supervision missions (para. 4.25); (i) The first five subprojects considered under the University Research Grant will be provided to the Bank for review before final approval by the Research Grant Board (para. 3.15); (j) The Borrower shall procure vehicles according to a schedule acceptable to the Bank (para. 4.12); (k) A joint mid-term evaluation will be undertaken about September 30, 1998 to assess the progress of the Project (para. 4.25). Recommendation 6.3 Subject to the above, the proposed project provides a suitable basis for a loan of US$63.0 million equivalent to the Republic of Indonesia. - 33- ANNEX 1 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT PROJECT IMPLEMENTATION PLAN INIRODUCrION This Project Inplementation Plan (PIP) was prepared during pre-appraisal and agreed with the Agency for Agricultural Research and Development (AARD), the Ministry of Agriculture (MOA) and the Agency for National Development Planning (BAPPENAS). The PIP is based on findings of the Bank's pre-appraisal and appraisal missions and consists of the five volume Project Operational Manual (POM) which was prepared by AARD in accordance with terms of reference provided by the Bank. The POM provides the detailed description of how the Project will be implemented. A copy of the POM is available in the project files. This annex, therefore, provides only a summary description of the project objectives, project components and subcomponents, and implementation arrangements. 1. THE PROJECT A. PRoJEcr OBJECrVEs 1.1 The overall aim of the ARM II Project is to strengthen regional agricultural research and development (R&D), based on local human and natural resources, by colUaboratively developing and transferring location-specific technology to support agaro-business and agro-industry development which is market-oriented and client-driven. Specifically, the objectives of the Project are: (a) to establish and operate eight priority regional Assessment Institutes of Agricultural Technology (AIATs) covering 12 provinces, as AARD's regional centers for firming systems research and technology transfer; (b) to introduce R&D management reforms at the regional level to ensure relevance of R&D to the needs of farmers and other end-users and to improve its quality and cost-effectiveness; - 34- ANNEX 1 (c) to support research in priority areas at the national level to support the regional R&D programs; (d) to improve Indonesia's access to internationally generated technologies and expand the horizon of its scientists by improving collaboration with national agencies and Asia-Pacific and international research centers and other national agricultural research systems. B. PROJECT DESCRIPTION 1.2 The ARM II Project will provide civil works, vehicles including boats, scientific equipment (including computer hardware and software), office equipment, furniture, fellowships, study tours, training, technical assistance, and incremental operating costs for research, research management, operations and maintenance, and technology transfer. The total cost of the Project is US$101.8 million, of which US$63.0 million equivalent will be financed by the Bank. The Project will be implemented over six years in two overlapping five-year phases by AARD and its Work Units, in collaboration with regional and provincial agencies. The Project has four components: 1 . Regionalization of Agricultural R&D 2. Institutionalization of R&D Management at the Regional Level 3. Priority Commodity and Discipline-Oriented Research Programs 4. Strengthening R&D Collaboration 2. IMPLEMENTATION ARRANGEMENTS A. ORGANIZATIONS RESPONSIBLE FOR TiE PROJECT 2.1 The Project will be implemented by AARD and its work units at two levels: (a) at the regional level by a network of 17 AIATs and the Center for Agricultural Socio-Economic Research (CASER), and (b) by the commodity research institutes and centers, the AARD Secretariat, and the Center for Agricultural Research Programming (CARP). At the regional level, implementation will be through the AIATs, the new AARD Work Units, in collaboration with local universities, the Directorates General under the MOA, DINAS, planners and policymakers, the extension service, farmers' groups, the private sector, and community and locally-based organizations. To ensure broad participation in each region, a Regional Advisory Committee, supported by a Regional Technical Working Group, will provide guidance to the AIATs on the R&D agenda, technology and information dissemination, collaborative activities, training, and technical assistance. Farmers and other stakeholders will be well represented in these regional bodies. CASER will coordinate the regional activities of the 17 AIATs, including -35- ANNEX1 Components 1 and 2. At the national level, commodity research institutes will backstop the AIATs in generating appropriate technology components based on the specific requirements of the local production systems. The AARD Secretariat and CARP will provide overall coordination of project activities, including those of Components 3 and 4. A National Advisory Committee will provide guidance to the AARD Director General on ARM II Project matters. 2.2 A national Project Management and regional Implementing Units will utilize existing structures and procedures of the agencies which they reside to carry out project operations, including fund releases, accounting, auditing, and technical audit. Two types of project units will be established: (a) a national Project Management Unit (PMU), under the AARD Secretariat (for financial aspects) and CARP (for management aspects), which will coordinate project-wide activities including Components 3 and 4 activities, and (b) a small Project Implementing Unit (PIU), which will be located in each of the eight priority AIATs, to coordinate implementation of Components I and 2. B. AGREEMENTS BETWEEN BORROWER AND IMPLEMENTATION AGENCIES 2.3 The Borrower is the Republic of Indonesia (GOI) represented by AARD, the national agricultural R&D agency under MOA. AARD Work Units will implement the Project in collaboration with relevant national, regional, and provincial agencies. Assurances have been obtained from the MOA and AARD management to ensure adequate funding for the AIAT network in addition to the existing national research network. GOI will continue to increase R&D operational expenditures by a minimum of 3 percent per annum, in real terms (as in the ARM Project). Funding will be based on the project financing plan and will be made available in a timely manner. Necessary steps will be taken to expedite the procurement procedures related to major civil works and equipment. R&D operational costs for the AIATs will be financed from the Loan on a sliding scale; as the Loan contributions decrease, GOI would maintain levels of operational expenditures at or above those projected in the Staff Appraisal Report. C. RESPONSIBILrriIES OF IMPLEMENTING AGENCIES 2.4 Agency for Agricultural Research and Development. Overall responsibility for coordination and implementation will rest with the AARD, with headquarters in Jakarta. The AARD is headed by a Director General. As a result of the regionalization of the agricultural research system (Chart 1), action has been taken to reorient the mandates of existing 16 commodity research institutes as follows: (a) five in Food Crops (Food Crops Biotechnology in Bogor, Rice in Sukamandi, Legumes and Tuber Crops in Malang, Maize and Cereals in Maros, Food Crops in Swampy Areas in Banjarbaru); (b) three in Horticulture (Ornamental Plants in Jakarta, Vegetables in Lembang, Fruit Crops in Solok); (c) three for Industrial Crops (Spices and Medicinal Plants in Bogor, Tobacco and Fiber Crops in Malang, Coconut and Palms in Manado); (d) two in Livestock (Livestock Production in Ciawi, Animal Diseases in Bogor); and (e) three in Fisheries (Fresh Water Fisheries in Sukamandi, Marine Fisheries in Jakarta, Coastal Fisheries in Maros). INDONESIA AGRICULTURAL RESEARCH MANAGEMENT 11 PROJECT Chart 1: AARD Organizational Structure Director General AARD SEC. CARP CARCCSAR CASER CAMD IPARD M.B. Sugar Estate Crops CRIFC CRIICz CRIH CRIAS CRIFI Biotechnology ISRI Bogor Pasuruan Food Crops Spices and | Livestock Fresh Water - Biotechnology Medicinal Plants V egetables j Protection | Fisheries Oil Palm Bogor Bo or Lembang Ciawi Sukamandi Medan RLice Tobacco and Fruit CropsAnimal Marine Cofee and - ~~~~~Fiber Crops Diese ihensCocoa Sukamandi Malang Solok BgrJakarta Jember Legumes and Coconut and Ornamental Coastal | - Tuber Crops Palms Plants - Fisheries Rubber | Malang | | Manado Jakarta Maros Medan Swamp Tea and - Food Crops I AIATs Chinchona Banjarbaru (17) Gambung *1 Maize and - Cereals Arbsns Maros ~~~~~~~~~~~~~~~~~~~~~~~~~Jakarta - 37 - ANNEX 1 2.5 In addition to these technical units, there are two coordinating bodies at the AARD Headquarters, the Secretariat which is in charge of finance, administration, organization and procedures, and human resource development, and CARP, which coordinates technical aspects, MIS, and R&D management program formnulating and research collaboration management. Other centers include the Center for Agricultural Library and Research Communication (CALREC), Center for Soil and Agroclimate Research (CSAR), Center for Agricultural Machinery Development (CAMD), and the CASER which will coordinate the AIATs. Six research institutes for Estate Crops under the Indonesian Planters Association for Research and Development (IPARD) are also linked with the AARD research network. These institutes include Estate Crops Biotechnology in Bogor, Oil Palm in Medan, Coffee and Cocoa in Jember, Rubber in Sungei Putih, Tea and Chinchona in Gambung, and Agribusiness in Jakarta. In addition, there is a Sugar Research Institute in Pasuruan. 2.6 At the regional level, the AIATs, new AARD Work Units, will be established to implement the regional R&D program and to forge linkages with regional and provincial agencies to ensure local participation in the planning and implementation of R&D activities. The AIAT organizational structure is indicated in Chart 2. The AIAT will have three units: (a) a Section for Technical Services, (b) a Sub-Division for Administration, and (c) Researchers and Other Functional Groups. 2.7 From the operational point of view, the Project will be implemented by the relevant AARD Work Units described in paras. 2.4, 2.5 and 2.6. Two project advisory bodies will provide advise and policy guidance during project implementation: (a) a National Advisory Committee will advise AARD's Director General, and (b) a Regional Advisory Committee, backstopped by a Regional Technical Working Group, will advise the AIAT Director. For project management at the national level, a PMU, headed by a Director (PIMPRO), will provide overall project coordination. At the regional level, a PIU, headed by a Subproject Coordinator (PIBAGPRO), will provide leadership in project implementation. Chart 3 shows the organizational arrangements related to project implementation. The flow of decision making related to project planning and approval of R&D Plan and Budget is shown in Chart 4. 2.8 Project Management Unit. The PMU will be headed by a full-time Director who will be an AARD staff assigned to the Project. The Director will report to the CARP Director for management and technical matters and to the AARD Secretary for financial and human resource development matters. The PMU Director will be supported by technical staff assigned from AARD Work Units. Limited technical assistance will be provided under the Project during implementation, mainly in development of project M&E procedures, financial management, including technical audit, procurement, and selected research management mechanisms and procedures. 2.9 Project Implementing Unit. A small PIU, under a Subproject Coordinator, based in each of the eight priority AIATs, will be in charge of project implementation at the regional level. The PIU Coordinator will report to the AIAT Director. A few AIAT staff will be assigned full- time to assist the PIU Coordinator. INDONESIA AGRICULTURAL RESEARCH MANAGEMENT 11 PROJECT Chart II: AIAT Organizational Structure Head of AIAT l l~~~~~_ Technical SubDivisionfor Technical Administrationw Services Sub-Section Sub-Section Sub-Section (Urusan) Sub-Section (Urusan) Cooperation & Facilities Personnel & Finance & Informnation Household Workplan K...... I O Indonesia AGRICULTURAL RESEARCH MANAGEMENT 11 PROJECT Chart Ill: Project Implementation Structure ARMP-II National MRD Committee DG Components 3 + 4 CARP/SEC Research CASER ---------- Centers/ PMU Institutes Components I 1 2 Regional Advisory A _ Receiving Committeeehn1 Institutions Regional Technical PIU Stakeholders Working Group Legend: j Administration Receiving Institutions: Implementors other than AARD work unit Stakeholders: Farmers, extension workers, planners, policymakers - - - - - - -Project Implementation DINAS, the private sector, community and locally based organizations Indonesia AGRICULTURAL RESEARCH MANAGEMENT 11 PROJECT Chart IV: Project Planning & Approval of Research & Development Plan and Budget (RDPB) National | AARD MOA BAPPENAS National Level Committee DG MORT MOF 7: Final Review & Approve 8: Allocate & Release 6:. Revievt Agricultural 5: Endorse Agri Itural RDPB Agricultural RDPB Budget for Agricultural RDPB= t ; RDPB I -~ CARP/SEC J Research _ CA tK CSERP/- - > Centers/ PMU Institutes 3: Review Consolidate 4: Review 8 Integrate Regiona RDPB Regional'RDPB & 1b: Prepare Conrmodity RDPB Commod7ty RDPB Regional Level with Agricultural RDPB Regional Advisory Receiving Committee _ A_t Institutions Regional Technical PIU- :I-- *j-- s IStitutiondes 4. Working Group takeholders Legend.- Ic. Participate in Consultations Admnitraio 2: Review & Approve la: Prepare Regional RDPB Prepare joint R&D Proposals Administraton Regional RDPB - - - - - Project Implementation -41- ANNEX 1 2.10 Regional Advisory Committee and Regional Technical Working Group. These bodies will provide policy guidance to the AIAT Director during project implementation. In the case of two-province AIATs, there will be one comnittee and working group per province. The Regional Advisory Committee will have the head of the provincial planning office (BAPPEDA) as first chair and the provincial representative of MOA (KANWIL) as second chair. The mernbers will include representatives from the various DINAS, provincial university, research institutes located in the regions, farmers groups, and the private sector (through KADIN or Regional Chamber of Commerce), and community and locally based organizations. The Regional Technical Working Group will be chaired by the AMAT Director with representation from various regional and provincial agencies. The responsibilities of the Regional Advisory Committee and the Regional Technical Working Group are given in Part D. 2.11 A summary of the responsibilities of implementing agencies and the additional resource requirements to undertake project-related activities and future investments of the GOI are given in Chart 5. D. FUNcTIONS OF IMPLEMENTING AGENCIES 2.12 The functions of the implementing agencies and of officials involved in project implementation are: (a) National Advisory Committee: (i) to assist AARD Director General to set the overall policies, strategies, and targets in order to ensure the attainment of project objectives, and review them as required; (ii) to provide advice to the AARD Director General on project-related matters; (iii) to ensure coordination of national and regional/provincial agencies, both from the public and private sectors, involved in project implementation; (iv) to set principles and procedures to be applied in coordinating with international and Asian organizations. (b) Regional Advisory Committee: (i) to set the policies, strategies, and targets to ensure the attainment of project objectives, and review them as required; (ii) to approve the detailed annual work plan and budget and endorse this to the AIAT; (iii) to provide guidance and advice to the AIAT Director and the PIU Coordinator on the timely implementation of project activities; -42 - ANNEX 1 Chart V. Implementation responsibilities and additional resource requirements. Implementing Add. Resource Component Activity Agency Requirement Project -Coordinate implementation of AARD For PMU: Management project activities - Secretariat -1 FT PMU Director -CARP -5 FT Technical Staff - PMU -3 FT Admin. Assistants -1 Finance Office -1 FT Civil Works & Prourement Specialist Component 1: -Rehabilitatc/construction -8 Priority ALATs For each of 8 PIUs: Agricultural facilities -CASER -1 FT PIU Coordinator regionalization of -Procure & install equipment -CSAR -3 FT Technical Staff R&D -Characterize AEZs in 8 regions -CARP -2 FT Admin Assistants -Prepare R&D master plans for -Secretariat -1 FT Civil Works & 8 priority regions -PIUs Procurement Specialist -Implement R&D programs -PMU -Coordinate training -Universities -Procure consultants -Prov. Agric. Services -Extension Service -Private Sector -Community and locally- based organizations Component 2: -Introduce R&D management -17 AIATs -PMU Staff Institutionalization mechanisms & tools -CASER -PIU Staff of R&D -Characterize AEZs in add. 9 -CSAR Management at regions -CARP Regional Level -Prepare R&D master plans in -Secretariat additional 9 regions -P1U -Strengthen libraries & -PMU communication -Universities -Establish MIS & NGAS -CALREC -Procure equipment -Research Centers -Procure consultants -Implement training -Establish 3 pilot soils laboratories Component 3: -Implement research projects in -Relevant National -PMJ Staff Priority fisheries, livestock, horticulture Research Institutes/ -PIU Staff Commodity and & tree crops Centers Discipline- -Implement priority discipline- -1PARD Research Oriented Research oriented research Institutes -implement national HRD -CARP program -PMU -rehabilitate specialized labs -Universities -procure specialized equipment -CASER -procure consultants -CSAR -43 - ANNEX 1 Component 4: -implement University Grant -National Research -PMU Staff Strengthening Scheme Institutes -PIU Staff R&D -implement joint activities with -AIATs Collaboration non-AARD units -CARP -implement Scientists/Managers -PMU Exchange Program -PIU -Joint research with IARCs, -Universities NARs -Non-AARD units -Participate in international & -Private Sector regional fora -Community and locally- -Scientific exchange based organizations -Asia-Pacific NARS -International -Regional centers (iv) to ensure coordination of public and private agencies, including regional and provincial groups and farmers, involved in project implementation. (c) Regional Technical Working Group: (i) to provide technical guidance to the Regional Advisory Committee on project-related matters; (ii) to provide guidance to the AIAT in regional R&D planning, priority setting, resource allocation, monitoring, and evaluation; (iii) to review the detailed annual work plan and budget of each AIAT and recommend action to the Regional Advisory Committee; (iv) to provide technical guidance to the AIAT during the implementation of the regional R&D programs; (v) to form part of the panel of evaluators for peer review of proposals and annual review of the achievements of the Project; (vi) to ensure coordination of the Regional R&D Program with the National Research Programs during project implementation. (d) Project Management Unit Director (PIMPRO): (i) to provide overall coordination and monitoring of all project components to ensure the successful and timely implementation of the Project; (ii) to ensure that financial resources required under the Project are made available to the implementing agencies in a timely manner; -44 - ANNEX 1 (iii) to monitor project expenditures an costs (local and foreign), process loan disbursement applications in collaboration with the Bank of Indonesia, and track disbursements of the Bank Loan and Government funds; (iv) to consolidate information for reporting and supervision of all requests for procurement of civil works, goods, and services, in accordance with World Bank Guidelines; (v) to ensure timely preparation and submission to relevant government institutions and the Bank of annual audit reports of project expenditures and accounts; (vi) to ensure movement of official documents and contracts through the usual approval processes and undertake measures to expedite their release; (vii) to prepare detailed specifications and coordinate preparation of procurement documents for national and regional civil works and for goods; review bid packages, and evaluate offers received; (viii) to coordinate an annual review of achievements of the Project and ensure preparation and distribution of consolidated periodic reports to relevant government and other participating institutions, including the Bank, reflecting: (a) status of implementation progress, problems encountered, and corrective actions needed; and (b) current costs of each project component and estimated costs of completion; (ix) to coordinate the preparation and ensure timely submission of annual work plans and budget to relevant government institutions and the Bank; (x) to coordinate the preparation of the Implementation Completion Report (ICR) within six months after the completion of the Project; (xi) to coordinate implementation of Components 3 and 4; (xii) to prepare LOI, detailed TOR, and hiring local and foreign consultants. (e) Project Implementation Unit Coordinator (PIMBAGPRO): (i) to undertake responsibility for the daily implementation of project activities at the regional level; (ii) to monitor project expenditures an costs (local and foreign), process loan disbursement applications in collaboration with the PMU, and track disbursements of the Bank loan and Government funds; (iii) to prepare requests for procurement of regional civil works, goods, and services, in accordance with World Bank Guidelines; - 45 - ANNEX 1 (iv) to prepare and submit to the PMU reports of project expenditures and accounts; (v) to ensure movement of official documents and contracts through the usual approval processes and undertake measures to expedite their release; (vi) to prepare detailed specifications and procurement documents for approved regional civil works and equipment lists, review of bid packages, and evaluation of offers received; (vii) to conduct an annual review of achievements of the Project and prepare and distribute consolidated periodic reports to the relevant government and other participating regional institutions, including the Bank, reflecting: (a) status of implementation progress, problems encountered and corrective actions needed; and (b) current costs of each project component and estimated costs of completion; (viii) to prepare and submit to the PMU the annual work plan and budget for Components 1 and 2; (ix) to assist the PMU Director in the preparation of the Implementation Completion Report (ICR) within six months after the completion of the Project; (f) AARD Secretariat: (i) to provide guidance to various implementing units on the financial and assets management aspects of project implementation, such as accounting and auditing; (ii) to provide guidance on training, technical assistance, assets management, MIS, administrative, and personnel matters. (g) Center for Agricultural Research Programming (CARP): (i) to provide guidance to implementing units on research management aspects of project implementation, such as planning, programming, priority setting, resource allocation, monitoring and evaluation, MIS, collaboration with other institutions, and research-extension-farmer linkages; (ii) to coordinate submission and evaluation of R&D proposals and budget; (iii) to coordinate technical and management inputs during project implementation; (iv) to oversee daily activities of the PMU. -46 - ANNEX 1 (h) Center for Agricultural and Socio-Economic Research (CASER): (i) to coordinate and monitor project-related activities of the AIATs, especially in the eight priority regions; (ii) to assign staff at the AIATs who will work with the PIU Coordinators, in project implementation at the regional level. (i) Assessment Institute for Agricultural Technology (AIAT): (i) to provide headquarters for the PIU, including full-time staff and support services for the daily implementation of the Project; (ii) to prepare detailed needs assessment, annual work plan and budget, quarterly report of project status and accomplishments, and financial reports; (iii) to monitor and report on detailed procedures, implementation schedules, and programs, with modifications if needed; (iv) to review and revise implementation targets and financial resources needed to support future actions; (v) to provide administrative support for the Regional Advisory Committee and the Regional Technical Working Group. (j) Receiving Institutions (AARD Work Units, LIIPI institutes, universities, regional and provincial institutions, the private sector, community and locally-based organizations): (i) to prepare detailed needs assessment, annual work plan and budget, and financial report of expenditures for each category of input that they will receive through the Project; (ii) to monitor and report on detailed procedures, implementation schedules, and program(s); (iii) to review and revise implementation targets and financial resources needed to support future actions. E. IMPLEMENTATION ARRANGEMENTS 2.13 Since the components of the Project are closely linked to each other, some of the activities under each component will be combined during implementation. Specifically, the scientific equipment to be procured for the AIATs and the commodity research institutes and the equipment (especially computers), will be combined into several packages of tender in order to shorten the - 47 - ANNEX 1 tendering procedures and offer attractive packages for larger suppliers and ensure compatibility of equipment across the network. Procedures and arrangements between AARD and Receiving Institutions for the preparation, delivery, and monitoring of outputs by receiving institutions are part of the overall R&D program. 2.14 The following procedures have been developed for each component of the Project: (a) contractual arrangements between the Borrower and the receiving institutions for procurement of civil works and equipment; (b) tendering procedures for different categories of civil works and equipment; (c) procedures related to the organization, delivery, and monitoring of training activities; (d) principles and procedures for hiring of long- and short-term consultants; and (e) procedures and protocols for coordination with other national agencies and Asia- Pacific and international research centers. 2.15 The implementation arrangements for project components are: (a) Regionalization of Agricultural R&D: (i) The eight priority AIATs covering 12 provinces will be responsible for the overall implementation of Component 1 and part of Component 2 of the Project. Regional activities will be carried out under the coordination of the PIU Coordinator in each AIAT. The Coordinator will receive guidance from the AIAT Director, and support from technical and administrative staff to be assigned full-time to the Project by AARD. The PIU will be responsible for procurement of civil works, furniture, vehicles, and equipment for the establishment and operation of the AIAT headquarters, designated installations, and R&D support facilities in each region. Under the coordination of the PIU Coordinator, the AIAT, with assistance from staff in AARD Headquarters, will be responsible for the development of technical specifications, in accordance with Bank guidelines, for the procurement of civil works, furniture, vehicles, and equipment. The AIAT and PIU will also be responsible for providing continuous support and integration of input from the Receiving Institutions in the region in the preparation of the annual work plan and budget, design and review of joint projects, and their implementation. (ii) Under Component 1, a number of fellowships and study tours will be provided for AIAT staff and staff of collaborating institutions. The criteria and procedures for awarding fellowships will follow those which are being used under the ARM Project, with modifications, as needed. The candidates for these fellowships and study tours will be selected by the -48 - ANNEX 1 Regional Advisory Committee upon the recommendation of the AIAT Director and approved by AARD and the Bank. (iii) Provision of technical assistance will be through the PMU and AARD Headquarters, following the procedures being used under the ARM Project, considering standard Bank guidelines, and will be based on the needs of specific AIAT or commodity research institute and the requirements of the R&D program. (b) Institutionalization of R&D Management at the Regional Level: (i) Under Component 2, common administrative and management activities will be implemented by the 17 AIATs in the network. Overall coordination of these activities, including the MIS, and the communication network, will be provided by CARP (for management matters) and by the AARD Secretariat (for financial matters), in collaboration with CASER, the AARD Work Unit which is administratively in charge of the AIATs. (ii) Provision of short-term technical assistance and training on management and special technical fields will be coordinated by the PMU and AARD Headquarters, and organized by the AIAT concerned, following procedures being used under the ARM Project and considering standard Bank guidelines. (c) Priority Commodity and Discipline-Oriented Research Programs: (i) The overall implementation responsibility for Component 3 will be the relevant commodity research institutes responsible for the identified priority commodities and selected disciplines. Researchers from these commodity research institutes will prepare research proposals on the identified areas required for backstopping the regional R&D program and initially screen these proposals using the procedures utilized within the research institute concerned. Evaluation of research proposals will follow the criteria, guidelines, and procedure developed by AARD which is currently used for proposals funded by the ARM Project, which will be modified, as needed. (ii) The PMU will be responsible for coordinating submission of required documents for procurement of civil works, furniture, equipment, and vehicles submitted by national research institutes concerned according to established procedures and Bank guidelines. Similarly, identified requirements for human resource development and technical assistance will be processed by the CARP and PMU on the basis of specifications prepared by the commodity research institutes involved. -49 - ANNEX 1 (d) Strengthening R&D Collaboration: (i) Overall implementation responsibility for Component 4 will rest with CARP and relevant commodity research institutes and AIATs. Under the coordination of the CARP Director, with assistance from the PMU Director, procedures and protocols for coordination with other national agencies, Asia-Pacific, and international research institutions will be developed, including identification of criteria and procedure for evaluating joint proposals, which will have to be concurred by the Bank. (ii) Two workshops will be conducted: (a) the first workshop to identify the priority areas for collaboration and potential collaborating institutions to ensure that activities will be based on the needs of Indonesia, and (b) a second workshop to consult with identified potential collaborators to discuss identified priority areas, prepare joint proposals, decide on responsibilities of each institution, and agree on a financing scheme. Evaluation of joint proposals will be done by the National Advisory Committee following approved guidelines and criteria. (iii) The Scientists/Managers Exchange Program will be coordinated through CARP and the PMU on the basis of joint proposals from the commodity research institutes, ALATs, and collaborating institutions, according to criteria and guidelines acceptable to GOI and the Bank. (iv) The University Research Grant will be coordinated through CARP and the PMU using the procedures used under the ARM Project, which will be modified, as needed. Guidelines for the implementation of new collaborative mechanisms, such as twinning between universities and joint projects between universities and the private sector and AARD Work Units, will follow guidelines, criteria, and procedures agreed by the GOI and the Bank (Annex 2). (v) Provision of short-term technical assistance and training on management and special technical fields will be coordinated by AARD Headquarters and the PMU, following procedures being used under the ARM Project, considering standard Bank guidelines, which will be modified, as needed. F. INTERAGENCY COORDINATION 2.16 The successful implementation of the Project will depend on good coordination among several different agencies, at the national, regional, and provincial levels, located in the public and private sectors. Implementation of the regional components (Components 1 and 2) will require close collaboration with local universities, local government, the extension service, farmers' groups, private sector institutions, and community and locally-based organizations, to ensure their active participation in R&D planning and implementation, including dissemination of technology, - 50 - ANNEX 1 information, and research management tools and methods. At the national level, joint projects will be implemented by AARD's commnodity research institutes and other national research agencies [i.e., under the National Institute of Sciences (LIPI)] under Component 3, and with international and Asia-Pacific research centers, including foreign universities, under Component 4. G. ROLE OF THE BANK 2.17 The Project will, on average, require about 17 staff-weeks of Bank supervision per year during implementation, as reflected in the proposed supervision plan below: SUPERVISION PLAN Timing Staff Weeks Staffing FY1996 18 Bank resources (18 weeks) of which: - Task Manager 6 weeks - Financial/Management Specialist (part RSI) 4 weeks - Soil Fertility Specialist 2 weeks - Civil Works/Procurement Officer (RSI) 2 weeks - Sociologist/Anthropologist (RSI) 2 weeks - R&D Management/M&E Specialist 2 weeks FY1997 16 Bank resources (16 weeks) of which: - Task Manager 6 weeks - Financial/Management Specialist 4 weeks - Information/MIS Specialist 2 weeks - Agriculturist (Technical field) (part RSI) 2 weeks - R&D Management Specialist 2 weeks FY1998 24 Bank resources (24 weeks Midterm Evaluation) of which: - Task Manager 8 weeks - Financial/Management Specialist (part RSI) 4 weeks - Agriculturist (Technical field) (part RSI) 2 weeks - Technology Transfer/Extension Specialist 2 weeks - Organization and Management Specialist 2 weeks - Applied Communications Specialist 2 weeks - Sociologist/Anthropologist (RSI) 2 weeks - Unspecified consultants (Biotechnology Soil Fertility 2 weeks FY1999 16 Bank resources (16 weeks) of which: - Task Manager 6 weeks - Financial/Management Specialist (part RSI) 4 weeks -51- ANNEX 1 - InfonnationlTechnology Transfer Specialist 2 weeks - Agriculturist (Technical field) (part RSI) 2 weeks - R&D Management Specialist 2 weeks FY2000 14 Bank resources (14 weeks) of which: - Task Manager 6 weeks - Financial/Management Specialist (part RSI) 4 weeks - Agriculturist (Soil Fertility) 2 weeks - R&D Management Specialist 2 weeks FY2001 18 Bank resources (18 weeks) - Task Manager 8 weeks - Financial Management/Specialist (part RSI) 4 weeks - Economist 2 weeks - Sociologist/Anthropologist (RSI) 2 weeks - R&D Management SpecialisttM&E Specialist 2 weeks Note: Where possible, project supervision will be coordinated with cluster supervision plan of The Resident Mission in Indonesia (RSI) which will make supervision more cost-effective. H. ADMINISTRATivE ARRANGEMENTS 2.18 The Project will be implemented at two levels. At the national level, the PMU Director will be responsible for carrying out all necessary administrative arrangement recommended by relevant AARD Work Units and approved by the National Advisory Committee. At the regional level the PIU Coordinator will carry out all activities recommended by the AIAT Director and approved by the Regional Advisory Committee. Full-time attention of relevant senior officials will be required in development and implementation of new administrative, financial, and management systems. 3. PROJECT FINANCING AND COSTS A. DETAILED FINANCING PLAN 3.1 The proposed Bank loan of US$63.0 million equivalent will finance 62 percent of the total project costs, comprising 93 percent of foreign exchange cost (US$22.3 million), 55 percent of local cost, excluding taxes (US$40.7 million). GOI will finance the balance of project costs (about USS38.8 million), including duties and taxes which are estimated at US$3.8 million equivalent. The Bank will finance 70 percent of Civil Works including some construction of new buildings, where necessary at the AIAT headquarters to accommodate transferred staff but also for the rehabilitation and expansion of existing buildings where appropriate; 80 percent of the -52 - ANNEX 1 total value of Furniture and Equipment (including computers), Books and Journals (details in para. D3.7); 100 percent of Overseas Training; 75 percent of Local Training; 80 percent of Foreign and Local Technical Assistance; 80 percent of Research Collaboration; 75 percent of University Research Grants; 80 percent of Scientists/Managers Exchange Programs; and 50 percent of Incremental Operating Costs (including Research Management, Operations and Maintenance, Research Operations, and Technology Transfer Costs) based on a decreasing scale of funding starting at 60 percent in Year 1 and falling to 40 percent in Year 5 for the remainder of the project implementation period. GOI would finance 30 percent of Civil Works; 20 percent of Furniture, Equipment, Books and Journals; 100 percent of Vehicles; 25 percent of Local Training; 20 percent of Foreign and Technical Assistance; 20 percent of Research Collaboration; 25 percent of University Research Grants; 20 percent of Scientists/Managers Exchange Program; 50 percent of Incremental Operating Costs based on an increasing level of funding over the project period, and all Taxes and Duties based on the current 10 percent value added on contracts for Civil Works, Furniture, Equipment and other goods and materials. All AARD's non-incremental costs (including staff salaries) would be financed by GOI. GOI would continue to increase R&D operational expenditures by a minimum of 3 percent per annum, in real terms, to ensure adequate funding of the AIAT network in addition to the existing national research network. As approximately 70 percent of project costs will be incurred at the regional level, funding from GOI will flow directly through the provincial PIMBAGPRO, to the AIATs based on budgets which will be agreed and approved by the respective Regional Advisory Committees. Any funds provided by provincial governments to assist in the financing of AIAT operations will be considered part of the counterpart funds provided by GOI. The financing plan is shown in Table 1 below, and further details of GOI's and IBRD's annual share of the funding of incremental costs over the project period are shown in Appendix 1 of Annex 1. Table 1: FINANCING PLAN BY EXPENDrruRE CATEGORY AiD FINANCIER (US$ Million) GOI IBRD Total Civil Works 3.5 8.1 11.6 Equipment/Furniture/Books and Journals 2.7 10.7 13.4 Vehicles 2.0 - 2.0 Overseas Training - 3.4 3.4 Local Training 1.4 4.1 5.5 Technical Assistance 1.0 3.8 4.8 Research Collaboration 0.5 2.1 2.6 University Research Grants 0.5 1.7 2.2 Scientists/Managers Exchange Program 0.6 2.6 3.2 Incremental Operating Costs 26.6 26.5 53.1 Total Project Costs auS % Share 38% 62% 100% -/a Including taxes and duties equivalent to US$3.8 million. - 53 - ANNEX 1 B. PROJECT COsTs 3.2 Total project costs amount to about US$101.8 million. Total base costs amount to US$86.7 million apportioned approximately between (a) Investment Costs (49 percent) comprising Civil Works; Equipment, Fumiture, Computers, Books and Joumals; Vehicles and Boats; Training; Technical Assistance, Research Collaboration; Scientists/Managers Exchange Program, and a University Research Grant; and (b) Incremental Operating Costs (51 percent) comprising Research Management Costs; Operating and Maintenance Costs; Research Operations Costs; and Technology Transfer Costs. Overall, it is estimated that 70 percent of total base costs will be incurred at the regional level mainly to support the eight priority AIATs and 30 percent of the costs will be incurred at the national level. Project costs are planned to be incurred in two phases, each of five years duration, covering a period of six years. 3.3 The estimated project cost by expenditure category is shown in Table 2 below. Project costs by project subcomponent are shown in Table 3. Details of project costs by expenditure and major components are shown in Table 4 and by subcomponents in Appendix 1 of Annex 1. Detailed cost tables for all components and priority AIATs are available in the project file. Table 2: TOTAL COST BY ExPENDlTURE CATEGORY - Rupiah billion - - USS million - % Foreign % Total Local Foreign Total Local Fornign Total Exchange Base Cost L Investment Costs A Civil Works 15.3 6.5 21.8 6.9 3.0 9.9 30 12 B. Eqpt/Furn/Books & Journals 10.1 16.5 26.6 4.6 7.5 12.1 62 14 C. Vehicles 1.8 2.2 4.0 0.8 1.0 1.8 55 2 D. Technical Assistance: 1. Policy Development 0.4 - 0.4 0.2 - 0.2 2. CapacityBuilding 2.1 3.1 5.2 1.0 1.4 2.4 3. Project Management 1.5 2.2 3.7 0.7 1.0 1.7 Subtotal Technical Assistance 4.0 5.3 9.3 1.9 2.4 4.3 56 5 E. Training 10.0 6.6 16.6 4.6 3.0 7.6 40 8 F. Research Collaboration 2.0 3.1 5.1 0.9 1.4 2.3 60 3 G. UniversityResearchGrants 1.7 2.6 4.3 0.8 1.2 2.0 60 2 H Scientists/Managers 1.6 4.9 6.5 0.8 2.2 3.0 75 3 Exchange Program Total Investment Cost 46.5 47.7 94.2 21.3 2L7 43.0 51 49 IL Recurmnt Costs 1. Research Management 20.6 - 20.6 9.4 - 9.4 - 11 2. Opcrations and Maintenance 10.2 - 10.2 4.6 - 4.6 - 5 3. Research Operations 44.8 - 44.8 20.4 - 20.4 - 24 4. Technology Transfer 20.4 - 20.4 9.3 - 9.3 - 11 Subtotal Recurrent Costs 96.0 - 96.0 43.7 - 43.7 - 51 Total Baseline Costs 142.5 47.7 190.2 65.0 2L7 86.7 25 100 Physical Contingencies 7.8 2.4 10.2 3.5 1.1 4.6 23 5 Price Contingencies 20.6 2.3 22.9 9.4 1.1 10.5 10 12 Total Project Costs 170.9 52.4 223.3 77.9 23.9 101.8 23 117 I - 54 - ANNEX I Table 3: TOTAL COST BY PROJECT CoMPONENT AND SUBcoMPONENT - Rupish bilon - - USS million - % Faeip % TOWl Loa Foreign Todtl Local Foreign Total Exchange Bae Cost A. Regionalzation of Agricultural R&D Establizhment & Opctim of S ALATa 363 15.4 51.7 16.6 7.0 23.6 30 27 CbsrrtrizalionofAEZs atregla 2.4 1.3 3.7 1.1 0.6 1.7 35 2 Regional Research Program 22.3 1.8 24.6 10.4 0.1 11.2 7 13 Regional Technology Transfer Propram 13.7 - 18.7 8.5 . 8.5 10 Subtoal Regionalzion of Ag cuhursl R&D 3A2 13.5 5 36 3.4 450 19 52 B. Into of R&D Manasee Steghening Regional R&D Mnageent 6.0 6.0 2.7 - 2.7 3 Strehening Nat Commuication and Sci. 3.2 2.9 6.1 1.5 1.3 2.3 47 3 Uiteratur FstahlisbhnmeofNaL lvfSandNGASin he 4.1 2.2 6.3 1.9 1.0 2.9 35 3 region Building Re R.L and Tech Transfer 1.6 1.2 2.8 0.7 0.6 1.3 44 1 Capability Pilot Reg. Soil Fertility and Fetizer Us Pro& 4.0 1.0 5.0 1.1 0.4 2.2 19 3 Suppoft for ARM ll Projed lmplamdt 6.3 1.3 7.6 2.9 0.6 3.5 17 4 Subtoal Inituionlization of R&D Managemt 25.2 a6 33J 11.5 33 154 25 IS C. Pririlty Commodity Rtsearch Prog. SupportforPriority UvelockResrdh 5.1 1.3 6.4 2.3 0.6 2.9 20 3 Support for Priority Fisheries Rearch 6.4 1.4 7.3 2.9 0.6 3.5 18 4 Support for Priority Horti uiltre & Tree Crops 3.0 2.3 10.3 3.6 1.1 4.7 23 5 Research Support for Priority Discipline-Oriented 7.5 1.3 9.3 3.4 0.3 4.2 19 S Research National Human Resource Development 0.8 3.5 4.3 0.4 1.6 2.0 31 2 Program National Technical Asgistance and Special 1.9 2.2 4.1 0.9 1.0 1.9 54 2 Studies Subtotal Priority Commodity Resarch Propam 29.7 12.5 42.2 13.5 57 19.2 30 22 D. SwegthenIng R&D Collabo SuarngthingLnkage to Nationsi Agecig 2.1 1.2 3.3 1.0 0.5 1.5 35 2 StreheningLinkageato nter. &Regioml 5.3 6.9 12.2 2.4 3.2 5.6 57 6 Res. Org. Subtotal Strengthening R&D Colaboralion 7.4 1 15. 3.4 3.7 7.1 52 a Total Baseline Coats 142.5 47.7 190.2 650 21.7 37 25 100 Physical Contingencies 7.8 2.4 10.2 3.5 1.1 4.6 23 5 Price Contingencies 20.6 2.3 22.9 9.4 1.1 10.5 10 12 Total Project Costa 170.9 52.4 223.3 77.9 233 103 23 117 - 55 - ANNEX 1 Table 4: TOTAL COST BY COMPONENT AND EXPENDTruRE USS million Priority Regionalization RegionaUzation Commodity Strengthening of Agriculture of R&D Ruearch R&D R&D Management Program Collaboration Total I. Investment Costs Civil Works 10.3 0.1 1.2 - 11.6 Equipment, Furniture, Books, Jrnls. 5.6 4.4 3.2 0.2 13.4 Vehicles 0.9 0.7 0.4 - 2.0 Technical Assistance: Policy Development - 0.2 - - 0.2 Capacity Building 0.7 0.9 0.9 0.2 2.7 Project Management - - 1.9 - 1.9 Subtotal Technical Assistance 0.7 1.1 2.8 0.2 4.8 Training 4.9 1.8 2.2 - 8.9 Research Collaboration - - - 2.6 2.6 UniversityResearch Grants 1.3 0.1 - 0.8 2.2 ScientistsfManagers Exchange Program - 0.8 - 2.4 3.2 Total Investment Cost 23.7 9.0 9.8 6.2 48.7 II. Recurrent Cost Research Management 4.5 6.8 - - 11.3 Operations and Maintenance 4.3 0.5 0.8 0.1 5.7 Research Operations 11.7 1.5 11.6 - 24.8 Technology Transfer 9.6 - - 1.7 11.3 Total Recurrent Cost 30.1 8.8 12.4 1.8 53.1 Total Project Costs . 1l LQ I10i 3.4 Bases of Cost Estimates. Project Costs were estimated as follows: (a) Base Costs. Cost estimates were based on a review of actual costs updated to April 1995 (date of negotiations) with adjustments for local and foreign inflation over the project period in accordance with Bank guidelines. Additional cost information was derived from: (a) GOI's updated standard cost guidelines for construction and refurbishment of civil works; (b) recent quotations from suppliers for equipment (including computers) furniture, boats and vehicles; (c) costs of foreign and local training and consultant services currently charged by local, European and North American consultants and training programs; (d) incremental recurrent costs, all aspects of which were exhaustively reviewed by the pre- appraisal and appraisal missions and have been arrived at using research operation costs derived from AARD's guidelines for estimating research costs based on the experience of the ARM Project. Estimates for other costs under the headings of research management, operations and maintenance, and technology transfer are also based on AARD's ARM Project experience and have been revised and - 56 - ANNEX 1 modified where appropriate by the appraisal mission. As the cost of some activities under the project (e.g., unit costs of laboratory equipment, workshops, meetings with farmers) are comprised of numerous items of expenditure, it was deemed appropriate to aggregate these costs into lump sums where necessary to facilitate the processing of the detailed project cost tables. Where costs have been aggregated, the composition of the lump sums shown in the cost tables may be found in working papers entitled " Notes to COSTAB" in the project files. Project costs have been converted into US dollars at the exchange rate of Rp 2,193tUSS1.00. (b) Contingency Allowances. Project costs include a contingency for unforeseen physical variations (US$4.6 million) equivalent to 10 percent of the base cost of Civil Works and 5 percent for all other items, with the exception of Scientists/Managers Exchange Program and Books and Journals. The following rates were used to cover expected price escalation over the 6 year project period from 1996-2001: local costs 5.0 percent; foreign costs 2.2 percent. Price contingencies amount to US$10.5 million over the project implementation period. (c) Foreign Exchange Component. The foreign exchange component is estimated at about US$23.9 million including contingencies, or 23 percent of total project cost. Calculations of the foreign exchange component were derived from an item by item analysis resulting in the following: 30 percent for Civil Works; 60 percent for Equipment; 55 percent for Vehicles; and 100 percent for Foreign Training and Technical Assistance; 60 percent for Research Collaboration; 60 percent for University Research Grants; 75 percent for Scientists/Managers Exchange Program; and 100 percent for Books and Journals. (d) Customs Duties and Taxes. Taxes and duties, which will be financed by GOI, are estimated at US$3.8 million based on the current 10 percent value added tax on all contracts for Civil Works, Equipment, and other goods and materials. 3.5 Incremental Operating Costs. Included in the project costs are about US$53.1 million to cover incremental operating costs directly attributable to the project over the 6 year project period. These consist of Incremental Research Management Costs connected with the decentralization of research management to the regions, Operations and Maintenance Costs for newly constructed civil works and items of equipment acquired under the Project, Research Operating Costs for research being undertaken in priority research areas, and Technology Transfer Costs to disseminate research results to farmers. During the Project duration, AARD will pay extra attention to monitoring the adequacy of recurrent finds for maintenance and operation of facilities and newly instituted programs, and take necessary actions to rectify any deficiencies. To monitor operating expenditure, AARD will collect and report, on a yearly basis, all incremental and non-incremental operating expenditure incurred under specific cost headings to assist in monitoring input and output indicators. (Appendix 1 in Annex I provides the format for reporting). - 57 - ANNEX 1 Table 5: SUMMARY OF PACKAGES AND SCHEDULE FOR PROCUREMENT OF CIVIL WORKS Estimated Procurement Project Award Contract Component No. Location Cost Needed Tendering Quotation Contract Completion USS m A- Reg. Agric. R&D 1. Palu/Sidondo 0.94 NCB Jun 95 Aug 95 Nov 95 April 98 2. ManadolKalasey 0.85 NCB Jun 95 Aug 96 Nov 95 April 98 3. Kendari/Wawotobi 1.11 NCB Jun 95 Aug 95 Nov 95 April 97 4.UugPandang ) 4 o Ns/Goa ) 0.90 NCB Jun 95 Aug 95 Nov 95 April 97 Jeneponto } 5. AmbonlMakariki 1.08 NCB Jun 95 Aug 95 Nov 95 April 97 6. Gcdong Johor Pasar Miring) Bcrastag } 1.04 NCB Jun 95 Aug 95 Nov 95 April 97 Sei Pu tih 7. Aceh/Paya Gajah 0.90 NCB Dec 95 Feb 96 May 96 April 99 8. Padang Marpoyan 1.27 NCB Dec 95 Feb 96 May 96 April 99 9. Pontianak 0.76 NCB Dec 95 Feb 96 May 96 April 98 10. Ungaran } Fisheries Semarng ) 1.50 NCB Dec 95 Feb 96 May 96 April 98 Yogyakarta ) B. Region. R&D 11. Regional Soil Programo.09 NCB Jun 95 Aug 95 Nov 95 April 96 Management Bogor C. Priority Res. 12. Livestock Ciawi 0.11 NCB Dec 95 Fcb 96 May 96 April 98 Prog. Fisheries Jakarta 13. Vessi Rehab. 0.21 NCB Jun 95 Dec 95 April96 April 97 14. Ecobiology Lab. 0.04 NCB Dec 95 Fcb 96 May 96 April 97 15. Fisheries Maros 0.09 NCB Dec 95 Fcb 96 May 96 April 97 16. Horticulture } Jakarta Tree Crops } 0.42 NCB Jun 95 Aug 95 Nov 95 April 97 17. Biosafety Lab. Ciomas 0.22 NCB Dec 95 Feb 96 May 96 April 98 18. Tools & Mach. Facil. Serpong 0.06 NCB Jun 95 Aug 95 Nov 95 April 97 Total Civil Works 1L59 Number of Contracts 18 (NCB for prior review: 10 contracts estimated value USS 10.4 mullion) - 58 - ANNEX 1 Table 6: SUMMARY OF PACKAGES AND SCHEDULE FOR PROCUREMENT OF EQUIPMENT, FuRNITuRE, BooKs AND JOURNALS Est. Cost Procurement Prepare Award Contract Component US$ mn Method Tendering Invitation Contract Completion A. Regionalization of Agric. R&D 1. Post Harvest Equipment 0.30 ICB Jun 95 Aug 95 Jan 96 Sep 96 2. Farm/Field Equipment 0.87 NCB Jul 95 Sep 95 Feb 96 Oct 96 3. Outboard Motors 0.08 NCB Jul 95 Sep 95 Feb 96 Sep 96 4. Office Equipment & Fum. 0.25 NCB Jul 95 Sep 95 Feb 96 Jun 98 5. Gen. Livestock Lab. Equip. 0.79 ICB Jun 96 Aug 96 Jan 97 Jun 98 6. Gen. Crop Lab. Equip. 0.85 ICB Jul 96 Sep 96 Feb 97 Jul 98 7. Gen. Fisheries Lab. Equip. 0.75 ICB Aug 96 Oct 96 Mar 97 Aug 98 8. Mult. Media Prod. Equip. 0.81 ICB May 96 Jul 96 Dec 96 Jun 98 9. Guest House Furn. 0.05 NCB Apr 96 Jul 96 Dec 96 Jun 99 10. Soil Sample Prep. Lab. 0.07 NS Apr 96 - - Jun 98 11. Soil Service Lab. Equip. 0.79 ICB Aug 95 Oct 95 Mar 96 May 98 B. Regionalization of R&D Mgmt. & Strength. Links Nat. Agencies 12. Audiovisual/Comm. Equip. 1.29 ICB May 95 Jul 95 Dec 95 Aug 97 13. Office Equip. & Fum. 0.48 NCB Jul 95 Sep 95 Feb 96 Jun 97 14. Books and Journals 0.72 DC May 96 - - Dec 99 15. Computer Equipment/Soft. 1.87 ICB Jun 95 Aug 95 Jan 96 Sep 96 16. Soil Test and Fert. Equip. 0.27 ICB Aug 95 Oct 95 Mar 96 Sep 96 463 C. Priority Comm. Res. Prog. 17. Livestock 0.65 ICB Jul 95 Sep 95 Jan 96 Oct 96 18. Fisheries 0.39 ICB Nov 95 Dec 95 Jan 96 Aug 96 19. Horticulture Crops 0.58 ICB Jul 95 Aug 95 Dec 95 Apr 96 20. Tree Crops 0.40 ICB Jul 95 Aug 95 Dec 95 Apr 96 21. Estate Crops 0.14 NCB Jul 95 Aug 95 Dec 95 Apr96 22. Bio Safety 0.87 ICB July 95 Sep 95 Jan 96 Sep 96 23. Equip/Ser. Pong. 0.13 NCB Apr 96 Jun 96 Dec 96 Apr 97 326 Total lSS13.40 23 Contract Packages (14 ICB and 6 NCB contracts subject to prior review with estinated value USS10.0 million and USS2.0 million respectively. -59- ANNEX 1 D. DISBURSEMENT AND FINANCING SCHEDULES 3.6 Disbursements. The Project is expected to be completed by October 1, 2001. The Bank Loan of US$63.0 million equivalent will be disbursed over the six year project implementation period, and is expected to be completed by April 30, 2001, the Loan Closing Date. This profile is consistent with the strong implementation capacity of AARD as demonstrated during the implementation of the ARM Project. This forecast takes into account the complexity of the Project, the decentralization of the research management function to the regions, and the capabilities of the accounting/finance function within AARD. Disbursements for FY1995/96 are based on the initial deposit into the Special Account and replenishments. A summary of the disbursement plan is shown in Table 7. Table 7: DISBURSEMENTS BY YEAR FY Annual Cumulative Cumulative % 1995/1996 7.0 7.0 11 1996/1997 14.0 21.0 33 1997/1998 15.0 36.0 57 1998/1999 14.0 50.0 79 1999/2000 7.0 57.0 90 2000/2001 6.0 63.0 100 3.7 Disbursements from the Loan will be made as follows: (a) 70 percent of expenditure on Civil Works; (b) 100 percent of foreign expenditure on Equipment (including computers), and Furniture, Books and Journals; 100 percent of local expenditures (ex-factory cost) for locally manufactured items; and 65 percent of other locally procured items; (c) 100 percent of expenditure on Overseas Training; 75 percent of expenditure on Local Training; (d) 80 percent of expenditure on Consultants Services; (e) 80 percent of expenditure on Research Collaboration; (f) 75 percent of expenditure on University Research Grants; l -60 - ANNEX 1 (g) 80 percent of expenditure on Scientists/Managers Exchange Program; (h) Incremental Operating Costs (including Research Management, Operations and Maintenance, Research Operations, and Technology Transfer costs) for the life of the loan based on the following declining percentages: 60 percent of expenditures incurred in FY1996 and FY1997; 50 percent of expenditures incurred in FY1998 and FYI 999; and 40 percent of expenditures incurred thereafter. 3.8 For disbursement purposes, full documentation will be required for all contracts at or exceeding the following amounts: (a) for civil works, US$750,000; (b) for goods USS200,000; (c) for technical assistance contracts with firms US$100,000, and (d) for contracts with individuals US$50,000. For all expenditure in those categories below the limits specified and for expenditure on training, research collaboration, university research grants, scientists/managers exchange program, and incremental operating costs, disbursements will be made on the basis of certified Statements of Expenditure (SOEs). This documentation will be available for the required audit and also to Bank supervision missions, and will be retained by the PMU for at least one year after receipt by the Bank of the audit report for the year in which the last disbursement was made. 3.9 Special Account. In order to facilitate disbursements, the Government will establish a Special Account in the amount of US$3.5 million in Bank Indonesia, or at a commercial bank acceptable to the Bank. This account should be maintained by the Directorate General of Budget, MOF. The Special Account would be used for all eligible foreign and local expenditures under all categories. Replenishment to the Special Account will be made on a monthly basis, or when 20 percent of the initial deposit has been used on the basis of replenishment requests with supporting documents satisfactory to the Bank. E. AccouNTs AND AuDrrs 3.10 Accounting and auditing arrangements under the Project will be similar to those established under the ARM Project (Loan 3031-IND). To facilitate the audit of the project accounts, AARD will collect and consolidate the account records of a8l project expenditure into a single document in a format agreed with the Bank (Appendix 1). Assurances were obtained from AARD during negotiations that: (a) all project accounts, including schedules of expenditure claimed under SOE procedures and usage of the Special Account will be audited annually by the Government Audit Agency (BPKP), or other suitably qualified auditors acceptable to the Bank; and (b) audit reports of project accounts, SOE, and Special Account will be submitted to the Bank within six months of each Government fiscal year. 3.11 Reporting and Annual Reviews. The PMU will prepare semi-annual descriptive and financial reports on each project component, objective, and activity (beginning from the date of Loan Effectiveness). Information on the regional components (Components 1 and 2) will be provided by the PrU Coordinators through quarterly reports to be submitted to the AARD Director General, with copies to the PMU Director, relevant AARD Work Units, and the Bank. The reports will describe: (a) current status and achievements of the Project; (b) problems met -61- ANNEX 1 and deviations, if any, from the implementation plan; and (c) the reasons for deviations and corrective actions being taken. The progress reporting format and procedure followed in the ARM Project will be used with modifications, as needed. Reporting and Bank supervision will focus on in-depth reviews of the: (i) policy framework for sectoral improvements; (ii) the consistency of activities for each component and subcomponent with agreements reached at negotiations, (iii) performance of the implementing groups and institutions; (iv) assessment of emerging needs for adjustments to project parameters; and (v) possible follow-up operations which could be supported by the Bank. Bank supervision will be based on the semi-annual progress reports and the annual evaluation of project activities by the AARD. This will be supplemented by a review of project expenditures and availability of financial resources, in addition to substantive discussions with technical assistance groups implementing and/or assisting in the implementation of various activities, and discussions with responsible Government authorities. The PIP will be the basis for supervision and reporting. 4. DETAILED IMPLEMENTATION ACTIVITIES A. DETALED PROJECT ACrIVITIES 4.1 Detailed activities under each component and subcomponent are summarized in this section. Detailed information is available in the Project Operational Manual prepared by an AARD Project Preparation Team, under the guidance of the AARD Director General. Implementation schedules for each component and subcomponent are given in Appendix 2 of the PIP (Annex 1). (a) Regionalization of Agricultural R&D (i) Establishment and operation of eight priority AJATs. The eight priority AIATs to be supported by the Project, including the provinces which they will cover, are as follows: for Phase I (beginning Year 1) - (a) AIAT Ambon (Maluku), (b) AIAT Gedong Johor (North Sumatra), (c) AIAT Kendari (South Sulawesi and Southeast Sulawesi), (d) AIAT Biromaru (Central Sulawesi and North Sulawesi), and for Phase II (beginning Year 2) - (e) AIAT Banda Aceh (DI Aceh), (f) AIAT Padang Marpoyan (Riau and Jambi), (g) AIAT Pontianak (West Kalimantan), and (h) AIAT Ungaran (Central Java and DI Yogyakarta). The other nine AIATs, including AIAT Naibonat (West Nusa Tenggara, East Nusa Tenggara and East Timor) under the Bank-supported proposed Nusa Tenggara Regional Agricultural Development Project, will be supported by GOI with assistance from other donors. The activities include the organization a Regional Advisory Committee and a Regional Technical Working Group for each AIAT. In cases of two- or three-province AIATs, there will be one committee and working group in each province. AARD will assign a full complement of staff in each AIAT, based on the needs of the regional R&D - 62 - ANNEX 1 program, by reassignment, relocation, limited recruitment, and retraining of staff. The physical facilities of the former Agricultural Information Centers, which were recently transferred to AARD, and AARD's substations and experimental farms, will be upgraded for used by the AIATs. Existing facilities will be rehabilitated and selected new facilities will be constructed, based on the specific needs of each AIAT, as follows: (a) offices for researchers, extension workers, and administrative staff, (b) facilities for production of multi-media materials; (c) soil preparation facility; (d) seed preparation and storage facility; (e) basic crops, fisheries and livestock research laboratories; (f) additional staff housing; (g) postharvest and processing facility; and (h) library. Furniture and equipment, including computers, will be procured to make these facilities operational. In addition, vehicles such as cars, boats, and motorcycles, will be procured through the Project. Using strategic planning and programming methods and tools developed under the ARM Project, and with assistance from short-term consultants, each AIAT will develop a regional R&D master plan, including R&D priorities, resource requirements, staffing requirements, priority R&D program and budget; and responsible agencies. A peer review process and criteria for evaluation will be introduced for approving proposals and for determining achievements and impact of project interventions. As new AARD Work Units, the AMATs capability to carry out R&D and management activities will have to be strengthened considerably. Fellowships, short-term training on technical, social sciences, and management topics, and short-term technical assistance will be provided to assist the AIAT staff. To give incentives for researchers and managers to move to more isolated AIATs to work on farm-level activities, the current incentive system will be reviewed and AARD will introduce innovative methods of rewarding excellence in R&D and management. AARD will also consider gender equity in recruitment, promotion, career advancement, priority for staff training, and other personnel matters. (ii) Characterization of AEZs as basis for planning in eight priority regions. The various AEZs in Indonesia have been characterized for different purposes, such as for provincial development planning. Under this subcomponent, existing AEZ characteristics will be refined by gathering additional data through diagnostic surveys, rapid rural appraisal, and analyzing and interpreting information for R&D planning. In addition to physical characteristics of the regions, information on the economic, social, and cultural aspects, including the role of men, women, youth, and distinct cultural groups whose production is primarily subsistence-oriented. Their roles in households and in the agricultural production systems, which will be used as basis for incorporating these agreed concems in project - 63 - ANNEX 1 activities. Potential effect of research output, to the environment, will be gathered. AEZ data bases will be developed to computerize, compile, analyze, interpret, and maintain the regional databases to facilitate the utilization of information by various user groups, such as local planners and policymakers, researchers, extension workers, and other development workers. (iii) Support for regional R&D program. The regional R&D program will focus on the important constraints and technology needs of the major production systems in the regions covered by AIATs. The AIAT staffs' capability in farming systems methodology, data analysis and interpretation, policy formulation, social analysis, gender analysis, and technology transfer methodology, will be improved. Constraints and available technology will be matched and tested in collaboration with farmers, DINAS, and extension workers. Emphasis will be on testing and verification of component technologies on farmers' fields, including focusing on the specific needs of special groups like women, youth, and distinct cultural groups whose production is primarily subsistence-oriented. The best technologies will be integrated with current farming practices and tested using farming systems approach. Technology menus will be developed for further on-farm testing and upscaling. Special studies will be carried out, with assistance from specialists (under TA) on topics such as role of men and women in the household and in the farming systems, cultural issues, assessment of extension impact, and analysis of farner adoption rates, in collaboration with local universities (under the University Research Grant). (iv) Support for regional technology transfer program. This subcomponent will promote the utilization of integrated technologies developed for use in specific major fanning systems. The skills of farmers and extension workers on the application of new technologies will be increased by organizing on- farm demonstrations of best technologies and field days to provide participatory evaluation and promote technology utilization. Upscaling and piloting selected technologies will be carried out with the DINAS and extension workers involving many more farmers to enhance farmers' adoption. Social, cultural, and gender-related concerns will be integrated in project activities, especially in areas traditionally the prerogative of women such as fruit and vegetable processing, fish handling and marketing, home gardens, etc. To facilitate technology transfer, farmer-oriented publications and audio-visual support materials, will be produced for farm-level information dissemination. Farmers will be exposed to new agricultural development activities elsewhere through their participation in regional fora, farmers' meetings, and farmer-to-farmer visits. Other well-targeted publications will also be prepared for public awareness-building on research outputs and impact. Based on feedback from farmers and other users, the regional MIS databases will be updated periodically. Other stakeholders, such as policymakers, community and locally-based organizations, and the - 64 - ANNEX 1 private sector, and special groups such as women, youth, and distinct cultural groups whose production is subsistence-oriented, will be encouraged to participate in regional fora, workshops, and other technology promotion activities. (b) Institutionalization of R&D Management (i) Strengthening R&D planning, priority setting, policy formulation, MIS, monitoring and evaluation. As the GOIL with possible assistance from other donors, will establish and operate the remaining nine AIATs in the network, the Project will assist GOI by introducing administrative and management reforms, developed under the ARM Project, to the regional level. The remaining nine AIATs and relevant provinces include: AIAT Karangploso (East Java and Bali), AIAT Koya Barat (Irian Jaya), AIAT Lembang (West Java and DKI Jakarta), AIAT Natar (Lampung), AIAT Naibonat (East Nusa Tenggara, West Nusa Tenggara and East Timor), AIAT Palang Karaya (Central Kalimantan and South Kalimanatan), AIAT Puntikayu (South Sumatra), AIAT Samarinda (East Kalimantan), and AIAT Sukarami (West Sumatra and Bengkulu). Regional planning, priority setting, policy formulation, monitoring and evaluation, including impact assessment methodologies, social analysis, gender analysis, and use of backstopping and feedback mechanisms, will be introduced to the 17 AIATs in the network. The skills of AMAT staff and the staff of collaborating institutions will be improved by training on appropriate management processes, procedures, and tools with assistance from consultants. The Project will support expenditures for putting these administrative and management procedures in the 17 AIATs in the network. Using initial experience in Phase I of the Project, the AEZs and regional R&D master plans in the remaining nine regions not covered in Component 1 wil be completed. The annual review of R&D activities and regional planning will be undertaken in all 17 AIATs each year. A peer review of R&D proposals and of research outputs will be undertaken at regional venues. To facilitate information dissemination and provide feedback to researchers, a regional forum will be established as a regular means of consulting relevant stakeholder, especially farmers, extension workers, local entrepreneurs, the private sector, and community and locally-based organizations. (ii) Strengthening national communication and scientific literature service. Under the leadership of CALREC, the national and regional communication networks will be linked and the scientific literature service at the regional level will be strengthened under the Project to improve access to scientific information by AIAT staff. AARD Work Units will be linked to IPTEKNET, an Indonesian consortium of government agencies - 65 - ANNEX 1 and universities for information exchange. Books and journals on appropriate topics will be provided the AIATs and the existing library facilities will be rehabilitated to provide better service to farmers, researchers, extension workers, local university students, and other development workers. Through CALREC, the linkages between the AARD commodity research institutes and regional assessment institutes will be strengthened to facilitate access to national and international databases. Computers will be procured to establish this electronic communication network within AARD Work Units that would provide access to e-mail and file transfer services, and worldwide linkages through ITERNET. Short-term technical assistance and staff training will be provided on information networking, computer technology, data analysis and interpretation, and database development and management. Preparation, mass production, and distribution of multi-media materials will be major activities at the regional level to support technology transfer. (iii) Establishment of national MIS and new government accounting and rinancial and administrative systems in the regions. Under the ARM Project, a national MIS was developed for project, financial, and personnel management. Under this subcomponent, the MIS databases will be streamlined to conform with AIAT needs and requirements by both managers and researchers at the regional level. To improve the capability to analyze and utilize information for planning and managing R&D activities, and policy formulation, the capability of AIAT staff will be improved by sequenced and timely short-term and in-service training. Relevant AIAT staff will also be trained on the New Government Accounting System (NGAS), to be introduced to the AIATs during the project period. To encourage AARD staff to move to the AIATs, especially those in more remote locations, the current staff incentive system will be reviewed to update the criteria for recruitment and promotion considering the new mandates of the AIATs, different skill mixes required for implementing the regional R&D activities, and the addition of extension workers in the AIAT staff complement. Innovations will be introduced to reward excellence in R&D and management. Among others, AARD will consider gender equity in recruitment, promotion, career development, staff training, and other personnel matters. (iv) Building regional research and technology transfer capability. As a new AARD Work Unit, the capability of AMAT staff to manage integrated R&D programs using multidisciplinary and participatory approaches, including farming systems methodology, will be very limited. The capability of staff will be strengthened by providing degree and non-degree training and short-term technical assistance in scientific fields, in strengthening research-extension-farmer linkages, including the use of new methods, such as community participation approaches. To assure sharing of information and experiences across regions, a national/regional and regional/regional - 66 - ANNEX 1 scientists, managers, and extension workers exchange program will be implemented to allow staff to move across organizations and provide them with the necessary support and incentives. (v) Pilot regional soil fertility and fertilizer use program. The pilot soil fertility and fertilizer use program will support the establishment of three regional soil testing laboratories in Maros (South Sulawesi), Medan (North Sumatra), and Yogyakarta (D.I. Yogyakarta) to serve the needs of farmers. This facility will work with the soil sample collection and preparation facilities at the AIATs under Component 1. Existing soil testing facilities at the AARD research institutes in the three areas will be upgraded and provided with special equipment to carry out analysis of a large number of samples for routine soil analysis. In addition, the laboratory in Medan will carry out plant tissue analysis. CSAR in Bogor will provide basic soils analysis training, coordination of work in the AIATs and the regional soils laboratories, and data storage. The Project will also provide travel and per diem to CSAR staff to carry out coordination activities. In addition, short- term technical assistance for the soil testing network and staff in-service- skill building will be provided on soil and plant sampling and analysis, technical data interpretation, and use of information. The Project will also support fertilizer-crop response studies in both over-fertilized and under- fertilized areas, including activities with universities under the University Research Grant. (vi) Support for ARMP II Project Implementation. This subcomponent will support the establishment and management of the national Project Management Unit (PMU) and eight regional Project Implementing Units (PIUs) which will be charged with daily operations of the Project. Office facilities, furniture, equipment, and vehicles will be provided for the PMU and PIU staff. AARD will assign full-time staff to support these units. The Project will also provide support for the PMU to coordinate national level activities (Component 3 and 4). In addition, support will be provided to CARP, the AARD Secretariat, and CASER for overall coordination of project activities. (c) Priority Commodity and Discipline-Oriented Research Program (i) Support for priority livestock research. Livestock research will focus on increasing the productivity of the livestock subsector, especially in small holder farming systems. Research will be implemented by the Research Institute for Livestock Production (RELP) and the Research Institute for Animal Diseases (RLAD), under the coordination of the Central Research Institute for Animal Science (CRLAS). Research will focus on: (a) animal feeding and nutrition emphasizing technologies for the Eastern Islands, (b) animal breeding with emphasis on selection and preservation of indigenous breeds, especially of goats, sheep, and chickens; and (c) animal - 67 - ANNEX 1 health with emphasis on a few major diseases in priority regions in collaboration with the Livestock Services in the provinces. To support these priority research projects, selected existing facilities, including barn and animal houses, will be rehabilitated to upgrade them. The Project will also provide scientific equipment, furniture, vehicles, and technical assistance. (ii) Support for priority fisheries research. The Central Research Institute for Fisheries (CRIF) and its three research institutes: (a) the Research Institute for Marine Fisheries (REMF) in Jakarta; (b) the Research Institute for Coastal Fisheries (RICF) in Maros, and (c) the Research Institute for Freshwater Fisheries (R1FF) in Sukamandi, will carry out research and contribute to the development of fisheries R&D capacity at the regional assessment institutes. Research areas identified include: (i) tuna stock assessment and formulation of a management plan; (ii) diversification of marine and fresh water finfish aquaculture; (iii) environmental management for intensive aquaculture especially to manage diseases; and (iv) post- harvest technology for fish. Support will be provided to construct and rehabilitate special laboratories, including rehabilitation and refurbishing of a research vessel, to upgrade these laboratories. The Project will provide scientific equipment, furniture, vehicles including boats, and technical assistance. Joint activities with research units of the National Institute of Sciences (LIPI) and the Agency for the Assessment and Application of Technology (BPPT) will also be supported. The tuna stock assessment is expected to be done through collaboration with the Philippines and a specialized organization. This research study will include a lump sum provision of funds for specialist support for training on methodology, data gathering and analysis, monitoring of stocks, and formulation of a stock management plan. (iii) Support for priority horticulture and tree crops research. This research program will diversify the selection of high value fruit, vegetable, ornamental, fiber, medicinal, spices, oil-producing, and estate crops and improve the quality and increase value added of products from these crops. Research will be implemented by the following AARD research institutes: (a) Central Research Institute for Horticulture (CRIH) for ornamental and cut flowers; (b) Research Institute for Vegetables (RIV); (c) Research Institute for Fruit Crops (RIFC); (d) Research Institute for Spices and Medicinal Plants (RISMP); (e) Research Institute for Coconut and Palms (RICP); and (f) the various estate crops research and development centers under the Indonesian Planters Association for Research and Development (IPARD). The research areas identified are: (i) development of superior hybrids/clones suitable for specific areas, especially in Eastern Indonesia; (ii) reduce crop losses from diseases, pests, and low soil fertility through integrated pest management and soil fertility management; and (iii) development of postharvest processing and management systems, - 68 - ANNEX 1 including agroprocessing to enhance product value and minimize effects of waste. Selected existing facilities will be rehabilitated to improve research implementation in these areas. The Project will provide scientific equipment, furniture, vehicles, and technical assistance. (iv) Support for priority discipline-oriented research. Relevant conmmodity research institutes will conduct projects on identified high priority disciplines that cut across several commodities, such as: (a) biotechnology (using plant, livestock, fish and microorganisms), including construction of bio-containment facility for testing transgenic plants; (b) development of postharvest handling and primary and secondary processing technologies; (c) development, testing and adaptation of agricultural equipment, tools, and implements, especially for processing and postharvest handling; (d) marketing studies to including grading of raw materials, market information, market intelligence, and market competition; (e) anthropology and sociology studies about the farming systems and rural communities, including local organizations, traditional community-based natural resource management systems, and gender and cultural issues which affect agricultural development; (f) agricultural policies and their impact; and (g) improvement of the quality of planting materials. The Project will provide scientific equipment, furniture, vehicles, and technical assistance. (v) National human resource development program. This subcomponent is a continuation of a similar program implemented under the ARM Project to further improve the capability of AARD on selected more basic and applied disciplines. Degree and non-degree training will emphasize special fields in livestock, fisheries, horticulture, and tree crops research. Some selected disciplines include (a) plant, livestock, and fish breeding; (b) biotechnology in plant, livestock, fish and microorganisms; (c) fisheries; (d) economics, sociology, and anthropology; (e) soil mapping and soil classification; (f) agroprocessing; (g) management information systems; and (h) research and extension management. The selection of staff who will undergo training will follow the guidelines and criteria used under the ARM Project, with modifications, as needed, but with special consideration to equity among men and women staff and among national and regional staff. Support for attendance to conferences, seminars, and workshops on scientific topics and methodologies, both local and foreign, will also be provided. (vi) National technical assistance and special studies. Considerable local expertise has been built in AARD Work Units on technical and management fields under the ARM Project. Hence, this component will augment expertise within the relevant commodity research institutes on key topics and to assist in carrying out special studies. Emphasis will be given to fields where local expertise in AARD is still weak or lacking. Most of the technical assistance will be short-term based on needs of specific - 69 - ANNEX 1 project implementing units. In addition to special technical disciplines, areas in research management, sociology including cultural and gender issues, development communication, extension education, and technology transfer will also be included. (d) Strengthening R&D Collaboration (i) Strengthening linkages to national agencies. This subcomponent will tap the research expertise in universities and other R&D institutes (i.e., under LIPI and BPPT) to backstop the needs of the AIATs in specific regions. It will continue the competitive grant program started under the ARM Project. Under the University Research Grant, universities and AARD Work Units, will plan and implement joint projects on the high priority areas identified in Components 1 and 3, but emphasizing topics of regional importance. A twining arrangement will be tested whereby a provincial university, a more developed university, and an AARD Work Unit will plan, design, and implement joint projects. Support will be provided by the Project to strengthen linkages with the private sector, DINAS at the provincial and district levels, parastatals, community and locally-based organizations, and other development projects, using innovative ways of cost-sharing. A forum for regular consultation on R&D priorities, information and technology sharing, and discussion of policy issues with stakeholders, will be established. (ii) Strengthening linkages to international and Asia-Pacific research organizations. This subcomponent will improve Indonesia's access to relevant technologies generated by international research centers (i.e., centers under the CGIAR) and enhance the exposure of Indonesian scientists to the international research community, other NARS in the region, and Asia-Pacific research centers. Special attention will be given to R&D activities which will support the ASEAN Growth Areas where Indonesia is an active participant. Joint proposals will be prepared by AARD Work Units in consultation with potential collaborating institutions following the priorities established by the AIATs (Components 1 and 2) and the commodity research institutes (Component 3) to ensure that collaboration is demand-driven. Support for collaboration on the following areas will be provided: (a) joint research, (b) hands-on training, (c) technical assistance, (d) information sharing; (e) publication in intemationally refereed joumals; (f) attendance to intemational and regional scientific fora to participate and present papers; and (g) conduct or joint sponsorship of intemational or regional fora (conferences, seminars, and workshops) to be held in Indonesia. The Project will also support an exchange program for scientists and managers of AARD Work Units and staff of international agricultural research centers, selected foreign universities, Asia-Pacific national agricultural research systems and research centers. - 70 - ANNEX 1 B. LMPLEMENTATION SCHEDULE 4.2 Appendix 2 of Annex 1 includes the detailed schedule of implementation by component, subcomponent, and activity. The schedule takes into account the work to be carried out to complete project preparation and reflects the detailed implementation activities. Based on the quality of the work already completed, it is planned that some implementation activities will start prior to the Project's Loan Effectiveness. 5. MONITORING AND EVALUATION A. PROJECT INDICATORS 5.1 Input Indicators will track planned investments in terms of contracted technical assistance (staff-months), enrollment and time (staff-months) in training programs, procurement of civil works and goods, and research, management, and technology transfer activities. These indicators will be presented in standard input tables for each component and major subcomponent of the Project to be developed by AARD. 5.2 Output Indicators will track items such as the number and type of technology or technology packages generated, tested, and verified by AIATs and farmers; rate of diffusion of these technologies; improved research management procedures and tools introduced; R&D priorities established and effect on allocation of R&D funds; number of training, workshop, field days, and on-farm demonstrations held and persons who participated; the number and outcome of R&D activities that have been completed by a given date during the project cycle; number and type of facilities rehabilitated or constructed; and number and type of equipment, journals, and books procured. These indicators will be tracked in standard output tables for each component and major subcomponent of the Project to be developed by AARD. 5.3 In an effort to track Government expenditures in agricultural research, including those from provincial sources, the Government has agreed that the AARD would collect and report, on a yearly basis, agricultural research expenditures, using existing methods, to assist in monitoring input and output indicators. B. DEVELOPMENT INDICATORS 5.4 Tracking key monitoring indicators is necessary to measure the effect of the project inputs on the attainment of the major development objectives of the Project. Given the essential role that project monitoring and evaluation play in determining the benefits or negative impact of a given intervention on development objectives, three sets of indicators will be used to monitor and evaluate progress during project implementation: (a) outcome indicators, (b) input indicators, and (c) output indicators. Details of the performance indicators by components, subcomponents, and - 71- ANNEX 1 evaluate progress during project implementation: (a) outcome indicators, (b) input indicators, and (c) output indicators. Details of the performance indicators by components, subcomponents, and activities are in the Notes on Performance Indicators in the Project Operational Manual in the project files. 5.5 Outcome Indicators. These key performance indicators will track whether or not the development objectives of the Project have been met. Two criteria were used to select the basic outcome indicators: (a) that the indicator is known to be sensitive to the intervention introduced under the Project; and (b) that the data will be available through periodic collection and analysis of relevant information. It is difficult to measure the impact of an agricultural research project in the short-term because of the long-term nature of R&D activities and that technology is only one of the contributing factors to success in agricultural development. Hence, during negotiations, it was agreed that the following performance measures of the initial impact of agricultural R&D activities and management reforms will be used to determine the attainment of the development objectives of the Project. Since most research activities (i.e., plant breeding) have long gestation and the impact of research (i.e., adoption of a new variety by farmers) has equally long-term effect, AARD will continue to track these indicators beyond the duration of the Project as one aspect of overall monitoring of the impact of research on agricultural development. The following is a list of the outcome indicators which will be tracked during Project implementation using periodic survey sampling techniques. Baseline data were gathered for the 12 project provinces (Provincial Profiles) and are included in the background project documents in project files. These profiles will be refined during the AEZ characterization of the 17 regions and periodically updated during project implementation. (a) Impact of R&D Outputs (i) Initial adoption level of recommended practices tested and disseminated by AIATs and their collaborating institutions; (ii) Cost benefit of recommended technology packages disseminated to farmers by AIATs; (iii) Rate of utilization by farmers, extension workers, and others of multimedia materials produced and disseminated by AIATs; (iv) Rate of utilization of location-specific fertilizer recommendations by farmers; (v) Research outputs transferred from commodity research institutes to AIATs for testing on farmer's fields; (vi) Research outputs from collaborative projects carried out by AARD Work Units with Asia-Pacific and international agricultural research centers; (vii) Special activities, such as on-farm trials and demonstrations, focused on women, youth groups, and distinct cultural groups, and their effects. - 72 - ANNEX 1 (b) Initial Impact of R&D Management Reforms (i) Changes in the annual fund allocation for R&D especially at the regional level from AARD and regional sources (APBD TK1 and TK2); (ii) Rate of utilization by local government, farmers, extension workers, university students of information and services from the MS databases, libraries and other AIAT facilities; (iii) Changes in the staffing patterns of the AIATs by level of training, gender, and hands-on experience; and (iv) Outputs from joint projects with universities, the private sector, Asia-Pacific, and international research centers and level of funds provided. (c) Long-Term Impact of Agricultural R&D (i) Improved fanning systems in terms of increased production, increased yield per hectare, new crop varieties or animal breeds adopted by farmers, etc.; (ii) Rate of adoption of technology or technology packages by farmers, other users; (iii) Increased income of farmers and others; (iv) Improved R&D capacity at the regional/provincial levels in terms of human resources, R&D facilities, etc.; and (v) Effect of technology on environment. / - 73 -ANNEX Appendix 1 Page 1 of 14 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT DETAILED COST ESTIMATES INCREMENTAL OPERATING COSTS ALLOCATION FOR FINANCING PURPOSES (US$ million) Year I Year2 Year 3 Year4 YearS Year6 Total LBRD % 60% 60% 50% 50% 40% 40% - Amount 3.4 5.9 5.2 5.5 4.5 2.0 26.5 GOI % 40% 40% 50% 50% 60% 600/ - Amount 2.3 4.0 5.2 5.4 6.7 3.0 26.6 Total Jf2 9 11Q 74 ANNEXI Appendix 1 Page 2 of 14 INDONESIA SECONDAGRICULTURAL RESEARCH MANAGEMENT PROJECT PROJECT ADMISRATION COSTS (USS'OOO) 95/96 96/97 97/98 98/99 99/00 00/01 Tobtl Component 1 8 Priority AIATs Advisory Committees Technical Woring Groups Travel, Per Diem, Meting AIAT Biromaru 12 12 12 1S 15 - 66 Expse cost AIATKendari 12 12 12 15 15 - 66 Expen Cost AIAT Ambon 5 5 5 5 5 - 25 Expnse Cost ALAT Gedong Johor 5 5 5 5 5 - 25 Expese Cost AAT Bonda Aceh - 5 5 5 5 5 25 Exense Cost AIAT Padang Marpoyan - 12 12 15 15 15 69 Expense Cost AAT Pontianak - S S 5 5 5 25 Expnse Cost AIAT Ungaran - 12 12 15 15 15 69 Subtotal 34 68 68 80 80 40 370 Component 2 Nat/Reg. Communication Coord. By CALREC 43 46 48 50 53 55 295 MlSlNGAs Coordination by Secretariat 29 31 32 34 35 37 198 Coordination Activities by CARPiScretarat 98 103 108 114 119 125 667 Research Mgmt for PMU 98 103 108 114 119 125 667 Resa:ch Mgmt for 8 PlUs 98 206 216 227 239 125 1,111 Coordination Activities by CASER 49 52 54 57 60 63 335 Subtotal 415 541 566 596 625 530 3,273 Component 3 Component 4 TOTAL 449 609 634 676 705 570 3,643 -75- ANNEX 1 Appendix 1 Page 3 of 14 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJIECT DRAFT SCHEDULE 1 OF LOAN AGREEMENT DISBURSEMENTS Amount Category USS million Disbursement Rate 1. Civil Works 7.3 70% 2. Equipment (except vehicles 9.7 100% of foreign expenditure; Furniture, Books and 100% of local expenditures (ex-factory cost); Joumals and 65% of other locally procured items 3. Training (a) Overseas 3.0 100% (b) Local 3.7 75% 4. Consultants Services 3.4 80% S. Research Collaboration 1.9 80% 6. Univ. Research Grant 1.5 75% 7. Scientists/Managers 2.4 80% Exchange Program 8. Incremental Operating Cost 23.8 60% of expenditures incurred in FY1996 and on a declining basis as FY1997; 50% of expenditures incurred in follows: Fyl998 and FY1999; and 40% of expenditures incurred thereafter. 8. Unallocated 6.3 Total USS63.0 -76- ANNEX I Appendix 1 Page 4 of 14 Indonesia Agncultural Research Management Project II Expenditure Accounts by Years - Totals Including Contingencies (USS '°°°) Totals Including Contingencies 9S196 96197 97198 98199 99/00 00/01 Total I. Investrnent Costs A. Civil Works 2,581 7,071 1,826 117 - - 11,595 B. Equipment/Fumiture 2,316 5,388 3,725 1,271 - - 12,700 C. Books, Joumals & Publications - 263 250 206 - - 719 D. Vehicles 233 627 848 343 - - 2,051 E. Foreign HRD 145 722 1,014 891 458 155 3,384 F. Local HRD 562 1,100 1,362 1,152 875 456 5,506 G. Foreign Technical Assistance 615 807 609 333 271 - 2,635 H. Local Technical Assistance 534 920 244 305 113 - 2,116 I. R&D Collaboration 494 509 525 542 559 - 2,630 J. Scientists/Managers Exchange Prog. 457 622 640 659 679 171 3,228 K University Research Grant 284 465 480 445 407 142 2,223 Total Investrent Costs 8,220 18,495 11,522 6,265 3,361 923 48,786 II. Recurrent Costs A. Operation and Maintenance 310 1,041 1,165 1,223 1,284 672 5,695 B. Research Management Cost 1,528 2,150 2,238 2,005 2,054 1,353 11,328 C. Research Operating Cost 2,743 4,568 4,857 5,372 5,378 1,847 24,767 D. Technology Transfer Cost 1,140 2,098 2,203 2,313 2,428 1,095 11,276 Total Recurrent Costs 5,721 9,857 10,462 10,913 11,145 4,968 53,065 Total PROJECT COSTS 13,941 28,352 21,984 17,177 14,506 5,891 101,852 - 77- ANNEX I Appendix 1 Page S of 14 Indonesia Agricultural Research Management Project II Project Components by Year - Totals Including Contingencies (US$ '000) Totals Including Contingencies 95196 96197 97198 98199 99100 00101 Total A. Regionalization of Agricultural R&D Establishment and Operation of8AIATs 3,287 9,854 7,422 3,888 2,182 1,045 27,679 Characterization ofAEZs at 8 regions 372 580 794 116 66 20 1,948 Regional Research Program 974 1,758 2,269 3,003 3,693 2,107 13,804 Regional Technology Transfer Program 904 1,922 2,018 2,119 2,225 1,182 10,369 Subtotal Regionalization of Agricultural R&D 5,537 14,113 12,503 9,126 8,166 4,355 53,801 B. Regionalization of R&D Management Strengthening Regional R&D Management 638 964 609 396 412 203 3,221 Strengthening Nat. Communication and Sci. Literature 132 1,674 542 410 186 191 3,135 Establishment of Nat. MIS and NGAS in the region 143 2,219 217 355 188 201 3,324 Building Reg. Res. and Tech. Transfer Capability 102 285 310 260 240 233 1,431 Pilot Reg. Soil Fertility and Fertilizer Use Prog. 369 871 470 456 368 95 2,629 Support for ARM II Project Implementation 344 1,098 1,074 556 584 488 4,143 Subtotal Regionalization of R&D Management 1,727 7,112 3,221 2,434 1,978 1,412 17,884 C. Priority Comniodity Research Program Support for Priority Livestock Research 290 1,199 855 554 508 5 3,411 Support for Priority Fisheries Research 748 1,285 961 858 229 6 4,087 Support for Priority Horticulture and Tree Crops Research 1,905 1,139 907 820 644 12 5,427 Support for Priority Discipline-Oriented Research 1,416 1,023 908 876 666 59 4,948 National Human Resource Development Program 178 522 602 560 295 42 2,198 National Technical Assistance and Special Studies 471 445 461 378 391 - 2,146 Subtotal Priority Conmnodity Research Program 5,009 5,613 4,693 4,046 2,733 124 22,218 D. Strengthening R&D Collaboration Strengthening Linkages to National Agencies 489 296 308 305 317 - 1,715 Strengthening Linkages to Inter. 8 Regional Res. Org. 1,179 1,218 1,259 1,267 1,311 - 6,234 Subtotal Strengthening R&D Collaboration 1,668 1,515 1,568 1,572 1,628 - 7,950 Total PROJECT COSTS 13,941 28,352 21,984 17,177 14,506 5,891 101,852 - 78 - ANNEX I Appendix 1 Page 6 of 14 Indonesia Agricultural Research Management Project II Expenditure Accounts by Financiers (USS '000) Government of Local IBRD Indonesia Total For. (Excl. Duties & Armount % Amount % Amount % Exch. Taxes) Taxes I. Investrnent Costs A. Civil Works 8,116 70.0 3,478 30.0 11,595 11.4 3,380 7,172 1,044 B. Equipment/Fumiture 10.160 80.0 2,540 20.0 12,700 12.5 7,486 3,944 1,270 C. Books, Joumals & Publications 575 80.0 144 20.0 719 0.7 719 - - D. Vehicles - - 2,051 100.0 2,051 2.0 1,101 745 205 E. Foreign HRD 3,384 100.0 - - 3,384 3.3 3,384 - - F. Local HRD 4,130 75.0 1,377 25.0 5,506 5.4 - 4,956 551 G. Foreign Technical Assistance 2,108 80.0 527 20.0 2,635 2.6 2,635 - - H. Local Technical Assistance 1,693 80.0 423 20.0 2,116 2.1 - 1,905 212 I. R&D Collaboration 2,104 80.0 526 20.0 2,630 2.6 1,539 828 263 J. Scientists/Managers Exchange Prog. 2,582 80.0 646 20.0 3,228 3.2 2,372 856 - K. University Research Grant 1,667 75.0 556 25.0 2,223 2.2 1,298 703 222 Total Investrnent Costs 36,519 74.9 12,267 25.1 48,786 47.9 23,913 21,108 3,766 II. Recurrent Costs A. Operation and Maintenance 2,787 48.9 2,908 51.1 5,695 5.6 - 5,695 B. Research Management Cost 5,691 50.2 5,637 49.8 11,328 11.1 - 11,328 C. Research Operating Cost 12,392 50.0 12,375 50.0 24,767 24.3 - 24,767 0 . Technology Transfer Cost 5,609 49.7 5,666 50.3 11,276 11.1 - 11,276 Total Recurrent Costs 26,479 49.9 26,586 50.1 53,065 52.1 - 53.065 Total Disbursemnent 62,999 61.9 38,853 38.1 101,852 100.0 23,913 74.173 3,766 Indonesia Agricultural Research Management Project II Expenditure Accounts by Components - Totals Including Contingencies (USS '000) Reglonalization of R&D Management Pilot Reg. Regionalizatlon of Agricultural R&D Strengthening Building Soil Regional Nat. Establishment Reg. Res. Fertility Establishment Characterization Regional Technology Strengthening Communication of Nat. MIS and Tech. and and Operation of AEZs at 8 Research Transfer Regional R&D and Scl. and NGAS in Transfer Fertilizer of I AIATs regions Program Program Management Literature the region Capability Use Prog. I. Investment Costs A. CMI Works 10,337 - - 92 B. Equiprnent/Fumlture 4,762 859 - - 1,163 1,870 - 270 C. Books, Joumals & Publications - - - - - 719 - - D. Vehicles 828 - - - - - - E. Foregn HRD 1,626 - - - F. Local HRD 3,290 - - 277 483 392 292 332 G. Foreign Technical Assistance - 159 127 - - - - - 200 H. Local Technical Assistance 308 72 57 - 467 71 285 - 70 1. R&D Collaboration - - - - - - - - - J. Scientsts/Managers Exchange Prog. - - - - - - - 806 - K UnhwsltyResearch Grarit - - 1,288 - - - - - 160 Total Investment Costs 21,151 1,090 1,472 - 745 2,436 2,546 1,098 1,123 II. Recurrent Costs A. Operation and Maintenance 4,308 - - - 124 88 - 23 B. Research MAnagement Cost 2,219 201 1,332 773 2,477 575 532 334 104 C. Research Operating Cost - 658 11,001 - - - 157 - 1,378 D. Technolgy Transfer Cost - - - 9,596 - - - - - Total Recurrent Costs 6,528 859 12,332 10,369 2,477 699 778 334 1,506 Total PROJECT COSTS 27,679 1,948 13,804 10,369 3,221 3,135 3,324 1,431 2,629 Taxes 1,849 93 134 - 74 172 255 29 91 Foreign Exchange 7,873 664 879 - - 1,406 1,105 589 479 cQ C, Indonesia Agricultural Research Management Project II Expenditure Accounts by Components - Totals Including Contingencies (USS '000) Priority Conrnodity Research Program Strengthening R&D Support for National Collaboration Support Support Priority National Technical Strengthening for for Horticufture Support for Human Assistance Strengthening Linkages to Support for Priority Priority and Tree Priority Resource and Linkages to Inter. & ARM if Project Livestock Fisheries Crops Discipline-Oriented Development Special National Regional Res. knplementation Research Research Research Research Progran Studies Agencies Org Total - 106 354 418 288 - - - - 11,595 410 648 392 1,117 1,005 - - 204 - 12,700 - . . - - - - - 719 755 63 84 171 149 - - - - 2,051 - - - - - 1,758 - - - 3,384 - - - - - 441 - - - 5,506 - 196 312 280 132 - 1,131 - 98 2,635 - - - - - - 742 45 - 2,116 - - - - - - - 2,630 2,630 - - - - - - - - 2,422 3,228 - - - - - - - 775 - 2,223 1,165 1,013 1,142 1,986 1,574 2,198 1,874 1,024 5,150 48,786 197 112 162 278 306 - - 96 - 5,695 2,781 - - - - - - - - 11,328 - 2,286 2,783 3,163 3,069 - 272 - - 24,767 - - - - - - - 595 1,085 11,276 2,978 2,398 2,946 3,441 3,375 - 272 691 1,085 53,065 4,143 3,411 4,087 5,427 4,948 2,198 2,146 1,715 6,234 101,852 117 81 79 166 141 44 74 102 263 3,766 648 643 690 1,160 893 1,758 1,131 575 3,420 23,913 P.,' O _- -81- ANNEX 1 Appendix 1 Page 9 of 14 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT PROJECT ACCOUNTS STATEMENT OF PROJECT RECEIPTS AND EXPENDrrURES For the year Cumulative ended to Cost Items April 30,- Funds Received Government of Indonesia IBRD Other (identify) Total Expenditure Civil Works Equipment/Furniture Books and Joumals Vehicles Foreign Training Local Training Foreign Technical Assistance Local Technical Assistance R&D Collaboration Scientists/Managers Exchange Program University Research Grants Research Management Cost Operations and Maintenance Research Operating Cost Technology Transfer Cost Total ANNEX 1 - 82 - Appendix 1 Page 10 of 14 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT PROJECT ACCOUNTS STATEMENT OF COSTS BY PROJECT COMPONENT For the year Cumulative ended to Component April 30,- 1. Regionalization of Agric. R&D Estab. And Op. Of 8 AIATs Characterization of AEZs at 8 Regions Regional Research Program Regional Technology Transfer Program Subtotal 2. Regionalization of R&D Management Strengthening Regional R&D Management Strngthning Nat. Conimunic. & Sci. Lit. Establishment of Nat. MIS & NGAS in Regions Building Reg. Trans. & Tech. Trans. Cap. Pilot Regional Soil Fert. & Fert. Use Prog. Support for ARM II Project implement. Subtotal 3. Priority Commodity Research Program Support for Priority Livestock Research Support for Priority Fisheries Research Support for Priority Horticulture Research National Human Resource Dev. Prog. National Tech. Assistance - Special Studies Subtotal 4. Strengthening R&D Collaboration Strengtheing Linkages to National Agencies Strengthening Linkages to Intemat.-Reg. Ags. Subtotal Total Costs -83 ANNEX 1 Appendix 1 Page 11 of 14 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT MONITORING COSr REPORTING FORMAT 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 1. Regionalization of Agric. R&D Investment Costs civil works Equipment/Furitir Vehicles Foreign Training Foreign TA Local Training Local TA University Research Grant Total Investment Cost Operating Costs Research Managerent Operations & Maintenance Research Op Costs Tech. Transfer Costs Total Operating Costs Total -84- ANNEXI Appendix 1 Page 12 of 14 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT MONITORING COST REPoRTING FORMAT (Continued) Component/Cost Item 199S/96 1996/97 1997/98 1998t99 1999/00 2000/01 Institutional6tion of R&D Mgnt. Investment Costs Civil Works Equipment/Furitur Books & Journals Vehicles Local Training Foreign TA Local TA Scientss/Manager Exch. Prog. University Ras. Grnt Total Investment Cost Operating Cost Res=T& Maganent Operations & Maintenance Resarch Op. Costs Total Operating Costs Total ANNEX 1 - 85 - Appendix 1 Page 13 of 14 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT MONITORING COST REPORTNG FORMAT (Continued) Component/Cost Item 199S/96 1996/97 1997/98 1998/99 1999/00 2000/01 Priority Comm. Res. Program Investment Cost Civil Works Equipment/Furnaur Vehicles Foreig Trnng LoalI TMning Foreign TA Local TA Total Investment Cost Operating Cost Operations & Mainenance Reerch Op. Cost Total Operating Costs Total ANNEX I - 86 - Appendix 1 Page 14 of 14 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT MONITORING COST REPORTING FORMAT (Continued) Component/Cost Item 1995196 1996/97 1997/98 1998/99 1999/00 2000/01 Strengthening R&D Coilab. Investment Cost Equipment/Funiture Foreign TA Local TA R&D Collaboration Scienfists/Managers Exch. Prog. University Res. Grant Total Investment Cost Operating Cost Operations & Maintenance Tech. Transfer Costs Total Operating Costs Total INDONESIA Agricultural Research & Management Project 11 _ ~~~~~~ ~~~~~~~~~~~~~~~1995 1996 1 '-197198 1999 2000 2001 _ ID Task Name Q20Q30Q4JQ10Q23Q41023Q4 31J203l4010 l 3l0401 0a2103040 02030401 I Agricultural Research & Management Proejct II 2 Comp. I: Reglonalizatlon of Agricultural R&D 3 Sub-Comp l: Establishment & Operation of 9 Priority AlATs 4 1.1.1 Organization & Management of AIATs 6 PhaseI 11 Phase II _ 1t 1.1.2 Development of the Regional R & D Master Plans 16 PhaseI 28 Phase II 33 1.1.3 Regional Human Resource Development Program 39 Phase I 47 Phase I 65 1.1.4 Consolidating/Upgrading R&D Support Facilities 56 Phase I 62 Phase II Be 1.1.6 Provision of TAs for Special Studies 68 Phase I 74 Phase II 79 Sub-Conmp n: Characterlzation of AEZs for AIATs so 1.2.1 Characterizing AEZs mr2 87 12.2 Compilng & Organizing AEZ Databases o 94 Sub Comp IU: Regional R & D Program Page 1 INDONESIA Agricultural Research & Management Project II 1996 1996 1997 1998 1999 2000) 2001 ID TasktName Q2l03 0401 Q2 030Q40Q2 0304Q102103IQ4101 Q20Q30Q4JQ1 Q20Q30Q40Q12Q0Q30Q4 Il 96 1.3.1 Enhance AIAT capability In farming system's R&D 99 1.3.2 Identification of Technology Needs of Farming Systems 100 Phase I - 107 Phase II - 114 1.3.3 On-Station & On-Farm Technologies Verification 115 Phase I 141 Phase II 167 1.3.4 Developing Technology Menus for On-Farm Testing 169 Phase I 193 Phase II 216 1.3.6 Special Studies & University R&D Grants oo 00 217 Phase I 283 Phase :I 359 Sub-Comp IV: Regional Technology Transfer Program 360 1.4.1 Building Extension Staff L Farmers' Skills & Capabilities 3C1 Phase I 378 Phase II 39N 1.4.2 Participatory Evaluation of Technology 398 Phase I 413 Phase N Z 430 1A.3 Producing Materials for Technology Ttansfer 431 Phasel I Page 2 INDONESIA Agricultural Research & Management Project II 1995 1996 1997 199S 1999 2000 2001 1 ID Task Name 0Q203lQ41Q02IQ03lQ401Q02 IQ 4 QQ2030 2030410Q203Q40Q10203104lQ 446 Phase II 468 1.4.4 Utilizing New Info, to Update Regional Databases 469 PhaseI 495 Phase ll 621 1.4.5 Prornote L Disseminate Technology 622 Phase I 663 Phase U 64 Comp II: Institutionalization of R L 0 mngl. at local level o6o Sub-Copm l: Strengthening regional R & 0 capabilities 6a6 2.1.1 Strengthening AIAT Staff & Collaborators' Capabilities 00 637 Year I - 911 Yawrl 504 Year 4 - 137 Year 6 ____________ew 400 Year m 603 2.1.2 Review & Conplete R&D4MPs for Remainig Regions 604 Year 1 611 Year2 - 617 Year3 623 Yewr4 623 Year 5 0 o 634 YearS Page 3 INDONESIA Agricultural Research & Management Project 11 1995 1996 1997 1 1993 1999 2000 1 2001 1 ID Task Name 02|03|04|01 0Q2 03 Q401 02 03 0401 Q2Q041 I 03Q 4 010 3 04 01 02 03 0401Q 640 2.1.3 PrioritizIng R&D Proposals 641 Year I - 645 Year 2 so Year 3 613 Year 4 - *67 Year 6 661 Year I - 666 2.1.4 Peer Review of R&D Proposals 666 Year 1 670 Year 2 - 673 Year3 - \0 676 Year4 4 679 Year 4-5 - 632 YearS - SIG Year 6 _ 633 2.1.6 Regional R&D Impact Assessment I I 693 Sub-Com II: Strengthening cornwnunicatlon & scientific literature service ___ ______ 694 2.2.1 Increasing Conwnunlcation Capabilities In AIATs 702 2.2.2 Strengthening Linkages Between Research & _ _ _i Assessrent Institutes 710 2.2.3 Increasing AIAT Staff Analytical Capability rt3 711 Year I - ojX 716 Year2 2.'. Page 4 INDONESIA Agricultural Research & Management Project II _ ~~~~~~~~~~~~~~~~~~~~1995 T| 199 | 97 1 1999 1999 2000 1 2001 i ID Task Name Q2|Q3|Qj|Q102|Q3|Q4|Q1|Q2|Q31Q4|Q102|Q3|Q4|Q1| 71S Year 3 723 Year 4 727 Year 6 731 Year I 736 Sub-Comp III: Establisment of National MIS & NOAS 736 2.3.1 Streamline MIS to Conform to AIAT Needs 737 Year 1 - 741 Year2 745 Year 3 749 Year 4 - 762 Year _ 756 2.3.2 Increasing AIAT Staff Capabilities In MIS 756 Year I - 7e1 Year 2 7e6 Year 3 - 771 Year 4 775 Year6 - 771 Year I - 7U4 Sub-Copm IV: Building Regional Research & Technology > Transfer Capabiltv _Q 735 2.4.1 Provide Needed Education, Training & TA X4 7S6 Year I 0 790 Year 2 I Page 5 INDONESIA Agricultural Research & Management Project II 1995 1996 1 i997 1 1998 | 1999 2000 2001 ID Task Name 0210304002030401 Q2 03 Q4 01020304010203040102030401020304 Q1 TN4 Year 3 _______ 73$ Year I _ _ __ _ _ _ 302 Year 6 3o06 2.4.2 Estabisahing Exchange Programs 307 Year 1 811 ~~~~Year 2 3104 Year 3 706 Year 4 32n Year - 827 YewrI 631 SubCopnm V: Pilot Sol Fertilty & Fertilizer Use Programs I 332 2.5.1 Constructing Central & Regional FacilitiesI 133 Year 1 813 Year 2 - 340 Year 3 - 343 Y"r 4 - 462 Year I - 649 Year - 362 2.5.2 Providing TA 8 Training In Soil SanmplIng & Analysis 853 Secure TA wr' 134 prepare referene operation manuals 365 Provide ln-servtc. training fir AlATlextenslon staff Page 5 fNDONESIA Agricultural Research & Management Project It 1995 1996 1997 1998 1999 2000 2001 ID Task Name 02|030Q41 Q0Q20Q30Q41 102103104 1| Q2 Q3|04 01|02 033|4 01|02|03|Q4 01|02|03|04 0 862 2.5.3 Support for Fertilizer-Crop Response Studies 863 Year I - 363 Year 2 373 Year 3 373 Year 4 - 333 Year 6 33U Year 6 393 Sub-Comp VI: Support for ARM II implementation 394 2.6.1 Establishing AARD AIAT Coordinating Units 396 Year 1 _ 399 Year 2 _____99_. . . 903 Year 3 907 2.6.2 Coordinating Regional Activities 908 Provide staff & facilities 913 Administer BackstopingtFeedback Mechanism 920 Comp Ill: Priority Commodity Research Programs 921 Sub-Comp l: Support for Priority Livestock Research 922 3.1.1: Research on Animal Feeding & Nutrition 928 3.1.2 Research on Animal Breeding 932 3.1.3 R&D on Major Diseases in Priority Regions _ t; 936 3.1.4 Rehabilitation on Existing FacilitieslLaboratories 942 Sub-comp II: Support for Priority Fisheries Research F-r Page 7 INDONESIA Agricultural Research & Management Project II 1995 1996 1997 1993 1999 2000 | 2001 ID Task Name _ Q21030I4Q01 3I3Q21 4 230Q40Q.Q20Q30Q40QlQ2Q3040Q12034123041 943 3.2.1 Stock Assessment of Fin/Shellfish i 943 3.2.2 Non-Destructive Technologies for Coral Reef Fishing 954 3.2.3 Domesticating Highly Exploited Species I 959 3.2.4 Environ. Mngt of Brackish Water Culture 964 3.2.5 Rehabilitate Existing FacilitieslLaboratories _ I 970 Sub-Comp IlIl: Support for Priority Horticulture & Tree Crop Research 971 3.3.1 Develop Superior Hybrids/Clones for Specific AEZs I 976 3.3.2 Reducing Crop Losses by IPM & Improved Soil Mngt 991 3.3.3 Developing Post Harvest Processing & Mngt Systems 996 3.3.4 Increasing Income & Reducing Seasonal __Unernplh!yment __ __ __. 991 3.3.5 Rehabilitate Existing Facilities/Laboratories i 997 Sub-comp fV: Support for priority discipline-oriented res. 993 3.4.1 Biotech Facilities /Equipment for R&D 999 Year 1 1004 Year 2 1009 Year 3 1014 Year 4 1019 Year 6 - 1024 Year 6 1029 3.4.2 Develop Postharvest Handling & Secondary I z _____ Processing Eco t 1030 Year I . X 1037 Year2 2 m Page 8 INDONESIA Agricultural Research & Management Project II 1995 1996 1997 1998 1999 2000 2001 ID Task Name Q2Q304Ql Q203Q401Q2Q304|1 Q2Q304Q1 02030401 Q2Q401 QaBCQaQ 1043 Year 3 1049 Year 4m 1066 Year - 1061 Year 6 1067 3.4.3 Develop, Test & Adapt Ag. Tools 1068 Year 1 1076 Year 2 1084 Year 3 .~~~ 1092 Year 4_ 1100 Year 6- 110t Year B _x 1142 3.4.4 Marketing Studies 1117 Year 1 1122 Year 3 1127 Year 4 1132 Year 6 1137 Year 6 1142 3.4.5 Cornrnunity Organizataon/Mngt Studies 1143 ~~~~Year I z0 1149 Year 3 rrz 1155 ~~~~Year 6 o X Page 9 INDONESIA Agricultural Research & Management Project 11 1995 1 1996 1 1997 1998 1999 2000 2001 ID Task Name Q20Q30Q40Q1 0Q2Q30Q41011020304Q 0234123Q4|Q1 IQ2134 10 341 1167 3.4.6 Improve Quality of Propagating Materials 1161 Year I ___ 1176 Year 3 i - 1132 Year 6 1169 Sub-Comp V: National Human Resource Development Program 1190 3.5.1 Education & Training In Special Fields 1194 3.6.2 Seminars on Methodologies 1198 Sub-Conp. VI: National Technical Assistance & Special Studies 1199 3.6.1 Provide Short-Term TA on Special Topics 1205 3.6.2 Support for Special Studies 1215 Comp IV: Strngthening Research & Developmnent Collaboration 1216 Sub-Conip 1: Strengthening Linkages to National Agencies 1217 4.1.1 Continue Competitve Research Grants to Universities I 1213 Confirm oDntinuation of joint AARDIDGHI committee 1219 Develop guidelines for cooperative work 1220 Year I _ 1223 Year 2 1226 Year 3 m 1229 Year4 - 1232 Year 5 . r'1 1236 Year6 _ 0 1237 4.1.2 Strengthen R&D Linkage wlth the Private Sector I ..I' : I Page 10 APPENDIX 2 -97- Page 11 of 12 0 ci C. a 0 0 C CF ~I 0 I 0 - C I* I o~ I-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I cd' <~~~~~~~~~~~~~~ Ub c a, is~~~~~~~~~~~~a L U Ia *- - ,i .0~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0~~~~~~~~~~~~~~I. V.C I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~49 INDONESIA Agricultural Rcsearch & Management Project 11 1995 1996 1997 1991 1999 2000 2001 v ID Task Narne Q2JQ3JQ4 Q 0Q21Q31Q4 0Q21Q31Q4011 02031a4 01 0Q2 0304 01 020304 01 02030401 1315 Year 2._ oo OQ d 00 I- Page 12 - 99 - ANNEX2 INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECT GUIDELINES FOR IMPLEMENTING THE UNIVERSrrY RESEARCH GRANT 1. Agriculture faculties of the universities in Indonesia are an important research resource to provide technology needs of specific regions. Shortages of funds and facilities restrict university research efforts and university staff spend more time in teaching and less in research. Many universities welcome the opportunity to develop collaborative research projects and to integrate these into the University Research Program, and the larger overall national research effort. 2. A research grant scheme for universities and other institutions has already been established by AARD through the ARM Project. These grants are currently managed and operated under a set of guidelines and criteria indicated below. The scheme is flexible and permits a rapid response to training arrangements and participation of local universities in emerging research topics of high priority which will not be possible through normal government procedures. Under this grant scheme, universities currently conduct some collaborative research projects with researchers in AARD's commodity research institutes. 3. Under the ARM II Project, this university grant scheme will be expanded and focused on the farming system needs of specific regions. The current scheme will be revised to reflect changes in grant duration, institution eligibility and overall management and introduce the concept of twinning, linking weaker universities with stronger ones. Other criteria will remain unchanged, e.g., collaborative research projects must address national development goals, productivity oriented, capable of being completed within a set time-frame, under the direction of competent staff; etc. The participating universities will be encouraged to fully support the priorities established under the Regional Research and Development Program under the AIATs and to enter into joint projects with AARD's commodity research institutes, AIATs, and international research centers. Institution Eligibility 4. Funds under the Project would be provided to AARD in trust for the universities and only university departments will be eligible to participate in the University Research Grant. Collaborative Research Time Frame and Grant Limits 5. The present arrangements for university research contracts used under the ARM Project will be followed with some modifications, if needed. The time-frame for -100 - ANNEX2 collaborative research projects will be extended to three years with fund release, subsequent to the first year, subject to the receipt of both financial and technical annual reports. The existing tranche system will remain in force for payments within any one year. The upper limit for financial support will be the equivalent of US$20,000 annually, but this could be varied after joint consideration by AARD and the Bank and in the light of experience. Eligible Expenditures 6. University Research Grant funds will be used for field plot equipment, laboratory equipment, reagents, agricultural chemicals, seeds, field labor, travel and allowances, and overhead costs according to existing Government rules and regulations. They will not normally be used for agricultural machinery, civil works or vehicles. Since it is assumed that the proposed collaborative research project will be part of the university staff member's normal work program, research grant funds will not be available for the payment of supplements to salaries or consultancy fees. Where post-graduate students are employed to work on the subproject, as part of their study program, fellowships will be paid under the grant scheme at the rate determined by AARD. Procurement will be according to Bank guidelines. 7. The Research Grant Board established under the ARM Project, which is chaired by the Director of CARP with membership of universities and the private sector, will be responsible for screening research proposals submitted by universities. The Board will meet at three monthly intervals and will be responsible for determining priorities between different commodities and research disciplines. The Board will provide overall supervision and policy guidance, and will be responsible for final approval of research proposals and the allocation of funds between competing project proposals. The technical content of the proposals will be assessed by the existing Commodity Research Groups which will provide the Board with recommendations to support or reject the research proposals. Routine administration and secretariat services to the Board will be provided by the Project Management Unit. The Project will finance the cost of administration of the grant scheme up to a limit of 15 percent of the value of grants made. 8. Research proposals will be prepared according to the existing AARD standard formats and agreements which will be based on the existing standard contracts (or assignment memorandum) used under the ARM Project. These guidelines will define the work program, responsibility for the research, reports to be provided, schedule for reporting, approved budget and schedule and condition for payment. The University Research Grant will be established in a separate account and will be replenished at intervals according to disbursements made and the anticipated demand. It is estimated that an initial deposit of US$200,000 equivalent will be needed. 9. It was agreed during negotiations that proposals for the first five collaborative research projects considered under the University Research Grant will be provided to the Bank for review before final approval by the Research Grant Board. -101- ANNEX3 INDONESIA SECOND AGRICULTURAL RSEARCH MANGAEMENT PROJECT SUMMARY OF EDUCATION/TRAINING (DEGREE) BY PROJECT COMPONENTS Component I Component II Component m Overseas Long-term Ph.D./S3 1 0 5 M.Sc./S2 26 0 14 Short-term 38 0 65 Local Long-term 53 3 1 5 S2 92 19 2 S1 34 0 0 So 84 115 0 Short-term by Discipline AEZ characterization 24 0 0 Agricultural Extension 10 10 0 Agricultural Machinery 30 0 20 Agro-Economic 10 0 5 Biotechnology 0 0 45 Development Communication 0 81 0 Fanming Systems 40 0 0 Fisheries/Fish Capture 10 0 0 Financial Management 0 81 0 Genetic Improvement 0 0 20fb MIS 10 10 0 Plant Protection 10 0 0 Postharvest/Processing 40 0 20 Project Management 10 10 0 Research Management I 10/a 81 0 Soil Fertility/Fertilizers 0 81 0 Sociology/Anthropology 20 0 5 /f Including 37 language training in Component I. /b Including 20 language training in Component m. -102 - ANNEX4 Page 1 of 4 INDONESIA AGRICULTURAL RESEARCH MANAGEMENT II PROJECT ESTMATED TECHNICAL ASSISTANCE REQUIREMENTS BY COMPONE NT Volumne Cmpmet/ Technical Asssance Local (SM) Overes (SM) Yee (SM) - -ompom/Aciivlky ST LT ST LT 1 2 3 4 5 6 Composs" 1 1.1.2 RAD MaslerPin Spealist 10 - - 6 4 . . 1.1.2 M&E Specialist - . 4 4 1.1.5 Socio Eoonomic Specialit a - - 4 4 Gaider hu eSpecialist - - 4 4 . . - Environ Sustainability Spec. 8 - - 4 4 1.2.1 AEZ/Soil Speciulit 10 10 - (0) 6 4 (L) 6 4 . . 1.334 Tech Transfer Specal 8 t 8 - (0) 0 2 2 2 2 (L) 0 2 2 ^ 2 Total Component 60 0 15 0 34 32 4 4 4 Compomebt n 2.1.1 R&DMaderPlanSpeciali 9 - - - - 5 4 2.1.2 M&E Specilist 9 - - - - 5 4 - - 2.1.3 SocioEconomic Specilst 9 - - - 5 4 - 2.1.4 Gender b uesSpecialit 9 - - - - 5 4 2.2.1 Enviro. Sutainability Spec. 9 - - - - 5 4 - - AEZ Specialixt 9 - - - - 5 4 - Tech Trnsfer Specialist 9 - - - - - 3 3 3 2.2.3 DatbAnalyst 9 3 3 3 2.3.1 MIS Speciulh 9 - - - - 3 3 3 MIS Specialist 9 3 3 3 2.3.3 Finance Specilst 9 - - - 3 3 3 2.3.4 Finance (database) Special 9 - - 3 3 3 2.5.1 Soils Specalist 9 - - - (L) - 3 3 3 - - - 12 -(0) . 4 4 4 Total Component II 117 0 12 5 52 49 25 3 Component mi Support for priority Livestock Reseach 3.1.1 Aninml Baeding Specialist - - 2 - - 2 3.1.2 AnimlQuantitative Gaa - 2 - - 2 - 3.1.3 AninslMolecuIarGentist - - 2 - - - 2 3.1.4 Scabies Specialist 3 . 3 3.1.5 Bacteriology Specialist - - 3 - 3 - Support for priority Fisheries Researh 3.2.1 Bio Fisheries Spec. - - 3 - - - 3 3.2.2 REA Fis Specialist - - 2 - - 2 - 3.2.3 Field Fish Tagging Spec. - - 3 - 3 - 3.2.4 Stoc Asses_nent Spec. - - I - I - - 3.2.5 DataAndayst - - 3 - - 2 1 3.2.6 Fish Breeding Spocilst - - I - - I - - 3.2.7 Fish Diies Specialist - - 4 - - 2 1 1 3.2.8 Mngement Plan Specialist - - 2 - 2 -103 - ANNEX4 Page 2 of 4 Volume Co mponentl Technical Assistance Local (SM) Overeas (SM) Year (SM) SubcornponentVAcdvity ST LT ST LT 1 2 3 4 5 6 Support for pnorty Horticuture Res. 3.3.1 Molecular Biology Specialhst - - 4 - - 2 2 3.3.2 Seed Production Specialist - - 3 - - 2 1 - - 3.3.3 Postharvest Tech- Specialist - - 3 - - 3 Support for priority Industnal Crops PRes. 3.3.3 Prosing Technologist - - 3 - 3 3.3.2 Plant Disea Speaialist - - 4 - - 2 2 - - Support for priority Agric. Engin. Res 3.4.3 Agricultural Enginering Spec. - - 4 - - 2 2 3.4.3 Agric. Machinery Industry Spec. - - 4 - - 2 2 Support for priority Magenernt Unit 3.6.1 Financial Management Specialist - 60 - 6 12 12 12 12 6 3.6.1 Research Miagemit Spec. - - 60 6 12 12 12 12 6 (Chief of Psty) 3.6.1 Civil Works Specialist - 36 6 12 12 6 Tol Componentl11 - 96 56 60 13 72 55 31 24 12 Component IV 4.1.2 Agribusine Specialid 6 - (L) - 2 2 - - - 4.23 Report Writing Specialist - 6 - (0) - 2 2 - Total Component TV 6 0 6 0 0 4 4 0 0 0 Crant Total 133 96 92 60 52 160 112 64 31 12 INDONESIA AGRICULTURAL RESEARCH MANAGEMENT II PROJECT TECHNICAL ASSISTANCE SUMMARY Start of Work /a Completion of Work /a Cost (S'000) Persons/Month List of TA Impnlenunting Cunrent Cunrent Current Current implementation ContracVActivity Agency Original Estimate Original Estimate Original Estimate Original Estimate Prograss A. Preparatlonwlmplementstlon Support Financial Management Spec. AARD and Nov '95 Oct '99 397 60 Reearch Management Spec. concerned Nov 95 Oct '99 900 60 Civil Woks Specialist work units Nov'95 Oct '99 238 36 Total Long-Term TA 1,535 156 B, Institution Capadty Building RD Master Plan Specialist AARD and Nov '95 Oct'97 126 19 M&ESpecialist concerned Apr'96 Jul'99 113 17 SocioEconomicSpecialist worktunits Nov'95 Aug'97 113 17 Gender lssues Specialist Nov'95 Aug'97 113 17 Environ.SustainabilitySpec. Nov'95 Jul'99 113 17 AEZ Specialist Apr '96 Aug '97 276 29 Technolog fransfer Specialist Apr'96 Jul '99 133 25 Data Analyst Apr'96 Jul '98 60 9 MIS Specialist Apr'96 Jul '98 60 9 MIS Specialist Apr'96 Jul '98 60 9 Financial (Acwoants) Spec. Apr '96 Jul '98 60 9 Finance (databese) Specialist Apr'96 Jul '98 60 9 Soils Specialist Apr '96 Jul '98 240 21 Animal Breeding Specialist Apr'96 June '96 30 2 Animal Quantitative Genetist Apr '96 June '96 30 2 Animal MolecularGenetist Apr '97 June'97 30 2 Scabies Specialist Apr'96 June '96 45 3 Bacteriology Specialist Apr '96 June '96 45 3 Bioecononic Fisheries Spec. Apr'97 Jul '97 45 3 REA Fisherics Specialist Apr '96 Jun '96 30 2 Field Fish Tagging Specialist Apr 96 Jul '96 45 3 StockAssessment Spec. Apr'96 May'96 15 I Data Analyst Jun '96 Jun '97 45 3 Fish Breding Specialist Apr '96 May '96 15 1 Start of Work La Completion of Work IA Cost (S'000) Persons/Month List of TA Implaemting Cunrat Current Cunt Cunent Implementation ContracActivity ANMcy Original Estimate Oriil Eimte Orin Estimate Original Emte P 3.lntItutIonal C.p.dty Building (Cont'd) Fish Dis Specialist Apr '96 my 91 60 4 Manpment Plan Specialist Apr'96 Jun'96 30 2 Molecular Biology Specialist Apr '96 Jim '97 60 4 Seed Prduton Specialit Apr '96 Ma '97 45 3 PotToTch Specialist May'96 Aug'96 45 3 Po ng Technologlst Apr '97 Jul'97 45 3 Plant Disse Specialist Aug '96 Oct '97 60 4 Aricultual Engineering Spec. Aug '96 Oct '97 60 4 Agpic. Maclinery Industy Spec. Aug '96 Oct '97 60 4 Agricbusin Specilist Jul '96 Sep '98 40 6 Technical Report Writing Spec. Jul '96 Sep '98 75 6 Total Short-Term TA 2,482 275 C. Policy Advica/Studies & Grand Total 4,017 431 ° & The periods indieted hre include intermittent inputs by dsht-term TA. & Sam ofthe outmnts for wnttutioal Capacity Building will also puicipate in Special Studies. I, : I -106 - ANNEX S INDONESIA SECOND AGRICULTURAL RESEARCH MANAGEMENT PROJECI SELECrED DOCUMENTS AVAILABLE IN FILES Background Reports 1. Project Operational Manual (POM) Part I - Background Information About the Project AARD, November 1994 Part II- Project Activity Plan Part Im - Proposed Technical Assistance (plus updated background statement on TA) Part IV - Project Cost and Financing (COSTAB) Part V - Proposed Civil Works and Equipment Procurement 2. Agricultural Research and Development Policy Statement. AARD, July 1994. 3. Strategic Plan 1995 - 2005. AARD, November 1994. 4. Agricultural Research Management Phase II - Initial Project Proposal Document. AARD, March 1994. 5. An Economic Impact Assessment of AARD's Research Program in Vegetables, Estate Crops, Fruits, Livestock and Fisheries. RE. Evenson, Edi Abdurachman, Budi Hutabara. AARD, Preliminary Draft, September 1994. 6. An Economic Impact Assessment of Food Crops - Agricultural Research Program in Indonesia. R.E. Evenson. AARD, August 1992. 7. AARD in the 1990s and Beyond. Seminar Report, Volume I: A Summary. AARD, September 1991. 8. Five Years of Agricultural Research and Development in Indonesia: 1987-1991, The Accomplishments and the Contributions. AARD, 1992. 9. Soil Fertility and Fertilizer Use Study in Indonesia: Report and Proposed Program. AARD, November 1994. 10. Working Paper - Proposed Format for Provincial Agricultural Technology Transfer Master Plan. 1994. - 107 - ANNEX 5 11. Working Paper - Konsolidasi Organisasi/Management Badan Penelitian dan Pengembangan Pertanian (AARD). 1994. 12. AARD's Human Resources Development Plan for Repelita VI. AARD Human Resources Council. 1994. 13. Provincial Profiles - Rencana Pengembangan BPTP, Central Java/Yogyakarta, Riau/Jambi, Aceh, North Sumatra, Maluku, West Kalimantan, Central/North Sulawesi, and South East Sulawesi. 14. Working Papers for the (a) Fisheries Research Component, (b) the Livestock Research Component, and (c) Horticulture and Tree Crops Research Component. AARD, December 1994 (updated). Staff Working Papers 1. Cost Tables I IBRD 26593R1 @ xnnALA tL- j , , INDONESIA ', ' >, 5,. PHILIPPINES *' AGRICULTURAL RESEARCH MANAGEMENT 11 PROJECT ] , ~~~~~~~~ ~ ~~BRUNEI; :" - " tto n AIAT MALAYSIA \P%,! tf - R O V IN CES CO V ERED dV B tA lA SU PRRITED 9 Y A R T lP 11 13 BRUNE~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1\ ~~~~~~~ ~PO IC SCOVERED B,9AlAT,SPN R F, )~~~~~MLYI Goe}o 1' OI:OTHER nONORS Pv4ALAYSIA \ ¢ j A HEADIQUARTERS EOF 8 AlAls %UPPORTD BY AR.P I / ,,* ® > j T^^ALAYSIA ) n / , S PROVINCE HEADOIIARTERS 1 MA .LASINGAPORE CAPI MonodTL / NION CAEITAL M-d.- PROVINCE BO'IINDARIES ,j .i,L#tXlm on ' '~